In pursuance of the Tariff based Competitive bidding Guidelines for Transmission Service , amended up to 10th October, 2008, issued by the Ministry of Power and Schedule 7 of the Standard Transmission Service Agreement documents, the Central Electricity Regulatory Commission

## Report on Central Electricity Regulatory Commission (CERC) Notification Regarding Transmission Service Agreements **1. Executive Summary:** This report analyzes a notification issued by the Central Electricity Regulatory Commission (CERC) concerning Tariff-Based Competitive Bidding (TBCB) Guidelines for Transmission Services. The notification, effective from October 1, 2022, to March 31, 2023, addresses the annual escalation rate for payment related to transmission service agreements and discount rates for relief determination during construction periods due to unforeseen events and changes in law. Key findings include a 9.74% annual inflation rate for escalable transmission charges and an 8.09% discount rate for relief calculations. **2. Introduction:** This report aims to provide information about the CERC notification concerning financial aspects of transmission service agreements, specifically focusing on annual escalation rates and discount rates for relief determination. The analysis is based solely on the provided text of the notification. **3. Policy Overview:** * This notification pertains to existing guidelines regarding "Tariff based Competitivebidding Guidelines for Transmission Service". * **Core Objective(s):** Based on the text, the core objective of this notification is to specify the applicable financial parameters (annual escalation rate and discount rate) for payments and relief calculations related to transmission service agreements. It provides clarity and standardization in the financial aspects of these agreements. **4. Background and Rationale:** * This notification appears to be an amendment or update to the existing Tariff-Based Competitive Bidding (TBCB) guidelines. The notification specifies rates applicable for a defined period. The inclusion of both an annual inflation rate and a discount rate suggests a need to address both increasing costs (inflation) and potential financial relief required by unforeseen events or changes in law during the construction phase of transmission projects. This provides financial predictability for both transmission service providers and procurers. **5. Key Provisions / Changes:** This notification introduces specific *changes* to the existing TBCB framework by setting defined rates for calculation purposes. * **Part of Original Policy Changed:** The notification directly impacts Schedule 7 and Schedule 9 of the Standard Transmission Service Agreement documents. * **New Rule/Provision:** * Sets the annual inflation rate for escalable transmission charges at 9.74% for the period of 01.10.2022 to 31.03.2023. This rate is used for payment calculations. * Sets the discount rate for determining relief under Force Majeure Event or Change in Law during the construction period at 8.09% for the period of 01.10.2022 to 31.03.2023. This rate is used to calculate relief amounts. * **Effect of Change:** These changes introduce specific, time-bound financial parameters that are to be used in calculations regarding payment and relief for Transmission Service Agreements. The specific rates provide certainty to the involved parties. **6. Target Audience and Stakeholders:** Based on the text, the primary target audience and stakeholders include: * Transmission service providers (companies involved in the construction and operation of interstate transmission lines). * Power procurers (entities that purchase transmission services). * Central Electricity Regulatory Commission (CERC). * Ministry of Power. **7. Implementation Aspects (Inferred):** * **Responsible agency/bodies:** The CERC is responsible for issuing and enforcing the notification. The Ministry of Power is involved in setting the overall guidelines. * **Timelines or procedures:** The notification specifies the period for which the rates are applicable (01.10.2022 to 31.03.2023). Transmission Service Agreements executed under the TBCB framework must incorporate these rates during this period. * **Specific to Changes:** The identified rates must be used in the specific calculations defined in Schedules 7 and 9 of the Standard Transmission Service Agreement documents. **8. Expected Outcomes / Impact of Changes:** The intended outcome of these specific changes introduced by the notification is: * **Increased clarity and predictability:** Providing specific rates for annual escalation and relief determination reduces ambiguity in financial calculations related to transmission service agreements. * **Fairer risk allocation:** The discount rate for Force Majeure/Change in Law events provides a mechanism for sharing risks between transmission service providers and procurers, ensuring that providers are appropriately compensated for unforeseen circumstances. * **Facilitation of investment:** By providing clarity and reducing financial uncertainty, the notification encourages investment in interstate transmission infrastructure. **9. Conclusion:** The CERC notification provides crucial updates to the existing TBCB framework by specifying the annual escalation rate and discount rate applicable to transmission service agreements. These rates, effective for a limited period, offer financial certainty and clarity to transmission service providers and procurers. The notification plays a significant role in maintaining a stable investment climate for the development of interstate transmission infrastructure.

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