Regulatory authorities must allow reimbursement of costs based on compliance with directives, without arbitrarily limiting recoverable costs.

ORDER

Power Grid Corporation of India Limited filed Petition No. 146/MP/2017 under Regulations 54 and 55 of the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulation, 2014 (hereinafter referred to as the “2014 Tariff Regulations‟), “Power to Relax‟ and “Power to remove Difficulty” seeking one time reimbursement of carrying cost for replacement of porcelain insulators with polymer insulators of the assets covered under Petition No. 305/2010 in respect of Northern Region. The Petitioner made the following prayers in the petition.

“(i) Approve the carrying cost on insulators of Rs. 1714.64 lakh;

(ii) Approve the loss on damaged insulators of Rs. 945.64 lakh; and

(iii) Approve the cost on unused insulators beyond 31.3.2017 or Rs. 2021.06 lakh as one time recovery of the WDV.”

2. The Commission vide order dated 28.5.2018 allowed carrying cost of the dismantled insulators only up to 31.3.2014, which includes the re-utilised as well as the un-utilised insulators. The Petitioner’s claim for compensation for loss on damaged insulators was rejected by the Commission, and the Commission observed that the loss in this regard should be absorbed by the Petitioner. Further, the Commission allowed the Written Down Value (WDV) (less 5% scrap value) on unused insulators till 31.3.2014. The relevant extract of the order dated 28.5.2018 in Petition No. 146/MP/2017 is as follows:

“10. In the 27^th TCC and 30^th NRPC meetings held on 27.2.2014 and 28.2.2014 respectively, it was agreed to replace all porcelain insulators with polymer insulators for all upcoming lines in view of better reliability and other advantages. Further, in the 15^th TCC and 15^th NERPC meetings held on 20.8.2015 and 21.8.2015 respectively, it was agreed by the OCC members that in future all new transmission lines would be built with polymer insulators and also existing disc insulators would be replaced with polymer insulators in phased manner as is being done in the Northern Region for betterment of the system. The Petitioner has requested to allow either the carrying cost on unused insulators beyond 31.3.2017 or to allow one time recovery of its WDV of Rs. 2021.06 lakh. It is noted that in Petition No. 305/2010, the Petitioner had not envisaged the date(s) of utilization of the dismantled insulators. Therefore, the same could not be dealt with while issuing the order dated 7.2.2013. It is further noticed that despite the decision taken in 27th TCC and 30th NRPC meetings dated 27.2.2014 and 28.2.2014 respectively to the effect that the Petitioner would not utilise the porcelain insulators in future, the Petitioner has utilized the same beyond 2013-14 i.e. till 31.3.2016. The Petitioner has orally clarified that the actual implementation of TCC and NRPC meeting`s decision could not take place till March, 2016. The Petitioner has contended that further utilization of the dismantled insulators have become uncertain, as the stocks of insulators have become very old and are gradually becoming defective and unusable. Considering the fact that the above TCC and NRPC meetings had not taken place at the time of issuing of order in Petition No. 305/2010, with the purpose of maintaining a proper balance between the interest of the beneficiaries and the Petitioner, and keeping in view the TCC/NRPC meetings and to avoid complexities, we allow the carrying cost of the dismantled insulators only till 31.3.2014, which includes the re-utilised as well as the un-utilised insulators.

11. The Petitioner in the second prayer has prayed for approval for the compensation for loss on damaged insulators. According to the Petitioner, 214325 nos. insulators got damaged during dismantling and a