Tariff2009 14

CERC tariff framework2004 &

2009

Components of ARR of GenCo

• Fixed Charges– Return on Equity

– Interest on loan capital

– Depreciation & AAD;

– Interest on working capital;

– Operation and maintenance expenses;

– Cost of secondary fuel oil (for coal-based and lignite fired generating stations only);

– Special Allowance in lieu of R&M or separate Compensation Allowance

• Energy Charges

• Special allowance in lieu of R&M or separate compensation allowance, wherever applicable.

Norms of Operations

• Availability of generation plant – 85% • PLF for incentives – 80%• Secondary Fuel Oil Consumption for Coal genCo – 1 ml/ kWh• Secondary Fuel Oil Consumption for Lignite fired genCo – 2 ml/ kWh• Auxiliary energy consumption for Coal Plants – 8.5%• Auxiliary energy consumption for Gas and Liquid Plants – 3% for Combined

Cycle, 1% for Open cycle• Limestone consumption norms• Normative Annual Plant Availability factor for Hydro plants redefined in

new regulation• NAPAF for AC Transmission system – 98%• NAPAF for DC bipole Transmission link – 92%• NAPAF for DC back to back Transmission link – 95%

Return on Equity

• 30% of the Capital Investment in Plant, Machinery and its offices – Where actual equity is more than 30%, excess equity shall be treated

as debt

– Where actual equity is less than 30%, actual equity shall be considered for Return

• Base Pretax Return 15.5%/(1-tax rate) (Earlier Post tax 14%)

• Base pretax Return 16.0 %/(1-tax rate) for projects commissioned after 01.04.2009 within prescribed Timeline

• The Tax on income shall be trued at actual every year after assessment

Interest on Loan Capital

• The benefit of swapping of loan shall be shared between genCo/ TransCo and beneficiary in ratio 1: 2

• Normative loan repayment equal to depreciation

• Accordingly interest shall be calculated on balance normative loan at weighted average interest rate.

• Cost of hedging and foreign exposure shall be recoverable from beneficiary

Depreciation & AADRegulation 2004 Regulation 2009

Coal Thermal Plant 3.60% +AAD 5.28% for 12 years

Gas/Diesel/ Liquid

Fuel Thermal Plant6.00% +AAD 5.28% for 12 years

Hydro Plant 2.57% +AAD 5.28% for 12 years

Transmission Line 5.28% for 12 years

Land and Civil

Building0%

Licence fee/ lease

life

0.00%

3.34%

Depreciation D & AAD D

Depreciation after

debt repayment periodRemaining unavailed depreciation to

spread on remaining useful life of

asset.

Interest on Working CapitalRegulation 2004 Regulation 2009

Coal/ Lignite/

limestone cost

1.5 month for pit head plants at

normative Plant availability

1.5 month for pit head plants at


Coal/ Lignite/

limestone cost

2 month for non-pit head plants

at normative Plant availability

2 month for non-pit head plants at


Secondary Fuel

oil Stock

2 month at normative Plant

availability

2 month at normative Plant

availability

Gas Station One month of Oil/ Gas One month of Oil/ Gas

Maintenance

Spares

1% of GFA in first year

Thereafter escalated by 6%

every year

20% of O&M Cost for Coal/ Lignite

Plant

30% of O&M Cost for Gas Plant

15% of O&M Cost for Hydro Plant

Receivables 2 months fixed + variable

charges calculated at target

availability

2 months fixed + variable charges

calculated at target availability

O&M Cost One month One month

Interest rate SBI PLR as on 1.4.2004 SBI PLR as on 1.4.2009

Notional charge Notional charge

Operations & Maintenance Cost

• As given in table.

• The charges schedule approved

Other matters in generation & Transmission

• Rebate 2% for payment through L/c

• Late Payment Surcharge 1.25% after 60 days from date of billing.

• UI Charges – Variation between actual generation and scheduled generation

Comparison of Key parametersParameter Regulation 2004 Regulation 2009

Useful Life of Coal/

Lignite Thermal Plants

25 years 25 years

Useful Life of Gas &

Liquid Fuel

15 Years 25 Years

AC/ DC S/s 25 years 25 years

Hydro Stations 35 years 35 years

Transmission Lines 25 years 35 years

Return on Equity 14% 15.50%

16.00%

Refinancing the Loan Cost to be borne by

beneficiary if there is net

benefit

All benefit to the

beneficiary

Cost to be borne by

beneficiary if there is net

benefit

Benefit to be shared in

GenCo 67%: beneficiary

33%

CDM benefit

• CDM revenue of 1st year for GenCo/ TransCo – 100%

• CDM revenue of 2nd year for GenCo/ TransCo – 90%

• CDM revenue of 3rd year for GenCo/ TransCo – 80%

• CDM revenue of 4th year for GenCo/ TransCo – 70%



• CDM revenue of subsequent year for GenCo/ TransCo – 50%

Tariff2009 14

Education

Transcript of Tariff2009 14