CERC Approves Transmission Tariffs for Power Grid's Southern Region Assets, Ensuring Continued Grid Stability - 2025-03-28

CERC Greenlights Transmission Tariff for Power Grid's Southern Region Network

New Delhi, India – The Central Electricity Regulatory Commission (CERC) has issued a crucial order approving the trued-up transmission tariff for the fiscal years 2019-24 and determining the tariff for 2024-29 for key transmission assets owned by Power Grid Corporation of India Limited (PGCIL). This decision, issued on March 28, 2025, ensures continued financial viability and operational stability for critical power infrastructure in Southern India.

Background and Petition

PGCIL, the country's largest power transmission utility, filed Petition No. 468/TT/2024 under Section 62 and Section 79 of the Electricity Act, 2003, seeking tariff truing-up for the 2019-24 period and tariff determination for the upcoming 2024-29 period. The petition pertains to the "Combined Assets" under the "System Strengthening-II" project in the Southern Region, which includes vital infrastructure like additional bays at Kolar and Hosur, and the 400 kV Hiryur Substation. A wide array of beneficiaries, including state electricity boards and distribution companies from Tamil Nadu, Kerala, Goa, Pondicherry, Andhra Pradesh, Telangana, and Karnataka, were listed as respondents.

Key Issues and CERC's Analysis

The CERC bench, comprising Shri Ramesh Babu V. and Shri Harish Dudani, meticulously reviewed PGCIL's petition, supporting affidavits, and responses from Karnataka State Electricity Board Limited (KSEBL), a key respondent. KSEBL raised concerns regarding Return on Equity (RoE) grossing up, Income Tax assessments, Interest on Loan (IoL), and Goods and Services Tax (GST).

The Commission addressed each aspect, relying on the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019 and 2024.

Depreciation, Interest on Loan, and Return on Equity: The CERC largely affirmed PGCIL’s claims for Depreciation, Interest on Loan, and Return on Equity after necessary adjustments. Notably, for RoE, the Commission considered the applicable Minimum Alternate Tax (MAT) rates for grossing up, ensuring PGCIL's post-tax return is maintained as per regulations. The order clarified that under/over recovery of grossed-up RoE will be adjusted on a year-to-year basis with beneficiaries.

Operation & Maintenance Expenses (O&M): O&M expenses were approved as claimed by PGCIL, aligning with the normative levels specified in the 2019 Tariff Regulations for the truing-up period and 2024 Tariff Regulations for the 2024-29 period. These norms are differentiated based on asset type (transmission lines, substations, transformers).

Interest on Working Capital (IWC): IWC was calculated based on the prescribed methodology in tariff regulations, considering components like O&M expenses, maintenance spares, and receivables, and utilizing the applicable SBI MCLR-linked interest rates for each year of both tariff periods.

Tariff Approvals and Other Reliefs

After detailed analysis, CERC approved the trued-up Annual Fixed Charges (AFC) for 2019-24 and determined the AFC for 2024-29.

Trued-up AFC (₹ in lakh):

Particulars	2019-20	2020-21	2021-22	2022-23	2023-24
AFC Allowed	819.20	824.43	830.04	840.93	859.25

Approved AFC for 2024-29 (₹ in lakh):

Particulars	2024-25	2025-26	2026-27	2027-28	2028-29
AFC Allowed	739.88	759.23	779.37	800.64	823.39

CERC also granted PGCIL permission to seek reimbursements for petition filing fees and publication expenses from beneficiaries. Further, it allowed separate billing and recovery of license fees and Regional Load Despatch Centre (RLDC) fees & charges. Claims related to Goods and Services Tax (GST) were deemed premature as GST is currently not applicable to transmission services. PGCIL was permitted to file separate petitions for security expenses, insurance expenses, capital spares, and CTUIL fees as per regulatory provisions.

Implications

This order by the CERC is crucial for ensuring the financial health of PGCIL’s transmission assets in the Southern Region. The approved tariffs enable PGCIL to recover its costs and earn a regulated return, which is vital for maintaining and upgrading the transmission infrastructure. This, in turn, supports the reliable and efficient flow of electricity to millions of consumers across Southern India, underpinning the region's economic activity and growth. The tariff determination process, grounded in established regulations, highlights CERC's role in balancing the interests of transmission companies and electricity consumers.