Petition for Truing up and determination of the transmission tariff for Transmission System associated with Ramagundam STPP including ICT at the Khammam and Reactor at the Gazuwaka under CTP Augmentation – EQ

Summary:

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#### Business & Regulatory Summary

This document is a Record of Proceedings (RoP) from a regulatory hearing before the CERC. It outlines a tariff dispute and approval process for a major interstate transmission system asset. Key business and regulatory highlights include:

– **Core Issue:** PGCIL, the central transmission utility, has filed a petition to finalize (true-up) the tariff it can charge for using a specific transmission system for the past period (2019-24) and to set the tariff for the upcoming regulatory period (2024-29). This is a routine but critical regulatory process for revenue recovery.
– **The Asset:** The assets in question are part of the transmission system augmenting the connection from the Ramagundam Super Thermal Power Project (STPP). They include ICTs (Interconnecting Transformers) at Khammam and a Reactor at Gazuwaka, which are crucial for stabilizing and transmitting power from this large thermal plant in Telangana to the Southern Region grid (including Tamil Nadu).
– **Key Development – Reconductoring Work:** During the hearing, PGCIL introduced a new element: “reconductoring work.” This involves upgrading existing transmission lines by replacing old conductors with new, higher-capacity ones. PGCIL is seeking to include this cost as “Add-Cap” (Additional Capitalization) and has sought permission to file an amended petition to incorporate it.
– **Regulatory Scrutiny:** The CERC has directed PGCIL to provide specific, detailed information to justify its claims, indicating a high level of scrutiny to ensure that only legitimate and efficiently incurred costs are passed through to beneficiaries (the Discoms like TANGEDCO).

#### Key Directives & Implications for Stakeholders

The Commission issued the following specific directions, which have direct business implications:

**For PGCIL (The Petitioner):**

1. **Amended Petition (within 4 weeks):** Must file a new, consolidated petition that properly incorporates the reconductoring work. Crucially, the Commission noted that this is an upgrade of an existing asset, not a new one, so it must be claimed as “Additional Capitalization” (Add-Cap) and presented in a **single set of tariff forms** covering both tariff periods. This prevents PGCIL from treating it as a separate, new project with potentially higher returns.
2. **OEM Certificate (within 2 weeks):** Must provide an Original Equipment Manufacturer (OEM) certificate to justify the “ACE” (likely meaning Additional Capital Expenditure or a specific cost element) claimed under Regulation 25(2) of the 2024 Tariff Regulations. This is to prove that the costs claimed are based on verified, original equipment costs.
3. **Reconciled Form-6 (within 2 weeks):** Must correct and resubmit “Form-6” (a standard tariff form for providing financial data) because the values in the original filing did not match the Auditor’s Certificate. This is a demand for financial data integrity.
4. **Details of LoA (within 2 weeks):** Must provide complete details of the Letter of Award (LoA) for the reconductoring works. This allows the Commission and respondents to examine the contracting process and the base cost of the work.

**For TANGEDCO & Other Respondents:**

– **Right to Reply (within 2 weeks):** TANGEDCO and the other 13 respondents (which are state utilities and Discoms that will ultimately pay this tariff) have been granted permission to file their replies. They will likely scrutinize PGCIL’s claims and may object to any costs they deem excessive or not prudent. This is their opportunity to protect the interests of electricity consumers in their respective states.

#### Strategic & Business Implications

– **Revenue Certainty for PGCIL:** Successful resolution of this petition is essential for PGCIL to recover its capital investment and earn a regulated return on the Ramagundam transmission assets. Any delay or disallowance of costs impacts its revenue.
– **Cost Pass-Through for Discoms:** The final tariff determined by CERC will be paid by the beneficiary states (like Tamil Nadu through TANGEDCO). These costs are ultimately borne by electricity consumers. Hence, TANGEDCO’s active participation is crucial to contest any unjustified cost claims.
– **Precedent for Asset Upgrades:** The CERC’s treatment of the reconductoring work as “Add-Cap” on existing assets, rather than a new project, sets a regulatory precedent. It clarifies how transmission licensees should file for cost recovery on asset modernization and upgradation works, potentially impacting future tariff petitions for similar “reconductoring” or “upgradation” projects across India.
– **Timeline and Compliance:** The strict deadlines (2-4 weeks for various submissions) imposed by the Commission indicate a push for timely resolution. Non-compliance by PGCIL could delay the tariff determination and its revenue stream.

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