Optimization of Power Purchase cost and analysis of annual fixed cost

Transcription

DECLARATION
I, Dilip Sridhar Koty, Roll no -28, student of MBA-Power Management (2012-14) at National
Power Training Institute, Faridabad hereby declare that the Summer Training Report entitled
“OPTIMISATION OF POWER PURCHASE COST AND ANALYSIS OF ANNUAL FIXED
COST” is an original work and the same has not been submitted to any other Institute for the
award of any other degree.
A Seminar presentation of the Training Report was made on September __, 2013 on the same
and the suggestions as approved by the faculty were duly incorporated.
Mr. N.V.Kumar
(Project Guide)
DILIP SRIDHAR KOTY
(Signature of Candidate)
Countersigned
Mr. S. K. Choudhary
(Director/Principal of the Institute)
ACKNOWLEDGEMENT
The projects done by me under this internship program wouldn’t have been completed, if not for
the active help and guidance of various people.
I express my sincere thanks to Mr. Rajeev Chowdhury, Head (Regulatory Affairs) BRPL
and Mr. Aditya Pyasi, D.G.M (Regulatory Affairs) for giving me a great opportunity to work
in such a dynamic organization and for guiding me in all stages of the project. I am thankful to
Mr. Kanishk Khettarpal (Asst. Manager) for his guidance and support. I have a deep sense of
gratitude and respect for the entire staff of BRPL for sharing their knowledge and for assisting
me. Their help has sparked my interest even more.
I wish to thank Mr. S.K Choudhary, Principal Director, Mrs. Manju Mam (Director) for
providing me an opportunity to do my summer internship at BRPL which was a great learning
for me.
I would also like to thank my Project In-charge Mr.N.V Kumar (Deputy. Director), National
Power Training Institute for his valuable inputs, assistance and support whenever required.
I would like to express my special thanks to my family and friends for their continuous
motivation, encouragement and support.
Dilip Sridhar Koty
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EXECUTIVE SUMMARY
The growing need of the economy is the availability of electricity which will be reliable, quality
power and most of all at cheap rates. The electricity whether cheap or costly depends on the
power purchase cost of the electricity.
The power purchase cost consist of fixed charges, energy charges, transmission charges,
wheeling charges and many other kind of charges and surcharges. But a significant amount of
power purchase cost consist of the fixed charges. The fixed charges payable by the distribution
companies to the generation station depends upon the annual fixed charges of the station and the
capital cost of the generating station as according to the Tariff Regulation 2009-14 the tariff will
be based on the capital cost admitted by the commission.
The various components of the annual fixed charges like the Return on equity, depreciation,
Operation and maintenance expenses, interest on the loan and the interest on the working capital
are fixed or cannot be altered as they are fixed by the commission on normative basis and they
are same for all the generating plants except in the case of O&M expenses which is set by the
commission on a case by case basis.
Keeping in view the above mandate of the Tariff Policy, first proviso to clause (2) of Regulation
7 of the 2009 Tariff Regulations provides as under:
"Provided that in case of the thermal generating station and the transmission system, prudence
check of capital cost may be carried out based on the benchmark norms to be specified by the
Commission from time to time:"
The capital Cost of a Thermal Generation plant or for that matter for any type of generation plant
can be reduced or optimized only when the additional capitalization of the plant is limited to the
extent that both the parties (The generation plant and the beneficiaries) may benefit from it and it
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should not be a burden on any single party.
But it has been observed that if the additional capitalization by a generation plant is allowed to
go unchecked or its prudence check is not done properly, the capital cost will increase
subsequently increasing the annual fixed cost, the beneficiaries like the distribution companies
will end up paying more without actually getting any benefit out of it. The beneficiaries will then
pass on the cost to the customers which will increase the tariff of the unit electricity, which will
defeat the very purpose of the commission allowing additional capitalization for increase in the
efficiency of the plant to reduce the tariff price.
This bring us to the question whether its appropriate for the commission to allow the additional
capitalization if it ultimately ends up increasing the tariff for the common people. The answer to
this question lies in the proper guidelines along which the additional capitalization should be
done and allowed by the commission rather than whimsical increase of the capital cost without
actually deriving any benefit out of such increase in investments.
The guidelines are very clearly stated by the Terms and Conditions of Tariff 2009-14, in which
the regulation number 9(1), 9(2) deals with the guidelines for the additional capitalization.
This report intends to show the framework within which the commission allows or disallows a
claim of additional capitalization which affects the Annual Fixed cost and then subsequently
effects the tariff at which per unit electricity is supplied by the distribution company to the
customer.
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LIST OF FIGURES
Figure 1.1 : Delhi Distribution area divided between 3 Distribution companies
Figure 2.1 : Research Methodology followed
Figure 3.1 : BRPL’s Share & Quantum from NTPC stations
Figure 4.1 : The additional capital expenditure claimed by the company and the additional capital
expenditure approved by the commission for a particular year
Figure 4.2 : The various components of the annual fixed cost of the plant
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LIST OF TABLES
Table 1.1: Shows Consumer Profile of BSES Group (Delhi Division)
Table 3.1 :The energy requirement for BRPL
Table 3.1 : The actual quantum purchased by BRPL
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LIST OF ABBREVIATIONS
Act / EA
Electricity Act, 2003
ABR
AFC
AT&C
Average Billing Rate
Annual Fixed Cost
Aggregate Technical & Commercial
CEA
Central Electricity Authority
CERC
Central Electricity Regulatory Commission
DERC
Delhi Electricity Regulatory Commission
DISCOM
Distribution Company
GENCOS
Generation Companies
SGS
State generating Stations
CGS
Central generating Stations
DTL
Delhi Transco Limited
SLDC
State Load Dispatch Centre
STU
State Transmission Utility
T&D
Transmission & Distribution
UI
Unscheduled Interchange
PPC
Power Purchase Cost
ARR
Average Revenue Requirement
ECR
Energy Charge Rate
CVPF
Calorific Value of Primary Fuel
LPPF
Landed Price of Primary Fuel
CVSF
Calorific Value of Secondary Fuel
LPSF
Landed Price of Secondary Fuel
GHR
Gross Station Heat rate
AUX
Auxiliary Consumption
PPAC
Power Purchase Adjustment Cost
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Contents
CHAPTER-1 INTRODUCTION ............................................................................................................. 3
1.1 History of Electricity in Delhi ............................................................................................................ 3
1.2 Chronology of the Delhi Privatization ................................................................................................ 3
1.3 BSES’s Customer Profile ................................................................................................................... 4
1.4 Problem Statement ............................................................................................................................. 5
1.5 Objectives of Project.......................................................................................................................... 5
1.6 Organization Profile........................................................................................................................... 5
1.6.1 About BSES Group ................................................................................................................. 5
1.6.2 BSES Delhi ............................................................................................................................. 6
1.6.2.1 BSES Yamuna Power Limited (BYPL) ................................................................................ 7
1.6.2.2 BSES Rajdhani Power Limited (BRPL) ................................................................................ 7
CHAPTER-2 LITERATURE SURVEY, POLICIES & RESEARCH METHODOLOGY ............................................. 10
2.1 Literature Review ............................................................................................................................ 10
2.1.1 Policies & Regulation............................................................................................................ 10
2.2 Research Methodology: ................................................................................................................... 14
CHAPTER-3 MYT MODEL & ANNUAL FIXED COST ..................................................................... 15
3.1 MYT Model for Distribution Licensee: ............................................................................................ 15
3.1.1 ATE’s directive to SERCs for timely tariff determination ...................................................... 21
3.2 Power Purchase cost ....................................................................................................................... 21
3.2.1 Fixed Charge......................................................................................................................... 22
3.2.2 The Variable Charge ............................................................................................................. 23
3.3 Power purchase-BRPL ..................................................................................................................... 24
3.3.1 Power purchase quantum ....................................................................................................... 24
3.3.2 Allocation of Power from Central & State Generating Stations ............................................. 25
3.4 ANNUAL FIXED COST(AFC) ....................................................................................................... 27
3.5 Capital Cost ..................................................................................................................................... 30
3.6 Additional Capitalisation. ................................................................................................................ 31
CHAPTER-4 RESULTS & DISCUSSION ...................................................................................................... 34
4.1- Feroze Gandhi Unchahar Thermal Power Station Stage-I (420 MW)............................................... 34
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4.2 Feroze Gandhi Unchahar Thermal Power Station Stage-II (420 MW) .............................................. 37
4.3 Feroze Gandhi Unchahar Thermal Power Station, Stage-III (210 MW) .............................................. 43
4.4 Badarpur Thermal Power Station (705 MW) ................................................................................... 48
4.5 National Capital Thermal Power Station Dadri, Stage-I (840 MW).................................................. 56
4.6 Anta Gas Power Station (419.33 MW) .............................................................................................. 60
4.7 Kahalgaon Super Thermal Power Station Stage-I (840 MW) ............................................................ 67
4.8 Simhadri Thermal Power Station, Stage-I (2 x 500 MW) ................................................................... 72
4.9 Kahalgaon Super Thermal Power Station Stage-II (3X500 MW)........................................................ 76
4.10 Farakka Super Thermal Power Station (1600 MW) ........................................................................ 81
4.11 Singrauli Super Thermal Power Station (2000 MW) ....................................................................... 88
CHAPTER-5 Conclusion....................................................................................................................... 94
5.1 Conclusion ...................................................................................................................................... 94
5.2 Limitations of the Project ................................................................................................................. 95
REFERENCES...................................................................................................................................... 97
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CHAPTER-1
INTRODUCTION
1.1 History of Electricity in Delhi
The history of electricity in Delhi dates back to 1905 when M/s John Fleming Company was
awarded the license as per Indian Electricity Act, 1903, for generation and Distribution of power
in Delhi. Electricity those days was a luxury and the privilege of the high ranking British
officials and a few rich people. It was a rare and costly commodity with a perception of being
dangerous. In fact, even rich Indian accepted this at a much later stage. M/s John Fleming
Company was replaced by the Delhi Tramway and Lighting Company, which was subsequently
renamed as Delhi Electricity Supply & Traction Company. In 1939, The Delhi Central Electric
Power Authority (DCEPA) was formed to run the services. In 1951, the DCEPA was taken over
by the Delhi State Electricity Board, constituted under Indian Electricity (Supply) Act 1948. In
1958, Delhi Electricity Supply Undertaking came into existence and was once again converted to
Delhi Vidyut Board in 1997. In July 2002, Delhi Vidyut Board unbundled into five Successor
entities – the three distribution companies, a transmission and a holding Company. Two of the
three distribution companies have been handed over to BSES, and third to TATA POWER.
1.2 Chronology of the Delhi Privatization
February 1999
Delhi Government issues strategy paper outlining its intention to unbundled DVB, creates an
independent regulatory entity, and privatizes distribution while protecting employee interests.
May 1999
DERC established, it was initially created under an act of the Central Government and then later
notified under the state reform act.
October 2000
Delhi Electricity Reform Act formalized. In March 2001, the ordinance was given a stronger
legal foundation through conversion into an act. Tri-partite agreement between DVB, its
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employees and the Delhi government, that protects the employment and pension rights of the
employees.
February 2001
Privatization process began with the Request for Qualification.
November 2001
Delhi Government issues Request for Proposals, issues a Policy Directive and announces the
transfer scheme.
February 2002
DERC issues an order that specifies opening loss levels and the initial Bulk Supply Tariff for
purchases made by the Discom from the Transco.
April 2002
Bids were received. The Cabinet of the Delhi government considers the bids to be unacceptable
“in present form” and creates a “Core Committee to explore alternatives including negotiation.
June 2002
Privatizations documents were signed with BSES and Tata.
July 2002
Date of privatization. June 2003 DERC issues first post-privatization tariff order.
1.3 BSES’s Customer Profile
Category
Domestic
1,465,561
Non-Domestic
244071
Industrial
12694
Agriculture
4259
Railway Traction
1
DMRC
6
Others
6396
Total
1,733,005
Table 1.1: Shows Consumer Profile of BSES Group (Delhi Division)
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1.4 Problem Statement
1. The Annual Fixed cost is a very significant part in the power purchase cost of a distribution
company. So it is essential to analyze the Annual Fixed Cost of the Generating Company from
which
the
distribution
company
is
purchasing
power.
2. To optimize the annual fixed cost is necessary to optimize the capital cost. So its important to
understand the framework under which the Additional Capitalization is accepted or rejected.
3. The average power purchase cost of Delhi discoms has been increasing each year due to
escalation in fuel prices resulting in increase in the Average Revenue Requirement of the
discoms
1.5 Objectives of Project
1. To understand and perceive the concept of Annual Fixed cost of a generation station and its
various components.
2. To understand the proceedings of regulatory department in respect of processing of ARR
filings, True up filing and other related aspects of the commission.
3. To study the framework in which the Additional Capitalization is admitted or Rejected.
1.6 Organization Profile
1.6.1 About BSES Group
BSES is the leading private sector power utility company in the country. BSES Limited is India's
premier utility engaged in the distribution of electricity. Formerly, known as Bombay Suburban
Electric Supply Limited, it was incorporated on 1st October 1929, for the distribution of
electricity in the suburbs of Mumbai, with a pioneering mission to make available
uninterrupted, reliable, and quality power to customers and provide value added services for
the development of the power and infrastructure sectors.
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1. BSES’s total consumer base is over 5 million covering substantial areas of Delhi, Goa, Orissa
and Mumbai.
2. Distribution area spans about 1.24 lakh sq. km covering an estimated population of 45 million.
3. Nearly 16,000 million units of electricity billed to industrial, commercial and residential
consumers with distribution capacity of nearly 6,000 MW.
With 7 decades in the field of power distribution, the Electricity Supply Division of BSES has
achieved the distinction of operating its distribution network with 99.98% on-line reliability and
has a distribution loss of only 11.6%. BSES is amongst the first utilities in India to adopt
computerization in 1967 to meet the increasing workload. With a view to optimally utilize
trained manpower and expertise in the field of power, the company commenced contracting
activities in 1966 by undertaking turnkey electrical contracts, thermal, hydro and gas turbine
installations and commissioning contracts, transmission line projects etc. BSES set up its own
500 MW Thermal Power Plant and the first 2 x 250 MW units of Dahanu Power Station were
synchronized and began commercial operation during 1995- 1996. A dedicated 220 kV double
circuit transmission line network with three 220 /33kV receiving stations have been installed to
evacuate the power to the distribution area of the Company. BSES through international
competitive bidding acquired an equity stake of 51% in three of the four Distribution Companies
of Orissa.
1.6.2 BSES Delhi
Following the privatization of Delhi’s power sector and unbundling of the Delhi Vidyut Board in
July 2002, the business of power distribution was transferred to BSES Yamuna Power Limited
(BYPL) and BSES Rajdhani Power Limited (BRPL). These two of the three successor entities
distribute electricity to 28.34 lakh customers in two thirds of Delhi. The Company acquired
assets, liabilities, proceedings and personnel of the Delhi Vidyut Board as per the terms and
conditions contained in the Transfer Scheme.
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1.6.2.1 BSES Yamuna Power Limited (BYPL)
BYPL distributes power to an area spread over 200 sq. kms with a population density of
5953per sq. km. Its 11.9lakh customers are spread over 14 districts across Central & East are as
including Chandni Chowk, Daryaganj, Paharganj, Shankar Road, Patel Nagar, G T Road,
Karkardooma, Krishna Nagar, Laxmi Nagar, Mayur Vihar, Yamuna Vihar, Nand Nagri and
Karawal Nagar. From a high of 63.1 % AT&C losses in BYPL area the losses have come down
to 19.8% a record reduction around 43.3%.
1.6.2.2 BSES Rajdhani Power Limited (BRPL)
BRPL distributes power to an area spread over 750 sq. km with a population density of 2192 per
sq. km. It’s over 16.44 lakh customers are spread over 19 districts across South and West areas
including Alaknanda, Khanpur, Vasant Kunj, Saket, Nehru Place, Nizamuddin, Sarita Vihar,
Hauz Khas, R.K. Puram, Janakpuri, Najafgarh, Nangloi, Mundka, Punjabi Bagh, Tagore Garden,
Vikas Puri, Palam and Dwarka. Since taking over distribution, BSES‟ singular mission has been
to provide reliable and quality electricity supply. BSES has invested over Rs 4500 crore on
upgrading and augmenting the infrastructure which has resulted in a record reduction of AT&C
losses. In BRPL area AT&C losses have been reduced from 51.2% to 16.8% a reduction of
34.4%.
1.6.2.2.1 Business of the Organization: Delhi Supply Division
 Caters to an area of 950 sq. kms
 Supply Area covers South Delhi, East Delhi, West Delhi and Central Delhi.
 Consumers include houses, residential complexes, high rise buildings, commercial Complex
medium and large industrial houses, government establishment like Airport, Worship
places,Milk Dairy, Mother Dairy and Municipal Hospitals, Sewerage projects etc.
 Caters to more than 28 lakh consumers.
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 Provides highly reliable and continuous supply
1.6.2.2.2 Classification of Supply
The Various categories of consumers served by BSES Rajdhani are as follows:1. Domestic connection
2. Non Domestic Low Tension
3. Mix Load High Tension
4. Small Industrial Power (SIP)
5. Large Industrial Power (LIP)
6. Agriculture Connection
7. Street Lighting & Signals
8. Delhi Airport Authority India Ltd (DAIL)
9. Delhi Metro Rail Corporation Ltd (DMRC)
10. Delhi Jal Board (DJB)
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Figure 1.1: Delhi Distribution area divided between 3 Distribution companies
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CHAPTER-2
LITERATURE SURVEY, POLICIES & RESEARCH
METHODOLOGY
2.1 Literature Review
2.1.1 Policies & Regulation
Electricity Act, 2003 confers the power of Policies & Regulation formulation in hands of
regulatory commissions. CERC (Central Electricity Regulatory Commissions) does the same for
central agencies and SERCs (State Electricity Regulatory Commissions) is for entities under
respective state government.
2.1.1.1 MYT Mechanism
Statutory framework
Section 61 of EA 2003 requires the Appropriate Commission to be guided by MYT Principles
while specifying the Terms and Conditions for determination of tariff.
Clause 5.3 (h) of the Tariff Policy stipulates that:
1. “The MYT framework is to be adopted for any tariffs to be determined from April 1, 2006.
The framework should feature a five-year control period. The initial control period may however
be of 3-year duration for transmission and distribution if deemed necessary by the Regulatory
Commission on account of data uncertainties and other practical considerations. In cases of lack
of reliable data, the Appropriate Commission may state assumptions in MYT for first control
period and a fresh control period may be started as and when more reliable data becomes
available
2. In cases where operations have been much below the norms for many previous years the initial
starting point in determining the revenue requirement and the improvement trajectories should be
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recognized at “relaxed” levels and not the “desired” levels. Suitable benchmarking studies may
be conducted to establish the “desired” performance standards. Separate studies may be required
for each utility to assess the capital expenditure necessary to meet the minimum service
standards.
3. Once the revenue requirements are established at the beginning of the control period, the
Regulatory Commission should focus on regulation of outputs and not the input cost elements.
At
the end of the control period, a comprehensive review of performance may be undertaken
4. Uncontrollable costs should be recovered speedily to ensure that future consumers are not
burdened with past costs. Uncontrollable costs would include (but not limited to) fuel costs, costs
on account of inflation, taxes and cess, variations in power purchase unit costs including on
account of hydro-thermal mix in case of adverse natural events.”
Some states have notified MYT Regulations, and many have also issued MYT Orders, namely
Maharashtra,
Delhi,
Andhra
Pradesh,
and
West
Bengal.
Principles & Objectives of MYT
The Commission through these Tariff Regulations aims to meet the following objectives:
(a) Continue and improve upon the existing incentivisation framework to reward performance
and promote efficiency.
(b) Provide regulatory certainty to the investors and consumers by promoting transparency,
consistency and predictability of regulatory approaches.
(c) Ensure financial viability of the sector to attract investments & safeguard consumer’s interest.
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(d)
Develop
equitable
risk
sharing
mechanism
between
utility
and
consumers.
Power Purchase cost
This section reviews the legal framework existing , along with the various provisions
of the EA 2003 to understand the legal boundaries within which the regulations would need to be
developed on purchasing cost.
2.1.1.2 According to the Electricity Act 2003
Section 62. (Determination of tariff): The Appropriate Commission shall determine the tariff for
(a) Supply of electricity from a generating company to a distribution licensee
(b) Transmission of electricity
(c) wheeling of electricity
(d) Retail Sale of electricity
2.1.1.3 According to the Tariff Policy
Tariff policy lays down following framework for performance based cost of service regulation in
respect of aspects common to generation, transmission as well as distribution. These shall not
apply to competitively bid projects as referred to in para 6.1 and para 7.1 (6). Sector specific
aspects are dealt with in subsequent sections.
(a) Return on Investment
Balance needs to be maintained between the interests of consumers and the need for investments
while laying down rate of return. Return should attract investments at par with, if not in
preference to, other sectors so that the electricity sector is able to create adequate capacity. The
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rate of return should be such that it allows generation of reasonable surplus for growth of the
sector.
(b) Equity Norms
For financing of future capital cost of projects, a Debt : Equity ratio of 70:30 should be adopted.
Promoters would be free to have higher quantum of equity investments. The equity in excess of
this norm should be treated as loans advanced at the weighted average rate of interest and for a
weighted average tenor of the long term debt component of the project after ascertaining the
reasonableness of the interest rates and taking into account the effect of debt restructuring done,
if any. In case of equity below the normative level, the actual equity would be used for
determination of Return on Equity in tariff computations.
(c) Depreciation
The Central Commission may notify the rates of depreciation in respect of generation and
ransmission assets. The depreciation rates so notified would also be applicable for distribution
ith appropriate modification as may be evolved by the Forum of Regulators. The rates of
depreciation so notified would be applicable for the purpose of tariffs as well as accounting.
There should be no need for any advance against depreciation
(d) Cost of Debt
Structuring of debt, including its tenure, with a view to reducing the tariff should be encouraged.
Savings in costs on account of subsequent restructuring of debt should be suitably incentivised
by the Regulatory Commissions keeping in view the interests of the consumers .
(e) Cost of Management of Foreign Exchange Risk
Foreign exchange variation risk shall not be a pass through. Appropriate costs of hedging and
swapping to take care of foreign exchange variations should be allowed for debt obtained in
foreign currencies. This provision would be relevant only for the projects where tariff has not
been determined on the basis of competitive bids.
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For Generation Tariff:
Tariff structuring and associated issues
(1) A two-part tariff structure should be adopted for all long term contracts to facilitate Merit
Order dispatch. According to National Electricity Policy, the Availability Based Tariff (ABT) is
to be introduced at State level by April 2006. This framework would be extended to generating
stations (including grid connected captive plants of capacities as determined by the SERC). The
Appropriate Commission may also introduce differential rates of fixed charges for peak and off
peak hours for better management of load.
(2) Power Purchase Agreement should ensure adequate and bankable payment security
arrangements to the Generating companies. In case of persisting default in spite of the available
payment security mechanisms like letter of credit, escrow of cash flows etc. the generating
companies may sell to other buyers.
2.2 Research Methodology:
Study of
Regulations
of CERC
Study of NTPC
Electricity
Bills
Annual Fixed
Cost
Modelling of
Power Plants
Study of Tariff
order of NTPC
plants
Figure 2.1: Research Methodology followed
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Analysis of
Fixed cost of
NTPC Plants
Study of
Methodology
of CERC wrt
ADD-CAP
CHAPTER-3
MYT MODEL & ANNUAL FIXED COST
3.1 MYT Model for Distribution Licensee:
Uncontrollable & Controllable parameter
Regulatory Commission has segregated the costs and performance elements into controllable and
uncontrollable based on the ability of the licensee to manage each of them.
Uncontrollable Parameters
Those parameters which are beyond the control of utility, following are some of the
uncontrollable factors
(a) Power purchase expenses due to increase in fuel costs and change in sales quantum.
(b) Sales quantum & sales mix.
(c) Interest expense on long term loan & working capital
(d) Increase in expenses due to force majeure such as fire, war, natural calamities, etc.
Targets for Controllable Parameters
The Commission shall set targets for each year of the Control Period for the parameters that are
deemed to be “controllable” and which include
(a) AT&C Loss, which shall be measured as the difference between the units input into the
distribution system and the units realized (units billed and collected) wherein the units realized
shall be equal to the product of units billed and collection efficiency.
(b) Distribution losses, which shall be measured as the difference between total energy input for
sale to all its consumers and sum of the total energy billed in its License area in the same year.
(c) Collection efficiency, which shall be measured as ratio of total revenue realized to the total
revenue billed for the same year.
(d) Operation and Maintenance Expenditure which includes employee expenses, repairs and
maintenance expenses, administration and general expenses and other miscellaneous expenses
viz.
audit
fees,
rents,
(e) Return on Capital Employed.
(f) Depreciation.
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legal
fees
et
(g) Quality of Supply.
Operation & Maintenance Expenses (O&M) expenses comprise of costs incurred on a day to
day basis in order to run the business efficiently. These costs include:
Employee Cost
Employee cost shall be computed as per the approved norm escalated by consumer price index
(CPI), adjusted by provisions for expenses beyond the control of the Distribution Licensee and
one time expected expenses, such as recovery/adjustment of terminal benefits, implications of
pay commission, arrears and Interim Relief, governed by the following formula:
EMPn = (EMPb * CPI inflation) + Provision
Where:
EMPn: Employee expense for the year n
EMPb: Employee expense as per the norm
CPI inflation: is the average increase in the Consumer Price Index (CPI) for immediately
preceding three years.
Provision: Provision for expenses beyond control of the Distribution Licensee and expected onetime expenses as specified above
Repairs and Maintenance Expense
Repairs and Maintenance expense shall be calculated as percentage (as per the norm defined) of
Opening Gross Fixed Assets for the year governed by following formula:
R&Mn = Kb* GFAn
Where:
R&Mn: Repairs & Maintenance expense for nth year
GFAn: Opening Gross Fixed Assets for nth year
Kb: Percentage point as per the norm
Administrative and General Expense
A&G expense shall be computed as per the norm escalated by wholesale price index (WPI) and
adjusted by provisions for confirmed initiatives (IT etc. initiatives as proposed by the
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Distribution Licensee and validated by the Commission) or other expected one-time expenses,
and shall be governed by following formula:
A&Gn = (A&Gb * WPI inflation) + Provision
A&Gn: A&G expense for the year n
A&Gb: A&G expense as per the norm
WPI inflation: is the average increase in the Wholesale Price Index (WPI) for immediately
preceding three years
Provision: Cost for initiatives or other one-time expenses as proposed by the Distribution
Licensee and validated by the Commission.
Mechanism for sharing of gains or losses on account of controllable factors
The approved aggregate gain to the Distribution Licensee on account of controllable factor of
aggregate technical and commercial (AT&C) losses shall be dealt with in the following manner:
a. One-third of the amount of such gain shall be passed on as a rebate in tariff over such period
as may be stipulated in the Order of the Commission.
b. The balance amount, which will amount to two-third of such gain, may be utilized at the
discretion of the Distribution Licensee.
The approved aggregate loss to the Distribution Licensee on account of controllable factor of
aggregate technical and commercial (AT&C) losses shall be dealt with in the following manner:
a. Two-thirds of the amount of such loss may be passed on as an additional charge in tariff over
such period as may be stipulated in the Order of the Commission.
b. The balance amount of loss shall be absorbed by the Distribution Licensee.
The gain or loss on account of other controllable factors, unless otherwise specifically provided
by the Commission shall be to the account of the Distribution Licensee.
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Annual Truing-up mechanism
The Commission shall review variations in approved values of uncontrollable parameters
through an annual truing up mechanism while there shall be no adjustment for variations in
controllable items. Annual truing-up shall be carried out for variations due to sales and power
purchase costs.
Return
The principle for providing return to the transmission and distribution licensee has been based on
the principle of Return on Capital Employed (RoCE) on a regulated rate base, with the weighted
average cost of capital to be determined independently for each year of the Control Period. In
case of generating companies, the principle for providing return has been based on the Return on
Equity.
Sales forecast
a. The Commission based on the Licensee’s filings, shall examine the forecasts for
reasonableness and consistency, and shall approve the sales forecast for each year of the Control
Period.
b. Sales shall be treated as uncontrollable. The open access transactions shall not form part of
sales. Power purchase quantum and cost for any Financial Year shall be computed on the basis of
AT&C loss targets and the estimated sales.
Capital Investment - The Commission shall approve capital investment plan of the Licensees
for the Control Period commensurate with load growth, distribution loss reduction and quality
improvement proposed in the Business Plan. The investment plan shall also include
corresponding capitalization schedule and financing plan.
Quality of Supply and Customer Service - The quality of supply and the customer service
parameters shall be monitored as per the norms to be prescribed by the Commission separately
from time to time.
a) Voltage fluctuations: Licensee shall maintain voltages at the point of commencement of the
supply to a consumer within the limits stipulated by the commission.
18
b) Meter complaints : The licensee shall perform the following meter related activities subject
to the provisions provided in the Supply Code and other associated regulations and codes
specified by the commission.
Other parameters of quality of supply should be followed as per the instruction by the
commission.
Some of the parameters are listed below:1. Operation of call center
2. Restoration of supply
3. Shifting of meters/service lines
4. New connections/additional load
5. Transfer of ownership and change of category
6. Temporary supply of power
7. Consumer bills complaint
8. Disconnection of supply
9. Reconnection of supply following disconnection due to non-payment of bills
10. Street Light faults
Reliability Indices
The Commission shall impose a uniform system of recording and reporting of distribution
system reliability performance. The same reliability indices shall be imposed on all licensees
under that commission. The performance target levels set by the Commission shall be unique to
each licensee to be based initially on the historical performance of licensee.
The licensee shall compute the following distribution reliability indices:-
(a) System Average Interruption Frequency Index (SAIFI) is the average number of sustained
interruptions per consumer during the year. It is the ratio of the annual number of interruptions to
the number of consumers.
SAIFI = Total number of sustained interruptions in a year / Total number of consumers
19
(b) System Average Interruption Duration Index (SAIDI is the average duration of interruptions
per consumers during the year. It is the ratio of the annual duration of interruptions (sustained) to
the number of consumers. If duration is specified in minutes,
SAIDI is given as consumer minutes.
SAIDI = Total duration of sustained interruptions in a year / Total number of consumers
(c) Momentary Average Interruption Frequency Index (MAIFI) is the average number of
momentary (less than 5 minutes) interruptions per consumer during the year. It is the ratio of the
annual number of momentary interruptions to the number of consumers.
MAIFI = Total number of momentary interruptions in a year / Total number of consumers
Contingency Reserve
The Commission has also created a Contingency Reserve (CR) for each licensee at the start of
the Control Period for minimizing the impact of uncontrollable factors on retail tariffs and
ensures tariff stability across the Control Period.
Income Tax
Income Tax, if any, on the Licensed business of the Distribution Licensee shall be treated as
expense and shall be recoverable from consumers through tariff. However, tax on any income
other than that through its Licensed business shall not be a pass through, and it shall be payable
by the Distribution Licensee itself.
The income tax actually payable or paid shall be included in the ARR. The actual assessment of
income tax should take into account benefits of tax holiday, and the credit for carry forward
losses applicable as per the provisions of the IT Act 1961 shall be passed on to the consumers.
Non-Tariff Income
All incomes being incidental to electricity business and derived by the Licensee from sources,
including but not limited to profit derived from disposal of assets, rents, delayed payment
surcharge, meter rent (if any), income from investments other than contingency reserves,
miscellaneous receipts from the consumers and income to Licensed business from the Other
Business of the Distribution Licensee shall constitute Non-Tariff Income of the Licensee.
20
3.1.1 ATE’s directive to SERCs for timely tariff determination
The Appellate Tribunal for Electricity (ATE) issued a judgment in its order dated 11 November
2011 and in its judgment has directed all SERCs to initiate suo-moto proceedings for tariff
determination in case of delays by the utilities in filing their tariff petitions. The key features of
ATE’s directive are mentioned below:
1. It should be the endeavor of every State Commission to ensure that the tariff for the financial
year is decided before 1st April of the tariff year, for which tariff petition should be filed by the
end of November of the previous year. Truing-up should also be an annual exercise.
2. In the event of any delay in filing the ARR, truing-up and Annual Performance Review, one
month beyond the scheduled date of submission of the petition, the State Commission must
initiate suo-moto proceedings for tariff determination.
3. The recovery of the Regulatory Asset (RA) should be time-bound and within a period not
exceeding three years at the most and preferably within the control period. The carrying cost of
the RA should be allowed to the utilities in the ARR of the year in which the RA are created to
avoid the problem of cash flow to the distribution licensee.
4. Fuel and Power Purchase cost is a major expense of the distribution company, which is
uncontrollable. The Fuel and Power Purchase cost adjustment should preferably be on a monthly
basis but in no case exceed a quarter. Any State Commission that does not already have such a
formula/mechanism in place must put in place such a formula/ mechanism within 6 months of
the date of this order.
This is a very positive development on the regulatory front for the power distribution sector.
However, the impact of this judgment by ATE on the financial position of the utilities will hinge
upon its implementation by SERCs in an independent manner without any kind of influence from
the state government/utility.
3.2 Power Purchase cost
The power purchase cost for a Distribution licensee like BRPL, BYPL and TPDDL consist of
two components.
1. The Annual Fixed Charge
21
2. The Variable Charge
3.2.1 Fixed Charge-The annual fixed charge also called as Capacity Charge are charged for the
recovery of annual fixed cost of that generation company (E.g. NTPC) from which the discom is
purchasing power. This annual fixed charge is recovered from the discom in the proportion of the
share
of
power
purchased
by
it.
The Annual fixed charge of a generation company depends on its Annual Fixed cost (AFC).The
Annual Fixed Cost or fixed cost is calculated on annual basis and are recovered from the discoms
on monthly basis.
The Capacity charge payable to the generating company by a discom is calculated on the basis of
formulae which is given in the Regulation 21 and 22 of the CERC Terms and conditions of tariff
regulation
2009-14.
(a) For Thermal Generation station(Regulation 21)
(i) Generating stations in commercial operation for less than ten (10) years on 1st April of the
financial year:
AFC x ( NDM / NDY ) x ( 0.5 + 0.5 x PAFM / NAPAF ) (in Rupees)
Provided that in case the plant availability factor achieved during a financial year (PAFY) is less
than 70%, the total capacity charge for the year shall be restricted to:
AFC x ( 0.5 + 35 / NAPAF ) x ( PAFY / 70 ) (in Rupees).
(ii) For generating stations in commercial operation for ten (10) years or more on 1st April of
the year:
AFC x ( NDM / NDY ) x ( PAFM / NAPAF ) (in Rupees).
Where,
AFC = Annual fixed cost specified for the year, in Rupees.
NAPAF = Normative annual plant availability factor in percentage
NDM = Number of days in the month
NDY = Number of days in the year
22
PAFM = Plant availability factor achieved during the month, in percent:
PAFY = Plant availability factor achieved during the year, in percent
(b) For Hydro Generation Station(Regulation 22)
The formulae for calculating the Capacity Charge payable to the Generating Station for a month
is given as :
AFC
x
0.5
x
NDM
/
NDY
x
(
PAFM
/
NAPAF
)
(in
Rupees)
3.2.2 The Variable Charge- The variable charge is charged by the generation station for the
recovery of the cost of primary fuel and the limestone (where applicable) from the discom who
areitsbeneficiaries.
The Variable charge or the energy charge is recovered on the basis of number of units (ex-bus)
scheduled
for
the
beneficiary
during
a
month.
The total Energy charge payable to the Generating company is given by:
Energy charge rate in Rs./kWh x Scheduled energy (ex-bus) for the month in kWh.
The energy charge rate (Rs/kwh) for a generating station is calculated by the formulae which is
given in the Regulation 21 and 22 of the CERC Terms and conditions of tariff regulation 200914.
(a)
For
coal
based
and
lignite
fired
stations:
ECR = { (GHR – SFC x CVSF) x LPPF / CVPF + LC x LPL } x 100 / (100 – AUX)
(b) For gas and liquid fuel based stations:
ECR = GHR x LPPF x 100 / {CVPF x (100 – AUX) }
Where
AUX = Normative auxiliary energy consumption in percentage.
CVPF = Gross calorific value of primary fuel as fired, in kCal per kg, per litre or per standard
cubic metre, as applicable.
CVSF = Calorific value of secondary fuel, in kCal per ml.
23
ECR = Energy charge rate, in Rupees per kWh sent out.
GHR = Gross station heat rate, in kCal per kWh.
LC = Normative limestone consumption in kg per kWh.
LPL = Weighted average landed price of limestone in Rupees per kg.
LPPF = Weighted average landed price of primary fuel, in Rupees per kg, per litre or per
standard cubic metre, as applicable, during the month.
SFC = Specific fuel oil consumption, in ml per kWh.
(c) For Hydro Generating stations
For a hydro generating station the energy charge payable will be given by the formulae given in
the regulation 22 as :
(Energy charge rate in Rs. / kWh) x {Scheduled energy (ex-bus) for the month in kWh} x
(100 – FEHS) / 100.
The energy charge rate for a hydro generating station will be given by the formulae given in
regulation 22
ECR = AFC x 0.5 x 10 / { DE x ( 100 – AUX ) x ( 100 – FEHS )}
Where
DE = Annual design energy specified for the hydro generating station
FEHS = Free energy for home State
So the total power purchase cost for a distribution company is equal to the sum of the Capacity
Charge and the Variable charge.
Power Purchase cost=Capacity Charge + Variable Charge
3.3 Power purchase-BRPL
BRPL receives its energy share mainly through long term PPA’s with Central Generating
Stations & State Generating Stations.
3.3.1 Power purchase quantum
The energy requirement for BRPL is being tabulated below in table no. 3.1
24
SOURCE:ARR Petition by BRPL F.Y. 2011-12
Based on projected sales & distribution loss , the quantum of power purchase has been estimated
considering the availability from generating stations within Delhi, Central generating Stations,
new plants to be commissioned , existing short term & bilateral arrangements.
3.3.2 Allocation of Power from Central & State Generating Stations
The actual quantum purchased by BRPL to meet energy requirement during FY2011-12
including short term purchases and sales is given below in Table 3.2
BRPL’s Share & Quantum from NTPC stations
25
SOURCE:ARR Petition by BRPL F.Y. 201112
3.3.3 BRPL’s Share & Quantum from NTPC stations in figure 3.1
ANTA GAS, 4.58
TALCHER, 0
AURAIYA
GAS, 4.73
DADRI-TPSII, 32.69
KAHALGAONII, 4.57
UNCHAHARIII, 6.02
UNCHAHARII, 4.88
UNCHAHARI,SINGRAULI,
2.49
3.2
BTPS, 33.37
DADRI
GAS, 4.78
FARAKKA, 0.61
KAHALGAONI, 2.65
NCPP, 33.18
7 RIHAND-I, 4.36
RIHAND-II, 5.49
SOURCE:ARR Petition by BRPL F.Y. 2011-12
26
3.4 ANNUAL FIXED COST(AFC)
The annual fixed cost of a generating station is the sum of seven different cost namely Return on
equity, Depreciation, Interest on loan, interest on working capital, operation and maintenance
expenses,
cost
of secondary fuel oil and
special
allowance
in
lieu
of R&M.
The AFC consist of following components
(a) Return on equity
(b) Interest on loan capital;
(c) Depreciation;
(d) Interest on working capital;
(e) Operation and maintenance expenses;
(f) Cost of secondary fuel oil (for coal-based and lignite fired generating stations only);
(g) Special allowance in lieu of R&M or separate compensation allowance, wherever applicable.
(a)Return on Equity
Return on Equity(ROE) is computed in the rupee terms on the equity base which is determined
On the basis of regulation 12.It is calculated on the pre-tax basis.Also if in the case of projects
commissioned on or after 1st April, 2009, an additional return of 0.5% shall be allowed if such
projects
are
completed
within
the
timeline.
Rate of return on equity shall be rounded off to three decimal points and be computed as per the
formula given in the regulation 15(4):
Rate of pre-tax return on equity = Base rate / (1-t)
Where t is the applicable tax rate.
(b) Interest on loan capital
For a project declared under commercial operation on or after 1.4.2009, if the equity actually
deployed is more than 30% of the capital cost, equity in excess of 30% shall be treated as
normative
loan.
27
The normative loan outstanding as on 1.4.2009 shall be worked out by deducting the cumulative
repayment as admitted by the Commission up to 31.3.2009 from the gross normative loan.
The repayment for the year of the tariff period 2009-14 shall be deemed to be equal to the
depreciation allowed for that year.
The interest on loan shall be calculated on the normative average loan of the year by applying the
weighted average rate of interest.
According to the tariff regulation 2009-14, The generating company or the transmission licensee
shall make every effort to re-finance the loan as long as it results in net savings on interest and in
that event the costs associated with such re-financing shall be borne by the beneficiaries and the
net savings shall be shared between the beneficiaries and the generating company or the
transmission licensee, as the case may be, in the ratio of 2:1.
(c)
Depreciation
Depreciation refers to two aspects of the same concept:
1. the decrease in value of assets (fair value depreciation), and
2. the allocation of the cost of assets to periods in which the assets are used.
As given in the tariff regulation 2009-14 The value base for the purpose of depreciation shall be
the
capital
cost
of
the
asset
admitted
by
the
Commission.
It is also given that the salvage value of the asset shall be considered as 10% and depreciation
shall be allowed up to maximum of 90% of the capital cost of the asset.
For the hydro generating stations, the salvage value shall be as provided in the agreement signed
by the developers with the State Government for creation of the site.Also for the hydro
generating station Land other than the land held under lease and the land for reservoir in case of
hydro generating station shall not be a depreciable asset and its cost shall be excluded from the
capital cost while computing depreciable value of the asset.
The
depreciation
amount
shall
be
calculated
by
the
straight
line
method.
It is important to note that, the remaining depreciable value as on 31st March of the year closing
after a period of 12 years from date of commercial operation shall be spread over the balance
useful
life
of
28
the
assets.
(d)
Interest
on
Working
Capital.
The interest on the working capital is based on the amount of the working capital required by the
generating station.The various components of the working capital for different power plants are
given in the tariff regulation 2009-14.
(1) For a Coal-based/lignite-fired thermal generating stations the various component of the
working capital are as follows:
(i) Cost of coal or lignite and limestone, if applicable, for 1½ months for pithead generating
stations and two months for non-pit-head generating stations, for generation corresponding to the
normative annual plant availability factor;
(ii) Cost of secondary fuel oil for two months for generation corresponding to the normative
annual plant availability factor, and in case of use of more than one secondary fuel oil, cost of
fuel oil stock for the main secondary fuel oil.
(iii) Maintenance spares @ 20% of operation and maintenance expenses specified in regulation
19.
(iv) Receivables equivalent to two months of capacity charges and energy charges for sale of
electricity calculated on the normative annual plant availability factor.
(v) Operation and maintenance expenses for one month.
(2) Open-cycle Gas Turbine/Combined Cycle thermal generating stations the various component
of the working capital are as follows:
(i) Fuel cost for one month corresponding to the normative annual plant availability
factor, duly taking into account mode of operation of the generating station on gas fuel and liquid
fuel;
(ii) Liquid fuel stock for ½ month corresponding to the normative annual plant availability
factor, and in case of use of more than one liquid fuel, cost of main liquid fuel.
(iii)Maintenance spares @ 30% of operation and maintenance expenses specified in regulation
19.
(iv) Receivables equivalent to two months of capacity charge and energy charge for sale of
electricity calculated on normative plant availability factor, duly taking into account mode of
operation of the generating station on gas fuel and liquid fuel,
29
(v) Operation and maintenance expenses for one month
(3) in case of hydro generating station and transmission system.
(i) Receivables equivalent to two months of fixed cost.
(ii) Maintenance spares @ 15% of operation and maintenance expenses specified in regulation
19
(iii) Operation and maintenance expenses for one month.
(e)Operation and Maintenance Expenses
The commission through the tariff regulation 2009-14 has decided the normative operation and
maintenance expenses depending on kind of power generating station and also in some cases
depending
on
the
years
of
operation
of
the
power
plants.
The different operation and maintenance expenses are elaborated in the tariff regulation 2009-14
in the regulation 19.
(f) Expenses on secondary fuel oil consumption for coal-based and lignite-fired generating
station.
According to the tariff regulation 2009-14 the expenses on secondary fuel oil in Rupees will be
computed corresponding to normative secondary fuel oil consumption (SFC) decided by the
commission which are duly specified in clause (iii) of regulation 26, in accordance with the
following formula:
SFC
x
LPSFi
x
NAPAF
x
24
x
NDY
x
IC
x
Where,
SFC – Normative Specific Fuel Oil consumption in ml/kWh
LPSFi – Weighted Average Landed Price of Secondary Fuel in Rs./ml considered initially
NAPAF – Normative Annual Plant Availability Factor in percentage
NDY – Number of days in a year
IC - Installed Capacity in MW.
3.5 Capital Cost
30
10
The capital cost of a generating plant are admitted by the commission after a prudence chec. The
capital cost consist of the following:
(a) The expenditure incurred or projected to be incurred, including interest during construction
and financing charges, any gain or loss on account of foreign exchange risk variation during
construction on the loan.
(b) Capitalized initial spares
(c) Additional capital expenditure
The tariff regulation also specifies that all the assets will be taken in account to calculate the
capital cost
Except
the
assets
which
are
not
in
use.
It also states that the tariff of a generating station will be calculated on the basis of the admitted
capital cost by the commission.
In the case of the thermal power plant and the transmission system the prudence check will be
carried on the basis of the benchmarks norms which are set by the from commission time to time.
Provided further that in cases where benchmark norms have not been specified, prudence check
may include scrutiny of the reasonableness of the capital expenditure, financing plan, interest
during construction, use of efficient technology, cost over-run and time over-run, and such other
matters as may be considered appropriate by the Commission for determination of tariff.
It has also been stated that the capital cost in case of such hydro generating station shall include:
(a) cost of approved rehabilitation and resettlement (R&R) plan of the project in conformity with
National R&R Policy and R&R package as approved; and
(b) cost of the developer’s 10% contribution towards Rajiv Gandhi Grameen Vidyutikaran
Yojana
(RGGVY)
project
in
the
affected
area.
3.6 Additional Capitalisation.
The additional capitalization is the the capital expenditure incurred or projected to be incurred,
after the date of commercial operation of the project.It is admitted by the commission after
prudence check.It is added to the capital cost of the project.
The additional capitalization by a generating station can be claimed citing the regulation 9,
regulation 5, regulation 6.The commission will be does a prudence check on the requirement of
the additional capitalization claimed by the firm and it also can reduce or increase the amount of
31
additional capitalization in its discretion.
(1) The capital expenditure incurred or projected to be incurred, on the following counts within
the original scope of work, after the date of commercial operation and up to the cut-off date
may be admitted by the Commission, subject to prudence check:
(i) Undischarged liabilities
(ii) Works deferred for execution;
(iii) Procurement of initial capital spares within the original scope of work, subject to the
provisions of regulation 8
(iv) Liabilities to meet award of arbitration or for compliance of the order or decree of a court
(v) Change in law
But the details of works included in the original scope of work along with estimates of
expenditure, undischarged liabilities and the works deferred for execution should be submitted to
the commission.
(2) The capital expenditure incurred on the following counts after the cut-off date may, in its
discretion,
be
admitted
by
the
Commission,
subject
to
prudence
check:
(i) Liabilities to meet award of arbitration or for compliance of the order or decree of a Court
(ii)Change in law
(iii) Deferred works relating to ash pond or ash handling system in the original scope of work
(iv) In case of hydro generating stations, any expenditure which has become necessary on
account of damage caused by natural calamities (but not due to flooding of power house
32
attributable to the negligence of the generating company) including due to geological reasons
after adjusting for proceeds from any insurance scheme, and expenditure incurred due to any
additional work which has become necessary for successful and efficient plant operation.
(v) In case of transmission system any additional expenditure on items such as relays, control
and instrumentation, computer system, power line carrier communication, DC batteries,
replacement of switchyard equipment due to increase of fault level, emergency restoration
system, insulators cleaning infrastructure, replacement of damaged equipment not covered by
insurance and any other expenditure which has become necessary for successful and efficient
operation of transmission system
33
CHAPTER-4
RESULTS & DISCUSSION
4.1- Feroze Gandhi Unchahar Thermal Power Station Stage-I (420 MW)
Actual/Projected Additional Capital Expenditure:
The actual/projected additional expenditure claimed by the petitioner is as under;
component
2009-10
2010-11
2011-12
2012-13
2013-14
Net Additional Capital Expenditure claimed
1860
1116
1225
379
0
The cut-off date for the generating station has expired. Hence, the petitioner’s claim for
additional capital expenditure has to be examined in terms of Regulation 9 (2) of the 2009 Tariff
Regulations.
Expenditure on account of change in law -Regulation 9(2)(ii)
1.
Petitioner’s claim
The petitioner has claimed expenditure of `137.00 lakh during 2012-13 for Installation of
Chlorine leak detection system (serial No.15 of the table above) under the CEA approved R&M
scheme on the ground that installation of the same is mandatory.
Commission’s views
Since, the petitioner has not submitted any documentary evidence in justification of its claim, the
capitalization of the expenditure claimed has not been allowed under this head.
2. Petitioner’s claim
The petitioner has also claimed expenditure of `43.00 lakh during 2011-12 towards On line
monitoring of CO2 in flue gas at stack (serial No.18 of the above table) on the ground that CO2
is to be monitored at stack on continuous basis as per revised environmental norms.
Commission’s view
34
The commission found no reference as regards the statutory requirement for installation of
On-line monitoring of CO2 in flue gas at stack. In view of this, the claim of the petitioner for
capitalization
is
not
allowed
under
this
head.
Expenditure on Other than CEA approved schemes
1.
The petitioner has claimed expenditure of `284.00 lakh during 2012-13 towards new fire-fighting
control & detection system (including stacker re-claimer) on the ground that the existing system
has become obsolete and spares of the old system are not available.
Commissionviews
The commission said that capitalization of expenditure not covered under the provisions of
regulation9(2)isnotpermissible.
Moreover, the petitioner can meet expenses in respect of the said capital asset from the
compensation allowance granted to the generating station under Regulation 19(e) of the 2009
TariffRegulation.
2.
The petitioner has claimed expenditure of `925.00 lakh for 2011-12 towards procurement of
Locomotives, as capital addition scheme.
The justification submitted by the petitioner has been considered. The said asset (WDS-4D
locomotive) has become obsolete and has been phased out by Railways and no spare sare
available at railway workshops. Due to non-availability of spares, the petitioner has sought the
replacement of the said locomotive on account of the difficulty in maintaining the same. Also,
the replacement of the old locomotive is necessary as the said asset has a bearing on the coal
handling system of the plant. Moreover, if one locomotive is under repair/out of order, there
would be difficulty in unloading of rakes, consequent upon which there would be reduction in
the availability of the generating station and corresponding loss of generation. Considering the
35
submissions of the petitioner and the factors in totality, we are of the view that the claim of the
petitioner is justified. Hence, the expenditure of `925.00 lakh is allowed to be capitalized under
Regulation 9(2)(vii) of the 2009 Tariff Regulations, along with the corresponding decapitalization of `167.84 lakh (as furnished by the petitioner), which works out to `757.16 lakh
for 2011-12.
Additional Capitalisation Allowed:
2009-10
2010-11
2011-12
2012-13
2013-14
Additional capital expenditure allowed
0
0
757.16
0
0
Liabilities discharged
42.92
12.59
0
0
0
total
42.92
12.59
757.16
0
0
The figure 4.1 shows the additional capital expenditure claimed by the company and the additional
capital expenditure approved by the commission for a particular year:
Add-cap Claimed/Approved
2500
in lakhs
2000
1500
1000
CLAIMED
500
APPROVED
0
2009-102010-112011-122012-132013-14
years
The various components of the annual fixed cost of the Feroze Gandhi Unchahar Thermal Power Station,
Stage-I are as given in the following figure 4.2:
In Lakhs
Annual Fixed Cost For 2009-13
12000
10000
8000
6000
4000
2000
0
Depriciation
Interest on Loan
Return on Equity
Interest on working
Capital
Control Period
36
O&M Expenses
4.2 Feroze Gandhi Unchahar Thermal Power Station Stage-II (420 MW)
Actual / Projected Additional Capital Expenditure during 2009-14
The actual/projected additional expenditure claimed by the petitioner is as under:
COMPONENT
2009-10
2010-11
2011-12
2012-13
2013-14
ADD CAP-EX CLAIMED
358.43
2804
0
0
0
additional capital expenditure is required to be considered in terms of Regulation 9 (2) of the
2009 tariff regulations
Change in law- Regulation 9(2)(ii)
1. Ambient air Quality management System (AAQMS)
The petitioner has claimed an expenditure of `100.09 lakh (`2.40 lakh for room for AAQMS and
`97.69 lakh for AAQMS Package) during 2009-10 under Regulation 9(2)(ii), on the ground that
proper monitoring of ambient air quality around the power plant is a legal requirement of the
station.
Respondent, UPPCL Views
It stated that the capitalization of the said item cannot be permitted since the petitioner has not
indicated any change in law which has taken place due to which the add-cap has taken place.
Petitioner Claim
The petitioner vide its affidavit dated 11.5.2010 has clarified that the said
expenditure is
required in compliance to the terms and conditions of the Environmental Clearance/NOC issued
by
the
Uttar
Pradesh
Pradushan
Nigam
Board
vide
letter
dated
15.7.1996.
Commission’s Views
On perusal of the terms contained in the letter dated 15.7.1996, it is noticed that apart from other
activities, continuous monitoring systems for measuring stack emission and ambient air quality is
also required to be arranged In view of the above, the expenditure for `100.09 lakh is allowed by
the
Commission
under
Regulation
9(2)(ii)
37
of
the
2009
Tariff
Regulations.
2.Liquid Waste Treatment Plant
The petitioner has claimed expenditure of `2233.00 lakh during 2010-11 towards or liquid waste
treatment plant in compliance with the terms and conditions of the Environmental
Clearance/NOC issued by the Uttar Pradesh Pradushan Nigam Board vide letter dated 15.7.1996.
Commission’sViews
It is noticed from the terms contained in the said letter that the effluents from the plant should be
properly treated to conform to Pollution Board's standards, prior to discharge from the plant. In
view of this, the expenditure is found justified and the same is allowed under Regulation 9(2)(ii)
of the 2009 Tariff Regulations.
3.Brick Making Machine
The petitioner has claimed expenditure of `30.00 lakh during 2009-10 under Regulation 9(2)(ii)
of the 2009 Tariff Regulations, towards brick making machine on the ground that the said asset
is required for achieving 100% ash utilization targets as per notifications of the Ministry of
Environment & Forests, Government of India and hence it is proposed to procure.
Respondent, UPPCL views
The respondent, UPPCL in its reply has objected to the capitalization of this expenditure on the
ground that the petitioner has not indicated the 'change-in-law' that has necessitated the sad
expenditure. UPPCL has also submitted that the said expenditure is not covered under
Regulation 9(1) or 9(2) of the 2009 Tariff Regulations and hence the expenditure may not be
allowed.
Commission’sViews
38
The commissions stated that it will not be prudent to load the said expenditure on brick making
machine as additional capital expenditure, when such expenditure is neither covered under
change in law nor the income from fly ash utilization is shared with the beneficiaries.
The petitioner has also claimed expenditure for `60.00 lakh towards atomic absorption
spectrophotometer and `15.00 lakh towards energy audit instrument during 2010-11 under
Regulation 9(2)(ii) of the 2009 Tariff Regulations
These are minor assets in the nature of tools and tackles. Since, the generating station is entitled
for compensation allowance under Regulation 19(e) of the 2009 Tariff Regulations to meet the
expenses
for
minor
assets.This
claim
is
not
allowed
in
ADD-CAP.
Deferred works relating to ash pond or ash handling system in the original
scope of work- Regulation 9(2) (iii)
Petitioner’sclaim
The petitioner has claimed an expenditure of `223.98 lakh (`203.98 lakh for Upstream slope
protection of ash dyke, `20.00 lakh for ash dyke modification) during 2009-10 and `159.00 lakh
(50.00 lakh for ash dyke modification, `47.00 lakh for construction of peripheral drains for ash
dyke and `62.00 lakh for construction of ash corridor road) during 2010-11 as these works are
required for proper storage of ash and maintaining the integrity of the ash pond.
These are normal activities done in phases depending upon the requirement with the passage of
time, during the useful life of the plant and is covered under the original scope of work hence
these are allowed
Expenditure on balance works
1.Sewerage system
Petitioner’sclaim
39
The petitioner has claimed expenditure for `143.00 lakh during 2010-11 towards sewerage
system on the ground that these balance works within the original scope of work are required to
be completed to ensure hygiene condition.
Since deferred works after the cut-off date of the generating station is not permitted to be
capitalized in terms of Regulation 9(2) of the 2009 Tariff Regulations, the expenditure claimed
by the
petitioner
is
not
allowed
by the
commission citing
the
above
reason.
2.Erection, Testing & Commissioning of 11 kV circuit line
The petitioner has claimed expenditure of `1.76 lakh towards erection testing & commissioning
of 11 kV circuit line and `2.60 lakh towards filling of area for 11 kV circuit line during 2009-10
on the ground that these are balance works under original scope of work
Since deferred works after the cut-off date of the generating station is not permitted to be
capitalized in terms of Regulation 9(2) of the 2009 Tariff Regulations, the expenditure claimed
by the petitioner cannot be allowed.
Also, the petitioner has not provided the justification for the said work after 9 to 10 years of the
commercial operation of the generating station and has also not indicated as to how the
generating station had been managed without undertaking the said work.
Petitioner’sclaim
The petitioner has also claimed expenditure of `130.00 lakh towards cup lock for boiler
(scaffolding) and `50.00 lakh towards modern tools for boiler during 2010-11 as 'Special tools'
for successful and efficient operation of the generating station.The petitioner has also submitted
that these T&P equipments are required to reduce equipment downtime through improved
practices,
speed
and
quality
of
repair
and
maintenance
functions.
The petitioner has also claimed expenditure of `14.00 lakh during 2010-11 towards Solar Water
40
heater
on
the
ground
that
the
same
is
required
fo
conserving
energy.
Respondent NDPL views
It has submitted that the petitioner's claim for expenditure may not be allowed in terms of the
last proviso to Regulation 9(2) of the 2009 Tariff Regulations as these assets do not contribute to
the successful and efficient operation of the generating station and are of regular nature occurring
everyyear.
The expenditure on acquiring minor items/assets in nature of tools and tackles after the cut-off
date is not permissible in terms of Regulation 9(2) of the 2009 Tariff Regulations, the claim of
the
petitioner
under
this
head
is
not
allowed
citing
the
reason
above.
Components
2009-10
2010-11
2011-12
2012-13
2013-14
Additional capital expenditure
324.07
2392
0
0
0
8.46
21.49
0
0
0
TOTAL Additional capital expenditure allowed
332.53
2413.49
0
0
0
The figure shows the additional capital expenditure claimed by the company and the additional capital
expenditure approved by the commission for a particular year:
iN LAKHS
ADD-CAP CLAIMED/APPROVED
3000
2500
2000
1500
1000
500
0
CLAIMED
APPROVED
2009-102010-112011-122012-132013-14
CONTROL PERIOD
Stage-II are as given in the following figure:
41
in lakhs
AFC-COMPONENTS FOR 2009-14
12000
10000
8000
6000
4000
2000
0
Depriciation
Interest on Loan
Return on Equity
Interest on working
Capital
Years
42
4.3 Feroze Gandhi Unchahar Thermal Power Station, Stage-III (210 MW)
Actual/Projected Additional Capital Expenditure
The actual/ projected additional capital expenditure claimed by the petitioner for 2009- 14 is as under:
Additional Capital Expenditure
2009-10
2010-11
2011-12
2012-13
2013-14
1031.01
121.53
1186.00
2506.00
0.00
claimed
additional capital expenditure is examined in terms of the provisions of Regulation 9 (2) .
Deferred works relating to Ash pond or Ash handling system in the original scope of
works-Regulation9(2)(iii)
1.
Petitioner’s
Claim
The petitioner has claimed the actual/projected expenditure of `81.77 lakh during 2009-10,
`93.64 lakh during 2010-11 and `62.00 lakh during 2012-13 for works relating to Ash pond, Ash
handling system, Piping system for Ash handling system and for dry ash extraction and
transportation
system
under
Regulation
9(2)(iii)
of
the
2009
Tariff
Regulations.
The works relating to Ash handling and Ash disposal system are a normal practice and the said
works form part of the original scope of work and are normally taken up in stages as and when
required.
Expenditure incurred for implementation of scheme for provision of supply of electricity in
5 km area around Central Power plants
1. Petitioner’s Claim
43
According to the notification dated 27.4.2010 of the Government of India regarding provision of
supply of electricity in 5 km area around Central Power plants, the petitioner is required to create
infrastructure for supply of reliable power to the rural households of the villages within a radius of
5 km of existing and new power stations.The petitioner has submitted that DPR for implementation
of the scheme is under preparation and it was not possible to estimate the projected expenditure at
this stage.
The petitioner is at liberty to approach the Commission through an appropriate application which
would be considered in accordance with law.
Other capital works
1 RCC Paving & CLSM Road
Petitioner’s Claim
The petitioner has claimed actual expenditure of `117.78 lakh during 2009-10 and 16.42 lakh
during 2010-11 for RCC Paving and CLSM Road. By affidavit dated 14.11.2011, the petitioner
has submitted that the work was in original scope and was awarded on 13.9.2006, before the cutoff date, to M/s Jay Dee construction (the agency) and the delay in execution of work was due to
poor mobilization of work by the agency and the said agency had left, without completing the
job and is absconding since March, 2010. Pursuant to this, the reconciliation of material issued
and work done by the agency is done at site for short closure of contract .
Respondent NDPL Views
It has submitted that the claims for capitalization in respect of deferred works, are not covered
under the provisions of Regulation 9(2) of the 2009 Tariff Regulations, except for ash
management systems, and the said deferred works should not be allowed to be capitalized.
Commission’sViews
Since the work was awarded prior to the date of commercial operation and the liability for
payment for such work had been incurred by the petitioner prior to the cut-off date, which was
discharged during the years 2009-10 and 2010-11, the case is covered under Regulation 9
(2)(viii) of the 2009 Tariff Regulations.
44
2. Construction of D-Type quarters
The petitioner has claimed total expenditure of Rs. 100.00 lakh during 2011-12 , Rs.250.00 lakh
during 2012-13 for construction of 'D' Type quarters.
The delay in execution of the work is not attributable to the petitioner. Since mediation and
settlement form part of arbitration process, the capitalisation of the said expenditure during 201112 and 2012-13 is allowed, under Regulation 9(2)(i) of the 2009 Tariff Regulations.
3.Sewerage System in Plant
The petitioner has claimed expenditure of `124.00 lakh during 2011-12 for Sewerage system in
plant
The generating station was taken over by the petitioner during 1992. It is observed that there
were difficulties in the restoration of the sewerage pipe lines in the absence of drawings of
underground facilities. However, there appears to be no justification in the execution of sewerage
system after more than three years after the cut-off date, i.e 31.3.2008. In view of this, the
justification submitted by the petitioner is not acceptable and accordingly, the expenditure of
`124.00 lakh during 2011-12 is not allowed to be capitalized.
4. HP/IP Turbine module
The petitioner has claimed the expenditure of `802.62 lakh during 2009-10, `900.00 lakh during
2011-12, for the supply of Rotors of HP and IP turbines
Respondent UPPCL views
It has submitted that the expenditure proposed to be incurred on initial spares, over and above the
ceiling norms, should not be allowed.
45
The date of commercial operation of the generating station is 1.1.2007 and the petitioner is aware
that all works within the original scope of the project need to be completed within the cut-off
date, in terms of the provisions of the 2004 Tariff Regulations. It is observed that the petitioner
had placed orders for spare rotors only after the commercial operation of the generating
station, and it had full knowledge of the frequent delays on the part of M/s BHEL to supply
the power plant equipments, after the placement of the order. This, according to us,
indicates that the petitioner has not taken appropriate monitoring and project
management measures, to complete all the works of the generating station within the cutoff date. The claim for capitalisation on the ground that orders were placed prior the cut-off date,
but could not be completed due to delays, is not acceptable, considering the fact that no steps
were taken by the petitioner for completion of the said work within the cut-off date. In view of
this,
the
claim
for
capitalisation
of
the
said
expenditure
is
not
allowed.
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
207.1
112.92
162
250
0
310.56
115.56
0
0
0
total
517.66
228.48
162
250
0
iN LAKHS
3000
2500
2000
1500
1000
500
0
Claimed
Allowed
2009-10 2010-11 2011-12 2012-13 2013-14
YEARS
46
Stage-III are as given in the following figure:
IN LAKHS
COMPONENTS OF AFC FOR 09-14
7000
6000
5000
4000
3000
2000
1000
0
Depriciation
Interest on Loan
Return on Equity
Interest on working
Capital
O&M Expenses
YEARS
47
4.4 Badarpur Thermal Power Station (705 MW)
Actual/Projected Additional Capital Expenditure during 2009-14
CEA approved R&M schemes
1.Main Plant Package
In the petition, out of an expenditure of `42705 lakh (including taxes & duties) projected to be
incurred for R&M of main plant package, an expenditure of 1474lakh during 2009-10, 17081
lakh
during
2013-14
and
24150
lakh
during
2014-15
has
been
claimed.
The benefits of R&M would be passed on to the beneficiaries only after completion of R&M of
Main Plant package during the year 2014-15 of the next tariff period, the expenditure of `41231
lakh projected to be incurred for R&M of main plant package could only be considered in the
next tariff period, Similarly, the actual expenditure of `1474 lakh pertaining to R&M of the main
plant package incurred during 2009-10 has also not been allowed by this order.
2.Ambient Air Quality Monitoring system (AAQMS)
The petitioner has claimed an expenditure of `1.11 lakh during 2010-11 towards provision for
Ambient Air Quality Monitoring system (AAQMS) for proper air quality measurement at the
station.
The asset is required for compliance to environmental norms and is statutory in nature the
capitalization of the same is allowed
3.Augmentation of Electro Static Precipitators (ESPs)
The petitioner has claimed expenditure of `3440.00 lakh and `382.00 lakh during the years 201213 and 2013-14 respectively, towards Augmentation of ESPs, which is within the CEA approved
cost of`3823 lakh.
The petitioner has submitted that average emission in Unit-IV is high (around 300-400 mg/Nm3)
compared to the present day emission norms and in Unit-V, the average emission in the range of
48
100-150 mg/Nm3.
As per the latest environmental norms specified in the Air consent given by the Delhi Pollution
Control Committee, CREP action plan and Environmental Pollution (Prevention and Control)
Authority (EPCA), the SPM emission levels are to be less than 50 mg/Nm3
The expenditure for `3822.00 lakh is allowed to be capitalized along with the corresponding decapitalization of `382.20 lakh (10%), subject to demonstration of environmental norms being
achieved.
3.R&M works of 220 kV Switchyard
The petitioner has claimed expenditure of `1000.00 lakh during 2011-12 and 272.00 lakh for
2012-13 (totalling `1272.00 lakh) for R&M works of 220 kV Switchyard which is within the
CEA approved cost of `1294.00 lakh..
This is a continuing work which consists of replacement of Current Transformers (CTs), Circuit
Breakers, Surge Arrestors, distance protection and busbar protection etc.
The total expenditure of `1272 lakh for 2011-13 along with the corresponding de-capitalization
of `127.20 lakh (10%) is allowed.
4.Replacement of existing station lighting fixtures
The petitioner has claimed expenditure of `11.97 lakh for 2009-10, `23.00 lakh for 2011-12 and
`30.03 lakh for 2012-13 (totalling `65.00 lakh) towards the replacement of existing station
lighting fixtures, which is as per the CEA approved cost. The petitioner has submitted that the
existing station area lighting fixtures got damaged due to ageing of the reflectors and the lumens
output of the area has reduced considerably. It has also submitted that the operation and
maintenance of the plant components/equipments gets hampered due to insufficient area lighting
of the plant. Moreover, the LT cables, lighting distribution boards, conduiting, wiring,
switchboards are damaged at most of the locations and some are beyond repair.
49
Since these assets are required for safe and efficient operation of the plant, the expenditure of
`65.00 lakh along with the corresponding de-capitalization of `6.50 lakh (10%) is allowed to be
capitalized
5.Replacement of Goods lift (2 nos)
The petitioner has claimed an amount of `37.04 lakh for 2010-11, `90.00 lakh for 2012-13 and
`10.00 lakh for 2012-13 (totaling `137.04 lakh) for replacement of Goods lift No. 2 and 3 against
the CEA approved cost of `88.00 lakh.
The petitioner has submitted that the goods lift (No.2 and 3) are of ECC make, the car bearing,
structure, load pulley, sheave pulley, counter weight, sling are in damaged condition and due to
obsolescence, spares and maintenance support are also not available from the OEM. The non
availability of goods lift hampers easy and timely movement of the equipment and tools to the
required elevation in steam generator thereby causing delay in maintenance activities.
Since the asset is necessary for safe and efficient operation of the plant, the CEA approved
expenditure of `88.00 lakh along with corresponding de-capitalization of `8.80 lakh (10%) is
allowed.
Supply and Installation of In Line Magnetic Separator (ILMS)
The petitioner has claimed expenditure of `61.02 lakh for 2010-11 and `68.00 lakh for 2011-12,
(totalling `129.02 lakh) against the CEA approved cost of `129.00 lakh for Supply and
Installation of ILMS and suspended magnets in CHP.
In view of the justification submitted the expenditure for `129.02 lakh along with corresponding
decapitalization of `12.90 lakh (10%) is allowed for safe and efficient operation of the plant
50
6.Replacement of on-line instrumentation in Water Treatment Plant (WTP)
The petitioner has claimed an expenditure of Rs 17.32 lakh for 2009-10 for replacement of online instruments in water treatment plant.
For the purpose of operational reliability and sustenance of availability, the expenditure of
`17.32 lakh with corresponding de-capitalization of `1.73 lakh (10%) is allowed.
7.Repair and Refurbishment of coal hopper in Coal Handling Plant (CHP)
The petitioner has claimed expenditure of 70.00 for 2012-13 and 30.00 for 2013-14 (totaling
`100.00 lakh) in line with the CEA approved cost towards Repair and refurbishment of coal
hopper in CHP
the expenditure of 100.00 lakh along with corresponding de-capitalization of `10.00 lakh (10%)
for strengthening of coal hoppers in Coal Handling Plant is allowed.
8.Fire detection and protection system package for Unit Control Board (UCB) and Main Control
Board (MCB)
Petitioner’sClaim
The petitioner has claimed an expenditure of `399.00 lakh for the year 2014-15 for fire detection
& protection system package for Unit Control Board (UCB) and Main Control Board (MCB).
The expenditure is not allowed to be capitalized during the period 2009-14 and the same would
be considered in accordance with law during the next tariff period.
Expenditure on Schemes other than CEA approved schemes
1.Plant Works
51
The petitioner has claimed total expenditure of `17691.05 lakh (`17676.05 lakh for 2009-14 in
respect of various items/works like pay loaders (`51.74 lakh), portable environment monitoring
instruments (`17.49 lakh), up-gradation of fire detection and protection system (`50.00 lakh),
installation of flow measuring device (`17.50 lakh) and line monitoring instruments in chimney
(`30.0 lakh), instruments (`49.32 lakh), fire tenders (`55.00 lakh), dual channel vibration analyzer
(`20.00 lakh), passenger lift No.2 (`65.00 lakh), shunting loco (`93.00 lakh), vapor absorption
system (`260.00 lakh), fire-fighting of Stage-II LDO and HSD tank (`25.00 lakh) electrical works
in employees and CISF colony (`55.00 lakh), installation of integrated RO plant for DM plant
(`2200.00 lakh) and `15.00 lakh for 2014-15 towards electrical works in employees and CISF
colony), against the approved cost of `17881.27 lakh.
It is also noticed that the said claims include an expenditure of `13850.00 lakh (`6925.00 lakh
each for 2012-13 and 2013-14) on Integrated Closed Cycle operation of CW system due to
deterioration in the inlet raw water quality including modification in auxiliary cooling system
Against the CEA approved cost of `17.00 lakh for passenger lifts, the petitioner has claimed an
expenditure of `65.00 lakh during 2011-13. However, no justification has been submitted by the
petitioner for the said increase in the expenditure claimed. In view of this, the expenditure is
restricted to the approved cost of `17.00 lakh and the same is allowed.
Out of the total expenditure of `70.00 lakh, the expenditure of `15.00 lakh proposed for 2014-15
towards electrical works in employees and CISF colony has not been allowed and the same
would be considered in accordance with law during the next tariff period.
2.Plant Civil Works
The petitioner has claimed expenditure of `7232.90 lakh (`1020 lakh for 2009-14 and `6212.90
lakh during 2014-15 in respect of works/items like nallah coverage, new services building,
canteen renovation, workshop building, renovation of stores, inter connection of underground
tanks for drinking water supply from DJB mains, construction of rain water harvesting, plant
52
boundary wall, labour rest rooms, strengthening of conveyor structure, 2 nd raising of Ash Dykes,
Phase-I and V against the approved cost of `8121.50 lakh under this scheme.
The expenditure for `6212.90 lakh (`5192 lakh) proposed for capitalization during 2014-15 is not
allowed and the same shall be considered in accordance with law during the next tariff period.
The claim of the petitioner for `45.00 lakh for 2011-12 for inter connection of underground tanks
for drinking water supply from DJB mains is restricted to the approved cost of `40.00 lakh and is
allowed, in the absence of any proper justification for increase in the said expenditure.
The capitalization of an expenditure of `1015.00 lakh for 2009-14 is allowed.
3.Township Civil Works
The petitioner has claimed an expenditure of `1468.00 lakh for 2014-15 under this head and has
furnished the asset-wise justification for the same.
Since, capitalization of this expenditure has been sought for during the next tariff period, the
claim of the petitioner is not allowed during 2009-14.
4.Other works
The petitioner has claimed total expenditure of `3327.06 lakh for 2009-14 against approved cost
of 1959.02 lakh in respect of various assets under the heads boiler, capital civil plant, Ash
handling, Energy conservation etc.
The petitioner has claimed `1106.62 lakh for 2010-12 against the approved cost of `438.80 lakh
for
bridges
over
Gurgaon
and
Agra
canal.
An expenditure of `438.80 lakh was projected to be incurred during 2009-14 and an expenditure
of `640.85 lakh has already been paid to the said departments prior to the filing this petition,
53
thereby
indicating
the
total
expenditure
for
the
work
as
`1106.62
lakh.
The expenditure of `1106.62 lakh is allowed to be capitalized, considering the negligible increase
from the projected cost
The petitioner has also claimed expenditure of `1951.00 lakh for 2011-13 against the approved
cost
of `959.18 lakh
for
dry ash extraction system package
under
this
head.
Against the value to be awarded / to be awarded amount of `1918.00 lakh, an expenditure of
`959.18 lakh is proposed for capitalization during 2009-14 and an expenditure of `1245.00 lakh
had already been paid to the contracting agencies upto 31.3.2009, prior to filing the petition and
the said amount was lying under CWIP.
The amount of `1951 lakh is allowed to be capitalized.
The petitioner's claim for an expenditure of `64.59 lakh for 2009-11 for UPS and `61.30 lakh
during 2009-13 for lab instruments.
Claims in respect of other works/items consisting of `20.00 lakh for 2011-12 for ventilation
system in CHP, `14.75 lakh for 2009-10 for PLC based system in old CHP, `15.70 lakh for 200910 and `17.09 lakh for 2009-11 for raising of Ash dyke (3rd and 1st raising for Phase-II and V
respectively) under Ash handling system.
The claim for lab instruments are restricted to the approved cost of `58.00 lakh and `60.00 lakh
respectively, in the absence of justification for increase in expenditure and the same is allowed to
be capitalized.
The claims in respect of other works/items consisting of under Ash handling system are allowed
as these works are under approved cost.
54
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
Amount allowed on CEA approved schemes (including IDC and FC)
0
0
0
0
0
Other than CEA approved SCEME
0
538.03
3145.55
7966.2
9814.4
Total
0
538.03
3145.55
7966.2
9814.4
Discharges of liabilities
41.36
18.81
0
0
0
Additional capital expenditure ALLOWED
41.36
556.84
3145.55
7966.2
9814.4
iN LAKHS
30000
25000
20000
15000
10000
5000
0
Net projected
additional capex
claimed
Total Capex Approved
YEARS
The various components of the annual fixed cost of the BadarpurThermal Power Station are as given in the
following figure
Axis Title
COMPONENTS OF AFC(09-14)
30000
25000
20000
15000
10000
5000
0
Depriciation
Interest on Loan
Return on Equity
Interest on working
Capital
O&M Expenses
Axis Title
55
4.5 National Capital Thermal Power Station Dadri, Stage-I (840 MW)
Actual/Projected Additional Capital Expenditure during 2010-14
The actual /projected additional capital expenditure claimed by the petitioner is as under:
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
Additional capital expenditure
378
136
0
6304
4840
The cut-off date for the generating station had expired. Hence, the petitioner’s claim for
additional capital expenditure needs to be considered in terms of Regulation 9 (2) of the 2009
Tariff Regulations.
Actual Capital Expenditure
1.
Petitioner’sClaim
The petitioner has sought the capitalization of expenditure of `27.00 lakh due to Arbitration
award in respect of the construction of transit camp and Quarters (A,B,C type), `300.00 lakh due
to Arbitration award in respect of NDCT package.
Commissions Views
It is allowed under Regulation 9(2)(i) of the 2009 Tariff Regulations. The expenditure of `12.00
lakh for payment of final bill towards fire detection system for Administrative building has been
allowed in terms of Regulation 9(2)(viii) of the 2009 Tariff Regulations.
2.Ash Handling System
The petitioner has claimed expenditure of `136.00 lakh during 2010-11 towards Ash Storage
modification.
The petitioner vide its affidavit dated 4.1.2012 has submitted that this Ash related work is
proposed for capitalization under Regulation 9(2)(ii) of the 2009 Tariff Regulations, since 100%
ash utilization is required to be undertaken as per notification dated 14.9.1999 and its amendment
dated 3.11.2009, issued by the Ministry of Environment & Forests, Government of India.
Commissions Views
The expenditure of `136.00 lakh is allowed to be capitalized under Regulation 9(2)(ii) of the
2009 Tariff Regulations.
56
CEA approved R&M schemes
The petitioner has claimed expenditure of `6304.00 lakh during 2012-13 and `4840.00 lakh
during 2013-14 (including taxes, duties and insurance etc.) under CEA approved R&M schemes.
The respondent UPPCL:
It has has submitted that the claims of the petitioner for additional capitalization in respect of
CEA approved works may be disallowed since the petitioner has taken the benefit of
compensation allowance under Regulation 19(e) of the 2009 Tariff Regulations.
The respondent BRPL:
It has has submitted that the expenditure on R&M activities cannot be considered during the
period 2009-14 since the petitioner has not complied with the provisions of Regulation 10 of the
It has also submitted that the petitioner should seek the approval of the Commission under
Regulation 10 for the expenditure proposed to be incurred on R&M activities and pursuant to the
approval, the said expenditure would form the basis for determination of tariff as per provisions
of Regulation 10(3) of the 2009 Tariff Regulations.
Petitioner’s Response
In response, the petitioner has submitted that the projected claim is not for life extension of the
plant beyond the useful life of 25 years and hence the same does not fall under Regulation 10.
The respondents NDPL and BYPL:
They have also submitted that the claims of the petitioner for additional capitalization, except for
works related to ash handling, are outside the scope of the 2009 Tariff Regulations and since
compensation allowance is admissible, the additional capitalization of expenditure may be
rejected.
Commissions Views
These assets/works are essentially required for efficient operation of the generating station.
However, there is no provision under Regulation 9(2) of the 2009 Tariff Regulations to consider
the capitalization of these capital assets. As decided by the Commission, the additional capital
expenditure for successful and efficient operation of the generating stations for reasons other
than those provided for under Regulation 9(2) of 2009 Tariff Regulations is not permissible.
Moreover, the generating station has not completed 25 years and hence the question of
57
considering
R&M
schemes
for
extension
of
useful
life
does
not
arise.
However Regulation 19(e) of the 2009 Tariff Regulations provides for a separate compensation
allowance to meet the expense on new assets of capital nature including in the nature of minor
assets as laid down therein. Since compensation allowance as per the said regulation is
admissible to the generating station, we are of the view that the expenses for these capital assets
may be met by the petitioner from the said allowance. The petitioner may limit the expenditure
within the compensation allowance, by phasing the expenditure suitably.
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
-378
136
0
0
0
103.5
0
0
0
0
Additional capital Expenditure allowed
-274.5
136
0
0
0
The annual fixed charges for the period 2009-14 in respect of the generating station is summarized as under:
Components
2009-10
2010-11
2011-12
2012-13
2013-14
Depreciation
2445.3
2433.21
2439.26
2439.26
2439.26
Interest on Loan
126.11
0
0
0
0
Return on Equity
20180.52
20175.64
20180.43
20180.43
20180.43
Interest on working Capital
7193.8
7240.85
7309.99
7349.25
7408.71
O&M Expenses
15288
16161.6
17085.6
18068.4
19101.6
Cost of Secondary fuel oil
2457.17
2457.17
2463.9
2457.17
2457.17
Special Allowance
210
252
294
294
357
TOTAL
47690.9
48468.47
49479.18
50494.51
51587.17
58
In Lakhs
Add-Cap Claimed/Approved
7000
6000
5000
4000
3000
2000
1000
0
-1000
Add-Cap Claimed
ADD-Cap Approved
Years
The various components of the annual fixed cost of the said Thermal Power Station are as given in the
following figure:
In Lakhs
AFC-Components
25000
20000
15000
10000
5000
0
Depriciation
Interest on Loan
Return on Equity
Interest on working
Capital
O&M Expenses
Years
59
4.6 Anta Gas Power Station (419.33 MW)
Projected /Actual Additional Capital Expenditure
The petitioner has claimed the actual/projected additional capital expenditure for the period 2009-14 as under:
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
Additional Capital expenditure
11079.6
1391.08
859.4
0
0
additional capital expenditure has to be examined in terms of Regulation 9 (2) of the 2009 Tariff
Regulations.
1.R&M of Gas Turbines (GTs).
The expenditure for `11868.12 lakh (11429.27 +438.25) on R&M of Gas Turbines (GTs) as
furnished by the petitioner. includes expenditure on compressor components, combustion
chamber components, Gas Turbine components, assembly materials, consumables, fasteners and
coupling materials, insulation etc.
Commissions views
Some of these expenditure like expenditure on consumables, insulation and a part of expenditure
on assembly material, fasteners and couplings, part of combustion chambers, and gas turbine
initial stage blades etc are already covered in O&M as part of major overhauls.In view of this the
expenditure on consumables and insulation is not to be capitalized.
The expenditure involved in the replacement of Hot gas path components like vanes, gas Turbine
stator and rotor blades, Inlet segment, entry segment, Tip sealing segment etc. which would be
covered under O&M expenses allowed to the generating station. Hence, the capitalization of
expenditure on replacement of Hot gas path components under R&M would require the
deduction of expenditure towards the cost of hot gas path components covered under O&M
expenditure from the additional capital expenditure to be allowed for R&M
2.Expenditure on Gas Turbine (GT-3) rotor:
60
The petitioner has claimed expenditure of `98.27 lakh for the said asset and the justification
submitted by the petitioner is as under.
“As per OEM, the expected life of the rotor 100000 operation hours and the rotor has exceeded
that life. As per experience of OEM, after 100000 operating hours of running life of rotor there
is chance of failures of welding joints of welded discs and if these welding defects originate, due
to high speed of running etc., the same may lead to catastrophic failure of the rotor and thus the
turbine as a whole. To avoid this, OEM have recommended to recondition the GT rotor at
100000 operating hours so as to further enhance their operation life to 100000 operating hours.
Under reconditioning work the Compressor portion of the Rotor has been reconditioned whereas
the turbine portion has been cut and removed as this portion cannot be reconditioned due to
continuous
operation
at
high
temperatures.”
As the expenditure pertains to balance work which was allowed by the Commission during 200809, the same is allowed.
Other Capital additions on R&M activities
1.Installation of Online Compressor cleaning system
The petitioner has claimed an expenditure of `231.00 lakh during 2010-11 towards the
installation of Online Compressor cleaning system.Apart from increase in the availability, on line
compressor cleaning would also improve the performance of GTs.
The benefit of such improvement in performance would be retained by the generator and hence it
may not be appropriate to allow such expenditure, especially in the absence of any commitment
on the part of the petitioner to pass on the benefit of efficiency improvement tothe beneficiaries.
Hence
the
said
claim
2.Installation of Additional CT Pump
61
is
not
allowed.
The petitioner has claimed an expenditure of `240.83 lakh during 2010-11 for installation of
additional CT pump. The justification furnished by the petitioner for such expenditure is that
there are 2 x 50% capacity Cooling Tower Pumps installed in the Cooling Water System and the
failure of one pump affects approximately 50% of generation of the Steam Turbine. For
sustained availability, another pump is required for emergency purpose
Since the expenditure in respect of the asset which is in the nature of spares, the capitalization of
the same is not allowed.
4.Installation of On-line Gas measurement
The petitioner has claimed an expenditure of `145.53 lakh during 2011-12 for installation of online Gas Measurement system for better control of GTs and to validate the information on
generation-vs- gas consumption
Since modernization of GT control contribute to the efficient and successful operation of the
generating station, the expenditure is allowed to be capitalized in terms of Regulation 9(2)(vi) of
the 2009 Tariff Regulations.
5.Up gradation of GT & ST Control System (C&I)
The petitioner has claimed expenditure of `385.70 lakh during 2009-10 and `300 lakh during
2010-11for up-gradation of C&I system. The petitioner has submitted that since the present
control systems were installed and commissioned as part of original main plant C&I package, the
Original Equipment Manufacturer has declared all these systems as obsolete and the spares for
the same are no more available.
The claim of the petitioner is justified and the expenditure is allowed to be capitalized along with
the corresponding de-capitalization of `177.43 lakh during 2009-10 and `138.00 lakh during
2010-11.
6.Installation of Fire Protection & Detection System for cable galleries
The petitioner has claimed expenditure of `31.71 lakh during 2009-10 for installation of fire
fighting system in cable galleries. The petitioner has submitted that the cable galleries have not
62
been provided with a fire fighting system and that there was only one entrance in the cable
gallery. In the present layout it is not feasible to provide additional regular fire exits for the cable
galleries and also there is no clear passage available for movement in cable galleries. In case of
fire it would be extremely difficult as all cables are provided in the basement of building
Since safety of the plant and personnel is an essential requirement for efficient and successful
operation of the generating station, the expenditure claimed is allowed to be capitalized.
7.Replacement of Hot Water Pipeline of Cooling Tower
The petitioner has claimed an expenditure of `157.39 lakh during 2011-12 for the said asset and
has submitted that due to high humidity in the vicinity of cooling tower and raw water media,
external and internal corrosion /erosion of the pipelines was taking place. Due to this the pipe
thickness has reduced and if the problem aggravates, the cooling tower system may be affected
disrupting the generation from Steam Turbine.
The submissions of the petitioner appear reasonable and the capitalization is justified hence
allowed after decapitalization,
8.Replacement of underground fire fighting pipelines
The petitioner has claimed expenditure of `217.33 lakh during 2011-12 in respect of the said
asset and has submitted that the underground fire fighting water pipe lines have got corroded and
eroded with passage of time, which has made the fire fighting system unreliable.
Considering the fact that the life of the generating station is more than 15 years and the
possibility of increase in failure of pipe lines leading to risk of reduced safety, the justification
furnished by the petitioner is accepted keeping in view the overall interest of the safety of the
generating station and its personnel.
The justification furnished by the petitioner is accepted keeping in view the overall interest of the
safety of the generating station and its personnel.
9.Phasing out of Halon system fire fighting system
63
The petitioner has claimed expenditure of `245.15 lakh during 2011-12 for the said asset towards
the replacement of Halon system to protect the ozone layer.
Considering the fact that the expenditure is statutory in nature (under National Fire Protection
Association Standard on Clean Agent Fire Extinguishing system (NFPA-2001), capitalization of
the same is allowed.
10.Augmentation of Raw Water Reservoir Capacity
The canal closure period which was increased by the Irrigation department of Rajasthan
Government has been may be taken as a change in policy of the State Government, which is
beyond the control of the petitioner.
In view of this, we allow the claim of the petitioner for `369.78 lakh during 2009-10 and `82.0
lakhs during 2010-11 under Regulation 9(2)(ii) of the 2009 Tariff Regulations.
11.Increase in WHRB stack height
The petitioner has claimed expenditure of `159.76 lakh during 2010-11 towards increasing the
stack height from +28 M level to +30 M level. According to the petitioner, thesaid expenditure is
necessary for compliance with the provisions of Air Act, 1981, since theRajasthan Pollution
Control Board has issued show cause notice dated 5.5.2009 to thisgenerating station for not
increasing the stack height.
The expenditure is allowed.
12.Welfare Centre Building
The petitioner has claimed expenditure of `16.64 lakh during 2009-10 towards Welfare Centre
Building. The petitioner has submitted that expenditure for construction of welfare Centre
building form part of a statutory requirement, and no welfare Centre building was available in
the plant to fulfill the social needs of the employees of the generating station.
64
The submissionof the petitioner is not justifiable as it does not give any direct benefit to the
beneficiaries. We are not inclined to load this expenditure on the beneficiaries and the
capitalization of the expenditure is not allowed.
The revised additional capital expenditure allowed for the purpose of tariff is as under:
2009-10
2010-11
2011-12
2012-13
2013-14
8606.34
781.25
747.823
0
0
Discharges of iabilities
572.03
396.02
0
0
0
TOTAL
9178.37
1177.27
747.823
0
0
The annual fixed charges for the period 2009-14 in respect of the generating station is summarized as under:
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
Depreciation
2117.25
2675.44
2750.85
2799.39
2799.39
Interest on Loan
530.91
396.47
366.3
328.35
286.47
Return on Equity
7462.92
7827.67
7895.47
7921.81
7921.81
2438.21
2479.16
2512.12
2535.36
2563.33
O&M Expenses
6206.08
6562.51
6935.72
7334.08
7753.41
0
0
0
0
0
Special Allowance
0
0
0
0
0
TOTAL
18755.38
19941.25
20460.46
20918.99
21324.41
in lakhs
Add-Cap Claimed/Approved
12000
10000
8000
6000
4000
2000
0
Add-cap claimed
Net Add-cap allowed
Years
following figure:
65
IN LAKHS
AFC-COMPONENTS
10000
8000
6000
4000
2000
0
Depriciation
Interest on Loan
Return on Equity
Interest on working
Capital
O&M Expenses
YEARS
66
4.7 Kahalgaon Super Thermal Power Station Stage-I (840 MW)
The actual /projected additional capital expenditure claimed by the petitioner is as under:
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
Add-cap claimed
-334.1
5913.8
7761.1
1430.1
341
The cut-off date for the generating station had expired. Hence, the petitioner’s claim for
additional capital expenditure is required to be considered in terms of Regulation 9 (2) of the
Deferred works relating to Ash pond or Ash handling system in the original scope of works
- Regulation 9 (2)(iii)
1.
The petitioner has claimed actual expenditure of `203.80 lakh during 2009-10, and projected
expenditure of `490.90 lakh during 2010-11, `798.50 lakh during 2011-12, `540.00 lakh during
2012-13 and `341 lakh during 2013-14 for Ash dyke raising works and Ash handling system.
These works relating to raising of Ash dykes and Ash disposal system are a normal practice and
the said works forms part of the original scope of work and are normally taken up in stages as
and when required. Since these are normal activities done in phases depending upon the
requirement with the passage of time, during the useful life of the plant and is covered under
original scope of work, the expenditure claimed is allowed to be capitalized under this head..
Environmental System - (Regulation 9(2)(ii))
1.Dry Ash Extraction System and transportation
The petitioner has claimed expenditure of `974.00 lakh during 2011-12 for commissioning of
Dry Ash Extraction System and transportation plant to be used for transporting fly ash from ESP
hoppers of Units-III and IV to the silos. Ash will be extracted from ESP hoppers and collected in
buffer hoppers and would then be transported from buffer hoppers to the silo with the help of
67
transport air blowers. There will be 2 nos of silos each having a storage capacity of 350 MT and
2 nos. of transport blowers each for the Units-III and IV.
The petitioner vide its affidavit dated 16.11.2010 has submitted that in order to achieve the target
for 100% fly ash utilization by all coal based thermal power plants in terms of the Gazette
Notification of the Ministry of Environment and Forests, Government of India dated 3.11.2009,
installation of dry ash system for Units –III and IV including silo is a basic requirement, since
ash is to be collected in dry form.
The expenditure is required for compliance with the guidelines of the Ministry of Environment
and Forests, Government of India notification dated 3.11.2009, the same is allowed to be
capitalized.
The petitioner has claimed expenditure of `95.90 lakh during 2009-10 for installation Ambient
Air Quality Management System (AAQMS). The petitioner vide its affidavit dated 16.11.2010
has submitted that the procurement of the said item was approved by CEA on 6.6.2003 in order
to continuously monitor the quality of ambient air in and around the plant to keep various
environmental related parameters within limits specified by various gazette notifications of the
Government
of
India
from
time
to
time.
Respondents Views
They have objected to the capitalization of the said asset on the ground that the petitioner has not
indicated the recent change in law.
Commissions views
Since the expenditure claimed by the petitioner is a statutory requirement under the notification
dated 18.11.2009, as stated above, the same is allowed to be capitalized under Regulation 9(2)(ii)
of the 2009 Tariff Regulations.
Other capital works-Regulation 9(2)(ii)
1.Wagon Tippler, locomotives, weigh bridge etc.
The petitioner has submitted that this generating station and its coal linkage was envisaged with
a Plant Load Factor (PLF) of 62.8%. However, with the change in the Target Availability (TA)
and PLF from 62.8% to 80% by the Commission for the tariff periods 2001-04 and 2004-09 and
68
with the deterioration of GCV of coal from 3050 kcal/kg to 2800 kcal/kg received from the
linked mines, the increased coal consumption resulted in the need for procuring coal from other
sources and transporting them to the generating station using the railway system to meet the
target availability specified by the Commission.
The respondents
BSEB, JSEB and GRIDCO in their replies have objected to the additional capital expenditure
claimed in respect of Wagon Tippler, locomotives etc and has submitted that change in norms
related to NAPAF do not constitute change in law.
TNEB has submitted that capitalization of the items Wagon Tippler, locomotives etc based on
works approved by CEA cannot constitute change in law.
UPPCL and MSEDCL have submitted that the additional capital expenditure in respect of these
items indicated above, is not on account of change in law and hence may be rejected.
Commissions views
Considering the fact that installation of Wagon tippler would bring about reduction in unloading
time of coal rakes and shall give flexibility in overall movement of rakes which would reduce the
apprehension of diversion of wagons by the railways, the claim of the petitioner is justified.
Also, if the petitioner is unable to arrange coal for generation up to the specified NAPAF of
85%, it would not be able to recover the full fixed charges which include the cost of Wagon
tippler. This, according to us, would adequately take care of the concerns raised by the
respondent beneficiaries. Moreover,the utilities are resorting to blending of imported coal taking
into account the overall shortage of coal in the country.
2.Condenser on-line tube cleaning systems
The petitioner has claimed expenditure of `125.00 lakh during 2011-12 for installation of
condenser on line tube cleaning system which is envisaged for cleaning of condenser tubes even
when the units are in operation.The provision of Regulation 9(2) under which capitalization is
sought for has not been mentioned.
Commissions views
However, there is no provision under Regulation 9(2) of the 2009 Tariff Regulations for
capitalization of this asset after the cut-off date. Since, compensation allowance is admissible to
69
the generating station under Regulation 19(e) of the 2009 Tariff Regulations, the petitioner shall
be able to meet the expenditure on this asset. Hence, capitalization of the expenditure claimed by
the petitioner is not allowed
3.Procurement of new wagons
The petitioner has claimed expenditure for `367.00 lakh during 2010-11 towards the procurement
of 10 nos. of new wagons against replacement of damaged / condemned wagons.
Commissions views
There is no provision under Regulation 9 (2) of the 2009 Tariff Regulations for capitalization of
this asset after the cut-off date. Since, compensation allowance is admissible to the generating
station under Regulation 19(e) of the 2009 Tariff Regulations, the petitioner shall be able to meet
the expenditure on this asset.
The additional capital expenditure approved for the purpose of tariff, is as under:
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
-162.3
5546.78
7636.09
1430.1
341
0.67
0
0
0
0
total
-161.63
5546.78
7636.09
1430.1
341
iN LAKH
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
-1000
Add-cap claimed
Net Add-cap allowed
2009-102010-112011-122012-132013-14
YEARS
70
The annual fixed charges for the generating station for 2009-14 is summarized as under:
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
Depreciation
3800.27
4046.05
4608.07
5035.28
5128.49
Interest on Loan
41.578399
0
18.913827
15.812511
0
Return on Equity
23880.694
24070.366
24534.686
24854.012
24916.394
5480.1649
5539.2859
5625.0114
5685.6195
5746.6759
O&M Expenses
15288
16161.6
17085.6
18068.4
19101.6
1219.45
1219.45
1222.79
1219.45
1219.45
Special Allowance
126
210
252
294
294
TOTAL
49836.157
51246.752
53347.072
55172.574
56406.609
71
4.8 Simhadri Thermal Power Station, Stage-I (2 x 500 MW)
Actual/Projected additional capital expenditure during 2010-14
The actual/projected additional capital expenditure claimed by the petitioner for 2009-14 is as under:
Column1
2009-10 2010-11 2011-12 2012-13 2013-14
Add-cap claimed 226.54
6801
6500
7260
3730
The cut-off date of the generating station has expired. Hence, the petitioner‟s claim for
additional capital expenditure for 2009-14 has to be examined in terms of Regulation 9(2) of the
Deferred works relating to ash pond or ash handling system in the original scope of workRegulation 9(2) (iii)-Ash dyke and related works
1.
The petitioner has claimed expenditure for `149.43 lakh during 2009-10, `2756.00 lakh during
2010-11, `3000.00 lakh during 2011-12, `3500.00 lakh duirng 2012-13 and `3500.00 lakh during
2013-14 for works of Ash dyke raising consisting of two lagoons i.e.lagoon-1 and lagoon-2 with
an\ area of 80 acres and 113 acres respectively.
The petitioner has submitted that the lagoons for ash dyke for the generating station are to be
raised in a phased manner and the original scope provides for future ash dyke raising. Further
raisings of ash dyke of lagoons 1 & 2 are to be taken up in future years over the entire life of the
power plant..
Considering the submissions of the petitioner and keeping in view that the work which is
covered under the original scope of work of the project, is in compliance with the requirements
of environment rules and regulations, the commission will allow the claim of the petitioner for
capitalization under this head.
The petitioner has claimed expenditure for `40.00 lakh during 2010-11, `125 lakh during 201112, `200 lakh during 2012-13 and `200.00 lakh during 2013-14 towards other capital works in
ash dyke. The petitioner has submitted that the expenditure is required for other infrastructure
72
works at ash dyke such as access roads, RCC drains, dust suppression system and works on
sprinkling system, which are to be taken up.
Keeping in view that these infrastructural works are required to be done on regular basis for ash
handling system and for control of fugitive emission in the ash handling area, the expenditure
claimed is allowed under Regulation 9(2) (iii).
Change in law- Regulation 9(2)(ii)
1.
The petitioner has claimed expenditure for `3530.00 lakh during 2012-13 towards the
augmentation of Dry Ash Evacuation System (DAES) under this head. The petitioner in its
affidavit dated 27.12.2010 has submitted that in terms of the notification of the Ministry of
Environment & Forests (MOE&F) dated 14.9.1999 and its amendments on 27.8.2003 and
3.11.2009 respectively, all thermal power stations in operation before the notification are
required to ensure 90% utilization of fly ash generated within four years and 100% utilization of
fly ash generated within five years of notification. The same has been reiterated by the Andhra
Pradesh Pollution Control Board (APPCB) for implementation of the provisions of the MOE&F
notifications as stated above.
Since these expenditure is required for compliance with the provisions of MOE&F notifications
and the directions of the APPCB, the expenditure claimed by the petitioner is allowed under this
head.
Capitals Addition Schemes
1.Wagon Tippler package and Procurement of locos & accessories
The petitioner has claimed expenditure for `3980.00 lakh during 2010-11 towards capitalization
of Wagon Tippler package.
It is evident that the generating station has been providing a consistent performance of more than
96% PLF and 97% DC for the last three years, without the installation of Wagon Tippler. The
73
number of rakes required for coal generating station of 1000 MW capacity would in the range of
6 to 7 rakes per day and considering 1.1/2 to 2 hours of unloading time for BOBR wagons, 40%
of the coal requirement supplied through BOXN wagons could be managed by the generating
station without Wagon Tippler. Hence, we are of the view that the requirement for installation of
Wagon Tippler for the generating station is not justified.
2.Ambient Air Quality Management System (AAQMS)
The petitioner has claimed expenditure for `92.67 lakh during 2009-10 towards erection work
and trial operation for Ambient Air Quality Management System (AAQMS) in order to comply
with the statutory requirements in terms of the directions of the Andhra Pradesh Pollution
Control Board.\
Since, the expenditure is incurred for compliance with the requirements of environmental norms,
as per statute, the same is allowed to be capitalized
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
-635.23
2821
3150
7260
3730
200.23
29.1
0
0
0
total
-435
2850.1
3150
7260
3730
ADD-CAP CLAIMED/ALLOWED-SIMHADRI
8000
IN LAKHS
6000
4000
Add-cap claimed
2000
Add-cap allowed
0
-2000
YEARS
74
The annual fixed charges for the period 2009-14 in respect of the generating station are summarized as
under:
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
Depriciation
17388.76
17449.43
17600.16
17861.67
18137.75
Interest on Loan
6402.56
5878.58
5385.84
4939.64
4493.22
Return on Equity
24380.35
24465.42
24676.75
25043.4
25430.49
6587.74
6621.5
6676.53
6713.73
6770.9
O&M Expenses
13000
13740
14530
15360
16240
1841.11
1841.11
1846.16
1841.11
1841.11
Special Allowance
0
0
0
0
150
TOTAL
69600.52
69996.04
70715.44
71759.55
73063.47
following figure:
IN LAKHS
AFC-COMPONENTS-SIMHADRI
30000
25000
20000
15000
10000
5000
0
Depriciation
Interest on Loan
Return on Equity
Interest on working
Capital
O&M Expenses
YEARS
75
4.9 Kahalgaon Super Thermal Power Station Stage-II (3X500 MW)
The generating station with a capacity of 1500 MW comprises of three units of 500 MW each.
The dates of commercial operation of the different units of the generating station are as under:
Date of commercial operation
Unit-I
1.8.2008
Unit-II
30.12.2008
Unit-III
20.3.2010
CAPITAL COST
The capital cost as on 20.3.2010 (the date of commercial operation of Unit-III/generating station) is
`472306.43 lakh and the same is allowed.
Opening Capital cost
331481.82
liabilities
16808.00
Capital cost on which tariff will be calculated
314673.82
Projected Additional Capital Expenditure
The actual/projected additional capital expenditure claimed by the petitioner is as under:
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
Add-cap claimed
1406
36584
24850
26464
1000
As stated, the date of commercial operation of the generating station is 20.3.2010. In terms of
Regulation 3(11) of the 2009 Tariff Regulations, the cut-off date of the generating station is
31.3.2013. Hence, the petitioner’s claim for projected additional capital expenditure is required
to be considered in terms of Regulation 9(1) of the 2009 Tariff Regulations.
Works deferred for execution and capitalization of initial spares–Regulations 9(1)(ii) and
(iii)
1.
Petitioners’ claim
76
The petitioner has claimed actual expenditure of `1406.00 lakh during the year 20.3.2010 to
31.3.2010 and projected expenditure of `27876.00 lakh for 2010-11, `17764.00 lakh for 2011-12
and `20555.00 lakh for 2012-13 in respect of works deferred for execution under the original
scope of work and for capitalization of initial spares.
It has also submitted by affidavit dated 11.1.2011 that the cost of initial spares projected in the
capital cost as on the date of commercial operation till the cut-off date of the generating station is
`3518 lakh on 20.3.2010, `5377 lakh on 31.3.2010, 8776 lakh on 31.3.2011, `12201 lakh on
31.3.2012 and `14671 lakh on 31.3.2013.
The respondent views:
GRIDCO in its reply dated 8.9.2011 has submitted that the total expenditure of `44543 lakh
towards the cost of initial spares claimed by the petitioner as above, is beyond the limit of 2.5%
of the original project cost.
Petitioners’ response
In its response dated 3.10.2011, the petitioner has clarified that the cost of initial spares indicated
in the affidavit dated 11.1.2011 are the total actual/projected capitalization against capital spares
as on the indicated dates and not capitalization of spares during the interim period
Accordingly, it has been submitted that the projected capitalization against initial spares as on
31.3.2013 is `14671 lakh and the same is within the limit of 2.5% allowed as per norms specified
by the Commission under Regulation 8 of the 2009 Tariff Regulations.
2.
The petitioner has claimed projected capital expenditure of `2633 lakh, `1730 lakh, `1528 lakh,
and `1000 lakh during the years 2010-11, 2011-12, 2012-13 and 2013-14 respectively, towards
Ash Dyke/Ash handling system, under Regulation 9(1)(ii) and 9(2)(iii).
These works include works like main plant superstructure, chimney, steam generator, coal
handling system switchyard etc, which have been deferred for execution and are within the
original scope of work. As stated, the cut-off date of the generating station is 31.3.2013 and
77
hence the projected capital expenditure till the cut-off date have been considered under “Works
deferred for execution” in terms of Regulation 9(1)(ii) of the 2009 Tariff Regulations and the
said amounts are allowed.
3.
The petitioner has claimed projected expenditure of `1000 lakh for 2013-14 towards Ashhandling/Ash-dyke works after the cut-off date.
GRIDCO has objected to the above claim and has submitted that the said expenditure is
permissible only when the expenditure is incurred at the discretion of the Commission.
Petitioners’ response
Since, the petitioner has not incurred the said expenditure the claim for capitalization may be
rejected. In response to this, the petitioner has submitted that the claim of the petitioner is in
terms of the Regulation 7(1) (a) and the last proviso to Regulation 7(2) of the 2009 Tariff
Regulations. According to the petitioner, since, the last proviso provides for capital expenditure
to be projected to be incurred as may be admitted by the Commission, the same is admissible.
The commission considered the submissions of the petitioner and GRIDCO. Since the generating
station has achieved the commercial operation on 20.3.2010, it is not covered under the last
proviso to Regulation 7(2) of the 2009 Tariff Regulations. Moreover, the additional capital
expenditure is not covered under Regulation 7(1)(a) of the 2009 Tariff Regulations. The
additional capital expenditure of the generating station shall be considered as per Regulation 9 of
the 2009 Tariff Regulations. Under Regulation 9(2), additional capital expenditure incurred after
the cut-off date can be admitted after it is incurred. The petitioner has claimed projected
additional capital expenditure of `1000 lakh for the ash dyke/ ash handling system during the
year 2013-14. This is in continuation of the work on ash dyke/ash handling system starting from
2010-11.The projected capital expenditure of `1000 lakh for the year 2013-14 towards ash
handling/ash dyke is allowed to be capitalized.
78
The projected additional capital expenditure allowed for the purpose of tariff, is as under :
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
1406
30509
19494
22083
1000
0
8205
5356
4381
0
total
1406
38714
24850
26464
1000
IN LAKHS
ADD-CAP CLAIMED/ALLOWED-KAHALGAON-II
40000
35000
30000
25000
20000
15000
10000
5000
0
Add-cap claimed
Add-cap allowed
YEARS
The annual fixed charges for the period 2009-14 in respect of the generating station are summarized as under:
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
Depreciation
40486.65
25339.18
26972.48
28291.01
28996.71
Interest on Loan
34207.68
20508.67
21013.57
21398.35
21183.57
Return on Equity
55486.77
34733.29
36972.11
38779.47
39746.79
15704.76
9590.08
9764.37
9886.67
9988.87
O&M Expenses
31850
19923
21068.5
22272
23548
5114.85
3663.13
3673.17
3663.13
3663.13
Special Allowance
0
0
0
0
0
TOTAL
182850.71
113757.35
119464.2
124290.63
127127.07
79
following figure:
IN LAKHS
AFC-COMPONENTS-KAHALGAON
60000
50000
40000
30000
20000
10000
0
Depriciation
Interest on Loan
Return on Equity
Interest on working
Capital
O&M Expenses
YEARS
80
4.10 Farakka Super Thermal Power Station (1600 MW)
The generating station with a total capacity of 1600 MW comprises of three units of 200 MW
each and two units of 500 MW each. The dates of commercial operation of the generating station
are as under:
Date of Commercial Operation(COD)
Unit-I
1.11.1986
Unit-II
1.10.1987
Unit-III
1.9.1988
Unit-IV
1.7.1996
Unit-V
1.4.1995
Capital Cost
Accordingly, in terms of the last proviso to Regulation 7 of the 2009 Tariff Regulations, the
capital cost as on 1.4.2009, after removal of un-discharged liabilities of `2579.17 lakh works out
to `310919.13 lakh, on cash basis.
The liabilities discharged, if any, by the petitioner would be included in the capital base as
additional capital expenditure, in the year of discharge.
313498.30
Capital cost as on 1.4.2009, as
per books
Undischarged liabilities
2579.17
Capital cost which will form the basis for determination of tariff
310919.13
Actual/Projected Additional Capital Expenditure
The actual/ projected additional capital expenditure claimed by the petitioner for 2009-14 is as under:
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
Add-cap claimed
6024
5761.1
1849
934
30992
81
additional capital expenditure is required to be examined in terms of the provisions of Regulation
9 (2) of the 2009 Tariff Regulations.
Environment systems- Regulation 9(2) (ii)
Petitioners’ Claim
The petitioner has claimed total expenditure of `16125.00 lakh during 2013-14 (`1125.00 lakh
for up-gradation of ESPs for Stage-I, `14000.00 lakh towards Dry Ash Extraction for Stage-I &
II package consisting of supply cum erection and commissioning of (i) Pneumatic conveying
system (ii) Compressor for Stage-I (iii) Air receiver (iv) Vacumn pump for Stage-II (v) Storage
system (vi) Electrical & C&I system including cabling and (vii) Civil & structural work, `500.00
lakh each for construction of road from DAETP to NH-34 and construction of rail line from
DAETP to Tildanga gate).
The petitioner has submitted that upgradation of ESP is as per scheme approved by CEA to meet
stricter environmental norms and the installation of Dry Ash Extraction system, which is a
standard fitment for all new power plants, is towards achievement of 100% ash utilization as per
notification dated 14.9.1999 (amended on 3.11.2009) of the Ministry of Environment & Forests,
Government of India and the installation of the same would help increased utilization of dry fly
ash.
The respondents Views
BSEB, GRIDCO in their replies have submitted that the claim under this head is permissible if
there is change in law and consequent upon that change, investment is required to be made to
fulfill that obligation of change in law. As the petitioner has not mentioned the change in law, the
expenditure is not to be allowed.
UPPCL has submitted that since the additional capital expenditure claimed for 2009-14 is for
both stages of the generating station and the use is inseparable, it is prudent to disallow the claim
of `3680.00 lakh towards special allowance for Units-I & II of the generating station.
NDPL has submitted that claims for additional capital expenditure except work related to ash
handling does not fall under any of the provisions of the 2009 TariffRegulations and should not
be allowed.
82
Deferred works relating to Ash pond or Ash handling system in the original scope of
works-Regulation 9(2)(iii)
The petitioner has claimed actual expenditure of `966.71 lakh during 2010-11 for 1st raising of
Malancha Ash Dyke lagoon and 3rd raising of Nishindra Ash dyke for Stage-II, `693.00 lakh
during 2012-13 for 4th raising of Nishindra Ash dyke lagoon I & II which are yet to be awarded
and `2983.00 lakh during 2013-14 for Starter Ash dyke lagoon-III and drainage channel and 1st
raising of Malancha ash dyke lagoon-II. It is observed that the 1st raising of lagoon-II of
Malancha ash dyke at a cost of `791.00 lakh may not be required by March, 2014
GRIDCO has submitted that the claim under Regulation 9(2)(iii) for the said work stated to have
been incorporated in the original scope of work should be produced by the petitioner.
Moreover, the expenses which are of continuous nature and process shall be met from the huge
O&M expense provided for the generating station.
Regulation 9(2)(iii) of the 2009 Tariff Regulations is limited for deferred works related to ash
pond or ash handling system in the original scope and the left over works for the generating
station cannot be allowed to be pending for such a long time and in case works continue to
remain pending, it should be presumed that the works are not necessary
Commissions’ views
Taking into consideration that the said work covered under the original scope of work is a
normal activity, undertaken in phases depending upon the requirement with the passage of time
during the useful life of the generating station, the expenditure claimed is allowed to be
capitalized.
Other capital works
1.Wagon Tippler (2 nos.), Associated conveying system and procurement of 3 nos. locos, lift
pumps etc
The petitioner has claimed total expenditure of `9658.03 lakh (`5220.29 lakh during 2009-10 and
`4437.74 lakh during 2010-11) for Wagon tipplers in terms of the last proviso to Regulation 7 of
83
the 2009 Tariff Regulations, against the CEA approved cost of `9604.00 lakh vide letter dated
12.8.2005.
It needs to be ensured that the petitioner is able to arrange coal for generation up to NAPAF of
85% and recover the full fixed charges including the impact of cost of wagon tippler. Moreover,
theutilities are also resorting to blending of imported coal taking into account the overall
shortage of coal in the country. Considering the above factors in totality, we allow the
expenditure claimed by the petitioner for Wagon Tippler and its associated works, under
Regulation 9 (2) (vii) of the 2009 Tariff Regulations.
2. Strengthening of MGR track
The petitioner has claimed `4556.00 lakh during 2013-14 for strengthening of MGR track against
the CEA approved cost of `4548.50 lakh.
Since, the expenditure during the year 2013-14 is in the nature of R&M expenses, we are of the
view that the petitioner should meet the said expenditure from the Special allowance admissible
to Units I&II of the generating station in terms of Regulation 10(4) of the 2009 Tariff
Regulations and/or the Compensation allowance admissible under Regulation 19 (e) of the 2009
Tariff Regulations in order to meet the expenses on new assets of capital nature including in the
nature of minor assets
3.Lift pumps
The petitioner has claimed expenditure of `6810.00 lakh during 2013-14 towards lift pumps
against the CEA approved cost of `12840.60 lakh. The petitioner has submitted that the
installation of lift pump is required to augment water supply to the existing cooling water system
which is unable to cater the cooling water requirement of the generating station due to drop in
water level of source feeder canal on account of the revised Indo-Bangla Ganga water sharing
agreement and the scheme agreed to by the Ministry of Power Government of India in its review
meeting on 16.7.2004.
84
BSEB and BRPL have also submitted that the capitalisation under Regulation 9(2) is permissible
only after the expenditure is incurred by the petitioner.
Since the requirement of this work is on account of the treaty of the Government of India, the
expenditure falls under Regulations 9(2)(ii) of the 2009 Tariff Regulations and the same is
admissible.
4.Additional way side station
The petitioner has claimed expenditure of `518.00 lakh during 2013-14 against the CEA
approved cost of `541.00 lakh vide letter dated 20.4.2004..
It is observed that the petitioner has been managing the MGR system of 85 Km since the
commissioning of the generating station without any difficulty. Moreover, in order to enhance
the coal receipt system on account of the increased quantum of coal being received through
Indian railways, Wagon Tippler has been allowed to this generating station. Accordingly, in
commissions’ view, there is no requirement for this work and the petitioner’s claim for the
expenditure on this count is not allowed.
5.Procurement of Wagons (35 nos)
The petitioner has claimed expenditure of `1260.00 lakh during 2011-12 for procurement of 35
nos. new wagons as replacement of wagons declared unserviceable during 2004-09.
The expenditure towards replacement of old wagons by new wagons cannot be considered under
the provisions of Regulation 9 (2) of the 2009 Tariff regulations. Keeping in view that the
generating station is entitled to meet such expenditure from the Compensation allowance
admissible under Regulation 19(e) of the 2009 Tariff Regulations.
6.Ambient Air Quality Monitoring System
The petitioner has claimed expenditure of `93.91 lakh during 2009-10 towards supply of
Ambient Air Quality Monitoring System (AAQMS) for continuous monitoring of air quality at
the generating station.
85
Since the asset is required in compliance with the statutory guidelines of the Central Pollution
Control Board, which mandates the continuous monitoring of various environmental parameters
at the generating station, we allow the claim of the petitioner under Regulation 9 (2) (ii) of the
CEA approved R&M activities
1.
The petitioner has claimed total expenditure of `1584.13 lakh during 2009-13 (`748.46 lakh
during 2009-10, `5.67 lakh during 2010-11, `589.00 lakh during 2011-12 and `241.00 lakh
during 2012-13) for CEA approved R&M activities vide letters dated 19.7.2002, 9.9.2002 and
24.3.2003, which are already under implementation.
The petitioner has submitted that the R&M schemes approved by CEA are for sustaining current
performance and efficiency levels in view of enhanced norms notified by the Commission from
time to time and for meeting other statutory requirements.
The submission of the parties has been considered. The claim of the petitioner for capitalization
of an expenditure of `1584.13 lakh for 2009-13 for successful and efficient operation of the
generating station is not admissible, since the generating station is entitled to a normative
compensation allowance under Regulation 19 (e) of the 2009 Tariff Regulations in order to meet
the expenses on new assets of capital nature including in the nature of minor assets. It is noticed
that the petitioner has also opted for Special allowance under Regulation 10(4) which is
admissible (unit-wise) to the generating station. Keeping all these factors in consideration, the
expenditure towards CEA approved R&M activities as claimed by the petitioner, has not been
allowed.
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
5156.2
5400.41
0
693
24002
103.08
330.99
0
0
0
total
5259.28
5731.4
0
693
24002
86
IN LAKHS
ADD-CAP CLAIMED/ALLOWED FARRAKKA
35000
30000
25000
20000
15000
10000
5000
0
Add-cap claimed
Add-cap allowed
YEARS
The annual fixed charges approved in respect of the generating station for the period 2009-14, is as under:
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
Depreciation
7135.85
7727.18
8043.9
8092.4
10138.95
Interest on Loan
166.22
22.09
0
0
0
Return on Equity
36357.6
36744.71
36946.57
36970.98
37840.78
11177
11273.23
11389.59
11476.91
11658.41
O&M Expenses
23920
25284
26734
28266
29884
2300.68
2300.68
2306.98
2300.68
2300.68
Special Allowance
540
640
640
1791.6
2978.38
TOTAL
81597.35
83991.89
86061.04
88898.57
94801.2
following figure:
IN LAKHS
AFC COMPONENTS-FARRAKKA
40000
35000
30000
25000
20000
15000
10000
5000
0
Depriciation
Interest on Loan
Return on Equity
Interest on working
Capital
O&M Expenses
YEARS
87
4.11 Singrauli Super Thermal Power Station (2000 MW)
The generating station with a total capacity of 2000 MW comprises of five units of 200 MW and
two Units of 500 MW each. The dates of commissioning of various units of the generating
station are as under:
Unit-I
1.6.1982
Unit-II
1.2.1983
Unit-III
1.7.1983
Unit-IV
1.1.1984
Unit-V
1.6.1984
Unit-VI
1.7.1987
Unit-VII
1.5.1988
Capital Cost
The annual fixed charges claimed in the petition are based on the opening capital cost of
`127861.82 lakh as on 1.4.2009. The annual fixed charges approved in order dated 15.6.2011 is
based on the capital cost of `127861.82 lakh as on 31.3.2009.
In terms of the last proviso to Regulation 7 of the 2009 Tariff Regulations, the capital cost, after
removal of un-discharged liabilities of `382.35 lakh works out to `127479.47 lakh, on cash basis,
as on 1.4.2009.
The liabilities discharged, if any, by the petitioner would be included in the capital base as
additional capital expenditure, in the year of discharge .
Capital cost as on 1.4.2009, as per books
127861.82
Undischarged liabilities
382.35
Capital cost which will form the basis for determination of tariff
127479.47
Additional Capital Expenditure
The actual/ projected additional capital expenditure claimed by the petitioner for 2009- 14 is as under:
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
Add-cap claimed
1780.45
1598.12
14258.29
14033.46
6368.94
88
additional capital expenditure is required to be examined in terms of the provisions of Regulation
9 (2) of the 2009 Tariff Regulations.
Environment and Ash utilization- Regulation 9(2)(ii)
1. Ash Brick Plant
The petitioner has claimed expenditure for `29.00 lakh (`25.00 lakh during 2010-11 and `4.00
lakh during 2011-12) towards procurement of ash brick manufacturing machine for the
generating station. From the submissions of the petitioner, it is apparent that the ash brick
making machine is for achieving 100% ash utilization targets as per notifications of the Ministry
of Environment & Forests, Government of India.
Notifications of the Ministry of Environment & Forests, Government of India.does not mandate
the coal or lignite based thermal power stations to manufacture bricks. The petitioner should
utilize the money earned from sale of fly ash or fly ash based product for
procurement/installation of brick making machines. Moreover, the income generated from sale
of fly ash or fly ash based products like bricks are not passed on to the beneficiaries. Hence, we
are of the view that it would not be prudent to load the said expenditure on brick making
machine as additional capital expenditure, when such expenditure is neither covered under
change in law nor the income from fly ash utilization is shared with the beneficiaries
2. Bio-Methanation plant
The petitioner has claimed expenditure for `14.22 lakh during 2011-12 towards procurement of
bio-methanation plant for the generating station in compliance with the environmental guidelines
These are assets of minor nature, and the expenditure can be met from the compensation
allowance admissible to the generating station. Accordingly, the expenditure claimed is not
allowed to be capitalized..
3. Dry Ash Extraction & Transportation system
89
The petitioner has claimed expenditure for `4570.00 lakh (`3200.00 lakh during 2011- 12 and
`1370.00 lakh during 2012-13) towards Dry Ash Extraction & Transportation (DAETP) system
for Stage-II of the generating station on the ground that CEA has approved the proposal for
capital addition.
The expenditure is for achieving 100% ash utilization targets as per notifications of the Ministry
of Environment & Forests, Government of India. In view of this, the expenditure claimed is
allowed for capitalization under this head.
4. Ash Water Recirculation System for S1 dyke
The expenditure of `4200.00 lakh (`2400.00 lakh during 2011-12 and `1800.00 lakh during 201213) has been claimed by the petitioner towards Ash Water Recirculation System (AWRS) for S1
dyke.
The expenditure to be incurred for the said asset is for complete re-circulation of new ash pond
overflow in order to achieve zero discharge of effluents, in compliance with the requirement of
the directions of the Uttar Pradesh Pollution Control Board, the same is allowed for
capitalization under this head
Ash pond or Ash handling system -Regulation 9(2) (iii)
1.
The petitioner has claimed total expenditure towards ash pond and ash handling system for 200913, under this head as detailed under:
total
2009-10
2010-11
2011-12
2012-13
312.31
53.00
7405.00
4385.00
90
Since the units and the generating station as a whole would complete useful life of 25 years
during the tariff period, there would be no remaining deferred work for Ash Pond or Ash
Handling system within the original scope of work. Accordingly, the expenditure incurred /
projected to be incurred for the works related to Ash Pond and Ash handling system is required
to be met from the Special allowance admissible to the generating station towards R&M and life
extension of the units/generating station
R&M and life extension and CEA approved R&M schemes
The petitioner has claimed a total expenditure for `3769.90 lakh (`1332.31 lakh during 2009-10,
`1505.90 lakh during 2010-11, and `931.69 lakh during 2011-12) towards R&M and life
extension.
The petitioner has also claimed a total expenditure of `13300.82 lakh during the period 2011-14
towards R&M schemes approved by CEA vide letter dated 17.4.2007 which includes schemes
like DDC MIS Stage-II, Renovation & Retrofitting of ESP, Energy Management System,
AAQMAS Package and Opacity Monitoring Equipment
UPPCL has submitted that the petitioner had already been granted an expenditure for `5700.18
lakh towards R&M for the period 2006-09 vide order dated 21.1.2011 in Petition No. 189/2009,
and is claiming expenditure on R&M for respective units, the Special allowance cannot be
allowed to the petitioner in terms of the second proviso to Regulation 10(4) of the 2009 Tariff
Regulations.
Since Special allowance is admissible for the units of the generating station which have
completed/to be completed its useful life of 25 years during the tariff period, we are of the view
that the actual / projected capital expenditure incurred / to be incurred for R&M for life extension
of Stage-I Units of the generating station, can be met from the Special allowance allowed for
Stage-I units. Similarly, the expenditure on R&M for Unit-VI of Stage-II can also be met from
the Special allowance allowed for the year 2013-14. Since, Unit-VII of Stage-II shall complete
its useful life of 25 years during 2013-14 only, the capital expenditure for R&M of Unit-VII
91
cannot be allowed as in terms of the provisions of the 2009 Tariff Regulations, the expenditure
on R&M for life extension can be allowed from the next financial year (2014-15) from the date
of completion of useful life of 25 years.
The additional capital expenditure allowed for the purpose of tariff for 2009-14, including liabilities
discharged, is as under:
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
0
0
5600
3170
0
3.29
53.14
0
0
0
total
3.29
53.14
5600
3170
0
IN LAKHS
ADD-CAP CLAIMED/ALLOWED SINGRAULI
16000
14000
12000
10000
8000
6000
4000
2000
0
Add-cap claimed
Add-cap allowed
YEARS
The annual fixed charges approved in respect of the generating station for the period 2009-14, is as under:
Column1
2009-10
2010-11
2011-12
2012-13
2013-14
Depreciation
237.25
254.81
195.91
379.37
463.06
Interest on Loan
482.43
361.9
396.07
453.67
453.67
Return on Equity
14331.39
14333.38
14532.49
14841.38
14953.03
7052.66
7174.82
7304.49
7421.79
7609.79
O&M Expenses
31200
32980
34870
36870
38980
3184.47
3175.77
3184.47
3184.47
3184.47
Special Allowance
4780
5936
6238.36
6558.01
9693.93
TOTAL
61268.2
64216.68
66721.79
69708.69
75337.95
92
following figure:
IN LAKHS
AFC COMPONENTS-SINGRAULI
50000
40000
30000
20000
10000
0
Depriciation
Interest on Loan
Return on Equity
Interest on working
Capital
O&M Expenses
YEARS
93
CHAPTER-5
Conclusion
5.1 Conclusion
5.1.1 Capital Cost:
As per Regulation 7 of The tariff regulations 2009-14, the capital cost includes the expenditure
incurred or projected to be incurred up to the COD, initial capitalized spares and additional
capital expenditure incurred or projected to be incurred.
The main problem with the inclusion of the projected additional capitalization being included in
the capital cost is that the beneficiaries which in this case is distribution company has to shell out
out more amount in form of tariff which will be returned after 4 to 5 years if the generation
station fails to invest in the said additional capital, which is a loss to the distribution company as
they will be cash strapped needlessly.
This problem can be solved if true up is done by the commission every year for the generation
company.
5.1.2 Need for prudence check:
1. Sometimes as we noted in the chapter 4, the generation company claims an additional
capitalization but the beneficiary receives the benefits , like reduction the tariff rates , after a long
time like 3 to 4 years. Such kind of claim should be discouraged as puts too much of a pressure
on the distribution company without reason.
2. The additional capitalization claimed by a generating station which offers no benefit to
The beneficiary but only to the said station must be discouraged.
3. The special allowance for the thermal generation plants based on coal must be utilized instead
of keeping the said expenditure for the additional capitalization which will benefit the
beneficiary as they will be charged less and also proper utilization of special allowance will be
done.
4. The assets of the minor nature must be met from the compensation allowance instead to be
capitalized via additional capitalization.
94
5.2 Limitations of the Project
1. Tariff orders are collected from commissions site but in general orders prior to FY09 were not
available anywhere.
2. Most of the analysis is done by the normative values set by the commission.
95
96
REFERENCES
[1]
Tariff
Order
for
DISCOMS
&
GENCOS
[2] “Emerging opportunities & challenges-Power sector”, PWC Consulting, Jan2012, New Delhi
[3] “Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations,
2009, India.
[4] National Tariff Policy, Ministry of Power,India
[5] Annual Report, CERC, 2010-11,India
[6] Approach Paper Tariff Regulation 2014-19,CERC, New Delhi
[7] "The Performance of State Power Utilities for the years 2008-09 to 2010-11", PFC, 2012,
New Delhi
[8] “Benchmark Capital Cost (Hard cost) for Thermal Power Stations with Coal as Fuel”, CERC,
2010, New Delhi
97
98

Optimization of Power Purchase cost and analysis of annual fixed cost

Transcription

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