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2002 Supreme(Online)(CERC) 26
CENTRAL ELECTRICITY REGULATORY COMMISSION
Shri D.P. Sinha, Member, Shri G.S. Rajamani, Member, Shri K.N. Sinha, Member
National Thermal Power Corporation Ltd. – Appellant
Versus
Uttar Pradesh Power Corporation Ltd. – Respondent
Petition No.32/2002
For the Appellants/Petitioners: Shri K.K. Garg, Shri M.S. Chawla, Shri C. Asokan, Shri B. Dubey
For the Respondents: Shri D.D. Chopra, Shri H.C. Verma, Shri A.K. Tandon, Shri T.P.S. Bawa, Shri R.K. Arora, Shri V.K. Gupta, Shri S.C. Mehta
The court reaffirmed the necessity for compliance with regulatory standards in determining tariff submissions and capitalisation claims.
Headnote:(A) Electricity Act - Sections applicable for tariff approval process - Notification dated 30.4.1994 - Additional capitalisation allowed under certain conditions - Approval of revised fixed charges petitioned for the Auraiya Gas Power Station covering years 1997-2001. (Paras 4, 8, 10)
(B) Tariff Calculation - Methodology outlined for allowing claims based on additional capitalisation, FERV, O&M expenses, and working capital. Court emphasizes regulatory compliance and proper accounting standards for cost consideration. (Paras 4, 8, 20, 24)
Facts of the case:
The petition requests approval for the Auraiya Gas Power Station's tariff for 1997-2001, citing the Ministry of Power's previous notifications and capitalisation claims.
Findings of Court:
Adjustments based on earlier tariff claims were directed; no capitalisation of post-commercial operation spares was allowed.
Issues: The key issues were the validity of additional capitalisation claims and the adherence to the Ministry of Power guidelines.
Ratio Decidendi: The methodology for tariff calculation was reaffirmed, emphasizing the necessity for regulatory compliance in cost submissions.
Result: The petition is disposed of in line with the established guidelines.
| Table of Content |
|---|
| 1. petition for tariff approval for auraiya gas power station. (Para 1 , 2 , 3) |
| 2. claims for additional capitalisation and costs need regulatory approval. (Para 4 , 5 , 10) |
| 3. court affirms methodology for tariff calculation and regulatory adherence. (Para 14 , 26) |
| 4. o&m expenses and working capital calculated per ministry of power guidelines. (Para 20 , 21) |
| 5. ruling that disposes of the petition with established guidelines. (Para 27) |
ORDER
(DATE OF HEARING 14.3.2002)
The petitioner has filed this petition for approval of tariff in respect of Auraiya Gas Power Station (Auraiya GPS) for the period from 1.4.1997 to 31.3.2001.
2. Auraiya GPS was declared under commercial operation with effect from 1.12.1990. The Central Government in Ministry of Power accorded its approval for the Revised Cost Estimate for Auraiya GPS at a cost of Rs.665.33 crores, excluding Working Capital Margin of Rs.13.44 crores vide its letter dated 21.10.1994. The tariff for Auraiya GPS was notified by Ministry of Power vide notification dated 30.4.1994, which was subsequently amended vide notifications dated 16.1.1997, 30.11.1998 and 14.5.1999 to account for increase in return on equity from 12% to 16% and additional capitalisation based on audited accounts up to 1996-97. The notification dated 30.4.1994 was valid up to 31.3.1997, but was continued on ad hoc basis beyond 31.3.1997 in view of Clause 6 thereof.
3. The petitioner had filed Petition No. 83/2000 to claim revised fixed charges due to additional capital expenditure and FERV capitalised in respect of Auraiya GPS for the years 1997-98 to 2000-01. The said petition was disposed of vide order dated 2.1.2002, when the Commission directed the petitioner to file fresh petition for determination of tariff for the period from 1.4.1997 to 31.3.2001 based on the terms and conditions notified by Ministry of Power as per the notification dated 30.4.1994. The present petition has been filed in pursuance of these directions of the Commission contained in the order dated 2.1.2002.
CAPITAL COST
4. Ministry of Power in its notification dated 16.1.1997 considered the project cost of Rs.617.23 crores, which included gross block of Rs.572.44 crores and initial spares of Rs.44.79 crores. Ministry of Power had allowed additional capitalisation of Rs.39.443 crores during 1992-93 to 1996-97 and FERV of Rs.13.14 crores. Therefore, the total admitted cost of the project, including the initial spares works out to Rs.669.81 crores as on 31.3.1997 and has been considered as the opening gross block for the purpose of present tariff petition.
5. The petitioner has claimed the amounts as detailed below for additional capitalisation during the period from 1997-98 to 2000-01: (Rs.in lakhs)
6. The petitioner has furnished justification for the following expenditure under the New Works in the respective years: 
7. The following methodology has been adopted for allowing or disallowing the claim of the petitioner:
New Works:
(a) Any work within the scope of approved project cost, but undertaken after the date of commercial operation has been allowed.
(b) The expenditure incurred for the replacement of existing equipment/facility due to technology becoming obsolete or the equipment having outlived its utility in the normal course of operation, has been allowed for capitalisation.
(c) The expenditure on the works undertaken on purchase of additional equipment/facility which is giving benefit exclusively to the petitioner without any apparent benefit to the beneficiaries has not been allowed, unless it is found that expenditure was necessary for the benefit of the employees for giving necessary facilities at the remote location of the power project.
(d) Any mandatory expenditure arising out of statutory obligation due to change of law, etc., has been allowed.
Balance Payments:
(a) Pertaining to works undertaken or order placed before the date of commercial operation which are presumed to be within the scope of approved project cost h
