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CENTRAL ELECTRICITY REGULATORY COMMISSION NEW DELHI Petition No.147/TT/2018 Coram: Shri. P. K. Pujari, Chairperson Dr. M. K. Iyer, Member Date of Order: 5.2.2019 In the matter of: Approval under Regulation: 86 of CERC (Conduct of Business) Regulations, 1999 and CERC (Terms and Conditions of Tariff) Regulations, 2014 for determination of Transmission Tariff from DOCO to 31.03.2019 for Aurangabad (POWERGRID) - Padghe (POWERGRID) 765kV D/C line & Padghe (POWERGRID) - Padghe/kudus (MSETCL) 400kV D/C (QUAD) line along with associated bays and Establishment of 765/400 kV 2x1500 MVA Padghe GIS SS under System Strengthening in North/West Part of Western Region for IPP Projects in Chhattisgarh (IPP-E). And in the matter of: Power Grid Corporation of India Limited "Saudamini", Plot No.2, Sector-29, Gurgaon -122 001 ……Petitioner Vs 1. Madhya Pradesh Power Management Company Ltd. Shakti Bhawan, Rampur Jabalpur - 482 008 2. Madhya Pradesh Power Transmission Company Ltd. Shakti Bhawan, Rampur Rabalpur - 482 008 3. Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 3/54, Press Complex, Agra-Bombay Road, Indore - 452 008 4. Maharashtra State Electricity Distribution Co. Ltd. Page 1 of 41 Order in Petition No. 147/TT/2018 Hongkong Bank Building, 3rd floor M.G. Road, Fort, Mumbai - 400 001. 5. Maharashtra State Electricity Transmission Co. Ltd. Prakashganga, 6th Floor, Plot no. C-19, E-Block, Bandra Kurla Complex, Bandra (East) Mumbai- 400 051. 6. Gujarat Urja Vikas Nigam Ltd. Sardar Patel Vidyut Bhawan, Race Course Road, Vadodara - 390 007 7. Gujarat Energy Transmission Corporation Ltd. Sardar Patel Vidyut Bhawan, Race Course Road, Vadodara - 390 007 8. Electricity Department Govt. of Goa, Vidyut Bhawan, Panaji, Near Mandvi Hotel, Goa - 403 001 9. Electricity Department Administration of Daman & Diu Daman - 396 210 10. Electricity Department Administration of Dadra Nagar Haveli U.T., Silvassa - 396 230 11. Chhattisgarh State Electricity Board P.O.Sunder Nagar, Dangania, Raipur Chhattisgarh - 492 013 12. Chhattisgarh State Power Transmission Co. Ltd. Office of the Executive Director (C&P) State Load Despacth Building, Dangania, Raipur – 492 013 13. Chhattisgarh State Power Distribution Co. Ltd. P.O.Sunder Nagar, Dangania, Raipur Chhattisgarh - 492 013 …..Respondents The following were present: Page 2 of 41 Order in Petition No. 147/TT/2018 For Petitioner: Shri S. K. Venkatesan, PGCIL Shri S. S. Raju, PGCIL Shri Vivek Kumar Singh, PGCIL Shri Zafrul Hasan, PGCIL Shri Pankaj Sharma, PGCIL Shri V P Rastogi, PGCIL For Respondents: Shri Mukesh Kori, Advocate, MPPMCL ORDER The present petition has been filed by the petitioner, Power Grid Corporation of India Ltd. (PGCIL) seeking approval of transmission tariff for Aurangabad (POWERGRID) - Padghe (POWERGRID) 765 kV D/C line & Padghe (POWERGRID) - Padghe/kudus (MSETCL) 400 kV D/C (QUAD) line along with associated bays and Establishment of 765/400 kV 2x1500 MVA Padghe GIS SS under System Strengthening in North/West Part of Western Region for IPP Projects in Chhattisgarh (IPP-E) (hereinafter referred to as “transmission system”) for 2014-19 tariff period under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 (hereinafter referred to as “the 2014 Tariff Regulations”). 2. The petitioner has made the following prayers:- i) Approve the Transmission Tariff for the tariff block 2014- 19 block for the assets covered under this petition. ii) Admit the capital cost as claimed in the petition and approve the Additional Capitalisation incurred/ projected to be incurred. iii) Tariff may be allowed on the estimated completion cost, since few elements of the project are yet to be completed, the completion cost for the asset covered under instant Petition are within the overall Page 3 of 41 Order in Petition No. 147/TT/2018 project cost. iv) Allow the petitioner to recover the shortfall or refund the excess Annual Fixed Charges, on account of Return on Equity due to change in applicable Minimum Alternate/ Corporate Income Tax rate as per the Income Tax Act, 1961 (as amended from time to time) of the respective financial year directly without making any application before the Commission as provided under clause: 25 of the Tariff Regulations, 2014. v) Approve the reimbursement of expenditure by the beneficiaries towards petition filing fee, expenditure on publishing of notices in newspapers in terms of Regulation: 52 of Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 and other expenditure (if any) in relation to the filing of petition. vi) Allow the petitioner to bill and recover Licensee fee and RLDC fees and charges, separately from the respondents in terms of Regulation: 52 of Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014. vii) Allow the petitioner to bill and adjust impact on Interest on Loan due to change in Interest rate on account of floating rate of interest applicable during 2014-19 period, if any, from the respondents. viii) Allow the petitioner to bill and recover GST on Transmission charges separately from the respondents, if service tax on transmission is withdrawn from negative list at any time in future. Further, any taxes and duties including cess etc. imposed by any statutory/Government/ Municipal Authorities shall be allowed to be recovered from the beneficiaries. ix) Allow 90% of the Annual Fixed Charges as tariff in accordance with clause 7 (i) of Regulation 7 of Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 for purpose of inclusion in the PoC charges. x) Allow the petitioner to bill Tariff from actual DOCO and also the petitioner may be allowed to submit revised Management Certificate and tariff Forms (as per the Relevant Regulation) based on actual DOCO. Page 4 of 41 Order in Petition No. 147/TT/2018 and pass such other relief as Hon'ble Commission deems fit and appropriate under the circumstances of the case and in the interest of justice. 3. The investment approval of the project was accorded by Board of Directors of POWERGRID vide the Memorandum No. C/CP/Chattisgarh IPP dated 27.12.2011 with an estimated cost of `1746.65 Crore including Interest During Construction of `111.43 Crore based on 2nd Qtr 2011 price level. The Revised Cost Estimate of the project was accorded by Board of Directors of POWERGRID vide the Memorandum No. C/CP/RCE/IPP dated March 9, 2015; with an estimated cost of `2228.71 Crore including Interest During Construction of `172.64 Crore based on August, 2014 price level. Further vide affidavit dated 14.12.2018, the petitioner has submitted the Revised Cost Estimate-2 (RCE-2) of the project accorded by Board of Directors of POWERGRID vide Memorandum No. C/CP/RCE/ SS North- West/IPP dated October 22, 2018; with an estimated cost of `2395.67 Crore including Interest during Construction of `321.49 Crore based on March, 2018 price level. 4. The scheme was approved in the 29th meeting of Standing Committee of Western Region held on 10th September, 2009. The Transmission System was later discussed and agreed for implementation in the 11th WRPC meeting held in Raipur on 25th September, 2009. Further, vide order dated 31.05.2010, Commission had accorded regulatory approval for execution of the Project. Page 5 of 41 Order in Petition No. 147/TT/2018 5. The details of the transmission elements covered under the transmission system are broadly as follows:- Transmission Line: (i) Aurangabad (POWERGRID) – Padghe (POWERGRID) 765 kV D/C Line (ii) Padhge (POWERGRID) - Padghe/Kudus (MSETCL) – 400 kV D/C (Quad) Line (iii) Vadodara - Asoj 400 kV D/C (Quad) Line. Substation: (i) Establishment of 765/400 kV, 2*1500 MVA Padghe GIS substation. (ii) Bay Extensions at 765/400 kV Aurangabad (POWERGRID), Vadodara (POWERGRID) and Asoj (GETCO) substation. (iii) Bay extensions at 400 kV Padghe Substation. 6. Details of asset being filed in the instant Petition: Asset Description of the Asset Scheduled COD Delay COD ( actual) Asset-I Aurangabad (POWERGRID) - Padghe (POWERGRID) 765 kV D/C line & Padghe (POWERGRID) - 40 Padghe/kudus (MSETCL) 27.08.14 31.12.17 months 400kV D/C (QUAD) line 4 days along with associated bays and Establishment of 765/400 kV 2x1500 MVA Padghe GIS SS Page 6 of 41 Order in Petition No. 147/TT/2018 7. The details of the transmission charges claimed by the petitioner are as under:- (` in lakh) Particulars Asset-I 2017-18 2018-19 (pro-rata) Depreciation 2648.37 10932.71 Interest on Loan 3016.94 11883.88 Return on Equity 3004.74 12422.62 Interest on Working Capital 204.58 831.89 O&MExpenses 297.93 1218.23 Total 9172.56 37289.33 8. The details of the interest on working capital claimed by the Petitioner are as under:- (` in lakh) Particulars Asset-I 2017-18 2018-19 (annualized) Maintenance Spares 176.86 182.73 O&M expenses 98.25 101.52 Receivables 6049.99 6214.89 Total 6325.10 6499.14 Interest 809.61 831.89 Rate of Interest 12.80% 12.80% 9. Annual Fixed Charges under the first proviso to Regulation 7(7) of the 2014 Tariff Regulations for inclusion in the PoC charges were granted vide order dated 13.09.2018 . 10. No comments or suggestions have been received from the general public in response to the notices published by the petitioner under Section 64 of the Electricity Act. MPPMCL, Respondent No. 1, has filed reply vide affidavit dtd. 17.05.2018. MPPTCL, Respondent No. 2, has raised issue of Page 7 of 41 Order in Petition No. 147/TT/2018 implementation schedule, Completion cost, additional capitalization, wage revision and effective tax rate. The petitioner has filed rejoinder dated 31.08.2018 to the reply of MPPTCL.