BEFORE THE HARYANA ELECTRICITY REGULATORY COMMISSION AT PANCHKULA

Case No. HERC/PRO-46 of 2019

Date of Hearing : 08.07.2020 Date of Order : 07.09.2020

In the Matter of

Petition under Section 62 of the Electricity Act, 2003 for determination of tariff of 1.2 MW Biogas-based power plant.

Petitioner

M/s. MOR Bio Energy Private Limited. Respondents 1. Haryana Power Purchase Centre, Panchkula (HPPC) 2. Haryana Renewable Energy Development Agency (HAREDA)

Present On behalf of the Petitioner through Vidyo App

1. Shri Raj Kumar, Director Present on behalf of the Respondents through Vidyo App

1. Smt. Sonia Madan, Advocate, HPPC. 2. Shri Vikas Kadiyan, Xen/HPPC 3. Shri R.S. Poonia, Project officer HAREDA

Quorum Shri D.S. Dhesi, Chairman Shri Pravindra Singh Chauhan Member Shri Naresh Sardana Member

ORDER Brief Background of the case 1. M/s. MOR Bio Energy Private Limited has filed the petition seeking project specific determination of tariff for sale of power from its 1.2 MW Biogas based Power plant in Morkhi village of Safidon Tehsil of Jind district of Haryana, under section 62 of Electricity Act, 2003, as directed by the Commission in its Order dated 30.04.2019 (HERC/PRO-20 of 2019).

2. The Petitioner has submitted as under:- a) That the Petitioner is setting up a 1.2 MW grid connected biogas-based Power Plant at a cost of about Rs. 1612.33 lakhs in Morkhi village of Safidon Tehsil of Jind district of Haryana. b) That the Petitioner intends to use the daily available Poultry litters of 185 tons to recycle it for generation of power using biogas-based generators to minimize the pollution in the surrounding area and accordingly submitted its proposal to HAREDA for its approval. HAREDA granted its approval vide its letter no. HAREDA/BG/3430-32 dated 17.10.2018 and it was advised to sign a MOU with HAREDA for development of the project. The MOU was signed with HAREDA on 30.10.2018 and also submitted its performance security to the HAREDA.

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c) That after taking approval of HAREDA on project DPR, the Petitioner applied to the HPPC for concluding PPA with the petitioner. HPPC signed draft PPA with the petitioner on 22.05.2019 and filed a petition with the Commission for its approval vide Case No. HERC/PRO-20 of 2019. d) That the Commission approved the proposed source vide its order dated 30.04.2019 (HERC/PRO-20 of 2019) and further directed that Tariff shall be decided on the separate petition to be filed by the Respondents under section 62 of the Electricity Act, 2003. The tariff petition shall include DPR approved by HAREDA and all other relevant documents to arrive at the reasonable capital cost and all other tariff components. HPPC was further directed by the Commission to recast the draft PPA submitted with its petition No. HERC/ PRO-20 of 2019, on the basis of the amendment approved in the order dated 03.04.2019 (case no. HERC /PRO-44 of 2018) and further directed to ensure that the terms of the PPA are strictly as per the provisions contained in the Haryana Electricity Regulatory Commission (Terms and Conditions for determination of Tariff from Renewable Energy Sources, Renewable Purchase Obligation and Renewable Energy Certificate) Regulations, 2017. e) That Regulation clause no 7.2 of HERC Regulation No. HERC/40/2018 dated 24/07/2018 (Terms & Conditions for determinations of Tariff for Renewable Energy Sources, Renewable Energy Purchase obligations and Renewable Energy Certificate) Regulation 2017 (hereinafter referred to as HERC RE Regulations, 2017), provides for procedure for determination of project specific tariff for Biogas based Power Projects. f) That HERC in its RE Regulation 2017 has laid down following parameters for determination of tariff for RE Power Plants:-

i) Capital Cost: It shall include all capital work including plant and machinery, initial spares, civil work, erection and commissioning, financing and interest during construction, and evacuation infrastructure up to inter-connection point. Provided that for project specific tariff determination, the generating company shall submit the break-up of capital cost items along with its petition. ii) Debt Equity Ratio: The debt equity ratio shall be 70: 30. iii) Loan and Finance Charges: For the purpose of determination of tariff, loan tenure of 13 years shall be considered. iv) Depreciation: The depreciation rate for the first 13 years of the Tariff Period shall be 5.38% per annum and the remaining depreciation shall be spread over the remaining useful life of the project from 14th year onwards. v) Return on Equity: 14% per annum calculated on normative Equity Capital.

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vi) MAT/Corporate Tax applicable shall be considered as pass through. Provided that the applicable MAT / Corporate Tax shall be separately invoiced as per the actual paid at the rate as declared by the Income Tax Department. The Generator shall raise the bill for reimbursement of MAT/ Corporate Tax applicable on Return on Equity in 12 equal instalments which shall be payable by the beneficiaries. vii) Interest on Working Capital: The Working Capital requirement in respect of biomass power projects (Rankine Cycle Technology), Biomass Gasifier / Bio gas based projects and bagasse / non-fossil fuel based co-generation projects shall be computed as under:- a) Fuel costs for four months at normative PLF; b) Operation & Maintenance expense for one month; c) Receivables equivalent to 2 (Two) months of fixed and variable charges for sale of electricity calculated on the normative PLF; d) Maintenance spare @ 15% of operation and maintenance expenses. viii) Interest on Working Capital: For the purpose of tariff determination, it shall be computed at the average Marginal Cost of funds-based lending rate (MCLR) (one-year tenor) of SBI prevailing during the last available six months plus an appropriate margin not exceeding 200 basis points i.e. 2%. ix) Operation and Maintenance Expenses: (1) ‘Operation and Maintenance or O&M expenses shall comprise repair and maintenance (R&M), establishment including employee expenses, and administrative and general expenses. Normative O&M expenses allowed during first year of the Control Period under these Regulations shall be escalated at the rate of 5.72% per annum over the Tariff Period. x) Technology specific parameters for Biogas based Power Project: The Commission in its RE Regulation 2017 has further specified following parameters for determination of project specific tariff in case of Biogas Based Power generation plants: - a) A technology for generation of power using a mixture of different gases produced by the breakdown of organic matter (anaerobic digestion with anaerobic organisms in the absence of oxygen / fermentation of biodegradable materials) i.e. produced from raw materials such as agricultural waste, manure, poultry droppings, cow dung, municipal waste, plant material, sewage, green waste or food waste. The projects shall qualify as biogas-based power project provided it is using new plant and machinery and having a grid connected system that and uses 100% biogas fired engine with MNRE approved technology. b) The useful life, for the purpose of these Regulations, for biogas- based projects, shall be 20 years. c) The normative Capital Cost, after accounting for capital subsidy, for the entire control period beginning the FY 2017-18 shall be Rs. 8.86 Crore / MW unless reviewed earlier by the Commission.

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d) The threshold Plant Load Factor (PLF), including stabilization period, shall be 90%. e) The Auxiliary Energy Consumption (AUXe), for the purpose of determination of levelized generic tariff under these Regulations, shall be 12%. f) The Normative Fuel consumption shall be 3.0 Kg/kWh of substrate mix. g) The Normative Operation and Maintenance (O&M) expenses shall be Rs. 0.53 Crore/MW for the base year i.e. the FY 2017-18, the same shall be subject to an escalation factor @ 5.72% per annum form second year onwards for determining levelized tariff for the entire useful life of the project. h) The base year (FY 2017-18) fuel cost (Feed Stock Price) shall be Rs. 1229 / MT and the same shall be escalated @ 5% per annum for the purpose of arriving at levelized tariff for the entire useful life of the project. Provided the cost recovery from digester effluent shall be set off against the Fuel Cost (feed stock price) while determining generic levelized tariff. i) That the plant cost, equity and loan details as per DPR approved by HAREDA is as under:- 1. Project Capacity 1.20 MW 2. Technology route Biogas based power generation utilizing available poultry litters 3. Total Plant Cost Rs.1415 lacs 4. Promoter’s Equity ( 30%) Rs.424.50 lacs 5. Bank Loan ( 70%) Rs.990.50 lacs Break up of plant capital cost:- 1. Land and Land Development Rs.30.00 lacs 2. Plant & Machineries including biogas digesters, automatic fuel Rs.1345.00 lacs mixers, automatic fuel feeders, biogas generators, power evacuations equipment, switch yard, HT/VCB Panel, HT transformer, Energy meters, transmission lines, related civil works 3. Contingencies Rs. 25.00 lacs 4. Preliminary expanses ( Statutory fees, PBG etc.) Rs.15.00 lacs 5. Total Plant Cost Rs.1415.00 lacs Working capital and its breakup:- 1. Total working capital required Rs.197.33 lacs 2. Promoters Contribution ( 30%) Rs.59.20 lacs 3. Bank Loan ( 70%) Rs.138.13 lacs Total Project Cost including working capital cost:- 1. Total Investment on Plant Capital Rs.1415.00 lacs 2. Total working Capital requirement Rs. 197.33 lacs 3. Total Project Cost Rs.1612.33 lacs Project DSCR, IRR, Annual Electricity generation and yearly Revenue flow:- 1. Daily Raw material requirement 185 Tones 2. Daily Biogas Production 14500 Nm3 3. Yearly Raw Material requirement 62160 Tones 4. Electricity generation Rs. 78,05,952 (@1056 Kwh/hour) 5. Annual Electricity generation 83,50,214 units 6. Annual Bio-Fertilizer production 6216000 kg 7. Per unit raw material needed 3 KG/ Kwh 8. Annual raw material cost Rs.1,86,48,000 ( @ Rs.300 per tonne) 9. Electricity Tariff required Rs.8.75 per unit 10. Bio-fertilizer sale cost Rs.1.50 /Kg. 11. Project DSCR 2.23 12. Project IRR 10.60 % 13. Man Power required 10

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j) That after considering the parameters specified in HERC RE Regulations for computation of project specific tariff.

k) That accordingly, the following components of fixed cost has been calculated:- All figures Rs in Million Interest Interest on Return Income Fixed O&M Depreciatio on Term Working on tax on Fixed cost Year Expenses n Loan Capital Equity ROE Cost (Rs/kWh) 2019-20 7.514 5.720 7.450 0.032 4.465 0.938 26.119 3.137 2020-21 7.944 5.720 6.854 0.033 4.465 0.938 25.954 3.117 2021-22 8.399 5.720 6.258 0.034 4.465 0.938 25.813 3.101 2022-23 8.879 5.720 5.662 0.035 4.465 0.938 25.699 3.087 2023-24 9.387 5.720 5.066 0.037 4.465 0.938 25.613 3.076 2024-25 9.924 5.720 4.470 0.039 4.465 0.938 25.555 3.070 2025-26 10.491 5.720 3.874 0.040 4.465 0.938 25.529 3.066 2026-27 11.092 5.720 3.278 0.042 4.465 0.938 25.535 3.067 2027-28 11.726 5.720 2.682 0.044 4.465 0.938 25.575 3.072 2028-29 12.397 5.720 2.086 0.046 4.465 0.938 25.652 3.081 2029-30 13.106 5.720 1.490 0.048 4.465 0.000 24.829 2.982 2030-31 13.856 5.720 0.894 0.050 4.465 0.000 24.985 3.001 2031-32 14.648 5.720 0.298 0.052 4.465 0.000 25.184 3.025 2032-33 15.486 0.009 0.000 0.055 4.465 0.000 20.015 2.404 2033-34 16.372 0.009 0.000 0.057 4.465 0.000 20.903 2.511 2034-35 17.308 0.009 0.000 0.059 4.465 0.000 21.842 2.624 2035-36 18.298 0.009 0.000 0.062 4.465 0.000 22.835 2.743 2036-37 19.345 0.009 0.000 0.066 4.465 0.000 23.885 2.869 2037-38 20.451 0.009 0.000 0.069 4.465 0.000 24.995 3.002 2038-39 21.621 0.009 0.000 0.072 4.465 0.000 26.168 3.143

l) That accordingly, the following components of variable cost has

been calculated:-

bus bus

-

st of st fuel

Sr Year Generation (Million Units) Auxiliary Cons(%) Generation (Ex Mllion Units) Fuel Consumption (MT) Co (Milion) Total of Cost Manure (Rs Million) FuelNet Cost (Rs/kWh) 1 2019-20 9.461 12 8.326 28382.400 48.456 3.832 5.360 2 2020-21 9.461 12 8.326 28382.400 50.879 3.832 5.651 3 2021-22 9.461 12 8.326 28382.400 53.423 3.832 5.957 4 2022-23 9.461 12 8.326 28382.400 56.094 3.832 6.277 5 2023-24 9.461 12 8.326 28382.400 58.899 3.832 6.614 6 2024-25 9.461 12 8.326 28382.400 61.844 3.832 6.968 7 2025-26 9.461 12 8.326 28382.400 64.936 3.832 7.339 8 2026-27 9.461 12 8.326 28382.400 68.183 3.832 7.729 9 2027-28 9.461 12 8.326 28382.400 71.592 3.832 8.139 10 2028-29 9.461 12 8.326 28382.400 75.172 3.832 8.569 11 2029-30 9.461 12 8.326 28382.400 78.930 3.832 9.020 12 2030-31 9.461 12 8.326 28382.400 82.877 3.832 9.494 13 2031-32 9.461 12 8.326 28382.400 87.021 3.832 9.992 14 2032-33 9.461 12 8.326 28382.400 91.372 3.832 10.515 15 2033-34 9.461 12 8.326 28382.400 95.940 3.832 11.063 16 2034-35 9.461 12 8.326 28382.400 100.737 3.832 11.640 17 2035-36 9.461 12 8.326 28382.400 105.774 3.832 12.245 18 2036-37 9.461 12 8.326 28382.400 111.063 3.832 12.880 19 2037-38 9.461 12 8.326 28382.400 116.616 3.832 13.547 20 2038-39 9.461 12 8.326 28382.400 122.447 3.832 14.247

m) That the following prayers have been made:-

i) To admit this petition; and ii) To condone any inadvertent errors and allow the Petitioner to rectify the same; and iii) To approve the tariff for 20 years from the date of COD of the plant; and

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iv) Renewable Energy Regulation-2017 where necessary in the facts and circumstances of the instant case; and v) To permit the Petitioner to allow further submissions, addition and alteration to this Petition as may be necessary from time to time; and vi) Pass any other order as Hon’ble Commission may deem fit and appropriate under the circumstances of the case and in the interest of justice.

Proceedings in the Case

3. The case was first heard on 01.10.2019. The Commission vide its Interim Order dated 03.10.2019 directed that a Committee comprising of the representatives of HPPC and HAREDA be constituted which shall submit detailed findings on all the relevant parameters. The Commission further directed the DISCOMs as well as HVPNL to grant grid connectivity to the plant of the Petitioner. The case was next heard on 20.11.2019, wherein the HPPC raised serious doubts about the capital cost, efficiency of the digester as well as cost of fuel stock of the projects. Additionally, it was pointed out that as per DPR approved by HAREDA, the fuel cost is Rs. 300/MT, as against Rs. 1700/MT taken by the petitioner in this petition.

4. In response to the Interim Orders of the Commission, HPPC filed its detailed reply dated 26.11.2019, based on scrutiny of Petition, Project DPR, report of HAREDA and site visit dated 15.11.2019, submitting as under:- a) Fuel Cost - The petitioner has considered the cost of raw material as Rs. 300 per MT. The DPR approved by HAREDA also envisaged the fuel cost at Rs. 300 per MT. Moreover, the HAREDA in its inspection report has also provided for cost of feed as Rs. 300 per MT. It is worth consideration that the Fuel used in the plant of the petitioner is a poultry waste generated from its Poultry Farm situated in vicinity to the power generating Plant. Considering the fuel cost taken by petitioner in its DPR and ascertained by HAREDA in approved DPR as well as in its inspection report, the fuel cost shall be pegged at Rs. 300 per MT with escalation of 5% for determination of tariff. b) O&M Cost - The Petitioner has taken O&M cost at Rs. 5.924 per MW. Such high O&M which is not justified in the case of Petitioner as the fuel is poultry waste is carried and transported from near vicinity for running of Plant and therefore, the carrying and handling cost is minimal. The Commission may, therefore, take reasonable O&M cost in account for effective determination of tariff. c) Auxiliary consumption - The Petitioner has taken Auxiliary consumption @ 12% in accordance with Regulations without providing any details with respect to the same. Whereas HAREDA in its inspection report has mentioned electricity consumed per day by the complete Plant as 50 kWh/hr. Based on the said figure, Auxiliary consumption @ 4.16% shall be taken into account for determination of tariff. d) Working Capital - The Petitioner had not provided any details with respect to the Working Capital and has taken normative value of the same. The same is not justified keeping in consideration the fact that no storage of fuel is required

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as the waste is generated and used on day to day basis. However, for the purpose of tariff calculations, cost of fuel equivalent two months shall be taken into account as Working Capital in respect of fuel. e) Accelerated Depreciation - The Petitioner has not declared/specified as to whether they will avail the benefit of Accelerated Depreciation. Such declaration must be sought before determination of tariff. f) Capital Cost - The Capital Cost as ascertained by HAREDA i.e. Rs. 864.82 lacs (excluding cost of land being promoter owned), is in line with the normative cost after considering the land cost. The same shall therefore be taken into account for determination of tariff. The subsidy applicable to the project, but not availed by the developer, shall not be allowed to pass through tariff. g) Sale of Bio-fertilizer - Clause 12.4 of the MYT Regulations provides for item wise gain to be shared between the generating company and the licensee in the ratio of 50:50. Considering the same, it is imperative that the sale value of Bio-fertilizer (by-product of generation) be taken in account for determination of tariff. As per approved DPR and HAREDA in its inspection report has mentioned the sale price of Bio-fertilizer as Rs.1.50/kg. HAREDA in its inspection report has taken production of bio-fertilizers as 10 % of the feed input per day where as the report dated 15.11.2019 has observed production of 1.42 kg of bio fertilizer resulted from one Unit of electricity generated. However, the Petitioner has not mentioned anything about the sale price of Bio- fertilizer. Sale of bio-fertilizer shall be considered @ Rs.1.5/kg with an escalation of 2% for tariff determination.

5. HPPC, vide memo no. Ch-63/CE/HPPC/SE/C&R-I/LTP-IV/Biogas/MBEPL dated 16.03.2020, filed the report of the Committee comprising of the officers of HPPC and HAREDA dated 15.03.2020, regarding CoD and other parameters, pursuant to the Interim Order of the Commission dated 22.01.2020, highlighting the followings:- a) That the 72 hour Trial Run scheduled from 11.03.2020 at 23.00 hrs to 14.03.2020 at 23.00 hrs, was extended up to 15.03.2020 at 2.30 hrs, and observed that the total generation occurred during trial run was 80.55% of the installed capacity, which fulfil the condition of CoD. b) The Auxiliary consumption was 5276 kWh i.e. 7.58%. c) The cost of input fuel and bio fertilizer could not be determined due to non- production of bills/invoice by the firm. 6. HPPC further filed its reply dated 03.07.2020 in response to the application filed by the Petitioner dated 04.06.2020:- a) That the Petitioner had filed an application dated 04.06.2020 for placing on record the written submissions pursuant to the site visit report dated 15.03.2020. b) That in pursuance to the order of the Commission dated 03.10.2019 and 22.01.2020, a committee comprising of the representatives of the Respondent (HPPC) and HAREDA was constituted and visited the Petitioner’s Plant on 11.03.2020. The Plant was run for continuous operation of 72 hours at

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minimum 80% of the installed capacity (i.e. 960 KW) and the values for all parameters were recorded. c) That by way of the said application dated 04.06.2020, the Petitioner for the first time has placed on record new documents and has raised certain arguments which were not even brought to the notice of the committee during site visit. This has necessitated the filing of the present reply on behalf of the Respondent. d) That the present reply, refuting the arguments raised by the Petitioner, is just and necessary for proper adjudication of the matter. i) Fuel Cost – The Petitioner in his written submissions dated 04.06.2020 has stated that the fuel cost estimated in the Feasibility cum Detailed Project Report (DPR) and assessed by HAREDA @300/MT is very less as compared to the actual cost of Rs.1125/MT. The Petitioner has also appended certain invoices in support of its claim. In this regard, the Respondent submits as under:- a. That no fuel cost should be taken into account in view of the fact that the plant has been established by the Petitioner to put into use the daily available poultry litre generated as a by-product by its own plant. The same is also evident from a perusal of point 1.2 of the petition wherein the Petitioner has mentioned that “..M/S MOR Bio Energy Private Limited wanted to use the daily available Poultry litters of 185 tonners to recycle it for generation of power..”. The relevant part of the DPR of the Petitioner Plant regarding Availability of Fuel, is reproduced, wherein it was categorically stated as under – “4.1 Availability of Cattle dung/ non-woody feed materials/ other feed- stocks This plant is proposed to be set-up in the vicinity of the Agricultural Land owned by the M/s MOR BIO ENERGY PVT. LTD. is in the Milk, poultry producing and agricultural belt of India, located in Village- Morkhi, Tehsil- Safidon, Distt. – Jind (Haryana). The area is well known for the Poultry & cattle manure and it has got many Poultry Farms/ Dairy Farms/ Industrial Farms, both small and large, in and around it. Promotors of the project are having their own poultry farms, so there will not be any problem for raw material (Poultry waste). Since, the client’s land and unit is one of the biggest social organisation in the area and as per the assurances/ guarantees given by nearby Poultry farms per the past records of their yield, we are assured of getting the required amount of raw material as required by the Plant. Since, the client’s land and unit is one of the biggest social organisations in that area and as per the assurances/ guarantees given by the nearer poultry farms also for supply of raw material. Daily 185 tons waste will be added such as Poultry Waste. The proposed scheme will ensure a stable microbial reaction and a smooth functioning of the digester performance. Quality of the addition will be adjusted as per the availability, TS content and storage requirements of the project.

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The other details of feed stock management are already mentioned. Table-1: Details of the average feed-materials available for the Plant. Raw Material QTY Assumed Biogas Total Biogas QTY (Tons per day) Generation/ MT Generation (Tons per year) Poultry Waste 185 80 14500 14500 Total 185 14500 14500 …” In view of the foregoing declaration in the DPR, the Petitioner had mentioned the cost of the Raw Material as Rs.300/MT under the Commercial Component, Part-III of the DPR. In fact, the committee in its report dated 15.03.2020 also observed as under – “ 1. The committee observed that fuel was mainly Poultry litter which was arranged partially from in-house poultry plant and rest from nearby poultry farm. Daily 8-9 tonnes of Cow dung waste was also mixed with poultry litter in the mixing tank.” There appears no justifiable reason to claim such high cost of the fuel especially when the setting up of the plant was approved on the premise that the Petitioner should use the fuel generated from its own poultry farms or from the nearby farms that assured to supply poultry waste to the Petitioner. b. That the only justification given by the Petitioner for the enhanced cost of Raw material is that he is procuring fuel from various sources at different rates of Rs.850/MT and Rs.1400/ MT respectively. At the outset, it is brought to the kind notice of the Commission that no such invoices were every produced before the Committee during the site visit despite specific demand by the Committee. The said fact is substantiated by the observation of the Committee in its report, which reads as under – “3. … Regarding the cost of input fuel and bio-fertilizer, the same is not determined during this period, due to non-production of bills/invoices by the firm.” Thus, the production of fuel bills at this stage cannot be permitted. The alleged invoices, besides being bogus are against the basic foundation of the setting up of the plant, do not deserve any consideration. c. That even otherwise the fuel invoices appended by the Petitioner are apparently factious and cannot be relied upon due to the following reasons: i. The invoices were never shown by the Petitioner at the time of site visit by the Committee and have now been produced for the very first time. ii. There is a lot of discrepancy in the invoices. Some of the invoices show purchase at the rate of Rs.850, whereas the other show purchase at the rate of Rs.1400 i.e. almost double the amount. There is no market price fixed for such poultry waste and it is highly unlikely that the same is sold at such high rate. Owing to the large variation in the invoices attached, even when the fuel is procured from the places near to the plant of the Petitioner, such invoices cannot be relied upon. iii. The invoices are computer generated invoices which do not bear any signatures. The genuineness and veracity of the invoices is highly

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doubtful. Further, no proof of payment of such bills has been attached by the Petitioner. iv. The alleged invoices are from five firms, i.e. Mor Poultries, M/s Mor Farms Pvt. Ltd., M/s Harsh Poultry farms, M/s Seema Poultry farms and M/s Dhanda Egg Farms Pvt. Ltd. Poultry Farms are situated in District Jind. All these invoices are dated March, 2020. The firms appear to be owned by the Petitioner and the alleged print of invoices seems to have been generated at imaginary prices. The Petitioner ought to have explained the need and necessity of procurement of alleged quantity of fuel from outside sources vis-à-vis the generation done from the fuel received from the Petitioner’s own farms. d. That, in the alternative, assuming but not admitting, that fuel cost is to be granted to the Petitioner, then the same cannot be more than Rs.300 per MT. The Petitioner himself at point no. 1.2 (V)(e) of the Petition has considered the cost of raw material as Rs. 300 per MT. Further, the DPR approved by HAREDA also envisaged the fuel cost at Rs.300 per MT. Moreover, the HAREDA in its inspection report has also provided for cost of feed as Rs.300 per MT. Thus, considering the fuel cost taken by petitioner in its DPR and ascertained by HAREDA in approved DPR as well as in its inspection report, the fuel cost shall be pegged at Rs.300 per MT for determination of tariff. ii) O&M Cost – The Petitioner in his written submissions dated 04.06.2020 has requested to consider the Normative O&M while deciding tariff for the plant. In this regard, it is submitted: a. That the fuel and O&M cost should be clubbed together in the case of the Petitioner as almost no expenditure is incurred by the Petitioner in handling of the fuel. b. That further, high O&M is not justified in the case of Petitioner as the fuel is poultry waste which is carried and transported from near vicinity of the Plant and therefore, the carrying and handling cost is minimal. The Commission may, therefore, take reasonable O&M cost in account for effective determination of tariff. iii) Auxiliary consumption - The Petitioner in his written submissions dated 04.06.2020 has contended that the Auxiliary Consumption of 7.58% estimated by the Committee during site visit is not correct as some of the auxiliary meant for cooling requirement for gas engine generators were not operating at the time of site visit due to low environmental temperature. The Petitioner has also shown the load capacities of various auxiliaries in a tabular form and has requested to consider Auxiliary consumption @12%. In this regard it is submitted:- a. That the argument of the Petitioner that due to low environmental temperature, some of the auxiliaries were not operating, is a totally fallacious and liable to be rejected. The Commission may kindly take cognizance of the fact that at the time, the petitioner was asked to demonstrate continuous operation for CoD, the Petitioner submitted

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otherwise that the cold weather requires additional heating and stirring of slurry to produce sufficient gas. As such, the continuous operation of plant during winter season instead requires more auxiliary consumption than normal. The Auxiliary Consumption was determined at 7.58% after continuous operation of plant during winter season. The contention of the Petitioner is therefore, not worthy of any credence. b. The Petitioner has not provided any details as to why Auxiliary consumption @12% should be taken into account. Rather, HAREDA in its inspection report has mentioned electricity consumed per day by the complete Plant as 50 kWh/hr. Based on the said figure, Auxiliary consumption works out to 4.16%. iv) Working Capital – In this regard it is submitted that the Petitioner had not provided any details with respect to the Working Capital and has taken the normative value. The same is not justified considering the fact that no storage of fuel is required as the waste is generated and used on day to day basis. However, for the purposes of tariff calculations, cost of fuel equivalent to two months shall be taken into account as Working Capital in respect of fuel. v) Interest on Loan and Working Capital- It is submitted that the Commission in its recent order dated 20.12.2019 in PRO-53 of 2019 has considered interest on term loan and working capital the lower of 10.13% and 9.13% respectively for determination of generic tariff for the projects commissioned during FY 2019-20 and FY 2021-22. Lower of actual value and normative value as mentioned be considered for the purpose of tariff determination. vi) Accelerated Depreciation - The Petitioner in his written submissions dated 04.06.2020 has stated that the Petitioner will not be claiming accelerated depreciation for the project. vii) Capital Cost – With respect to the Capital Cost, it is submitted that the Capital Cost as ascertained by HAREDA i.e. Rs.864.82 lacs (excluding cost of land being promoter owned), is in line with the normative cost after considering the land cost. The same shall therefore be taken into account for determination of tariff. The subsidy applicable to the project, but not availed by the developer, shall not be allowed to pass through tariff. viii) Sale of Bio-fertilizer: The Petitioner in the written submissions dated 04.06.2020 has stated that the Petitioner is not able to sell the bio fertilizer as on date and had requested the Commission to take a holistic approach while deciding on the matter. In this regard it is submitted: a. That the project was envisaged considering sale of bio-fertilizer at the cost of Rs. 1.50/kg and the project DPR was approved by HAREDA accordingly. The alleged financial constraints have been contended without any basis and the same cannot be considered for determination of tariff. b. That the inability of the Petitioner to sell the bio-fertilizer or the argument of the Petitioner that no one in the vicinity of the plant is ready to purchase

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bio-fertilizer at the cost of Rs.1.50/kg has no bearing on the tariff determination. c. That Clause 12.4 of the MYT Regulations provides for item wise gain to be shared between the generating company and the licensee in the ratio of 50:50. Considering the same, it is imperative that the sale value of Bio- fertilizer (by-product of generation) be taken in account for determination of tariff. As per approved DPR and HAREDA in its inspection report has mentioned the sale price of Bio-fertilizer as Rs.1.50/kg. HAREDA in its inspection report has taken production of bio-fertilizers as 10 % of the feed input per day whereas the report dated 15.11.2019 has observed production of 1.42 kg of bio fertilizer resulted from one Unit of electricity generated (i.e. 3 kg/kWh). d. The Petitioner deliberately did not produce any invoice before the Committee to assess the cost of Bio-fertilizer. No other document has been produced by the Petitioner to evince that it had made some effort to sell the fertilizer. e. Further, the Petitioner has failed to mention anything about the prevalent sale price of Bio-fertilizer. Thus, the sale of bio-fertilizer shall be considered @ Rs.1.5 /- kg with an escalation of 2% for tariff determination. In view of the submissions made hereinabove, HPPC has prayed that the tariff be determined considering the parameters as detailed by the Respondent hereinabove, in interest of justice.

7. HAREDA, vide memo no. 8015 dated 03.09.2019, filed its reply to the Petition filed by M/s. Mor Bio Energy Pvt. Ltd., submitting as under: - a) That the application of the Petitioner for claiming the Central Financial Assistance (CFA) was sanctioned by IREDA for this project but they have invested their own funds. b) That in the guidelines of the “Programme on Energy from Urban, Industrial and Agricultural wastes/Residues for Plant period 2017-18, 2018-19 & 2019-20” of Ministry of New and Renewable Energy, Government of India, it is mentioned that “the entire CFA will be released to developer’s loan account in the lending financial institution/banks for the purpose of offsetting the loan amount only after successful commissioning of the project, Waste to energy projects without loan will not be supported”. Considering this HAREDA has not forwarded their application for CFA to MNRE, GoI. Accordingly, no CFA has been given by Ministry of New and Renewable Energy, Government of India for this project. c) That the petitioner has mentioned the cost of fuel as Rs.300/MT in their detailed project report submitted with HAREDA and also has mentioned the same at Para 1.2 (v)(e) at page no. 8 of the Petition. But while computing the tariff, they have calculated the same at Rs. 1707/MT for the FY 2019-20. Accordingly, fuel cost of Rs. 300/- MT may be considered for determination of tariff. d) That the Petitioner has submitted capital expenditure of Rs. 1388.92 lakhs (dated 15.05.2019) duly certified by Chartered Accountant for 1.2 MW biogas- based power plant as per details provided below: -

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SNo Items Actual Expenditure (Rs. Lacs) 1 Land Promotors owned 2 Land Development 25.15 3 Plant and Machinery for Biogas Generation & 515.70 Storage and fertilization production 4 Civil work 421.09 5 Biogas Genset and accessories 409.66 6 Contingency - 7 Preliminary expenses (including Govt. License Fee) 17.32 Total 1388.92

Accordingly, total plant cost may be considered as Rs. 1388.92 lakhs for determination of tariff. 8. HAREDA, vide memo no. HAREDA/2020/2158 dated 30.06.2020, filed its reply, submitting as under: - e) A committee of HPPC and HAREDA constituted by the Commission carried out inspection regarding CoD of power plant during the period 11/3/2020 to 15.03.2020 and submitted detailed report regarding parameters considered by the Petitioners in its petition for tariff determination. f) The committee observed that fuel was mainly poultry litter in which cow dung was also mixed. It was also observed that substantial poultry litter arranged from nearby poultry farm was bought in water tankers which contained very high moisture content. Similarly, Cow dung also have moisture content up to 80%. Accordingly, the moisture of feed material fed in the Digester contained high moisture content and less Total Volatile Solid (TVS) content. Due to which feed input was at higher side i.e.180 MT/day. It resulted in high specific fuel consumption i.e. 7.7 Kg/kWh against 3 Kg/kWh estimated by the Commission vide order dated 20.12.2019. g) The higher moisture content can also be estimated from less fertilizer generated by Fertilizer Separated. It was 13.44 MT/day against estimation of 18 MT/day in DPR and subsequent petition filed by petitioner. h) The petitioner has submitted bills of Poultry litter purchased from various Poultry farms for generation of electricity during the March/2020. These bills cannot be relied upon and are inflated in quantity. During the period 11.3.2020 to 31.3.2020, the petitioner has exported electricity 1,74,765 kWh to grid (As per reading taken by the committee during the period 11.3.2020 to 15.3.2020 and energy bills generated by petitioner for the period 17.3.2020 to 31.3.2020). They have submitted feed material bills of 3499 MT raised during the period 11.3.2020 to 31.3.2020 (This do not include cow dung of 8-9 MT fed daily by the petitioner). It is to mention here that feed material is fed on the same day, the day it arrives at plant. It is not stored. It means the specific fuel consumption as per the bills and the electricity exported to grid is 20Kg/kWh. Which is nearly 3 times higher as observed by the committee and cannot be relied upon. i) Fuel Cost: HAREDA has not assessed the fuel cost. The fuel cost of Rs.300/MT has been estimated by Petitioner itself in its DPR as well as in petition submitted by them in the Commission. In its written reply on dated 26.11.2019, the petitioner has submitted fuel cost of Rs. 3000/dumper of 6 MT capacity i.e.Rs.500/MT. Now, in their revised submission they have given bills of fuel indicating cost of Rs.850 to Rs.1400/MT. These bills are of inflated

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quantity as mentioned earlier and cannot be relied upon. Further, the feed input was at higher side due to excess moisture content. However, the Commission vide its Order dated 20.12.2019 has considered Base year (FY 2017-18) fuel cost (Feed Stock Price) shall be Rs. 1229 / MT and the same shall be escalated @ 5% per annum with specific fuel consumption of 3.00 Kg/kWh of substrate mix. j) O&M cost: The Commission vide its Order dated 20.12.2019 has considered O&M Rs. 0.53 Crore / MW for the base year i.e. the FY 2017-18 with annual escalation of 5.72% thereafter. k) Auxiliary Consumption: The auxiliary consumption of 7.58% reported by committee is on actual basis after considering all the parameters. l) Working Capital: The Commission vide its Order dated 20.12.2019 has considered fuel cost for 4 months. m) Accelerated depreciation: The Commission vide its Order dated 20.12.2019 has considered depreciation of 5.38% for 13 years. n) Capital cost: The contents of this para are matter of record. Subsidy has not been granted for this project. o) Sale of Bio Fertilizer: The content of para is denied. The sale price of bio- fertilizer @Rs.1500/MT has been estimated by Petitioner in its DPR and as well as in his subsequent petition. Further, bio-fertilizer generated from this plant is rich in nutrients and beneficial for crop production. Accordingly, there is sale value of bio-fertilizer and petitioner need to explore the potential for its sale. 9. The Petitioner M/s. Mor Bio Energy Pvt. Ltd., filed its written reply on the points raised by HPPC. The Petitioner has primarily submitted as under: - a) That the break up of the capital cost amounting to Rs. 1388.92 lacs duly certified by Chartered Accountant was submitted to HAREDA. In this cost, contingency amount and land cost of Rs. 26.08 lacs were not mentioned. But, while submitting its petition, the same has been included in the total cost of Rs. 1415 lacs (Rs. 1388.92 lacs + Rs. 26.08 lacs). b) That in the petition fuel cost of Rs. 1229/MT has been taken with annual escalation of 5%. The fuel mix is 30% of poultry waste generated internally (for which fuel cost has been taken at Rs. 300/MT) and buying remaining 70% quantity of fuel (poultry and other biomass waste) from the plants located in the nearby area, which is costing around Rs. 800/MT to Rs. 950/Mt on base year of 2017-18, when the DPR of the project was submitted to HAREDA for consideration. c) O&M cost has been taken as per HERC RE Regulations 2017, which is the same as in the CERC Order dated 19.03.2019. d) That auxiliary consumption has been taken @ 12%, as per HERC RE Regulations, 2017, as against actual auxiliary consumption of 13.25% i.e. auxiliary power consumption of 143.10 kw/hour to total power generation of 1.2 MW plant @ 90% PLF i.e. 1080 kw/hour. e) That HPPC has taken bio-fertilizer production at 3kg/unit, without any basis, whereas the Petitioner has taken the production of bio-fertilizer @ 30% of input fuel quantity processed by the plant. In fact, practically after drying and till the

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time it is picked up by consumer for use as a fertilizer, the quantity available for sale is around 10% of weight only. 10. The Petitioner M/s. Mor Bio Energy Pvt. Ltd., filed its written submissions dated 04.06.2020, pursuant to the reply filed by HPPC dated 26.11.2019 & site visit report dated 15.03.2020, primarily submitting as under: - a) Fuel Cost - The fuel cost estimated in DPR and assessed by HAREDA at Rs. 300 per MT is very less as compared to actual cost of Rs. 1125/MT. The petitioner purchases raw material/fuel from two sources @ 50% from each source @ Rs. 850/MT and Rs. 1400/MT, respectively. The copy of fuel invoices are enclosed. b) O&M Cost – O&M expenses does not include fuel handling and transportation charges. Rather the same is part of landed fuel cost. O&M has been taken as per the norms fixed by the Commission in its RE Regulations. c) Auxiliary consumption - Auxiliary consumption @ 4.16% calculated by HAREDA and taken by HPPC in its submission is wrong. During the visit by the Committee, it was found to be 7.58%, as some of the auxiliary meant for cooling requirement of gas turbine generators were not operating due to low environment temperature. Auxiliaries to be run during hot season of Mid-April to Mid-October in every year, like HT Radiator Fan (5.5 kw), LT Radiator Fan (3.7 kw), Ventilation fan motor (0.75 kw), Exhaust Fan (5.5 kw), DAP Pump (1.5 kw), O2 Blower Pump (0.75 kw), will increase per hour energy consumption by 17.70 kwh. Accordingly, % age auxiliary at same level of generation will be 7.61%. Apart from this, there are other auxiliaries, which are running at partial load, which are to be taken into consideration while deciding %age auxiliary consumption. d) Working Capital - The plea of HPPC to reduce holding period of fuel from 4 months as provided in HERC RE Regulations to two months is incorrect, as the period of 4 months has been kept in Regulations, taking into consideration of the time taken from the payment to fuel supplier till the time it is received from the Respondent. e) Accelerated Depreciation - The Petitioner will not be claiming Accelerated Depreciation for the project. f) Capital Cost - The Capital Cost as ascertained by HAREDA i.e. Rs. 864.82 lacs are normative capital cost after adjustment of subsidy availed. However, in case of the Petitioner, the subsidy has not been granted. Moreover, capital cost of Rs. 13.88 crore has already been approved. There, revisit of the same by HPPC is unwarranted. g) Sale of Bio-fertilizer – The petitioner is not able to sale the bio fertilizer as on date. In the vicinity of the plant, no one is ready to purchase the Bio Fertilizer at such high cost of Rs. 1.5/kg.

The Petitioner has submitted that the various operation parameters of Generation, fuel consumption and auxiliary consumption have been checked and verified. The Petitioner further requested the Commission to set aside the following clause no. 2.1.2 of the PPA: -

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“2.1.2 The applicable tariff shall be the lowest tariff amongst the offered tariff, HERC generic tariff and the project specific tariff to be determined by HERC under section 62 of Electricity Act, 2003 on the tariff petition filed by the Seller. Such tariff shall be applicable and payable by the Discoms/HPPC to the seller. Provided that till the determination of tariff by the Commission, interim tariff @ average power purchase cost (APPC) of that particular year, as determined by the Commission, shall be payable as on interim measure subject to adjustment thereafter, however, without any interest liability on such adjustments. Provided further that energy supplied by the Seller over and above the normative Plant Load Factor (PLF), as considered by the Commission for determination of tariff, shall be paid @ 50% of applicable tariff”. 11. The case was finally heard by the Commission on 08.07.2020, as scheduled, through virtual court (Vidyo App), wherein the Petitioners as well as Respondents mainly reiterated the contents of their written submission, which for the sake of brevity have not been reproduced.

Commission’s Analysis and Order

12. The Commission heard the arguments of the parties at length as well as perused the application/reply filed in the matter. The Commission has carefully examined the Regulations occupying the field & its Order dated 20.12.2019, regarding determination of levelized tariff for Waste to Energy (WtE) projects as well as other RE projects viz. Biomass, Biogas & Bagasse etc. commissioned during the FY 2019-20 & FY 2020-21 on the basis of the parameters provided in the Haryana Electricity Regulatory Commission (Terms and Conditions for determination of Tariff from Renewable Energy Sources, Renewable Purchase Obligation and Renewable Energy Certificate) Regulations, 2017.

At the onset, the Commission observes that such like projects should be promoted and needs to be given special dispensation given the fact that the project is to give thrust to “Swachh Bharat Mission (SBM)” of Government of India and helpful in improving green environment by efficient management of poultry waste/cow dung. Therefore, the commercial aspects of the tariff determination, wherever possible, can be relaxed in view of the social benefits attached to the project.

13. Accordingly, the Commission has proceeded to examine each component relevant for the purpose of tariff determination as under: - a) Capital cost: The Regulation clause no. 52 (3) of HERC RE Regulations, 2017, provides as under:-

“The normative Capital Cost, after accounting for capital subsidy, for the entire control period beginning the FY 2017-18 shall be Rs. 8.86 Crore / MW unless reviewed earlier by the Commission.”

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The same has been retained by the Commission in its Order dated 20.12.2019 for biogas-based power projects commissioned during the FY 2019-20 & 2020- 21.

HERC RE Regulations, 2017, has not specified capital cost for the project without subsidy. However, CERC (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2017, in Regulation clause no. 70 has specified capital cost for biogas-based power projects before subsidy as well as the case where subsidy is availed by the generator. The relevant extract of the Regulation is as under:-

“70. Capital Cost

The normative capital cost for the biogas-based power shall be Rs. 1185.76 Lakh/MW (FY 2017-18 during first year of Control Period) and will remain valid for the entire duration of the control period unless reviewed earlier by the Commission After taking into account of capital subsidy of Rs. 300 Lakhs/MW, net project cost is Rs. 885.76 Lakh/MW.”

The Petitioner has taken capital cost OF Rs. 14.15 crore in the original petition and revised the same to Rs. 13.88 Crore (11.56 Crore/MW) in its submissions dated 04.06.2020, which been vetted by HAREDA based on the certificate dated 15.05.2019 from a Chartered Accountant. The Petitioner has submitted that in this cost, contingency amount and land cost of Rs. 26.08 lacs were not included. However, while submitting its petition, the same has been included in the total cost of Rs. 1415 lacs (Rs. 1388.92 lacs + Rs. 26.08 lacs).

Per-contra, HPPC has argued that the Capital Cost as ascertained by HAREDA i.e. Rs. 864.82 lacs (excluding cost of land being promoter owned), may be taken into account for determination of tariff. The subsidy applicable to the project, but not availed by the developer, shall not be allowed to pass through tariff.

HAREDA has submitted that Central Financial Assistance (CFA) was sanctioned by IREDA for this project but it was available in case the Petitioner obtained loan. However, the Petitioner has invested their own funds. Therefore, their application for CFA to MNRE, GoI was not submitted and no CFA has been given by Ministry of New and Renewable Energy, Government of India for this project. HAREDA has further verified the capital cost of the project and recommended the same to be taken as 13.88 Crore, as detailed under: -

SNo Items Actual Expenditure (Rs. Lacs) 1 Land Promotors owned 2 Land Development 25.15 3 Plant and Machinery for Biogas Generation & 515.70 Storage and fertilization production 4 Civil work 421.09 5 Biogas Genset and accessories 409.66 6 Contingency - 7 Preliminary expenses (including Govt. License Fee) 17.32 Total 1388.92

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HPPC, in the hearing held on 08.07.2020, has submitted that capital cost as approved by HAREDA may be taken for determination of tariff. Further, the inspection report of HAREDA, submitted to HPPC vide memo no. HAREDA/2019/6803 dated 23.07.2019, contains cost details of major Plant & Machinery verified by HAREDA from bills made available by the Petitioner, as per detais provided below:- SNo Items Actual Expenditure (Rs. Lacs) 1 Biogas Digestor 345.12 2 Scrubber 156.34 3 Biogas Holder 87.00 4 Biogas Generator Set 275.00 5 Separator for bio fertiliser 57.12 6 Feeding pump and agitator 117.20 Total 1037.78

The Commission observes that the cost of plant (Rs. 1037.78 lacs) mentioned by HAREDA in its inspection report dated 23.07.2019 is in variance with the cost (Rs. 1388.92 lacs) certified in the CA Certificate dated 15.05.2019 and vetted by HAREDA. The Petitioner has submitted bills in support of the Capital Cost as under: - SNo Items Actual Expenditure (Rs. Lacs) (A) As included in the inspection report of HAREDA 1 Biogas Digestor 345.12 2 Scrubber 156.34 3 Biogas Holder 87.00 4 Biogas Generator Set 275.00 5 Separator for bio fertiliser 57.12 6 Feeding pump and agitator 117.20 Total (A) 1037.78 (B) Other bills not included in the inspection report of HAREDA 1 Civil Work – Genset, control panel and office block 86.15 2 Genset accessories and commissioning charges 142.45 3 Hesitator for digestor 68.67 4 Meter equipment and instruments for SLDC 12.45 Total (B) 309.72 Grand Total (A+B) 1347.50

The Commission observes that such projects which has spin off benefits in terms of ridding the area of housefly menace and other mitigating the pollution and un-hygienic conditions of the surrounding areas ought to have been set-up under subsidy / Govtt. Financial Assistance. However, in the present case given the Capital Structure of the project, subsidy / CFA is not admissible to the Petitioner. Accordingly, the capital cost before subsidy determined by CERC @ Rs. 1185.76 lacs/MW (Rs. 1424.11 lacs for 1.2 MW) is the guiding norm available with the Commission. Since, the Petitioner has now claimed capital cost of Rs. 13.47 Crore, including the bills not included in the HAREDA inspection report, in its revised submission and the same is also lower than the norms determined by the CERC. The Commission further observes that the additional bills amounting to Rs. 3.0972 Crore, as per the break-up provided in the table above, are essential component of the project. Hence, the Commission approves capital cost of the project at Rs. 13.47 crore for 1.2 MW biogas-based power project of the petitioner for the purpose of tariff determination.

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b) Interest on Term Loan & Return on Equity: The Commission observes that the Petitioner has used own funds in the project and has not availed of any loan fund for the biogas power project. The Commission has relied on Regulation No. 12, 13 & 15 of the HERC RE Regulations, 2017 as under:-

“12. Debt Equity Ratio. – (1) For generic tariff to be determined based on suo motu petition, the debt equity ratio shall be 70: 30. (2) For Project specific tariff, if the equity actually deployed is more than 30% of the capital cost, equity in excess of 30% shall be treated as normative loan. Provided that where equity actually deployed is less than 30% of the capital cost, the actual equity shall be considered for determination of tariff. Provided further that the equity invested in foreign currency shall be designated in Indian rupees on the date of each investment.

13. Loan and Finance Charges. – (1) For the purpose of determination of tariff, loan tenure of 13 years shall be considered. (2) (a) The loans arrived at in the manner indicated above shall be considered as gross normative loan for calculation for interest on loan. The normative loan outstanding as on 1st April of every year shall be worked out by deducting the cumulative repayment up to March 31st of the previous year from the gross normative loan. (b) For the purpose of computation of tariff, the normative interest rate shall be considered as the average Marginal Cost of funds based lending rate (MCLR) (one-year tenor) of SBI prevailing during the last available six months plus a margin of up to 200 basis points i.e. 2%. (c) Notwithstanding any moratorium period availed by the generating company, the repayment of loan shall be considered from the first year of commercial operation of the project and shall be equal to the annual depreciation allowed.

14. Return on Equity. –

(1) The value base for the equity shall lower of the two either 30% of the capital cost or actual equity (in case of project specific tariff determination) as determined under Regulation. (2) The normative Return on Equity shall be as under:- a) 14% per annum calculated on normative Equity Capital. b) MAT/Corporate Tax applicable shall be considered as pass through. Provided that the applicable MAT / Corporate Tax shall be separately invoiced as per the actual paid at the rate as declared by the Income Tax Department. The Generator shall raise the bill for

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reimbursement of MAT / Corporate Tax applicable on Return on Equity in 12 equal installments which shall be payable by the beneficiaries.”

Accordingly, the Capital Cost of Rs. 10.378 Crore approved by the Commission has been segregated into normative Equity and Loan on at 30:70 ratio i.e. Rs. 3.113 crore & Rs. 7.265 crore, respectively.

Further, the Commission in its Order dated 20.12.2019 at para 11, while determining levelized tariff for projects commissioned during the FY 2019-20 & FY 2020-21, has determined interest on term loan and discount factor, as under:-

“Average of SBI MCLR (one-year tenor) from July-Dec 2019 comes to 8.125%. Therefore, Interest on Term Loan is to be taken at 10.125%. In view of the above, discount factor for working out levelized tariff comes to 11.29% (.70x10.125%+.30x14%)/2.

However, it is added that the tariff payable is the year to year tariff computed by the Commission for the entire life of the project. The relevance of levelized tariff impacted by WACC is limited to comparing projects across the life of the project, as the same normalizes front loading/ back loading of tariff.”

In view of the above, the Commission has considered normative term loan as Rs. 9.43 Crore, with repayment period of 13 years at interest rate of 10.13% p.a. Further, the Equity is determined at Rs. 4.04 Crore eligible for return @ 14% p.a. The Income Tax shall not form part of the tariff determined by the Commission and the Petitioner shall raise the bill for reimbursement of MAT / Corporate Tax applicable on Return on Equity in 12 equal installments which shall be payable by the beneficiaries. c) Depreciation: The Regulation No. 14 of HERC RE Regulations, 2017, provides as under:-

“14. Depreciation. – (1) The value base for the purpose of depreciation shall be the Capital Cost of the asset admitted by the Commission. The salvage value of the asset shall be considered as 10%. (2) Depreciation per annum shall be based on ‘Differential Depreciation Approach’ over loan tenure and period beyond loan tenure over useful life computed on ‘Straight Line Method’. The depreciation rate for the first 13 years of the Tariff Period shall be 5.38% per annum and the remaining depreciation shall be spread over the remaining useful life of the project from 14th year onwards. (3) Depreciation shall be chargeable from the first year of commercial operation.

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Provided that in case of commercial operation of the asset for part of the year, depreciation shall be charged on pro rata basis.

Depreciation has been calculated considering 20 years as useful life of the project. For the first thirteen years the depreciation amount has been estimated @ 5.38% p.a. of the capital Cost less salvage value and remaining eligible depreciation has been equally spread over the remaining useful life of the project i.e. 7 years. The Commission has taken note of the submissions of the Petitioner that they will not claim the benefits of accelerated depreciation. d) Other Project specific parameters: The Commission in its Order dated 20.12.2019 at para 52, has determined technology specific parameters for Biogas Power Projects, summarized as under, considered by the Commission for determining tariff in the present case:- i) Useful life of the project: 20 years ii) Plant Load Factor (PLF): 80% iii) Operation and Maintenance (O&M Expenses): Rs. 0.53 Crore / MW for the base year i.e. the FY 2017-18, the same shall be subject to an escalation factor @ 5.72% per annum i.e. Rs. 0.592 Crore/MW for the FY 2019-20, which shall include repair and maintenance (R&M), establishment including employee expenses of 10 staff claimed in the DPR, and administrative and general expenses. e) Interest on working capital: The Regulation clause no. 16 (2) of HERC RE Regulations, 2017, provides as under:- “The Working Capital requirement in respect of biomass power projects (Rankine Cycle Technology), Biomass Gasifier / Bio gas-based projects and bagasse / non-fossil fuel-based co-generation projects shall be computed as under: - a) Fuel costs for four months at normative PLF; b) Operation & Maintenance expense for one month; c) Receivables equivalent to 2 (Two) months of fixed and variable charges for sale of electricity calculated on the normative PLF; d) Maintenance spare @ 15% of operation and maintenance expenses.”

The Commission has taken note of the arguments of HPPC that the Petitioner had not provided any details with respect to the working capital and considering the same at normative level is not justified as no storage of fuel is required since the waste is generated and used on day to day basis. HPPC has further submitted that for the purposes of tariff calculations, cost of fuel equivalent to two months may be taken as working capital in respect of fuel.

Per-contra, the Petitioner has argued that the period of 4 months has been kept in Regulations, taking into consideration of the time taken from the payment to fuel supplier till the time it is received from the Respondent.

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The Commission observes that the fuel cost for four months has been provided in the HERC RE Regulations, 2017 for all the biomass/biogas/ co-generation projects, which has to be relooked on case specific basis. In the present case, the Petitioner is using poultry litter and cow-dung as raw material, which is directly fed into the feed preparation pit from the dumpers. The argument of the Petitioner that four months are the time lag between date of the payment to fuel supplier and the date of realisation from HPPC, does not hold good, since the time from the date of billing to the date of realisation forms part of receivables and two months receivables are already considered in the working capital. Therefore, the Commission decides that the balance two months shall be taken as fuel holding period i.e. the time taken between date of the payment to fuel supplier and the date of billing to HPPC. Other factors of working capital shall be taken as per the norms specified in the Regulations in vogue. Further, the rate of interest on working capital shall be taken as specified by the Commission in its Order dated 20.12.2019 i.e. 9.13% p.a.

The Commission reiterates that projects of such nature which has spin off benefits in term of addressing environmental benefits by addressing house fly menace and spread of associated disease, may not be viewed only in terms of pure economics but also from the angle of Social Cost benefits. Hence, such projects ought to be encouraged and promoted. Keeping the wider public interest in mind, the Commission has taken a considered view on the following parameters germane to tariff determination in the present case. f) Fuel Cost: The petitioner, in its original petition, has taken the cost of fuel as Rs. 1707.265/MT with escalation @ 5% p.a., which was reduced to Rs. 1125/MT (average of the cost of bills ranging from Rs. 850 to Rs.1400/MT), in the revised details provided along with written submissions dated 04.06.2020. In the detailed project report (DPR) submitted by the Petitioner and approved by HAREDA, the cost of fuel was pegged at Rs. 300/MT. The Petitioner in its written reply dated 26.11.2019, has submitted fuel cost of Rs. 3000/dumper of 6 MT capacity i.e. Rs.500/MT. HAREDA further submitted that in the revised submission, the Petitioner has provided bills of fuel indicating cost of Rs. 850 to Rs.1400/MT. These bills are of inflated quantity and cannot be relied upon. Further, the feed input was at higher side due to excess moisture content. Accordingly, HAREDA has submitted that fuel cost of Rs. 300/- MT may be considered for determination of tariff. HAREDA has further submitted that the Commission vide its Order dated 20.12.2019 has considered Base year (FY 2017-18) fuel cost (Feed Stock Price) at Rs. 1229 / MT.

The Commission has considered the submission of HPPC that the invoices now produced by the Petitioner appears to be un-reliable as the same has been raised by the sister concerns of the Petitioner and no such invoices were produced by the Petitioner before the Committee during the site visit despite

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specific demand of the same by the Committee. The said fact is substantiated by the observation of the Committee in its report, which reads as under – “3. … Regarding the cost of input fuel and bio-fertilizer, the same is not determined during this period, due to non-production of bills/invoices by the firm.” The Commission has carefully examined the Petition filed by the Petitioner and observes that at Para 1.2 (v)(e) (page no. 8) of the Petition, the parameters mentioned are as per DPR approved by HAREDA. Whereas, while computing consumption of fuel at page 23 of the Petition, the cost of fuel has been taken as Rs. 1707.25/MT (Rs. 48.456 Million divided by 28432 MT). The Petitioner in its reply to the points raised by HPPC has submitted that in the petition fuel cost of Rs. 1229/MT has been taken with annual escalation of 5%. The fuel mix is 30% of poultry waste generated internally (for which fuel cost has been taken at Rs. 300/MT) and buying remaining 70% quantity of fuel (poultry and other biomass waste) from the plants located in the nearby area, which is costing around Rs. 800/MT to Rs. 950/MT on base year of 2017-18.

The Commission has considered the concerns / objections raised by the Intervener on the issue of cost of fuel. It is also observed that this Commission after due deliberations and public proceedings, in its Order dated 21/09/2010 in the matter of petition filed by M/s Green Indus Bio Energy for tariff determination of 5.6 MW poultry litter-based power project to be set up in Barwala, had considered fuel cost of Rs. 370 / MT and specific fuel consumption of 4.21 Kg / kWh. Even if the same is escalated by five percent per annum, the current cost would work out to Rs. 603 / MT as against Rs. 1229 / MT (base year FY 2017-18 – Rs. 1355 / MT for the FY 2019-20) ) for biogas projects as per HERC RE Regulations in vogue.

The Commission observes the cost of raw material in case of poultry litter produced in the farm of the Petitioner represents the opportunity cost i.e. the sale price which the Petitioner would have realised in case it would have been sold in the market. Further, the procurement of raw material from far flung areas might have contributed higher transportation cost. HPPC has pointed out that there is no market price fixed for such poultry waste and it is highly unlikely that the same is sold at such high rate.

In order to balance the equity on both sides and after examining all the facts and circumstances of the case and the concerns raised by HPPC as well as HAREDA, the Commission, given the anomalies/ inconsistencies pointed out in reporting fuel cost including the invoices by the Petitioner, is of the considered view that genuineness of such invoices cannot be benchmarked in the absence of organised market for such feedstock. Further, the feedstock of Rs. 300/ MT contained in the DPR submitted by the Petitioner herein to HAREDA cannot also be relied upon as the project was initially envisaged on the basis of poultry waste generated from its

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own poultry farm situated in the vicinity of the power plant on the basis of specific fuel consumption (SFC) of 3kg/kWh. Further, a time lag of three years has passed, since the date of submission of DPR with HAREDA. Much water has flown down the river since then and actual parameters turned out to be different than envisaged at the time of preparation of the project report. It is evident from the fact that Fuel Consumption of 3 kg/kWh projected in the DPR was actually recorded at 7.7 kg/kWh, by the committee of HPPC and HAREDA during inspection regarding CoD of power plant on 11/03/2020 to 15/03/2020. Therefore, it can be construed in most unequivocal terms that the requirement of fuel (Kg / kWh) turned out to be much higher than it was projected in DPR, due to significantly higher SFC.

Since, the plant has achieved CoD and started generated electricity, the economics on the realistic platform has to be considered, where it is found that the waste internally generated is not sufficient to meet the fuel requirement of the power plant. Out of the total fuel requirement, only 30% is actually met from poultry waste generated internally (for which fuel cost has been taken at Rs. 300/MT) and remaining 70% quantity of fuel (poultry and other biomass waste) is required to be procured from nearby area. The high transportation cost involved in lifting the highly stinking poultry litter, as argued by the Petitioner, cannot be ruled out.

The Commission is further concerned about the viability of the project at fuel cost of Rs. 300/- per MT and taking into consideration of socio- economic benefit of the project as well as base year (FY 2017-18) fuel cost of Rs. 1229/- per MT (FY 2019-20 Rs. 1355/- per MT) considered by the Commission in its Order dated 20.12.2019, in order to balance both sides, considers it appropriate to consider the lowest rate invoice of Rs. 850/MT, submitted by the Petitioner, as cost of feedstock procured from outside market.

Taking the fuel mix of 70:30 for externally procured and internally sourced fuel, the first-year fuel cost has been considered at Rs. 685/- MT (Rs. 850 x 70% + Rs. Rs. 300 x 30%), for the purpose of tariff determination with an annual escalation of 5% p.a. going forward. g) Sale of Bio-fertilizer:

The Commission has considered the submissions of HPPC that Clause 12.4 of the MYT Regulations provides for item wise gain to be shared between the generating company and the licensee in the ratio of 50:50. Considering the same, the sale value of Bio-fertilizer (by-product of generation) be taken in account for determination of tariff. As per approved DPR and HAREDA in its inspection report has mentioned the sale price of Bio-fertilizer as Rs. 1.50/kg.

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HAREDA in its inspection report has taken production of bio-fertilizers as 10% of the feed input per day whereas the report dated 15.11.2019 has observed production of 1.42 kg of bio fertilizer resulted from one Unit of electricity generated (i.e. 3 kg/kWh). Similarly, HAREDA has also submitted that bio- fertilizer generated from this plant is rich in nutrients and beneficial for crop production. Accordingly, there is sale value of bio-fertilizer and petitioner need to explore the potential for its sale. The Petitioner in its reply dated 04.06.2020 has submitted that sale of bio fertilizer in the vicinity of the plant, at such high cost of Rs. 1.5/kg, is not possible. However, while calculating the revised tariff, the Petitioner has taken manure generation @ 7.47% of the biomass with sale price @ Rs. 1.5/kg with 50% sharing with the beneficiary. The Petitioner, in the original petition has taken the production of manure @ 9% of the feed input.

The Commission has considered the rival contentions on this issue. It is observed the poultry litter, given its nature, may not be directly sold as such. Hence, some direct and indirect cost may also be involved in the process to make the same useable as manure by the farmers. The Commission is conscious of the Regulation 52(8) of the HERC RE Regulations, 2017 which provides “Provided the cost recovery from digester effluent shall be set off against the Fuel cost (feed stock price) while determining levelized tariff”. However, given the un-certainly regarding the quantum of useable manure and its pricing, the Commission is of the considered view that the proceeds for sale of bio- fertiliser shall be accounted for on actual basis i.e. the Generator shall maintain separate monthly account recording the production and sale of bio-fertiliser. The HPPC may inspect the same at any point of time and the IPP shall provide all possible assistance to the officer / officials of the Discoms / HPPC including production of bills / amount realised etc. Accordingly, on a quarterly basis, the verified proceeds netted off for any associated direct / indirect cost shall be shared in 50:50 ratio between the Discoms / HPPC and the Generator herein. h) Specific Fuel Consumption

The Commission in its RE Regulations, 2017 had specified fuel consumption as 3 kg/kWh. HAREDA and HPPC has also argued that normative fuel consumption may be considered for calculating the tariff. The Petitioner, in the original petition has taken the fuel consumption as 3 kg/kWh, whereas, in the revised calculations dated 04.06.2020 the same has been pegged at 7.7 kg/kWh.

The Commission has considered the detailed calculation of specific fuel consumption of 7.7 kg/kWh provided by HAREDA in its reply dated 30.06.2020. HAREDA has submitted that the substantial poultry litter arranged from nearby poultry farm was bought in water tankers which contained very high moisture

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content. Similarly, Cow dung also have moisture content upto 80%. Accordingly, the moisture of feed material fed in the Digester contained high moisture content and less Total Volatile Solid (TVS) content. Due to which feed input was at higher side i.e.180 MT/day. It resulted in high specific fuel consumption i.e. 7.7 Kg/kWh against 3 Kg/kWh. HAREDA has further submitted that bills submitted by the Petitioner cannot be relied upon and are inflated in quantity.

The Commission observes that Specific Fuel Consumption of 3 kg/kWh provided in HERC RE Regulations, 2017 is generic for all kind of biogas-based project. In the poultry litter-based fuel, the Specific Fuel Consumption is bound to be higher due to high moisture content and less TVS content. The Commission further observes that it might cause immense hardship to the Petitioner as well endanger the viability of the project, in case Specific Fuel Consumption of 3 kg/kWh which is much less than Specific Fuel Consumption of 7.7 kg/kWh, witnessed by the committee of HPPC and HAREDA during inspection regarding CoD of power plant on 11/03/2020 to 15/03/2020. The Commission is of the view that it may not fair to reduce fuel cost on one hand (even less than the norm provided in HERC RE Regulations, 2017) and freeze the Specific Fuel Consumption to normative level of 3 kg/ kWh, on the other.

Considering the above, the Commission approves the average of the Specific Fuel Consumption provided in the HERC RE Regulations, 2017 and actual Specific Fuel Consumption recorded by the inspection committee i.e. 5.35 kg / kWh (3 + 7.7 = 10.7/2= 5.35 kg/kWh). i) PLF / CUF

The Commission observes that the RE Regulations in vogue provides for CUF of 90% for all sorts of biogas power projects. However, in the present case specific determination of tariff, it has been observed that the actual power generation has been considerably lower than the normative gross generation arrived at a CUF of 90%. Further, while reckoning with the issue of PLF / CUF the Commission has kept in mind the fact that there are very few poultry litter-based power plant set up in the country. Such power plants set up in Punjab and Tamil Nadu set up sometimes back were also struggling to optimise generation to achieve 85% to 90% CUF and also witnessing considerable machine downtime.

In view of the above discussions, the Commission, after due deliberations, has considered it appropriate to peg CUF at 80% for the purpose of tariff determination.

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j) Auxiliary Energy Consumption

The Commission observes that the Petitioner, in its original petition has taken the Auxiliary consumption as 12%, as per the norms specified in the HERC RE Regulations, 2017. However, consequent to the inspection by the Committee, the Petitioner in its revised calculation of tariff dated 04.06.2020, has taken the same @ 7.58%. Accordingly, the Commission approves the Auxiliary Energy Consumption @ 7.58% for the purpose of project specific tariff determination.

Based on the parameters discussed in the foregoing paras, the Commission determines the tariff for 20 years life of the project, appended to the present Order (Annexure – A). The tariff payable is the year to year tariff computed by the Commission for the entire life of the project. Further, regarding the prayer of the Petitioner to set aside the undermentioned clause no. 2.1.2 of the PPA, the Commission has already considered the issue in its 102nd meeting held on 04.11.2019 and directed HPPC vide memo no. 778/HERC/Tariff dated 12.12.2019 that clause 2.1.2 of the PPA signed by the parties has been incorporated in wrong interpretation of the Commission’s Order dated 30.04.2019 (HERC/PRO-20 of 2019) wherein it was ordered that “Tariff shall be decided on the separate petition to be filed by the Respondents under Section 62 of the Electricity Act, 2003.” HPPC is directed to strictly comply with the directions of the Commission.

In terms of the above Order, the present petition is disposed of.

This Order is signed, dated and issued by the Haryana Electricity Regulatory Commission on 7TH September , 2020.

Date: 07.09.2020 (Naresh Sardana) (Pravindra Singh Chauhan) (D.S. Dhesi) Place: Panchkula Member Member Chairman

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ANNEXURE - A Tariff Mor Bio Energy Pvt. Ltd. for 1.2 MW Biogas based Project Table of Parameters Capital cost (Rs. in Million / MW) 112.290 103.78 Million for 1.2 MW 86.4833333 30.972 103.78 Capital cost (Rs. in Million 1.2 MW) 134.748 134.752 Residual value (10%) 13.4748 112.29 Total depreciation ( Rs in Million 1.2 MW) 121.2732 Loan component ( Rs in Million 1.2 MW) 94.3236 Equity component ( Rs in Million 1.2 MW) 40.4244 CUF (stablisation) 80% CUF 1st year (Including Stabilisation) 80% 7.2556615 CUF 2nd year onwards 80% O&M ( Rs Million / MW) 5.9237 5.30 5.60316 5.92366075 O&M escalation 5.72% Depreication (first 13 years) 5.38% ROE (1st 10 years) 14% ROE (11th year onwards) 14% Income tax (MAT) pass through 0.00% Income tax (Corporate Tax) pass through 0.00% Interest on term loan 10.13% Interest on working capital 9.13% Auxiliary consumption (1st year) 7.58% Auxiliary consumption (2nd year onwards) 7.58% Fuel cost (Rs. / MT) 685 300 315 330.75 Fuel price escalation 5.00% Specific Fuel Consumption (kg/kWh) 5.35

Discount rate WACC without tax 11.29% Levellised Tariff (Rs / kWh) 9.33

Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Fuel cost with escalation @ 5% PA from 2nd year 685 719 755 793 833 874 918 964 1012 1063 1116 1172 1230 1292 1356 1424 1495 1570 1649 1731 O&M escalation for 1.2 MW 7.11 7.51 7.94 8.40 8.88 9.39 9.92 10.49 11.09 11.73 12.40 13.11 13.86 14.65 15.49 16.37 17.31 18.30 19.35 20.45 Outstanding Loan amount 94.32 87.07 79.81 72.56 65.30 58.05 50.79 43.53 36.28 29.02 21.77 14.51 7.26 Loan repayment 7.26 7.26 7.26 7.26 7.26 7.26 7.26 7.26 7.26 7.26 7.26 7.26 7.26 Interest on Term loan 9.19 8.45 7.72 6.98 6.25 5.51 4.78 4.04 3.31 2.57 1.84 1.10 0.37 Working Capital Fuel cost for two months 5.14 5.39 5.66 5.95 6.24 6.56 6.88 7.23 7.59 7.97 8.37 8.79 9.22 9.69 10.17 10.68 11.21 11.77 12.36 12.98 One month O&M 0.59 0.63 0.66 0.70 0.74 0.78 0.83 0.87 0.92 0.98 1.03 1.09 1.15 1.22 1.29 1.36 1.44 1.52 1.61 1.70 2 Months receivables 10.14 10.35 10.58 10.83 11.09 11.38 11.68 12.01 12.36 12.74 13.14 13.57 14.03 14.36 15.00 15.68 16.39 17.14 17.93 18.76 Maintenance spares15% of O&M 1.07 1.13 1.19 1.26 1.33 1.41 1.49 1.57 1.66 1.76 1.86 1.97 2.08 2.20 2.32 2.46 2.60 2.74 2.90 3.07 Total 16.94 17.50 18.10 18.73 19.41 20.12 20.88 21.69 22.54 23.44 24.40 25.41 26.49 27.46 28.78 30.18 31.64 33.18 34.80 36.51 Interest on working capital 1.55 1.60 1.65 1.71 1.77 1.84 1.91 1.98 2.06 2.14 2.23 2.32 2.42 2.51 2.63 2.76 2.89 3.03 3.18 3.33 Variable Costs Parameters Derivation 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Capacity (MW) 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 Generation (Million Units) A 8.41 8.41 8.41 8.41 8.41 8.41 8.41 8.41 8.41 8.41 8.41 8.41 8.41 8.41 8.41 8.41 8.41 8.41 8.41 8.41 Auxiliary Cons (%) 7.58% 7.58% 7.58% 7.58% 7.58% 7.58% 7.58% 7.58% 7.58% 7.58% 7.58% 7.58% 7.58% 7.58% 7.58% 7.58% 7.58% 7.58% 7.58% 7.58% Generation (Ex-bus Mllion Units) A1 7.77 7.77 7.77 7.77 7.77 7.77 7.77 7.77 7.77 7.77 7.77 7.77 7.77 7.77 7.77 7.77 7.77 7.77 7.77 7.77 Specific Fuel Consumption (kg/kWh) B 5.35 5.35 5.35 5.35 5.35 5.35 5.35 5.35 5.35 5.35 5.35 5.35 5.35 5.35 5.35 5.35 5.35 5.35 5.35 5.35

Fuel Consumption (MT) for 1.2 MW C=(A*B*1000) 44991.36 44991.36 44991.36 44991.36 44991.36 44991.36 44991.36 44991.36 44991.36 44991.36 44991.36 44991.36 44991.36 44991.36 44991.36 44991.36 44991.36 44991.36 44991.36 44991.36 Cost of fuel (Rs. per MT) D 685 719 755 793 833 874 918 964 1012 1063 1116 1172 1230 1292 1356 1424 1495 1570 1649 1731 Total Cost of fuel (Rs Million) E=C*D/10^6 30.82 32.36 33.98 35.68 37.46 39.33 41.30 43.37 45.53 47.81 50.20 52.71 55.35 58.11 61.02 64.07 67.27 70.64 74.17 77.88 Manure Produced @ 10% of raw material F= C*10% Sale price of manure @ Rs. 1.50 / Kg esc 2% PA G=F*0.75 Total Cost of fuel (Rs Million) adjusted for bio-fert sale H=E-G 30.82 32.36 33.98 35.68 37.46 39.33 41.30 43.37 45.53 47.81 50.20 52.71 55.35 58.11 61.02 64.07 67.27 70.64 74.17 77.88 Fuel Cost (Rs/kWh) I=H/A1 3.97 4.16 4.37 4.59 4.82 5.06 5.31 5.58 5.86 6.15 6.46 6.78 7.12 7.48 7.85 8.24 8.66 9.09 9.54 10.02 Fixed Costs (Rs. Million) O&M Expenses 7.11 7.51 7.94 8.40 8.88 9.39 9.92 10.49 11.09 11.73 12.40 13.11 13.86 14.65 15.49 16.37 17.31 18.30 19.35 20.45 Depreciation 6.52 6.52 6.52 6.52 6.52 6.52 6.52 6.52 6.52 6.52 6.52 6.52 6.52 5.21 5.21 5.21 5.21 5.21 5.21 5.21 Interest on Term Loan 9.19 8.45 7.72 6.98 6.25 5.51 4.78 4.04 3.31 2.57 1.84 1.10 0.37 Interest on Working Capital 1.55 1.60 1.65 1.71 1.77 1.84 1.91 1.98 2.06 2.14 2.23 2.32 2.42 2.51 2.63 2.76 2.89 3.03 3.18 3.33 Return on Equity 5.66 5.66 5.66 5.66 5.66 5.66 5.66 5.66 5.66 5.66 5.66 5.66 5.66 5.66 5.66 5.66 5.66 5.66 5.66 5.66 Income tax on ROE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Fixed Cost 30.03 29.75 29.50 29.28 29.08 28.92 28.79 28.70 28.64 28.62 28.65 28.71 28.83 28.02 28.98 30.00 31.07 32.20 33.39 34.65 Fixed cost (Rs/kWh) 3.86 3.83 3.80 3.77 3.74 3.72 3.70 3.69 3.69 3.68 3.69 3.69 3.71 3.61 3.73 3.86 4.00 4.14 4.30 4.46 Total cost (Fixed+variable) 60.85 62.11 63.48 64.95 66.54 68.25 70.09 72.06 74.18 76.43 78.85 81.42 84.17 86.14 90.00 94.07 98.34 102.83 107.56 112.53 Tariff (Rs/kWh) 7.83 7.99 8.17 8.36 8.56 8.78 9.02 9.27 9.54 9.83 10.14 10.48 10.83 11.08 11.58 12.10 12.65 13.23 13.84 14.48 Per unit tariff components (Rs / kWh) Per unit O&M Expenses 0.91 0.97 1.02 1.08 1.14 1.21 1.28 1.35 1.43 1.51 1.60 1.69 1.78 1.88 1.99 2.11 2.23 2.35 2.49 2.63 Per Unit Depreciation 0.84 0.84 0.84 0.84 0.84 0.84 0.84 0.84 0.84 0.84 0.84 0.84 0.84 0.67 0.67 0.67 0.67 0.67 0.67 0.67 Per Unit Interest on term loan 1.18 1.09 0.99 0.90 0.80 0.71 0.61 0.52 0.43 0.33 0.24 0.14 0.05 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Per Unit Interest on working capital 0.20 0.21 0.21 0.22 0.23 0.24 0.25 0.25 0.26 0.28 0.29 0.30 0.31 0.32 0.34 0.35 0.37 0.39 0.41 0.43 Per Unit Return on equity 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 Per unit income tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Levellised tariff (Rs/kWh) Discount factor 1.00 0.899 0.807 0.73 0.65 0.59 0.53 0.47 0.42 0.38 0.34 0.31 0.28 0.25 0.22 0.20 0.18 0.16 0.15 0.13 Discounted tariff components(variable) 5.55 3.97 3.74 3.53 3.33 3.14 2.96 2.80 2.64 2.49 2.35 2.22 2.09 1.97 1.86 1.76 1.66 1.56 1.47 1.39 1.31 Discounted tariff components(fixed) 3.79 3.86 3.44 3.06 2.73 2.44 2.18 1.95 1.75 1.57 1.41 1.26 1.14 1.03 0.90 0.83 0.78 0.72 0.67 0.63 0.58 Discounted tariff components (Total) 7.83 7.18 6.59 6.06 5.58 5.14 4.75 4.39 4.06 3.76 3.48 3.23 3.00 2.76 2.59 2.43 2.29 2.15 2.02 1.90 Levellised Tariff (Rs/kWh) 9.33