Date: 2015-11-24Category: Extra OrdinaryState: Union GovernmentCountry: India
: In exercise of powers conferred under Section 178 of the Electricity Act, 2003 (36 of 2003) read with Section 61 thereof and all other powers enabling
Executive Summary:
This document outlines amendments to the Central Electricity Regulatory Commission (CERC) Terms and Conditions of Tariff Regulations, 2014. These amendments cover various aspects, including tariff determination for gas-based generating stations, treatment of foreign exchange risk, and depreciation norms for IT equipment. Regulation 23A is effective from June 1, 2015, and applies to the years 2015-16 and 2016-17 unless extended.
Key Points / Main Content:
Tariff Regulations:
* The difference between tariffs determined under different provisos will be recovered or refunded with simple interest, in three equal monthly installments.
* Financial gains from operational parameters for generating stations (excluding hydro) will be shared between generating stations and beneficiaries in a 60:40 ratio.
* Specific formulas are provided for calculating net gains for hydro generating stations based on auxiliary energy consumption.
Financial and Cost-Related Amendments:
* Gains or losses from foreign exchange risk on loan amounts during construction are to be included as part of the capital cost.
* The term "and IEDC" is inserted after "IDC" in the second proviso to subclause ii of Clause 2 of Regulation 12.
* Actual tax on income from other business streams will not be considered for calculating the effective tax rate.
* Salvage value for IT equipment and software will be considered NIL, with 100% asset value being depreciable.
Specific Unit and Appendix Amendments:
* "Durgapur TPS Unit 1" is replaced with "Durgapur TPS Unit 3."
* A clause regarding deferred tax liabilities is amended, specifying recoverability periods.
* Fibre Optic (6.33) is added to Appendix II Depreciation Table.
Gas-Based Generating Stations:
* Regulation 23A is inserted, addressing tariff determination for gas-based generating stations covered under the Government of India's scheme. Tariff will be determined considering the scheme's provisions, with deviation of relevant regulations.
Impact Analysis:
Generating Stations:
* Impact: Changes in tariff calculation methods, financial gain sharing, and depreciation norms affect revenue and cost considerations.
* Action Required: Adapt financial models and operational strategies to comply with the new regulations, particularly concerning gas-based stations and hydro stations.
Beneficiaries and Long-Term Transmission Customers (DICs):
* Impact: Alterations in tariff structures and deferred tax liability recovery impact electricity costs.
* Action Required: Understand the changes in tariff calculations and deferred tax recovery to manage electricity procurement costs.
Regulatory Bodies (CERC):
* Impact: Responsible for enforcing the amended regulations and ensuring compliance.
* Action Required: Monitor the implementation of these amendments and address any disputes or clarifications needed.
Transmission Licensees:
* Impact: Changes in deferred tax liability recovery impact financial liabilities.
* Action Required: Understand the changes in tariff calculations and deferred tax recovery to manage financial liabilities.
Key Entities Referenced
Central Electricity Regulatory Commission: The central regulatory body for the electricity sector in India, responsible for tariff regulations and other related matters.
Electricity Act, 2003: The Indian legislation governing the electricity sector, providing the legal framework for generation, transmission, distribution, and regulation of electricity.
Central Electricity Regulatory Commission Terms and Conditions of Tariff Regulations, 2014: The original tariff regulations which are being amended by this notification.
New Delhi: The location where the notification was issued.
Ministry of Power: The ministry of the Government of India responsible for the electricity sector.
Office Memorandum No. 422015Th.1 dated 27.3.2015: Office Memorandum issued by the Ministry of Power, Government of India regarding utilization of Gas based power generation capacity.
Durgapur TPS Unit3: A unit of the Durgapur Thermal Power Station, referenced in the amendment to Regulation 29.
Government of India Press, Ring Road, Mayapuri, New Delhi110064: Printer of the Gazette of India
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4910 GI/2015 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC. 4]
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CENTRAL ELECTRICITY REGULATORY COMMISSION
NOTIFICATION
New Delhi, the 5th November, 2015
No. L-1/144/2013/CERC: In exercise of powers conferred under Section 178 of the Electricity Act, 2003 (36 of
2003) read with Section 61 thereof and all other powers enabling it in this behalf, and after previous publication, the
Central Electricity Regulatory Commission hereby makes the following regulations to amend Central Electricity
Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 (hereinafter referred as “the Principal
Regulations”):
1. Short title and commencement
(1) These regulations may be called the Central Electricity Regulatory Commission (Terms and Conditions of
Tariff) (First Amendment) Regulations, 2015.
(2) These regulations except Regulation 23A shall come into force from the date of publication in the Official
Gazette.
(3) Regulation 23A shall come into force with effect from 1.6.2015 and shall be applicable for the years
2015-16 and 2016-17 unless extended further.
2. Amendment to Regulation 7 of the Principal Regulations:
(1) The following proviso shall be added after proviso (i) under Clause 7 of Regulation 7 of the Principal
Regulations:
“(ia) The difference between the tariff determined in accordance with proviso (i) above and the tariff
determined in accordance with Regulation 6 of these regulations shall be recovered or refunded with
simple interest at the rate equal to the bank rate as on 1st April of the respective year, in three equal
monthly instalments.”
(2) The following proviso shall be added after proviso (i) under Clause 8 of Regulation 7 of the Principal
Regulations:4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC. 4]
“(ia) The difference between the tariff determined in accordance with proviso (i) above and the tariff
determined in accordance with Regulation 6 of these regulations shall be recovered or refunded with
simple interest at the rate equal to the bank rate as on 1st April of the respective year, in three equal
monthly instalments.”
3. Amendment to Regulation 8 of the Principal Regulations: (1) In Clause (6) of Regulation 8 of Principal
Regulations, the second sentence shall be substituted as under:
“The financial gains computed as per the following formulae in case of generating station other than hydro
generating stations on account of operational parameters as shown in Clause 2 (a) (i) to (iii) of this Regulation
shall be shared in the ratio of 60:40 between the generating stations and beneficiaries.”
(2) The following proviso shall be added after the formula given under Clause (6) of Regulation 8 of the Principal
Regulations:
Provided that in case of hydro generating stations, the net gain on account of Actual Auxiliary Energy
Consumption being less than the Normative Auxiliary Energy Consumption, shall be computed as per following
formulae provided the saleable scheduled generation is more than the saleable design energy and shall be shared in the
ratio of 60:40 between generating station and beneficiaries:
(i) When saleable scheduled generation is more than saleable design energy on the basis of normative
auxiliary consumption and less than or equal to saleable design energy on the basis of actual auxiliary
consumption:
Net gain (Million Rupees) =
(Saleable Scheduled generation in MUs- Saleable Design energy on the basis of normative auxiliary
consumption in MUs) x 0.90
(ii) When saleable scheduled generation is more than saleable design energy on the basis of actual
auxiliary consumption:
Net gain (Million Rupees) =
{Saleable Scheduled generation in MUs- [(Saleable Scheduled Generation in MUs x (100-normative
AEC in %)/(100- actual AEC in %)]}x 0.90
4. Amendment to Regulation 9 of the Principal Regulations: A new sub-clause shall be added under sub-clause
(b) of Clause (2) of Regulation 9 of Principal Regulations as under:
“(bi) Any gain or loss on account of foreign exchange risk variation pertaining to the loan amount availed
during the construction period shall form part of the capital cost.”
5. Amendment to Regulation 12 of the Principal Regulations: In second proviso to sub-clause (ii) of Clause (2)
of Regulation 12 of the Principal Regulations, the word “and IEDC” shall be inserted after the word “IDC”.
6. Addition of a new Regulation to the Principal Regulations: A new regulation, namely Regulation 23A shall
be inserted after Regulation 23 of the Principal Regulations:
“23A. Tariff Determination of Gas based generating stations: The tariff of gas based generating stations
covered under the “Scheme for Utilization of Gas based power generation capacity” issued by the Government
of India, Ministry of Power vide Office Memorandum No. 4/2/2015-Th.1 dated 27.3.2015 shall be determined
in due consideration of the provisions of that scheme in deviation of the relevant regulations”.
7. Amendment to Regulation 25 of the Principal Regulations: In Clause (1) of Regulation 25 of the Principal
Regulations, the last sentence shall be substituted as under:
“The actual tax on income from other business streams including deferred tax liability (i.e. income on business
other than business of generation or transmission, as the case may be) shall not be considered for the calculation
of effective tax rate.”
8. Amendment to Regulation 27 of the Principal Regulations: The following proviso shall be added under
Clause (3) of Regulation 27 of the Principal Regulations:
“Provided that the salvage value for IT equipment and software shall be considered as NIL and 100% value of
the assets shall be considered depreciable.”
9. Amendment to Regulation 29 of the Principal Regulations: In the table under sub-clause (b) of Clause (1) of
Regulation 29 of the Principal Regulations, the words “Durgapur TPS (Unit-1)” shall be substituted by the words
“Durgapur TPS (Unit-3)”.¹Hkkx IIIµ[k.M 4º Hkkjr dk jkti=k % vlk/kj.k 5
10. Amendment to Regulation 49 of the Principal Regulations: Regulation 49 of the Principal Regulations shall
be substituted as under:-
“49. Deferred tax liabilities for the period upto 31st March, 2009 whenever they materialise shall be recoverable
directly by the generating companies or transmission licensees from the beneficiaries or long term transmission
customers/DICs, as the case may be. Deferred tax liabilities for the periods from 1.4.2009 to 31.3.2014 and
1.4.2014 to 31.3.2019 shall not be recoverable from the beneficiaries or the long term transmission
customers/DICs, as the case may be.”
11. Amendment to the Appendix II to the Principal Regulations: In Appendix II (Depreciation Table) to the Principal
Regulations, the following shall be added under Serial No. (o):
(iii) Fibre Optic 6.33%
[ADVT.-III/4/Exty/150/15]
SHUBHA SARMA, Secy.
Note : The Principal Regulations were published on 12th March, 2014 in the Gazette of India Extraordinary Part III-
Section 4 at Serial No.83.
Printed by the Manager, Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.