Petition for truing up and determination of transmission tariff for the Kaiga Project in the Southern Region of the CERC (Conduct of Business) and (Terms and Conditions of Tariff) Regulations – EQ
Summary:
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## Key Directions Issued by CERC
### For Petition No. 412/TT/2025:
1. **Item-wise details** of Additional Capital Expenditure (ACE) claimed for 2019-24 and projected for 2024-29 – due to significant difference between approved and claimed figures.
2. **Equipment-wise cost estimate** for ACE projected for 2024-29.
3. **Justification & supporting documents** for contingency liability claim of **₹8,752.92 lakh (₹875.29 crore)** .
### For Petition No. 578/TT/2025:
– **Equipment-wise cost estimates** for ACE claimed (2019-24) and projected (2024-29).
### For Petition No. 599/TT/2025:
– **Interest During Construction (IDC) sheets** in Excel format for all assets.
### General Directions:
– POWERGRID to submit information **on affidavit** within **two weeks** (by ~2 April 2026) with advance copy to Respondents.
– **Respondents** (State DISCOMs & others) to file replies within **one week** thereafter.
– **POWERGRID** may file rejoinder within **one week** after replies.
– **Orders reserved** by CERC subject to above compliance.
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# Business Points & Implications
| Business Aspect | Implication |
|—————-|————–|
| **Regulatory Scrutiny on Capex** | CERC is closely examining POWERGRID’s ACE claims due to large deviations from approved figures. Transmission licensees must maintain rigorous cost tracking and justification. |
| **Contingency Liability Risk** | The ₹875.29 crore contingency claim is under scrutiny. If disallowed, POWERGRID’s regulated equity and return on equity (RoE) will reduce, impacting profitability. |
| **IDC Transparency Required** | Excel-based IDC sheets for all assets (Petition 599) signal CERC’s demand for granular, auditable data. Other utilities should expect similar formatting requirements. |
| **Tariff Certainty Delayed** | Final tariff orders for 2024-29 period will be deferred until compliance submissions and replies are completed. DISCOMs face continued tariff uncertainty. |
| **DISCOM Opportunity** | Respondents (state DISCOMs like TANGEDCO, MPPower) can challenge inflated ACE/IDC claims to reduce their transmission charges payable to POWERGRID. |
| **Precedent for Future Petitions** | CERC’s directions set a benchmark: ACE claims must be justified equipment-wise, and contingency liabilities need strong documentary support. |
| **Nuclear Evacuation Infrastructure** | Kaiga 3 & 4 are nuclear assets. Timely tariff finalization ensures stable revenue for evacuation infrastructure, impacting nuclear power dispatch in Southern Region. |
| **Compliance Deadline Pressure** | POWERGRID has only 2 weeks to compile detailed equipment-wise ACE data – may require internal resource reallocation. |
| **Virtual Hearing Efficiency** | CERC continues to use virtual hearings, reducing legal travel costs for utilities and DISCOMs. |
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## Stakeholder-Specific Takeaways
| Stakeholder | Action / Implication |
|————-|———————-|
| **POWERGRID** | Submit robust, equipment-wise ACE justification with IDC sheets in Excel; contingency liability needs third-party validation. |
| **State DISCOMs (Tamil Nadu, MP, others)** | File timely replies challenging any inflated ACE/IDC; engage tariff consultants if needed. |
| **Other Transmission Licensees** | Anticipate similar detailed ACE/IDC scrutiny in their own tariff petitions; prepare equipment-wise cost data upfront. |
| **Nuclear Power Operator (NPCIL)** | Tariff finalization for evacuation lines affects project viability for future nuclear plants. |
| **Investors in POWERGRID Bonds/Equity** | Monitor outcome – disallowance of ACE or contingency claims could impact regulated RoE (~15.5%) and cash flows. |
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