In pursuance of the Tariff based Competitive bidding Guidelines for Transmission Service

## Report on Central Electricity Regulatory Commission Notification Regarding Tariff-Based Competitive Bidding **1. Executive Summary:** This report analyzes a notification issued by the Central Electricity Regulatory Commission (CERC) on March 30, 2022, concerning tariff-based competitive bidding guidelines for transmission services. This document, which appears to be an amendment related to escalation rates for bid evaluation and payment, updates specific rates used in the evaluation and payment processes for transmission projects. Key findings highlight revised annual escalation rates for escalable transmission charges, discount rates for levelized transmission charges, and an annual inflation rate for payment purposes. This notification is crucial for stakeholders involved in transmission projects, as it directly impacts financial evaluations and payment structures. **2. Introduction:** This report provides an overview of the CERC notification issued on March 30, 2022, regarding tariff-based competitive bidding guidelines for transmission services. The report aims to inform affected parties about the changes to escalation rates relevant to bid evaluation and payment, as outlined in the notification text. The analysis is based solely on the information provided within the given document. **3. Policy Overview:** * **Amendment:** This notification acts as an amendment to the "Tariff based Competitive bidding Guidelines for Transmission Service", amended up to 10th October, 2008, issued by the Ministry of Power. * **Core Objective(s):** The core objective, as inferred from the text, is to update and notify the applicable rates for bid evaluation and payment processes within the framework of tariff-based competitive bidding for transmission services. The amendment aims to reflect current economic realities in tariff calculations. **4. Background and Rationale:** The amendment addresses the need to adjust financial parameters used in the tariff-based competitive bidding process. The rationale for the amendment appears to be the requirement to update escalation and discount rates to align with prevailing economic conditions (likely reflecting inflation and market interest rates). These updates are critical for ensuring fair and accurate project valuation and payment within the transmission sector. The prior rates were apparently no longer reflective of market realities, necessitating this adjustment. **5. Key Provisions / Changes:** This notification specifically revises the annual escalation and discount rates used for bid evaluation and payment within transmission service agreements. * **Specific Part of Original Policy Changed:** Schedule 7 of the Standard Transmission Service Agreement documents and Clause 3.3.1.3 a of the Standard Request for Proposal are impacted by this amendment. * **New Rule/Provision:** The notification introduces the following revised rates: * Annual escalation rate for escalable transmission charges for bid evaluation: 5.29% * Discount rate for computation of levelized transmission charges for bid evaluation: 8.09% * Annual inflation rate for escalable transmission charges for payment: 10.21% * **Difference/Effect of the Change:** The new rates replace the previous rates used in bid evaluation and payment calculations. This change will affect the financial modeling of transmission projects, potentially influencing bid competitiveness and the ultimate cost of services. Higher inflation rates may lead to increased payments over time, while adjusted escalation rates will influence bid pricing. **6. Target Audience and Stakeholders:** The target audience and stakeholders directly affected by these changes include: * Transmission service providers (TSPs) participating in tariff-based competitive bidding. * Project developers bidding for transmission projects. * Financial institutions involved in financing transmission projects. * The Central Electricity Regulatory Commission (CERC) itself, as the regulatory body. * The Ministry of Power, who issued the base guideline. **7. Implementation Aspects (Inferred):** * **Responsible agency/bodies mentioned?** The Central Electricity Regulatory Commission (CERC) is the responsible body for issuing and implementing these rate changes. * **Any timelines or procedures specified in the text?** The rates are applicable for the period from April 1, 2022, to September 30, 2022. This suggests that these rates will be reviewed and potentially updated periodically. * This is an amendment, so the implementation rests on the existing implementation framework related to the original guideline, now updated with these new rates for the stated period. **8. Expected Outcomes / Impact of Changes:** The intended outcome of these changes is to provide a more accurate and up-to-date financial framework for tariff-based competitive bidding in the transmission sector. The revised rates are likely to influence bid submissions, potentially leading to adjustments in project costs and payment schedules. The updated inflation rate for payment aims to ensure that transmission service providers are adequately compensated for inflationary pressures. This potentially promotes a fair and attractive environment for investment in transmission infrastructure. **9. Conclusion:** The CERC notification of March 30, 2022, represents an important update to the tariff-based competitive bidding guidelines for transmission services. By adjusting the annual escalation rates and discount rates, the CERC seeks to maintain the relevance and accuracy of the financial framework governing transmission projects. These changes have direct implications for stakeholders involved in the sector, particularly concerning bid evaluation, project financing, and payment structures. The notification underscores the CERC's commitment to adapting regulatory parameters to reflect evolving economic conditions within the power sector. The short validity period suggests more frequent rate revisions may be expected.

Key Entities Referenced