Petition of the CERC (Conduct of Business) and (Terms and Conditions of Tariff) Regulations for the Ranganadi-Ziro Transmission System in the North Eastern Region – EQ
Summary:
**Objective:**
Approval for truing up of transmission tariff for the 2019–24 period under the 2019 Tariff Regulations, and determination of transmission tariff for the 2024–29 period under the 2024 Tariff Regulations.
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### Key Business & Financial Points
#### 1. Asset Overview
| Parameter | Details |
|———–|———|
| **Scope** | 132 kV S/C transmission line + 132/33 kV Ziro Substation with 2 bays |
| **Investment Approval** | ₹27.25 crore (as on 29.08.2001) |
| **Scheduled COD** | September 2003 |
| **Actual COD** | April 1, 2004 (7-month delay condoned by CERC on 31.12.2007) |
| **Capital Cost as on 1.4.2024** | ₹18.20 crore (after truing up) |
| **Debt-Equity Ratio** | 70:30 (normative) |
#### 2. Trued-Up Tariff (2019–24) – Key Numbers
| Particulars | 2019-20 | 2020-21 | 2021-22 | 2022-23 | 2023-24 |
|————-|———|———|———|———|———|
| **AFC Allowed (₹ Lakh)** | 258.53 | 257.86 | 257.92 | 258.58 | 260.24 |
| Depreciation | 36.82 | 36.82 | 36.82 | 36.82 | 36.82 |
| Interest on Loan | 20.17 | 16.55 | 13.41 | 10.43 | 7.38 |
| Return on Equity | 99.74 | 99.74 | 99.74 | 99.74 | 99.74 |
| O&M Expenses | 95.29 | 98.59 | 102.12 | 105.65 | 109.40 |
| Interest on Working Capital | 6.51 | 6.16 | 5.84 | 5.94 | 6.90 |
#### 3. Determined Tariff (2024–29) – Key Numbers
| Particulars | 2024-25 | 2025-26 | 2026-27 | 2027-28 | 2028-29 |
|————-|———|———|———|———|———|
| **AFC Allowed (₹ Lakh)** | 240.67 | 243.06 | 247.12 | 252.84 | 258.78 |
| Depreciation | 36.82 | 36.81 | 36.82 | 36.81 | 36.82 |
| Interest on Loan | 4.19 | 1.29 | 0.00 | 0.00 | 0.00 |
| Return on Equity | 99.74 | 99.74 | 99.74 | 99.74 | 99.75 |
| O&M Expenses | 93.78 | 98.72 | 103.86 | 109.35 | 115.03 |
| Interest on Working Capital | 6.13 | 6.49 | 6.70 | 6.93 | 7.20 |
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### Critical Regulatory Findings
#### 4. Additional Capital Expenditure (ACE) – 2019–24 – **Disallowed in Full**
| Claimed ACE | ₹12.15 Lakh |
|————-|————-|
| **Allowed ACE** | **₹0.00 Lakh** |
**Reasoning:**
– The Petitioner claimed ACE for balance/retention payments related to works (fire alarm, hydrant system, DG set) approved in 2015.
– The Commission found that:
– The Petitioner failed to provide item-wise unit costs despite multiple directions.
– The claimed ACE was for already completed works, not for replacement due to obsolescence under Regulation 25(2)(c).
– Reconciliation of liabilities against actual costs was not workable.
– **Business Implication:** Strict compliance with documentary requirements (unit costs, OEM obsolescence certificates) is essential for ACE claims to be allowed.
#### 5. Return on Equity (RoE) – MAT Rate Applied
– **Base RoE:** 15.50%
– **Effective Grossed-Up RoE:** 18.782% (based on MAT rate of 17.472%)
– **Allowed RoE (Annual):** ₹99.74 Lakh
– **Difference from Claim:** Petitioner claimed slightly higher RoE (₹100.03–100.39 Lakh); CERC allowed lower amount based on notified MAT rates.
– **Business Implication:** RoE gross-up is strictly based on **notified MAT rates** of respective financial years, not on projected or claimed rates.
#### 6. Interest on Loan (IoL) – Slightly Reduced
| Period | Petitioner Claim | CERC Allowed |
|——–|—————–|————–|
| 2019-20 | ₹20.47 Lakh | ₹20.17 Lakh |
| 2020-21 | ₹17.13 Lakh | ₹16.55 Lakh |
| 2021-22 | ₹13.95 Lakh | ₹13.41 Lakh |
| 2022-23 | ₹10.93 Lakh | ₹10.43 Lakh |
| 2023-24 | ₹7.87 Lakh | ₹7.38 Lakh |
– **Business Implication:** IoL is calculated based on actual weighted average rate of interest (WAROI) and normative loan repayment schedule; claims not aligned with actual portfolio may be reduced.
#### 7. O&M Expenses – Approved as per Norms
– CERC allowed O&M expenses strictly in accordance with **normative rates per km and per bay** as prescribed in the Tariff Regulations.
– Petitioner’s claimed O&M was substantially aligned with norms and was approved.
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