ORDER

The petitioner, North Eastern Electric Power Corporation Ltd (NEEPCO) had filed this petition for approval of tariff in respect of Assam Gas Based Power Station (291 MW) (hereinafter referred to as “the generating station”) for the period from 1.4.2003 to 31.3.2004 based on the terms and conditions contained in the Commission’s notification dated 26.3.2001, (hereinafter referred to as “the notification dated 26.3.2001”). On completion of pleadings and after hearing the parties, final tariff in respect of the generating station for the said period was awarded vide the Commission’s order dated 22.8.2005. Subsequently, the petitioner filed Review Petition No 115/2005 for revision of tariff of the generating station. Consequently, the tariff of the generating station was revised vide the Commission’s order dated 14.12.2006. The summary of the Annual Fixed Charges awarded is given hereunder:

(Rs in lakh)

2. The petitioner filed Appeal No 162 of 2005 before the Appellate Tribunal for Electricity (hereinafter referred to as “the Appellate Tribunal”) which was disposed vide order dated 31.10.2007. The Appellate Tribunal vide the above order had held as under:

(a) Interest on loan capital shall be determined based on normative debt repayment formula.

(b) Cost of refinancing shall be shared by the beneficiaries who are benefited as a result of refinancing.

3. The above judgment of the Appellate Tribunal has necessitated recalculation of the annual fixed charges of the generating station. Accordingly, we proceed to recalculate the tariff of the generating station.

4. Interest on Loan has been recalculated in the following manner:

(a) The gross opening loan amount has been worked out based on normative debt - equity ratio of 1:1.

(b) The cumulative repayment of loan upto 31.3.2003 has been worked out considering the scheduled repayment based on loan details given in the petition and in the subsequent submissions of the petitioner.

(c) Annual repayment for the year 2003-04 has been worked out on normative basis using the formula:

Actual repayment during the year X normative net loan at the beginning of the year/actual net loan at the beginning of the year.

(d) The loan drawals upto 31.3.2003 have been considered.

(e) Some of the Government of India loans having higher rate of interest were pre-paid during 2002-03 by taking loans from HUDCO, United Bank of India and PSU Bonds of 8^th and 9^th series. Subsequently, HUDCO loan and the balance Government of India loan were repaid by syndicated loan having floating rate of interest on 19.3.2004. Interest rates applicable on refinanced/substituted loans with fixed rate of interest have been considered in the calculation. As such the interest rate applicable on HUDCO loan, UBI loan and PSU Bonds of 8^th and 9^th series have been considered in the calculation.

(f) Refinancing/substitution of HUDCO loan and balance Government of India loan by syndicated loan having floating rate of interest has not been considered in the calculation because as per the Commission’s order dated 13.12.2002 in Petition No(s). 94/2002, 95/2002, 96/2002, 98/2002 and 99/2002, the benefit of re-financing should be passed on to the beneficiaries and through them the ultimate consumer only when a costlier loan is re-financed through cheaper loan with fixed rate of interest.

(g) In the above context, para 38 (f) of the Commission’s order dated 22.8.2005 in Petition No. 33/2003 is reproduced herein:

“In the present case, some of the GOI loans having higher rate of interest were pre-paid during 2002-03 by taking loans from HUDCO, United Bank of India (UBI) and PSU Bonds of 8^th and 9^th series. Subsequently, HUDCO loan and the balance GOI loan were repaid by syndicated loan having floating rate of interest on 19.3.2004.

The Commission in its order dated 13.12.2002 in petition no 94/200