Proposal(s) by REALIDEA Consultants to Ministry of Power on Draft Electricity (Amendment Act) and Effect by way of Provisions in the CERC Draft Tariff Regulation, 2019:
| Proposal to Ministry of Power | The effect in CERC Draft Tariff Regulation, 2019 | |
| 1 | To add as a new Proviso to sec 61 (1) (h): Provided that only the depreciated cost of the Asset shall qualify for ‘Rate of Return on Equity’ to be applied after the expiry of the fair life of that Asset; | (6) In case of generating station or a transmission system including communication system which has completed its useful life as on or after 1.4.2019, the accumulated depreciation as on the completion of the useful life less cumulative repayment of loan shall be utilized for reduction of the equity and depreciation admissible after the completion of useful life and the balance depreciation, if any, shall be first adjusted against the repayment of balance outstanding loan and thereafter shall be utilized for reduction of equity till the generating station continues to generate and supply electricity to the beneficiaries |
| 2 | To add following as a new Proviso to sec 61 (1) (h) Provided also that only debt shall be deployed to meet ‘Capital Expenditure’ that may be incurred consequent to any change in law; | Return on equity in respect of additional capitalization after cut off date within or beyond the original scope shall be computed at the weighted average rate of interest on actual loan portfolio of the generating station or the transmission system; |
| 3 | To add following as a new Proviso to sec 61 (1) (h) Provided also that any expenditure after “Commercial Operation Date” of an Asset shall be met through debt only, exception being the projects executed with a Debt: Equity Ratio of 80:20 or where equity is less than 20%; | Return on equity in respect of additional capitalization after cut off date within or beyond the original scope shall be computed at the weighted average rate of interest on the actual loan portfolio of the generating station or the transmission system; |
| 4 | To add following as a new Proviso to sec 61 (1) (h) Provided also that only those Assets that meet the technical standards prescribed by the Authority, shall qualify for the ‘Availability Based Tariff’; | “28. Special Provision for a thermal generating station which has completed 25 years of operation from commercial operation date: (1) In respect of a thermal generating station that has completed 25 years of operation from the date of commercial operation, the generating company and the beneficiary may agree on an arrangement where the total cost inclusive of the fixed cost and the variable cost for the generating station as determined under these regulations, shall be payable on scheduled generation instead of the pre-existing arrangement of separate payment of fixed cost based on availability and energy charge based on schedule. (2) The beneficiary will have the first right of refusal and upon its refusal to enter into an arrangement as above the generating company shall be free to sell the electricity generated from such station in a manner as it deems fit. |