{"id":171517,"date":"2008-05-06T00:00:00","date_gmt":"2008-05-05T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/power-grid-corporation-of-india-vs-bihar-state-electricity-board-and-on-6-may-2008"},"modified":"2018-03-25T17:52:35","modified_gmt":"2018-03-25T12:22:35","slug":"power-grid-corporation-of-india-vs-bihar-state-electricity-board-and-on-6-may-2008","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/power-grid-corporation-of-india-vs-bihar-state-electricity-board-and-on-6-may-2008","title":{"rendered":"Power Grid Corporation Of India … vs Bihar State Electricity Board And … on 6 May, 2008"},"content":{"rendered":"
Central Electricity Regulatory Commission<\/div>\n
Power Grid Corporation Of India … vs Bihar State Electricity Board And … on 6 May, 2008<\/div>\n
Bench: B Bhushan, R Krishnamoorthy<\/div>\n<\/p>\n
<\/pre>\n
ORDER<\/p>\n
1. This petition has been filed for approval of transmission charges for (i) 315 MVA, 400\/220 kV, ICT at Siliguri (Asset-I), and (ii)  400 kV D\/C Biharshariff-Muzaffarpur transmission   line, Biharshariff 400 kV extension and Muzaffarpur 400 kV extension (Asset- II)  (collectively referred to as  ` the transmission assets`), under System Strengthening Scheme (hereinafter referred to as `the scheme`) for Eastern Region (formerly part of Tala Supplementary Scheme)    from the date of commercial operation  of  the  respective  transmission  asset,  based  on  the  Central  Electricity  Regulatory  Commission (Terms  and  Conditions  of  Tariff)  Regulations, 2004 (hereinafter  referred  to  as “the 2004 regulations”) after  accounting  for  additional capitalization during 2006-07. The petitioner has also prayed for reimbursement of expenditure  from  the  beneficiaries  incurred  towards  publishing  of  notices  in newspapers and the petition filing fee.\n<\/p>\n
2.  The petitioner also filed I.A. No. 32\/2007 for an interim order permitting it to charge the provisional tariff on monthly basis from the date of commercial operation pending determination of final tariff  by  the  Commission. During the hearing, the representative of the petitioner stated that the audited expenditure upto     the date of commercial operation was available and the same was furnished in the petition. Accordingly, the representative of the petitioner prayed for approval of final tariff without  pursuing  for  provisional  tariff.  The  beneficiaries  present  at  the  hearing expressed their no objection to allowing final tariff. Accordingly, we are considering the petitioner’s claim for final tariff.   In this view, IA has become infructuous.\n<\/p>\n
3.  The investment approval for  the  scheme was accorded by the Board of Directors of the petitioner company vide letter dated 25.2.2003 at an estimated cost of Rs. 24791 lakh, which included IDC of Rs. 2364 lakh.  Subsequently, the revised cost estimate  for  the  scheme  was approved by Board of Directors of the  petitioner company vide its letter dated  9.7.2007 at an estimated cost of Rs.  33618 lakh, incuding an IDC of Rs. 1837 lakh.\n<\/p>\n
4. The dates of commercial operation of the two assets are stated to be as under:\n<\/p>\n
S.\n<\/p>\n
  No.\n<\/p>\n
\u00a0Name
\n  of the assets <\/p>\n
Date
\n  of commercial\u00a0 operation <\/p>\n
1.<\/p>\n
Asset-I <\/p>\n
1.10.2006<\/p>\n
2.<\/p>\n
Asset-II<\/p>\n
1.11.2006<\/p>\n
5.  The details of the apportioned approved cost and the estimated completion cost of the transmission assets are stated to be as under:\n<\/p>\n
                                                                (Rs. in lakh)<\/p>\n
Name
\n  of the assets <\/p>\n
Apportioned approved cost <\/p>\n
Capital expenditure as
\n  on\u00a0 the date of commercial operation <\/p>\n
Capital Expenditure from the
\n  date of commercial operation to 31.3.2007 <\/p>\n
Balance Expenditure <\/p>\n
Total estimated completion
\n  cost\u00a0 <\/p>\n
Asset-I <\/p>\n
1081.00 <\/p>\n
866.38 <\/p>\n
64.55 <\/p>\n
115.45 <\/p>\n
1046.38 <\/p>\n
Asset-II<\/p>\n
19119.00 <\/p>\n
17432.95 <\/p>\n
245.91 <\/p>\n
1087.09 <\/p>\n
18765.95 <\/p>\n
6. The petitioner has claimed the transmission charges as under:\n<\/p>\n
                                                                (Rs. in lakh)<\/p>\n
\u00a0<\/p>\n
Asset-I<\/p>\n
Asset-II<\/p>\n
\u00a0<\/p>\n
2006-07<\/p>\n
\u00a02007-08 <\/p>\n
2008-09 <\/p>\n
2006-07 <\/p>\n
2007-08 <\/p>\n
2008-09 <\/p>\n
Depreciation<\/p>\n
16.18 <\/p>\n
33.51 <\/p>\n
33.51 <\/p>\n
196.78 <\/p>\n
476.04 <\/p>\n
476.04 <\/p>\n
Interest
\n  on Loan\u00a0 <\/p>\n
23.28 <\/p>\n
46.73 <\/p>\n
44.24 <\/p>\n
382.66 <\/p>\n
900.92 <\/p>\n
865.78 <\/p>\n
Return
\n  on Equity <\/p>\n
18.87 <\/p>\n
39.09 <\/p>\n
39.09 <\/p>\n
305.83 <\/p>\n
739.16 <\/p>\n
739.16 <\/p>\n
Advance
\n  against Depreciation <\/p>\n
0.00 <\/p>\n
0.00 <\/p>\n
0.00 <\/p>\n
0.00 <\/p>\n
0.00 <\/p>\n
0.00 <\/p>\n
Interest
\n  on Working Capital\u00a0 <\/p>\n
2.29 <\/p>\n
4.72 <\/p>\n
4.81 <\/p>\n
25.00 <\/p>\n
60.48 <\/p>\n
61.20 <\/p>\n
O
\n  & M Expenses <\/p>\n
30.42 <\/p>\n
63.26 <\/p>\n
65.80 <\/p>\n
78.03 <\/p>\n
194.50 <\/p>\n
202.52 <\/p>\n
Total<\/p>\n
91.04 <\/p>\n
187.32 <\/p>\n
187.45 <\/p>\n
988.29 <\/p>\n
2371.11 <\/p>\n
2344.69 <\/p>\n
7. The details submitted by the petitioner in support of its claim for interest on working capital are given hereunder:\n<\/p>\n
                                                                (Rs. in lakh)<\/p>\n
\u00a0<\/p>\n
Asset-I<\/p>\n
Asset-II<\/p>\n
\u00a0<\/p>\n
2006-07 <\/p>\n
2007-08 <\/p>\n
2008-09 <\/p>\n
2006-07 <\/p>\n
2007-08 <\/p>\n
2008-09 <\/p>\n
Maintenance
\n  Spares <\/p>\n
9.31 <\/p>\n
9.59 <\/p>\n
10.16 <\/p>\n
174.33 <\/p>\n
178.69 <\/p>\n
189.41 <\/p>\n
O
\n  & M expenses <\/p>\n
5.07 <\/p>\n
5.27 <\/p>\n
5.48 <\/p>\n
15.61 <\/p>\n
16.21 <\/p>\n
16.88 <\/p>\n
Receivables<\/p>\n
30.35 <\/p>\n
31.22 <\/p>\n
31.24 <\/p>\n
395.32 <\/p>\n
395.18 <\/p>\n
390.78 <\/p>\n
Total<\/p>\n
44.73 <\/p>\n
46.08 <\/p>\n
46.89 <\/p>\n
585.26 <\/p>\n
590.08 <\/p>\n
597.07 <\/p>\n
Rate
\n  of Interest <\/p>\n
10.25% <\/p>\n
10.25% <\/p>\n
10.25% <\/p>\n
10.25% <\/p>\n
10.25% <\/p>\n
10.25% <\/p>\n
Interest<\/p>\n
2.29 <\/p>\n
4.72 <\/p>\n
4.81 <\/p>\n
25.00 <\/p>\n
60.48 <\/p>\n
61.20 <\/p>\n
8. The reply to the petition has been filed by Bihar State Electricity Board (BSEB) and West Bengal State Electricity Distributing Company Limited  (WBSEDCL), the successor entity of West Bengal State Electricity Board. In response to the public notices published by the petitioner in accordance with the procedure specified by the Commission, no comments have been received from the general public.\n<\/p>\n
9.  BSEB and WBSEDCL in their replies have raised  question  of  delay  of commissioning of transmission assets.   The issue is being discussed in this order at an appropriate place.\n<\/p>\n
CAPITAL COST <\/p>\n
10.    As per Clause (1) of Regulation 52 of the 2004 regulations, subject to prudence check, the actual expenditure incurred on completion of the project shall form the basis for determination of final tariff. The final tariff shall be determined based on the admitted capital expenditure actually incurred up to the date of commercial operation of the transmission system and shall include capitalised initial spares subject to a ceiling norm as 1.5% of original project cost. The regulation is applicable in case of the transmission system declared under commercial operation on or after 1.4.2004.\n<\/p>\n
11.    The petitioner has claimed additional capitalization of Rs. 64.55 lakh and Rs. 245.91 lakh on the works for date of the commercial operation to 31.3.2007 over the capital expenditure of Rs. 866.38 lakh and Rs. 17432.95 lakh for Asset-I and Asset-II, respectively as on the date of commercial operation.\n<\/p>\n
ADDITIONAL CAPITALIZATION 2006-07 <\/p>\n
12.    Clause (1) of Regulation 53 of the 2004 regulations provides-\n<\/p>\n
(1)   The following capital expenditure within the original scope of work actually incurred after the date of commercial operation and up to the cut off date may be admitted by the Commission, subject to prudence check:\n<\/p>\n
(i) Deferred liabilities;\n<\/p>\n
(ii) Works deferred for execution;\n<\/p>\n
(iii) Procurement of initial  capital  spares  in  the  original  scope  of  works subject to the ceiling norm specified in regulation 52;\n<\/p>\n
(iv) Liabilities  to  meet award of arbitration or compliance of the order or decree of a court; and<\/p>\n
(v) On account of change in law:\n<\/p>\n
Provided that original scope of work along with estimates of expenditure shall be submitted along with the application for provisional tariff:\n<\/p>\n
 Provided further that a list of the deferred liabilities and works deferred for execution shall be submitted along with the application for final tariff after the date of commercial operation of the transmission system.\n<\/p>\n
13. The details submitted by the petitioner in support of its claim for additional capital expenditure are given hereunder:\n<\/p>\n
Asset-I<\/p>\n
Asset-II<\/p>\n
Nature of expenditure <\/p>\n
Nature of expenditure <\/p>\n
Sub-station  = Rs. 64.55 lakh <\/p>\n
 Total \u00a0\u00a0 \u00a0\u00a0 \u00a0 \u00a0\u00a0 = Rs. 64.55 lakh <\/p>\n
Sub-station \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 = Rs. 99.90 lakh <\/p>\n
   Transmission line \u00a0\u00a0 = Rs. 140.90 lakh <\/p>\n
   PLCC \u00a0\u00a0  \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 =  Rs. 5.11 lakh <\/p>\n
   Total \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 = Rs. 245.91 lakh <\/p>\n
14.    The additional capital expenditure claimed is within the original scope of work and is found to be in order as it was against the committed liability. Accordingly, the additional capital expenditure of Rs. 64.55 lakh and Rs. 245.91 lakh has been allowed for the transmission assets.\n<\/p>\n
Time Over-run <\/p>\n
15.    As per the original approval, the transmission assets were scheduled to be commissioned by June 2006. The lines were declared under commercial operation on 1.10.2006 and 1.11.2006, respectively. Therefore, there   has been a delay of three  to  fourth  months  in  the  commissioning  of  the  transmission  assets.    The petitioner has explained following reasons for delay:\n<\/p>\n
(i) In respect of Asset-I, the   petitioner has submitted that the progress of work was  delayed  mainly  due  to  delay  in  availability  of  steel, bandh\/strikes\/political  disturbances,  heavy  rains  in  the  area  and delay on account of statutory inspection. Copies of the correspondence in this regard have been placed on record ;\n<\/p>\n
(ii)  In respect of Asset-II, the progress of work was   stated to be hampered mainly due to hindrance by local people, erection of RCE towers in flood  condition  and  stringing  under  difficult  working  condition.  Copies  of  the correspondence in this regard have been attached with the application.\n<\/p>\n
16. We have  considered  the  matter  very  carefully.  There  is  satisfactory explanation from the petitioner for the entire delay in completion of the transmission line. It needs to be pointed out that the petitioner does not gain anything by delaying the commissioning of its transmission assets. Therefore, the delay in commissioning of line is considered to be beyond the control of the petitioner.\n<\/p>\n
TOTAL CAPITAL COST <\/p>\n
17. Based on the above, gross block as given below has been considered for the purpose  of  tariff  for  both  the  transmission  assets,  after  allowing  additional capitalization on woks as claimed by the petitioner:\n<\/p>\n
                                                                (Rs. in lakh)<\/p>\n
\u00a0<\/p>\n
Expenditure up on date of
\n  commercial operation <\/p>\n
Additional capital expenditure
\n  up to 31.3.2007 <\/p>\n
Total capital expenditure <\/p>\n
Asset-\n<\/p>\n
  I <\/p>\n
866.38 <\/p>\n
64.55 <\/p>\n
930.93 <\/p>\n
Asset-II<\/p>\n
17432.95 <\/p>\n
245.91 <\/p>\n
17678.86 <\/p>\n
Total<\/p>\n
18299.33 <\/p>\n
310.46 <\/p>\n
18609.79 <\/p>\n
DEBT- EQUITY RATIO <\/p>\n
18.    Clause (1) of Regulation 54 of the 2004 regulations inter alia provides that,-\n<\/p>\n
(1)  In case of the existing projects, debt-equity ratio Considered by the Commission for fixation  of  tariff  for  the  period  ending 31.3.2004 shall  be considered for determination of tariff with effect from 01.04.2004:\n<\/p>\n
Provided that in cases where the tariff for the period ending 31.3.2004 has not been determined by the Commission, debt-equity ratio shall be as may be decided by the Commission:\n<\/p>\n
Provided  further  that  in  case  of  the  existing  projects  where  additional capitalisation has been completed on or after 1.4.2004 and admitted by the Commission under Regulation 53, equity in the additional capitalisation to be considered shall be:\n<\/p>\n
(a) 30% of the additional capital expenditure admitted by the Commission, or<\/p>\n
(b) equity approved by the competent authority in the financial package, for additional capitalisation, or<\/p>\n
 (c) actual equity employed, <\/p>\n
whichever is the least:\n<\/p>\n
 Provided further that in case of additional expenditure admitted under the second proviso, the Commission may consider equity of more than 30% if the transmission licensee is able to satisfy the Commission that deployment of such equity of more than 30% was in the interest of general public.\n<\/p>\n
19. The Note 1 below Regulations 53 lays down that any expenditure on account of committed liabilities with the original scope of work is to be serviced in the normative debt-equity ratio specified in Regulation 54.\n<\/p>\n
20. In the present case, the revised investment approval     for the scheme was accorded by the Board of Directors of the petitioner vide its letter dated 9.7.2007 with debt-equity ratio 70:30. The petitioner has considered debt-equity ratio of 70:30 and 70.14:29.86  for  the  transmission  assets,  as  actually  deployed  on  the  date  of commercial operation. The petitioner has further considered the amount of additional capitalization in the debt-equity ratio of 70:30.   We have considered the debt-equity ratio on the date of commercial operation and for the additional capitalisation on works of Rs. 64.55 lakh and Rs. 245.91 lakh for the transmission assets as considered by the petitioner. Accordingly, for the purpose of tariff, debt-equity considered for two assets as under:\n<\/p>\n
                                                                (Rs. in lakh)<\/p>\n
\u00a0<\/p>\n
Capital cost as on date of
\n  commercial operation <\/p>\n
Equity on the date of
\n  commercial operation <\/p>\n
Additional capital expenditure
\n  during 200607 <\/p>\n
Capital cost as on 1.4.2007 <\/p>\n
Addition of equity <\/p>\n
Equity considered as on
\n  1.4.2007 <\/p>\n
Asset-\n<\/p>\n
  I <\/p>\n
866.38<\/p>\n
\u00a0259.88 <\/p>\n
64.55 <\/p>\n
930.93 <\/p>\n
19.37 <\/p>\n
279.25 <\/p>\n
Asset-II<\/p>\n
17432.95<\/p>\n
\u00a05205.95 <\/p>\n
245.91 <\/p>\n
17678.86 <\/p>\n
73.77 <\/p>\n
5279.72 <\/p>\n
Total<\/p>\n
18299.33<\/p>\n
\u00a05465.83 <\/p>\n
310.46 <\/p>\n
18609.79 <\/p>\n
93.14 <\/p>\n
5558.97 <\/p>\n
RETURN ON EQUITY <\/p>\n
21.    As per Clause (iii) of Regulation 56 of the 2004 regulations, return on equity shall be computed on the equity base determined in accordance with regulation 54 @ 14% per annum. Equity invested in foreign currency is to be allowed a return in the same currency and the payment on this account is made in Indian Rupees based on the exchange rate prevailing on the due date of billing.\n<\/p>\n
22.  Equity has been considered as on the date of commercial operation and as on 1.4.2007 onwards as given in the table below para 20 above.   However, tariff for the period from date of the commercial operation to  31.3.2007 has been allowed on average equity. Accordingly, the petitioner shall be entitled to return on equity as under:\n<\/p>\n
                                                                (Rs. in lakh)<\/p>\n
Name
\n  of the <\/p>\n
Equity
\n  as on the <\/p>\n
Addition
\n  due to <\/p>\n
Average equity <\/p>\n
Return on equity<\/p>\n
assets<\/p>\n
date
\n  of commercial operation <\/p>\n
additional
\n  capitalization <\/p>\n
\u00a0<\/p>\n
2006-07 (Pro rata) <\/p>\n
2007-08 <\/p>\n
2008-09 <\/p>\n
Asset-\n<\/p>\n
  I <\/p>\n
259.88<\/p>\n
19.37<\/p>\n
269.56 <\/p>\n
18.87 <\/p>\n
39.09 <\/p>\n
39.09 <\/p>\n
Asset-\n<\/p>\n
  II <\/p>\n
5205.95<\/p>\n
73.77<\/p>\n
5242.84 <\/p>\n
305.83 <\/p>\n
739.16 <\/p>\n
739.16 <\/p>\n
INTEREST ON LOAN<\/p>\n
23. Clause (i) of regulation 56 of the 2004 regulations inter alia provides that,-\n<\/p>\n
 (a) Interest on loan capital shall be computed loan wise on the loans arrived at in the manner indicated in regulation 54.\n<\/p>\n
(b)  The loan outstanding as on 1.4.2004 shall be worked out as the gross loan  in  accordance  with  Regulation 54  minus  cumulative  repayment  as admitted by the Commission or any other authority having power to do so, up to 31.3.2004. The repayment for the period 2004-09 shall be worked out on a normative basis.\n<\/p>\n
(c)  The transmission licensee shall make every effort to re-finance the loan as long as it results in net benefit to the beneficiaries. The costs associated with such re-financing shall be borne by the beneficiaries.\n<\/p>\n
(d)  The changes to the loan terms and conditions shall be reflected from the date of such re-financing and benefit passed on to the beneficiaries.\n<\/p>\n
(e)  In case of dispute, any of the parties may approach the Commission with proper application. However, the beneficiaries shall not withhold any payment ordered by the Commission to the transmission licensee during pendency of any dispute relating to re-financing of loan;\n<\/p>\n
(f) In case any moratorium period is availed of by the transmission licensee, depreciation provided for in the tariff during the years of moratorium shall be treated as repayment during those years and interest on loan capital shall be calculated accordingly.\n<\/p>\n
(g) The transmission licensee shall not make any profit on account of re-financing of loan and interest on loan;\n<\/p>\n
(h)  The transmission licensee may, at its discretion, swap loans having floating rate   of interest with loans having fixed   rate of interest, or vice versa, at its own cost and gains or losses as a result of such swapping shall   accrue   to the transmission licensee:
\n Provided that the beneficiaries shall be liable to pay interest for the loans initially contracted, whether on floating or fixed rate of interest.\n<\/p>\n
24.    The petitioner has claimed interest on loan in the following manner:\n<\/p>\n
(i) Gross loans opening has been considered from 2006-07.\n<\/p>\n
(ii) On the basis of actual rate of interest on actual average loan, the weighted average rate of interest on loan is worked out for various years.\n<\/p>\n
(iii)  Gross loans at (i) above has been considered and the weighted average  rate of interest on loan for respective years as per above has been has been multiplied to arrive at interest on loan, considering (deprecation + AAD) as repayment.\n<\/p>\n
25.   In our calculation, the interest on loan has been worked out as detailed below:\n<\/p>\n
(i) Gross amount of loan, repayment of instalments and rate of interest   submitted have been used to work out weighted average rate of interest   on actual loan.\n<\/p>\n
(ii)  Notional  loan  arising  out  of  additional  capitalization  from  date  of  commercial operation to 31.3.2007 has been added in loan amount as   on date of commercial operation to arrive at total notional loan. This adjusted gross loan has been considered as normative loan for tariff   calculations <\/p>\n
(iii)  Tariff has been worked out considering normative loan and normative   repayments. Once the normative loan has been arrived at, it has been  considered for all purposes in the tariff. Normative repayment has been  worked out by the following formula:
\n  Actual repayment of actual loan during the year\n<\/p>\n
———————————————— X Opening balance of
\nOpening balance of actual loan during the year     normative     loan
\n                                                   during the year<\/p>\n
(iv)  Moratorium in repayment of loan has been considered with reference to  normative loan and if the normative repayment of loan  uring the year is  less than the depreciation during the year, it has been considered as   moratorium and depreciation during the year has been deemed as   normative repayment of loan during the year.\n<\/p>\n
(v)  Weighted average rate of interest on actual loan worked out as per (i)  above has been applied on the average loan during the year to arrive at   the interest on loan.\n<\/p>\n
26. Based on the above, the year-wise details of interest worked out are given hereunder:\n<\/p>\n
                                                                (Rs. in lakh)<\/p>\n
\u00a0<\/p>\n
Asset-I<\/p>\n
Asset-II<\/p>\n
Details of loan <\/p>\n
2006-07 (Pro rata) <\/p>\n
2007-08 <\/p>\n
2008-09 <\/p>\n
2006-07 (Pro rata) <\/p>\n
2007-08 <\/p>\n
2008-09 <\/p>\n
Opening Gross Loan\u00a0 <\/p>\n
606.50<\/p>\n
\u00a0651.69<\/p>\n
\u00a0651.69 <\/p>\n
12227.00 <\/p>\n
12399.14 <\/p>\n
12399.14 <\/p>\n
Cumulative Repayment <\/p>\n
0.00 <\/p>\n
16.18 <\/p>\n
49.69 <\/p>\n
0.00 <\/p>\n
196.78 <\/p>\n
672.82 <\/p>\n
Net Loan-Opening <\/p>\n
606.50<\/p>\n
\u00a0635.51<\/p>\n
\u00a0602.00 <\/p>\n
12227.00 <\/p>\n
12202.36 <\/p>\n
11726.32 <\/p>\n
Additions due to Additional
\n  Capitalisation <\/p>\n
45.19 <\/p>\n
–\n<\/p>\n
–\n<\/p>\n
172.14 <\/p>\n
–\n<\/p>\n
–\n<\/p>\n
Repayment during the year <\/p>\n
16.18 <\/p>\n
33.51 <\/p>\n
33.51 <\/p>\n
196.78 <\/p>\n
476.04 <\/p>\n
476.04 <\/p>\n
Net Loan-Closing <\/p>\n
635.51<\/p>\n
\u00a0602.00<\/p>\n
\u00a0568.48 <\/p>\n
12202.36 <\/p>\n
11726.32 <\/p>\n
11250.28 <\/p>\n
Average Loan <\/p>\n
621.00<\/p>\n
\u00a0618.75<\/p>\n
\u00a0585.24 <\/p>\n
12214.68 <\/p>\n
11964.34 <\/p>\n
11488.30 <\/p>\n
Weighted Average Rate of
\n  Interest on Loan\u00a0 <\/p>\n
7.50% <\/p>\n
7.55% <\/p>\n
7.56% <\/p>\n
7.52% <\/p>\n
7.53% <\/p>\n
7.54% <\/p>\n
Interest <\/p>\n
23.28 <\/p>\n
46.73 <\/p>\n
44.24 <\/p>\n
382.66 <\/p>\n
900.92 <\/p>\n
865.78 <\/p>\n
27. The detailed calculations in support of the weighted average rate of interest are contained in Annexure-I and Annexure-II attached.\n<\/p>\n
DEPRECIATION <\/p>\n
28. Sub-clause (a) of Clause (ii) of Regulation 56 of the 2004 regulations provides for computation of depreciation in the following manner, namely:\n<\/p>\n
(i) The value base for the purpose of depreciation shall be the historical cost of the asset.\n<\/p>\n
(ii) Depreciation shall be calculated annually based on straight line method   over the useful life of the asset and at the rates prescribed in Appendix II   to these regulations. The residual value of the asset shall be considered   as 10% and depreciation shall be allowed up to maximum of 90% of the   historical capital cost of the asset. Land is not a depreciable asset and   its cost shall be excluded from the capital cost while computing 90% of   the historical cost of the asset. The historical capital cost of the asset  shall include additional capitalisation on account of Foreign Exchange   Rate  Variation  up  to 31.3.2004  already  allowed  by  the  Central   Government\/Commission.\n<\/p>\n
(iii) On repayment of entire loan, the remaining depreciable value shall be   spread over the balance useful life of the asset.\n<\/p>\n
(iv) Depreciation shall be chargeable from the first year of operation. In case   of  operation of the asset for part of the year, depreciation shall be  charged on pro rata basis.\n<\/p>\n
29.  Depreciation allowed has been worked out as calculated below:\n<\/p>\n
                                                                (Rs. in lakh)<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
Asset-I <\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
Asset-II <\/p>\n
\u00a0<\/p>\n
Details
\n  of Depreciation <\/p>\n
2006-07 (Pro rata) <\/p>\n
2007-08 <\/p>\n
2008-09 <\/p>\n
2006-07 (Pro\u00a0 rata) <\/p>\n
2007-08<\/p>\n
\u00a02008-09 <\/p>\n
Gross
\n  block as on the date of commercial operation <\/p>\n
866.38<\/p>\n
\u00a0930.93 <\/p>\n
930.93 <\/p>\n
17432.95 <\/p>\n
17678.86 <\/p>\n
17678.86 <\/p>\n
Additional
\n  Capitalisation during the period <\/p>\n
64.55 <\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
245.91 <\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
Gross
\n  Block at the end of the <\/p>\n
930.93<\/p>\n
\u00a0930.93 <\/p>\n
930.93 <\/p>\n
17678.86 <\/p>\n
17678.86 <\/p>\n
17678.86 <\/p>\n
period<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
Rate
\n  of Depreciation <\/p>\n
3.6000% <\/p>\n
3.6000% <\/p>\n
3.6000% <\/p>\n
2.6901% <\/p>\n
2.6927% <\/p>\n
2.6927% <\/p>\n
Depreciable
\n  Value (90%) <\/p>\n
808.79<\/p>\n
\u00a0837.84 <\/p>\n
837.84 <\/p>\n
15800.31 <\/p>\n
15910.97 <\/p>\n
15910.97 <\/p>\n
Balance
\n  Useful life of the asset <\/p>\n
–\n<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
–\n<\/p>\n
–\n<\/p>\n
–\n<\/p>\n
Remaining
\n  Depreciable Value <\/p>\n
808.79<\/p>\n
\u00a0821.66 <\/p>\n
788.15 <\/p>\n
15800.31 <\/p>\n
15714.19 <\/p>\n
15238.16 <\/p>\n
Depreciation<\/p>\n
16.18 <\/p>\n
33.51 <\/p>\n
33.51 <\/p>\n
196.78 <\/p>\n
476.04 <\/p>\n
476.04 <\/p>\n
ADVANCE AGAINST DEPRECIATION <\/p>\n
30.    As per Sub-clause (b) of Clause (ii) of    Regulation 56 of the 2004 regulations, in addition to allowable depreciation, the transmission licensee is entitled to Advance Against Depreciation, computed in the manner given hereunder:
\n AAD = Loan repayment amount as per regulation 56 (i) subject to a ceiling of 1\/10th of loan amount as per regulation 54 minus depreciation as per schedule <\/p>\n
31.    It is provided that Advance Against Depreciation shall be permitted only if the cumulative repayment up to a particular year exceeds the cumulative depreciation up to that year.    It is further provided that Advance Against Depreciation in a year shall be restricted to the extent of difference between cumulative repayment and cumulative depreciation up to that year.\n<\/p>\n
32.    The petitioner has not claimed Advance Against Deprecation and accordingly Advance Against Deprecation has not been considered <\/p>\n
OPERATION & MAINTENANCE EXPENSES <\/p>\n
33.    In accordance with Clause  (iv) of Regulation  56 the  2004 regulations, the following norms are prescribed for O & M expenses <\/p>\n
\u00a0<\/p>\n
Year<\/p>\n
2004-05<\/p>\n
2005-06 <\/p>\n
2006-07<\/p>\n
\u00a02007-08<\/p>\n
\u00a02008-09 <\/p>\n
O&M
\n  expenses (Rs in lakh per ckt-km) <\/p>\n
0.227 <\/p>\n
0.236 <\/p>\n
0.246 <\/p>\n
0.255 <\/p>\n
0.266 <\/p>\n
O&M
\n  expenses (Rs in lakh per bay) <\/p>\n
28.12 <\/p>\n
29.25 <\/p>\n
30.42 <\/p>\n
31.63 <\/p>\n
32.90 <\/p>\n
34.    The petitioner has claimed O & M expenses for 2 bays for   the Asset-I   and 266.60 Ckt.km and 4 bays of Asset – II, which has been allowed. Accordingly, the petitioner’s entitlement to O & M expenses has been worked out as given hereunder:\n<\/p>\n
                                                                (Rs. in lakh)<\/p>\n
\u00a0<\/p>\n
Asset-I<\/p>\n
Asset-II<\/p>\n
\u00a0<\/p>\n
2006-07 (Pro- rata) <\/p>\n
2007-08 <\/p>\n
2007-08<\/p>\n
\u00a0<\/p>\n
2006-07 (Pro- rata) <\/p>\n
2007-08 <\/p>\n
2008-09 <\/p>\n
O&M
\n  expenses for 2 bays <\/p>\n
30.42<\/p>\n
\u00a063.26 <\/p>\n
65.80<\/p>\n
O&M
\n  expenses for 266.60 ckt.km. \u00a0\n<\/p>\n
27.33 <\/p>\n
67.98 <\/p>\n
70.92 <\/p>\n
\u00a0<\/p>\n
–\n<\/p>\n
–\n<\/p>\n
\u00a0<\/p>\n
O&M
\n  expenses for 4 bays <\/p>\n
50.70 <\/p>\n
126.52 <\/p>\n
131.60 <\/p>\n
TOTAL<\/p>\n
30.42<\/p>\n
\u00a063.26 <\/p>\n
65.80<\/p>\n
TOTAL<\/p>\n
78.03 <\/p>\n
194.5 <\/p>\n
202.52 <\/p>\n
35.    The petitioner has submitted that the wage revision of its employees is due with effect from 1.1.2007. Therefore, according to the petitioner, O & M expenses should be subject to revision on account of revision of employee cost from that date. In the alternative,  it  has  been  prayed that the increase in employee cost due to wage revision be allowed as per actuals for extra cost to be incurred consequent to wage revision.  We  are  not  expressing  any  view,  as  this  issue  does  not  arise  for consideration at this stage. The petitioner may approach for a relief in this regard at an appropriate stage in accordance with law.\n<\/p>\n
INTEREST ON WORKING CAPITAL <\/p>\n
36. The components of the working capital and the interest thereon are discussed hereunder:\n<\/p>\n
(i) Maintenance spares<\/p>\n
Regulation 56(v) (1) (b)   of  the 2004  regulations  provides  for maintenance spares @ 1% of the historical cost escalated @ 6% per annum from the date of commercial operation. In the present case, element wise capital  expenditure  on  the  date  of  commercial  operation  which  has  been considered as the historical cost for the purpose of the present petition and maintenance spares have been worked out accordingly by escalating 1% of the historical cost  @ 6% per annum. In this manner, the value of maintenance spares works out to Rs.   8.66 lakh and Rs. 174.33 lakh for Asset-I and Asset-II, respectively as on date of commercial operation. The necessary details are given hereunder:\n<\/p>\n
Transmission
\n  assets <\/p>\n
Date of Commercial Operation <\/p>\n
Capital Expenditure\u00a0 (Rs.\n<\/p>\n
  in lakh) on the date of commercial operation <\/p>\n
Escalated spares Cost as on
\n  1.4.2004 (Rs. in lakh) <\/p>\n
Asset-\n<\/p>\n
  I <\/p>\n
1.10.2006 <\/p>\n
866.38 <\/p>\n
8.66 <\/p>\n
Asset-II<\/p>\n
1.11.2006 <\/p>\n
17432.95 <\/p>\n
174.33 <\/p>\n
(ii) O & M expenses<\/p>\n
Regulation 56(v)(1)(a) of the 2004 regulations provides for operation and maintenance expenses for one month as a component of working capital. The petitioner has claimed O&M expenses for 1 month of O&M expenses of the respective year as claimed in the petition. This has been considered in the working capital.\n<\/p>\n
(iii) Receivables<\/p>\n
As per Regulation 56(v)(1)(c) of the 2004 regulations, receivables will be equivalent to two months average billing calculated on target availability level. The petitioner has claimed the receivables on the basis 2 months’ transmission charges claimed in the petition. In the tariff being allowed, receivables have been worked out on the basis 2 months’ transmission charges.\n<\/p>\n
(iv)  Rate of interest on working capital<\/p>\n
As per Regulation 56(v) (2) of the 2004 regulations, rate of interest on  working capital shall be on normative basis and shall be equal to the short-term Prime Lending Rate of State Bank of India as on 1.4.2004 or on 1st April of the year in which the project or part thereof (as the case may be) is declared under commercial operation, whichever is later. The interest on working capital is payable on normative basis notwithstanding that the transmission licensee has not taken working capital loan from any outside agency. The petitioner has claimed interest  on  working capital @ 10.25% based on SBI PLR as on 1.4.2006, which is in accordance with the  2004 regulations and has been allowed.\n<\/p>\n
37. The necessary computations in support of interest on working capital are   appended herein below:\n<\/p>\n
                                                                (Rs. in lakh)<\/p>\n
\u00a0<\/p>\n
Asset-I<\/p>\n
Asset-II<\/p>\n
\u00a0<\/p>\n
2006-07 (Pro rata) <\/p>\n
2007-08 <\/p>\n
2008-09 <\/p>\n
2006-07 (Pro rata) <\/p>\n
2007-08 <\/p>\n
2008-09 <\/p>\n
Maintenance
\n  Spares <\/p>\n
8.66 <\/p>\n
8.92 <\/p>\n
9.46 <\/p>\n
174.33 <\/p>\n
178.69 <\/p>\n
189.41 <\/p>\n
O
\n  & M expenses <\/p>\n
5.07 <\/p>\n
5.27 <\/p>\n
5.48 <\/p>\n
15.61 <\/p>\n
16.21 <\/p>\n
16.88 <\/p>\n
Receivables<\/p>\n
30.34 <\/p>\n
31.21 <\/p>\n
31.23 <\/p>\n
395.32 <\/p>\n
395.18 <\/p>\n
390.78 <\/p>\n
Total<\/p>\n
44.07 <\/p>\n
45.40 <\/p>\n
46.17 <\/p>\n
585.25 <\/p>\n
590.08 <\/p>\n
597.07 <\/p>\n
Rate
\n  of Interest <\/p>\n
10.25% <\/p>\n
10.25% <\/p>\n
10.25% <\/p>\n
10.25% <\/p>\n
10.25% <\/p>\n
10.25% <\/p>\n
Interest<\/p>\n
2.26 <\/p>\n
4.65 <\/p>\n
4.73 <\/p>\n
25.00 <\/p>\n
60.48 <\/p>\n
61.20 <\/p>\n
TRANSMISSION CHARGES<\/p>\n
38. The transmission charges being allowed for the two transmission assets are summarised below:\n<\/p>\n
                                                                (Rs. in lakh)<\/p>\n
\u00a0<\/p>\n
Asset-I<\/p>\n
Asset-II<\/p>\n
\u00a0<\/p>\n
2006-07\u00a0 (Pro rata) <\/p>\n
2007-08 <\/p>\n
2008-09 <\/p>\n
2006-07 (Pro rata) <\/p>\n
2007-08 <\/p>\n
2008-09 <\/p>\n
Depreciation<\/p>\n
16.18 <\/p>\n
33.51 <\/p>\n
33.51 <\/p>\n
196.78 <\/p>\n
476.04 <\/p>\n
476.04 <\/p>\n
Interest
\n  on Loan <\/p>\n
23.28 <\/p>\n
46.73 <\/p>\n
44.24 <\/p>\n
382.66 <\/p>\n
900.92 <\/p>\n
865.78 <\/p>\n
Return
\n  on Equity <\/p>\n
18.87 <\/p>\n
39.09 <\/p>\n
39.09 <\/p>\n
305.83 <\/p>\n
739.16 <\/p>\n
739.16 <\/p>\n
Advance
\n  against Depreciation <\/p>\n
0.00 <\/p>\n
0.00 <\/p>\n
0.00 <\/p>\n
0.00 <\/p>\n
0.00 <\/p>\n
0.00 <\/p>\n
Interest
\n  on Working Capital <\/p>\n
2.26 <\/p>\n
4.65 <\/p>\n
4.73 <\/p>\n
25.00 <\/p>\n
60.48 <\/p>\n
61.20 <\/p>\n
O
\n  & M Expenses <\/p>\n
30.42 <\/p>\n
63.26 <\/p>\n
65.80 <\/p>\n
78.03 <\/p>\n
194.50 <\/p>\n
202.52 <\/p>\n
Total<\/p>\n
91.01 <\/p>\n
187.25 <\/p>\n
187.38 <\/p>\n
988.30 <\/p>\n
2371.10 <\/p>\n
2344.70 <\/p>\n
39.    In addition to the transmission charges, the petitioner shall be entitled to other  charges like income-tax, incentive, surcharge and other cess and taxes in accordance with the 2004 regulations.\n<\/p>\n
40.  The petitioner has sought approval for the reimbursement of expenditure of Rs. 1,58,365\/-   incurred on publication of notices in the newspapers.   The petitioner shall claim reimbursement of the said expenditure directly from the respondents in one installment in the ratio applicable for sharing of transmission charges <\/p>\n
41.    This order disposes of Petition No. 97\/2007 along with I.A. No.   32 \/2007.<\/p>\n","protected":false},"excerpt":{"rendered":"
Central Electricity Regulatory Commission Power Grid Corporation Of India … vs Bihar State Electricity Board And … on 6 May, 2008 Bench: B Bhushan, R Krishnamoorthy ORDER 1. This petition has been filed for approval of transmission charges for (i) 315 MVA, 400\/220 kV, ICT at Siliguri (Asset-I), and (ii) 400 kV D\/C Biharshariff-Muzaffarpur transmission […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-171517","post","type-post","status-publish","format-standard","hentry","category-judgements"],"yoast_head":"\nPower Grid Corporation Of India ... vs Bihar State Electricity Board And ... on 6 May, 2008 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/power-grid-corporation-of-india-vs-bihar-state-electricity-board-and-on-6-may-2008\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Power Grid Corporation Of India ... vs Bihar State Electricity Board And ... on 6 May, 2008 - 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