Petition for Truing up and determination of transmission tariff for “SYSTEM STRENGTHENING–XX” in the Southern Region of the CERC (Conduct of Business) and (Terms and Conditions of Tariff) – EQ
Summary:
—
### **1. Introduction & Case Overview**
– **Petitioner:** Power Grid Corporation of India Limited (PGCIL)
– **Subject:** Petition for truing up of transmission tariff for the period **2019–24** and determination of transmission tariff for the period **2024–29** for **Combined Assets** under the “System Strengthening–XX” scheme in the Southern Region.
– **Legal Basis:** Electricity Act, 2003 (Sections 62 & 79(1)(d)) and relevant CERC Tariff Regulations (2019 & 2024).
– **Respondents:** 14 state power distribution companies and electricity departments across Southern India.
—
### **2. Background & Project Scope**
– **Project:** System Strengthening–XX in the Southern Region.
– **Assets:** 13 transmission assets (substations, transformers, reactors, line upgrades) were merged into “Combined Assets” for tariff purposes. Key locations include:
– Hyderabad, Warangal, Khammam, Vijayawada, Gooty, Kadapa, Malekuttaiyur, Somanahalli, Mysore, Pugalur, Trichy, Narendra, and Trissur.
– **Original Approvals:**
– Initial Investment Approval (2014): ₹28,849 lakh.
– Revised Cost Estimate–I (2017): ₹37,609 lakh.
– Revised Cost Estimate–II (2025): ₹32,936 lakh.
– **Earlier Tariff Orders:** Tariffs for individual assets were previously approved in separate petitions; truing up for 2014–19 and determination for 2019–24 were approved in Petition No. 23/TT/2021.
—
### **3. Prayers Sought by PGCIL**
PGCIL requested the Commission to:
a. Approve trued-up tariff for 2019–24 and projected tariff for 2024–29.
b. Admit capital cost claims and additional capital expenditure (ACE).
c. Allow recovery/refund of Annual Fixed Charges (AFC) due to changes in tax rates.
d. Approve reimbursement of petition filing fees and publication expenses.
e. Allow separate billing of RLDC fees, license fees, and GST (if levied in future).
f. Permit filing of separate petitions for security expenses, insurance, capital spares, and CTUIL expenses.
g. Allow adjustment of interest on loan due to floating interest rates.
—
### **4. Commission’s Analysis & Decisions**
#### **A. Truing Up for 2019–24 Period**
– **Capital Cost:** Approved at **₹31,404.80 lakh** as on 01.04.2019 (including ACE of ₹28.39 lakh for Asset-V).
– **Additional Capital Expenditure (ACE):** **₹670.92 lakh** allowed (against claimed ₹670.92 lakh), mostly under Regulations 24(1)(a), 24(1)(b), and 25(1)(d) of 2019 Tariff Regulations.
– **Debt-Equity Ratio:** Maintained at **70:30** as per Regulation 18.
– **Depreciation:** Allowed as claimed, based on Weighted Average Rate of Depreciation (WAROD) of **5.30%**.
– **Interest on Loan (IoL):** Allowed based on actual weighted average interest rates (7.96% to 7.68%).
– **Return on Equity (RoE):** Grossed-up rate of **18.782%** applied (base rate 15.50%, MAT rate 17.472%).
– **O&M Expenses:** Allowed as per normative rates under 2019 Regulations.
– **Interest on Working Capital (IWC):** Allowed based on SBI MCLR + 350 bps.
– **Total Annual Fixed Charges (AFC) Allowed (₹ in lakh):**
– 2019–20: ₹8,200.48
– 2020–21: ₹8,131.64
– 2021–22: ₹8,122.60
– 2022–23: ₹8,172.65
– 2023–24: ₹8,225.99
—
#### **B. Tariff Determination for 2024–29 Period**
– **Capital Cost:** Opening capital cost as on 01.04.2024 = **₹32,075.72 lakh**.
– **ACE for 2024–29:** **₹6.58 lakh** allowed (undischarged liabilities).
– **Debt-Equity Ratio:** Continued at **70:30**.
– **Depreciation:** WAROD = **5.30%** (2024–25) and **5.27%** (2025–29).
– **Interest on Loan:** Allowed based on projected weighted average interest rates (~7.99% to 8.15%).
– **RoE:** Grossed-up rate remains **18.782%** (base 15.50%, MAT 17.472%).
– **O&M Expenses:** Allowed as per 2024 Tariff Regulation norms.
– **IWC:** Rate = **11.90%** (SBI MCLR + 325 bps).
– **Total AFC Allowed (₹ in lakh):**
– 2024–25: ₹6,971.76
– 2025–26: ₹6,960.26
– 2026–27: ₹6,957.82
– 2027–28: ₹6,971.58
– 2028–29: ₹7,002.98
—
### **5. Other Key Rulings**
– **Filing Fee & Publication Expenses:** Allowed for reimbursement from beneficiaries.
– **CTUIL Fees:** PGCIL may bear and recover through a separate petition as additional O&M expenses.
– **License Fee & RLDC Charges:** Allowed for separate recovery.
– **GST on Transmission Charges:** Not currently applicable; prayer considered premature.
– **Security, Insurance & Capital Spares:** PGCIL may file a **single consolidated petition** for these items for the 2024–29 period.
– **Sharing of Transmission Charges:** To be recovered monthly as per:
– 2019–24: Regulation 57 of 2019 Regulations + 2020 Sharing Regulations.
– 2024–29: Regulation 78 of 2024 Regulations + 2020 Sharing Regulations.
—
For more information please see below link:
