Before the MAHARASHTRA ELECTRICITY … 58 42/Order-32 of 2016-08082016.pdf · Shri Deepak Lad, Member ORDER Date: ... Business Plan Order for MYT 2nd Control Period ... 7.2 Energy

MERC Order in Case No. 32 of 2016 Page 1 of 224

Before the

MAHARASHTRA ELECTRICITY REGULATORY COMMISSION

13th Floor, Centre No.1, World Trade Centre, Cuffe Parade, Mumbai- 400 005

Tel: 022 - 22163964/65/69 Fax: 022 - 22163976

E-mail: [email protected]

Website: www.merc.gov.in / www.mercindia.org.in

CASE No. 32 of 2016

In the matter of

Petition of Tata Power Company Ltd. (Generation) for Truing-up of FY 2014-15,

Provisional Truing-up for FY 2015-16 and ARR and Tariff for the 3rd Control

Period FY 2016-17 to FY 2019-20

CORAM

Shri Azeez M. Khan, Member

Shri Deepak Lad, Member

ORDER

Date: 8 August, 2016

The Tata Power Company Limited (Generation Business) (TPC-G) has, under Regulation 5 of

the MERC (Multi Year Tariff (MYT)) Regulations (‘MYT Regulations’), 2015, filed its Petition

for Truing-up of FY 2014-15, Provisional Truing-up of FY 2015-16 and Aggregate Revenue

Requirement (ARR) and Tariff for the 3rd

Control Period from FY 2016-17 to FY 2019-20. The

Truing-up for FY 2014-15 and Provisional Truing-up for FY 2015-16 is approved under the

MYT Regulations, 2011, while the ARR forecast and Tariff for FY 2016-17 to FY 2019-20 are

as per MYT Regulations, 2015. The original Petition was filed on 11 February, 2016. TPC-G

filed a revised Petition on 24 March, 2016.

The Commission, in exercise of its powers under Sections 61 and 62 of the Electricity Act (EA),

2003 and all other powers enabling it in this behalf, and after considering the submissions made

by TPC-G, suggestions and objections received, issues raised during the Public Hearing and

other relevant material, issues the following Order.

mailto:[email protected]

http://www.merc.gov.in/

http://www.mercindia.org.in/

MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period


TABLE OF CONTENTS

1 BACKGROUND AND REGULATORY PROCEEDINGS .............................................................. 16

1.1. Background ................................................................................................................................. 16

1.2. MYT Regulations, 2011 .............................................................................................................. 16

1.3. Business Plan Order for MYT 2nd

Control Period ...................................................................... 16

1.4. Truing-up of FY 2011-12 and ARR for 2nd

Control Period FY 2012-13 to FY 2015-16 ........... 16

1.5. Truing-up of FY 2012-13 and FY 2013-14, Provisional Truing-up of FY 2014-15 and

Projection of ARR and Tariff for FY 2015-16 ........................................................................................ 17

1.6. MYT Regulations, 2015 .............................................................................................................. 17

1.7. Admission of the Petition and Public Consultation Process ....................................................... 17

1.8. Organisation of the Order ........................................................................................................... 19

2 SUGGESTIONS/ OBJECTIONS RECEIVED, TPC-G’S RESPONSE AND COMMISSION’S

VIEW .......................................................................................................................................................... 21

2.1 Fuel Prices ................................................................................................................................... 21

2.2 Competitive Bidding for Power Purchase ................................................................................... 24

2.3 Blended Tariff for Unit-7 ............................................................................................................ 26

2.4 GT Losses ................................................................................................................................... 27

2.5 Colony Consumption .................................................................................................................. 28

2.6 Unit-7 PLF for 3rd

Control Period ............................................................................................... 29

2.7 Foreign Exchange Loss ............................................................................................................... 29

2.8 Income Tax ................................................................................................................................. 30

2.9 Capital Expenditure and Capitalisation ....................................................................................... 31

2.10 O&M Expenses ........................................................................................................................... 33

2.11 Sharing of Unit-6 Fixed Cost ...................................................................................................... 34

2.12 Delayed Payment Charges .......................................................................................................... 35

2.13 Force Majeure in case of Units 7 and 8....................................................................................... 35

2.14 Incentive for Backing Down of Units ......................................................................................... 37

2.15 Property Tax ................................................................................................................................ 37

2.16 Recovery of Fixed Cost for Bhira Hydro Station ........................................................................ 38

2.17 Submissions for 3rd

Control Period ............................................................................................. 39

2.18 Shortcomings in Petition Filing .................................................................................................. 41



3 IMPACT OF ATE JUDGMENTS ON PREVIOUS YEARS’ TRUE-UP ......................................... 42

3.1 Appeal challenging MTR Order dated 26 June, 2015 in Case 6 of 2015 ................................... 42

4 TRUING-UP FOR FY 2014-15 .......................................................................................................... 49

4.1 Background ................................................................................................................................. 49

4.2 Performance Parameters ............................................................................................................. 49

4.3 Performance of Units-4 to 7 and Hydro Stations ........................................................................ 49

4.3.1 Availability and Gross Generation ...................................................................................... 49

4.3.2 Auxiliary Energy Consumption .......................................................................................... 52

4.3.3 Gross Station Heat Rate ...................................................................................................... 61

4.3.4 Fuel Cost ............................................................................................................................. 63

4.3.5 Fuel Cost of Unit-6 under MSLDC Directions ................................................................... 66

4.3.6 Entry Tax ............................................................................................................................ 67

4.3.7 Operation and Maintenance Expenses ................................................................................ 68

4.3.8 Capital Expenditure and Capitalisation ............................................................................... 73

4.3.9 Non-DPR Capitalisation for FY 2010-11 to FY 2013-14 ................................................... 75

4.3.10 Depreciation ........................................................................................................................ 79

4.3.11 Interest on Long-term Loans ............................................................................................... 81

4.3.12 Return on Equity ................................................................................................................. 83

4.3.13 Interest on Working Capital ................................................................................................ 84

4.3.14 Income Tax ......................................................................................................................... 85

4.3.15 Non-Tariff Income .............................................................................................................. 87

4.3.16 Revenue from Sale of Power .............................................................................................. 87

4.3.17 PLF Incentive for Thermal Station and Hydro Incentive for Hydro Stations ..................... 88

4.3.18 Reduction of Fixed Charges on account of lower Availability of Unit-7 ........................... 89

4.3.19 Sharing of Gains / Losses for FY 2014-15.......................................................................... 93

4.3.20 Gains / Losses on account of fuel costs .............................................................................. 93

4.3.21 Gains / Losses on account of Auxiliary Consumption ........................................................ 94

4.3.22 Gains / Losses on account of O&M Expenses .................................................................... 95

4.3.23 Net Entitlement, and resultant Gap/ Surplus for Units 4 to 7 and Hydro Stations .............. 97

4.4 Performance of Unit-8 ................................................................................................................ 99

4.4.1 Gross Generation................................................................................................................. 99

4.4.2 Auxiliary Energy Consumption ........................................................................................ 100

4.4.3 Gross Station Heat Rate .................................................................................................... 100



4.4.4 Fuel Cost ........................................................................................................................... 101

4.4.5 Operation and Maintenance Expenses .............................................................................. 102

4.4.6 Capital Expenditure and Capitalisation ............................................................................. 103

4.4.7 Non-DPR Capitalisation for FY 2011-12 to FY 2013-14 ................................................. 104

4.4.8 Depreciation ...................................................................................................................... 106

4.4.9 Interest on Long-term Loan .............................................................................................. 107

4.4.10 Return on Equity ............................................................................................................... 109

4.4.11 Interest on Working Capital .............................................................................................. 110

4.4.12 Income Tax ....................................................................................................................... 110

4.4.13 Non-Tariff Income ............................................................................................................ 111

4.4.14 Revenue from Sale of Power ............................................................................................ 111

4.4.15 Reduction of Fixed Charges on account of lower Availability of Unit-8 ......................... 112

4.4.16 Sharing of Gains / Losses for FY 2014-15........................................................................ 119

4.4.17 Gains / Losses on account of fuel cost .............................................................................. 119

4.4.18 Efficiency Gains / Losses on account of Auxiliary Energy Consumption ........................ 119

4.4.19 Efficiency Gains / Losses on account of O&M Expenses ................................................ 120

4.4.20 Net Entitlement, and resultant Revenue Gap/ Surplus for Unit-8 ..................................... 121

5. PROVISIONAL TRUE-UP OF ARR FOR FY 2015-16 .................................................................. 124

5.1 Background ........................................................................................................................... 124

5.2 Performance Parameters ....................................................................................................... 124

5.3 Performance Parameters of TPC-G’s Generating Station/ Units .......................................... 124

5.3.1 Availability ....................................................................................................................... 124

5.3.2 Gross Generation............................................................................................................... 126



5.3.5 Design Energy for Hydro Generating Stations ................................................................. 132

5.3.6 Fuel Price and Calorific Value .......................................................................................... 134

5.3.7 Fuel Cost ........................................................................................................................... 135

5.3.8 Fuel Cost of Unit-6 operating under MSLDC Directions ................................................. 135

5.3.9 Entry Tax .......................................................................................................................... 136



5.3.12 Depreciation ...................................................................................................................... 141




5.3.14 Return on Equity ............................................................................................................... 144


5.3.16 Income Tax ....................................................................................................................... 146


5.3.18 PLF Incentive for Thermal Station ................................................................................... 147

5.3.19 Provisional Truing-up for FY 2015-16 ............................................................................. 148

5.4 Past Recoveries from Distribution Licensees ....................................................................... 149

5.4.1 Incentive for backing down instructions from MSLDC for FY 2011-12 to FY 2013-14 . 149

5.4.2 Fuel Cost of Unit-6 under MSLDC Directions ................................................................. 150

5.4.3 Other Past Recoveries from Distribution Licensees ......................................................... 151

6. ARR FOR 3RD CONTROL PERIOD FROM FY 2016-17 TO FY 2019-20 .................................. 158

6.1 Background ............................................................................................................................... 158

6.2 Performance Parameters ........................................................................................................... 158

6.3 Generating Stations ................................................................................................................... 158

6.4 Performance Parameters ........................................................................................................... 159

6.4.1 Availability ....................................................................................................................... 159

6.4.2 Gross Generation............................................................................................................... 160



6.4.5 Fuel Cost ........................................................................................................................... 168



6.4.8 Depreciation ...................................................................................................................... 180


6.4.10 Return on Equity ............................................................................................................... 185


6.4.12 Income Tax ....................................................................................................................... 190


6.4.14 Fixed Cost of Unit-4 ......................................................................................................... 193

6.4.15 Summary of Annual Fixed Charges .................................................................................. 194

7. MULTI-YEAR TARIFF FOR 3RD CONTROL PERIOD FROM FY 2016-17 TO FY 2019-20 ... 196

7.1 AFC for TPC-G ......................................................................................................................... 196



7.2 Energy Charges for Thermal Generating Units ........................................................................ 201

7.3 Capacity Charges and Energy Charges for Hydro Generating Units ........................................ 201

8. COMPLIANCE OF DIRECTIVES IN MTR ORDER ..................................................................... 204

8.1 Non-DPR Capitalisation ........................................................................................................... 204

8.2 Section 80 IA of Income Tax Act ............................................................................................. 206

8.3 BHEL Circular .......................................................................................................................... 206

8.4 Replacement of Blades.............................................................................................................. 207

8.5 Operating Conditions ................................................................................................................ 209

9. SUMMARY OF THE RULINGS ..................................................................................................... 212

9.1 Carrying Cost on impact of ATE Judgment .............................................................................. 212

9.2 True-up For FY 2014-15 ........................................................................................................... 212

9.2.1 Performance of Unit-8 ...................................................................................................... 213

9.3 Provisional True-up for FY 2015-16 ........................................................................................ 215

9.4 Past Recoveries from Distribution Licensees ........................................................................... 215

9.5 ARR for the 3RD

Control Period from FY 2016-17 TO FY 2019-20 ........................................ 217

10. DIRECTIVES ................................................................................................................................... 220

10.1 Imported Coal Purchase ............................................................................................................ 220

10.2 Expiry of PPA ........................................................................................................................... 220

11. APPLICABILITY OF ORDER ........................................................................................................ 221



LIST OF TABLES

Table 1: Potential Impact of ATE Appeal 244 of 2015 as submitted by TPC-G ........................................ 42

Table 2: Potential Impact of ATE Appeal 244 of 2015 as submitted by TPC-G ....................................... 43

Table 3: Potential Impact of ATE Appeal 244 of 2015 including carrying cost as submitted by TPC-G . 45

Table 4: Revised Tax Computation for FY 20-14-15 as submitted by TPC-G .......................................... 46

Table 5: Gross Generation and Availability certified by MSLDC for FY 2014-15 ................................... 50

Table 6: Summary of Availability for Units 4 to 7 and Hydro Stations for FY 2014-15 as approved by

Commission ................................................................................................................................................ 51

Table 7: Summary of Gross Generation for Units 4 to 7 and Hydro Stations for FY 2014-15 as approved

by Commission ........................................................................................................................................... 51

Table 8: Auxiliary Energy Consumption for FY 2014-15 as submitted by TPC-G ................................... 52

Table 9: Unit-4Auxiliary Energy Consumption for FY 2014-15 as submitted by TPC-G ......................... 52

Table 10: Auxiliary Energy Consumption of Hydro Stations for FY 2014-15 as submitted by TPC-G .... 54

Table 11: Auxiliary Energy Consumption for nallah diversion as submitted by TPC-G for FY 2014-15 . 54

Table 12: Actual GT Losses for FY 2014-15 as submitted by TPC-G ....................................................... 55

Table 13: Headworks consumption as submitted by TPC-G ...................................................................... 56

Table 14: Hydro Auxiliary Energy Consumption for FY 2014-15 as submitted by TPC-G ...................... 57

Table 15: Normative Auxiliary Energy Consumption for Hydro Generating Stations as approved by

Commission for FY 2014-15 ...................................................................................................................... 61

Table 16: Auxiliary Energy Consumption for FY 2014-15 as approved by Commission .......................... 61

Table 17: SHR for Unit-6 for FY 2014-15 as submitted by TPC-G ........................................................... 62

Table 18: Actual SHR for Unit-6 under different modes of operation, as submitted by TPC-G for FY

2014-15 ....................................................................................................................................................... 62

Table 19: Unit-wise SHR for 2014-15 approved by Commission .............................................................. 63

Table 20: Break-up of Fuel Cost, as submitted by TPC-G for FY 2014-15 ............................................... 63

Table 21: Fuel Parameters as approved by Commission for FY 2014-15 .................................................. 64

Table 22: Fuel Cost Reconciliation as submitted by TPC-G for FY 2014-15 ........................................... 65

Table 23: Fuel Cost for Units 4 to 7 for FY 2014-15 as approved by Commission .................................. 65

Table 24: Impact of Entry Tax as submitted by TPC-G for FY 2014-15 ................................................... 68

Table 25: Recovery of Entry Tax, as approved by Commission ................................................................ 68

Table 26: Employee Expenses for Trombay Units 4-7 &Hydro Stations for FY 2014-15 ........................ 69

Table 27: Summary of O&M Expenses for FY 2014-15 as approved by Commission ............................. 72

Table 28: Non-DPR Schemes not considered for Capitalisation ............................................................... 74

Table 29: Capitalisation approved by Commission for FY 2014-15 ......................................................... 75

Table 30: Summary of Merged DPRs, as submitted by TPC-G ................................................................ 76

Table 31: Summary of Merged Non-DPR Capitalisation now approved by Commission for Units 4 to 7

and Hydro Generating Stations .................................................................................................................. 78

Table 32: Non-DPR Capitalisation for Units 4 to 7 and Hydro Generating Stations as approved by

Commission for FY 2010-11 to FY 2013-14 ............................................................................................. 78

Table 33: Depreciation as approved by Commission for FY 2014-15 ...................................................... 80

Table 34: Details of Fresh Loans for FY 2014-15 ...................................................................................... 81

Table 35: Allocation of Loans as submitted by TPC-G ............................................................................. 81

Table 36: Interest on Long-term Loans as approved by the Commission for FY 2014-15 ....................... 83



Table 37: Return on Equity as approved by the Commission for FY 2014-15 .......................................... 84

Table 38: Interest on Working Capital as approved by Commission for FY 2014-15 .............................. 85

Table 39: Income Tax as approved by Commission for FY 2014-15 ........................................................ 86

Table 40: Non-Tariff Income as approved by Commission for FY 2014-15 ............................................. 87

Table 41: Revenue from Sale of Power for FY 2014-15 ............................................................................ 87

Table 42: Approved Reduction in AFC for Unit-7 for FY 2014-15 ........................................................... 92

Table 43: Gains and Losses due to variation in Fuel Cost, as approved by Commission for FY 2014-15 94

Table 44: Gain/Loss due to variation in Auxiliary Energy Consumption as approved by Commission for

FY 2014-15 ................................................................................................................................................ 95

Table 45: Property Tax Summary as submitted by TPC-G for FY 2014-15 ............................................. 96

Table 46: Gains due to variation in O&M Expenses for Units 4 to 7 and Hydro Stations for FY 2014-15

as approved by Commission ...................................................................................................................... 97

Table 47: Truing-up for FY 2014-15 for Units 4 to 7 and Hydro Stations, including sharing of efficiency

gains/ losses ............................................................................................................................................... 98

Table 48: Unit-8 Performance in FY 2014-15 as submitted by TPC-G...................................................... 99

Table 49: Availability of Unit-8 as approved by Commission for FY 2014-15 ....................................... 100

Table 50: Gross Generation of Unit-8 as approved by the Commission for FY 2014-15 ........................ 100

Table 51: Summary of Auxiliary Energy Consumption of Unit-8 as approved by Commission for FY

2014-15 ..................................................................................................................................................... 100

Table 52: Summary of SHR of Unit-8 as approved by Commission for FY 2014-15 .............................. 101

Table 53: Fuel Cost of Unit-8 for FY 2014-15 as submitted by TPC-G ................................................... 101

Table 54: Fuel Parameters as approved by Commission for Unit-8 for FY 2014-15 ............................... 102

Table 55: Fuel Cost as approved by Commission for Unit-8 for FY 2014-15.......................................... 102

Table 56: Summary of O&M Expenses approved by Commission for Unit-8 for FY 2014-15 .............. 103

Table 57: Capitalisation of Unit-8 as approved by Commission for FY 2014-15 ................................... 104

Table 58: Summary of Non-DPR Capitalisation now approved by Commission for Unit-8 ................... 105

Table 59: Non-DPR Capitalisation for Unit-8 as approved by Commission for FY 2011-12 to FY 2013-14

.................................................................................................................................................................. 106

Table 60: Depreciation for Unit-8 as approved by Commission for FY 2014-15 ................................... 107

Table 61: Interest on Long-term Loan as approved by Commission for FY 2014-15 ............................. 108

Table 62: Return on Equity for Unit-8 as approved by Commission for FY 2014-15 ............................ 109

Table 63: Income Tax for Unit-8 for FY 2014-15 as approved by Commission ..................................... 110

Table 64: Revenue from GenerationofUnit-8 for FY 2014-15, as submitted by TPC-G .......................... 112

Table 65: Summary of Reduction of AFC for Unit-8 for FY 2014-15 as approved by Commission ....... 118

Table 66: Gains/Losses in Fuel Cost as approved by Commission for FY 2014-15 ................................ 119

Table 67: Efficiency Gains/ Losses due to variation in Auxiliary Energy Consumption of Unit-8 in FY

2014-15, as approved by Commission ...................................................................................................... 120

Table 68: Efficiency Gains/ Losses due to variation in O&M Expenses for Unit-8 for FY 2014-15 ....... 121

Table 69: Truing-up for FY 2014-15 for Unit 8, including sharing of Efficiency Gains/ (Losses) ......... 122

Table 70: Availability of Generating Units as submitted by TPC-G for FY 2015-16 .............................. 124

Table 71: Availability of Generating Units as submitted by TPC-G (revised submission) for FY 2015-16

.................................................................................................................................................................. 125

Table 72: Availability as approved by the Commission for FY 2015-16 ................................................. 125

Table 73: Gross Generation and PLF as submitted by TPC-G for FY 2015-16 ...................................... 127



Table 74: Gross Generation and PLF as submitted by TPC-G in revised submission for FY 2015-16 .... 127

Table 75: Gross Generation and PLF as approved by Commission for FY 2015-16 ............................... 128

Table 76: Auxiliary Energy Consumption as submitted by TPC-G for FY 2015-16 ............................... 128

Table 77: Auxiliary Energy Consumption as submitted by TPC-G in its revised submission for FY 2015-

16 .............................................................................................................................................................. 129

Table 78: Auxiliary Energy Consumption as approved by Commission for FY 2015-16 ........................ 130

Table 79: SHR for FY 2015-16 as submitted by TPC-G .......................................................................... 130

Table 80: SHR as submitted by TPC-G in its revised submission for FY 2015-16 .................................. 130

Table 81: Revised Normative SHR for Unit-6 for FY 2015-16 ................................................................ 131

Table 82: SHR as approved by the Commission for FY 2015-16 ............................................................ 131

Table 83: Fuel Prices in FY 2015-16, as submitted by TPC-G ................................................................ 134

Table 84: Fuel Prices and Calorific Value as approved by Commission for FY 2015-16 ........................ 134

Table 85: Impact of Entry Tax as submitted by TPC-G for FY 2015-16 ................................................. 136

Table 86: Recovery of Entry Tax, as approved by Commission for FY 2015-16 .................................... 136

Table 87: O&M Expenses as approved by Commission for FY 2015-16 ............................................... 137

Table 88: Schemes with major impact on Capitalisation, as submitted by TPC-G .................................. 137

Table 89: Summary of disallowed DPR Capitalisation for restricted cumulative Capitalisation ............ 139

Table 90: Summary of Capitalisation disallowed by Commission for FY 2015-16 ................................ 140

Table 91: Capitalisation as approved by Commission for FY 2015-16 ................................................... 140

Table 92: Depreciation as approved by Commission for FY 2015-16 .................................................... 142

Table 93: Interest on Long-term Loan as approved by Commission ....................................................... 143

Table 94: Return on Equity as approved by Commission for FY 2015-16 .............................................. 144

Table 95: IoWC for Units 4 to 7 and Hydro Stations as approved by Commission for FY 2015-16 ...... 145

Table 96: IoWC for Unit-8 as approved by Commission for FY 2015-16 .............................................. 146

Table 97: Income Tax as approved by Commission for FY 2015-16 ...................................................... 146

Table 98: Non-Tariff Income as approved by Commission for FY 2015-16 ........................................... 147

Table 99: Incentive as claimed by TPC-G on account of Backing Down in FY 2015-16 ........................ 148

Table 100: Provisional Truing-up for FY 2015-16 as approved by Commission .................................... 148

Table 101: PLF Incentive on account of Backing Down for FY 2011-12 to FY 2013-14, as submitted by

TPC-G ...................................................................................................................................................... 150

Table 102: Fuel Cost for Unit-6 under MSLDC Directions .................................................................... 150

Table 103: Amounts Recoverable from Distribution Licensees as submitted by TPC-G ........................ 152

Table 104: Amounts Recoverable from Distribution Licensees as approved by Commission ................ 154

Table 105: Break up of recoverable amount as approved by the Commission ........................................ 155

Table 106: Carrying Cost on recovery as approved by the Commission ................................................. 156

Table 107: Net Amount to be recovered from Distribution Licensees in FY 2016-17 ............................ 156

Table 108: Monthly recovery from Distribution Licensees in FY 2016-17 ............................................ 157

Table 109: Existing Generation Capacity of TPC-G ................................................................................ 159

Table 110: Availability of Generating Units in 3rd

Control Period as submitted by TPC-G .................... 159


Control Period as approved by Commission............. 160

Table 112: Summary of Gross Generation and PLF as submitted by TPC-G for 3rd

Control Period ....... 161

Table 113: Summary of Gross Generation and PLF as approved by the Commission for 3rd

Control Period

.................................................................................................................................................................. 162



Table 114: Normative Auxiliary Energy Consumption for Thermal Generating Stations for 3rd

Control

Period as submitted by TPC-G ................................................................................................................. 162

Table 115: Auxiliary Energy Consumption for Nallah Diversion as submitted by TPC-G for 3rd

Control

Period ........................................................................................................................................................ 163

Table 116: Auxiliary Energy Consumption for Thermal Generating Units for 3rd

Control Period as

approved by Commission ......................................................................................................................... 164

Table 117: Auxiliary Energy Consumption for Nallah Diversion as approved by Commission for 3rd

Control Period ........................................................................................................................................... 165

Table 118: Auxiliary Energy Consumption for Hydro Generating Stations as approved by Commission

for 3rd

Control Period ................................................................................................................................ 166

Table 119: Normative SHR for Thermal Generating Stations for 3rd

Control Period as submitted by TPC-

G ................................................................................................................................................................ 166

Table 120: SHR as approved by Commission for 3rd

Control Period ....................................................... 168

Table 121: Fuel proposed for Thermal Generating Stations in 3rd

Control Period as submitted by TPC-G

.................................................................................................................................................................. 168

Table 122: Existing Contracts for APM Gas as submitted by TPC-G ...................................................... 169

Table 123: Fuel Parameters as projected by TPC-G for 3rd

Control Period.............................................. 170

Table 124: Summary of Fuel Parameters as approved by Commission for 3rd

Control Period ................ 171

Table 125: Summary of Energy Charges as approved by Commission for 3rd

Control Period ................ 172

Table 126: O&M Expenses for Base Year as submitted by TPC-G for 3rd

Control Period ..................... 172

Table 127: O&M Expenses as submitted by TPC-G for Units 4 to 7 and Hydro for 3rd

Control Period . 173

Table 128: O&M Expenses as submitted by TPC-G for Unit-8 for 3rd

Control Period ............................ 173

Table 129: Summary of O&M Expense escalation computation for 3rd

Control Period .......................... 175


Control Period .......................... 175

Table 131: O&M Expenses as approved by Commission for Units 4 to 7 and Hydro Generating Stations

for 3rd

Control Period ............................................................................................................................... 176

Table 132: O&M Expenses as approved by Commission for 3rd

Control Period for Unit-8 ................... 176

Table 133: Capitalisation for Units 4 to 7 and Hydro Generating Stations for 3rd

Control Period as

submitted by TPC-G ................................................................................................................................ 177

Table 134: Capital Expenditure and Capitalisation as submitted by TPC-G for Unit-8 during 3rd

Control

Period ....................................................................................................................................................... 178

Table 135: Capitalisation disallowed by Commission for FY 2015-16 ................................................... 179

Table 136: Capitalisation approved by Commission for 3rd

Control Period ............................................ 179

Table 137: Depreciation for Units 4 to 7 and Hydro Stations as submitted by TPC-G for 3rd

Control

Period ....................................................................................................................................................... 180

Table 138: Depreciation for Unit-8 as submitted by TPC-G for 3rd

Control Period ................................ 181

Table 139: Depreciation approved by Commission for Units 4 to 7 and Hydro Stations for 3rd

Control

Period ....................................................................................................................................................... 182

Table 140: Summary of Depreciation approved by Commission for Unit-8 for 3rd

Control Period ........ 182

Table 141: Interest on Long-term Loan for Units 4 to 7 and Hydro Stations as submitted by TPC-G for 3rd

Control Period .......................................................................................................................................... 183

Table 142: Interest on Long-term Loan for Unit-8 as submitted by TPC-G for 3rd


Table 143: Interest on Long-term Loan for Units 4 to 7 and Hydro Stations as approved by Commission

for 3rd

Control Period ............................................................................................................................... 184



Table 144: Interest on Long-term Loan for Unit-8 as approved by Commission for 3rd

Control Period 184

Table 145: Return on Equity as submitted by TPC-G for 3rd

Control Period for Units 4 to 7 and Hydro

Stations ..................................................................................................................................................... 185


Control Period for Unit-8 ......................... 186

Table 147: Return on Equity as approved by the Commission for Units 4 to 7 and Hydro Generating

Stations for 3rd

Control Period ................................................................................................................. 187

Table 148: Return on Equity as approved by the Commission for Unit-8 for 3rd

Control Period ........... 187

Table 149: Interest on Working Capital as submitted by TPC-G for Units 4 to 7 and Hydro Stations for 3rd

Control Period .......................................................................................................................................... 188

Table 150: Interest on Working Capital as submitted by TPC-G for Unit-8 for 3rd


Table 151: Interest on Working Capital as approved by the Commission for Units 4 to 7 and Hydro for 3rd

Control Period .......................................................................................................................................... 189

Table 152: Interest on Working Capital as approved by Commission for Unit-8 for 3rd

Control Period 189

Table 153: Income Tax for Units 4 to 7 and Hydro Stations as submitted by TPC-G for 3rd

Control Period

.................................................................................................................................................................. 190

Table 154: Income Tax for Unit-8 as submitted by TPC-G for 3rd

Control Period ................................. 190

Table 155: Income Tax for Units 4 to 7 and Hydro Stations as approved by TPC-G for 3rd

Control Period

.................................................................................................................................................................. 191

Table 156: Income Tax for Unit-8 as approved by TPC-G for 3rd

Control Period .................................. 191

Table 157: Non-Tariff Income as submitted by TPC-G for Units 4 to 7 and Hydro Stations for 3rd

Control

Period ....................................................................................................................................................... 192

Table 158: Non-Tariff Income as submitted by TPC-G for Units 4 to 7 and Hydro Stations for 3rd

Control

Period ....................................................................................................................................................... 192

Table 159: Non-Tariff Income as submitted by TPC-G for Unit-8 for 3rd

Control Period ...................... 192

Table 160: Non-Tariff Income as approved by the Commission for Units 4 to 7 and Hydro Stations for 3rd

Control Period .......................................................................................................................................... 193

Table 161: Non-Tariff Income as approved by the Commission for Unit-8 for 3rd


Table 162: Annual Fixed Charges for Units 4 to 7 and Hydro Stations for 3rd

Control Period ............... 194

Table 163: Annual Fixed Charges for Unit-8 for 3rd

Control Period ....................................................... 194

Table 164: Annual Fixed Charges as approved by Commission for FY 2016-17 ................................... 197




Table 168: Energy Charges as approved by Commission for Thermal Stations for 3rd

Control Period ... 201

Table 169: Capacity and Energy Charges for Khopoli Hydro Generating Station as submitted by TPC-G

for 3rd

Control Period ................................................................................................................................ 201

Table 170: Capacity and Energy Charges for Bhira Hydro Generating Station as submitted by TPC-G for

3rd

Control Period ...................................................................................................................................... 202

Table 171: Capacity and Energy Charges for Bhivpuri Hydro Generating Station as submitted by TPC-G

for 3rd

Control Period ................................................................................................................................ 202

Table 172: Capacity and Energy Charges for Khopoli Hydro Generating Station as approved by

Commission for 3rd

Control Period ........................................................................................................... 202

Table 173: Capacity and Energy Charges for Bhira Hydro Generating Station as approved by

Commission for 3rd

Control Period ........................................................................................................... 203



Table 174: Capacity and Energy Charges for Bhivpuri Hydro Generating Station as approved by

Commission for 3rd

Control Period ........................................................................................................... 203

Table 175: Disallowed Capitalisation towards Non-DPR Schemes as submitted by TPC-G for FY 2012-

13 ............................................................................................................................................................. 205

Table 176: Disallowed Capitalisation towards Non-DPR Schemes for FY 2013-14 .............................. 205

Table 177: Past recoveries from Distribution Licensees as approved by Commission ........................... 216

Table 178: Net Amount to be recovered from Distribution Licensees in FY 2016-17 ............................ 217

Table 179: Monthly recovery from Distribution Licensees in FY 2016-17 ............................................. 217



List of Abbreviations

Abbreviations Definitions

A&G Administrative and General

AFC Annual Fixed Charges

APR Annual Performance Review

ARR Aggregate Revenue Requirement

ATE Appellate Tribunal for Electricity

BEST BEST Undertaking

BHEL Bharat Heavy Electricals Limited

BPCL Bharat Petroleum Corporation Limited

CAGR Compounded Annual Growth Rate

CAPEX Capital Expenditure

CAT Conservation Action Trust

CERC Central Electricity Regulatory Commission

CFR Cost and Freight

COD Commercial Operation Date

CPI Consumer Price Index

CPRI Central Power Research Institute

CRZ Coastal Regulation Zone

Cu. M Cubic meter

GCV Gross Calorific Value

DPC Delayed Payment Charges

DPR Detailed Project Report

EA Electricity Act

FAC Fuel Adjustment Charge

FCCB Foreign Currency Convertible Bond

FGD Flue Gas De-sulphurisation

FOB Free On Board

FY Financial Year

GAIL Gas Authority India Limited

GFA Gross Fixed Assets

GoI Government of India

GoM Government of Maharashtra

GT Generator Transformer

HBA Index Harga Patokan Batubara Index

HOSS Head Office and Support Services

HPCL Hindustan Petroleum Corporation Limited

IDC Interest During Construction

IOC Indian Oil Corporation Limited

IWC Interest on Working Capital




IDBI Industrial Development Bank of India Limited

IDFC Infrastructure Development Finance Company Limited

kCal kilo Calories

kW kilo Watt

kWh kilo Watt hour

LCC Load Control Centre

LSHS Low Sulphur Heavy Stock

MAT Minimum Alternative Tax

MbPT Mumbai Port Trust

MCGM Municipal Corporation of Greater Mumbai

MCM Million Cubic Meters

MERC or the Commission Maharashtra Electricity Regulatory Commission

MoD Merit Order Despatch

MoEF Ministry of Environment & Forest

MoPNG Ministry of Petroleum and Natural Gas

MPCB Maharashtra Pollution Control Board

MT Metric Tonnes

MTR Mid-Term Review

MU Million Units

MW Mega Watt

MWRRA Maharashtra Water Resources Regulatory Authority

MYT Multi Year Tariff

NAPAF Normative Annual Plant Availability Factor

NGT National Green Tribunal

OEM Original Equipment Manufacturer

O&M Operation and Maintenance

ONGC Oil and Natural Gas Corporation Limited

PLF Plant Load Factor

PPA Power Purchase Agreement

RBI Reserve Bank of India

RLNG Re-gasified Liquefied Natural Gas

RTL Rupee Term Loan

RoE Return on Equity

RPM Rotations Per Minute

R&M Repair and Maintenance

SBAR State Bank of India Advance Rate

SBI State Bank of India

SBI-PLR State Bank of India-Prime Lending Rate

SHR Station Heat Rate

SLP Special Leave Petition




STU State Transmission Utility

SBAR State Bank Advance Rate

TPC The Tata Power Company Ltd.

TPC-D Tata Power Company-Distribution

TPC-G Tata Power Company-Generation

TPC-T Tata Power Company-Transmission

TVS Technical Validation Session

UMPP Ultra Mega Power Project

USD US Dollar

WPI Wholesale Price Index



1 BACKGROUND AND REGULATORY PROCEEDINGS

1.1. Background

1.1.1 TPC is a Company with its registered office at Bombay House, 24, Homi Mody Street,

Fort, Mumbai. TPC has various regulated and non-regulated business verticals. TPC

(Distribution Business) (TPC-D), TPC (Transmission Business) (TPC-T) and TPC-G

(Generation Business) are regulated businesses under the provisions of the EA, 2003.

TPC-G’s installed generation capacity is 2027 MW, comprising 447 MW of Hydro

Generation and 1580 MW of Thermal Generation. However, the 150 MW Unit-4

Generating Capacity is no longer in use, and hence the operational Thermal Generation

Capacity is 1430 MW. The entire generation capacity of TPC-G is tied up on a long-

term basis with two Distribution Licensees of Mumbai, namely TPC-D and

Brihanmumbai Electric Supply and Transport Undertaking (BEST).

1.1.2 This Order relates to TPC-G’s Petition for Truing-up of FY 2014-15, Provisional

Truing-up of FY 2015-16 and approval of ARR and determination of Tariff for the 3rd

Control Period from FY 2016-17 to FY 2019-20.

1.2. MYT Regulations, 2011

The Commission notified its MYT Regulations, 2011 on 4 February, 2011, applicable

for determination of Tariff for the 2nd

Control Period from FY 2011-12 to FY 2015-16.

1.3. Business Plan Order for MYT 2nd

Control Period

In its Order dated 9 August, 2012 in Case No. 166 of 2011 on TPC-G’s Business Plan

Petition, the Commission directed TPC-G to file a MYT Petition for the 2nd

Control

Period from FY 2012-13 to FY 2015-16. However, for FY 2011-12, the Commission

directed it to file the ARR as per the Tariff Regulations, 2005. On TPC-G’s Appeal

against that directive, the Appellate Tribunal for Electricity (ATE), in its Order dated 28

November, 2013, entitled it to claim ARR based on the MYT Regulations, 2011 for FY

2011-12.

1.4. Truing-up of FY 2011-12 and ARR for 2nd

Control Period FY 2012-13 to FY 2015-

16

In its Order dated 5 June, 2013 in Case No. 177 of 2011 (‘previous MYT Order’), the

Commission undertook the Truing-up of FY 2011-12 and approved the Tariff for FY

2012-13 to FY 2015-16. Aggrieved on issues relating to wrongful computation of

Operation and Maintenance (O&M) expenses, considering income from gain/losses on



Foreign Exchange as a part of Non-Tariff Income, disallowance of Auxiliary Energy

Consumption of Unit-6 and non-allowance of carrying cost on past recovery, TPC-G

filed an Appeal No. 212 of 2013. In its Judgment dated 27 October, 2014, the ATE

entitled TPC-G to claim some of the earlier disallowed expenditure.

1.5. Truing-up of FY 2012-13 and FY 2013-14, Provisional Truing-up of FY 2014-15

and Projection of ARR and Tariff for FY 2015-16

On TPC-G’s Mid-Term Review (MTR) Petition for the 2nd

Control Period (Case No. 6

of 2015) for Truing-up of FY 2012-13 and FY 2013-14, Provisional Truing-up of FY

2014-15 and projection of ARR and Tariff for FY 2015-16, the Commission issued its

Order on 26 June, 2015 (‘MTR Order’).

1.6. MYT Regulations, 2015

1.6.1 The Commission notified the MYT Regulations, 2015 on 8 December, 2015. These

Regulations are applicable for determination of Tariff for the 3rd

Control Period, i.e., FY

2016-17 to FY 2019-20.

1.6.2 TPC-G requested the Commission to extend the time for filing of MYT Petition stating

its difficulties in collecting the data and preparation of MYT Petition within the due

date. Considering the requests of various Generating Companies and Licensees,

including TPC-G, vide Order dated 15 January, 2016 the Commission allowed TPC-G to

file its Petition by 31 January, 2016.

1.7. Admission of the Petition and Public Consultation Process

1.7.1 TPC-G filed its MYT Petition on 11 February, 2016. Preliminary data gaps were

forwarded to TPC-G on 24 and 29 February and 4 March, 2016. TPC-G stated its replies

on 3 March, 2016.

1.7.2 The Commission conducted a Technical Validation Session (TVS) on 4 March, 2016.

The list of persons who participated in the TVS is at Appendix - 1. TPC-G made a

presentation on the salient features of the Petition.

1.7.3 The Commission sought additional information and clarifications on the issues raised

during the TVS. TPC-G stated replies to the pending data gaps and issues raised during

the TVS vide its letters dated 10, 17, and 18 March 2016. Thereafter, TPC-G filed a

revised Petition on 24 March, 2016 incorporating the changes pointed out through data

gaps.

1.7.4 TPC-G’s prayers are as follows:



“

I. Accept the Truing-up for FY 2014-15, Provisional Truing-up of FY 2015-16 and past

Gap / (Surplus) thereof in accordance with the guidelines & principles outlined in

MYT Regulations, 2011;

II. Accept the Projections for FY 2016-17 to FY 2019-20 in accordance with the

guidelines & principles outlined in MYT Regulations, 2015;

III. Allow determination of normative Auxiliary Energy Consumption in Standby Mode

for Unit 6.

IV. Allow Heat Rate and Auxiliary Energy Consumption for Unit 6 under Technical

Minimum operation.

V. Allow Heat Rate and Auxiliary Energy Consumption for Unit 7 in open cycle mode

for the Third Control Period, similar to that approved in the Business Plan Order in

Case 166 of 2011 for the Second Control Period.

VI. To treat the release of 30 MCM water from Mulshi dam for drinking water purpose

as uncontrollable over and above that of low rainfall during FY 2015-16 and allow us

to apply the appropriate regulatory mechanisms provided in the Regulations in the

future years to enable the recovery of the entire fixed cost of the Generating Stations.

VII. Condone any inadvertent omissions / errors / rounding off differences / shortcomings

and permit Tata Power- G to add / change / modify / alter this filing and make further

submissions as may be required at a future date;

VIII. Pass such further and other orders, as the Hon’ble Commission may deem fit and

proper, keeping in view the facts and circumstances of the case.”

1.7.5 The Commission admitted the revised Petition on 29 March, 2016, directed TPC-G to

publish it Petition in an abridged form by 1 April, 2016, and to reply expeditiously to all

suggestions and objections received on its Petition.

1.7.6 TPC-G published the Public Notice in the daily newspapers Hindustan Times and Indian

Express (English), and Loksatta and Saamna (Marathi) on 31 March, 2016. Copies of

the Petition and its Executive Summary were made available at TPC’s offices and on

TPC-G’s website (www.tatapower.com). The Public Notice and Executive Summary of

the Petition were also made available on the websites of the Commission

(www.mercindia.org.in / www.merc.gov.in) in downloadable format.

1.7.7 A Public Hearing was held on 26 April, 2016 in the Office of the Commission, 13th

Floor, Centre No. 1, World Trade Centre, Cuffe Parade, Colaba, Mumbai. The list of

persons at the Public Hearing is atAppendix-2.

http://www.tatapower.com/

http://www.mercindia.org.in/

http://www.merc.gov.in/



1.7.8 Two more sets of data gaps were sent to TPC-G on 20 and 25 April, 2016, seeking

additional information relating to fuel purchase and revised actual unaudited data of FY

2015-16 (since the year was over). TPC-G stated its replies vide letters dated 5, 6, 10

and 13 May, 2016.

1.7.9 TPC-G made additional submission on Plant Load Factor (PLF) incentive on account of

backing down instructions for FY 2011-12 to FY 2015-16 vide letters dated 25 April and

23 May, 2016.

1.7.10 The Commission has ensured that the due process contemplated under the law to ensure

transparency and public participation was followed at every stage, and adequate

opportunity was given to all to submit their views.

1.7.11 The Commission received written suggestions and objections, and oral submissions at

the Public Hearing.

1.8. Organisation of the Order

This Order is organised in the following Sections:

Section 1 provides a brief history of the quasi-judicial regulatory process undertaken

by the Commission. A list of abbreviations with their expanded forms has been

included.

Section 2 discusses the suggestions and objections given in writing as well as those

presented during the Public Hearing. The suggestions and objections have been

summarised, followed by the response of TPC-G and the views of the Commission

on each issue.

Section 3 details the impact of ATE Judgments on the previous years' Truing-up.

Section 4 details the Truing-up of the ARR for FY 2014-15, including sharing of

efficiency gains/ losses.

Section 5 details the approval of the Provisional Truing-up for FY 2015-16.

Section 6 details the ARR and Tariff for the 3rd

Control Period.

Section 7 deals with summary of approved Tariff for the 3rd

Control Period

Section 8 covers the directives given in the MTR Order, TPC-G's responses and new

directives.



Section 9 summarises the rulings of the Commission.

Section 10 deals with Directives to TPC-G.

Section 11 sets out the applicability of this Order



2 SUGGESTIONS/ OBJECTIONS RECEIVED, TPC-G’S RESPONSE AND

COMMISSION’S VIEW

2.1 Fuel Prices

Suggestions/Objections

2.1.1 The Indian Hotel and Restaurant Association, Shri Kamlakar Shenoy, Shri Guruprasad

Shetty and Shri Lalit Vashista stated that TPC-G has inflated the purchase price of fuel.

TPC-G has projected LSHS price of Rs. 47211 per MT for the 3rd

Control Period, while

the same is sold by Bharat Petroleum at Rs. 15678 per MT. Similarly TPC-G has

projected coal purchase price as Rs. 4747 per MT, while it is being sold by Coal India

Ltd. (CIL) at Rs. 1600 per MT. TPC-G has projected purchase of Administered Pricing

Mechanism (APM) Gas at Rs. 16138 per MT, while the APM rate of Gas Authority of

India Ltd. (GAIL) is $2.32 MMBTU which works out to Rs. 6669 per MT. TPC-G has

also projected the price of imported coal as Rs 4747 per MT, which has in fact crashed

to $ 45 per MT or Rs 2992 per MT. Thus, TPC-G has inflated fuel prices by almost 3

times, thereby inflating the ARR. TPC-G is able to inflate its costs as it has the

monopoly of supplying to two major power Distribution Licensees, namely BEST and

TPC-D, who in turn charge high Tariff to their consumers.

2.1.2 Shri Kamlakar Shenoy and Shri Lalit Vashista further stated that this act of inflating the

fuel costs on affidavit filed before the Commission is a gross misrepresentation of facts,

and that such false declaration is an offence under the Indian Penal Code, IPC and hence

the Commission is duty bound to register a First Information Report (FIR) against

TPC’s Directors and concerned officials. Such deterrent actions are required to stop such

Companies from inflating expenses and thereby causing wrongful loss to consumers.

2.1.3 They also questioned why the cost of electricity has not come down as expected after the

enactment of the EA, 2003. The cost in the neighboring States is almost one third of

what is paid by electricity consumers of Mumbai. Further, verification by the

Commission of the cost of raw materials and expenses incurred was necessary before

fixing the Tariff.

TPC-G’s Response

2.1.4 TPC-G has projected the fuel prices based on its analysis of the market and to the best of

its knowledge. As per the Regulations, the fuel price gets charged at actuals by way of

the Fuel Adjustment Charge (FAC). The assumptions for fuel-wise price projections are

as below:



Oil

2.1.5 The fuel oil prices have gone down recently, and thus the projections of future prices are

in line with this trend. TPC-G uses oil in its 500 MW Unit-6, which is operated

intermittently. This intermittent operation requires it to maintain a certain inventory of

fuel oil in order to be available for generation as per requirements. As the Unit was

under economic shutdown, the fuel oil procured earlier is part of the inventory.

Accordingly, the price of fuel oil includes the weighted price of fuel oil procured earlier

at the then prevailing rates. Hence, the fuel oil price projections for the 3rd

Control

Period appear to be slightly higher.

2.1.6 As per Bharat Petroleum Corporation Ltd. (BPCL), the current price of LSHS with Low

Sulphur content of 0.5-0.65 % is Rs. 21639 per MT, which is higher than the projected

oil prices of future purchases, i.e., Rs. 20998 per MT indicated in the MYT Petition.

Coal

2.1.7 For the Trombay Generating Station, TPC-G has to abide by the stringent emission

norms on Sulphur and Ash stipulated by the Maharashtra Pollution Control Board

(MPCB). Accordingly, TPC-G has to use coal with Sulphur content below 0.3% and

Ash below 5%, which is sourced from Indonesia as Indian coal of the required

specifications is not available. Even washed domestic coal has an ash content of 34%.

2.1.8 It is not stated whether the imported coal price of USD 42 per MT cited by the objectors

is Free On Board (FOB) or Cost and Freight (CFR), and the type of coal has also not

been mentioned. Thus, TPC-G is not in a position to comment on the price of coal cited.

It appears that the price referred to is the FOB price and does not include sea freight,

local logistics, taxes and duties to arrive at the landed cost. TPC-G’s projections of FOB

price is also in the range of USD 35 to 37.5 per MT, based on the market view on

imported coal and the current FOB prices. Considering this FOB price, the landed cost

of coal works out to Rs. 4747 per MT for FY 2016-17, as stated in the Petition.

APM Gas

2.1.9 The price of APM gas is governed by the Ministry of Petroleum & Natural Gas

(MoPNG), and the gas prices indicated in the MYT Petition are based on its pricing

guidelines.

2.1.10 Thus, the projections of fuel prices are not inflated.



Commission’s View

2.1.11 The Commission has examined the data stated by TPC-G and sought additional

information, viz. imported coal contracts and bills, details of quantity, price and Gross

Calorific Value (GCV) of fuel, details of process followed for competitiveness, etc. The

GCV, price and quantity of fuel have been approved based on scrutiny, as summarized

below

a. Regarding imported coal, the Commission asked for the Letter of Award (LoA)

for contracts relating to imported coal and asked TPC-G to clarify whether the

procurement was through competitive bidding. TPC-G has provided all the bills

for imported coal for FY 2014-15 and FY 2015-16. The Commission analyzed

these contracts, bills and submissions. The Commission found that the payments

for coal-related invoices were made to the agencies with whom the LoAs were

signed. The quantity of fuel claimed in the Petition matched the totals of the

quantity in the bills for imported coal. The Commission sought details of the

process followed for entering into supply agreements for imported coal for the

Trombay Station. TPC-G stated that the annual coal requirement is about 2.70

MMT. The Trombay Station requires low sulphur, low ash and medium GCV coal

to meet the stringent environment norms. TPC-G had existing contracts for 1.3

MMT per annum with P. T Adaro, Indonesia. For the balance 1.4 MMT, global

competitive bids were invited on 25 March, 2015 in EXIM (Weekly newsletter)

and Platts International Coal Trader (Daily News Letter). In response, three

bidders submitted their interest:

i. P.T. Adaro, Indonesia

ii. Samtan Co. Ltd., Korea

iii. P.T. Mitrabara, Indonesia

b. After technical evaluation and quality checks, two bidders, viz. P.T. Adaro and

Samtan Co. were found to be technically suitable and were invited for price

negotiations. Thereafter, in order to have two sources for better operational

flexibility, the contract was awarded to both these bidders at the same negotiated

price (P.T. Adaro 0.6 MMT per annum and Samtan 0.8 MMT per annum). The

Commission noted that the negotiated price was linked the international coal

index.

c. The Commission sought details of month-wise opening stock (quantity and price),

procurement and closing stock of each fuel. The Commission has also considered



the month-wise weighted average price calculations for fuel based on existing

stock and new purchases.

d. The Commission also cross-checked the fuel cost claim for FY 2014-15 with the

audited allocation statement of accounts.

2.1.12 The Commission has approved the fuel prices and GCV for the 3rd

Control Period as per

the MYT Regulations, 2015, i.e., considering the actual weighted average fuel price as

considered above and the GCV of the past three months. The landed price of coal is also

adjusted for the variation in Clean Environment Cess (earlier known as Clean Energy

Cess). The Commission has not allowed any year-wise escalation in fuel prices as the

future variations upwards or downwards are taken into account through the FAC

charges.

2.2 Competitive Bidding for Power Purchase


2.2.1 The Indian Hotel and Restaurant Association and Shri Guruprasad Shetty stated that the

object of the EA, 2003 is to bring in competition. The Govt. of India (GoI) has issued

guidelines that power procured by the Distribution Licensees should be through

competitive bidding. Many Licensees, i.e., from Gujarat, Goa, Madhya Pradesh,

Karnataka, etc. have benefited by competitive bidding, lowering their power purchase

cost. M/s Torrent, Adani, National Thermal Power Corporation (NTPC), Videocon,

Reliance Infrastructure Ltd. (RInfra) and TPC have opted for competitive bidding and

have obtained at lower cost. RInfra’s Sasan Ultra Mega Power Project (UMPP) has

publicized the cost of Rs 1.19/ kWh. To be fair to the consumers, TPC-G should not be

given the comfort of monopoly supply and Distribution Utilities should undertake

transparent competitive bidding for price discovery. Further, if electricity generation and

distribution are two separate businesses of the same Company, it should be ensured that

there is no conflict of interest.

2.2.2 Shri Guruprasad Shetty further stated that, in the recent past, the prices of raw material

required for power generation have substantially decreased. Coal, oil and gas are now

amply available at rates which are one third of the rates prevailing a few years back. The

electricity prices in the open market have crashed, and electricity in the open market is

now available at around Rs. 2.00 per Unit whereas the Tariff proposed by TPC-G is

nearly double that. As TPC-G’s cost of generation is more than the rates at which power

is being sold through competitive bidding and in the open market, TPC should buy

power from the open market instead of generating itself. Alternatively, the Distribution

Licensee can buy power through competitive bidding from the open market. Further,

Comptroller & Auditor General (CAG) audits have revealed that some of the biggest



scams occurred when competitive bidding was bypassed. Even the Supreme Court has

reprimanded the authorities for not calling for competitive tenders.

2.2.3 Shri Kamlakar Shenoy and Shri Lalit Vashista also stated that Sections 61(c) and (d) of

the EA, 2003 regarding encouraging competition and safeguarding of consumers'

interest have not been complied with while determining Tariff in the past. The final cost

borne by electricity consumers in neighboring States is around Rs. 4.00/kWh to Rs.

5.00/kWh whereas it is around Rs. 17.00/kWh for Mumbai consumers. Hence, gross

injustice is caused to the electricity consumers of Mumbai due to non-compliance of

Section 61.

TPC-G’s Response

2.2.4 The objections pertain to the Distribution Business, and hence no response is required

from TPC-G.

Commission’s View

2.2.5 The issues raised relate to the procurement modalities of the Mumbai Distribution

Licensees in general and TPC-D in particular, and whether at all they should buy

apparently costly power from TPC-G. TPC-D and BEST, both Mumbai Distribution

Licensees, have entered into a long-term Power Purchase Agreements (PPA) for power

procurement from TPC-G (in addition to sourcing a smaller quantum from elsewhere).

This PPA procurement is at Tariffs approved by the Commission from time to time after

examination and in accordance with Section 62 and other provisions of the EA, 2003

and the MYT Regulations.

2.2.6 Long-term power procurement through PPA and short-term power procurement from the

open market both have certain merits and demerits. While short-term power

procurement from the open market appears to be beneficial and cheaper at present (and

is, indeed, being resorted to from time to time), Distribution Licensees cannot depend

upon it for the bulk of their requirements considering variations in availability and price

(which is also influenced by the extent of their purchases), and stable long-term

arrangements are required which also enable better transmission system planning.

2.2.7 Moreover, sourcing of power from outside for Mumbai, in particular, is still constrained

by transmission availability. This also limits the quantum of power which can be

procured through competitive bidding. Hence, the power purchase costs of Distribution

Licensees in other States cannot be compared with that of Licensees in Mumbai. On the

other hand, along with stand-by arrangements with Maharashtra State Electricity

Distribution Co. Ltd. (MSEDCL), sourcing from Mumbai’s ‘embedded’ generation also

provides security advantages by facilitating the ‘islanding’ of Mumbai.



2.2.8 In this background, and as explained above, the Commission has approved the Tariff

after due examination. Further, with the PPAs of TPC-D and BEST with the embedded

generation of TPC-G expiring in March, 2018, the Commission would be addressing the

issue of their future procurements in its forthcoming MYT Orders in respect of those

Distribution Licensees.

2.3 Blended Tariff for Unit-7


2.3.1 With regard to TPC-G’s justification for a blended rate for Unit-7 despatch, Shri R. G.

Sonawane stated that TPC-G has considered an average power purchase rate of Rs.

3.49/kWh. The Commission should verify the proposed rates with the actual short-term

power purchase cost, and accept the proposal only if TPC-G commits not to charge more

than the rate cited in its cost-benefit analysis.

2.3.2 Shri Ashok Pendse, for Thane-Belapur Industries Association (TBIA), an authorised

Consumer Representative (CR) stated that Unit-7 generation from RLNG comes at Rs.

3.49/kWh and hence is not likely to come within the Merit Order Despatch (MOD).

Some Units of National Thermal Power Corporation (NTPC) are also facing a similar

situation (Kawas and Gandhar). Due to the high cost of RLNG-based generation and

lower position in MOD, they are not able to generate around 3800 MU yearly. No

different treatment should be given to Unit-7, which should be operated as per the MOD

criteria.

TPC-G’s Response

2.3.3 TPC-G has proposed that Unit-7 run with blended gas for the following benefits:

Unit-7 will run to its full capacity and, thus, be efficient on account of Heat Rate and

Auxiliary Consumption being within the normative parameters.

On account of higher generation, the fixed cost of the Generating Unit will be spread

over a larger generation quantum, reducing the overall per Unit cost.

The probability of running Unit-6 under the directions of Maharashtra State Load

Despatch Centre (with significantly higher cost of generation) may reduce, as Unit-7

RLNG generation will become available.

2.3.4 Further, this blending will ensure assured demand, providing better leverage to TPC-G

for tying up fuel gases at better contractual terms.



2.3.5 It is possible to achieve the same per Unit rate by using a combination of APM gas and

RLNG for Unit-7 as with only APM gas including fixed cost, i.e., there would be no

extra burden on the consumer from power purchase from Unit-7. TPC-G has sought in-

principle clearance for use of blended gas with ‘must run’ status, and would run it when

such blending would maintain the same overall cost for the Unit.

Commission’s View

2.3.6 The Commission observes that, if the blending of RLNG and APM gas for Unit-7 is

done in the ratio of 1:2, the blended variable cost comes to around Rs. 3.10/ kWh. The

Commission is of the view that, with such a high blended rate, the Unit will not be under

MOD for a significant period, leading to loss of generation even on APM gas. Further,

with a blended rate, on many occasions power costlier than Unit-7 APM but cheaper

than the Unit-7 blended rate would get scheduled at the cost of Unit-7 APM generation,

thereby overburdening consumers. Considering these factors, the Commission is not

determining any blended rate for Unit-7. The fuel wise Tariff for Unit-7 will be as

determined at para.7.2 of this Order.

2.4 GT Losses


2.4.1 Shri Ashok Pendse (TBIA) urged that GT losses should be considered as per the Central

Power Research Institute (CPRI) report.

2.4.2 Shri R. G. Sonawane stated that TPC-G has sought review of the Commission’s decision

on the transformation loss and Headworks for Hydro Stations. However, the

Commission had rejected the claim for additional losses in recent Order. Since TPC-G

has not filed any Appeal on this issue, the Commission cannot give any ruling on it

contrary to its earlier rejection. Moreover, the Bombay High Court, in its recent Order in

case of MERC vs. Reliance, has expressed its displeasure over the abuse of legal process

by Utilities in order to obtain the desired reliefs. Hence, the proposal should be rejected

on legal grounds alone.

TPC-G’s Response

2.4.3 TPC-G agrees with Shri. Ashok Pendse that GT losses be considered as per the CPRI

report.

2.4.4 As regards Shri R. G. Sonawane’s point, at the time of the MTR Petition TPC-G had

sought approval for the actual GT losses for Truing-up of FY 2012-13 and FY 2013-14.

Thereafter, TPC-G had approached the Commission in Case No. 52 of 2015 seeking



approval of revised norms for Auxiliary Consumption of Hydro Generating Stations for

FY 2015-16. In the present MYT Petition, TPC-G has sought reassessment of the actual

GT Losses and Headworks for Truing-up for FY 2014-15 and FY 2015-16. This is in

line with the approach suggested in the Order in Case No. 52 of 2015, and also includes

a request for change in norms for the 3rd

Control Period. In this regard, TPC-G has also

made some additional submissions to the Commission. Hence, there has been no

violation of the legal process on this matter, as the periods in question are not the same.

Commission’s View

2.4.5 The Commission has analysed the Auxiliary Consumption for Hydro Generating

Stations in subsequent Sections of this Order.

2.5 Colony Consumption


2.5.1 Shri R. G. Sonawane stated that TPC-G has proposed its colony consumption as part of

the Auxiliary Consumption. This is contrary to the MYT Regulations, 2011 which

specify that the colony consumption of a Generating Station shall not be included in the

Auxiliary Consumption. The MYT Regulations, 2015 also specify that the electricity

supply to housing colonies of operating staff and construction works at the Generating

Station shall be metered and billed separately, at the Tariff approved for the respective

consumer categories of the concerned Distribution Licensee.

TPC-G’s Response

2.5.2 TPC-G has not proposed colony consumption as part of Auxiliary Consumption. In fact,

it has been reduced from the total hydro Auxiliary Consumption of 2.71% for FY 2014-

15, and the total hydro Auxiliary Consumption claim of 2.54% is net of the colony

consumption. The treatment of hydro colony consumption proposed is in line with the

methodology approved in the MTR Order.

Commission’s View

2.5.3 The Commission has not considered colony consumption as a part of Auxiliary

Consumption. It has considered its cost as a part of O&M expenses, based on the

methodology in the MTR Order. However, as per the MYT Regulations, 2015, the

electricity supplied to the housing colonies of operating staff and for construction works

at the Generating Station are to be metered and billed separately at the Tariff approved

for the respective consumer categories of the Distribution Licensee for that area of

supply. Accordingly, the Commission has not considered colony consumption as a part



of O&M expenses for the 3rd

Control Period. Actual colony consumption and

corresponding revenue at the rate stipulated in the Regulations will be considered as part

of Non Tariff Income at the time of Truing-up.

2.6 Unit-7 PLF for 3rd

Control Period


2.6.1 Shri R. G. Sonawane stated that TPC-G has projected Plant Load Factor (PLF) of 54%

for Unit-7 for the 3rd

Control Period. However, for computing the working capital

requirement, it has considered PLF of 85%. Since TPC-G itself has projected a lower

PLF, the working capital requirement should be restricted to the projected PLF as per

Regulation 31 of the MYT Regulations, 2015.

TPC-G’s Response

2.6.2 As per Regulation 31, the actual generation has to be considered at the time of Truing-up

for working capital computation. As the present submission is part of projections and not

at actuals, TPC-G has considered the normative PLF of 85%.

Commission’s View

2.6.3 The Availability projected by TPC-G for Unit-7 is more than 85% even though the PLF

projected is around 54%. TPC-G has computed Interest on Working Capital (IoWC) for

this projected Availability. Further, Regulation 31 of MYT Regulations, 2015 states that

working capital requirement shall be based on target Availability. The Commission has

computed IoWC accordingly.

2.7 Foreign Exchange Loss


2.7.1 Shri R. G. Sonawane stated that TPC-G has considered foreign exchange loss as part of

fuel cost, which is a complete departure from its earlier practice and the disclosure made

before the ATE and the Commission. In its earlier Order, the Commission has not

considered the buyer’s credit and corresponding hedge contracts under Non-Tariff

Income, as they are in the nature of working capital funding. Hence, the Commission

should disallow such cost. Only the dollar variation of the fuel price may be allowed as

part of the fuel cost and not the dollar to rupee Depreciation, if any.

TPC-G’s Response



2.7.2 The foreign exchange loss shown under the fuel cost pertains to the difference in foreign

exchange rate prevailing on the date of bill of lading and the date of actual payment. The

portion of fuel for which buyer’s credits have been availed and its associated foreign

exchange is not claimed in the Petition.

Commission’s View

2.7.3 The Commission has considered the claim relating to foreign exchange rate variations

(FERV) on payment of fuel as per the methodology approved in the MTR Order.

2.8 Income Tax


2.8.1 Shri R. G. Sonawane stated that TPC-G should disclose the year-wise Corporate Tax

and Minimum Alternate Tax (MAT) applicable in previous years and clearly establish

the available MAT credits of those years. From the Petition, it is not possible to

ascertain whether the entire accrued MAT credit has been claimed by TPC-G. Further,

the previous Order directed TPC-G to utilize the initial year’s business loss while

computing the Income Tax for Unit-8. These details should be obtained before

approving the Income Tax for Unit-8.

2.8.2 He further stated that, despite the Commission’s direction to utilize Section 80 IA

(Income Tax Act) benefit for Unit-8, TPC-G has considered it as ‘nil’ during the 3rd

Control Period. Details may be obtained before approving the Income Tax for True-up

and the 3rd

Control Period.

2.8.3 Shri R. G. Sonawane also sought that the Commission verify the computation of

reduction of efficiency gains from income while computing Income Tax. It appears that

the efficiency gain amount that is shared with consumers has been deducted against the

requirement of deduction of amount to be retained by consumers.

TPC-G’s Response

2.8.4 TPC-G has adopted the methodology approved in the MTR Order and considered the

actual revenue and expenditure approved in the various Tariff Orders. Accordingly, if

the Generation Business is coming under Normal Tax and MAT credit is available of

previous years, the same has been adjusted to arrive at the Income Tax payable. For

example, FY 2014-15 MAT credit of Rs. 29.97 Crore has been adjusted against the Tax

payable. The details of MAT credit have been provided in response to data gaps raised.



2.8.5 TPC-G will be considering the 80 IA benefit, if applicable, for the respective years, at

the time of Truing-up. Hence, TPC-G has not considered it for the future period at

present.

2.8.6 As regards the consideration of efficiency gains, the suggestion is addressed to the

Commission.

Commission’s View

2.8.7 The Commission has scrutinized the Income Tax computations of TPC-G, and had

asked for the detailed break-up of various components, namely, MAT Credits, other

disallowances while computing it, Other Expenses allowed, deductions under Section 80

IA and disallowance under Income Tax. The Commission has computed Income Tax in

accordance with Regulation 34.1 of the MYT Regulations, 2011, and has arrived at

Income Tax paid on Regulatory Profit Before Tax (PBT) basis. Further, no efficiency

gains and incentive earned are considered for computation of the Tax on PBT basis.

2.9 Capital Expenditure and Capitalisation


2.9.1 Shri R. G. Sonawane stated that other Utilities like BEST and Reliance do not claim any

capitalisation towards Head Office and other non-regulated Business. The Commission

may disallow such expenses. CERC also does not allow such expenses for NTPC.

2.9.2 The Commission has to assess the need for capex for new Units like Unit-8. Since, for

new Stations, no capex needs to be allowed after the cut-off date. The Commission may

analyse the capex of NTPC’s new Stations and compare the type of capitalisation

incurred by them with that sought by TPC-G in its Petition.

2.9.3 TPC-G has proposed Non-Detailed Project Report (DPR) capitalisation for the

Generation Business as a whole, by which such capitalisation comes within the limit of

20%. However, for all other purposes like sharing of incentive, Income Tax, etc. TPC-G

proposes to consider the business of Units 4 to 7 and Hydro and Unit-8 on an isolated

basis. No such request should be considered.

2.9.4 TPC-G has not disclosed whether it has incurred actual Interest During Construction

(IDC) or not for capitalisation of FY 2014-15 and FY 2015-16. The Commission may

obtain a reconciliation statement with audited accounts for IDC. As observed from TPC-

G’s submission, out of a total debt requirement of Rs. 830 Crore, the actual loan

available was Rs. 580 Crore. Therefore, it is possible that TPC-G has claimed notional



IDC on the capitalisation amount. Notional IDC, if any, must be disallowed as it is

permissible under the law.

2.9.5 TPC-G has considered reduction in equity by 30% for de-capitalisation, as against the

higher equity contribution, i.e., more than 30%, approved by the Commission in the first

Tariff Order. Such working may be reviewed by the Commission.

2.9.6 TPC-G should disclose whether capitalisation of Rs. 830 Crore for FY 2014-15 is on

cash basis or also includes un-discharged liabilities. In case of any un-discharged

liability, the Commission should allow Return on Equity (RoE), interest and

Depreciation only corresponding to expenses incurred on cash basis.

2.9.7 In its previous Order, the Commission had directed to merge the Non-DPR schemes and

submit the DPR for post facto approval within 3 months. TPC-G has delayed its

submission. Considering its submission, it is most likely that approval would be granted

in FY 2016-17. Therefore, the impact of capitalisation in FY 2014-15 should not be

considered since carrying cost would also accrue to TPC-G as a result, which would be

contrary to the ruling in the previous Order. Hence, the Commission should consider the

impact only in FY 2016-17 onwards.

TPC-G’s Response

2.9.8 As regards the capitalisation towards Head Office and other non-regulated Business, the

capitalisation proposed is in line with the principles applied by the Commission in its

various Orders on the ARR of TPC-G.

2.9.9 The capital expenditure requirement of Unit-8 is proposed as per Regulation 28.1 (f) of

the MYT Regulations, 2011.

2.9.10 As regards the Non-DPR capitalisation, certain costs are common for Unit-5 to 7 and

Unit-8. These costs are allocated based on the methodology approved in the previous

Orders. Since a considerable portion of the capitalisation in FY 2014-15 is common to

the entire Trombay Station area, the Commission may consider the ratio of Non-DPR /

DPR as a whole. However, as the performance parameters are approved separately for

each Unit, they cannot be combined for the Trombay Station as whole.

2.9.11 As regards IDC, as per the MYT Regulations, 2011 and 2015, the loan and equity are to

be considered on a normative basis. If the equity actually deployed is more than 30% of

the capital cost, the excess is to be treated as a normative loan for the determination of

Tariff. The capitalisation amount claimed is inclusive of IDC. IDC has been determined

on the normative debt portion associated with the capitalized amount, in accordance

with the methodology in the MTR Order.



2.9.12 As regards the reduction in equity for de-capitalisation, TPC-G has considered the

deletion in equity based on the methodology approved in previous Orders. In case equity

actually deployed is more than 30% of the capital cost, the excess is treated as normative

loan as per the Regulations.

2.9.13 As regards whether capitalisation is on cash basis or also includes un-discharged

liability, TPC-G fails to understand the query. However, the capitalisation details given

in the MYT Petition and RoE claimed on are as per the MYT Regulations, 2015.

2.9.14 As for the merged DPR, the merging of Non-DPR schemes pertaining the years starting

from FY 2008-09 is a humongous task. Accordingly, TPC-G had sought extension of

time for submission of the merged DPRs, well before the submission of this MYT

Petition.

Commission’s View

2.9.15 The Commission has approved capitalisation as per the provisions of the Regulations

and approach in earlier Orders, as set out at paras. 4.3.8, 4.4.6, 5.1.1a.5.3.11 and 6.4.7 of

this Order.

2.9.16 Capitalisation towards Head Office has been considered in proportion to the allocation

made to the Generation Business as per the methodology in the MTR Order.

2.9.17 Regarding Capex, the Commission has approved DPR schemes in principle as per its

2005 Guidelines for “In-Principle Clearance of Proposed Investment Schemes”. Non-

DPR capitalisation has been restricted to 20%, as per the MYT Regulations, 2011.

2.9.18 The Commission has considered a Debt:Equity ratio of 70:30 to arrive at the normative

debt and equity portion. Interest on Long-term Loan, IDC and RoE have been calculated

as per the normative Debt:Equity ratio.

2.9.19 After seeking extension of time, TPC-D has submitted the merged DPRs, which have

been considered by the Commission.

2.10 O&M Expenses


2.10.1 Shri R. G. Sonawane stated that TPC-G has claimed salary review of Head Office and

Support Services (HOSS) on provisional basis. However, actual payment would be

made once the review is finalized, but TPC-G is claiming the additional expenses now

as well as the carrying cost, whereas no employee has been paid salary arrears with



carrying cost. Such expenses may be allowed once actual expenses are incurred and not

on a provision basis, as per the principle applied by the Commission to MSLDC.

2.10.2 Shri R. G. Sonawane stated that TPC-G has not provided any reason why the Central

Civil and Central Construction Department services, from FY 2015 onwards, will not be

availed by other Departments. In such case, the manpower requirement should be

assessed and reduced.

TPC-G’s Response

2.10.3 The claim towards the salary review of HOSS has been made based on the entries in the

books of accounts and as audited by the statutory auditors. Any revision in the provision

made will be adjusted in the subsequent Truing-up process. Details regarding the salary

review as a part of HOSS expenses have been provided in response to queries of the

Commission. The expenses are claimed according to the principles of the MYT

Regulations, 2011 and the methodology of the Commission in previous Orders.

2.10.4 TPC-G has given a detailed response to the queries raised by the Commission vide letter

dated 10 March, 2016. The consequent additional increase in employee expenses is

insignificant compared to the total O&M expenses, i.e., Rs 0.28 Crore for the Generation

Business.

Commission’s View

2.10.5 The amount of Rs. 8.62 for FY 2014-15 pertaining to the salary review has not been

actually incurred by TPC-G. Accordingly, the Commission has not allowed this amount

in the present Order. It will be considered once the cost is actually incurred.

2.11 Sharing of Unit-6 Fixed Cost


2.11.1 BEST stated that, when generation from Unit-6 is required for meeting Mumbai

demand, it is shared among all Distribution Licensees in the ratio of sharing of

transmission costs, as per the arrangement arrived at the meeting held by Principal

Secretary (Energy), GoM on 24 March, 2014. Unit-6 generated 636 MU during FY

2014-15 and also to some extent in FY 2015-16 during transmission constraints. This

arrangement may be continued in the 3rd

Control Period. The fixed cost of Unit-6 is

being shared by TPC-D and BEST in the ratio stipulated in their respective PPAs. Since

Unit-6 is being primarily run for meeting the demand of Mumbai during transmission

constraints, its fixed cost in this constraint scenario should also be shared in the ratio of

the transmission capacity among BEST, TPC-D and RInfra-D, as the Unit-6 power



during such period will be utilized to meet the demand of all three Licensees. This will

reduce the burden of costly power to consumers.

TPC-G’s Response

2.11.2 The present mechanism of payment of fixed cost of Unit-6 is as per the existing PPA

with Distribution Licensees as approved by the Commission. The Commission may

decide to change the methodology of recovery of the fixed cost in the event of its

operation under MSLDC directions provided there is no financial impact on TPC-G.

Commission’s View

2.11.3 The recovery of fixed cost is linked with the PPAs of the respective Generating Units.

Even if Unit-6 is not operational, its fixed cost has to be borne by TPC-D and BEST.

Thus, the fact of the Unit running mostly to meet the transmission constraints has no

bearing on the fixed cost-sharing mechanism.

2.12 Delayed Payment Charges


2.12.1 Shri R. G. Sonawane stated that TPC-G should disclose whether the full income from

delayed payment charges (DPC), including interest thereon, has been considered as part

of Non-Tariff Income.

TPC-G’s Response

2.12.2 The income from DPC and Interest on DPC has been considered as a part of Non-Tariff

Income. The component-wise Non-Tariff Income is set out in Form 11.

Commission’s View

2.12.3 The Commission has considered DPC and Interest on DPC as a part of Non-Tariff

Income.

2.13 Force Majeure in case of Units 7 and 8


2.13.1 Shri R. G. Sonawane stated that the reduced Availability for Unit-7 is being ascribed to

Force Majeure. The Commission should appoint the Central Electricity Authority (CEA)

or other technical body to verify the claim. On the one hand, TPC-G is claiming the

benefit of better Auxiliary Consumption and Heat Rate. On the other hand, it is asking

for relaxation in the reduction in fixed cost due to low Availability. TPC-G may perform



better in one year and may not in another year. Hence, if TPC-G has gained because of

higher Availability in the past, such benefit should be first adjusted to offset the losses

and the balance loss, if any, may be considered, if the event is attributable to Force

Majeure.

2.13.2 Regulation 49 of the MYT Regulations, 2011 requires payment of Annual Fixed

Charges (AFC) on monthly basis in equal installments, subject to adjustment at the end

of the year, with respect to target Availability. Unit-7 & 8 have not achieved target

Availability and so, for billing purposes, AFC should have been reduced automatically.

The MYT Regulations do not empower the Generating Company to bill more in case it

has not achieved target Availability. The result of doing so is that the power purchase

cost for that year has increased artificially. Hence, for Truing- purposes, the revenue of

TPC-G should be reduced and, correspondingly, the power purchase cost of Distribution

Licensees should also be reduced for FY 2014-15.

TPC-G’s Response

2.13.3 Operating efficiency and Force Majeure are two separate matters in the Regulations, the

former being within the control of the Generating Company while the latter is not. All

the necessary details have been provided to prove that the fault could not have been

detected even after regular testing and inspections of the machine as per the Original

Equipment Manufacturer (OEM). The Force Majeure clause is intended to protect the

Utility from such unforeseen conditions even after performing better during the year.

Hence, these two situations are distinct and cannot be clubbed together.

2.13.4 The methodology followed for recovery of AFC of Unit-7 and Unit-8 on monthly basis

in equal installments is in line with the MYT Regulations, 2011, and also considering

the reduced AFC as approved in the MTR Order.

Commission’s View

2.13.5 Regarding the outage of Unit-7, the Commission has gone through TPC-G’s

submissions and the root cause analysis carried out by M/s. Siemens in the Incident

Analysis Report. The Commission notes that TPC-G had adhered to the maintenance

schedule stipulated by the OEM during minor and major outages. According to the

Incident Analysis Report, the probable contributor to the failure was mechanical stress

strain condition at the J-Strap and radial bolt. The Commission also notes that, in order

to reduce the down-time of the machine outage, TPC-G arranged for a spare rental rotor

from the OEM, which was installed in Unit-7 and the machine taken in service.

Considering these, the Commission is of the view that the occurrence in Unit-7 which

led to its tripping, considerable damage and subsequent outage for repairs was beyond



the reasonable control of TPC-G, and qualifies as a Force Majeure condition. The

detailed analysis is at para. 4.3.18 of this Order.

2.13.6 Regarding the outage of Unit-8, TPC-G has given detailed responses to the directives in

the MTR Order and provided supporting material. Considering these, the Commission is

of the view that the forced outage of Unit-8 on 9 January, 2014 was a Force Majeure

event beyond the control of TPC-G, as detailed at para. 4.4.15 of this Order.

2.13.7 Incentives are calculated on a yearly basis as per the Regulations, and hence there is no

provision for adjusting past incentives against the current claim.

2.13.8 For Truing-up, the actual revenue recovered by TPC-G is considered for arriving at

gains/ (surplus), and holding cost is charged on any excess recovery (gains). Thus, there

is no incentive for any Generator or Licensee to charge more than permitted under the

Regulations.

2.14 Incentive for Backing Down of Units


2.14.1 Shri R. G. Sonawane stated that there is no provision in the MYT Regulations for

incentive for backing down of Hydro Plants, and this is provided only for Thermal

Plants. The incentive for Hydro Units, if worked out, would be Rs. 1.57/kWh on energy

generated over and above Design Energy, as compared to Rs. 0.25/kWh for a Thermal

Plant.

TPC-G’s Response

2.14.2 TPC-G has not claimed any deemed PLF for backing down of Hydro Generating

Stations.

Commission’s View

2.14.3 Incentive corresponding to generation loss on account of backing down instructions is

considered only for Thermal generation. Since, in FY 2014-15, none of the Generating

Units achieved PLF exceeding 85%, such incentive has not been claimed by TPC-G.

2.15 Property Tax


2.15.1 Shri R. G. Sonawane stated that TPC-G has claimed Property Tax and actual expenses,

being more than normative O&M expenses, as uncontrollable. The sharing of gains and



losses has to be as per the Regulations. The ATE in case of Torrent Power has held that

it should be allowed on normative basis and the sharing of gains and losses should be as

per the Regulations. The Commission has also ruled in previous Order that O&M

expense is normative and cannot be segregated into individual items. The Commission

may see whether TPC-G has raised the Property Tax issue before ATE or not. Since

such disallowance by the Commission was an issue of principle, TPC-G cannot seek a

review of the Commission’s decision in the current proceedings. Since TPC-G has not

challenged it before the ATE, the issue has achieved finality.

TPC-G’s Response

2.15.2 TPC-G has provided detailed justification regarding the treatment of Property Tax at

page no. 82, 83 and 84 of Section 4.1.18 of its Petition. The increase in the total O&M

expenses is claimed as a consequence of uncontrollable increase in individual

components and is based on the principles in the MTR Order. Hence, TPC-G is not

seeking any review.

Commission’s View

2.15.3 Normative O&M expenses are derived based on the methodology specified in the MYT

Regulations. Therefore, the normative O&M expenses are being approved on a

composite basis, without segregation of costs into employee, A&G and R&M expenses,

which is also in keeping with earlier Orders. An average escalation of 5.72% is being

allowed by the Commission on different components of O&M expenses. These

components may have different escalation rates, and are not individually considered for

Truing-up. Increases in any type of taxes are also subsumed in the composite escalation

rate. In the present case, the actual expenses are higher than the normative O&M

expenses based on the MYT Regulations. The gains and losses due to the variation in

O&M expenses have been computed based on the normative O&M expenses and the

approved actual O&M expenses.

2.16 Recovery of Fixed Cost for Bhira Hydro Station


2.16.1 Shri R. G. Sonawane stated that, as regards the lower rainfall resulting in lower recovery

of fixed cost for Bhira Hydro Station, the Commission should see whether the combined

revenue of all Hydro Plants would be sufficient to recover the fixed cost. On the other

hand, for Non-DPR capitalisation, TPC-G has requested the Commission to consider all

its Units as a whole. The Commission may deal appropriately with the selective

treatment of different issues by TPC-G.



TPC-G’s Response

2.16.2 The Commission has approved separate Design Energy for each Hydro Generating

Station of TPC-G and has also determined capacity and Energy Charges separately.

Since the revenue recovery is separate for all Units based on the respective approved

capacity and Energy Charges, combining recovery of all the Units would be incorrect.

Further, TPC-G has requested treatment of the Energy Charge shortfall of FY 2015-16

as being due to uncontrollable factors as per MYT Regulations, 2011 as well as 2015.

Commission’s View

2.16.3 The Commission recognizes the fact of low rainfall in FY 2015-16, and notes that TPC-

G had to additional release 30 MCM water in Mulshi dam for drought-affected areas as

per the Order of the Maharashtra Water Resources Regulatory Authority (MWRRA).

This has led to generation lower than Design Energy. The Commission has approved the

fixed cost recovery as per the provisions of MYT Regulations, 2011.

2.17 Submissions for 3rd

Control Period


2.17.1 Shri R. G. Sonawane stated that TPC-G has sought different performance parameters

norms for the 3rd

Control Period. This amounts to a review of the Regulations, which

cannot be allowed in the current proceedings.

2.17.2 TPC-G has not considered the O&M expenses for FY 2012-13 to FY 2014-15 in the true

spirit to derive the normative expenses for the 3rd

Control Period as per Regulation

45.1(b), i.e., excluding abnormal O&M expenses, if any. Hence, the Commission should

take a re-look at the claims of TPC-G.

2.17.3 TPC-G should be directed to display on its website in easy downloadable format,

i. Copies of the fuel bills

ii. Details of GCV and price of fuel, i.e., domestic coal, imported coal, e-

auction coal, lignite, natural gas, RLNG, liquid fuel, etc.

iii. Details of blending ratio

iv. Proportion of e-auction coal.

2.17.4 In the past, Utilities have only provided a summary sheet which does not give any

details to enable scrutiny. The Commission may also make public the FAC details of



Generating and Distribution Companies before post facto approval so that consumers

may make suggestions, if any.

TPC-G’s Response

2.17.5 The norm sought for Unit-7 in open cycle operation mode is not a revised norm but one

which was approved in the Order dated 5 June, 2013 in Case No. 177 of 2011 for the 2nd

Control Period. Hence TPC-G has sought that it be considered for open cycle operation

of Unit-7 during the 3rd

Control Period. The request for a norm for Unit-6 is new based

on its current operating condition. In case of Hydro Generating Stations, the request for

GT Losses and Headworks energy consumption is based on the CPRI Report and a

genuine requirement of the Hydro Generating Stations in view of their unique

operational set up and geographical spread. Under Regulation 102 of the MYT

Regulations, 2015 the Commission has the power to specify such norms.

2.17.6 TPC it has computed O&M expenses in accordance with the MYT Regulations, 2015.

2.17.7 All the relevant data as required by the Commission is uploaded on its website as a part

of the MYT Petition.

2.17.8 As regards publishing FAC data, the suggestion is addressed to the Commission.

Commission’s View

2.17.9 The Commission notes the suggestion for providing more details on the website.

However, if any relevant additional data/information is not available on the website, it

can also be sought from the Commission as per the Conduct of Business Regulations.

2.17.10 FAC is a mechanism for pass through of variation in cost of fuel and power purchase.

The idea is to allow the recovery of variations on account of uncontrollable factors so

that the gap at the time of Truing-up and the consequent carrying cost is minimized. Any

variations in actual revenue recovery and actual cost incurred is Trued-up and the

gap/surplus adjusted in future ARR. Further, during the Truing-up, audited accounts

with the details of audited fuel cost is available, and the Commission reconciles the fuel

cost and related information (GCV, price, blending ratio etc.) from the data in the

audited statement of accounts. Such annual fuel-related information is part of the Tariff

Petition and is made available to the public for providing objections and suggestions.

2.17.11 TPC-G has provided its justification for any claim beyond that allowed in the MYT

Regulations. The Commission has scrutinized all the claims and rationale for any

approval or disapproval of such claims is given in the relevant Sections of this Order.



2.18 Shortcomings in Petition Filing


2.18.1 Shri R. G. Sonawane stated that TPC-G’s Petition is incomplete, as neither the audited

accounts have been made available on TPC-G’s website as part of the Petition, nor has

TPC-G replied to all the queries raised by the Commission. Instead TPC-G has stated in

various replies that it would submit the replies shortly. Further, the reconciliation

statement on its website is not legible, and so it is impossible to verify or analyse the

details. TPC-G may be asked to provide documents in legible form on its website. The

Commission may postpone the Public Hearing till all documents sought by it are made

available to the public. Moreover, for this default, appropriate deductions in the carrying

cost should be done and penalty imposed.

2.18.2 If there has been any delay in filing the Petition, as per the principle settled by the ATE,

consumers should not be required to bear the carrying cost for that period.

TPC-G’s Response

2.18.3 TPC-G has submitted its Petition with all relevant documents as the Commission may

require for assessing the variations in financial performance from the approved forecast

of ARR and expected revenue from Tariff and charges. Further, responses to all queries

raised by the Commission have been provided. In some instances, it had been stated that

TPC-G would provide the responses shortly, which have been provided in subsequent

submissions. With respect to clarity in the documents uploaded, TPC-G has checked the

soft copies and found them to be legible and usable for analysis. The contact details of

concerned officials were provided in the Public Notice to enable the general public to

seek additional information and clarifications regarding the Petition.

2.18.4 As regards the delay in submission, the ARR submission involves enormous activity and

large amount of data. TPC-G had sought extension of 10 days for filing the MYT

Petition vide letter dated 1 February, 2016 and had submitted the Petition on 10

February, 2016. Hence, there is no delay beyond the committed date.

Commission’s View

2.18.5 The Commission has admitted the Petition after replies to all data gaps were received.

TPC-G had sought extension of time for filing its Petition, which was granted by the

Commission.



3 IMPACT OF ATE JUDGMENTS ON PREVIOUS YEARS’ TRUE-UP

3.1 Appeal challenging MTR Order dated 26 June, 2015 in Case 6 of 2015

TPC-G’s Submission

3.1.1 TPC-G had filed Appeal No. 244 of 2015 before the ATE challenging the MTR Order

with respect to certain disallowances. In the Appeal, TPC-G had claimed the following

amounts along with applicable carrying costs.

Table 1: Potential Impact of ATE Appeal 244 of 2015 as submitted by TPC-G

S. No. Issue Disallowance

1

Disallowance of actual Auxiliary Energy Consumption of Unit-6,

despite the fact that the Unit was not operating for approximately 8

months due to economic shutdown

14.23

2 Disallowance of Carrying Cost 156.34

3

Disallowance of Income Tax on incentive and efficiency gains,

considering it on actual basis instead of accrual basis, and failing to

consider entire income while computing Profit before Tax

To be determined

4 Incorrect treatment of delayed payment charges 18.56

3.1.2 TPC-G had submitted in its Petition that the ATE Judgment is expected during the 3rd

Control Period. If it is in favour of TPC-G, it will be entitled to recover an additional

amount from the Distribution Licensees with whom it has PPAs.

3.1.3 The ATE passed its Judgment in Appeal No. 244 of 2015 on 3 June, 2016 dismissing the

Appeal and upholding the Order of the Commission.

3.1.4 Subsequently, TPC-G has made an additional submission on 18 July, 2016 stating the

following:


3.1.5 In its MTR Petition, TPC-G had sought recovery of approved Gap / (Surplus) in the

same year in which it was approved for the purpose of Income Tax calculation. The

Commission had however, set out different principles for computing the Income Tax

based on actual income. In its Judgment dated 3 June, 2016 in Appeal No 244 of 2015,

the ATE has upheld the methodology of the Commission for computation of Income

Tax based on actual income. On account of this Judgment, TPC-G is entitled to

additional Income Tax for the period FY 2007-08 to FY 2013-14, and has recalculated



the Income Tax as per the actual "billed" revenue allowed to be recovered through its

various Tariff Orders.

3.1.6 The impact has been submitted without prejudice to the rights of TPC-G to seek

appropriate relief and adjustment in view of the pendency of Review Petition No 13 of

2016, against the above Judgment of the ATE. The impact computed by TPC-G is as

under:

Table 2: Potential Impact of ATE Appeal 244 of 2015 as submitted by TPC-G (Rs. Crore)

Particulars FY

2007-08

FY

2008-09

FY

2009- 10

FY

2010-11

FY

2011-12

FY

2012-13

FY

2013-14

FY

2013-14

Total

Unit 4 to 7 plus Hydro Unit 8

Revenue Considered

in the MTR T.O. Case

No 6 of 2015

A 4152.59 4963.52 3688.52 3030.91 4194.54 4662.83 3114.23 756.20

Revenue allowed to

be recovered

separately

(pertaining to past

period)

A1 85.00 15.31 716.30 -47.34

Revised Revenue

amount A2 4152.59 4963.52 3773.52 3046.22 4194.54 4662.83 3830.53 708.86

Less: Incentive and

efficiency gains B 95.52 106.56 92.35 40.35

Total Expenses C 3685.27 4661.23 3414.9 2815.61 3941.84 4406.54 2644.87 584.55

Profit before Tax D = A

2- B - C 467.32 302.29 358.62 230.61 157.17 149.73 1093.31 83.96

Tax adjustment

Add

Depreciation

considered in

Expenses

E 47.7 57.21 77.59 69.43 104.04 101.77 114.24 57.14

Other disallowance

while computing

Income Tax

F 28.61 35.89 25.67 18.93 17.53 46.15 59.06 20.28

Total Tax

disallowances

G = E +

F 76.31 93.1 103.26 88.36 121.57 147.91 173.29 77.41

Less

Tax Depreciation H 69.98 107 134.54 133.46 124.74 148.98 204.94 73.44

Other expenses

allowed for computing

Income Tax

I 23.86 14.69 10.57 18.36 25.62 48.97 57.53 16.66

Deduction - U/s 80 IA J 112.32 82.14 24.9 53.74 82.96 68.51 35.26

Total Tax allowances K = H +

I + J 206.17 203.84 170.01 205.56 233.32 266.46 297.72 90.10

Total Taxable Income L = D +

G - K 337.46 191.55 291.87 113.41 45.43 31.18 968.88 71.27

Corporate Tax Rate M 33.99% 33.99% 33.99% 33.22% 32.45% 32.445% 33.99% 33.99%



Particulars FY

2007-08

FY

2008-09

FY

2009- 10

FY

2010-11

FY

2011-12

FY

2012-13

FY

2013-14

FY

2013-14

Total

Tax Payable at

Normal rate

N =

L*M 114.70 65.11 99.21 37.67 14.74 10.12 329.32 24.22

MAT Computation

Profit before Tax O=D 467.32 302.29 358.62 230.61 157.17 149.73 1093.31 83.96

Add: Disallowances

under Income Tax (U/s

14 A, provision for

doubtful debt)

P 0.00 0.01 1.70 -0.93 -0.21 0.14 -0.05 0.00

Less: Deduction under

Income Tax (Exempt

Income, FBT, Wealth

Tax, Withdrawal from

Income)

Q 1.19 0.95 -0.49 0.15 0.00 0.00 0.00 0.00

Book Profit R = O +

P – Q 466.13 301.36 360.81 229.52 156.97 149.87 1093.25 83.96

MAT Rate S 11.33% 11.33% 16.995% 19.93% 20.01% 20.0077

% 20.961% 20.961%

Tax payable under

MAT T = R*S 52.81 34.14 61.32 45.75 31.41 29.99 229.15 17.60

Tax applicable U= max

(N,T) 114.70 65.11 99.21 45.75 31.41 29.99 329.32 24.22 739.70

V Normal Normal Normal MAT MAT MAT Normal Normal

MAT Credit

Available

if V =

MAT,

then

W=U-N

0.00 0.00 0.00 8.07 16.67 19.87 0.00 0.00

Cumulative MAT

Credit Available x 0.00 0.00 8.07 24.74 44.61 44.61

Tax Payable

y= if(v=

Normal,

v-x)

114.70 65.11 99.21 45.75 31.41 29.99 284.71 24.22

Tax Approved in

MTR T.O. / Claimed

in MYT for FY 2014-

15

X 114.70 65.11 69.29 42.69 31.41 29.99 85.85 40.32 479.35

Impact due to ATE

Judgment 0.00 0.00 29.92 3.06 0.00 0.00 198.86 -16.09 215.75

Note: Revenue of FY 2009-10 is considered as per the T.O. 105of 2011 dated 15th February, 2012 (P.No.113 of 234)

3.1.7 TPC-G has also claimed carrying cost on this additional claim of Rs. 215.75 Crore as

per the methodology of the Commission. The Commission may allow the revised

Revenue Gap of Rs. 299.50 Crore along with the carrying cost due to the consequential

tax impact as shown in the Table below:



Table 3: Potential Impact of ATE Appeal 244 of 2015 including carrying cost as submitted

by TPC-G (Rs. Crore)

S.

No. Particulars Year

SBI

PLR

rate

Approved

in the MTR

T.O

Additional

Impact

1

Impact of Hon'ble ATE

Judgment in Appeals 182 of

2012 and 212 of 2013

including Carrying Cost

Unit 4 to 7

and Hydro 66.30 0.00

2



2012 including Carrying Cost

Unit 8 7.27 0.00

3



2012 including Carrying Cost

Unit 4 to 7

and Hydro 139.65 32.97

4



2011 w.r.t disallowed

capitalization including

Carrying Cost

Unit 4 to 7

and Hydro 38.90 0.00

5 Carrying Cost allowed for past

recovery in Appeal 212 of 2013 64.99 0.00

6 Total ATE Impact

317.11 32.97

12 Truing-up gap for FY 2012-13

Unit 4 to 7

and Hydro 133.50 0.00


Unit 8 -6.17 0.00

14 Total

127.32 0.00

15 Carrying Cost FY 2012-13 14.61%

9.30 0.00


18.57 0.00


18.78 0.00

18 Total with Carrying Cost

173.98 0.00


Unit 4 to 7

and Hydro -75.14 198.86


Unit 8 -29.14 -16.09

21 Total

-104.28 182.77


-7.60 13.33


-15.38 26.96

24 Total with Carrying Cost

-127.27 223.06

25 Fuel Cost recovery pertaining

to past period -14.36 0.00

26 Total amount to be passed on

in FY 2015-16 349.44 256.03

27 Carrying Cost for FY 2015-16 FY 2015-16 14.75%

27.00 31.82



S.

No. Particulars Year

SBI

PLR

rate

Approved

in the MTR

T.O

Additional

Impact

28 Total Recovery allowed with

Carrying Cost till FY 2015-16 376.44 287.85

29 Carrying Cost for FY 2016-17

for 6 months FY 2016-17 10.80%

11.65

30 Total Impact of ATE Judgment

376.44 299.50

3.1.8 Since the MAT credit gets utilised by FY 2013-14, there is no MAT credit available for

FY 2014-15. Accordingly, the revised Tax computation for FY 2014-15 is as shown in

the Table below:

Table 4: Revised Tax Computation for FY 2014-15 as submitted by TPC-G (Rs. Crore)

Particulars FY 2014-15

Revenue Considered in the MTR T.O. Case No 6 of 2015 A 2641.56

Revenue allowed to be recovered separately (pertaining to

past period)

A1 0.00

Revised Revenue amount A2 2641.56

Less: Incentive and efficiency gains B 46.12

Total Expenses C 2133.56

Profit before Tax D = A 2- B - C 461.87

Tax adjustment

Add

Depreciation considered in Expenses E 117.29

Other dissallowance while computing Income Tax F 73.36

Total Tax disallowances G = E + F 190.65

Less

Tax Depreciation H 178.40

Other expenses allowed for computing Income Tax I 79.21

Deduction - U/s 80 IA J 14.77

Total Tax allowances K = H + I + J 272.38

Total Taxable Income L = D + G - K 380.14

Corporate Tax Rate M 0.34

Tax Payable at Normal rate N = L*M 129.21

MAT Computation

Profit before Tax O=D 461.87

Add: Disallowances under Income Tax (U/s 14 A, provision

for doubtful debt)

P 0.17



Particulars FY 2014-15

Less: Deduction under Income Tax (Exempt Income, FBT,

Wealth Tax, Withdrawal from Income)

Q 0.00

Book Profit R = O + P - Q 462.04

MAT Rate S 20.961%

Tax payable under MAT T = R*S 96.85

Tax applicable U = max(N,T) 129.21

V Normal

MAT Credit Available if V = MAT, then

W=U-N 0.00

Cumulative MAT Credit Available x 0.00

Tax Payable y= if(v=Nor,v-x) 129.21

Tax Approved in MTR T.O. / Claimed in MYT for FY

2014-15

X 99.24

Impact due to ATE Judgment 29.97

Commission’s Analysis and Ruling

3.1.9 The submission of TPC-G pertains to Income Tax calculation for the period FY 2007-08

to FY 2013-14. The MTR Order had reassessed the Income Tax for the period FY 2007-

08 to FY 2010-11 on PBT method as per the ATE Judgment in Appeal No. 105 of 2012.

Further, the Commission undertook the revised Truing-up of FY 2011-12 and Truing-up

of FY 2012-13 and FY 2013-14 and determined the Income Tax based on PBT method

as per the data and information submitted by TPC-G.

3.1.10 TPC-G had filed an Appeal No. 244 of 2015 in ATE against the MTR Order challenging

the methodology of computation of Income Tax calculation. In its Judgment dated 3

June, 2016, the ATE has dismissed all the submissions of TPC-G on the issues relating

to Income Tax calculation. The ATE has upheld the Commission’s Order, and there is

no direction from ATE for revised calculation of Income Tax for the past periods which

have attained finality. The relevant para. of ATE Judgement reads as follows:

“The State Commission has rightly disallowed income tax on accrual basis by giving

clear reasons in the Impugned Order stating that for computing income tax liability it

has considered the regulated PBT on the income less permissible expense and other

provisions of the Income Tax Act. The State Commission has considered only revenue

from sale of power. Since income booked as tariff adjustment has not been considered

for truing up purposes and State Commission has not considered income tax as payable

on such income which is yet to be approved by the Commission and yet to be billed or

recovered.



After going through the case law, cited by the appellant, the said case laws are not

applicable to the facts of the matter in hand. They are on different aspects with which we

are not concerned in these appeals. We are clearly of the view that income tax based on

regulated PBT is payable on the actual income in such situation. In view of the above

discussion, on this issue we approve the findings and view expressed by the State

Commission in the Impugned Order. This issue is also decided against the appellant in

each of the appeals.”

3.1.11 The Commission, has therefore, not considered the claims made by TPC-G in its

additional submission.



4 TRUING-UP FOR FY 2014-15

4.1 Background

TPC-G has sought final Truing-up of FY 2014-15 based on the actual expenditure and

revenue as per the audited Annual Accounts, in accordance with MYT Regulations,

2011. It has also stated the reasons for differences between the actual expenses for FY

2014-15 and those approved in the MTR Order. The detailed analysis of the True-up

undertaken by the Commission is provided below.

4.2 Performance Parameters

In the MTR Order, the Commission had approved the provisional performance

parameters for TPC-G for FY 2014-15. TPC-G has now given the actual performance

parameters for FY 2014-15, which are different from those approved earlier. TPC-G’s

submissions regarding the actual performance parameters for FY 2014-15 and the

Commission’s analysis and rulings are detailed below.

4.3 Performance of Units-4 to 7 and Hydro Stations

4.3.1 Availability and Gross Generation


4.3.1.1 TPC-G has achieved a total gross generation of 6745.71 MU. The Unit-wise

performance is detailed below.

Unit-4: It is a stand-by Unit. In FY 2014-15, it was not required to be brought into

service and the generation was nil.

Unit-5: Generation for FY 2014-15 was as per that approved in the MTR Order.

Unit-6: Cost of generation from Unit-6 is higher due to running on oil and RLNG. While

determining the Tariff for the 2nd

Control Period, the Commission had not considered

Unit-6 generation. Considering this, both the Distribution Licensees had asked TPC-G to

stop generation from this Unit. TPC-G has kept Unit-6 under economic shutdown.

However, the Unit is operated when there is a requirement from the Distribution

Licensees or under the directions of MSLDC to address system constraints. When

generation from Unit-6 is as per MSLDC directions for meeting Mumbai’s demand, it is

shared by all Mumbai Distribution Licensees in the ratio of sharing of transmission

costs, as per the arrangement arrived at in the meeting held by Principal Secretary

(Energy), GoM on 24 March, 2014. Generation from Unit-6 during FY 2014-15 under

the PPAs (as per the requirement of Distribution Licensees) was 201.80 MU.



Additionally, Unit-6 generated 636.40 MU under the directions of MSLDC to meet

system constraints.

Unit-7: The generation in FY 2014-15 was as approved in the MTR Order.

Hydro generation: The overall Hydro power generation in FY 2014-15 was as approved

in the MTR Order.


4.3.1.2 The Commission asked TPC-G for the MSLDC certificate in support of the Availability

claimed for FY 2014-15. TPC-G provided the MSLDC certification showing

Availability and gross generation for FY 2014-15, summarized as follows:

Table 5: Gross Generation and Availability certified by MSLDC for FY 2014-15

Year

Unit-5 Unit-6 Unit-7 Bhira Khopoli Bhivpuri

Gross

Generati

on (MU)

Availabili

ty (%)

Gross

Generati

on (MU)

Availabili

ty (%)

Gross

Genera

tion

(MU)

Availabili

ty (%)

Availabili

ty (%)

Availabili

ty (%)

Availabili

ty (%)

FY

2014-15 3316.29 85.07% 838.20 99.96% 1148.48 77.34% 99.30% 96.99% 99.47%

4.3.1.3 The Commission notes that the Availability calculated by MSLDC is based on declared

Availability and normative Auxiliary Energy Consumption. Further, the Availability for

Bhira Hydro Generating Station is shown as 99.46% whereas the Availability as per the

MSLDC Certificate is 99.30%. For Truing-up, the Commission has considered

Availability as per the MSLDC Certificate.

4.3.1.4 Actual Availability as certified by MSLDC for Unit-5 and Unit-6 is higher than the

normative level of 85%, whereas the Availability of Unit-7 is lower than the normative.

Accordingly, the Commission allows recovery of full AFC for Unit-5 and Unit-6.

4.3.1.5 Regulation 49.2 of the MYT Regulations, 2011 states that the recovery of AFC below

the target Availability shall be provided on pro rata basis. Accordingly, the Commission

has approved the AFC for Unit-7 on pro rata to its actual Availability as detailed in

para.4.3.18.19 of this Order.

4.3.1.6 The Commission verified the actual gross generation achieved by Thermal Generating

Stations of TPC-G from the MSLDC certificate and found it to be in order, and

considered it accordingly.



4.3.1.7 The Commission has considered gross generation from Unit-6 as per TPC-G’s

submission, i.e., 201.80 MU under the PPAs (as per the requirement of Distribution

Licensees) and 636.40 MU under the directions of MSLDC to meet system constraints.

4.3.1.8 The summary of Unit-wise gross generation and Availability considered by the

Commission for Truing-up is shown in the Table below:

Table 6: Summary of Availability for Units 4 to 7 and Hydro Stations for FY 2014-15 as

approved by Commission

Generating

Station MTR Order TPC-G Petition

Normative

Availability

Considered for

Truing-up

Hydro Stations

Khopoli 99.09% 96.99% 90.00% 96.99%

Bhivpuri 97.64% 99.47% 90.00% 99.47%

Bhira 98.60% 99.46% 90.00% 99.30%

Trombay

Thermal Station

Unit-5, Trombay 85.00% 85.07% 85.00% 85.07%

Unit-6, Trombay 100.00% 99.96% 85.00% 99.96%

Unit-7, Trombay 77.00% 77.34% 85.00% 77.34%

Table 7: Summary of Gross Generation for Units 4 to 7 and Hydro Stations for FY 2014-15

as approved by Commission (MU)

Generating Station MTR Order TPC-G Petition Approved in this

Order

Hydro Stations

Khopoli 276.00 275.62 275.62

Bhivpuri 330.00 330.02 330.02

Bhira 837.00 837.11 837.11

Total Hydro 1443.00 1442.75 1442.75

Trombay Thermal

Station

Unit-4, Trombay 0.00 0.00 0.00

Unit-5, Trombay 3316.00 3316.29 3316.29

Unit-6, Trombay-

Regulated 838.00

201.80 201.80

Unit-6, Trombay

(MSLDC Directions) 636.40 636.40

Unit-7, Trombay 1148.00 1148.48 1148.48

Total Thermal 5302.00 5302.96 5302.96



Generating Station MTR Order TPC-G Petition Approved in this

Order

Grand Total 6745.00 6745.71 6745.71

4.3.2 Auxiliary Energy Consumption


4.3.2.1 Auxiliary Energy Consumption for Units 4 to 7 and Hydro Generating Stations is as

shown in the Table below:

Table 8: Auxiliary Energy Consumption for FY 2014-15 as submitted by TPC-G

Generating Station MTR Order TPC-G Petition

Hydro-w/o Colony Consumption 1.78% 2.54%

Unit-4, Trombay* 5.11 2.11

Unit-5, Trombay 6.00% 5.69%



Note:*: Unit-4 is in stand-by mode. Hence, Auxiliary Energy Consumption is shown in MU

as per MYT Order

Unit-4

4.3.2.2 The Commission has approved monthly Auxiliary Energy Consumption of 0.426 MU

for Unit-4 in stand-by mode in the MTR Order. Considering that the Unit was in stand-

by mode throughout FY 2014-15, the Auxiliary Energy Consumption is within the

normative level approved by the Commission. Further, TPC-G has not claimed any gain/

loss on account of this better Auxiliary Energy Consumption. The Auxiliary Energy

Consumption claimed for FY 2014-15 for Unit-4 is as shown in the Table below:

Table 9: Unit-4Auxiliary Energy Consumption for FY 2014-15 as submitted by TPC-G

Particulars Unit

Unit-4Auxiliary Energy Consumption as approved in

the Business Plan under S/B mode for 150 MW

capacity

MU 0.426

Number of months Months 12

Total Auxiliary Energy Consumption MU 3.68

Actual Auxiliary Energy Consumption for FY 2014-15 MU 2.11

Difference in Auxiliary Energy Consumption MU (1.57)



Unit-5

4.3.2.3 Auxiliary Energy Consumption of Unit-5 is within the normative Auxiliary Energy

Consumption approved in the MTR Order.

Unit-6

4.3.2.4 Auxiliary Energy Consumption of Unit-6 is higher due to part-load operation and factors

beyond the reasonable control of TPC-G and may, therefore, be considered as

uncontrollable.

4.3.2.5 The relationship between generation and Auxiliary Energy Consumption is non-linear.

This is because some auxiliaries such as cooling water pump, ACW pump, DM Plant,

and fuel oil pump system are essential for the Unit and remain in service even if it is

running at lower PLF. In support, TPC-set out the trend of Unit-6 Auxiliary Energy

Consumption at various PLFs showing a variation of 5.43% Auxiliary Energy

Consumption at 47% PLF vis-à-vis 2.73% at 94% PLF.

4.3.2.6 To determine the quantum of essential auxiliaries and the impact of lower PLF, CPRI

was engaged by TPC-G. On the basis of the CPRI test observation also, the percentage

of Auxiliary Energy Consumption increases with reduction in the load.

4.3.2.7 In view of the above, the Commission may approve actual Auxiliary Energy

Consumption of 6.88% for Unit-6 for to the extent operating under PPA. TPC-G has

considered this Auxiliary Energy Consumption for sharing of gains/losses.

4.3.2.8 Unit-6 has generated 636.40 MUs under the directions of MSLDC, for which Auxiliary

Energy Consumption was 42.34 MUs, i.e., 6.65%. TPC-G has not considered this

Auxiliary Energy Consumption for sharing of gains/losses.

4.3.2.9 Auxiliary Energy Consumption for the period when the Unit was on stand-by mode is

11.78 MU. Unlike Unit-4, the Commission has not notified any normative value for

Auxiliary Energy Consumption for Unit-6 under stand-by mode. Accordingly, the

calculation for Auxiliary Energy Consumption under stand-by mode has been done

based on the electricity consumption of the essential equipment required for keeping the

Unit operational. The equipment-wise annual electricity consumption estimate of such

equipment has been submitted. Accordingly, the Commission may provide norms for

Auxiliary Energy Consumption under stand-by mode for the period of economic

shutdown of Unit-6. TPC-G has not considered this Auxiliary Energy Consumption for

sharing of gains/losses.



Unit-7

4.3.2.10 Auxiliary Energy Consumption of Unit-7 is within the normative Auxiliary Energy

Consumption approved in the MTR Order.

Hydro Stations

4.3.2.11 The Auxiliary Energy Consumption for Hydro Stations in FY 2014-15 is as under:

Table 10: Auxiliary Energy Consumption of Hydro Stations for FY 2014-15 as submitted

by TPC-G

Particulars TPC-G Petition

Auxiliary Energy Consumption including static excitation 0.79%

Pumping energy for nallah diversion 0.39%

GT losses 1.15%

Headworks 0.18%

Condenser mode of operation 0.02%

Total 2.54%

Colony consumption 0.18%

Total 2.71%

Auxiliary Energy Consumption, including Static Excitation

4.3.2.12 Auxiliary Energy Consumption under this head is lower than the approved value.

Pumping energy for nallah diversion

4.3.2.13 TPC-G has computed the Auxiliary Energy Consumption for nallah diversion based on

the methodology in the MYT Order. Accordingly, TPC-G has considered the average of

the latest five year period, i.e., FY 2009-10 to FY 2013-14 to arrive at the average

Auxiliary Energy Consumption for the water pumped. The normative Auxiliary Energy

Consumption for 78.33 MCM of water pumped during FY 2014-15 is worked out as

under:

Table 11: Auxiliary Energy Consumption for nallah diversion as submitted by TPC-G for

FY 2014-15

Particulars Unit

TPC-G Petition

Average Auxiliary Energy Consumption for last five years MU a 5.03

Average water pumped for last five years MCM b 59.86

Actual flow of water in FY 2014-15 MCM c 78.33

MUs based on MCM water flow for FY 2014-15 MU d=a*c/b 6.59



Particulars Unit

TPC-G Petition

Gross generation MU e 1442.75

Normative Auxiliary Energy Consumption % f=d/e 0.46%

Actual Auxiliary Energy Consumption MU g 5.68

Actual Auxiliary Energy Consumption % h=g/e 0.39%

4.3.2.14 Even if the prorated Auxiliary Energy Consumption is considered based on the norm in

the Business Plan Order, the Auxiliary Energy Consumption works out to 5.68 MU

(0.39%), which is equivalent to the actual Auxiliary Energy Consumption. Accordingly,

the Commission may approve the actual Auxiliary Energy Consumption of 5.68 MU

towards nallah diversion schemes for FY 2014-15.

GT Losses

4.3.2.15 The MTR Order had disallowed the Auxiliary Energy Consumption towards GT Losses

stating that the CPRI reports do not justify the impact of the small Generating Units on

transformation losses. The Commission had opined, that based on the CPRI

observations, the transformation losses are within the control of TPC-G.

4.3.2.16 In this regard, TPC-G has taken measures like correction of metering errors in all the

locations of Hydro Stations. This has reduced GT Losses over the years, which have

now settled near the minimum recommended level certified by CPRI, as shown in the

Table below:

Table 12: Actual GT Losses for FY 2014-15 as submitted by TPC-G

Particulars Approved As Per CPRI Actual Difference

Khopoli 0.50% 1.19% 1.07% -0.12%

Bhivpuri 0.50% 1.17% 1.18% 0.01%

Bhira 0.50% 1.09% 1.16% 0.07%

Hydro Total 0.50% 1.13% 1.15% 0.02%

4.3.2.17 Accordingly, the Commission may approve the norms for GT losses of 1.13% as against

the approved value of 0.50%.

Headworks

4.3.2.18 The MTR Order had disallowed the Auxiliary Energy Consumption towards

Headworks, opining that the requirement of the Headworks distribution system is

common to almost all Hydro Stations and is not a special case.



4.3.2.19 TPC-G’s Headworks distribution system is unique because of

a. Large geographical spread as compared to the generating capacity

b. Complex water system consisting of gate operations at multiple lake reservoirs,

inter-lake water transfer systems, valve houses at various locations, open canal

water conductor system, fore bay, tunnels and penstocks.

c. Various control points at critical locations requiring significant Auxiliary Energy

Consumption for all head works distribution systems

d. Distribution transformers for providing power supply for operation at various

locations, also requiring significant Auxiliary Energy Consumption

4.3.2.20 In order to show the distinctive nature of the hydro projects, TPC-G has provided the

layouts of the individual Hydro Stations.

4.3.2.21 The Headworks Auxiliary Energy Consumption has reduced over the past few years

(0.30% in FY 2012-13 to 0.18% in FY 2014-15) due to efforts like installation of energy

savers and the replacement of old pumps. The Headworks Auxiliary Energy

Consumption as shown in the Table below:

Table 13: Headworks consumption as submitted by TPC-G

Particulars Approved As Per CPRI Actual Difference

Khopoli - 0.67% 0.37% -0.30%

Bhivpuri - 0.07% 0.08% 0.01%

Bhira - 0.30% 0.15% -0.15%

Hydro Total - 0.33% 0.18% -0.15%

4.3.2.22 The Commission may approve the normative Auxiliary Energy Consumption under this

head based on the CPRI study report, i.e., 0.33% on overall Hydro Generation. TPC-G

has claimed actual Auxiliary Energy Consumption of 0.18% for Truing-up purpose.

Colony Consumption

4.3.2.23 TPC-G has excluded the colony consumption from the total Auxiliary Energy

Consumption and included it in O&M expenses by multiplying the colony consumption

in MUs with the average energy rate for FY 2014-15.

4.3.2.24 Based on the above, the Auxiliary Energy Consumption for Hydro Generating Stations

is as follows:



Table 14: Hydro Auxiliary Energy Consumption for FY 2014-15 as submitted by TPC-G


Auxiliary Energy Consumption for Hydro Generating Stations 2.54%

Colony consumption 0.18%


4.3.2.25 As regards the Auxiliary Energy ConsumptionofUnit-4, the Commission had approved it

as 0.426 MU per month for stand-by mode in its MYT Order for the 2nd

Control Period.

This works out as 5.112 MU Auxiliary Energy Consumption yearly. The Commission

observed that the actual Auxiliary Energy Consumption for Unit-4 was 2.11 MU, which

is within the approved value, and accordingly considered it for the purpose of Truing-up.

4.3.2.26 The actual Auxiliary Energy Consumption for Unit-5 during FY 2014-15 was 5.69% as

against the normative level of 6.00%. As the actual Auxiliary Energy Consumption was

lower than the normative, the Commission has considered it.

4.3.2.27 As regards the Auxiliary Energy Consumption of Unit-6 (when not operating under

MSLDC directions), TPC-G has considered the actual Auxiliary Energy Consumption

on account of part-load operation, stating that the actual Auxiliary Consumption is high

due to factors beyond its control. TPC-G also sought separate norms for Auxiliary

Consumption of Unit-6 under the stand-by mode. TPC-G had earlier also sought

relaxation in the performance parameters of Unit-6 in Case Nos. 40 of 2012 and 6 of

2015. In its MTR Order (Case No. 6 of 2015), the Commission held as under:

“4.1.2.19 The Commission notes that there is no provision in the MYT

Regulations for lowering the performance norms for operation of the plant at low

PLF. Accordingly, the Commission has specified the norm of Auxiliary Energy

Consumption for Unit-6 as 3.5% in the MYT Order. Further, the Commission

notes that TPC-G has filed an Appeal No. 212 of 2013 challenging the norm of

Auxiliary Energy Consumption of Unit-6 specified in the MYT Order. In its

Judgment dated 27 October 2014, the ATE has upheld the view of the

Commission.”

4.3.2.28 TPC-G filed Appeal No. 244 of 2015 challenging the methodology in the MTR Order of

sharing of gains/losses on account of Auxiliary Consumption of Unit-6 and asking for

separate norms for Auxiliary Consumption in the standby mode. In its Judgment dated 3

June, 2016, the ATE has upheld the view of the Commission:



“From the Impugned Order we find that the State Commission in 5.1.2.13 of the

Impugned Order (which is subject matter of Appeal No.244 of 2015), has clearly

observed that there is no provision in MYT Regulations 2011 for lowering the

performance for plant operation at low PLF and the State Commission has

specified the norm of auxiliary consumption for Unit-6 as 3.5% in the MYT order.

The said view of the State Commission has been upheld by this Appellate

Tribunal’s judgment dated 27.10.2014 in Appeal No.212 of 2013. Accordingly,

the State Commission has considered the approved normative auxiliary

consumption of Unit-6 of 3.5% for truing up purposes.

…After going through various provisions of law, counter submissions of the

parties and going through the judgment of this Appellate Tribunal in Appeal

No.212 of 2013, we are of the view that this issue is clearly covered by the

judgment in Appeal No.212 of 2013 pronounced by this Appellate Tribunal. We

find merits and substance in the submissions put forth by the respondent State

Commission. There is no merit in any of the contentions made by appellant on this

issue. This issue is decided against the appellant.”

4.3.2.29 Considering the above, the Commission has approved the normative Auxiliary Energy

Consumption of Unit-6 (when not operating under MSLDC directions) as 3.50%. It has

not considered separate norms for Auxiliary Consumption under stand-by mode for the

purpose of Truing-up, in accordance with the methodology followed in the MTR Order

and keeping in view the ATE Judgments in Appeal Nos. 212 of 2013 and 244 of 2015.

4.3.2.30 However, the Commission notes that Unit-6 operation under MSLDC directions is a

special mode of operation. It does not arise from the demand of Distribution Licensees

but is required to meet system constraints. In such eventuality, the Unit normally runs at

low load with intermittent operation as and when required, resulting in higher

uncertainties in operation. Vide instructions dated 26 March, 2014, the MSLDC directed

TPC-G to operate Unit-6 for some period to avoid load shedding, subsequent to

decisions taken at a meeting chaired by the Principal Secretary (Energy), GoM.

Considering the exceptional nature of operation of Unit-6 under MSLDCs direction on

intermittent load, the Commission considers this a fit case for exercising its power under

the MYT Regulations, 2011 to remove difficulties. Accordingly, the Commission now

approves the actual Auxiliary Consumption of 42.34 MU for the period in FY 2014-15

when Unit-6 was running as per MSLDC directions, after prudence check of meter

reading data of 15 minute time block submitted by TPC-G.

4.3.2.31 The actual Auxiliary Energy Consumption for Unit-7 in FY 2014-15 was 2.54% as

against the normative level of 3.00%. As the actual Auxiliary Energy Consumption of

was lower than the normative, the Commission has considered it.



4.3.2.32 The MYT Regulations, 2011 specify the norms of Auxiliary Energy Consumption of

Hydro Generating Stations. The norm applicable for machines with static excitation

systems is 1% with an additional 0.50% for transformation losses. In the MYT Order for

the 2nd

Control Period, the Commission had considered additional Auxiliary Energy

Consumption to the extent of 0.28% on account of pumping energy for nallah diversion.

Accordingly, the Commission stipulated the normative Auxiliary Energy Consumption

of 1.78% for Hydro Stations in that Order. Further, the Commission has not considered

any additional Auxiliary Energy Consumption on account of Condenser mode of

operation, and colony consumption is considered as part of O&M expenses.

4.3.2.33 As regards the GT Losses, the MTR Order reads as follows:

“4.1.2.26 The Commission is of the view that the CPRI reports do not justify the

impact of the small Generating Units on the transformation losses, as contended

by TPC-G. Moreover, based on the observations made, it may be noted that the

transformation losses are within the control of TPC-G. The Commission finds no

merit in considering the transformation losses over and above the normative

losses of 0.50%. The Commission has considered the GT losses of 0.5% for the

Hydro Stations.”

4.3.2.34 The Commission notes that TPC-G has taken measures that reduced the GT losses, and

that now the GT losses are near the minimum recommended by CPRI. However,

notwithstanding this reduction in GT losses, the CPRI reports do not support TPC-G’s

contention regarding the impact of small Generating Units on transformation losses.

Moreover, considering the observations made in the CPRI report, the transformation

losses are within the control of TPC-G. Therefore, the Commission finds no merit in

considering the transformation losses over and above the normative losses of 0.50%.

4.3.2.35 Moreover, at the TVS, TPC-G was asked to submit the Cost Benefit Analysis (CBA) of

GT replacement recommended by CPRI. The CBA submitted in response shows that

TPC-G has considered a benefit over 15 years. However, the Commission is of the view

that the existing transformers are very old and are unlikely to perform at the desired

level for next 15 years, as considered by TPC-G in the CBA. Hence, it would be more

prudent to replace the transformers and get the benefit of reduced Auxiliary Energy

Consumption, as also suggested by CPRI. Accordingly, the Commission has not

considered any additional GT Losses, but only the normative GT losses of 0.50% for

Hydro Generating Stations.

4.3.2.36 The MTR Order stated that the Headworks distribution system loss cannot be included

in Auxiliary Energy Consumption as such requirements are common to almost all Hydro

Stations. In this regard, TPC-G has made fresh submissions with additional supporting

data and information. From the layouts of the individual Hydro Stations provided, TPC-



G’s system is apparently different from the usual Headworks distribution system in

terms of large geographical spread, a water system consisting of gate operations at

multiple lake reservoirs, inter-lake water transfer systems, valve houses at various

locations, open canal water conductor system, fore bay, tunnels and penstocks. Further,

the system has control points and distribution network of HT and LT Lines and

transformers along the pen stock, requiring significant Auxiliary power consumption.

TPC-G also provided details of the layout and pictorial representations of its Hydro

Generating Stations to show the unique design of the Headworks distribution system.

4.3.2.37 On the basis of the material now provided, the Commission is clear that the Hydro

Generating Station is spread over a large geographical area (particularly between the

dam site and the Generating Plant) out of proportion to the generating capacity.

Consequently, several control points, distribution network of HT and LT Lines and

distribution transformers are required at different locations. This requires significant

Auxiliary Energy Consumption. Considering that the difference in design necessitates

such additional Auxiliary Energy Consumption, the Commission is now of the view that

the additional Auxiliary Energy Consumption on account of Headworks should be

allowed.

4.3.2.38 The Commission asked for details of the transformers used for various requirements of

the Headworks distribution system. From TPC-G’s response, the Commission notes that

there are 47 transformers in the three Hydro Generating Stations, with total

transformation capacity of more than 100 MVA.

4.3.2.39 The Commission also notes that TPC-G has taken measures to reduce Headworks

Auxiliary Energy Consumption to 0.18% as compared to 0.33% stipulated in the CPRI

Report.

4.3.2.40 Considering these aspects, the Commission is of the view that the requirements of the

Headworks distribution system of TPC-G represent a special case. Accordingly, in

exercise of its power under Regulation 100of the MYT Regulations, 2011 to remove

difficulties, the Commission approves the actual Auxiliary Energy Consumption of

0.18% on account of Headworks distribution systems.

4.3.2.41 In the light of the above discussion, the Commission has considered the normative

Auxiliary Energy Consumption of 1.96% for Hydro Generating Stations for Truing-up

purposes as shown in the Table below:



Table 15: Normative Auxiliary Energy Consumption for Hydro Generating Stations as

approved by Commission for FY 2014-15

Particulars

TPC-G Petition Normative as

approved in this

Order

Auxiliary Energy Consumption including static

excitation

0.79% 1.00%

Condenser mode of operation 0.02% 0.00%

Pumping Energy from nallah diversion 0.39% 0.28%

GT Losses 1.15% 0.50%

Headworks 0.18% 0.18%

Total 2.54% 1.96%

4.3.2.42 The summary of Unit-wise actual Auxiliary Energy Consumption in FY 2014-15 and

that considered by the Commission for sharing of gains/losses is as shown in the Table

below:

Table 16: Auxiliary Energy Consumption for FY 2014-15 as approved by Commission

Generating Station Actuals Approved in this Order

Hydel Stations (%) 2.54% 1.96%

Unit-4, Trombay (MU) 2.11 2.11

Unit-5, Trombay (%) 5.69% 6.00%

Unit-6, Trombay- Regulated (%) 6.88% 3.50%

Unit-7, Trombay (%) 2.54% 3.00%

Note:*: Unit-4 is in stand-by mode. Hence, Auxiliary Energy Consumption is shown in MU

4.3.2.43 The Commission has considered the Auxiliary Energy Consumption as a controllable

parameter. Hence, the difference between the actual Auxiliary Energy Consumption as

submitted by TPC-G and the normative Auxiliary Energy Consumption as approved by

the Commission in this Order has been considered for computing the sharing of

efficiency gains.

4.3.3 Gross Station Heat Rate


4.3.3.1 Station Heat Rate (SHR) of Unit-5 and Unit-7 are lower than approved in the MTR

Order.



4.3.3.2 For Unit-6, SHR depends upon the mix of oil:gas firing used. In line with the

methodology in the MYT Tariff Order for the 2nd

Control Period, TPC-G has considered

SHR based on the actual ratio of fuels used in FY 2014-15 as shown in the Table below:

Table 17: SHR for Unit-6 for FY 2014-15 as submitted by TPC-G (kCal/kWh)

Particulars Normative SHR for FY 2014-15

Full gas firing 2656

Full oil firing 2411

Normative SHR as per MYT

Regulations @ 50:50 Mix 2534

Normative SHR Approved in

MTR (Provisional Fuel Mix)

Normative SHR as

per Actual Fuel Mix

Actual gas % 90.39% 96.13%

Actual oil % 9.61% 3.87%

Revised Normative Heat Rate 2632 2647

4.3.3.3 Unit-6 is in economic shutdown mode owing to its high generation cost. Generation

from Unit-6 is intermittent, with multiple start-ups and shut downs, high variation in

generation and frequent ramping up/down. These factors and lower PLF have led to a

higher SHR of Unit-6 in FY 2014-15.

4.3.3.4 The actual SHR of Unit-6 in different modes of operation is as shown in the Table

below:

Table 18: Actual SHR for Unit-6 under different modes of operation, as submitted by TPC-

G for FY 2014-15

Mode of Operation Station Heat Rate (kCal/kWh)

Under PPA mode of operation 2846

As per MSLDC directions 2831


4.3.3.5 The MTR Order approved the SHR for Unit-6 as per the Regulations based on the

provisional gas: oil ratio of 90.39:9.61 for FY 2014-15. The Regulations specify that the

SHR for Unit-6 be based on the actual fuel mix if the variation in gas and oil mix is

more than ± 5% of a 50:50 ratio. From the data furnished by TPC-G, the actual gas and

oil mix for FY 2014-15 was in the ratio of 96.13:3.87, i.e. beyond the permissible

variation of ± 5%. Hence, the Commission has considered a revised normative SHR for

Unit-6 (when not operating under MSLDC directions) for FY 2014-15 based on the



actual fuel mix, which comes as 2647 kCal/kWh. The Commission notes that the SHR

of Unit-5 and Unit-7 are lower than approved in the MTR Order. The summary of Unit-

wise actual and normative SHR considered for Truing-up and sharing of gains and

losses is as under:

Table 19: Unit-wise SHR for 2014-15 (kCal/kWh) approved by Commission

Generating Station Actuals Normative approved in this Order

Unit-5, Trombay 2507 2573

Unit-6, Trombay- Regulated 2846 2647

Unit-7, Trombay 1968 2021

4.3.3.6 The Commission has considered the SHR as a controllable parameter. Hence, the

difference between the actual SHR as submitted by TPC-G and normative SHR as

approved by the Commission in this Order has been considered for computing the

sharing of efficiency gains.

4.3.4 Fuel Cost


4.3.4.1 The total fuel cost for FY 2014-15 was Rs 1357.85 Crore. Various fuel price parameters

were provisionally Trued-up in the MTR Order. Hence, there is no major difference

between the parameters approved in the MTR Order and the actuals. The fuel cost

includes the cost on account of minor fuels used, fuel handling charges and other

adjustments. The fuel-wise break-up is given in the Table below:

Table 20: Break-up of Fuel Cost, as submitted by TPC-G for FY 2014-15

Particulars FY 2014-15 (Actual)

Consumption (MT)

Gas – APM 195971

Gas – RLNG + NAPM 35025

Coal 1671995

Oil 2744

GCV (kCal/kg)

Gas – APM 13124

Gas – RLNG 12988

Coal 4840

Oil 10501



Particulars FY 2014-15 (Actual)

Price (Rs./MT)

Gas – APM 15884

Gas – RLNG 44842

Coal 5414

Oil 51365

Fuel cost in Rs. Crore

Gas – APM 311.28

Gas – RLNG + NAPM 127.08

Coal 905.39

Oil 14.10

Total 1357.85


4.3.4.2 The Commission has gone through the details of fuel receipts, calorific value and price.

The variation in fuel price and calorific value in FY 2014-15 has been considered as part

of FAC, and has already been passed through monthly under that mechanism.

4.3.4.3 The Commission sought additional information and material, viz. imported coal

contracts and bills, details of quantity, price and GCV of fuel, procedure followed for

competitive procurement, etc. The GCV, price and quantity of fuel has been approved

after scrutiny. The Commission also verified the fuel cost claim with the audited

allocation statement of accounts. On this basis, for the Truing-up of fuel costs, the

Commission has considered the actual fuel prices and calorific value as given in the

Table below:

Table 21: Fuel Parameters as approved by Commission for FY 2014-15

Particulars TPC-G Petition Approved in this Order

GCV (kCal/kg)

Gas – APM 13124 13124

Gas – RLNG 12988 12988

Coal 4840 4840

Oil 10501 10501

Price (Rs./MT)

Gas – APM 15884 15884

Gas – RLNG 44842 44842




Coal 5414 5414

Oil 51365 51365

4.3.4.4 The fuel cost for Units 4 to 7 and Unit-8 as per the audited allocation statement is Rs.

1529.10 Crore, whereas TPC-G has claimed Rs. 1533.29 Crore. In reply to the

clarification sought, TPC-G stated that it has considered fuel adjustment on account of

exchange rate variation for Units-4 to 8. It has considered adjustment of Rs. 4.31 Crore

for Units-4 to 8 on account of exchange rate change and foreign exchange fluctuation on

payment for fuel. TPC-G submitted the reconciliation of the fuel cost for Units 4 to 7and

Unit-8 as shown in the Table below:

Table 22: Fuel Cost Reconciliation as submitted by TPC-G for FY 2014-15 (Rs. Crore)

Fuel Units 4 to 7 Unit-8

APM Gas 311.28 -

RLNG + NAPM Gas 127.08 -

Coal 905.39 170.34

Oil 14.10 5.23

Total 1357.85 175.56

4.3.4.5 The Commission notes that the actual fuel cost for Units 4 to 7 as per the audited

statement is Rs. 1355.69 Crore, and the reconciled fuel cost, including foreign exchange

rate adjustment, as submitted by TPC-G is Rs. 1357.85 Crore. Accordingly, the

Commission has considered Rs. 2.16 Crore (1357.85 -. 1355.69) for Units 4 to 7on

account of exchange rate change and foreign exchange fluctuation on payment of fuel.

The adjustment pertaining to Unit-8 has been considered in the subsequent Section.

4.3.4.6 Based on the SHR, fuel prices and fuel calorific value as discussed earlier, the total fuel

cost for FY 2014-15 is as summarised in the Table below:

Table 23: Fuel Cost for Units 4 to 7 for FY 2014-15 as approved by Commission (Rs.

Crore)

Particulars Actual Normative approved in this Order

Unit-5, Trombay 948.39 973.23

Unit-6, Trombay* 139.70 129.91

Unit-7, Trombay 269.75 277.08

Total 1357.84 1380.23

*Note: Unit-6 fuel cost is after excluding fuel cost of operation under MSLDC

directions



4.3.4.7 The Commission approves the normative Fuel Cost of Rs. 1380.23 Crore for FY

2014-15 for Units 4 to 7, and has considered the actual fuel cost of Rs. 1357.84

Crore (excluding Fuel Cost of Unit-6 when operated under MSLDC directions) for

sharing of gains as per the MYT Regulations, 2011.

4.3.5 Fuel Cost of Unit-6 under MSLDC Directions

TPC-G’ Submission

4.3.5.1 Fuel cost for Unit-6 operation under MSLDC directions was Rs. 792.11 Crore.


4.3.5.2 TPC-G has considered the actual SHR while computing the fuel cost of Unit-6 for

operation under MSLDC directions, while the MTR Order had considered it based on

the normative SHR. However, the Order also states that the Commission would consider

all material and information afresh during the final Truing-up for Unit-6 for FY 2014-

15:

“Fuel Cost of Unit 6

…6.2.2.5 The above is for provisional Truing up of Unit 6 only considering the

circumstances of operation of Unit 6, which may also recur, and not the final

dispensation. The Commission shall consider all material and information afresh

while carrying out the final truing up for Unit 6 for FY 2014-15.”

4.3.5.3 As explained earlier with regard to the Auxiliary Consumption of Unit-6 under MSLDC

directions, the Commission is of the view that its operation in these circumstances is of

an exceptional nature and requires the Unit to run on low and intermittent load.

Considering this, the Commission approves the actual SHR of 2831 kCal/kWh for FY

2014-15, after prudence check of the month-wise fuel cost calculation submitted by

TPC-G.

4.3.5.4 Based on actual Auxiliary Consumption and SHR, the Commission approves the

actual Fuel Cost of Rs. 792.11 Crore for Unit-6 for operation under MSLDC

directions during FY 2014-15, as claimed by TPC-G.

4.3.5.5 The Commission is separately considering the protocol to resort to idle capacity and

apportionment and commercial settlement of Unit-6 operating under MSLDC directions

in Case No. 133 of 2015, which would apply prospectively.



4.3.6 Entry Tax


4.3.6.1 TPC-G had challenged the Entry Tax liability, introduced in 2002 by GoM, in the

Bombay High Court. The High Court, in its Order dated 16 January, 2004, held the levy

of this Tax as unauthorised and unconstitutional. The GoM filed a Special Leave

Petition (SLP) in the Supreme Court, and in the meantime amended the Sales Tax Act.

The Supreme Court dismissed the SLP on the ground that GoM had removed the levy of

Entry Tax, which in fact it had not actually removed but allowed only to be partially set

off.

4.3.6.2 As only partial set off was allowed, TPC-G has now received a demand notice from

GoM for Rs 326.40 Crore and Rs 458.96 Crore against Entry Tax liabilities, including

interest and penalty, for FY 2005-06 and 2008-09 respectively, under the Maharashtra

Tax on the Entry of Goods into Local Areas Rules, 2002. Against this demand notice,

TPC appealed to the Joint Commissioner of Sales Tax (Appeals) V, Mumbai. However,

for admission of the Appeal, TPC-G had to pay the amount due after set off, which it

paid under protest. Finally, the Joint Commissioner of Sales Tax dismissed the Appeal.

4.3.6.3 TPC-G had appealed against this dismissal to the Maharashtra Sales Tax Tribunal,

which admitted the Appeal considering the partial payment already made. However, the

Tribunal also rejected the Appeal.

4.3.6.4 TPC-G has now approached the Bombay High Court in Writ Petition 1321 of 2015 and

Appeals 20 and 21 of 2015 against the above decision and demand. These Appeals and

Writ were also admitted by the Bombay High Court on the basis of part payment already

made under protest, and are pending. However, the High Court has stayed the disputed

demand, which is being extended from time to time.

4.3.6.5 The Deputy Commissioner of Sales Tax issued a demand notice for FY 2006-07 and FY

2009-10. TPC-G made part payment after making adjustment for Value Added Tax

(VAT) refund of Rs. 25.62 Crore and Rs. 8.39 Crore for FY 2006-07 and FY 2009-10

respectively. On Appeal, the Joint Commissioner of Sales Tax (Appeals) V, Mumbai has

granted stay till the final Judgment of the Bombay High Court for FY 2005-06 and

2008-09. In the present Petition, TPC-G has claimed the amount which has been paid

under protest.

4.3.6.6 As per the Entry Tax Act, set off is allowed on payment of Entry Tax. Hence, though the

gross tax is 12.5%, the effective rate after set-off against VAT is 3% to 4%. TPC-G has,

therefore, paid the amount after the set off, which works out to Rs. 34.01 Crore.



4.3.6.7 TPC-G has paid this net liability to the Tax Department on 28 July, 2014 and 17 March,

2015. As per the demand made by GoM, TPC-G has made a provision of around Rs. 200

Crore in its books of accounts. The Commission may permit its recovery in future years,

in case it becomes payable.

4.3.6.8 The Entry Tax amount pertains to FY 2006-07 and FY 2009-10, when TPC-G was

supplying power to three Distribution Licensees, i.e., TPC-D, RInfra-D and BEST.

Hence, this amount is to be charged in the ratio of sales to these Licensees in the

respective years. The computation is as given below:

Table 24: Impact of Entry Tax as submitted by TPC-G for FY 2014-15

Particulars TPC-D RInfra-D BEST Total

Entry Tax (Rs. Crore) 8.03 12.36 13.62 34.01


4.3.6.9 The Commission has examined the material furnished by TPC-G, and has accordingly

considered the Entry Tax amount to be recovered from the Distribution Licensees, i.e.,

TPC-D, RInfra-D and BEST. This recovery is considered separately along with the

recovery of the other past Revenue Gaps.

Table 25: Recovery of Entry Tax, as approved by Commission


Entry Tax (Rs. Crore) 8.03 12.36 13.62 34.01

4.3.7 Operation and Maintenance Expenses


4.3.7.1 The actual O&M expenses were Rs. 489.78 Crore for FY 2014-15. The break-up of the

O&M expenses is detailed below.

Employee Expenses

4.3.7.2 TPC-G has incurred Rs. 209.61 Crore towards employee related expenditure in FY

2014-15 as compared to Rs. 163.91 Crore in FY 2013-14. The break-up as under:



Table 26: Employee Expenses for Trombay Units 4-7 &Hydro Stations for FY 2014-15 (Rs.

Crore)

Particulars FY 2013-14 (Actuals) FY 2014-15 (Actuals)

Salary, wages and staff welfare 176.09 230.46

Terminal benefits 13.43 0.00

VRS expenses 0.46 0.82

Fringe benefit tax 0.00 0.00

Less: expenses capitalised -26.07 -21.67

Total 163.91 209.61

4.3.7.3 The employee expenses have increased on account of the increase in allocation of the

HOSS cost to the Generation, Transmission and Distribution Businesses. Further, salary

review of a set of employees is being considered which will have retrospective effect

and liability, and its impact has been provisioned as Rs. 8.62 Crore. There has been a

slight increase in manpower at HOSS and increase in staff welfare expenses on account

of Mediclaim insurance premium. Also, additional provision of Rs. 5 Crore has been

made towards pension and gratuity based on the actuarial report, and Rs. 0.28 Crore on

account of change in the cost allocation methodology among different Businesses of

TPC.


4.3.7.4 The increase in actual employee expenses is mainly on account of salary, wages and

staff welfare. As regards the increase in manpower at HOSS and increase in staff welfare

expenses, the Commission asked TPC-G to submit the exact amounts. TPC-G has stated

that the HOSS allocation towards medical insurance premium to Generation Business in

FY 2013-14 was Rs. 0.76 Crore, and in FY 2014-15 was Rs. 1.26 Crore.

4.3.7.5 TPC-G has clarified that the provision for salary review has been made on account of

projected cost increase in salary cost for non-management staff ,which is Rs. 21.33

Crore for FY 2014-15 out of which the impact on TPC-G is Rs. 8.62 Crore. The

Commission notes that the increase in salary cost is due to the provisioned amount of

Rs. 8.62 Crore which has not been actually incurred by TPC-G. Accordingly, the

Commission has not allowed this increase of Rs. 8.62 Crore in the present Order. It will

be considered once the cost is actually incurred.

4.3.7.6 As regards Rs. 0.28 Crore on account of change in the cost allocation methodology

among the different Businesses of TPC, the Commission asked TPC-G to submit the

amount which has been shared within the Licence area. TPC-G has submitted that, out

of the total Rs. 5.72 Crore employee cost of Central Civil and Central Construction



Departments, Rs. 4.16 Crore would have been allotted to the Licence area as per the

earlier practice. However, on account of change in cost allocation, the entire amount of

Rs. 5.72 Crore is allotted to the Licence area only, resulting in increase of Rs. 0.28 Crore

in employee expenses.

4.3.7.7 On the basis of the details provided, the Commission has considered the actual employee

expenses of Rs. 200.99 Crore for FY 2014-15 for the Truing-up and sharing of O&M

expenses on composite basis.

A&G Expenses


4.3.7.8 TPC-G has incurred Rs. 107.34 Crore towards A&G expenses for FY 2014-15, which is

11% higher than in FY 2013-14. The major increase is on account of water charges,

Rent and Taxes and Insurance. The increase in Property Tax of Rs. 15 Crore has led to

an increase under the head of rent, rates and taxes, and the increase in insurance

premium has led to increase in insurance costs. The community and welfare expenses

have been deducted while computing the total A&G expenses, in line with the ATE

Judgment dated 31 August, 2012 in Appeal No. 18 of 2011.


4.3.7.9 TPC-G has claimed Rs. 12.85 Crore as an uncontrollable expense on account of revision

in the Property Tax rates. The Commission asked TPC-G for documentary evidence in

support of its claims and detailed computations for Property Tax paid along with the

difference between the previous and present Property Tax rates. TPC-G submitted the

documentary evidence along with the detailed computations sought.

4.3.7.10 Considering the details furnished, the Commission has considered the actual A&G

expenses of Rs. 107.34 Crore for FY 2014-15 for the Truing-up and sharing of O&M

expenses on composite basis.

R&M Expenses


4.3.7.11 TPC-G has incurred Rs. 172.82 Crore towards R&M expenses for FY 2014-15, which is

14% higher than in FY 2013-14. The main reason for the increase is because expense of

Rs. 7.00 Crore on account of work relating to forced outage of Unit-7 and Rs. 5.00 Crore

on account of work carried out during Unit-5 outage.




4.3.7.12 The Commission notes that Rs. 7.00 Crore was on account of works relating to the

forced outage of Unit-7, rotor removal and transportation, etc. Rs. 5.00 Crore was

incurred on works carried out during Unit-5 outage arising out of the findings.

Considering the details provided and the audited allocation statement, the Commission

has considered the actual R&M expenses of Rs. 172.82 Crore for FY 2014-15 for the

Truing-up and sharing of O&M expenses on composite basis.

Brand Equity Expenses


4.3.7.13 The Commission had directed that Brand Equity expenses be computed based on the

revenue earned in the previous year. In view of this, there is a difference between the

actual amount and that arrived at as directed by the Commission. TPC-G has adjusted

O&M expenses on account of Brand Equity to the extent of the expenses computed on

the basis of revenue earned in the previous year, and has accordingly considered Rs.

8.92 Crore towards Brand Equity expenses.


4.3.7.14 In its Order in Case No. 105 of 2011, the Commission had noted that the Brand Equity

Agreement states that payment towards Brand Equity has to be computed on the basis of

annual net income of the financial year immediately preceding the year in which the use

occurs, and had directed TPC-G to compute the Brand Equity expenses accordingly.

4.3.7.15 TPC-G has provided the computation of Brand Equity expenses for FY 2014-15 on the

basis of Annual Net Income of FY 2013-14. Accordingly, the Commission has

considered the amount of Rs. 8.92 Crore.

Corporate Social Responsibility Expenditure


4.3.7.16 The Commission, in previous Orders, had disallowed the Corporate Social

Responsibility (CSR) expenditure. Considering this, TPC-G has adjusted the O&M

expenses to exclude the CSR expenditure.


4.3.7.17 The Commission has considered the amount as submitted by TPC-G, and the CSR

expenditure has been excluded from the actual O&M expenses.



Load Control Centre Expenditure


4.3.7.18 The Load Control Centre (LCC)/ PSCC expenditure has not been allocated separately

for FY 2014-15, and is part of the O&M expenses.


4.3.7.19 The Commission has considered LCC / PSCC expenditure for FY 2014-15 as part of the

O&M expenses.

Colony Consumption for Hydro Stations


4.3.7.20 The colony consumption cost based on the energy rate for FY 2014-15 is Rs. 0.56

Crore.


4.3.7.21 The Commission has considered the cost towards the colony consumption of Hydro

Stations considering the revised AFC based on the methodology in the MTR Order as

Rs. 0.55 Crore for FY 2014-15.

Total O&M Expenses


4.3.7.22 The total O&M expenses for FY 2014-15, considering all the above adjustments, is Rs.

490.52 Crore.


4.3.7.23 Considering all adjustments, the Commission has taken the O&M expenses for Truing-

up as under:

Table 27: Summary of O&M Expenses for FY 2014-15 as approved by Commission (Rs.

Crore)

Particulars TPC-G Petition Approved in this

Order

Employee expenses 209.61 200.99

R&M expenses 172.82 172.82



Particulars TPC-G Petition Approved in this

Order

A&G expenses 107.34 107.34

Sub-Total 489.78 481.16

Less: actual Brand Equity expenses 8.73 8.73

Add: Brand Equity expenses as per approved

methodology 8.92 8.92

Total O&M expenses 489.96 481.34

Add: hydro colony consumption 0.56 0.55

Total 490.52 481.89

4.3.7.24 The Commission has considered the O&M Expenses of Rs. 481.34 Crore for

sharing of gains as per the MYT Regulations, 2011.

4.3.8 Capital Expenditure and Capitalisation


4.3.8.1 TPC-G has carried out capitalisation of Rs. 163.96 Crore in FY 2014-15 as against Rs.

124.02 Crore approved in the MTR Order. Of this, the capitalisation on account of DPR

schemes (including merged DPRs) is Rs. 134.91 Crore. The balance is on account of

Non-DPR schemes, i.e., Rs. 29.05 Crore, which is about 22% of the DPR scheme

capitalisation.

4.3.8.2 The increase in the DPR to Non-DPR ratio is primarily because, generally, the Hydro

Generating Stations spread over a large area have a large number of small capital

expenditure schemes. As they are at various locations, merging them to form a DPR

with a common theme is difficult. Of the total non-DPR capitalisation of 22%, the

contribution of capitalisation towards non-DPR schemes of Hydro Stations is 9%.

Further, the capitalisation of HOSS schemes allocated to the Generation Business is also

of a Non-DPR nature, thus increasing the Non-DPR capitalisation. For the Generation

Business as a whole, i.e., including Unit-8, the proportion is within 20%.

4.3.8.3 The Commission may consider capitalisation for the Generation Business as a whole and

allow the entire capitalisation towards Non-DPR schemes.


4.3.8.4 The Commission has gone through the details of scheme-wise capitalisation provided by

TPC-G.



4.3.8.5 For the DPR schemes, the Commission has examined the CBA Reports. The

Commission notes that all the DPR schemes proposed by TPC-G have been approved

in-principle except for four new schemes, viz. a) Environment, fire, safety, security and

statutory requirements 2013-17, b) Unit-5 Reliability Schemes, c) Refurbishment of SET

1 and d) Replacement of Unit-5 condenser tubes. The Commission has reviewed the

justification and CBA as per its Guidelines of 2005. Based on this analysis, the

Commission has considered the impact of these four Capex schemes for capitalisation.

4.3.8.6 Regarding Non-DPR schemes, TPC-G has also included the capitalisation of some Non-

DPR schemes that are of O&M nature or are for common employee facilities, such as

procurement of tools and tackles, procurement of safety equipment, swimming pool

renovation, mobiles and canteen equipment for staff, etc. The Commission has deducted

such schemes from the Non-DPR schemes capitalisation as below:

Table 28: Non-DPR Schemes not considered for Capitalisation (Rs. Crore)

Sche

me

Code

Particulars

FY

2010-

11

FY

2011-

12

FY

2012-

13

FY

2013-

14

FY

2014-

15

FY

2015-

16

FY

2016-

17

FY

2017-

18

FY

2018-

19

FY

2019-

20

G.075

1012

Procurement of

safety equipments

for hydro

0.49 0.25 0.44 0.35 0.02 0.00 0.00 0.00 0.00 0.00

G.073

1020

Procurement of

tools &tackles 0.00 0.19 0.21 0.01 0.00 0.00 0.10 0.24 0.00 0.00

G.040

1006

Misc. emergency

budget for hydro 0.07 0.08 0.08 0.08 0.07 0.00 0.00 0.00 0.00 0.00

G.072

1134

Procurement of

modular furniture/

lockers

0.00 0.00 0.00 0.16 0.06 0.00 0.00 0.00 0.00 0.00

G.072

1193

Procurement of

unforeseen items –

Trombay

0.00 0.14 0.15 0.20 0.29 0.25 0.15 0.00 0.00 0.00

G.072

1211

Procurement of

tools &equipment 0.00 0.00 0.00 0.21 -0.01 0.00 0.00 0.00 0.00 0.00

G.072

1234

Mobiles &canteen

equipment for staff 0.00 0.00 0.11 0.18 0.11 0.14 0.12 0.12 0.00 0.00

G.100

19116

015

Safety Tool &

Tackle & Testing

Instruments

0.00 0.00 0.00 0.00 0.00 0.00 0.55 0.56 0.00 0.00

G.110

30117

080

Swimming pool

renovation 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.00 0.00 0.00

Total 0.57 0.66 1.00 1.18 0.54 0.39 0.92 1.91 0.00 0.00



4.3.8.7 In line with the Commission’s previous Orders, the Commission has restricted Non-DPR

capitalisation to 20% of DPR capitalisation. TPC-G is directed to club similar Non-DPR

schemes and submit such merged schemes to the Commission if it seeks their

consideration in future.

4.3.8.8 The summary of the capitalisation approved for FY 2014-15 is as shown in the Table

below:

Table 29: Capitalisation approved by Commission for FY 2014-15 (Rs. Crore)

Particulars TPC-G Petition Approved in

this Order

DPR capitalisation 134.91 134.91

Non-DPR capitalisation including HOSS 29.05 26.98

Total Capitalisation 163.96 161.89

4.3.8.9 The Commission approves Capitalisation of Rs. 161.89 Crore for FY 2014-15 for

Units 4 to 7 and Hydro Stations, as against Rs. 163.96 Crore claimed by TPC-G.

4.3.9 Non-DPR Capitalisation for FY 2010-11 to FY 2013-14


4.3.9.1 The Commission in its Order dated 8 September, 2010 in Case No. 96 of 2009 for

Truing-up for FY 2008-09, APR for FY 2009-10 and ARR for FY 2010-11 had

restricted the Non-DPR capitalisation to 20% of the DPR capitalisation, and accordingly

disallowed certain amounts towards Non-DPR schemes. In its Judgment on TPC-G’s

Appeal No. 18 of 2011, the ATE ruled that:

“In view of the judgment in Appeal No.199 of 2010, TPC-G should submit

justification of non-DPR schemes to the Commission and the Commission should

consider the same for capitalisation subject to prudence check.”

4.3.9.2 In view of this Judgment, in its MTR Petition TPC-G had provided details of Non-DPR

schemes for FY 2008-09 to FY 2010-11, along with CBA Reports, and requested the

Commission to allow the disallowed capitalisation of Rs. 53.14 Crore, Rs. 58.25 Crore

and Rs. 39.58 Crore for Unit-4 to 8 and Hydro Generating Stations pertaining to each of

these 3 years, respectively. However, in its MTR Order the Commission has not

considered certain capitalisation towards Non-DPR schemes from FY 2010-11 to FY

2011-12, and directed TPC-G to club these Non-DPR schemes and submit a merged

DPR for prudence check. For FY 2012-13 and FY 2013-14, the Commission restricted

the Non-DPR capitalisation to 20% and gave similar directions.



4.3.9.3 The summary of merged DPRs is as shown in the Table below:

Table 30: Summary of Merged DPRs, as submitted by TPC-G (Rs. Crore)

Particulars

FY

2008-09

FY

2009-10

FY

2010-11

FY

2011-12

FY

2012-13

FY

2013-14

Capitalisation claimed by TPC-G

in MTR Petition (Units 4 to 7&

Hydro)

a 53.14 57.76 39.58 151.85 158.09 327.65

Capitalisation approved by

Commission. b 50.14 53.67 0 128.26 146.46 317.06

Balance Capitalisation claimed c=a-b 3.00 4.09 39.58 23.59 11.63 10.59

Capitalisation Claimed by TPC-G

in MTR Petition (Unit-8) d 17.07 12.90 11.95

Capitalisation approved by

Commission. e 15.63 10.10 9.42

Balance Capitalisation claimed f=d-e 1.44 2.80 2.53

Total Balance Capitalisation to

be claimed g=c+f 3.00 4.09 39.58 25.03 14.43 13.12

Submission of (Part 1) Merged

DPR (Trombay) h 0.72 4.89 15.18 14.95 3.16 0.67


DPR (Hydro) i 0.16 0.29 5.77 4.23 1.15 1.17


DPR (Hydro) j 4.06 3.34 8.01 5.95 0.92 0.42


DPR (Trombay) k 0.48 1.18 5.12 0.77 0.28 0.06

Merged DPR of Environment,

fire, safety, security and statutory

2013 -17

l 7.63 3.96


DPR (Trombay) m 16.29

Total Submission of Merged

DPR

(n = h + i + j + k + l + m) n 5.43 9.70 34.08 25.91 13.14 22.57

20% of Merged DPR Value o = n *

20% 1.09 1.94 6.82 5.18 2.63 4.51

Balance Capitalisation p = g-

n-o 0 0 0 0 0 0


4.3.9.4 TPC-G submitted the Non-DPR capitalisation of merged DPRs vide letters dated 26

October, 2015, 2 November, 2015, 26 November, 2015, 5 January, 2016 and 25 January,

2016.



4.3.9.5 The MTR Order had disallowed Non-DPR capitalisation for certain schemes for FY

2008-09 and FY 2009-10:

“3.1.2.6 The Commission has examined the schemes and the CBA as submitted by

TPC-G, and has scrutinised the Non-DPR schemes implemented by TPC-G in FY

2008-09 and FY 2009-10. The Commission notes that some of the schemes were

executed for replacement of old assets which have outlived their useful life. The

assets were replaced for repeated failures due to ageing. Other reasons for their

replacement were up-gradation of technology, non-Availability of spares and

Original Equipment Manufacturer (OEM) support. These were one-time

replacements and non-recurring expenditure.

3.1.2.7 In reply to the Commission’s query, TPC-G stated that the assets, which

are replaced, are normally very old/obsolete. Such assets are decapitalised and

retired, and have been removed from the Gross Fixed Assets (GFA) after

replacement. In very rare cases, such assets could be used at some other location

and hence may be included in GFA.

3.1.2.8 The Commission notes that TPC-G could not furnish adequate

justification for capitalisation of some schemes. Hence, capitalisation towards

these schemes has been disallowed. The details of such schemes are tabulated

below:…

…

3.1.2.10 In view of the above, as regards the capitalisation for FY 2010-11

onwards, the TPC-G was bound by the directions given in Case No. 111 of 2008

to club the related Non-DPR schemes for In–Principle approval by the

Commission and restrict the capitalisation towards such schemes to 20%.”

4.3.9.6 Thus, the issue of approval of capitalisation for FY 2008-09 and FY 2009-10 was settled

in the MTR Order after scrutiny and prudence check. The Commission had also stated

that TPC-G was bound to club the related Non-DPR schemes for in–principle approval

and restrict the capitalisation towards such schemes to 20% for FY 2010-11.

Accordingly, the present Order has not considered the merged Non-DPR capitalisation

claimed by TPC-G for FY 2008-09 and FY 2009-10, and has considered the merged

Non-DPR capitalisation only from FY 2010-11 onwards.

4.3.9.7 At para. 4.3.8.6 of this Order, the Commission has disallowed certain Non-DPR

schemes that are of O&M nature or are for common employee facilities. Since the

schemes are disallowed, the Commission has not considered their yearly capitalisation

from FY 2010-11 to FY 2019-20. Accordingly, the Commission has adjusted the yearly

capitalisation under these schemes till FY 2013-14 in the merged Non-DPR

capitalisation submitted by TPC-G.



4.3.9.8 In view of the above discussion and scrutiny, the Commission has now approved certain

merged Non-DPR capitalisation for Units 4 to 7 and Hydro Generating Stations for FY

2010-11 to FY 2013-14, as summarised in the Table below:

Table 31: Summary of Merged Non-DPR Capitalisation now approved by Commission for

Units 4 to 7 and Hydro Generating Stations (Rs. Crore)

Particulars FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14

DPR Capitalisation as approved in

MTR Order 52.49 106.88 122.05 264.22

Non-DPR Capitalisation as

approved in MTR Order 10.50 21.38 24.41 52.84

Total Capitalisation as approved

in MTR Order 62.99 128.26 146.46 317.06

Merged Non-DPR Schemes as

submitted by TPC-G 39.58 23.59 11.63 10.59

Less: Non-DPR Capitalisation

before FY 2013-14 now

disallowed for selected schemes as

in para.4.3.8.6

0.57 0.66 1.00 1.18

Approved Merged Non-DPR

Capitalisation 39.01 22.93 10.63 9.41

4.3.9.9 The Commission has reviewed the justification and CBA submitted for these merged

DPR Capex proposals. On that basis, the Commission has considered the impact of these

capitalisations in the 3rd

Control Period. Accordingly, the Commission has approved the

impact of merged DPR capitalisation on the opening Gross Fixed Assets (GFA),

opening Loan and opening Equity for FY 2014-15. It has considered the impact of

yearly RoE, Interest on Long-term Loan and Depreciation disallowed on account of

subsequent approval of these capital expenditures in the past years. Further, as set out in

the MTR Order, the Commission has not considered any carrying cost on the now

approved merged Non-DPR capitalisation. The summary of the Non-DPR capitalisation

approved by the Commission is as shown in the Table below:

Table 32: Non-DPR Capitalisation for Units 4 to 7 and Hydro Generating Stations as

approved by Commission for FY 2010-11 to FY 2013-14 (Rs. Crore)

Particulars FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 Total

Units 4 to 7 and Hydro

Depreciation Computations

Opening GFA 0.00 39.01 61.94 72.58

Addition 39.01 22.93 10.63 9.41



Particulars FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 Total


Closing GFA 39.01 61.94 72.58 81.99

Depreciation rate 2.09% 3.04% 2.87% 3.03%

Depreciation 0.41 1.54 1.93 2.34 6.21

Interest Expenses Computations

Opening loan 0.00 26.90 41.42 46.93

Addition 27.31 16.05 7.44 6.59

Repayment 0.41 1.54 1.93 2.34

Closing loan 26.90 41.42 46.93 51.18

Interest rate 9.63% 10.67% 11.06% 10.99%

Interest on Long-term

Loan 1.29 3.65 4.88 5.39 15.21

RoE Computation

Opening equity 0.00 11.70 18.58 21.77

Addition 11.70 6.88 3.19 2.82

Closing equity 11.70 18.58 21.77 24.60

Rate of return 14.00% 15.50% 15.50% 15.50%

Return on equity 0.00 1.81 2.88 3.37 8.07

Grand Total 1.70 7.00 9.69 11.11 29.50

4.3.9.10 The Commission approves the impact of the merged DPR Capitalisation allowed

for FY 2010-11 to FY 2013-14 on Return on Equity, Interest Expenses and

Depreciation as Rs. 29.50 Crore for Units 4 to 7 and Hydro Generating Stations.

The Commission has considered this recovery separately along with the recovery of

other past Revenue Gaps.

4.3.10 Depreciation


4.3.10.1 TPC-G has computed Depreciation as Rs. 117.29 Crore for FY 2014-15 by applying the

rates specified under the MYT Regulations, 2011.


4.3.10.2 As discussed at para.4.3.9.10 of this Order, the Commission has considered the impact

of merged DPR capitalisation on the opening GFA for FY 2014-15. The opening GFA

as submitted by TPC-G in Form-5 of the Petition does not match the sum of approved

closing GFA for FY 2013-14 in the MTR Order and the merged DPR capitalisation



allowed in this Order. When asked to clarify, TPC-G provided a revised Form-5 along

with reconciliation with the merged DPR submission.

4.3.10.3 The Petition sets out the opening GFA as Rs. 4013.79 Crore and Depreciation as Rs.

117.29 Crore. However, in the formats annexed, opening GFA is Rs. 4018.07 Crore. The

Commission also noted that TPC-G had provided asset-wise Depreciation computations

resulting in Depreciation of Rs. 117.29 Crore. To the clarification sought, TPC-G stated

that there was an error in the opening GFA in the formats, and submitted revised formats

showing opening GFA of Rs. 4013.79 Crore.

4.3.10.4 The Commission has considered the opening GFA for FY 2014-15 taking the closing

GFA for FY 2013-14 in the MTR Order, plus the merged DPR capitalisation from FY

2010-11 to FY 2013-14 approved in para. 4.3.9.8 of this Order. The Commission has

also considered the assets added during the year, subject to the actual capitalisation

approved for FY 2014-15 in this Order.

4.3.10.5 Regulation 31.2 of the MYT Regulations, 2011 specifies that the Generating Company

may recover Depreciation on the value of fixed assets, computed annually based on the

straight-line method at the specified rates. The Commission has determined the

Depreciation on opening GFA for the full operational period, and on additional

capitalisation from the date of capitalisation, for various classes of assets at the rates as

per the MYT Regulations, 2011.

4.3.10.6 The summary of Depreciation claimed by TPC-G and as approved by the Commission

for FY 2014-15 is as under:

Table 33: Depreciation as approved by Commission for FY 2014-15 (Rs. Crore)

Particulars MTR Order TPC-G Petition Approved in this

Order

Opening GFA 3921.28 4013.79 4003.29

Asset Addition during the year 124.02 163.96 161.89

Asset Retirement during the year (10.02) (9.23) (9.23)

Closing GFA 4,035.28 4,168.52 4,155.95

Depreciation 126.38 117.29 116.96

4.3.10.7 The Commission approves Depreciation of Rs. 116.96 Crore for FY 2014-15 for




4.3.11 Interest on Long-term Loans


4.3.11.1 TPC-G has taken various loans in the past to finance the capitalization, and availed fresh

loan from HDFC Bank (Rs. 350 Crore) and Kotak Mahindra Bank (Rs. 250 Crore). It

has also drawn from the previous sanctioned loans from HDFC Bank (Sanctioned

amount – Rs. 300 Crore, Amount drawn – Rs. 101 Crore), Kotak Mahindra Bank

(Sanctioned amount – Rs. 300 Crore, Amount drawn – Rs. 101 Crore) and BNP Paribas

(Sanctioned amount – Rs. 55.1 Crore, Amount drawn – Rs. 44.48 Crore). The details of

new loans are set out below:

4.3.11.2 TPC has raised a loan of Rs. 350 Crore from HDFC Bank and Rs 250 Crore from Kotak

Mahindra Bank for funding its capital expenditure on the terms set out in the Table

below:

Table 34: Details of Fresh Loans for FY 2014-15

Particulars Terms and Conditions

HDFC loan

Amount Rs. 350 Crore

Repayment schedule 2 years moratorium, Quarterly Repayment with 7.5% of total amount

every year for the first ten years and 25% in the last year

Interest rate 10.15% p.a. pm linked to Base Rate

Kotak loan

Amount Rs. 250 Crore

Repayment schedule 2 years moratorium, with Repayment of 65% over 10 years and 35% in

the last year

Interest rate 10.30% p.a. pm linked to Base Rate

4.3.11.3 Loans from various banks have been allocated to different Business Areas (Generation,

Transmission and Distribution) based on the ratio of capitalisation in FY 2014-15. The

balance loan is assumed to be financed through normative loan. The allocation of loan

for various Businesses is as shown in the Table below:

Table 35: Allocation of Loans as submitted by TPC-G (Rs. Crore)

Particulars Unit4-7

& Hydro Unit-8 Total Transmission Distribution

Total

GTD

Capitalisation 163.95 46.89 210.84 481.26 494.27 1186.37

Debt 114.77 32.82 147.59 336.88 345.99 830.46

% 14% 4% 18% 41% 42% 100%



Particulars Unit4-7

& Hydro Unit-8 Total Transmission Distribution

Total

GTD

HDFC - Rs. 300

Crore 13.96 3.99 17.95 40.97 42.08 101.00

Kotak - Rs. 300

Crore 13.96 3.99 17.95 40.97 42.08 101.00

BNP Paribas - Rs.

55 Crore 6.15 1.76 7.90 18.04 18.53 44.48

HDFC - Rs. 350

Crore 48.37 13.83 62.20 141.98 145.82 350.00

HDFC - Rs. 250

Crore 3.97 1.14 5.11 11.67 11.98 28.76

Normative 28.36 8.11 36.47 83.25 85.50 205.22

4.3.11.4 TPC-G has computed the interest expenses for FY 2014-15 as Rs. 82.38 Crore after

considering the above loan drawals, repayment equal to Depreciation claimed and

weighted average interest rate of 10.94%.

4.3.11.5 TPC-G has considered Other Finance Charges of Rs. 0.21 Crore attributable to Trombay

Station and Hydro Stations.


4.3.11.6 TPC-G has furnished details of loan allocation along with interest rates of loans from

various banks as on 1 April for FY 2014-15. As discussed at para. 4.3.9.8 of this Order,

the Commission has considered the impact of merged DPR capitalisation on the opening

loan for FY 2014-15. The Commission has considered 70% of the merged DPR

capitalisation as funded through debt. Accordingly, the opening balance of loan for FY

2014-15 has been arrived at by adding the closing balance for FY 2013-14 as approved

in the MTR Order with the debt portion of the merged DPR capitalisation approved in

this Order. Further, in accordance with Regulation 33.3, loan repayment has been

considered as equal to the Depreciation allowed for FY 2014-15 in this Order.

4.3.11.7 While computing RoE, TPC-G has considered reduction in equity capital on account of

retirement of assets. However, while computing Interest on Long-term Loan, TPC-G has

not considered reduction in loan on account of retirement of assets. To the clarification

sought, TPC-G stated that the book value and entire normative loan relating to retired

assets is repaid, and no further reduction is required to be made in the computation of

Interest on Long-term Loan.

4.3.11.8 Regulation 33.5 of the MYT Regulations, 2011 specifies the rate of interest as the

weighted average rate of the actual loan portfolio at the beginning of the year applicable



to TPC-G. Based on this, TPC-G has submitted the weighted average rate of interest for

FY 2014-15 as 10.94%. The Commission has checked the interest rates from the loan

document copies provided, and considered the weighted average interest rate as

submitted by TPC-G for computation of Interest on Long-term Loans.

4.3.11.9 The Commission also approves the Other Finance Charges of Rs. 0.21 Crore as sought

by TPC-G based on the basis of the audited allocation statement of accounts.

4.3.11.10 The summary of the Interest on Long-term Loans as submitted by TPC-G and as

approved by the Commission after Truing-up is shown in the Table below:

Table 36: Interest on Long-term Loans as approved by the Commission for FY 2014-15

(Rs. Crore)

Particulars MTR Order TPC-G Petition Approved in this Order

Opening loan balance of the year 682.85 754.51 734.03

Loan addition during the year 86.81 114.77 113.32

Repayment during the year 126.38 117.29 116.96

Closing balance of the year 643.29 752.00 730.39

Interest rate 10.93% 10.94% 10.94%

Interest expense 72.49 82.38 80.08

Other Finance Charges

0.21 0.21

4.3.11.11 The Commission approves Interest on Long-term Loans for FY 2014-15 as Rs.

80.08 Crore, as against Rs. 82.38 Crore claimed by TPC-G, for Units 4 to 7 and

Hydro Stations.

4.3.12 Return on Equity


4.3.12.1 The RoE based on the opening balance of equity and reduction of equity on account of

de-capitalisation of certain assets, at 15.5%, works out to Rs. 228.82 Crore.


4.3.12.2 RoE has been taken at the rate of 15.5% of the equity, in accordance with Regulation

32.2.1 of the MYT Regulations, 2011, on the opening equity of the year. The

Commission has considered 30% of the merged DPR capitalisation, as discussed in para.

4.3.9.8 of this Order, as funded through equity. Accordingly, the regulatory equity at the

beginning of FY 2014-15 has been arrived at by adding the approved regulatory equity

at the end of FY 2013-14 in the MTR Order and the equity portion of the merged DPR



capitalisation. The Commission has considered addition to equity considering the

capitalisation approved for FY 2014-15 in this Order and the debt: equity ratio of 70:30.

Reduction in equity has been considered at 30% of the value of retirement/de-

capitalisation of assets.

4.3.12.3 The RoE as claimed by TPC-G and approved by the Commission for FY 2014-15 after

Truing-up is summarised in the following Table:

Table 37: Return on Equity as approved by the Commission for FY 2014-15 (Rs. Crore)

Particulars MTR

Order

TPC-G

Petition

Approved in this

Order

Opening equity of the year 1447.08 1476.23 1471.68

Equity addition for asset addition during the

year 37.21 49.19 48.57

Equity reduction for asset de-capitalised

during the year (3.01) (2.77) (2.77)

Closing equity for the year 1481.28 1522.65 1517.48

Rate of return 15.50% 15.50% 15.50%

Return on equity 224.30 228.82 228.11

4.3.12.4 The Commission approves Return on Equity for FY 2014-15 of Rs. 228.11 Crore

for Units 4 to 7 and Hydro Stations, as against Rs. 228.82 Crore claimed by TPC-G.

4.3.13 Interest on Working Capital


4.3.13.1 The IoWC has been computed considering the elements specified in the MYT

Regulations, 2011. Interest rate of 14.75% has been considered, as in the MTR Order.

The IoWC works out to Rs. 65.37 Crore for Thermal Units and Rs. 7.14 Crore for Hydro

Stations, amounting to Rs. 72.51 Crore for FY 2014-15.


4.3.13.2 Regulation 35.1(e) stipulates that the rate of interest should be the State Bank of India

Advance Rate (SBAR) as on the date of filing of the Petition. Accordingly, the

Commission has considered the interest rate of 14.75%, as approved in the MTR Order,

for working out the IoWC for FY 2014-15.

4.3.13.3 TPC-G has considered 2 months’ fuel cost for Unit-6 based on actual PLF, which the

Commission has accepted in line with the methodology in previous Orders.



4.3.13.4 TPC-G has computed the fuel cost for Unit-6 based on the GCV and fuel price as

approved in the MYT Order. For Truing-up, the Commission has considered the fuel

price and GCV as approved for FY 2014-15 in this Order, in accordance with the MYT

Regulations, 2011.

4.3.13.5 The IoWC as claimed by TPC-G and approved by the Commission for FY 2014-15 after


Table 38: Interest on Working Capital as approved by Commission for FY 2014-15 (Rs.

Crore)

Particulars TPC-G Approved in this Order

Working capital requirement 491.62 504.19

Interest rate 14.75% 14.75%

Interest on working capital 72.51 74.37

4.3.13.6 The Commission approves the normative Interest on Working Capital as Rs. 74.37

Crore for FY 2014-15 for Units 4 to 7 and Hydro Stations, as against Rs. 72.51

Crore claimed by TPC-G.

4.3.14 Income Tax


4.3.14.1 TPC-G has computed the Income Tax as per the methodology of the MTR Order, at Rs.

99.24 Crore.


4.3.14.2 The Commission has scrutinized the Income Tax computations, and asked for the break-

up of various components such as MAT Credits, Other Disallowances, Other Expenses

allowed, Deductions u/s 80 IA and Disallowance under Income Tax.

4.3.14.3 TPC-G provided the information sought on Income Tax computations. TPC-G has

followed the methodology of the MTR Order. However, the Commission has re-

computed the Income Tax based on the revenue and expenses approved in this Order.

The summary of the Income Tax claimed by TPC-G and approved by the Commission is




Table 39: Income Tax as approved by Commission for FY 2014-15 (Rs. Crore)


Total Revenue 2641.56 2642.02

Less: Incentive and efficiency gains 46.12 54.38

Total expenses 2133.56 2126.46

Profit before tax 461.87 461.18

Add

Depreciation considered in expenses 117.29 116.96

Other disallowance while computing IT 73.36 73.36

Total tax disallowances 190.65 190.32

Less

Tax Depreciation 178.4 178.40

Other expenses allowed for computing IT 79.21 79.21

Deduction - U/s 80 IA 14.77 14.77

Total tax allowances 272.38 272.38

Total taxable income 380.14 379.11

Corporate Tax rate 33.99% 33.99%

Tax payable at normal rate 129.21 128.86

MAT computation


Add: Disallowances under Income Tax

(U/s 14 A, provision for doubtful debt) 0.17 0.17

Less: Deduction under Income Tax

(Exempt Income, FBT, Wealth Tax,

Withdrawal from Income)

0.00 0.00

Book profit 462.04 461.34

MAT rate 20.96% 20.96%

Tax payable under MAT 96.85 96.70

MAT credit available 29.97 29.97

Tax applicable 129.21 128.86

Tax applicable after MAT credit 99.24 98.89

4.3.14.4 The Commission approves Income Tax of Rs. 98.89 Crore for Units 4 to 7 and

Hydro Stations for FY 2014-15, as against Rs. 99.24 Crore claimed by TPC-G.



4.3.15 Non-Tariff Income


4.3.15.1 The Non-Tariff Income for FY 2014-15 works out to Rs. 31.64 Crore, consisting of

recurring items of Rs. 5.42 Crore and non-recurring items of Rs. 26.21 Crore.


4.3.15.2 The Non-Tariff Income claimed by TPC-G in the Petition was different from the

Audited Allocation Statement. To the reconciliation sought, TPC-G stated that it had

inadvertently shown Non-Tariff Income as Rs. 31.64 Crore instead of Rs. 32.10 Crore

due to an incorrect figure of Rs. 1.99 Crore considered for Sale of Scrap instead of the

correct figure of Rs. 2.46 Crore.

4.3.15.3 Accordingly, the Commission has considered the Non-Tariff Income of Rs. 32.10 Crore.

The Non-Tariff Income as claimed by TPC-G and approved by the Commission for FY

2014-15 after Truing-up is summarised in the following Table:

Table 40: Non-Tariff Income as approved by Commission for FY 2014-15 (Rs. Crore)

Particulars

TPC-G Petition Approved in this Order

Non-Tariff Income 31.64 32.10

4.3.15.4 The Commission approves Non-Tariff Income of Rs. 32.10 Crore for FY 2014-15

for Units 4 to 7 and Hydro Stations.

4.3.16 Revenue from Sale of Power


4.3.16.1 TPC-G has earned revenue of Rs. 2609.92 Crore from TPC-D and BEST for FY 2014-

15. The break-up is as below:

Table 41: Revenue from Sale of Power for FY 2014-15

Particulars Unit BEST TPC-D Total

Energy MU 2980.18 2844.37 5824.55

Fixed charges Rs. Crore 546.06 521.09 1067.15

Incentive Rs. Crore 0 0 0

Energy Charges Rs. Crore 787.23 751.23 1538.46

Revenue from FBSM final

settlement

Rs. Crore 2.37 1.94 4.31




Considered for ARR Rs. Crore 1335.66 1274.26 2609.92


4.3.16.2 Based on the details furnished, the Commission has considered the Revenue from

Sale of Power during FY 2014-15 to BEST and TPC-D as Rs. 1335.66 Crore and

Rs. 1274.26 Crore, respectively, and the total Revenue as Rs. 2609.92 Crore.

4.3.17 PLF Incentive for Thermal Station and Hydro Incentive for Hydro Stations


4.3.17.1 Regulation 44.1 of the MYT Regulations, 2011 permit Incentive on Thermal generation

with PLF higher than 85%. No Thermal Generating Units exceeded the target PLF of

85%, and no incentive is due. However, TPC-G has claimed an incentive of Rs. 39.70

Crore for Hydro generation being higher than the Design Energy, and actual Availability

being higher than the normative.


4.3.17.2 The Commission asked for the actual Plant Availability Factor, PLF and actual ex-bus

generation for FY 2014-15 as certified by MSLDC. TPC-G has furnished these, the

Commission has considered the same for Truing-up.

4.3.17.3 While computing the incentive for Hydro Generating Stations, TPC-G has considered

the revised AFC based on the Truing-up proposed in its Petition. The Commission has

computed the incentive for Hydro Generating Stations considering the AFC for FY

2014-15 as approved in this Order after Truing-up.

4.3.17.4 TPC-G made an additional submission regarding incentives considering the backing

down of Generating Stations for in FY 2011-12 to FY 2015-16. For FY 2014-15, no

incentive on account of backing down instructions has been claimed by TPC-G.

Accordingly, the Commission has also not allowed any additional incentive.

4.3.17.5 The Commission approves Incentive for higher Capacity Index for Hydro Stations

for FY 2014-15 as Rs 39.46 Crore, as against Rs. 39.70 Crore claimed by TPC-G.



4.3.18 Reduction of Fixed Charges on account of lower Availability of Unit-7


4.3.18.1 The Availability of Unit-7 for FY 2014-15 was 77.34%. Unit-7 was taken out at 20:51

hours on 11 December, 2014 for boiler certification and minor inspection of gas turbine.

After the inspection and other outage related jobs, the gas turbine machine was rolled for

synchronization in presence of the OEM (M/s Siemens) on 15 December, 2014, but the

machine tripped on ‘Generator bearing high vibration’.

4.3.18.2 On 16 December, 2014, the machine was again rolled at 600 RPM, and the speed was

raised manually up to 690 RPM. However, the machine was tripped manually as the rate

of rise of vibration was high. In consultation with the OEM, electrical testing of the

GTG rotor revealed an inter-turn fault on rotor winding. After threading out the rotor on

18 December, 2014, it was seen that its Current Carrying (CC) bolts and J-Strap were

melted on Pole-2, due to which Unit-7 had to be kept out of service for rotor repair. The

Unit came back in service on 28 February, 2015.

4.3.18.3 Since Unit-7 was shut from 16 December, 2014 to 27 February, 2015, its Availability of

in FY 2014- 15 was 77.34%. The occurrence on Unit-7 which led to its tripping on

account of damage to the GTG rotor was something which was beyond TPC-G’s control

due to the following reasons:

Adherence to maintenance schedule stipulated by OEM

4.3.18.4 TPC-G had adhered to the maintenance schedule stipulated by the OEM during minor

and major outages as shown below:

During minor outage:

a. Visual inspection.

b. Proper cleaning.

c. Inspection of slip rings and carbon brushes.

d. Electrical tests on stator &rotor.

e. Inspection and replacement of shaft grounding brush if required.

During major outage:

a. Threading out / in of rotor.

b. Internal visual inspection.

c. Proper cleaning & varnishing if require.

d. Inspection of generator accessories like, coolers, bearings etc.

e. Electrical tests on stator & rotor.

f. Inspection of brush assembly.



No prior indication of Fault

4.3.18.5 The rotor of Unit-7 had never given any prior indication of fault during its health checks

on previous occasions, and the Unit was running without any problem before taking the

outage for works on the mechanical side. Hence, there was no possibility of TPC-G

getting any prior indication so as to avoid this rotor earth fault.

4.3.18.6 The physical location of the CC Bolt is below the overhang windings of the rotor (all

slots). This overhang portion is covered with retaining rings on either side of the rotor

and hence visual inspection of the CC Bolt is not possible. Thus, any problem or defect

relating to the CC Bolt can only be identified in electrical tests.

4.3.18.7 The results of the electrical tests on the GTG Rotor in 2008 and 2013were found to be

within the permissible limits, and the test reports have been submitted with the Petition.

This rotor was rewound in 2008 as per the OEM’s recommendations, and all the

electrical tests were carried out and were found satisfactory.

Incident Investigation by OEM

4.3.18.8 The OEM has also carried out the incident investigation at its end, and the Incident

Analysis Report has been submitted with the Petition. The Report shows that the root

cause of the damage was the crack initiation at J-Strap and also that the existing

protection system was designed for multiple start ups.

Efforts by TPC-G for minimizing non-availability of the Machine

4.3.18.9 The OEM had indicated a repair time of 6 months for the machine. However, to reduce

the down time, TPC-G arranged a spare rental rotor from the OEM and the machine was

taken in service on 28 February, 2015. Further, the original rotor was repaired as per the

recommendations of OEM and was put back into service in July, 2015. This has saved a

down time of 744 hours, i.e., 8.3 % of Availability for FY 2014-15.

4.3.18.10 Regulation 49.2 of the MYT Regulations, 2011 specifies the following regarding

recovery of Fixed Charges with respect to Availability:

“The full AFC shall be recoverable at target availability specified in Regulation

44.1, recovery of AFC below the level of Target Availability shall be on pro rata

basis. At zero Availability, no Capacity Charges shall be payable.”

4.3.18.11 In the context of Regulation 2(29), the occurrence on Unit-7 which led to its tripping,

considerable damage and subsequent outage for repairs was beyond TPC-G’s control,

and hence a Force Majeure condition.



4.3.18.12 Considering the outage as a Force Majeure event, TPC-G proposes to deduct Employee

expenses, Interest on Long-term Loan and Depreciation from the AFC (i.e. the

expenditures of Unit-7 which anyway had to be incurred independent of the operation /

outage of the Unit) to arrive at the AFC as applicable for Unit-7 for pro rata reduction.

On the basis of this computation, reduction in Fixed Cost for Unit-7of Rs. 10.76 Crore is

sought.

4.3.18.13 Rs. 5.82 Crore was spent towards restoration of Unit-7 and Rs. 5.68 Crore towards

arrangement of spare rotor from M/s Siemens. TPC-G has a Mega Insurance Policy for

Trombay Unit-7 covering Machine Loss of Profit (MLOP). TPC-G has accordingly

raised a claim for the total amount of Rs. 11.50 Crore (5.82 + 5.68) to the insurance

company. The insurance claim is still under process, and accordingly TPC-G has not

considered the impact of this claim. TPC-G has also not considered any claim towards

capitalisation or retirement of assets, if any, for Truing-up of FY 2014-15.


4.3.18.14 The Siemens (OEM) Incident Analysis Report states that the most probable contributor

to the failure was mechanical stress strain condition at the J-Strap and radial bolt. The

mechanical stress strain condition at the J-Strap and the radial bolt has been examined in

the Siemens Laboratory in Muelheim, Germany by experienced material experts to

ascertain whether the J-Strap failed first or the radial bolt.

4.3.18.15 The Siemens Report states further that:

“As per the material related summary below, a crack developed first at the 90°

bend area of the J-Strap which led first to a separation in that area and as

consequence by the flowing electrical current, during start up operation, to a

overheating and melting of the J-Strap.

As a second effect, the overheated and melted area grew larger by the electrical

arcing until it reached the radial bolt, damaged the electrical insulation of the

radial bolt and J-Strap. This has led to the electrical arcing between radial bolt

and shaft material which has caused overheating and melting there, too.

The conclusion… is that during the start up of the Gas turbine the voltage applied

in the generator comes from the start up convertor. It has less than 10% of

generator nominal voltage and a frequency of maximally 35 Hz (see below). This

means that during GT start up the rotor earth fault protection relay –F48 / 7UR22

is not operational due to low auxiliary voltage (needed are 110V and a frequency

of 50Hz).”

4.3.18.16 The Commission notes that the final conclusion and recommendation of the Siemens

Report are as follows:



“Conclusion: The original J Strap was a state-of-the art system in the past. The

root cause of the rotor damage is the crack initiation at the 90° bend area of the

J-strap at one pole of the rotor, for the old design J-Strap. Overheating and

melting induced by electrical arcing then spread out and led to the damage at the

radial bolt and melting at the surrounding area at the rotor body.

Existing Protection system was a state-of-the art system at the time of installation

and it was inhibited as designed, during start up condition voltages and

frequencies and therefore did not prevent multiple start up attempts.

Recommendation is to replace the J-strap with the newest J-strap design. Also it

is recommended to update the generator rotor earth fault protection and

neighboring systems involving static frequency start up converter (SFC / SEE)

with the latest technology (see below recommendations).”

4.3.18.17 The Commission has examined TPC-G’s submissions and the root cause analysis carried

out by M/s. Siemens in its Incident Analysis Report. The Commission notes that TPC-G

had adhered to the maintenance schedule as specified by the OEM during minor and

major outages. The Commission also notes that the Siemens Report identifies the most

probable contributor to the failure as mechanical stress strain condition at the J-Strap and

radial bolt. TPC-G also made efforts to reduce the down time of the machine outage and

obtained a spare rental rotor from the OEM, which was installed in Unit-7 and the

machine taken in service.

4.3.18.18 Considering the above, the Commission is of the view that the occurrence on Unit-7

which led to its tripping, considerable damage and subsequent outage for repairs was

beyond the control of TPC-G. Accordingly, the Commission considers it as a Force

Majeure event and allows the reduction in the AFC for Unit-7 based on the methodology

in the MTR Order in the case of Unit-8.

Table 42: Approved Reduction in AFC for Unit-7 for FY 2014-15

Particulars Unit TPC-G

Petition

Approved in

this Order

Employee expenses Rs. Crore 22.37 21.45

Interest on Long-term Loan Rs. Crore 24.90 24.23

Depreciation Rs. Crore 13.93 13.89

Total Rs. Crore 61.20 59.57

AFC Rs. Crore 180.65 178.62

AFC without employee cost, interest and

Depreciation

Rs.

Crore 119.45 119.05

Normative Availability % 85.00% 85.00%

Actual Availability % 77.34% 77.34%




Petition

Approved in

this Order

Revised fixed cost Rs. Crore 108.68 108.32

Reduction in fixed cost Rs. Crore 10.76 10.73

4.3.18.19 The Commission approves the reduction in AFC for Unit-7 for lower than Target

Availability for FY 2014-15 as Rs. 10.73 Crore, as against Rs. 10.76 Crore

submitted by TPC-G.

4.3.19 Sharing of Gains / Losses for FY 2014-15


4.3.19.1 The MYT Regulations, 2011 specify the methodology for treatment of sharing of gains

and losses, and categories the various heads of expenditure as (i) controllable and (ii)

uncontrollable. After such categorisation, the gains / losses for controllable expenditure

have been computed, and sharing between the consumers and TPC- G has been

proposed.


4.3.19.2 Regulation 12 specifies the controllable factors to be considered in case of Generation

and Regulation 14 specifies the treatment of sharing of gain or loss on account of such

controllable factors.

4.3.19.3 Sharing in case of Generation ARR components is to be done in terms of fuel cost,

revenue due to variation in Auxiliary Energy Consumption, O&M expenses and IoWC

only. The ATE in its Judgment dated 31 August, 2012 in Appeal No. 18 of 2011 has

ruled that the Commission may frame Regulations for evaluation of cost of internal

accruals used as working capital for arriving at the actual IoWC and efficiency gain. The

Commission has filed an Appeal against this Judgment regarding the sharing of gain/

loss on IoWC before the Supreme Court, which is pending. In the meantime, in view of

the ATE Judgment, the Commission has not considered the sharing of gains or losses on

IoWC.

4.3.20 Gains / Losses on account of fuel costs


4.3.20.1 As per the MYT Regulations, 2011 one third of the efficiency gains on account of

variation in the Unit SHR of Rs. 7.46 Crore has been considered to be passed on to the

Distribution Licensees.




4.3.20.2 For computing the efficiency gain/ loss, the Commission has considered the SHR as

approved in this Order. Accordingly, it has determined the total efficiency gain on

account of approved fuel cost. The summary of the approved efficiency gain on account

of fuel cost has been shown in the Table below:

Table 43: Gains and Losses due to variation in Fuel Cost, as approved by Commission for

FY 2014-15 (Rs. Crore)

Particulars Unit-5 Unit-6 Unit-7 Total

Fuel cost (Rs. Crore) 948.39 139.70 269.75 1357.84

Actual SHR (kcal/kWh) 2507.32 2845.84 1967.53

Normative SHR (kcal/kWh) 2573.00 2646.52 2021.00

Fuel cost applying normative SHR(Rs.

Crore) 973.23 129.91 277.08 1380.23

Net gains/ (loss) (Rs. Crore) 24.84 (9.78) 7.33 22.39

Passed on to the Distribution Licensees

(Rs. Crore) 8.28 (3.26) 2.44 7.46

4.3.20.3 The Commission approves the efficiency gain as Rs. 7.46 Crore, to be passed on to

the Distribution Licensees, on account of variation in Fuel Cost of Units 4 to 7 and

Hydro Generating Stations for FY 2014-15.

4.3.21 Gains / Losses on account of Auxiliary Consumption


4.3.21.1 The loss of Rs. 0.63 Crore on account of Auxiliary Energy Consumption has been

passed on to the Distribution Licensees. TPC-G has not considered the Auxiliary Energy

Consumption of Unit-4 for any gain and loss computations.


4.3.21.2 The Commission has computed the variation in revenue on account of the variation in

Auxiliary Energy Consumption considering the Tariff approved in the MYT Order.

TPC-G had not considered Auxiliary Energy Consumption of Unit-4 for gain and loss

computations. The Commission has also not done so as the Unit was in stand-by mode

the whole year. The summary of the approved efficiency gain/ loss on account of

Auxiliary Energy Consumption is as shown in the Table below:



Table 44: Gain/Loss due to variation in Auxiliary Energy Consumption as approved by

Commission for FY 2014-15 (Rs. Crore)

Particulars Unit-5 Unit-6 Unit-7 Hydro Total

Gross generation (MUs) 3316.29 201.80 1148.48 1442.75 6109.31

Actual Auxiliary Energy Consumption

(%) 5.69% 6.88% 2.54% 2.54%

Norm Auxiliary Energy Consumption (%) 6.00% 3.50% 3.00% 1.96%

Difference in net generation (MUs) 10.35 (18.61) 5.25 (8.35) (11.36)

Rate (Rs./kWh) 3.90 8.62 2.01 1.30 3.90

Auxiliary Energy Consumption gain /

(loss) (Rs. Crore) 4.04 (16.04) 1.06 (1.08) (12.03)

Passed on to Distribution Licensees (Rs.

Crore) (4.01)

4.3.21.3 The Commission determines an Efficiency Loss of Rs. 4.01 Crore to be passed on to

Distribution Licensees on account of variation in Auxiliary Consumption for Units

4 to 7 and Hydro Stations for FY 2014-15.

4.3.22 Gains / Losses on account of O&M Expenses


4.3.22.1 Property Tax, levied by Municipal Corporation of Greater Mumbai (MCGM) and

governed by the Mumbai Municipal Corporation Act, 1888 (MMC Act) is an

uncontrollable expenditure. Vide Maharashtra Act 11 of 2009, GoM amended the MMC

Act, enabling MCGM to levy Property Tax based on ‘capital value’ of properties as

against their rateable value as per the earlier provision. Section 140A of the MMC Act

now reads as below:

“Property Taxes to be levied on capital value and the rate thereof.—

Notwithstanding anything contained in Section 140 or any other provisions of this

Act, the Corporation may pass a resolution to adopt levy of Property Tax on

buildings and lands in Brihan Mumbai on the basis of capital value of the

buildings and lands on and from such date and at such rates, as the Corporation

may determine in accordance with the provisions of Section 128;……”

4.3.22.2 As per this amendment, the Property Tax paid for FY 2014-15 is set out in the Table

below, along with the amount payable prior to the amendment:



Table 45: Property Tax Summary as submitted by TPC-G for FY 2014-15 (Rs. Crore)

S. No. Expenditure as reflected in Accounts FY 2014-15

1 Actual Tax paid in year 17.94

2 Property Tax paid/payable prior to MCGM Revision 5.09

3 Uncontrollable, to be claimed in Truing-up 12.85

4.3.22.3 Accordingly, TPC-G has claimed Rs. 12.85 Crore as an uncontrollable expense towards

payment of Property Tax while calculating the sharing of gains/losses on account of

O&M expenses.

4.3.22.4 The net O&M expenses after sharing of gains/ losses have been considered as Rs. (1.24)

Crore. The total amount to be passed on to the Distribution Licensees is Rs (0.41) Crore.


4.3.22.5 Regulation 48 of MYT Regulations, 2011 specifies the norms for O&M expenses,

considering escalation of 5.72% on the expenses determined for FY 2009-10 as the

average of actual O&M expenses of the last 3 years. Accordingly, the Commission had

computed the normative O&M expenses for FY 2014-15 in the MYT Order.

4.3.22.6 The Commission asked TPC-G to submit the documentary evidence in support of its

claims and detailed computations for Property Tax paid, along with the difference

between the previous and revised rates. TPC-G has furnished the required information.

4.3.22.7 The Commission also asked whether the increased Property Tax value is a settled value

or if TPC-G had approached MCGM for revising or recalculating the amount. TPC-G

stated that it has challenged the increase in Property Tax with regard to the rules fixing

the capital value of storage tanks vide Writ Petition No. 1906 of 2015 in the Bombay

High Court. This Petition has been tagged along with Petition No. 2592 of 2013

(Property Owners Association V/s. State of Maharashtra). However, in line with the

High Court’s Order dated 24 February, 2014 in respect of Writ Petition no 2592 of 2013,

TPC-G has paid the Tax at the pre-amended rates.

4.3.22.8 The normative O&M expenses are derived through the methodology specified in the

MYT Regulations. Therefore, the normative O&M expenses are being approved on a

composite basis, without segregation of costs into employee, A&G and R&M expenses,

in line with the earlier Orders. An average escalation of 5.72% is being allowed on

different components of O&M expenses. These components may have different

escalation rates, and are not individually considered for Truing-up. Increase in any type



of taxation is also subsumed as part of the composite escalation rate. In the present case,

the actual expenses are higher than the normative O&M expenses as per the MYT

Regulations.

4.3.22.9 Considering the normative and the approved actual O&M expenses, the gains and losses

due to the variation have been computed. The Commission has not considered the Hydro

Station colony consumption for sharing of efficiency gains and losses. The summary of

sharing of gains/ losses for O&M expenses is given in the Table below:

Table 46: Gains due to variation in O&M Expenses for Units 4 to 7 and Hydro Stations for

FY 2014-15 as approved by Commission (Rs. Crore)


Approved O&M Expenses 475.87 475.87

Actual O&M 489.96 481.34

Less: Expenditure considered as uncontrollable 12.85 0.00

Actual O&M Expenses 477.11 481.34

O&M Expense gain / (loss) (1.24) (5.47)

Passed on to the Distribution Licensee (0.41) (1.82)

Net entitlement of O&M Expense 489.13 477.69

4.3.22.10 The Commission approves the efficiency loss of Rs. 1.82 Crore to be passed on to

Distribution Licensees on account of variation in O&M Expenses for Units 4 to 7

and Hydro Stations for FY 2014-15.

4.3.23 Net Entitlement, and resultant Gap/ Surplus for Units 4 to 7 and Hydro Stations

4.3.23.1 Based on the Truing-up of various elements of expenses and revenue and TPC-G’s share

of efficiency gains/ losses, the Commission has determined the total Revenue

Gap/Surplus as against that estimated by TPC-G. The summary of the net ARR and

sharing of efficiency gains/losses as approved by the Commission for FY 2014-15 is

given in the following Table:



Table 47: Truing-up for FY 2014-15 for Units 4 to 7 and Hydro Stations, including sharing

of efficiency gains/ losses (Rs. Crore)

Particulars TPC-G

Petition

Approved

after

Truing-up

Entitlement

as per

Regulations

/ Order

Efficiency

Gains /

(Losses)

Efficiency

Gains

/(Losses)

shared with

Distribution

Licensees

Net

Entitlement

after

sharing of

gains/

(losses)

approved

Fuel related expenses 1372.76 1357.84 1380.23 22.39 7.46 1372.76

Auxiliary benefit (1.26) (12.03) (12.03) (4.01) (8.02)

O&M expenses 489.13 481.34 475.87 (5.47) (1.82) 477.69

Depreciation expenses 117.29 116.96 116.96

Interest on Long-term

Loan 82.38 80.08 80.08

Interest on working capital 72.51 74.37 74.37

Other expenses (finance

charges) 0.21 0.21 0.21

Income Tax 99.24 98.89 98.89

Add: Colony consumption

of hydro 0.56 0.55 0.55

Incentive (PLF, Hydro

Incentive) 39.70 39.46 39.46

Total revenue

expenditure 2272.53 2237.66 2252.95

Add: Return on equity

capital 228.82 228.11 228.11

Less : Unallocated fixed

cost portion of Unit-4 12.86 12.80 12.80

Less : Allocation from

Unit-8 for Shared Capacity 12.50 12.50 12.50

ARR 2475.98 2440.47 2455.76

Reduction in fixed cost

due to lower Availability

of Unit-7

10.76 10.73 10.73

Revenue

Revenue from sale of

electricity 2609.92 2609.92 2609.92

Non-Tariff Income 31.64 32.10 32.10

Revenue Gap/(surplus) (176.34) (212.28) (196.99)

4.3.23.2 The Commission determines a Revenue Surplus of Rs. 196.99 Crore, as against Rs.

176.34 Crore claimed by TPC-G, for FY 2014-15.



4.4 Performance of Unit-8

4.4.1 Gross Generation


4.4.1.1 The 250 MW Unit-8 tripped on 9 January, 2014, and was under Force Majeure outage

for the rest of FY 2013-14. It was brought back in service after major repairs on 21

November, 2014. Even after repairs, the Unit was gradually loaded to full load, leading

to generation lower than approved in the MTR Order.

4.4.1.2 The SHR in FY 2014-15 was 2275 kcal/kWh as against the approved normative value of

2450 kcal/kWh, while Auxiliary Energy Consumption was 6.48% as against the

approved value of 8.50%.

4.4.1.3 The performance of Unit-8 in FY 2014-15 is as tabulated below:

Table 48: Unit-8 Performance in FY 2014-15 as submitted by TPC-G

Particulars Unit MTR Order TPC-G

Petition

Gross generation MU 795.71 715.47

Auxiliary Energy Consumption % 8.50% 6.48%

Net generation MU 728.07 669.14

SHR kCal/kWh 2450 2275

Availability % 37.00% 36.61%

PLF % 36.00% 33.00%


4.4.1.4 The Commission has examined the gross generation and Availability certified by

MSLDC. The Commission has considered each of the performance parameters as under:

Gross Generation

4.4.1.5 The actual gross generation achieved by Unit-8 during FY 2014-15 is 715.47 MU, as

against 795.71 MU approved in the MTR Order. The actual PLF of 33% for FY 2014-15

is lower than the normative PLF of 85%. The Availability, as certified by MSLDC, was

36.61%, which is significantly lower than the normative Availability of 85%.

4.4.1.6 The Commission verified the actual gross generation achieved by Unit-8 of TPC-G from

the MSLDC certificate and found the same to be in order. Since the actual Availability is

lower than the normative, the Commission has considered disallowance of AFC in



accordance with the MYT Regulations, 2011 in subsequent Sections of this Order.

Accordingly, the Commission has considered the gross generation as per the MSLDC

Certificate for the Truing-up of 2014-15 as shown in the Table below:

Table 49: Availability of Unit-8 as approved by Commission for FY 2014-15

Particulars Unit MTR

Order

TPC-G

Petition Normative

Considered for

Truing-up

Availability % 37.00% 36.61% 85.00% 36.61%

Table 50: Gross Generation of Unit-8 as approved by the Commission for FY 2014-15

Particulars Unit MTR Order TPC-G Petition Approved in this Order

Gross generation MU 795.71 715.47 715.47


4.4.2.1 The actual Auxiliary Energy Consumption achieved by Unit-8 during FY 2014-15 is

6.48% as against the normative level of 8.50%. As the actual Auxiliary Energy

Consumption is lower than the normative, the Commission has considered the normative

Auxiliary Energy Consumption for the Truing-up of FY 2014-15 and sharing of

efficiency gains and losses as shown in the Table below:

Table 51: Summary of Auxiliary Energy Consumption of Unit-8 as approved by

Commission for FY 2014-15

Particulars Unit Normative TPC-G

Petition

Normative approved in

this Order

Auxiliary Energy

Consumption % 8.50% 6.48% 8.50%


4.4.3.1 The actual SHR for Unit-8 in FY 2014-15 was 2275 kcal/kWh, which is lower than the

normative SHR of 2450 kcal/kWh specified in the MYT Regulations, 2011. Hence, for



Truing-up and sharing of gains/losses, the Commission has considered the normative

SHR as shown in the Table below:

Table 52: Summary of SHR of Unit-8 as approved by Commission for FY 2014-15

Particulars Unit MTR Order TPC-G Petition Normative Approved in this

Order

SHR kCal/kWh 2450.00 2274.91 2450.00

4.4.4 Fuel Cost


4.4.4.1 Fuel cost of coal and support oil in FY 2014-15 for Unit-8 works out to Rs. 175.56

Crore, as given in the Table below:

Table 53: Fuel Cost of Unit-8 for FY 2014-15 as submitted by TPC-G

Particulars FY 2014-15 (Actuals)

Consumption (MT)

Coal 325058

Oil 926

GCV (kCal/kg)

Coal 4975

Oil 10495

Prices (Rs./MT)

Coal 5240

Oil 52653

Total Cost (Rs. Crore) 175.56


4.4.4.2 The Commission has examined the details of month-wise receipt of fuel, its calorific

value and price. The variation in fuel price and calorific value during FY 2014-15 has

been considered as part of FAC and has already been passed through to consumers

monthly under the FAC mechanism.

4.4.4.3 The Commission also verified the fuel cost claim with the audited allocation statement

of accounts. Considering the above, for the purpose of Truing-up of fuel costs, the

Commission has taken the actual fuel prices and calorific value as given in the Table

below:



Table 54: Fuel Parameters as approved by Commission for Unit-8 for FY 2014-15

Particulars MTR Order TPC-G

Petition

Approved in this

Order

Calorific Value (kCal/kg)

Coal 4862 4975 4975

Oil 10500 10495 10495

Prices (Rs./MT)

Coal 5386 5240 5240

Oil 51707 52653 52653

4.4.4.4 As explained in para. 4.3.4.5 of this Order, the actual fuel cost for Unit-8 as per the

audited statement is Rs. 173.41 Crore, and the reconciled fuel cost, including foreign

exchange rate adjustment, as submitted by TPC-G is Rs. 175.56 Crore. Accordingly, the

Commission has considered Rs. 2.15 Crore (Rs. 175.56 Crore less Rs. 173.41 Crore) for

Unit-8 on account of exchange rate change and foreign exchange fluctuation on payment

for fuel.

4.4.4.5 Based on the SHR, fuel prices and fuel calorific value as discussed above, the total fuel

cost for Unit-8 FY 2014-15 is as summarised in the Table below:

Table 55: Fuel Cost as approved by Commission for Unit-8 for FY 2014-15

Particulars Actuals

(Rs. Crore)

Normative Fuel Cost

approved in this Order

(Rs. Crore)

Fuel cost 175.56 196.78

4.4.4.6 The Commission approves the normative Fuel Cost of Rs. 196.78 Crore for FY

2014-15 for Unit-8, and has considered the actual Fuel Cost of Rs. 175.56 Crore for

sharing of efficiency gains as per the MYT Regulations, 2011.



4.4.5.1 Actual O&M expenses for FY 2014-15 were Rs. 51.99 Crore, which is higher than Rs.

43.75 Crore approved in the MTR Order.



4.4.5.2 TPC-G has computed the Brand Equity based on the revenue of the previous year, in

accordance with the methodology approved by the Commission in its previous Orders.


4.4.5.3 The Commission has approved the O&M expenses for Unit-8 on the basis of the per

MW norms specified in the MYT Regulations, 2011 for the capacity of 250 MW.

4.4.5.4 Based on the details submitted by TPC-G of employee expenses, A&G expenses and

R&M expenses, the Commission has considered the actual O&M expenses for Truing-

up purpose.

4.4.5.5 In its Order dated in Case No. 105 of 2011, the Commission had noted that the Brand

Equity Agreement states that payment towards Brand Equity has to be computed on the

basis of Annual Net Income of the year immediately preceding the year in which the use

occurs, and had directed TPC-G to compute the Brand Equity expenses accordingly.

4.4.5.6 Considering the adjustments towards Brand Equity expenses, the Commission has

considered the O&M expenses for the Truing-up as shown in the Table below:

Table 56: Summary of O&M Expenses approved by Commission for Unit-8 for FY 2014-15

(Rs. Crore)


Petition

Approved in

this Order

Employee expenses

43.75

10.39 10.39

R&M expenses 35.23 35.23

A&G expenses 4.82 4.82

Less: Actual Brand Equity expenses 0.38 0.38

Add: Brand Equity expenses as per

approved methodology 1.93 1.93

Total O&M Cost 51.99 51.99

4.4.5.7 The Commission approves the actual O&M Expenses of Rs. 51.99 Crore for Unit-8

for FY 2014-15, and has considered it for sharing of efficiency gains/ losses.



4.4.6.1 The total capitalisation for Unit-8 in FY 2014-15, including HOSS expenses, is Rs.

46.89 Crore, compared with the approved capitalisation of Rs 37.55 Crore in the MTR



Order. The capitalisation on account of DPR schemes is Rs. 40.00 Crore. The balance is

on account of Non-DPR Schemes, constituting 17% of the DPR schemes.


4.4.6.2 The capitalisation for Non-DPR Schemes is 17% of that of the DPR schemes, which is

within 20%. Accordingly, the Commission has approved the capitalisation of Rs. 6.89

Crore towards Non-DPR Schemes.

4.4.6.3 For the DPR schemes, the Commission has examined the CBA reports provided by

TPC-G. All the DPR schemes proposed by TPC-G have already been approved in-

principle, except for the scheme of Facility for online data transfer to Maharashtra

Pollution Control Board (MPCB). The Commission has reviewed the justification and

CBA stated for this new scheme as per its 2005 Guidelines for In-Principle Clearance of

Proposed Investment Schemes, and has considered the impact of this new Capex scheme

for capitalisation. The Commission has allowed the capitalisation of Rs. 40.00 Crore for

DPR Schemes as submitted by the TPC-G. Accordingly, for the Truing-up of FY 2014-

15, the Commission approves the following capitalisation:

Table 57: Capitalisation of Unit-8 as approved by Commission for FY 2014-15 (Rs. Crore)


DPR schemes 31.29 40.00 40.00

Non-DPR schemes 6.26 6.89 6.89

Total 37.55 46.89 46.89

4.4.6.4 The Commission approves Capitalisation of Rs. 46.89 Crore for Unit-8 for FY

2014-15, as claimed by TPC-G.

4.4.7 Non-DPR Capitalisation for FY 2011-12 to FY 2013-14


4.4.7.1 The Commission, in the Order dated 8 September, 2010 in Case No. 96 of 2009 for

Truing-up for FY 2008-09, APR for FY 2009-10 and ARR for FY 2010-11, had

restricted the Non-DPR capitalisation to 20% of the DPR capitalization, and accordingly

disallowed a certain amount towards the Non-DPR schemes. TPC-G filed Appeal No. 18

of 2011 before the ATE. The ATE ruled that:



“…In view of the judgment in Appeal No.199 of 2010, TPC-G should submit

justification of non-DPR schemes to the Commission and the Commission should

consider the same for capitalisation subject to prudence check.”

4.4.7.2 In view of that Judgment, TPC-G in its MTR Petition had provided the details of Non-

DPR schemes for FY 2008-09 to FY 2010-11, along with the CBA Reports and

requested the Commission to allow the disallowed capitalisation of Rs. 53.14 Crore, Rs.

58.25 Crore and Rs. 39.58 Crore for Units 4 to 8 and Hydro Generating Stations

pertaining to each of these 3 years, respectively. The Commission in its MTR Order did

not consider certain capitalisation towards Non-DPR schemes from FY 2008-09 to FY

2011-12, and directed TPC-G to club them and submit a separate merged DPR for

prudence check. Similarly, for FY 2012-13 and FY 2013-14, the Commission restricted

the Non-DPR capitalisation to 20% and directed TPC-G to club these Non-DPR

schemes and submit a separate merged DPR.

4.4.7.3 The summary of merged DPRs submitted by TPC-G is as shown at Table 30 earlier in

this Order.


4.4.7.4 TPC-G has submitted the Non-DPR Capitalisation as merged DPRs through its letters

listed at para. 4.3.9.4 earlier in this Order.

4.4.7.5 The Commission has examined the submissions made by TPC-G for Non-DPR

capitalisation for Unit-8 and found them to be in order. Accordingly, the Commission

has now approved certain Non-DPR capitalisation for Unit-8 for FY 2011-12 to FY

2013-14. The summary of the Non-DPR capitalisation as approved by the Commission

is as shown in the Table below:

Table 58: Summary of Non-DPR Capitalisation now approved by Commission for Unit-8

(Rs. Crore)

Particulars FY

2011-12

FY

2012-13

FY

2013-14

DPR Capitalisation as approved in MTR Order 13.03 8.42 7.85

Non-DPR Capitalisation as approved in MTR Order 2.61 1.68 1.57

Total Capitalisation as approved in MTR Order 15.64 10.10 9.42

Merged DPR Schemes as submitted by TPC-G 1.44 2.80 2.53

Approved Non-DPR Capitalisation 1.44 2.80 2.53

4.4.7.6 As discussed at para. 4.3.9.8, the Commission has considered the impact of

capitalisation on account of merged DPRs submitted by TPC-G in the 3rd

Control



Period. The Commission has also considered the impact of yearly RoE, Interest on

Long-term Loan and Depreciation disallowed on account of subsequent approval of

these capital expenditures in past years as shown in the Table below:

Table 59: Non-DPR Capitalisation for Unit-8 as approved by Commission for FY 2011-12

to FY 2013-14 (Rs. Crore)

Particulars FY 2011-12 FY 2012-13 FY 2013-14 Total

Unit-8

Depreciation Computations

Opening GFA 0.00 1.44 4.24

Addition 1.44 2.80 2.53

Closing GFA 1.44 4.24 6.77

Depreciation Rate 5.22% 5.23% 5.26%

Depreciation 0.04 0.15 0.29 0.48

Interest Expenses Computations

Opening loan 0.00 0.97 2.78

Addition 1.01 1.96 1.77

Repayment 0.04 0.15 0.29

Closing loan 0.97 2.78 4.26

Interest rate 10.32% 10.73% 11.09%

Interest on Long-term Loan 0.05 0.20 0.39 0.64

RoE Computations

Opening equity 0.00 0.43 1.27

Addition 0.43 0.84 0.76

Closing equity 0.43 1.27 2.03

Rate of Return 15.50% 15.50% 15.50%

Return on Equity 0.00 0.07 0.20 0.26

Grand Total 0.09 0.42 0.88 1.38

4.4.7.7 The Commission approves the impact of merged DPR Capitalisation now allowed

for FY 2011-12 to FY 2013-14 on RoE, Interest Expenses and Depreciation as Rs.

1.38 Crore for Unit-8. The Commission has considered this recovery separately

along with that of other past Revenue Gaps.

4.4.8 Depreciation




4.4.8.1 The Depreciation for Unit-8, based on the rates specified under the MYT Regulations,

2011 is Rs. 57.69 Crore.


4.4.8.2 As discussed at para. 4.3.9.10, the Commission has considered the opening GFA for FY

2014-15 as the closing GFA for FY 2013-14 as approved in the MTR Order, plus the

merged DPR capitalisation till FY 2013-14 as approved earlier in this Order. The

Commission has considered the assets added during the year, subject to the actual

capitalisation approved for FY 2014-15.

4.4.8.3 Regulation 31.2 of the MYT Regulations, 2011 allows recovery of Depreciation on the

value of Fixed Assets, computed annually on the straight-line method at the specified

rates. The Commission determines the Depreciation on opening GFA for the full

operational period, and on additional capitalisation from the date of capitalisation, for

various classes of assets at the rates as per the Regulations.

4.4.8.4 The summary of Depreciation claimed by TPC-G and approved by the Commission for

FY 2014-15 is as under:

Table 60: Depreciation for Unit-8 as approved by Commission for FY 2014-15 (Rs. Crore)


Opening GFA 1090.66 1098.16 1097.42

Asset Addition during the year 37.548 46.89 46.89

Asset Retirement during the year 0.00 -0.43 -0.43

Closing GFA 1128.20 1144.63 1143.88

Depreciation 59.95 57.69 57.69

4.4.8.5 The Commission approves Depreciation of Rs. 57.69 Crore for Unit-8, as submitted

by TPC-G, for FY 2014-15.

4.4.9 Interest on Long-term Loan


4.4.9.1 Interest on Long-term Loan of Rs. 60.95 Crore has been computed in accordance with

the MYT Regulations, 2011 by considering interest rate of 11.08%.




4.4.9.2 As discussed in para. 4.3.9.8 of this Order, the Commission has considered the impact of

merged DPR capitalisation on the opening loan balance for FY 2014-15. The

Commission has taken 70% of the merged DPR capitalisation as funded through debt.

The opening loan balance for FY 2014-15 has been arrived at by adding the closing

balance of FY 2013-14, as approved in the MTR Order, and the debt portion of the

merged DPR capitalisation approved in this Order. As per Regulation 33.3, loan

repayment has been considered equal to the Depreciation allowed for FY 2014-15 in this

Order.

4.4.9.3 Regulation 33.5 specifies the rate of interest as the weighted average rate of interest

calculated on the basis of the actual loan portfolio at the beginning of the year. TPC-G

has submitted the weighted average rate of interest for FY 2014-15 to be 11.08%,

considering the outstanding loan balances at the beginning of the year. The Commission

has checked the rates from the loan document copies and taken the weighted average

interest rate as submitted by TPC-G for computation of the Interest on Long-term Loan.

4.4.9.4 The Commission also approves the Other Finance Charges of Rs. 0.02 Crore as

submitted by TPC-G based on the audited allocation statement of accounts.

4.4.9.5 The summary of the Interest on Long-term Loan as submitted by TPC-G and as

approved by the Commission after Truing-up is shown in the Table below:

Table 61: Interest on Long-term Loan as approved by Commission for FY 2014-15 (Rs.

Crore)


Petition

Approved in this

Order

Opening balance of the year 557.31 562.47 561.58

Loan addition during the year 26.28 32.82 32.82

Repayment during the year 59.95 57.69 57.69

Closing balance of the year 523.64 537.60 536.70

Interest rate 11.08% 11.08% 11.08%

Interest on Long-term Loan 59.89 60.95 60.86

Other Finance Charges

0.02 0.02

4.4.9.6 The Commission approves Interest on Long-term Loan for Unit-8 for FY 2014-15

as Rs. 60.86 Crore, as against Rs. 60.95 Crore claimed by TPC-G.





4.4.10.1 The RoE based on the opening balance of equity and reduction of equity on account of

de-capitalisation of certain assets, at 15.5%, works out to Rs. 51.02 Crore.


4.4.10.2 RoE has been taken at 15.5% of the equity, as per Regulation 32.2.1, on the opening

equity of the year. 30% of the merged DPR capitalization has been considered, as

discussed in para. 4.3.9.8, as funded through equity. The regulatory equity at the

beginning of FY 2014-15 has been arrived at by adding the regulatory equity at the end

of FY 2013-14 as approved in the MTR Order and the equity portion of the merged DPR

capitalisation. The Commission has considered addition to equity considering

capitalisation approved for FY 2014-15 in this Order and the debt: equity ratio of 70:30.

Reduction in equity has been considered at 30% of the value of retirement/de-

capitalisation of assets.



Table 62: Return on Equity for Unit-8 as approved by Commission for FY 2014-15 (Rs.

Crore)

Particulars MTR

Order

TPC-G

Petition

Approved

in this

Order

Opening equity of the year 327.19 329.18 329.22

Equity addition for asset addition during the year 11.26 14.07 14.07

Equity reduction for asset de-capitalised during the year 0.00 (0.13) (0.13)

Closing equity of the year 338.46 343.12 343.16

Rate of return 15.50% 15.50% 15.50%

Return on equity 50.71 51.02 51.03

4.4.10.4 The Commission approves Return on Equity for FY 2014-15 of Rs. 51.03 Crore for

Unit-8, as against Rs. 51.02 Crore claimed by TPC-G.





4.4.11.1 IoWC of Rs. 16.28 Crore has been computed based on the elements specified in the

MYT Regulations, 2011 and an interest rate of 14.75% (i.e., average SBAR for FY

2014-15).


4.4.11.2 Regulation 35.1(e) stipulates that the rate of interest be the SBAR as on the date of filing

of the Petition. Accordingly, the Commission has taken 14.75%, as approved in the

MTR Order, for working out the IoWC for FY 2014-15.

4.4.11.3 The Commission approves the Interest on Working Capital as Rs. 16.17 Crore in

FY 2014-15 for Unit-8, as against Rs. 16.28 Crore claimed by TPC-G.

4.4.12 Income Tax


4.4.12.1 Income Tax for Unit-8 for FY 2014-15 has been worked out as Rs. 25.03 Crore on the

basis of the MYT Regulations, 2011.


4.4.12.2 In line with the methodology set out in this Order for Income Tax computation for FY

2014-15 for Units 4 to 7 and Hydro Stations, the Commission has computed the Income

Tax for Unit-8 for FY 2014-15 as shown in the Table below:

Table 63: Income Tax for Unit-8 for FY 2014-15 as approved by Commission (Rs. Crore)


Revenue 477.00 477.00

Less: Incentive and efficiency gains 6.19 8.93

Total expenses 369.87 368.71


Add

Depreciation considered in expenses 57.69 57.69

Other disallowance while computing IT 20.80 20.80

Total tax disallowances 78.49 78.49

Less

Tax Depreciation 84.19 84.19




Other expenses allowed for computing IT 21.61 21.61

Deduction - U/s 80 IA 0.00

Total tax allowances 105.79 105.79

Total taxable Income 73.64 72.06

Corporate Tax rate 33.99% 33.99%

Tax Payable at normal rate 25.03 24.49

MAT computation


Add: Disallowances under Income Tax (U/s

14 A, provision for doubtful debt) 0.14 0.14

Less: Deduction under Income Tax (Exempt

Income, FBT, Wealth Tax, Withdrawal from

Income)

0.00 0

Book profit 101.08 102.24

MAT rate 20.96% 20.96%

Tax payable under MAT 21.19 21.43

Tax applicable 25.03 24.49

4.4.12.3 The Commission approves the Income Tax as Rs. 24.49 Crore for FY 2014-15 for

Unit-8, as against TPC-G’s claim of Rs. 25.03 Crore.



4.4.13.1 The Non-Tariff Income for Unit-8 for FY 2014-15 is Rs. 1.45 Crore, of which Rs. 0.29

Crore is towards Recurring Items and the balance is towards Non-Recurring Items.


4.4.13.2 Based on the audited allocation statement, the Commission approves the Non-

Tariff income of Rs. 1.45 Crore, as submitted by TPC-G.

4.4.14 Revenue from Sale of Power


4.4.14.1 TPC-G has earned Rs. 475.55 Crore from TPC-D and BEST from sale of power in FY

2014-15 as shown in the Table below:



Table 64: Revenue from GenerationofUnit-8 for FY 2014-15, as submitted by TPC-G


Energy MU 267.65 401.48 669.14

Fixed charges Rs. Crore 112.47 168.7 281.17

Incentive Rs. Crore 0 0 0

Energy Charges Rs. Crore 77.33 115.99 193.31

Cash discount Rs. Crore 0.33 0.74 1.06

Considered for ARR Value Rs. Crore 190.12 285.43 475.55


4.4.14.2 Based on the details furnished by TPC-G, the Commission has considered the total

revenue from sale of power in FY 2014-15 from Unit-8 to BEST and TPC-D as Rs.

190.12 Crore and Rs. 285.43 Crore, respectively, for the purpose of Truing-up.

4.4.15 Reduction of Fixed Charges on account of lower Availability of Unit-8


4.4.15.1 Availability of Unit-8 was 36.61%, which is lower than the target Availability of 85%

for recovery of AFC. Unit-8 tripped on 9 January, 2014 and was under Force Majeure

outage for the remaining period of FY 2013-14 and part of FY 2014-15. TPC-G had

provided the details of the occurrence and the relevant reports as part of its MTR

Petition in Case 6 of 2015.

4.4.15.2 The MTR Order made certain observations on the data and reports submitted on the

Unit-8 outage. The Commission had directed TPC-G to submit the details and

supporting material required to determine whether the circumstances leading to the

occurrence were uncontrollable or otherwise, in the next Tariff filing. Accordingly, the

present Petition includes a detailed response.

4.4.15.3 Considering the outage as a Force Majeure event, TPC-G has deducted Employee

expenses, Interest on Long-term Loan and Depreciation from the AFC (the expenses of

Unit-8 which had anyway to be incurred independent of the operation / outage of the

Unit) to arrive at the AFC for pro rata reduction. On this basis, reduction in fixed cost

for Unit-8 is proposed to the extent of Rs. 82.55 Crore

4.4.15.4 Rs. 173.11 Crore was spent towards restoration of the Unit-8 till March, 2015 and TPC-

G had raised a claim for the total amount of Rs. 173.11 Crore to the insurance company

for the expenses incurred till that date. As on 31March, 2015, TPC-G has received a

total refund of Rs. 100.35 Crore from the insurance company. Hence, as on that date, the



capital expenditure of Rs. 63.87 Crore has been capitalized. As some remaining work

was in progress, the insurance claim could not be settled and is expected in FY 2016-17.

Accordingly, TPC-G has not considered the impact on capitalisation and the retirement

of assets for Truing-up of FY 2014-15. TPC-G will approach the Commission during the

Truing-up of FY 2015-16 with the final impact of the above.


4.4.15.5 The Commission had discussed this matter in the MTR Order and had directed TPC-G

to submit all the details in the next Tariff filing for determining whether the

circumstances leading to the occurrence were uncontrollable or otherwise. TPC-G has

now provided point-wise replies to the Commission’s observations and directives. These

are discussed below:

BHEL Circular

4.4.15.6 The MTR Order had stated as follows:

“BHEL had earlier experienced crack formation in LP blades of similar design

and had shared this information with its customers vide its Circular of October,

2011. BHEL had also advised certain predictive checks and tests to detect such

failures in advance. TPC-G has not stated any evidence or even a statement

regarding compliance of the important advice issued by BHEL.”

4.4.15.7 TPC-G stated that BHEL’s Technical Circular dated 8 October, 2011 advised as follows:

“To avoid blade failures, it is recommended to conduct the following Non

Destructive Tests at an Interval of 20000 to 25000 hours:

1. Crack detection in free standing blades of LP last stage advanced class blading

by MPI (In Disassembled condition).

2. Measurement of Natural Frequency of all free standing blades of last stages

(LP 3R and LP 3L). The measurement of Natural Frequency of these blades is

to be done by using Technological Pieces after removing existing clamping

pieces. Therefore new clamping pieces are to be fitted in position.”

4.4.15.8 TPC-G stated that, learning from the experience of cracks in LP turbine blades of Unit-8

and as recommended by BHEL subsequently, it carried out the required tests well before

the interval of 20000 to 25000 operating hours stipulated by BHEL. TPC-G has also

provided the details of inspections carried out between August, 2011 and January, 2014,

as discussed below:



a. At an interval of around 5200 operating hours since August, 2011: In March, 2012,

during 3 days outage availed (from 18 to 23 March, 2012), i.e. 8 months after the

initial inspection, in situ MPI was carried out and no crack was found.

b. At an interval of around 5700 operating hours since March, 2012: During outage in

December, 2012 –January, 2013, the LP rotor was removed, de-bladed and MPI and

Natural Frequency Testing (NFT) was done under the supervision of BHEL. Nothing

abnormal was found in the LP blades.

4.4.15.9 TPC-G stated that the next detailed inspection as per the BHEL Circular was scheduled

in January, 2015 (approximately 16000 operating hours after the January, 2013

inspection, well before the recommended 20000 EOH). However, as a proactive step,

TPC-G had planned inspection of LP Turbine blades in February, 2014. However, the

LP blade failure occurred on 9 January, 2014.

4.4.15.10 TPC-G stated that the inspections / overhauls of Unit-8 Turbine were carried out under

the supervision of BHEL. Copies of its letter to BHEL for supervision of blade

inspection and of the purchase orders placed on BHEL for the planned inspection have

been submitted.

4.4.15.11 In view of the above, TPC-G contends that it is evident that, whereas the BHEL

Technical Circular advised that the LP turbine blades be inspected after every 20000 to

25000 hours, i.e., around every 2.5 years, TPC-G had inspected the blades every 8-9

months (after around 6000 hrs). TPC-G submitted that the LP blades failed in spite of

adherence to all the recommendations of BHEL. Hence, the failure of LP blades due to

cracks which led to the incident on 9 January, 2014 was beyond the control of TPC-G.

Replacement of Blades

4.4.15.12 The Commission in the MTR Order had observed as follows:

“The Commission notes that TPC-G has submitted that it has meticulously

followed maintenance practices, which has been supported by the BHEL report.

However, the BHEL report has not explicitly commented on maintenance

practices followed by TPC-G…

BHEL had stipulated that certain checks and tests be carried out on the blades at

specified intervals. TPC-G should clarify when these check / tests were due,

whether these were conducted, what were their results, and whether follow-up

action was taken under guidance of the supplier. In 2011, some blades of the LP

turbine were replaced. The Commission notes that replacement of blades in new

turbines is not a common industrial practice. TPC-G should clarify what analysis



was carried out after such failure, and whether the lessons drawn were

implemented.”

4.4.15.13 TPC-G has submitted the Steam Turbine Manual provided by BHEL. TPC-G has stated

that, as per the section on Instructions for Overhaul, the maintenance schedule of LP

turbine after certain Equivalent Operating Hours (EOH) is as below:

a. Minor Overhaul (Inspection and Servicing) to be done after 17000 EOH.

b. Medium Overhaul (Inspection, Servicing and Repair) to be done based on long-term

observations, operating experience and manufacturer’s recommendations.

c. Major Overhaul (Inspection, Servicing and Repair) to be done after 50000 EOH.

4.4.15.14 According to TPC-G, it is evident from the job scope of the Steam Turbine Manual that

overhaul of the Machine involving detailed inspection of LP turbine free standing blades

by complete removal and detailed checks for cracks by MPI and NFT was not due as

Unit-8 had not completed 50000 EOH at the time of the incident.

4.4.15.15 TPC-G has stated that the recommendation, subsequently issued by BHEL vide

Technical Circular dated 8 October, 2011, superseded the above inspection intervals and

that it has adhered to them.

Replacement of Blades

4.4.15.16 The Commission, in the MTR Order, had observed as follows:

“As regards the probable cause of cracks in the failed Unit, the BHEL Report has

pointed out that Unit-8 was often subjected to cyclic load variations between 180

MW and 250 MW on a daily basis, and has concluded that High Cycle fatigue can

be considered as one of the probable causes of crack initiation. TPC-G has

commented on the observations of BHEL. Further, while BHEL considers

“fatigue” as one of the prime reasons for such failure, and has also indicated that

the fatigue occurred because the machine was subjected to cyclic load variation

daily, TPCG does not appear to have consulted BHEL regarding subjecting the

machine to such high cyclic loading variations.

As per TPC-G’s submission, the 250 MW ThermalUnit-8 was operating on 182

MW load. BHEL has mentioned that the loading pattern of the Unit showed cyclic

variations between 180 MW to 250 MW on daily basis, which could be conducive

to crack formation in the LP Turbine blades. TPC-G needs to clarify whether the

Unit was designed for such cyclic loading (which may be beyond the standard

industry practice), and whether information regarding high cyclic variations was

conveyed to the manufacturer/ OEM and its observations and recommendations

sought.”



4.4.15.17 TPC-G has stated that it had appointed Tata Consulting Engineers (TCE) to define the

specifications to be given to BHEL for design of the Unit. Section 14.2 included in the

Design Specifications on the Steam Turbine & Accessories and Regenerative Cycle

System clearly mentioned that the turbine should be designed for cyclic loading due to

daily load fluctuations. Design specifications on Duty forUnit-8 mentions as follows:

“1.1.4 Duty: Continuous base load operation of minimum 8000 hrs with 50 starts

per annum. Unit shall also be capable of cyclic loading due to daily load

fluctuations.”

4.4.15.18 According to TPC-G, it is evident that the cyclic loading pattern which was expected to

be observed on Unit-8 in line with the MOD was indicated to BHEL at the design stage

and the Unit was designed accordingly. TPC-G stated further that BHEL itself has

specified the guaranteed performance of the Unit at 100%, 80% and 60% of full load in

the form of Heat Balance Diagrams (HBD).

4.4.15.19 TPC-G has also submitted that, in accordance with the technical minimum study

undertaken by CPRI (as directed by the Commission), around 30% load variation is

allowed on Unit-8. The BHEL Technical Circular does not mention cyclic loading as a

probable cause of blade failure observed at other sites, nor did it recommend restricting

the minimum load.

4.4.15.20 Based on the above, TPC-G has stated that BHEL was informed about cyclic loading at

the design stage of the Unit-8 Steam turbine specifications, and that Unit-8 is designed

for daily cyclic loading pattern. Therefore, there was no need for any separate

communication / permission from BHEL for the daily cyclic loading. The cyclic loading

of the Unit is as per the MOD, which is not at all abnormal and is as per the regular

industry practice.

Operating Conditions

4.4.15.21 The MTR Order stated as follows:

“Among other causes, BHEL has mentioned “locally aggressive environment that

produces corrosion pits or troughs, localized corrosion, or local dissolution”, as

a probable cause of crack initiation. However, TPC-G has neither contradicted

nor provided any clarification regarding this.

One of the key observations of BHEL in its report is the following:

“For crack initiation to occur fatigue origins should be present. Some of

the possible fatigue origins are given: Locally aggressive environment

that produces corrosion pits or troughs, localized corrosion, or local

dissolution.”



As regards the above said BHEL’s observation regarding the probable cause for

crack initiation, TPC-G has not provided any clarification. Hence, TPC-G should

elaborate on the above and provide evidence regarding the existence of the above

phenomena in the instant case.””

4.4.15.22 TPC-G has stated that chloride corrosion could be one reason for fatigue origin leading

to crack initiation, which can happen due to higher chloride levels in the steam cycle.

The chloride carry-over can happen only in case of condenser tube leak in the Unit.

However, Unit-8 has not experienced any condenser tube leak in the last two years, as

can be seen from the chemical analysis of Unit-8 which clearly shows that the chloride

content level is much below permissible limits. Hence, chloride corrosion is ruled out.

4.4.15.23 TPC-G has further stated that the LP Turbine blades were changed on account of the

crack, and not even a single blade was recommended to be changed by BHEL on

account of corrosion. In its RCA report also, BHEL has indicated corrosion as one of

such causes but has not clearly attributed the failure of the blade to this in case of Unit-8.

The Water Chemistry report was also shared with BHEL for its recommendations, but,

BHEL had not commented on it. TPC-G contended that it is evident that it has

maintained the operating conditions of the Unit-8 as per the standard guidelines

specified by the OEM.

Corrective Actions

4.4.15.24 The Commission in the MTR Order had observed as follows:

“Submissions based on such Technical Reports are expected to include the

Utility’s detailed comments and views on their observations, findings and

conclusions. In the present case, in the absence of such analysis by TPC-G, many

issues remain unanswered and unresolved.

In the Internal Investigation Report, the column relating to “corrective steps” has

been left blank. In the above background, the Commission notes that, since an

exception has been pleaded for, it was TPC-G’s responsibility to come out with

all details in its support.”

4.4.15.25 TPC-G has clarified that the Internal Incident Investigation Report was documented at

an early stage when the detailed analysis of blade samples was not available, and hence

the corrective action section was kept blank. However, based on the observations /

findings, the following corrective actions have been taken/proposed:

a. Revision by BHEL of Technical Minimum Load to 200 MW by BHEL from the

earlier 180 MW. Unit-8 is being operated in line with this recommendation since

November, 2014.



b. Blade Vibration Monitoring System (BVMS) has been installed at Unit-8.

c. Crack detection by Phased Array Ultrasonic Testing (PAUT), which is an

advanced non-destructive testing method with better analysis capability.

4.4.15.26 As regards the insurance claim, the Commission notes that, since some work is still in

progress, the final claim settlement is not possible at this stage. Accordingly, the

Commission has not considered the amount pertaining to this while computing the gains

and losses for FY 2014-15. It would take it up issue in the subsequent MTR exercise, at

which time TPC-G should submit the details of expenditure incurred on restoration of

Unit-8, insurance claimed, insurance received and other relevant information.

4.4.15.27 The Commission notes that TPC-G has provided detailed responses to the directives in

the MTR Order along with supporting material. After examining these, the Commission

is of the view that the forced outage of Unit-8 on 9 January, 2014 was a Force Majeure

event beyond the control of TPC-G. Accordingly, the Commission allows the pro rata

reduction in the AFC for Unit-8 based on the methodology in the MTR Order.

Table 65: Summary of Reduction of AFC for Unit-8 for FY 2014-15 as approved by

Commission


Petition

Approved in

this Order

Employee expenses Rs. Crore 10.39 10.39

Interest on Long-term Loan Rs. Crore 60.95 60.86


Total Rs. Crore 129.04 128.94

AFC Rs. Crore 274.05 273.31

AFC without employee cost, interest and


Normative Availability % 85% 85%

Actual Availability % 37.00% 36.61%

Revised fixed cost Rs. Crore 62.45 62.18

Reduction in fixed cost Rs. Crore 82.55 82.19

4.4.15.28 The Commission approves the reduction in AFC for Unit-8 for Availability lower

than the Target Availability for FY 2014-15 to the extent of Rs. 82.19 Crore.



4.4.16 Sharing of Gains / Losses for FY 2014-15

4.4.16.1 As discussed earlier for Units 4 to 7 and Hydro Stations, the Commission has considered

the sharing of efficiency gain or losses in case of fuel cost, revenue due to variation in

Auxiliary Energy Consumption and O&M expenses for Unit-8.

4.4.17 Gains / Losses on account of fuel cost


4.4.17.1 TPC-G has considered normative SHR, normative secondary fuel oil consumption, fuel

prices and calorific value. Efficiency gains/ losses of Rs. 7.07 Crore on account of

variation in the SHR have been passed on to the Distribution Licensees.


4.4.17.2 For computing the efficiency gains/ losses, the Commission has considered the SHR as

approved in the MTR Order. Accordingly, it has considered the total efficiency gain on

account of fuel cost, one third of which has been passed on to the Distribution

Licensees, as under:

Table 66: Gains/Losses in Fuel Cost as approved by Commission for FY 2014-15

Particulars Units Unit-8

Fuel cost Rs Crore 175.56

Cost of generation (Normative) Rs/kWh 2.75

Gross generation MU 715.47

Fuel cost applying normative SHR Rs Crore 196.78

Net gains/ (loss) Rs Crore 21.22

Passed on to the Distribution Licensees Rs Crore 7.07

4.4.17.3 The Commission approves Efficiency Gain of Rs. 7.07 Crore to be passed on to

Distribution Licensees on account of variation in Fuel Cost for Unit-8 for FY 2014-

15.

4.4.18 Efficiency Gains / Losses on account of Auxiliary Energy Consumption


4.4.18.1 There are variations in the actual Auxiliary Energy Consumption of the Unit vis-à-vis

the approved parameters, and TPC-G has computed the total gain as Rs. 1.86 Crore to be

passed on to the Distribution Licensees.




4.4.18.2 The Commission has computed the variation in revenue on account of the variation in

Auxiliary Energy Consumption, considering the Tariff as approved in the MYT Order,

for FY 2014-15 as under:

Table 67: Efficiency Gains/ Losses due to variation in Auxiliary Energy Consumption of

Unit-8 in FY 2014-15, as approved by Commission

Particulars Units TPC-G

Petition

Approved in this

Order

Gross generation MU 715.47 715.47

Actual Auxiliary Energy Consumption % 6.48% 6.48%

Norm Auxiliary Energy Consumption % 8.50% 8.50%

Difference in net generation MU 14.48 14.48

Rate Rs/kWh 3.85 3.85

Auxiliary Energy Consumption gain /

(loss) Rs Crore 5.58 5.58

Passed on to Distribution Licensees Rs Crore 1.86 1.86


Distribution Licensees on account of variation in Auxiliary Energy Consumption of

Unit-8 in FY 2014-15.

4.4.19 Efficiency Gains / Losses on account of O&M Expenses


4.4.19.1 TPC-G has computed the efficiency loss for FY 2014-15 on account of O&M expenses

as Rs.2.75 Crore to be shared with the Distribution Licensees.


4.4.19.2 The MYT Order had approved the normative O&M expenses for Unit-8 by considering

the per MW norms in the MYT Regulations, 2011. TPC-G has not considered any

uncontrollable expense for sharing of gains and losses. It has stated that Unit-8 was shut

down up to November, 2014 on account of a major fire in January, 2014. Hence,

additional activities such as site weld joints of economizer were radio graphed and

repaired, boiler was inspected, burner overhaul was carried out and RAPH elements

were cleaned considering the outage availability, which increased the expenditure by

around Rs. 9 Crore.



4.4.19.3 The normative O&M expenses are derived as per the MYT Regulations, 2011. Hence,

the normative O&M expenses are being approved on a composite basis, without

segregation of costs into employee, A&G and R&M expenses, in line with earlier

Orders. The Commission is of the view that employee, A&G and R&M expenses are a

part and parcel of the O&M expenses as a whole, which is derived on the basis of norms

from which deviation is not justified considering that TPC-G has not shown that it has

suffered any loss because of those expenses claimed to be uncontrollable.

4.4.19.4 Considering the difference between the normative and the approved actual O&M

expenses, the efficiency gains/ losses due to variation in O&M expenses has been

computed, and there is summarized in the Table below:

Table 68: Efficiency Gains/ Losses due to variation in O&M Expenses for Unit-8 for FY

2014-15(Rs. Crore)

Particulars TPC-G Petition As Approved in this

Order

Approved O&M expenses 43.75 43.75

Actual O&M expenses 51.99 51.99

Less: Uncontrollable expenses as claimed by

TPC-G 0.00 0.00

Net actual O&M expenses 51.99 51.99

O&M expenses gain /(loss) (8.24) (8.24)

Passed on to Distribution Licensees (2.75) (2.75)

Net entitlement of O&M Expense 46.50 46.50

4.4.19.5 The Commission approves an Efficiency Loss of Rs. 2.75 Crore to be shared with

Distribution Licensees on account of variation in O&M Expenses of Unit-8 in FY

2014-15.

4.4.20 Net Entitlement, and resultant Revenue Gap/ Surplus for Unit-8

4.4.20.1 Based on the Truing-up of various elements of expenses and revenue and TPC-G’s share

of efficiency gains/losses, the Commission has determined the total Revenue

Gap/Surplus as against that estimated by TPC-G for Unit-8 for FY 2014-15. The

summary of the net ARR and sharing of efficiency gains/losses as approved by the

Commission for FY 2014-15 is as shown in the Table below:



Table 69: Truing-up for FY 2014-15 for Unit 8, including sharing of Efficiency Gains/ (Losses) (Rs. Crore)

Particulars TPC-G

Petition

Approved

after

Truing-up

Entitlement

as per

Regulations /

Order

Efficiency

Gains

/(Losses)

Efficiency Gains

/(Losses) shared

with Distribution

Licensees

Net

Entitlement

after sharing of

gains/(losses)

Fuel Related Expenses (Based on

Normative SHR) 189.71 175.56 196.78 21.22 7.07 189.71

Aux. Benefit 3.72 5.58 5.58 1.86 3.72

Operation & Maintenance Expenses 46.50 51.99 43.75 (8.24) (2.75) 46.50

Depreciation Expenses 57.69 57.69 57.69

Interest on Long-term Loan 60.95 60.86 60.86


Other expenses 0.02 0.02 0.02

Income Tax 25.03 24.49 24.49

Reduction in AFC on account of lower

Availability (82.55) (82.19) (82.19)

Total Revenue Expenditure 317.35 310.18 316.97

Add: Return on equity capital 51.02 51.03 51.03

Less: Non-Tariff Income 1.45 1.45 1.45

Aggregate Revenue Requirement 368.37 359.76 366.55

Revenue

Revenue from sale of electricity 475.55 475.55 475.55

Gap / (Surplus) (108.62) (115.79) (108.99)

Expenditure towards shared capacity of

Units 4 to 7 12.50 12.50 12.50

Total Revenue Gap/(Surplus) (96.12) (96.49)



4.4.20.2 The Commission approves a Revenue Surplus of Rs. 96.49 Crore for Unit-8 for FY

2014-15, as against Rs. 96.12 Crore stated by TPC-G.



5. PROVISIONAL TRUE-UP OF ARR FOR FY 2015-16

5.1 Background

TPC-G has sought Provisional Truing-up of ARR for FY 2015-16. The detailed analysis

undertaken by the Commission is set out below.


The MTR Order had approved the revised performance parameters for TPC-G for FY

2015-16. TPC-G has submitted the actual performance parameters for the first half (H1)

of FY 2015-16 and estimated them for the remaining 6 months (H2). Subsequently,

TPC-G furnished the actual performance parameters for the whole year. TPC-G’s

submissions and the Commission’s analysis and rulings are detailed below.

5.3 Performance Parameters of TPC-G’s Generating Station/ Units

5.3.1 Availability


5.3.1.1 Based on the actual performance for H1 and estimated performance for H2 of FY 2015-

16, the Availability of all the Thermal Generating Units and Hydro Generating Stations

is estimated to be more than the normative Availability of 85%, as shown in the Table

below:

Table 70: Availability of Generating Units as submitted by TPC-G for FY 2015-16

Unit 2015-16 H1 2015-16 H2 FY 2015-16

Unit-5 95.72% 92.32% 94.02%

Unit-6 100.00% 80.53% 90.26%

Unit-7 86.35% 99.32% 92.84%

Unit-8 98.95% 91.43% 95.19%

Hydro

Khopoli 99.82% 99.59% 99.58%

Bhira 81.63% 99.40% 91.24%

Bhivpuri 100.00% 92.50% 96.00%


5.3.1.2 The Commission had asked TPC-G for details of actual performance parameters for

entire FY 2015-16 since the year was now over. TPC-G provided the details of actual



un-audited performance parameters for FY 2015-16, and thereafter revised figures and

MSLDC certificate for Availability and PLF of Thermal Generating Stations vide letter

dated 23 May, 2016.

5.3.1.3 The actual Availability as per the MSLDC certificate submitted by TPC-G for FY 2015-

16 is as shown in the Table below:

Table 71: Availability of Generating Units as submitted by TPC-G (revised submission) for

FY 2015-16

Unit FY 2015-16

Unit-5 95.25%

Unit-6 92.99%

Unit-7 93.69%

Unit-8 94.72%

5.3.1.4 The MTR Order had approved the Availability for the Thermal Generating Units and

Hydro Generating Stations for FY 2015-16 as projected by TPC-G as it was in line with

the Availability approved in the previous MYT Order.

5.3.1.5 For the Provisional Truing-up for FY 2015-16, the Commission has considered the

Availability for Thermal Generating Stations as per the MSLDC certificate and

Availability for Hydro Generating Stations as per the revised submission of TPC-G, as


Table 72: Availability as approved by the Commission for FY 2015-16

Unit MTR Order Approved in this Order

Unit-5 97.00% 95.25%

Unit-6 99.00% 92.99%

Unit-7 97.00% 93.69%

Unit-8 99.00% 94.72%

Hydro

Khopoli 98.44% 99.58%

Bhira 99.98% 91.24%

Bhivpuri 98.99% 96.00%





5.3.2.1 Considering the actual performance in H1 and estimated performance for H2 of FY

2015-16, TPC-G has achieved a total gross generation of 5728.88 MU. The Unit-wise

performance is detailed below.

Unit-4 is under stand-by and has not been in service for the past three years due to its

high cost of power. Accordingly, no generation from Unit-4 has been considered by

TPC-G.

Unit-5 generation has been computed based on its projected Availability in H2 of FY

2015-16 and its position in the MoD.

Unit-6 has a high cost of generation and is higher in the MoD. Further, Unit-6 is under

economic shutdown at the request of its beneficiaries, TPC-D and BEST. Hence, TPC-G

has projected the gross generation based only on actual generation in H1 and assuming

no likelihood of any planned generation in H2. However, the Unit may be required to

run on directions of MSLDC in case there is a system constraint.

Unit-7estimated generation is lower than that approved in the MTR Order. This is

mainly on account of lower gas availability and forced shutdown during July – August,

2015 due to STG Exciter failure.

Unit-8 estimated generation is less than that approved in the MTR Order. The reason for

lower generation from Unit-8 in H2 FY 2015-16 is the planned outage for blade

inspection. However, the overall generation is in the range of the gross generation

approved in the MTR Order.

Hydro Stations

5.3.2.2 The Hydro Generation during FY 2015-16 is expected to be lower than the MTR figures

because of significantly low rainfall in the catchment areas of the Hydro Generating

Stations and allocation of 30 MCM water from Mulshi dam for drought-affected areas as

per the Order of the MWRRA. The rainfall recorded at the Hydro Generating Station has

been lower by 30% as compared to the average rainfall over the last 10 years.

5.3.2.3 Based on the above, the estimation for H2 and actual performance inH1 is as follows:



Table 73: Gross Generation and PLF as submitted by TPC-G for FY 2015-16

Unit

Gross Generation PLF

2015-16 H1 2015-16 H2 FY 2015-16 2015-16 H1 2015-16 H2 FY 2015-16

MU MU MU % % %

Unit-5 1869.15 1627.16 3496.31 85.12% 74.00% 79.61%

Unit-6 42.13 0.00 42.13 0.96% 0.00% 0.96%

Unit-7 496.83 581.77 1078.61 62.85% 73.59% 68.22%

Unit-8 1032.17 927.34 1959.51 94.00% 84.46% 89.23%

Hydro

Khopoli 132.17 109.72 241.93

Bhira 348.97 292.85 641.82

Bhivpuri 118.84 109.25 228.09


5.3.2.4 On 20 April, 2016, the Commission had sought details of actual performance parameters

for the entire FY 2015-16, since the year was over. TPC-G has provided the actual un-

audited performance details for FY 2015-16. The actual gross generation and PLF

submitted by TPC-G for FY 2015-16 is as shown in the Table below:

Table 74: Gross Generation and PLF as submitted by TPC-G in revised submission for FY

2015-16

Unit Gross Generation (MUs) PLF (%)

Unit-5 3503.45 79.77%

Unit-6 42.13 0.96%

Unit-7 1179.73 74.61%

Unit-8 1883.34 85.76%

5.3.2.5 Being on stand-by, Unit-4 has not been operated in the last three years. Accordingly, the

Commission has not considered any generation from Unit-4 in FY 2015-16.

5.3.2.6 The Commission recognizes that rainfall in FY 2015-16 was low and TPC-G had to

allocate 30 MCM water from Mulshi dam for drought-affected areas considering the

Order of the MWRRA. This has led to lower generation than Design Energy.

5.3.2.7 The Commission has considered the actual gross generation and PLF for FY 2015-16 as

submitted by TPC-G in reply to the data gaps raised on 20 April, 2016. The summary of

Gross Generation and PLF considered for FY 2015-16 is as shown in the Table below:



Table 75: Gross Generation and PLF as approved by Commission for FY 2015-16

Unit

Gross Generation PLF

MTR Order Approved in this

Order MTR Order

Approved in this

Order

MU MU % %

Unit-5 3294.00 3503.45 75.20% 79.99%

Unit-6 0.00 42.13 0.00% 0.96%

Unit-7 1454.00 1179.73 92.20% 74.61%

Unit-8 1958.00 1883.34 89.40% 85.76%

Hydro

Khopoli 267.00 241.93

Bhira 883.00 641.82

Bhivpuri 300.00 228.09



5.3.3.1 The annual Auxiliary Energy Consumption for Unit-5 and Units 7 and 8 is projected to

be lower than approved in the MTR Order. Also, Unit-6 remains under stand-by mode

most of the year and operates only intermittently, which results in higher Auxiliary

Energy Consumption.

5.3.3.2 The CPRI study on GT Losses and Head Works Losses found the GT Losses to be

1.13% instead of the normative 0.50%. The Commission may consider a higher

Auxiliary Energy Consumption for Hydro Generating Station than approved in the MTR

Order. Auxiliary Energy Consumption for FY 2015-16 is as follows:

Table 76: Auxiliary Energy Consumption as submitted by TPC-G for FY 2015-16

Unit 2015-16 H1 2015-16 H2 FY 2015-16

Unit-5 5.74% 6.01% 5.86%

Unit-6* 16.23 12.31 28.54

Unit-7 2.70% 2.85% 2.78%

Unit-8 6.13% 6.20% 6.16%

Hydro

Khopoli 4.21% 2.50% 3.44%

Bhira 3.02% 2.64% 2.85%

Bhivpuri 2.28% 3.06% 2.65%

*Note: Unit-6Auxiliary Energy Consumption is shown in MU




5.3.3.3 The Commission had sought details of actual performance parameters for the entire FY

2015-16, since the year was over. TPC-G provided the actual un-audited performance

parameters for FY 2015-16. The actual Auxiliary Energy Consumption of Thermal

Generating Stations as submitted by TPC-G for FY 2015-16 is as shown in the Table

below:

Table 77: Auxiliary Energy Consumption as submitted by TPC-G in its revised submission

for FY 2015-16

Unit Auxiliary Energy Consumption

Unit-5 5.87%

Unit-6 27.16

Unit-7 2.63%

Unit-8 6.20%

5.3.3.4 The Auxiliary Energy Consumption of Units 5, 7 and 8 is within the limits approved in

the MTR Order. Accordingly, the Commission approves the actual Auxiliary Energy

Consumption for these Units as submitted by TPC-G for Provisional Truing-up. The

Commission will compute the sharing of efficiency gains/losses based on normative

parameters at the time of Truing-up.

5.3.3.5 As regards the Auxiliary Energy Consumption of Unit-6, its gross generation when

operating under the PPAs and when operating under MSLDC directions was 13.8 MU

and 28.33 MU respectively. As discussed at para. 4.3.2.29, the Commission has

approved the normative Auxiliary Energy Consumption of Unit-6 (when not operating

under MSLDC directions) as 3.50% for Provisional Truing-up.

5.3.3.6 As regards the Auxiliary Energy Consumption of Unit-6 under MSLDC directions, as

discussed at para. 4.3.2.30, considering the exceptional nature of the operation of Unit-6

on intermittent load, the Commission approves the actual Auxiliary Consumption of

1.85 MU for FY 2015-16.

5.3.3.7 TPC-G has sought approval of Auxiliary Energy Consumption for Hydro Generating

Stations higher than approved in the MTR Order. The MTR Order considered the

normative Auxiliary Energy Consumption of Hydro Generating Stations as 1.78% for

FY 2015-16. As discussed in para.4.3.2.36 of this Order, the Commission has now

considered the Headworks losses of 0.18%. Accordingly, the Commission approves the

Auxiliary Energy Consumption for Hydro Generating Stations as 1.96% for FY 2015-

16.



5.3.3.8 The summary of the Auxiliary Energy Consumption as approved by the Commission for

FY 2015-16 is as shown in the Table below:

Table 78: Auxiliary Energy Consumption as approved by Commission for FY 2015-16

Unit MTR Order Approved in this Order

Unit-5 6.00% 5.87%

Unit-6-Regulated 3.50% 3.50%

Unit-7 3.00% 2.63%

Unit-8 8.50% 6.20%

Hydro

Khopoli 1.78% 1.96%

Bhira 1.78% 1.96%

Bhivpuri 1.78% 1.96%



5.3.4.1 Unit-6 remains under stand-by mode most of the year and operates only intermittently

which results in higher SHR. The SHR for Unit-7 is also higher than normative because

of lower gas availability. The SHR for FY 2015-16 is as shown in the Table below:

Table 79: SHR for FY 2015-16 as submitted by TPC-G

Unit 2015-16 H1 2015-16 H2 FY 2015-16

Unit-5 2505 2549 2526

Unit-6-Regulated 3054 0.00 2944

Unit-7 2320 2083 2192

Unit-8 2281 2299 2290



2015-16 after the year was over. TPC-G provided the actual un-audited performance

parameters for FY 2015-16. The actual SHR as submitted by TPC-G is as shown in the

Table below:

Table 80: SHR as submitted by TPC-G in its revised submission for FY 2015-16

Unit SHR (Kcal/kWh)

Unit-5 2520

Unit-6-Regulated 3054



Unit SHR (Kcal/kWh)

Unit-7 2136

Unit-8 2300

5.3.4.3 The SHR for Units 5, 7 and 8 are within limits approved in the MTR Order.

Accordingly, the Commission approves the SHR these Units as submitted by TPC-G for

Provisional Truing-up. The Commission will compute the sharing of efficiency

gains/losses based on normative parameters at the time of Truing-up.

5.3.4.4 The Commission has considered the revised normative SHR of 2594 kCal/kWh of Unit-

6 (when not operating under MSLDC directions) based on the actual fuel mix for FY

2015-16, as per the methodology of the MTR Order.

Table 81: Revised Normative SHR for Unit-6 for FY 2015-16

Particulars Normative SHR for FY 2015-16 (Kcal/kWh)

Full gas firing 2661

Full oil firing 2416

Normative SHR as per MYT

Regulations @ 50:50 Mix 2539

Normative SHR Approved in

MTR (Provisional Fuel Mix)

Normative SHR as

per Actual Fuel Mix

Actual gas % 50% 72.80%

Actual oil % 50% 27.20%

Revised Normative SHR 2539 2594

5.3.4.5 The summary of SHR as approved by the Commission for FY 2015-16 is as shown in

the Table below:

Table 82: SHR as approved by the Commission for FY 2015-16

Unit MTR Order (Kcal/kWh) Approved in this Order (Kcal/kWh)

Unit-5 2581 2520

Unit-6-Regulated 2539 2594

Unit-7 2025 2136

Unit-8 2450 2300



5.3.5 Design Energy for Hydro Generating Stations


5.3.5.1 Rainfall in FY 2015-16 was very low in the catchment areas of the Hydro Generating

Stations because of which the generation is likely to be lower than the Design Energy.

5.3.5.2 Further, low rainfall has resulted in a shortage of drinking water in the State.

Consequently, in compliance with the MWRRA Order dated 26 October, 2015 and

subsequent letter from the Pune Irrigation Circle dated 3 November, 2015, TPC-G was

required to allocate 30 MCM water from the Mulshi dam for the drought-affected areas.

This has reduced the generation from Bhira Generating Station to that extent in FY

2015-16.

5.3.5.3 In view of this loss of generation from the Hydro Stations, TPC–G filed a Petition in

Case No. 144 of 2015 requesting the Commission to consider the release of 30 MCM

water as uncontrollable over and above the low rainfall during FY 2015-16.

Accordingly, TPC-G sought to be allowed recovery of the entire fixed cost as per the

mechanism in Regulation 49.7 of MYT Regulations, 2015 for recovery of Energy

Charge of FY 2015-16 and future years.


5.3.5.4 In its Order dated 6 April, 2016, in Case No. 144 of 2015, the Commission allowed

TPC-G to withdraw its Petition and raise the issues in its revised MYT Petition. TPC-G

has accordingly included the issue of release of 30 MCM of water and low rainfall in FY

2015-16 in the present Petition.

5.3.5.5 The Commission notes that the MWRRA held a Public Hearing on 8 October, 2015 in

Case No. 5 of 2015 regarding release of water for equitable distribution in the Bhima

sub-basin upto the Ujjani Reservoir. TPC-G was asked to divert 30 MCM water from

Mulshi reservoir into the Bhima sub-basin considering the drought situation. TPC-G

agreed to do so considering the larger public cause and interest.

5.3.5.6 The Commission recognizes that rainfall during FY 2015-16 was unusually low in the

catchment areas of the Hydro Generating Stations, because of which their generation has

been lower than the Design Energy. The release of 30 MCM water from Mulshi dam to

provide relief in the drought-affected areas was also beyond the control of TPC-G.

Accordingly, the Commission has considered the impact on the gross generation of the

Hydro Generating Stations as submitted by TPC-G.



5.3.5.7 The MYT Regulations, 2011 specify the treatment to be given in case the actual energy

generated is less than the Design Energy:

“50.5 In case actual total energy generated by a Hydro Generating Station

during a year is less than the Design Energy for reasons beyond the control of the

Generating Company, the following treatment shall be applied on a rolling

basis:—

(i) In case the energy shortfall occurs within ten years from the date of

commercial operation of a Generating Station, the ECR for the year following the

year of energy shortfall shall be computed based on the formula specified in

Regulation 50.4 with the modification that the DE for the year shall be considered

as equal to the actual energy generated during the year of the shortfall, till the

Energy Charge shortfall of the previous year has been made up, after which

normal ECR shall be applicable :

Provided that in case actual generation from a hydel Generating Station is

less than the Design Energy for a continuous period of 4 years on account of

hydrology factor, the Generating Station shall approach the Central Electricity

Authority with relevant hydrology data for revision of Design Energy of the

Station.

(ii) In case the energy shortfall occurs after ten years from the date of commercial

operation of a Generating Station, the following shall apply : —

Explanation—Suppose the specified annual Design Energy (DE) for the

Station is DE MWh, and the actual energy generated during the concerned

(first) and the following (second) Years is A1 and A2 MWh, respectively,

A1 being less than DE. Then, the Design Energy to be considered in the

formula in Regulation 49.6 of these Regulations for calculating the ECR

for the third Year shall be moderated as (A1 + A2 – DE) MWh, subject to

a maximum of DE MWh and a minimum of A1 MWh.

(iii) Actual energy generated (e.g., A1, A2) shall be arrived at by multiplying the

net metered energy sent out from the Station by 1 / (1 – AUX).

50.6 In case the Energy Charge Rate (ECR) for a Hydro Generating Station, as

computed in Regulation 50.5, exceeds eighty paise per kWh, and the actual

saleable energy in a Year exceeds { DE x ( 1 – AUX ) } kWh, the Energy Charge

for the energy in excess of the above shall be billed at eighty (80) paise per kWh

only :

Provided that in a year following a year in which total energy generated

was less than the Design Energy for reasons beyond the control of the Generating

Company, the Energy Charge Rate shall be reduced to eighty (80) paise per kWh

after the Energy Charge shortfall of the previous year has been made up.”



5.3.5.8 In accordance with the Regulations, the Commission will consider the impact of lower

generation than the Design Energy for computing the future Energy Charge at the time

of final True-up of the respective years of the 3rd

Control Period.

5.3.6 Fuel Price and Calorific Value


5.3.6.1 While the APM Gas price has remained the same as in the MTR Order, the price of Oil

has declined marginally by about 2%. Coal and RLNG Gas prices have fallen by 9% and

18%, respectively, on account of steep decline in commodity prices. The fuel prices for

H2 of FY 2015-16 have been considered accordingly. The fuel prices are as shown in

the Table below:

Table 83: Fuel Prices in FY 2015-16, as submitted by TPC-G (Rs./MT)

Fuel 2015-16 H1 2015-16 H2 FY 2015-16

GAS-APM 16936 14491 15789

Gas-NAPM 17628 17628

Gas-RLNG 36461 37767 36679

Coal 5113 4717 4928

Oil 50881 50746 50668



2015-16 since the year was now over. TPC-G provided the details of actual landed fuel

price and calorific value of fuels for the entire year. The Commission has considered

actual landed fuel price and calorific value of fuels as submitted by TPC-G for

Provisional Truing-up.

5.3.6.3 The summary of fuel prices and calorific value as approved by the Commission for FY

2015-16 is given in the Table below:

Table 84: Fuel Prices and Calorific Value as approved by Commission for FY 2015-16

Fuel

Revised Submission Approved in this Order

GCV

(kCal/Kg)

Price (Rs./MT,

Rs./KL)

GCV

(kCal/Kg)

Price (Rs./MT,

Rs./KL)

APM Gas 13.13 15760.61 13.13 15760.61

Non-APM Gas 13.16 16045.49 13.16 16045.49

RLNG 13.02 36387.61 13.02 36387.61



Fuel

Revised Submission Approved in this Order

GCV

(kCal/Kg)

Price (Rs./MT,

Rs./KL)

GCV

(kCal/Kg)

Price (Rs./MT,

Rs./KL)

Coal 4828.27 4978.36 4828.27 4978.36

LSHS 10461.62 50651.36 10461.62 50651.36

Kerosene 8937.94 49267.09 8937.94 49267.09

HSD 9216.21 34300.60 9216.21 34300.60

5.3.7 Fuel Cost

5.3.7.1 As sought by the Commission, TPC-G had submitted the actual fuel cost as Rs. 1245.08

Crore for Units 4 to 7 for FY 2015-16, excluding Unit-6 operated on the directions of

MSLDC, and Rs. 448.38 Crore for Unit-8.

5.3.7.2 As discussed in para. 5.3.4.4, the Commission has considered the normative SHR for

Unit-6 when it was not operating under MSLDC directions. Accordingly, the fuel cost

works out to Rs. 11.85 Crore, as against Rs. 13.95 Crore submitted by TPC-G.

5.3.7.3 The Commission has considered Fuel Cost of Rs. 1242.97 Crore, as against Rs.

1245.08 Crore submitted by TPC-G, for Units 4 to 7 for FY 2015-16 (excluding

Unit-6 when operated on MSLDC directions).The Commission has considered the

actual fuel cost of Rs. 448.38 Crore of Unit-8 for FY 2015-16 for the Provisional

Truing-up.

5.3.8 Fuel Cost of Unit-6 operating under MSLDC Directions


5.3.8.1 Fuel cost for Unit-6 operation under MSLDC directions for FY 2015-16 was Rs. 24.13

Crore.


5.3.8.2 As explained at para. 4.3.5, considering the exceptional nature of operation of Unit-6

under MSLDC directions, the Commission approves the actual SHR of 2890.13

kCal/kWh for FY 2015-16, after prudence check of the month-wise fuel cost calculation

submitted by TPC-G. Also, the Commission has considered actual Auxiliary Energy

Consumption while computing the fuel cost of Unit-6 when operating under MSLDC

directions, after prudence check of meter reading data of 15 minute time block submitted

by TPC-G.



5.3.8.3 In view of the above, the Commission approves the actual Fuel Cost of Rs. 24.13

Crore for Unit-6 when operating under MSLDC directions during FY 2015-16.

5.3.9 Entry Tax


5.3.9.1 As discussed at para. 4.3.6 of this Order, TPC-G has paid some amount towards Entry

Tax as per the tax rates applied by GoM. TPC-G has stated that it has paid Rs. 36.31

Crore for FY 2015-16. It also stated that the Entry Tax amount pertains to FY 2005-06

to FY 2009-10, when it was supplying power to three Distribution Licensees, i.e., TPC-

D, R Infra-D and BEST. Hence, this amount is to be charged in the ratio of sales to these

Licensees in the respective years. The computation is as given below:

Table 85: Impact of Entry Tax as submitted by TPC-G for FY 2015-16(Rs. Crore)


Entry Tax 15.56 7.36 13.39 36.31


5.3.9.2 The Commission has examined the supporting documents provided by TPC-G, and has

accordingly considered the Entry Tax amount to be recovered from TPC-D, RInfra-D

and BEST. The Commission has computed the recovery of Entry Tax as submitted by

TPC-G and has considered it separately along with the recovery of the other past

Revenue Gaps.

Table 86: Recovery of Entry Tax, as approved by Commission for FY 2015-16(Rs. Crore)


Entry Tax 15.56 7.36 13.39 36.31



5.3.10.1 For Units 4 to 7 and Hydro, TPC-G has considered the normative O&M expenses for FY

2015-16 as in the MTR Order. Accordingly O&M expenses for FY 2015-16 for Units 4

to 7 and Hydro are Rs. 503.08 Crore.

5.3.10.2 For Unit-8, TPC-G has considered the normative O&M expenses for FY 2015-16 as

considered in the MTR Order. Accordingly O&M expenses for Unit-8 are Rs. 46.25

Crore.




5.3.10.3 The Commission had asked for details of actual performance parameters for the entire

FY 2015-16 since the year was now over. TPC-G in its reply stated that the normative

O&M expense for the Trombay Station plus Hydro Stations was Rs. 503.08 Crore, and

Rs. 46.25 Crore for Unit-8. The provisional actual O&M expense for the former Stations

is around Rs. 486 Crore, and Rs. 40.97 crore for Unit-8. However, as this is a

Provisional Truing-up for FY 2015-16, TPC-G has not considered any gain or loss on

these.

5.3.10.4 TPC-G has considered the O&M expenses for FY 2015-16 as approved in the MTR

Order. Accordingly, the Commission approves the O&M expenses as submitted by

TPC-G and as shown in the Table below:

Table 87: O&M Expenses as approved by Commission for FY 2015-16 (Rs. Crore)

Unit MTR Order TPC-G Petition Approved in this Order

Unit-4-7 & Hydro 503.08 503.08 503.08

Unit-8 46.25 46.25 46.25

5.3.10.5 The Commission approves O&M Expenses of Rs. 503.08 Crore for Units 4 to 7 and

Hydro Stations and Rs. 46.25 Crore for Unit-8 for FY 2015-16.



5.3.11.1 The Commission had approved capitalisation of Rs. 252.98 Crore in the MTR Order.

Against this, Rs. 181.33 Crore is estimated for FY 2015-16. Out of this total revised

estimate, Rs. 155.24 Crore is on account of DPR schemes and the balance Rs. 26.09

Crore is on account of Non-DPR Schemes.

5.3.11.2 The main reasons for the reduction in capitalisation are as below

Table 88: Schemes with major impact on Capitalisation, as submitted by TPC-G

Particulars Reason

Refurbishment of ESP

of Trombay for Unit-

5:

Mainly due to delay in completion of refurbishment of ESP streams.

The refurbishment of one stream has been completed. The Project is

delayed as the work has to be executed on running Unit and

simultaneous work cannot be taken up for the balance 3 streams.

Steel Scaffold for The Commission-approved phasing for FY 2015-16 is Rs. 4.95 Crore



Particulars Reason

Trombay of capitalization, and TPC-G’s FY 2015-16 estimate would be nil as

this project has not been started and is planned to be dropped.

5.3.11.3 The total capitalisation for Unit-8 for FY 2015-16 is estimated to be Rs. 23.95 Crore as

against the approved capitalisation of Rs. 2.93 Crore in the MTR Order, of which the

capitalisation on DPR schemes (including merged DPRs) is Rs.22.25 Crore. The

remaining Rs.1.70 Crore is on account of Non-DPR Schemes, i.e. about 7.64% of the

capitalization of DPR schemes.


5.3.11.4 The Commission had sought details of actual capitalisation for the entire FY 2015-16

after the year was over, which TPC-G has provided.

5.3.11.5 The Commission has examined the capital expenditure schemes submitted for FY 2015-

16 for Units 4 to 7 and Hydro. TPC-G has proposed capitalisation of Rs. 190.41 Crore

for FY 2015-16 for these, as against Rs. 252.98 Crore approved in the MTR Order. The

difference is on account of the deferment of some schemes, such as refurbishment of

ESP for Unit-5, and also because some projects are being dropped, such as Steel

Scaffold for the Trombay Station.

5.3.11.6 For Unit-8, TPC-G has proposed capitalisation of Rs. 18.06 Crore for FY 2015-16, as

against Rs. 2.93 Crore approved in the MTR Order.

5.3.11.7 While approving the revised estimates of capitalisation for FY 2015-16, the Commission

has considered the previous performance of TPC-G in actual capitalisation as against

that approved.

5.3.11.8 The Commission notes that TPC-G has also included capitalisation of schemes not yet

submitted for in-principle approval. Hence, the Commission has not considered such

capitalisation.


TPC-G. All the DPR schemes proposed by TPC-G have already been approved in-

principle except for 4 new schemes, viz. a) Environment, fire, safety, security and

statutory 2013-17, b) Unit-5 Reliability Schemes, c) Refurbishment of SET 1 and d)

Replacement of Unit-5 condenser tubes. The Commission has reviewed the justification

and CBA reports submitted for these new schemes as per its Guidelines of 2005. Based

on the CBA reports submitted, the Commission has considered the impact of these four

Capex schemes for capitalisation.



5.3.11.10 TPC-G has also included the capitalisation of some Non-DPR schemes that are of O&M

nature or are for common employee facilities, such as procurement of tools and tackles,

procurement of safety equipments, swimming pool renovation, mobiles and canteen

equipment for staff, etc. Hence, the Commission has deducted these from the

capitalisation. The details of such Non-DPR schemes not considered for capitalisation

are set out at para. 4.3.8.6 of this Order.

5.3.11.11 The Non-DPR capitalisation is approved as submitted by TPC-G, considering this is

within the limit of 20% of DPR capitalisation as stipulated by the Commission in

previous Orders. For the scheme of ‘Replacement of FGD-II GGH’, TPC-G has

presented a cumulative capitalisation which is around 0.02 Crore more than the

approved cost. Accordingly, its capitalisation has been restricted to the approved

amount. The details of such DPR schemes whose capitalisation has been restricted to the

approved amount are as shown in the Table below:

Table 89: Summary of disallowed DPR Capitalisation for restricted cumulative

Capitalisation (Rs. Crore)

Particulars FY

2014-15

FY

2015-16

FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

As submitted by TPC-G

Up-gradation of Protection

system 0.26 0.30 0.30 0.30 0.55 0.00

Unified SCADA System for

Trombay 5.74 0.83 3.98 6.00 0.00 0.00

Replacement of FGD-II GGH 14.08 1.22 0.00 0.00 0.00 0.00

Replacement of Unit 5 FD & PA

Fans blades 0.00 0.09 5.00 0.00 1.02 0.00

Fire hydrant system up-gradation

CLP 0.00 1.00 14.90 0.00 0.00 0.00

Rotary Compressors for Unit 0.00 4.17 0.32 0.00 0.00 0.00

Total 20.08 7.60 24.51 6.30 1.57 0.00

As Approved in this Order

Up-gradation of Protection

system 0.26 0.30 0.30 0.30 0.25 0.00

Unified SCADA System for

Trombay 5.74 0.83 3.98 5.95 0.00 0.00

Replacement of FGD-II GGH 14.08 1.20 0.00 0.00 0.00 0.00

Replacement of Unit 5 FD & PA

Fans blades 0.00 0.09 5.00 0.00 0.93 0.00

Fire hydrant system up-gradation

CLP 0.00 1.00 10.60 0.00 0.00 0.00

Rotary Compressors for Unit 0.00 4.17 0.00 0.00 0.00 0.00



Particulars FY

2014-15

FY

2015-16

FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Total 20.08 7.58 19.88 6.25 1.18 0.00

Disallowed Capitalisation 0.00 0.02 4.62 0.05 0.39 0.00

5.3.11.12 The summary of the capitalisation disallowed by the Commission is as shown in the

Table below:

Table 90: Summary of Capitalisation disallowed by Commission for FY 2015-16 (Rs.

Crore)

Particulars Capitalisation

Disallowed


Disallowed DPR capitalisation for yet to be submitted schemes 2.01

Disallowed Non-DPR capitalisation for O&M nature schemes 0.39

Disallowed DPR capitalisation for restricted cumulative capitalisation 0.02

Total Disallowed Capitalisation 2.42

Units 8

Disallowed DPR capitalisation for yet to be submitted schemes 0.00

Disallowed Non-DPR capitalisation for O&M nature schemes 0.00

Disallowed DPR capitalisation for restricted cumulative capitalisation 0.00

Total Disallowed Capitalisation 0.00

5.3.11.13 The capitalisation as proposed by TPC-G and as approved by the Commission for FY

2015-16 is as shown below:

Table 91: Capitalisation as approved by Commission for FY 2015-16 (Rs. Crore)


Petition

Revised

Submission

Approved in

this Order

Units 4 to 7& Hydro Stations

DPR Capitalisation 210.85 155.24 167.15 165.11

Non-DPR Capitalisation 42.13 26.09 23.27 22.87

Total 252.98 181.33 190.41 187.99

Unit-8

DPR Capitalisation 2.44 22.25 17.17 17.17

Non-DPR Capitalisation 0.49 1.70 0.89 0.89

Total 2.93 23.95 18.06 18.06



5.3.11.14 The Commission approves Capitalisation of Rs. 187.99 Crore for Units 4 to 7 and


5.3.12 Depreciation


5.3.12.1 For existing assets of Units 4 to 7 and Hydro Stations, TPC-G has computed

Depreciation at the rates specified in the MYT Regulations, 2011. For the assets added

during FY 2015-16, Depreciation has been computed based on the estimated

capitalisation and considering a gross Depreciation rate of 5.28%. Accordingly, the

Depreciation for FY 2015-16 has been worked out as Rs. 141.39 Crore.

5.3.12.2 For existing assets of Unit-8, Depreciation is computed based at the rates specified in the

Regulations. For the assets added during FY 2015-16, Depreciation has been computed

based on the estimated capitalisation and considering a gross Depreciation rate of

5.28%. Accordingly, the Depreciation has been worked out as Rs. 64.62 Crore.



FY 2015-16 since the year was now over. TPC-G submitted that, based on the actual

capitalisation in FY 2015-16, the Depreciation for Units 4 to 7 and Hydro Stations is Rs.

141.63 Crore, and for Unit-8 is Rs. 64.46 Crore.

5.3.12.4 Regulation 31.2 of the MYT Regulations, 2011 specifies that the Generating Company

can recover Depreciation on the value of fixed assets, computed annually on the straight-

line method at the specified rates. The Commission determines the Depreciation on

opening GFA for the full operational period, and on additional capitalisation from the

date of capitalisation for various classes of assets based on the rates of Depreciation as

per the Regulations.

5.3.12.5 The Commission has considered the closing GFA of FY 2014-15 as approved in this

Order as the opening GFA for FY 2015-16 for computation of Depreciation. The

Commission has not considered any retirement of assets, as submitted by TPC-G.

5.3.12.6 The summary of Depreciation as claimed by TPC-G and as approved by the

Commission for FY 2015-16 is summarised in the following Table:



Table 92: Depreciation as approved by Commission for FY 2015-16 (Rs. Crore)

Particulars MTR

Order

TPC-G

Petition

Revised

Submission

Approved in

this Order

Units 4 to 7& Hydro

Opening GFA 4035.28 4172.80 4172.80 4155.95

Asset Addition during the year 252.98 181.33 190.41 187.99

Asset retirement during the year (6.15) 0.00 0.00 0.00

Closing GFA 4282.11 4354.13 4363.21 4343.94

Depreciation during the year 132.05 141.39 141.63 141.17

Unit-8

Opening GFA 1128.20 1144.62 1144.62 1143.88


Asset retirement during the year 0.00 0.00 0.00 0.00

Closing GFA 1131.13 1168.58 1162.68 1161.94

Depreciation during the year 60.73 64.62 64.46 64.46

5.3.12.7 The Commission approves Depreciation of Rs. 141.17 Crore for Units 4 to 7 and




5.3.13.1 For Units 4 to 7 and Hydro Stations, TPC-G has proposed the financing of the estimated

capitalisation in the debt: equity ratio of 70:30. After considering the closing balance of

loan for FY 2014-15 and the additional capitalisation estimated for FY 2015-16, TPC-G

has computed the Interest on Long-term Loan capital for FY 2015-16 as Rs. 81.45

Crore.

5.3.13.2 For Unit-8, TPC-G has computed the interest charges for FY 2015-16 as Rs. 56.92

Crore.


5.3.13.3 The Commission had sought information on the actual performance parameters for the

entire FY 2015-16 since the year was now over. TPC-G submitted that, based on the

actual capitalisation for FY 2015-16, the Interest on Long-term Loan for Units 4 to 7 and

Hydro Stations is Rs. 81.79 Crore, and Rs. 56.71 Crore for Unit-8.

5.3.13.4 For the Interest on Long-term Loan for FY 2015-16, the Commission has taken the

approved closing balance of loan for FY 2014-15 considered in this Order. Loan



repayment has been considered equal to the Depreciation allowed for FY 2015-16 in this

Order, in accordance with Regulation 33.3.

5.3.13.5 TPC-G has not submitted the Interest on Long-term Loan considering the weighted

average interest rate of the actual loan portfolio for FY 2015-16. TPC-G has stated that it

has not considered any revision in the interest rate for FY 2015-16 based on the actual

loan data as the loan drawn by TPC-G is for the entire License area and allocation will

be possible only after the actual capitalisation figures for Generation, Transmission and

Distribution businesses are finalized. The Commission has checked the interest rates

from the loan documents provided, and has considered the weighted average interest rate

as submitted by TPC-G for computing the Interest on Long-term Loan.

5.3.13.6 The summary of the Interest on Long-term Loan as submitted by TPC-G and as

approved by the Commission for FY 2015-16 is shown in the Table below:

Table 93: Interest on Long-term Loan as approved by Commission (Rs. Crore)

Particulars MTR

Order

TPC-G

Petition

Revised

Submission

Approved in

this Order

Units 4 to 7& Hydro

Opening loan 643.29 751.99 751.99 730.39

Loan addition during the year 177.09 126.93 133.29 131.59

Loan repayment during the year 132.05 141.39 141.63 141.17

Closing loan balance 688.33 737.53 743.65 720.81

Interest rate (%) 10.92% 10.94% 10.94% 10.94%


Unit-8

Opening Loan 523.64 537.60 537.60 536.70

Loan addition during the year 2.05 16.77 12.64 12.64

Loan repayment during the year 60.73 64.62 64.46 64.46

Closing loan balance 464.97 489.74 485.78 484.89

Interest rate (%) 11.08% 11.08% 11.08% 11.08%


5.3.13.7 The Commission approves Interest on Long-term Loan of Rs. 79.36 Crore for Units

4 to 7 and Hydro Stations and Rs. 56.61 Crore for Unit-8 for FY 2015-16.





5.3.14.1 For Units 4 to 7 and Hydro Stations, RoE based on the opening balance of equity and

reduction of equity on account of de-capitalisation of certain assets, at 15.5%, works out

to Rs. 236.01 Crore for FY 2015-16, and to Rs. 53.18 Crore for Unit-8.


5.3.14.2 The Commission had asked for the actual performance parameter data for the entire FY

2015-16 once the year was over. TPC-G stated that, based on the actual capitalisation for

FY 2015-16, the RoE for Units 4 to 7 and Hydro Stations is Rs. 236.01 Crore, and Rs.

53.18 Crore for Unit-8.

5.3.14.3 The Commission has computed RoE at 15.50% of the equity, in accordance with

Regulation 32.2.1, on the opening equity of the year.

5.3.14.4 For arriving at the Regulatory Equity at the beginning of the year for FY 2015-16, the

Commission has considered the closing equity at the end of FY 2014-15 as approved

while Truing-up for that year earlier in this Order.


Provisional Truing-up is as summarised in the following Table:

Table 94: Return on Equity as approved by Commission for FY 2015-16 (Rs. Crore)

Particulars MTR

Order

TPC-G

Petition

Revised

Submission

Approved in

this Order

Units 4 to 7& Hydro

Opening equity 1481.26 1522.65 1522.65 1517.48

Equity addition during the year 75.89 54.40 57.12 56.40

Equity reduction during the year (1.85) 0.00 0.00 0.00

Closing equity 1555.30 1577.05 1579.77 1573.87

Rate of return (%) 15.50% 15.50% 15.50% 15.50%

Return on equity 229.60 236.01 236.01 235.21

Unit-8

Opening equity 338.46 343.12 343.12 343.16

Equity addition during the year 0.88 7.19 5.42 5.42

Equity reduction during the year 0.00 0.00 0.00 0.00

Closing equity 339.34 350.30 348.54 348.58

Rate of return (%) 15.50% 15.50% 15.50% 15.50%



Particulars MTR

Order

TPC-G

Petition

Revised

Submission

Approved in

this Order

Return on equity 52.46 53.18 53.18 53.19

5.3.14.6 The Commission approves Return on Equity of Rs. 235.21 Crore for Units 4 to 7

and Hydro Stations and Rs. 53.19 Crore for Unit-8 for FY 2015-16.



5.3.15.1 IoWC is computed based on the MYT Regulations, 2011. TPC-G has considered an

interest rate of 14.75% (equivalent to the SBAR). The total IoWC for Units 4 to 7 and

Hydro Stations for FY 2015-16 is Rs. 54.83 Crore, and estimated as Rs. 15.29 Crore for

Unit-8.



FY 2015-16 since the year was over. TPC-G submitted that, based on the actual fuel

cost, actual capitalisation, revised Interest on Long-term Loan, revised RoE and revised

Depreciation for FY 2015-16, the IoWC for Units 4 to 7 and Hydro Stations is Rs. 54.99

Crore and Rs. 15.66 Crore for Unit-8.

5.3.15.3 As sought by the Commission, TPC-G submitted material for consideration of the

SBAR for computation of IoWC. The Commission has computed the working capital

requirement in accordance with the MYT Regulations, 2011 and the IoWC by applying

the SBAR rate of 14.75% as on the date of filing of this Petition. The IoWC approved by

the Commission is shown in the Tables below:

Table 95: IoWC for Units 4 to 7 and Hydro Stations as approved by Commission for FY

2015-16 (Rs. Crore)

Particulars TPC-G

Petition

TPC-G Revised

Submission

Approved in this

Order

Working capital requirement 371.70 372.79 374.83

Interest rate 14.75% 14.75% 14.75%




Table 96: IoWC for Unit-8 as approved by Commission for FY 2015-16 (Rs. Crore)

Particulars TPC-G

Petition

TPC-G Revised

Submission

Approved in this

Order

Working capital requirement 103.69 106.17 104.03

Interest rate 14.75% 14.75% 14.75%


5.3.15.4 The Commission approves Interest on Working Capital of Rs.55.29 Crore for Units

4 to 7 and Hydro Stations and Rs. 15.34 Crore for Unit-8 for FY 2015-16.

5.3.16 Income Tax


5.3.16.1 In accordance with Regulations 34.1 and 34.2 of the MYT Regulations, 2011, Income

Tax for the future period is considered based on the actual Income Tax payable as per

the latest Audited Accounts, as allowed by the Commission subject to prudence check.

Accordingly, TPC-G has presented the Income Tax approved in the MTR Order for FY

2013-14 as the Income Tax for FY 2015-16, i.e., Rs. 85.85 Crore for Units 4 to 7 and

Hydro and Rs. 40.32 Crore for Unit-8.


5.3.16.2 While approving the Income Tax for FY 2014-15, Income Tax payable was worked out

considering the Truing-up amounts as per the audited accounts. Therefore, in accordance

with Regulations 34.1 and 34.2, the Commission approves the Income Tax for FY 2015-

16 as equivalent to that approved in this Order for FY 2014-15.

5.3.16.3 The Income Tax estimation as submitted by TPC-G and as approved by the Commission

for FY 2015-16 is as summarised in the Table below:

Table 97: Income Tax as approved by Commission for FY 2015-16 (Rs. Crore)


Unit-4-7 & Hydro 104.17 85.85 98.89

Unit-8 20.25 40.32 24.49

5.3.16.4 The Commission approves Income Tax as Rs. 98.89 Crore for Units 4 to 7 and

Hydro Stations for FY 2015-16 and as Rs. 24.49 Crore for Unit-8 for FY 2015-16.





5.3.17.1 TPC-G has considered Non-Tariff Income for FY 2015-16 as provisionally approved in

the MTR Order.


5.3.17.2 The Commission approves the Non-Tariff Income as in the MYT Order, which has also

been proposed by TPC-G, as under:

Table 98: Non-Tariff Income as approved by Commission for FY 2015-16 (Rs. Crore)


Unit-4-7 & Hydro 16.73 16.73 16.73

Unit-8 2.26 2.26 2.26

5.3.17.3 The Commission approves the Non-Tariff Income as Rs. 16.73 Crore for Units 4 to

7 and Hydro Stations and Rs. 2.26 Crore for Unit-8 for FY 2015-16.

5.3.18 PLF Incentive for Thermal Station


5.3.18.1 The first proviso of Regulation 49.8 of the MYT Regulations, 2011 states as follows:

“Provided that the actual generation shall also consider the generation loss on

account of any backing down instruction from the Maharashtra State Load

Despatch Centre.”

5.3.18.2 TPC-G has computed the incentive including the impact of the generation loss on

account of backing down instructions from MSLDC. Considering the deemed

generation, TPC-G would be eligible for additional PLF incentive of Rs. 12.42 Crore for

FY 2015-16 as shown in the Table below:



Table 99: Incentive as claimed by TPC-G on account of Backing Down in FY 2015-16

Unit

Actual Net

Generation

with

Normative

Auxiliary

Consumpti

on (MU)

Ex-Bus

MU

Eligible

due to

Backin

g Down

Total Net

Generatio

n, incl.

deemed

Generatio

n (MU)

Net

Generatio

n at 85%

PLF (MU)

Energy

eligible

for

Incentiv

e (MU)

Rate of

Incentive

(Rs/kWh

)

Total

Incentive

(Rs

Crore)

Incentiv

e

claimed

(Rs.

Crore)

Balance

Incentiv

e to be

claimed

(Rs.

Crore)

A C D E = C + D F G = E-F H I =

H*G/10 J K = I – J

Unit-5 3293.24 555.29 3848.53 3509.21 339.32 0.25 8.48 0.00 8.48

Unit-6 808.86 99.30 908.16 3602.54 0.00 0.25 0.00 0.00 0.00

Unit-7 1144.34 197.77 1342.10 1303.63 38.47 0.25 0.96 0.00 0.96

Unit-8 1723.25 119.19 1842.44 1707.94 134.50 0.25 3.36 0.38 2.98

Total 6969.69 971.55 7941.23 10123.32 512.29 1.00 12.80 0.38 12.42


5.3.18.3 In this Order, the Commission is undertaking the Provisional Truing-up for FY 2015-16

based on unaudited data. Accordingly, at this stage it is not considering any incentive on

account of higher PLF or sharing of efficiency gains/ losses. These shall be considered

at the time of Truing-up based on actual audited data.

5.3.19 Provisional Truing-up for FY 2015-16

5.3.19.1 The Commission has computed the Revenue Gap/ Surplus for FY 2015-16 as under:

Table 100: Provisional Truing-up for FY 2015-16 as approved by Commission (Rs. Crore)

Particulars

Units 4-7 & Hydro Unit-8

TPC-G

Petition

Approved in

this Order

TPC-G

Petition

Approved in

this Order

Expenditure

Fuel related expenses 1245.08 1242.97 448.38 448.38

O&M expenses 503.08 503.08 46.25 46.25

Depreciation 141.63 141.17 64.46 64.46


Interest on working capital 54.99 55.29 15.66 15.34

Income Tax 85.85 98.89 40.32 24.49



Particulars

Units 4-7 & Hydro Unit-8

TPC-G

Petition

Approved in

this Order

TPC-G

Petition

Approved in

this Order

Total Revenue Expenditure 2112.41 2120.76 671.78 655.54

Add: Return on equity 236.01 235.21 53.18 53.19

Less : Unallocated fixed cost

portion of Unit-4 12.75 12.75 0.00 0.00

Less : Allocation from Unit-8 for

Shared Capacity 12.50 12.50 (12.50) (12.50)

Total Including Expenditure+

RoE 2323.17 2330.76 737.46 721.23

Revenue

Revenue from sale of electricity 2351.97 2351.97 760.30 760.30

Non-Tariff Income 16.73 16.73 2.26 2.26

Total Revenue 2368.70 2368.70 762.56 762.56

Total Revenue Gap/(Surplus) (45.52) (37.93) (25.10) (41.33)

5.3.19.2 The Commission approves a Revenue Surplus of Rs. 37.93 Crore for Units 4 to 7

and Hydro Stations, and Rs. 41.33 Crore for Unit-8, for FY 2015-16. The

Commission has adjusted this Surplus separately against past recoveries.

5.4 Past Recoveries from Distribution Licensees

5.4.1 Incentive for backing down instructions from MSLDC for FY 2011-12 to FY 2013-

14


5.4.1.1 In the background of the 1st proviso of Regulation 49.8 quoted above, the impact of PLF

incentive on account of backing down instructions was not considered by TPC-G while

calculating the applicable incentives for the Thermal Generating Units during the 2nd

Control Period and FY 2015-16. TPC-G has now computed the revised incentive

including the impact of the generation loss on account of backing down instructions

from MSLDC.

5.4.1.2 Considering the deemed generation, TPC-G would be eligible for additional PLF

incentive of Rs. 41.96 Crore for FY 2011-12 to FY 2013-14 as shown in the Table

below:



Table 101: PLF Incentive on account of Backing Down for FY 2011-12 to FY 2013-14, as

submitted by TPC-G (Rs. Crore)

Unit FY 2011-12 FY 2012-13 FY 2013-14

Unit-5 1.38 10.07 12.79

Unit-6 13.35 3.10 0.00

Unit-7 0.00 0.00 0.00

Unit-8 0.00 1.26 0.00

Total 14.73 14.43 12.79

Grand Total 41.96


5.4.1.3 TPC-G has sought additional incentive considering the backing down of Generating

Stations for FY 2011-12 to FY 2013-14. This claim for FY 2011-12 to FY 2013-14

cannot be considered since the True-up for these past years has already been completed

taking into account the submissions of TPC-G at that time.

5.4.2 Fuel Cost of Unit-6 under MSLDC Directions

5.4.2.1 The Commission has approved the actual fuel cost of Rs. 792.11 Crore and Rs. 24.13

Crore for Unit-6 for operation under MSLDC directions during FY 2014-15 and FY

2015-16 respectively. This approved fuel cost has been allocated between the

Distribution Licensees in the ratio of MUs of power allocated to them for FY 2014-15

and FY 2015-16. The gap/ surplus between this allocated fuel cost and the actual

revenue recovered from the Distribution Licensees is considered under the past period

recovery in para. 5.4.3. The computations for the same is as shown in Table below:

Table 102: Fuel Cost for Unit-6 under MSLDC Directions (Rs. Crore)

Particulars

BEST TPC-D RInfra-D Total

FY 2014-15

Actual Fuel Cost A 217.25 288.05 286.81 792.11

Actual Revenue Recovered B 215.46 285.69 262.29 763.44

Gap/ (Surplus) c=a-b 1.79 2.36 24.52 28.67

FY 2015-16

Actual Fuel Cost A 6.58 8.62 8.93 24.13

Actual Revenue Recovered B 5.61 6.83 8.19 20.63

Gap/ (Surplus) c=a-b 0.97 1.79 0.74 3.50



5.4.3 Other Past Recoveries from Distribution Licensees


5.4.3.1 The recoveries of the past periods of FY 2014-15 and FY 2015-16 pertaining to the

Revenue Gap / Surplus, along with interest up to FY 2015-16, taking into account the

Truing-up of those previous years.

5.4.3.2 The recoveries of the past periods are as shown in the Table below:



Table 103: Amounts Recoverable from Distribution Licensees as submitted by TPC-G (Rs. Crore)


BEST TPC-D R Infra Total

Gap / (Surplus) of Trombay Station& Hydro for FY 2014-15 Trombay Station& Hydro (90.23) (86.11)

(176.34)

Gap / (Surplus) of Unit-6 based on Revenue Billed as per MTR

Petition for Unit-6 generation based on MSLDC directions

Unit-6 (Under MSLDC

Directive) 1.79 2.35 24.52 28.67

Entry Tax amount to be recovered pertaining to past period Trombay

Station& Hydro Trombay Station& Hydro 13.61 8.03 12.36 34.01

Gap / (Surplus) of Unit-8 for FY 2014-15 Unit-8 (38.45) (57.67) 0.00 (96.12)

Total Gap Surplus for FY 2014-15 (113.28) (133.40) 36.88 (209.78)

Amount already recovered from Distribution Licensees in the T.O. in

Case 06 of 2015 Trombay Station& Hydro (90.38) (86.26) 0.00 (176.64)

Amount already recovered from Distribution Licensee in the T.O. in

Case 06 of 2015 Unit-8 (45.60) (68.39) 0.00 (113.99)

Total Gap/(Surplus) for Provisional Truing-up for FY 2014-15

allowed to recovered in T.O. (135.98) (154.65) 0.00 (290.63)

Net Gap /(Surplus) to be recovered for FY 2014-15 22.72 21.25 36.89 80.85

Carrying Cost on Gap / (Surplus) of FY 2014-15 (for 06 Months) 14.75% 1.68 1.57 2.72 5.96

Carrying Cost for FY 2015-16 14.29% 3.25 3.04 5.27 11.55

Total Recovery for FY 2014-15 including carrying cost 27.64 25.85 44.88 98.36

Gap / (Surplus) of Trombay Station& Hydro for FY 2015-16 Trombay Station& Hydro (11.43) (10.91)

(22.33)

Gap / (Surplus) of Unit-6 based on Revenue Billed as per MTR

Petition for Unit-6 generation based on MSLDC directions

Unit-6 (Under MSLDC

Directive) 0.97 1.79 0.74 3.50

Entry Tax amount to be recovered pertaining to past period Trombay Station& Hydro 13.39 15.56 7.36 36.31

Gap / (Surplus) of Unit-8 for FY 2015-16 Unit-8 (14.72) (22.08)

(36.81)

Recovery for FY 2015-16 w/o carrying cost for future period (11.79) (15.64) 8.10 (19.33)

Total Past Recovery for TPC-G 15.85 10.21 52.98 79.03



5.4.3.3 TPC-G has proposed recovery of Rs.79.03 Crore within one month of the Order in this

Case. It has also sought carrying cost in case the Commission allows such recovery in

installments.


5.4.3.4 In earlier Sections, the Commission has computed the past Revenue Gap arising from

the Truing-up of past years. Accordingly, the amounts to be recovered from the

Distribution Licensees, as approved by the Commission, are as shown in the Table

below:



Table 104: Amounts Recoverable from Distribution Licensees as approved by Commission (Rs. Crore)

Particulars

Approved in this Order


Gap / (Surplus) of Trombay Station& Hydro for FY 2014-15 Units 4 to 7 and hydro a (100.80) (96.19) 0.00 (196.99)

Gap / (Surplus) of Unit-6 based on Revenue Billed as per MTR Petition for

Unit-6 generation based on MSLDC directions

Unit-6 (Under

MSLDC Directive) b

1.79 2.36 24.52 28.67


Station& Hydro Units 4 to 7 and hydro

c 13.61 8.03 12.36 34.01

Gap / (Surplus) of Unit-8 Unit-8 d (38.60) (57.89) 0.00 (96.49)

Total Gap/ (Surplus) for FY 2014-15 e = a+b+c+d (124.00) (143.70) 36.88 (230.81)

Amount already recovered from Distribution Licensees in the T.O. in Case

06 of 2015 Units 4 to 7 and hydro

f (90.38) (86.26) 0.00 (176.64)

Amount already recovered from Distribution Licensee in the T.O. in Case

06 of 2015 Unit-8

g (45.60) (68.39) 0.00 (113.99)

Total Gap/(Surplus) for Provisional Truing-up for FY 2014-15 allowed to

recovered in T.O.

h = f+g (135.98) (154.65) 0.00 (290.63)

Net Gap /(Surplus) to be recovered for FY 2014-15 i = e-h 11.98 10.95 36.88 59.82

Carrying Cost on Gap / (Surplus) of FY 2014-15 (for 06 Months) 14.75% j = i/2*14.75% 0.88 0.81 2.72 4.41

Carrying Cost for FY 2015-16 14.29% k = i*14.29% 1.71 1.56 5.27 8.55

Total Recovery for FY 2014-15 including carrying Cost l = i+j+k 14.58 13.32 44.87 72.77

Gap / (Surplus) of Trombay Station& Hydro for FY 2015-16 Units 4 to 7 and hydro m (19.42) (18.53) 0.00 (37.93)



Unit-6 (Under

MSLDC Directive)

n 0.97 1.79 0.74 3.50

Entry Tax amount to be recovered pertaining to past period Units 4 to 7 and hydro o 13.39 15.56 7.36 36.31

Gap / (Surplus) of Unit-8 for FY 2015-16 Unit-8 p (16.53) (24.79) 0.00 (41.33)

Recovery for FY 2015-16 w/o carrying cost for future period q=m+n+o+p (21.59) (25.98) 8.10 (39.46)

Recovery towards of impact of merged DPR capitalisation from FY 2010-

11 to FY 2013-14 Units 4 to 7 and hydro

r 15.04 14.08 0.38 29.50


12 to FY 2015-16 Unit-8

s 0.55 0.83 0.00 1.38

Total Past Recovery for TPC-G u = l+q+r+s 8.59 2.25 53.35 64.19



5.4.3.5 The Commission approves the net Revenue Gap of Rs. 64.19 Crore as at the end of

FY 2015-16, recoverable from the Distribution Licensees, viz. BEST, TPC-D and

RInfra-D.

5.4.3.6 TPC-G has requested the recovery of revenue gap in one month from the issuance of the

Order or in installments along with carrying cost. The Commission is of the view that

the recovery from Rinfra-D is substantial and recovery of such amount in one month

will impact the cash flow of the distribution licensee. Hence, the Commission allows

TPC-G to recover this approved amount, on account of past recoverable, from BEST

and TPC-D within one month of issue of this Order and from Rinfra-D in 3 equal

monthly installments from September 2016 to November 2016, unless agreed by Rinfra-

D for early payment. The Commission has considered the carrying cost on monthly basis

on reducing balance on such recoverable amount.

5.4.3.7 The total approved recoverable amount of Rs. 64.19 Crore includes the Revenue Gap of

Rs. 90.70 Crore till FY 2014-15, carrying cost of Rs. 12.96 Crore and Provisional

Truing-up amount of Rs. (39.46) Crore as shown in table below:

Table 105: Break up of recoverable amount as approved by the Commission (Rs. Crore)

Particulars Revenue

Gap

Carrying

Cost

Total

Recoverable

Amount

Net Gap /(Surplus) to be recovered for FY 2014-15 59.82 12.96 72.77

Recovery towards of impact of merged DPR

capitalisation from FY 2010-11 to FY 2013-14 29.50 - 29.50

Recovery towards of impact of merged DPR

capitalisation from FY 2011-12 to FY 2015-16 1.38 - 1.38

Total Revenue Gap till FY 2014-15 90.70 12.96 103.66

Total Recovery for FY 2015-16 w/o carrying Cost for

future period (39.46) (39.46)

5.4.3.8 The Commission had considered the Revenue Gap of Rs. 90.70 Crore till FY 2014-15

for computation of carrying cost. The Commission has also considered the carrying cost

on such revenue gap for April 2016 to August 2016, since the recovery is applicable

from September 2016. The carrying cost amount payable by each Distribution Licensee

is as under:



Table 106: Carrying Cost on recovery as approved by the Commission (Rs. Crore)

Installment Opening

Balance Recovery

Closing

Balance

Interest

@10.80% BEST TPC-D R-Infra-D

Apr-16 90.70 0.00 90.70 0.82 0.25 0.23 0.34

May-16 90.70 0.00 90.70 0.82 0.25 0.23 0.34

Jun-16 90.70 0.00 90.70 0.82 0.25 0.23 0.34

Jul-16 90.70 0.00 90.70 0.82

0.25 0.23 0.34

Aug-16 90.70 0.00 90.70 0.82 0.25 0.23 0.34

Sep-16 90.70 65.85 24.84 0.52 0.12 0.12 0.28

Oct-16 24.84 12.42 12.42 0.17 0.00 0.00 0.17

Nov-16 12.42 12.42 0.00 0.06 0.00 0.00 0.06

Total

90.70

4.82 1.37 1.28 2.18

5.4.3.9 The Commission approves the net past Revenue Gaps to be passed on to or

recovered from the Distribution Licensees, viz. BEST, TPC-D and RInfra-D, as

shown in Table below:

Table 107: Net Amount to be recovered from Distribution Licensees in FY 2016-17 (Rs.

Crore)

Particulars Approved in this Order

Total BEST TPC-D R-Infra-D

Total Revenue Gap till FY 2014-15 including

Carrying cost 30.18 28.23 45.25 103.66

Carrying cost for April, 2016 to August 2016 1.24 1.16 1.68 4.08

Carrying Cost during the recovery period

(September 2016 to November 2016) 0.12 0.12 0.50 0.74

Gap/(Surplus) for Provisional Truing up for FY

2015-16 (21.59) (25.98) 8.10 (39.47)

Total 9.95 3.53 55.53 69.01

5.4.3.10 The Commission approves the net amount arising out of past period recovery to be

passed on to or recovered from the Distribution Licensees, viz. BEST, TPC-D and

RInfra-D, commencing from September, 2016 to November, 2016, as shown in

Table below:



Table 108: Monthly recovery from Distribution Licensees in FY 2016-17 (Rs. Crore)

Installments BEST TPC-D RInfra-D Total

Sep-16 9.95 3.53 18.62 32.11

Oct-16 0.00 0.00 18.51 18.51

Nov-16 0.00 0.00 18.40 18.40

Total 9.95 3.53 55.53 69.01



6. ARR FOR 3RD CONTROL PERIOD FROM FY 2016-17 TO FY 2019-20

6.1 Background

6.1.1.1 TPC-G has sought the ARR and Multi Year Tariff determination for the 3rd

Control

Period from FY 2016-17 to FY 2019-20. The analysis undertaken by the Commission is

set out below.

6.1.1.2 Further, TPC-G has submitted that its PPAs with TPC-D and BEST are valid till 31st

March, 2018. Therefore, with respect to the 3rd

Control Period of FY 2016-17 to FY

2019-20, TPC-G has valid PPAs for the first two years of the Control Period.

Subsequent to that, TPC-D has requested off-take on a long term basis from TPC-G for

a similar capacity as is tied up now from Units 5, 7 and 8 and Hydro Stations.

Considering this, TPG-G has proposed the Tariff for all years of the 3rd

Control Period.

6.1.1.3 Considering TPC-G submissions regarding determination of Tariff for FY 2018-19 and

FY 2019-20 after the expiry of PPAs, the Commission has determined the Tariff for the

period assuming a business as usual situation. However, such Tariff will actually apply

only depending on whether and at what rate and terms and conditions the PPAs are

extended with the approval of the Commission.


6.2.2.1 The MYT Regulations, 2015 specify the normative performance parameters for

Generating Stations for the 3rd

Control Period. TPC-G’s submissions and the

Commission’s analysis are detailed below.

6.3 Generating Stations


6.3.1.1 The existing installed generation capacity is 2027 MW, comprising 447 MW Hydro and

1580 MW Thermal.

6.3.1.2 Unit-4 (150 MW) has outlived its useful life and is to be retired. It has been operating as

a stand-by Unit for the past few years. It was mutually agreed between TPC-G, BEST

and TPC-D that the fixed cost of Unit-4 will no longer be paid from FY 2014-15. Hence,

no fixed charges for Unit-4 will be collected for the remaining period of the PPA. TPC-

G is in the process of retiring this Unit and selling it. Any profit / loss on account of sale

of the plant and machinery would be shared with TPC-D and BEST.



6.3.1.3 The Station-wise and Unit-wise break up of total capacity of TPC-G is given in the

Table below:

Table 109: Existing Generation Capacity of TPC-G

Station/ Unit Type of Fuel Installed Capacity (MW)

Thermal - Trombay

Unit-5 Coal, Oil and Gas 500

Unit-6 Oil and Gas 500

Unit-7 Gas 180

Unit-8 Coal 250

Total Thermal Capacity 1430

Hydro

Bhira Hydro 300

Bhivpuri Hydro 75

Khopoli Hydro 72

Total Hydro Capacity 447

Total TPC-G 1877


6.4.1 Availability


6.4.1.1 Availability of the Thermal and Hydro Generating Units has been estimated considering

the outage plan during the 3rd

Control Period, as shown in the Table below:



Station/ Unit FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20

Thermal Generating Units

Unit-5 87.02% 97.40% 87.83% 96.86%

Unit-6 97.38% 92.45% 97.38% 92.47%

Unit-7 97.40% 97.40% 86.51% 97.40%

Unit-8 92.66% 97.21% 93.21% 97.05%

Hydro Generating Stations

Bhira 97.64% 96.39% 98.06% 98.26%

Bhivpuri 99.58% 98.18% 98.18% 99.58%

Khopoli 99.53% 99.58% 99.58% 98.12%




6.4.1.2 The Availability projected by TPC-G is based on the outage plan and is higher than the

normative target Availability of 85% (for Thermal Generation) and 90% (for Hydro

Generation) specified in Regulations 44.1 and 46.1, respectively, of the MYT

Regulations, 2015. Accordingly, the Commission has approved the Availability as

projected by TPC-G.

6.4.1.3 The summary of the Availability for the 3rd

Control Period as approved by the

Commission is shown in the Table below:


Control Period as approved by

Commission



Unit-5 87.02% 97.40% 87.83% 96.86%

Unit-6 97.38% 92.45% 97.38% 92.47%

Unit-7 97.40% 97.40% 86.51% 97.40%

Unit-8 92.66% 97.21% 93.21% 97.05%


Bhira 97.64% 96.39% 98.06% 98.26%

Bhivpuri 99.58% 98.18% 98.18% 99.58%

Khopoli 99.53% 99.58% 99.58% 98.12%

6.4.1.4 Although the Commission has considered Availability higher than the target

Availability, TPC-G will be entitled to recover the full fixed charges at target

Availability of 85% and 90% for Thermal and Hydro Generating Units, respectively, as

stipulated in the Regulations. Further, as mentioned in para. 5.3.5 of this Order, the

impact of change in future Design Energy of Hydro Stations on account 30 MCM of

water being reserved for drinking water purposes and low rainfall in FY 2015-16 shall

be considered at the time of Truing-up.



6.4.2.1 Gross Generation and PLF projections are based on the requirement of consumers and

Availability of the Generating Units. The projected generation from Units 6 and 7 is

lower than the scheduled generation, mainly because of their position in the MOD.



6.4.2.2 Since the Distribution Licensees have requested economic shutdown of Unit-6 on

account of its high generation cost, TPC-G has considered ‘nil’ generation in the 3rd

Control Period. However, from the experience of the past Control Period, it is expected

that Unit-6 generation will be required during outages of other Generating Units and

during system constraints on MSLDC directions. As such requirements are difficult to

project, any generation as per such request would be dealt with separately during the

Truing-up.

6.4.2.3 The gross generation and PLF for various Generating Units for the 3rd

Control Period are


Table 112: Summary of Gross Generation and PLF as submitted by TPC-G for 3rd

Control

Period

Station/ Unit

Gross Generation (MU) PLF (%)

FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

FY

2016-

17

FY

2017-

18

FY

2018-

19

FY

2019-

20


Unit-5 3723.00 3723.00 3722.76 3723.00 85.00% 85.00% 84.99% 84.77%

Unit-6 0.00 0.00 0.00 0.00 0.00% 0.00% 0.00% 0.00%

Unit-7 884.12 884.12 782.86 884.12 56.07% 56.07% 49.65% 55.92%

Unit-8 1862.59 1863.00 1863.00 1863.00 85.05% 85.07% 85.07% 84.84%


Bhira 875.00 899.00 896.00 896.00

Bhivpuri 279.00 297.00 300.00 300.00

Khopoli 271.00 274.00 274.00 274.00


6.4.2.4 TPC-G has projected gross generation for the 3rd

Control Period based on projected

Availability and demand. In this Order, the Commission has approved the gross

generation as projected by TPC-G. However, the target Availability for the recovery of

total AFC shall be calculated as stipulated in para.6.4.1.4 of this Order.

6.4.2.5 TPC-G has not projected any generation from Unit-6 for the entire 3rd

Control Period.

The Commission has also not considered any generation from Unit-6 in view of the

nature of the Unit and the uncertainties involved. However, Unit-6 may have to operate

during outages of other Generating Units and during system constraints as directed by

MSLDC. The allocation of generation among Distribution Licensees and issues relating

to commercial settlements in such an event is being separately considered in Case No.



133 of 2015, and would be subject to the dispensation that may be provided by the

Commission in its Order in that Case.

6.4.2.6 The gross generation and PLF for Generating Units of TPC-G for the 3rd

Control Period

as approved by the Commission are shown in the Table below:

Table 113: Summary of Gross Generation and PLF as approved by the Commission for 3rd

Control Period

Station/ Unit

Gross Generation (MU) PLF (%)

FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

FY

2016-

17

FY

2017-

18

FY

2018-

19

FY

2019-

20


Unit-5 3723.00 3723.00 3722.76 3723.00 85.00% 85.00% 84.99% 84.77%

Unit-6 0.00 0.00 0.00 0.00 0.00% 0.00% 0.00% 0.00%

Unit-7 884.12 884.12 782.86 884.12 56.07% 56.07% 49.65% 55.92%

Unit-8 1862.59 1863.00 1863.00 1863.00 85.05% 85.07% 85.07% 84.84%


Bhira 875.00 899.00 896.00 896.00

Bhivpuri 279.00 297.00 300.00 300.00

Khopoli 271.00 274.00 274.00 274.00



6.4.3.1 TPC-G has submitted the normative Auxiliary Energy Consumption for the 3rd

Control

Period as shown in the Table below:

Table 114: Normative Auxiliary Energy Consumption for Thermal Generating Stations for

3rd



Unit-5 6.00% 6.00% 6.00% 6.00%

Unit-6 3.50% 3.50% 3.50% 3.50%

Unit-7

Combined Cycle 3.00% 3.00% 3.00% 3.00%

Unit-7

Open Cycle 1.00% 1.00% 1.00% 1.00%

Unit-8 8.50% 8.50% 8.50% 8.50%



6.4.3.2 The MYT Regulations, 2015 specify the norms for Auxiliary Energy Consumption of

Hydro Generating Stations. The norm applicable to TPC-G is 1% (for machines with

static excitation systems). This is not adequate considering the peculiarities and

geographical spread of TPC-G’s Hydro Stations. TPC-G asked for the following

additional components to be included in Auxiliary Energy Consumption:

GT Losses

6.4.3.3 As mentioned at paras. 4.3.2.15-17 earlier in this Order, the CPRI report has established

the minimum required Auxiliary Energy Consumption represented as GT losses of the

Hydro Generating Station. TPC-G has taken measures like correction of metering errors

at all the locations of Hydro Stations, which has led to the reduction of GT losses over

the years. GT losses have now settled near the minimum recommended GT losses

certified by CPRI. Accordingly, the Commission may approve Auxiliary Energy

Consumption towards GT losses as 1.13% as per the CPRI Report.

Headworks

6.4.3.4 The unique and distinct features of the Headworks distribution system in TPC-G’s

Hydro Generating Stations, as described by TPC-G, have been set out at paras. 4.3.2.19-

22 of this Order, and detailed layouts of the individual Hydro Stations have been

submitted to the Commission. As stated earlier, the Headworks Auxiliary Energy

Consumption has reduced due to the measures taken by TPC-G. Accordingly, the

Commission may consider Auxiliary Energy Consumption towards Headworks as

0.33% as stipulated in the CPRI Report.

Auxiliary Energy Consumption for nallah diversion

6.4.3.5 Auxiliary Energy Consumption towards nallah diversion may be computed in the

manner approved for the 2nd

Control Period in the Business Plan Order in Case No. 166

of 2011, in which an additional 0.28% had been provided towards pumping for nallah

diversion schemes. TPC-G has considered the average of the latest 5 year period, i.e.,

FY 2010-11 to FY 2014-15, to arrive at the average Auxiliary Energy Consumption for

the water pumped. The Auxiliary Energy Consumption computations for nallah

diversion scheme is as shown in the Table below:

Table 115: Auxiliary Energy Consumption for Nallah Diversion as submitted by TPC-G

for 3rd

Control Period

Particulars Unit FY

2010-11

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

Water pumping for nallah

diversion MCM 45.52 76.82 76.85 53.98 78.33



Particulars Unit FY

2010-11

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

Pumping energy for nallah

diversion MU 3.82 7.56 5.79 4.10 5.69

Average water quantity

pumped from FY 2011 to

FY 2015

MCM 66.30

Average energy

consumption towards nallah

diversion FY 2011 to FY

2015

MU 5.39


6.4.3.6 The Auxiliary Energy Consumption projected by TPC-G for Units 5 and 8 is lower than

the normative, while that of Units 6 and 7 are equal to the normative.

6.4.3.7 Since the Auxiliary Energy Consumption of all the Thermal Generating Units as

projected by TPC-G for the 3rd

Control Period is either within norms or in line with the

norms specified in the MYT Regulations, 2015, the Commission has taken the

normative Auxiliary Energy Consumption as shown in the Table below:

Table 116: Auxiliary Energy Consumption for Thermal Generating Units for 3rd

Control

Period as approved by Commission


Unit-5 6.00% 6.00% 6.00% 6.00%

Unit-6 3.50% 3.50% 3.50% 3.50%

Unit-7 (Combined Cycle) 3.00% 3.00% 3.00% 3.00%

Unit-7 (Open Cycle) 1.00% 1.00% 1.00% 1.00%

Unit-8 8.50% 8.50% 8.50% 8.50%

6.4.3.8 As regards the Auxiliary Energy Consumption towards GT losses in respect of the

Hydro Generating Stations, the Commission has set out its views and decision at paras.

4.3.2.33-35 earlier in this Order, which are equally applicable to the 3rd

Control Period.

Moreover, the MYT Regulations, 2015 do not provide for any transformation losses.

Accordingly, the Commission has not considered any additional transformation losses

for Hydro Generating Stations for the 3rd

Control Period.

6.4.3.9 As discussed at paras. 4.3.2.36-40 of this Order, the Commission has considered the

Auxiliary Energy Consumption towards Headworks as 0.18% for the 3rd

Control Period.



6.4.3.10 As regards the Auxiliary Energy Consumption for nallah diversion, the Commission in

its Business Plan Order dated 9 August, 2012 in Case No. 166 of 2011 held as under:

“The Commission is of the view that such energy on account of the nallah

diversions is being consumed for improving the inflow of water into the lakes and

enables additional generation, which benefits the consumers. The Commission

has hence, considered the relaxation in the Auxiliary Energy Consumption norms

for Hydro Stations to the extent of 0.28% as proposed by TPC-G.”

6.4.3.11 The Commission again dealt with the issue of Auxiliary Energy Consumption for nallah

diversion in its earlier MYT Order dated 5 June, 2013 in Case No. 177 of 2011 as

follows:

“…Further, the Commission in its Business Plan Order in Case No. 166 of 2011

has additionally allowed the Auxiliary Energy Consumption of 0.28% for energy

consumption for nallah diversion considering the last five year average

consumption of 3.78 MU. TPC-G stated that in the last five years, i.e., from 2007

to 2011 average of 52.46 MCM water was pumped. However, during FY 2011-12

since the rainfall was very high, the quantum of water pumped was 76.82 MCM.

In view of the same, the Commission has considered the energy consumption of

5.54 MU on pro rata basis considering the water pumping of 76.82 MCM.

Further, considering the total Gross Generation of 1532.05 MU the Commission

has allowed the additional Auxiliary Energy Consumption of 0.36%.”

6.4.3.12 Accordingly, in line with the methodology adopted for the 2nd

Control Period for the

Auxiliary Energy Consumption towards nallah diversion, the Commission has

considered the average water pumped and average energy consumption during the

period FY 2010-11 to FY 2014-15. Thus, the Commission has considered the average

energy consumption of 5.39 MU for 66.30 MCM of water pumped. Considering the total

gross generation for each year of the 3rd

Control Period, the Commission has allowed the

additional Auxiliary Energy Consumption as shown in the Table below:

Table 117: Auxiliary Energy Consumption for Nallah Diversion as approved by

Commission for 3rd

Control Period

Particulars Unit Value

Average water quantity pumped from

FY 2011 to FY 2015 MCM 66.30

Average energy consumption towards

nallah diversion FY 2011 to FY 2015 MU 5.39

FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20

Gross generation during 3rd Control

Period MU 1425.00 1470.00 1470.00 1470.00

% Normative Auxiliary Energy

Consumption % 0.38% 0.37% 0.37% 0.37%



6.4.3.13 The Commission approves the Auxiliary Energy Consumption for Hydro Generating

Stations by applying the normative level 1.00%, Headworks of 0.18% and additional

Auxiliary Energy Consumption towards nallah diversion as 0.38% for FY 2016-17 and

0.37% for the remaining years of the 3rd

Control Period. The summary of the Auxiliary

Energy Consumption as approved by the Commission is as shown in the Table below:

Table 118: Auxiliary Energy Consumption for Hydro Generating Stations as approved by

Commission for 3rd

Control Period

Station FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Normative Auxiliary Energy Consumption 1.00% 1.00% 1.00% 1.00%

Headworks distribution losses 0.18% 0.18% 0.18% 0.18%

Auxiliary Energy Consumption towards nallah

diversion 0.38% 0.37% 0.37% 0.37%

Total Auxiliary Energy Consumption 1.56% 1.55% 1.55% 1.55%



6.4.4.1 The normative SHR for the 3rd

Control Period is as shown in the Table below:

Table 119: Normative SHR for Thermal Generating Stations for 3rd

Control Period as

submitted by TPC-G


Unit-5 2525 2533 2541 2549

Unit-6 2666 2671 2676 2681

Unit-7 CC 2023 2027 2031 2035

Unit-7 OC 2900 2900 2900 2900

Unit-8 2450 2450 2450 2450

Note: CC – Combined Cycle, OC – Open Cycle

6.4.4.2 As per the MYT Regulations, 2015, the SHR for Unit-6 would be decided on an annual

basis considering the fuel mix used for firing in Unit-6, similar to the practice followed

in the 2nd

Control Period.

6.4.4.3 Unit-7 is sometimes required to be operated in Open Cycle condition. This typically

happens when there are some operational exigencies on the steam turbine side of the



CCGT or incidences of inadequate gas pressure due to tripping of the ONGC platforms

from where the gas is supplied. The Unit had operated in Open Cycle mode in the 2nd

Control Period as well.

6.4.4.4 In the 2nd

Control Period, TPC-G had approached the Commission regarding SHR for

Open Cycle operation of Unit-7. In the Business Plan Order in Case No. 166 of 2011,

the Commission had considered its request to approve a SHR of 2900 kCal/kWh for

Unit-7 in Open Cycle mode for the 2nd

Control Period. Accordingly, the Commission

may consider the SHR and Auxiliary Energy Consumption for Unit-7 in Open Cycle

mode, as approved in the Business Plan Order.


6.4.4.5 The SHR as submitted by TPC-G for Units 5 and 8 for the 3rd

Control Period is within

the normative SHR. The Commission approves the SHR as specified in the MYT

Regulations, 2015 accordingly.

6.4.4.6 The MYT Regulations, 2015 specify the SHR norms of Unit-6 for the 3rd

Control Period

with oil and gas mix in the proportion of 50:50. Accordingly, the Commission approves

the SHR for Unit-6 for the 3rd

Control Period as specified in the Regulations. In case the

variation is more than +/-5%, the SHR shall be approved considering the actual oil and

gas mix at the time of Truing-up.

6.4.4.7 The Regulations specify the SHR norm for Unit-7 operating in the Combined Cycle

mode. The SHR projected by TPC-G for the 3rd

Control Period is in line with the

normative SHR, and the Commission approves it accordingly.

6.4.4.8 For the Open Cycle mode operations of Unit-7, the norm has not been specified in the

MYT Regulations, 2015. However, for the 2nd

Control Period, in its Order dated 9

August, 2012 in Case No. 166 of 2011 the Commission had approved this SHR as 2900

kCal/kWh:

“….Further, for the open cycle mode operations, the norm for heat rate for Unit#

7 has not been specified in the MERC MYT Regulations. However, in the first

control period the Commission, as per the MERC Tariff Regulations, 2005 had

been approving the heat rate norm of 1950 kcal/kWh and 2830 kcal/kWh for the

combined cycle operation and the open cycle operation, respectively, of the

CCGT Units. In the said Regulations, the Commission had considered a

deterioration of 880 kcal/kWh towards operation in open cycle mode, considering

such deterioration, the open cycle Heat Rate for the second Control Period (FY

2012-13 to FY 2015-16) would be in the range of 2893 kcal/kWh to 2905

kcal/kWh. Further, Central Electricity Regulatory Commission (Terms and

Conditions of Tariff) Regulations, 2009 has stipulated open cycle Heat Rate norm



of 2900 kcal/kWh for the Faridabad GPS and Kayamkulam GPS with the

combined cycle heat rate norm of 2000 kcal/kWh, which is close to the combined

cycle heat rate norm of Unit# 7. The Commission, in line with the same, approves

the heat rate norm under open cycle operation of Unit# 7 as 2900 kcal/kWh for

the second Control Period…”

6.4.4.9 In this context, the Commission notes that the CERC (Terms and Conditions of Tariff)

Regulations, 2014 have not revised the normative Open Cycle SHR of 2900 kcal/kWh

for the Faridabad GPS and Kayamkulam GPS. Hence, the Commission approves the

SHR norm under Open Cycle mode operation for Unit-7 as 2900 kCal/kWh for the 3rd

Control Period.

6.4.4.10 In light of the above discussions, the SHR for the Thermal Generating Units as approved

by the Commission for the 3rd


Table 120: SHR as approved by Commission for 3rd

Control Period (kCal/kWh)


Unit-5 2525 2533 2541 2549

Unit-6 2544 2549 2554 2559

Unit-7 (Combined Cycle) 2023 2027 2031 2035

Unit-7 (Open Cycle) 2900 2900 2900 2900

Unit-8 2450 2450 2450 2450

6.4.5 Fuel Cost


6.4.5.1 The type of fuel proposed to be used in the Thermal Generating Units in the 3rd

Control

Period is as shown in the Table below:

Table 121: Fuel proposed for Thermal Generating Stations in 3rd

Control Period as

submitted by TPC-G

Station/ Unit Type of Fuel

Unit-5 Coal, Oil and Gas

Unit-6 Oil and Gas

Unit-7 Gas

Unit-8 Coal

6.4.5.2 TPC-G uses imported coal, domestic natural gas (under APM), oil (LSHS) and imported

RLNG for its Generating Units at Trombay. The coal is imported from Indonesia under



long-term contracts, the gas and RLNG are supplied by GAIL, and oil (LSHS) is

sourced from local oil refineries. The fuel forecast is based on TPC-G’s view of the fuel

market based on market interactions and internal research.

6.4.5.3 Coal prices for the 3rd

Control Period are forecasted as per Global Coal and Platts

reports, and the HBA Indonesian Index of Government of Indonesia is taken as per the

benchmark index. TPC-G has escalated the logistics cost annually by 5% and the

exchange rate is assumed as per the Consensus report. Other current statutory payments

are considered, viz., custom duty of 2%, Clean Energy Cess of Rs 412/MT, and

wharfage of Rs 22/ MT. As per the Union Budget for FY 2016-17, Service Tax @ 15%

has been taken on the freight cost component.

6.4.5.4 TPC-G has been procuring oil through imports or through local refineries. The quantity

of imports as well as local off-take has been reducing as Unit-6 generation on oil has

reduced. For the oil projections, TPC-G has considered that LSHS would be sourced

from local suppliers. However, this supply would be available at an import parity price.

6.4.5.5 TPC-G has projected the fuel oil price from a forecast from a leading oil Trading House,

and taken for the entire 3rd

Control Period. For the transportation of fuel oil, TPC-G has

taken the transportation cost corresponding to Low Sulphur premium oil corresponding

to the freight for 25000 MT shipments. Based on this computation, the freight charges

have been assumed as 75 USD/ MT for the entire 3rd

Control Period.

6.4.5.6 For APM gas, the Ministry of Petroleum & Natural Gas (MoPNG) pricing mechanism is

expected to be same as in last year, i.e., the variation in six monthly weighted average of

four indices, i.e., Henry Hub, Alberta, NBP Gas, Russian natural gas, are applied to the

existing price. With the current movement in international gas prices, it is estimated that

the variation in gas prices would be a nominal +/-3%. TPC-G has the following

contracts for APM gas:

Table 122: Existing Contracts for APM Gas as submitted by TPC-G

Source Quantity Duration

Remarks MCM per Day

GAIL 1.50 1 Jan 2016 - 31 Dec 2020

Actual supplies may depend on day-to-

day availability from ONGC Uran gas

fields

GAIL 0.50 1 Jan 2015 - 31 Dec 2018

Spot Gas E-bidding fortnightly. Supply

on best endeavour basis. Supply may

increase as per operational requirement



6.4.5.7 Imported RLNG gas prices are linked to crude oil. With the fall in crude oil prices,

RLNG prices have also fallen. RLNG prices are based on the prevalent RLNG contracts,

and are subject to change depending on market conditions. The long-term contracts are

‘take or pay’. However, if spot procurement is done instead of a take or pay

arrangement, the prices may vary depending on supply and demand of RLNG in India

and may not be in line with the current RLNG contract prices.

6.4.5.8 The fuel price projections for various fuels for the 3rd

Control Period are as shown in the

Table below:

Table 123: Fuel Parameters as projected by TPC-G for 3rd

Control Period


Fuel Price (Rs./MT)

APM Gas 16138 17965 19145 20381

RLNG 25393 28895 31565 34281

Oil 47211 46930 47073 47582

Coal 4747 4831 4992 5080

Calorific Value (kCal/Kg)

APM Gas 13109 13109 13109 13109

RLNG 13085 13085 13085 13085

Oil 10462 10462 10462 10462

Coal 4960 4940 4920 4900


6.4.5.9 The Commission had asked TPC-G for details of the actual fuel-related parameters for

the entire FY 2015-16 once the year was over. TPC-G has provided the actual fuel cost

calculations for FY 2015-16, based on the actual un-audited fuel parameters (GCV,

landed cost and fuel cost).

6.4.5.10 The Commission sought the LoAs for coal imports and asked whether the procurement

was through competitive bidding. TPC-G has provided all the bills for imported coal for

FY 2014-15 and FY 2015-16. The Commission has analyzed these contracts, bills and

submissions. From these, the Commission found that the payment for coal related

invoices were made to the agencies with whom the LoAs were signed. Further, the

quantities of fuel claimed in the Petition match the quantities in the bills for imported

coal. Further, on the data gap raised by the Commission, TPC-G clarified that

procurement of imported coal was done through international competitive bidding as

detailed in para. 2.1.11 of this Order.



6.4.5.11 The Commission has considered the landed cost of fuel for the 3rd

Control Period as

specified in the MYT Regulations, 2015:

“48.5 Energy Charge Rate (ECR) in Rs/kWh

…Provided that the landed cost of primary fuel and secondary fuel for tariff

determination shall be based on actual weighted average cost of primary fuel and

secondary fuel of the three preceding months, and in the absence of landed costs

for the three preceding months, latest procurement price of primary fuel and

secondary fuel for the Generating Station, preceding the first month for which the

Tariff is to be determined for existing Stations and immediately preceding three

months in case of new Generating Stations shall be taken into account…”

6.4.5.12 As per the Regulations, the Commission has considered the weighted average fuel price

and GCV of the past three months as submitted by TPC-G and arrived at the landed cost

of primary and secondary fuel for the 3rd

Control Period. The Commission has

considered the stacking loss as 150 Kcal/kg in accordance with Regulations, as

submitted by TPC-G. The landed price of coal is also adjusted for the variation in Clean

Environment Cess (earlier known as Clean Energy Cess).

6.4.5.13 The Commission has not considered any escalation in fuel prices as the adjustments for

variation in fuel prices is allowed through the Fuel Surcharge Adjustment mechanism

under Regulation 48.6.

6.4.5.14 The Commission approves the fuel parameters for FY 2016-17 to FY 2019-20 based on

the above assumptions for the 3rd

Control Period, as summarised in the Table below:

Table 124: Summary of Fuel Parameters as approved by Commission for 3rd

Control

Period (Rs./MT)


Fuel Prices (Rs./MT)

APM Gas 14857 14857 14857 14857

Non-APM Gas 15217 15217 15217 15217

Oil- LSHS 51605 51605 51605 51605

Coal 5003 5003 5003 5003

RLNG 28526 28526 28526 28526

Calorific Value (kCal/Kg)

APM Gas 13157 13157 13157 13157

Non-APM Gas 13163 13163 13163 13163

Oil- LSHS 10459 10459 10459 10459

Coal 4888 4888 4888 4888

RLNG 13085 13085 13085 13085



6.4.5.15 Based on the approved performance parameters, i.e., Gross Generation, SHR and

Auxiliary Energy Consumption, and considering the fuel prices and calorific value as

discussed in above, the summary of Energy Charges as projected by TPC-G and as

considered by the Commission for the 3rd

Control Period is given in the Table below:

Table 125: Summary of Energy Charges as approved by Commission for 3rd

Control

Period (Rs./kWh)

Unit Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20

Petition Approved Petition Approved Petition Approved Petition Approved

Unit-5 APM Gas 3.31 3.03 3.69 3.08 3.95 3.09 4.22 3.10

Unit-5 Oil- LSHS 12.12 13.25 12.09 13.49 12.16 13.53 12.33 13.57

Unit-5 Coal 2.65 2.84 2.72 2.85 2.83 2.85 2.90 2.86

Unit-6 RLNG 5.40 5.75 6.16 5.76 6.74 5.77 7.33 5.78

Unit-6 Oil- LSHS 12.47 13.01 12.42 13.03 12.48 13.06 12.64 13.08

Unit-7 APM Gas 2.57 2.36 2.86 2.36 3.06 2.36 3.26 2.37

Unit-7 RLNG 4.08 4.55 4.65 4.56 5.09 4.56 5.54 4.57

Unit-8 Coal 2.68 2.83 2.74 2.83 2.84 2.83 2.90 2.83



6.4.6.1 TPC-G has considered the O&M Expenses in accordance with Regulation 45.1 of the

MYT Regulations, 2015 for the Trombay Thermal Generating Units 4 to 7 and the

Hydro Stations with actual Commercial Operation Date (COD) prior to 26 August,

2005.

6.4.6.2 In accordance with the Regulations, TPC-G has considered the actual O&M Expenses

for the period from FY 2012-13 to FY 2014-15, and the average base cost for FY 2013-

14 was derived. An escalation rate of 5.72% was applied to arrive at the base O&M

expenses in FY 2015-16. The detailed working is as shown in the Table below:

Table 126: O&M Expenses for Base Year as submitted by TPC-G for 3rd

Control Period

(Rs. Crore)

Particulars 2012-13 2013-14 2014-15

Actual O&M Expenses 419.79 437.49 489.13

Actual Water Charges 12.51 10.33 11.46

Actual O&M Expenses excluding Water

Charges 407.28 427.16 477.67

Average O&M - base for FY 2013-14 437.37



Particulars 2012-13 2013-14 2014-15

Escalation Rate 5.72%

FY 2014-15 462.39

FY 2015-16 488.84

6.4.6.3 These O&M expenses of FY 2015-16 would be escalated by a factor comprising 60%

weightage of the actual point to point inflation over the Wholesale Price Index (WPI)

numbers (as per the Office of Economic Advisor, Government of India (GoI)) in the

concerned year and 40% weightage of the actual Consumer Price Index (CPI) for

Industrial Workers (All India) as per the Labour Bureau, GoI in the current year. The

combined inflation rate works out to 1.11%. The Regulations also specify an efficiency

factor of 1% to be reduced from this inflation factor. However, TPC-G has considered

efficiency factor as nil because the inflation rates have been lower only in the past few

months and the average inflation rates have been above 1.11% in previous years.

6.4.6.4 Considering the base year O&M expenses and the inflation factor, the O&M expenses

for FY 2016-17 to FY 2019-20 are computed as shown in the Table below:

Table 127: O&M Expenses as submitted by TPC-G for Units 4 to 7 and Hydro for 3rd

Control Period (Rs. Crore)


Normative O&M Expenses 494.28 499.78 505.34 510.96

Water Charges + Hydro Colony

Consumption of 0.53 Crore 11.99 11.99 11.99 11.99

Total O&M Expense 506.27 511.77 517.33 522.95

6.4.6.5 Unit-8 has achieved COD after August 26, 2005 and hence the O&M expense norms for

new Generating Stations are applicable to it. In accordance with Regulation 45.2, TPC-

G has computed the O&M expenses as shown in the Table below:

Table 128: O&M Expenses as submitted by TPC-G for Unit-8 for 3rd

Control Period


O&M Norms for 250 MW Unit (Rs.

Lakh/MW) 23.8 24.99 26.24 27.55

Projected O&M Expenses as per

Norms (Rs. Crore) 59.50 62.48 65.60 68.88




6.4.6.6 The Commission has examined the submissions made by TPC-G with respect to O&M

expenses.

6.4.6.7 The Commission has considered the three year average of actual Trued-up base O&M

expenses to arrive at the base O&M expenses for the year ending 31 March, 2014. That

is then escalated by 5.72% as per the MYT Regulations, 2015 to arrive at the expenses

in FY 2015-16.

6.4.6.8 As regards the O&M escalation rate, Regulation 45.1(d) stipulates as follows:

“The O and M expenses for each subsequent year shall be determined by

escalating the base expenses determined above for FY 2015-16, at the inflation

factor considering 60% weightage for the actual point to point inflation over

Wholesale Price Index numbers a per Office of Economic Advisor of Government

of India in the previous year and 40% weightage for the actual Consumer Price

Index for Industrial Workers(all India) as per Labour Bureau, Government of

India in the previous year, as reduced by an efficiency factor of 1%, to arrive at

permissible O and M expenses for each year of the Control Period.”

6.4.6.9 From the WPI and CPI data for the previous year FY 2015-16, it is seen that, by

applying 60% weightage to WPI and 40% weightage to CPI, the escalation rate works

out to 0.76%. Applying the efficiency factor of 1%, the inflation factor to be considered

for projecting O&M expenses from FY 2016-17 onwards works out to (-) 0.24%.

6.4.6.10 The escalation rates based on actual WPI and CPI have reduced significantly during the

last 2 years as compared to previous years. The Commission is of the view that it may

not be appropriate to consider this negative inflation factor for projecting O&M

expenses from FY 2016-17 onwards since some O&M expenses are likely to increase

from year to year.

6.4.6.11 The Commission also analysed the approach of the CERC for O&M expenses in its

Tariff Regulations, 2014. The CERC considered the escalation rate based on 5 years

average WPI and CPI indices from FY 2008-09 to FY 2012-13 considering 60%

weightage to WPI and 40% weightage to CPI, and compared them with the actual

increase in such expenses.

6.4.6.12 The inflation factor based on the MYT Regulations, 2015 is negative due to the

reduction in average WPI in FY 2015-16 over FY 2014-15. The Commission is of the

view that, at this stage, it would be more appropriate to consider the WPI and CPI

variation over a longer period so that wide fluctuations in any one particular year are

smoothened while arriving at the inflation factor. Hence, the Commission has

considered the three year average variation in WPI and CPI to arrive at the inflation

factor for projecting the O&M expenses from FY 2016-17 onwards. Based on this



approach, the escalation rate considering 60% weightage to WPI and 40% weightage to

CPI works out to 3.97%. After applying the efficiency factor of 1%, the escalation factor

considered for projecting O&M expenses from FY 2016-17 to FY 2019-20 is 2.97%.

6.4.6.13 In view of the above, and in exercise of its power to remove difficulties under

Regulation 102, the Commission has computed the O&M expenses for the 3rd

Control

Period applying the inflation factor of 2.97% as worked out above.

6.4.6.14 The computation of O&M expense escalation considered accordingly in this Order is as



Control Period

Month

WPI CPI

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

April 163.5 171.3 180.8 176.4 205 226 242 256

May 163.9 171.4 182 178 206 228 244 258

June 164.7 173.2 183 179.1 208 231 246 261

July 165.8 175.5 185 177.6 212 235 252 263

August 167.3 179 185.9 176.5 214 237 253 264

September 168.8 180.7 185 176.5 215 238 253 266

October 168.5 180.7 183.7 176.9 217 241 253 269

November 168.8 181.5 181.2 177.5 218 243 253 270

December 168.8 179.6 178.7 176.8 219 239 253 269

January 170.3 179 177.3 175.4 221 237 254 269

February 170.9 179.5 175.6 174.1 223 238 253 267

March 170.1 180.3 176.1 174.6 224 239 254 268

Average 168 178 181 177 215 236 251 265

YoY Increase

% 5.98% 2.00% -2.52%

9.68% 6.29% 5.65%


Control Period

Average of Three

year CPI Growth %

Average of Three

year WPI Growth %

Escalation rate with

60% WPI and 40%

CPI

Escalation

Considering 1%

Efficiency Factor

7.21% 1.82% 3.97% 2.97%

6.4.6.15 TPC-G has considered the Hydro Station colony consumption of 0.53 Crore for each

year of the 3rd

Control Period in the O&M expenses. Regulation 43.2 of the MYT

Regulations, 2015 specifies that the Hydro colony consumption should be considered in

the Non-Tariff Income. Accordingly, the Commission has not considered such



consumption as a part of O&M expenses. Further, the Commission approves the water

charges for the 3rd

Control Period as per the actual charges for FY 2015-16 submitted by

TPC-G.

6.4.6.16 In view of the above discussion, O&M expenses for Units 4 to 7 and Hydro Stations for

the 3rd

Control Period approved by the Commission are as shown in the Table below:

Table 131: O&M Expenses as approved by Commission for Units 4 to 7 and Hydro

Generating Stations for 3rd



O&M Expenses 498.98 513.81 529.09 544.82

Water Charges 11.46 11.46 11.46 11.46

Total O&M Expenses 510.44 525.27 540.55 556.28

6.4.6.17 The Commission approves O&M Expenses of Rs. 510.44 Crore for FY 2016-17, Rs.

525.27 Crore for FY 2017-18, Rs. 540.55 Crore for FY 2018-19 and Rs. 556.28

Crore for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.

6.4.6.18 The O&M expenses of Unit-8 as computed by TPC-G are in line with the normative

expenses as per the MYT Regulations, 2015. Accordingly, the Commission approves

O&M expenses for Unit-8 as submitted by TPC-G as shown in the Table below:

Table 132: O&M Expenses as approved by Commission for 3rd

Control Period for Unit-8

(Rs. Crore)


O&M Norms for 250 MW Unit (Rs.

Lakh/MW) 23.8 24.99 26.24 27.55

Projected O&M Expenses as per

Norms (Rs. Crore) 59.50 62.48 65.60 68.88


62.48 Crore for FY 2017-18, Rs. 65.60 Crore for FY 2018-19 and Rs. 68.88 Crore

for FY 2019-20 for Unit-8.



6.4.7.1 The capital expenditure and capitalisation proposed for Units 4 to 7 and Hydro

Generating Stations during the 3rd




Table 133: Capitalisation for Units 4 to 7 and Hydro Generating Stations for 3rd

Control

Period as submitted by TPC-G (Rs. Crore)


DPR 176.24 200.90 187.25 41.94

Non-DPR 23.28 26.19 31.25 5.44

TOTAL 199.52 227.09 218.50 47.38

Non-DPR : DPR Ratio 13% 13% 17% 13%

6.4.7.2 A detailed description of the major capital expenditure projects planned during the 3rd

Control Period is provided below:

Condenser Tube Replacement of Unit-5

6.4.7.3 Unit-5 condenser, which utilizes sea water for cooling purposes, has started

experiencing problems in the condenser tubes since FY 1999-00 which has affected

generation from FY 2002-03 onwards. TPC-G proposes to replace half the condenser

tubes over outages (20 days each) planned during FY 2016-17 and FY 2018-19. The

proposed capital expenditure is around Rs. 21.16 Crore in each year.

Unit-7 Life Extension

6.4.7.4 Optimized Life Time Extension (LTE) of Unit-7 is proposed involving GT overhaul,

compressor partial blade replacement, refurbishment of turbine stage 1 and 2 blades,

replacement of heat shields in combustion chamber, weld repairs of diffuser and turbine

exhaust and replacement of all diverter damper seals. The proposed capital expenditure

is estimated at around Rs. 80 Crore for 5 years extension, which would restore the gas

turbine to full operating condition.

Heater Nos. 5 and 6 Replacement of Unit-5

6.4.7.5 High pressure heater nos. 5 & 6 of Unit-5 have been experiencing tube failures due to

chloride induced corrosion cracking. The repeated tube failures indicate that the extent

of damage caused to the tubes due to chloride induced corrosion is very high. The failure

trend indicates that the heaters will not be able to give reliable service for a long period

and it cannot be ensured by attending to tube leaks. As the numbers of plugged tubes are

more, there is additional risk of tube failures due to highly stressed tubes. Replacement

of the high pressure heaters nos. 5 & 6 is proposed at an estimated cost of Rs. 30 Crore.

Replacement of 25 MW Unit-1 at Bhira



6.4.7.6 Unit-1 of 25 MW at Bhira has completed more than 60 years, and most of its major

components like hydraulic systems, main inlet valve, needle, deflector, electrical

systems, and turbine have outlived their useful life. Hence, to avoid the possibility of

major breakdown or failure of the machine and associated non-availability of Hydro

generation, it is proposed to replace the Unit-1 at Bhira. This will also result in

additional generation due to installation of runner with higher efficiency. The project is

estimated to cost Rs. 65.50 Crore.

Unit-8

6.4.7.7 The capital expenditure and capitalisation proposed for Unit-8 during the 3rd

Control

Period is as shown in the Table below:

Table 134: Capital Expenditure and Capitalisation as submitted by TPC-G for Unit-8

during 3rd


Particulars

Capital Expenditure Capitalisation

FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

DPR 1.33 0.04 9.81 0.00 2.04 0.00 10.86 0.00

Non-DPR 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total 1.33 0.04 9.81 0.00 2.04 0.00 10.86 0.00


6.4.7.8 In its Petition, TPC-G has included the capitalisation of 48 schemes that are yet to be

submitted for in-principle approval to the Commission. The Commission has not

considered the capitalisation for these schemes.


TPC-G. All the DPR schemes proposed for capitalisation have already been approved

in-principle except for four new schemes, viz. a) Environment, fire, safety, security and

statutory 2013-17, b) Unit-5 Reliability Schemes, c) Refurbishment of SET 1 and d)

Replacement of Unit-5 condenser tubes. The Commission has reviewed the justification

and CBA submitted for these four new schemes as per its Guidelines of 2005. Based on

this review, the Commission has considered the impact of these four capex schemes for

capitalisation.

6.4.7.10 The Petition includes capitalisation of some Non-DPR schemes that are in the nature of

O&M or for common employee facilities, such as procurement of tools and tackles,

procurement of safety equipment, swimming pool renovation, mobiles and canteen

equipments for staff, etc. Hence, the Commission has not considered such Non-DPR



schemes for capitalisation. The details of these schemes are at para. 4.3.8.6 of this Order.

Further, In line with the Commission’s previous Orders, the Commission has restricted

Non-DPR capitalisation to 20% of DPR capitalisation.

6.4.7.11 The cumulative capitalisation of some schemes during the 3rd

Control Period exceeds

their approved cost. Their capitalisation has been restricted by the Commission to that

extent. Details of these schemes are at para. 5.3.11.11 of this Order.

6.4.7.12 The summary of the capitalisation disallowed by the Commission is as shown in the

Table below:

Table 135: Capitalisation disallowed by Commission for FY 2015-16 (Rs. Crore)

Particulars

Capitalisation Disallowed

FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20


Disallowed DPR capitalisation for yet to be

submitted schemes 41.24 50.87 142.60 23.04

Disallowed Non-DPR capitalisation for O&M

nature schemes 0.92 1.91 0.00 0.00

Disallowed DPR capitalisation for restricted

cumulative capitalisation 4.62 0.05 0.39 0.00

Total Disallowed Capitalisation 46.78 52.83 142.99 23.04

Unit-8

Disallowed DPR capitalisation for yet to be

submitted schemes 0.90 0.00 9.85 0.00

Disallowed Non-DPR capitalisation for O&M

nature schemes 0.00 0.00 0.00 0.00

Disallowed DPR capitalisation for restricted

cumulative capitalisation 0.00 0.00 0.00 0.00

Total Disallowed Capitalisation 0.90 0.00 9.85 0.00

6.4.7.13 The summary of the capitalisation as submitted by TPC-G and as approved by the

Commission for the 3rd


Table 136: Capitalisation approved by Commission for 3rd


Particulars 2016-17 2017-18 2018-19 2019-20


Units 4 to 7 and Hydro Generating Stations

DPR Schemes 176.24 130.38 200.90 149.98 187.25 44.26 41.94 18.90

Non-DPR Schemes 23.28 22.36 26.19 24.28 31.25 8.85 5.44 3.78



Particulars 2016-17 2017-18 2018-19 2019-20


Total 199.52 152.74 227.09 174.26 218.50 53.11 47.38 22.68

Unit-8

DPR Schemes 2.04 1.14 0.00 0.00 10.86 1.01 0.00 0.00

Non-DPR Schemes 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total 2.04 1.14 0.00 0.00 10.86 1.01 0.00 0.00

6.4.7.14 The Commission approves Capitalisation of Rs. 152.74 Crore for FY 2016-17, Rs.


for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations. Capitalisation of

Rs. 1.14 Crore for FY 2016-17, none for FY 2017-18, Rs. 1.01 Crore for FY 2018-19

and none for FY 2019-20 is approved for Unit-8.

6.4.8 Depreciation


6.4.8.1 For existing assets of Units 4 to 7 and Hydro Stations, TPC-G has computed

Depreciation based on the rates in the MYT Regulations, 2015. For the assets added

during the 3rd

Control Period TPC-G has computed Depreciation based on estimated

capitalisation and considering the Depreciation rate for plant and machinery, i.e., 5.28%.

Depreciation computations are shown in the Table below:

Table 137: Depreciation for Units 4 to 7 and Hydro Stations as submitted by TPC-G for 3rd


Particulars Depreciation Rate FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Depreciation on account of

assets as on FY15 133.02 126.72 116.64 105.25


assets added in FY16 9.57 9.57 9.57 9.57


assets added inFY17 5.28% 5.27 10.53 10.53 10.53


assets added inFY18 5.28% 6 11.99 11.99


assets added inFY19 5.28% 5.77 11.54


assets added inFY20 5.28% 1.25

Total Depreciation 147.86 152.83 154.51 150.14



6.4.8.2 For existing assets of Unit-8, TPC-G has computed Depreciation as per the rates in the

Regulations. For the assets added during the 3rd

Control Period TPC-G has computed

Depreciation based on estimated capitalisation and considering Depreciation rate for

plant and machinery, i.e., 5.28% for the 3rd

Control Period. Depreciation computations

are as shown in the Table below:

Table 138: Depreciation for Unit-8 as submitted by TPC-G for 3rd

Control Period (Rs.

Crore)

Particulars Depreciation Rate FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20


assets as on FY15 63.99 63.86 63.57 61.46


assets added in FY16 1.26 1.26 1.26 1.26


assets added in FY17 5.28% 0.05 0.11 0.11 0.11


assets added in FY18 5.28%

0.00 0.00 0.00



0.29 0.57



0.00

Total Depreciation 65.31 65.24 65.23 63.40


6.4.8.3 For computing Depreciation for the 3rd

Control Period, the Commission has considered

closing GFA for FY 2015-16 as provisionally Trued-up earlier in this Order and assets

added during the year, subject to the capitalisation approved for the 3rd

Control Period in

this Order.

6.4.8.4 Regulation 27 of the MYT Regulations, 2015 permits recovery of Depreciation on the

value of fixed assets, computed annually on the straight-line method at the specified

rates. The Commission determines Depreciation on the opening GFA for the full

operational period and on additional capitalisation, from the date of capitalisation, for

various classes of assets at the rates as per the Regulations.

6.4.8.5 On this basis, the Commission has computed Depreciation for Units 4 to 7 and Hydro

Generating Stations for the 3rd

Control Period as shown in the Table below:



Table 139: Depreciation approved by Commission for Units 4 to 7 and Hydro Stations for

3rd


Particulars FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Opening GFA 4343.94 4496.68 4670.94 4724.05

Asset Addition During the Year 152.74 174.26 53.11 22.68

Asset Retirement During the Year 0.00 0.00 0.00 0.00

Closing GFA 4496.68 4670.94 4724.05 4746.73

Depreciation 146.59 149.94 148.28 141.41

6.4.8.6 The Commission approves Depreciation of Rs. 146.59 Crore for FY 2016-17, Rs.

149.94 Crore for FY 2017-18, Rs. 148.28 Crore for FY 2018-19 and Rs. 141.41


6.4.8.7 The Commission has computed Depreciation for Unit-8 in line with the MYT

Regulations, 2015 as shown in the Table below:

Table 140: Summary of Depreciation approved by Commission for Unit-8 for 3rd

Control

Period (Rs. Crore)

Particulars FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Opening GFA 1161.94 1163.09 1163.09 1164.10

Asset Addition During the Year 1.14 0.00 1.01 0.00

Asset Retirement During the Year 0.00 0.00 0.00 0.00

Closing GFA 1163.09 1163.09 1164.10 1164.10

Depreciation 65.29 65.19 64.90 62.82



for FY 2019-20 for Unit-8.



6.4.9.1 Based on the closing balance of loans for FY 2015-16 and the additional capitalisation

during the 3rd

Control Period, the Interest on Long-term Loan has been computed

considering the weighted average rate of interest of the actual loan portfolio for FY

2014-15. As provided in the MYT Regulations, 2015, the repayment of loans is



considered equal to the Depreciation for the year. The Interest on Long-term Loan for

the 3rd


Table 141: Interest on Long-term Loan for Units 4 to 7 and Hydro Stations as submitted by

TPC-G for 3rd


Particulars FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Opening Loan Balance 737.54 729.34 735.48 733.91

Loan addition for asset addition during

the year 139.66 158.96 152.95 33.16

Loan Repayment during the year 147.86 152.83 154.51 150.14

Closing Loan Balance 729.34 735.48 733.91 616.94

Weighted Average Interest Rate 10.94% 10.94% 10.94% 10.94%

Interest Expense 80.22 80.10 80.35 73.87

Table 142: Interest on Long-term Loan for Unit-8 as submitted by TPC-G for 3rd

Control

Period (Rs. Crore)

Particulars FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20


Loan addition for asset addition during

the year 1.43 0.00 7.60 0.00






6.4.9.2 For the interest expenses, the Commission has considered the approved closing balance

of loan for FY 2015-16 considered in this Order as the opening balance of FY 2016-17.

The loan repayment has been considered equal to the Depreciation allowed during the

respective years of the 3rd

Control Period in this Order, in accordance with Regulation

29.3 of MYT Regulations, 2015. The loan addition during the year has been considered

at 70% of the capitalisation approved in this Order, based on the debt:equity ratio of

70:30.

6.4.9.3 Regulation 29.5 of MYT Regulations, 2015 specifies as follows:



“The rate of interest shall be the weighted average rate of interest computed on

the basis of the actual loan portfolio at the beginning of each year:

…Provided also that if the Generating Company or the Licensee or the

MSLDC, as the case may be, does not have actual loan even in the past, the

weighted average rate of interest of its other Businesses regulated by the

Commission shall be considered…”

6.4.9.4 TPC-G has computed Interest on Long-term Loan considering the weighted average rate

of interest of the actual loan portfolio for FY 2014-15 as discussed in para. 5.3.13.5. The

Commission has considered that rate for computation of interest expenses for the 3rd

Control Period as shown in the Tables below:

Table 143: Interest on Long-term Loan for Units 4 to 7 and Hydro Stations as approved by

Commission for 3rd


Particulars FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20



Loan addition for asset addition during the

year 106.92 121.98 37.18 15.88

Loan reduction for asset addition during the

year 0.00 0.00 0.00 0.00





6.4.9.5 The Commission approves Interest on Long-term Loan of Rs. 76.66 Crore for FY

2016-17, Rs. 72.97 Crore for FY 2017-18, Rs. 65.36 Crore for FY 2018-19 and Rs.

52.42 Crore for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.

Table 144: Interest on Long-term Loan for Unit-8 as approved by Commission for 3rd


Particulars FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20



Loan addition for asset addition during the

year 0.80 0.00 0.71 0.00



Particulars FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Loan reduction for asset addition during the

year 0.00 0.00 0.00 0.00





6.4.9.6 The Commission approves Interest on Long-term Loan of Rs. 50.16 Crore for FY


28.77 Crore for FY 2019-20 for Unit-8.



6.4.10.1 TPC-G has computed RoE based on Regulation 28 of the MYT Regulations, 2015 and

projections of capitalisation during the 3rd

Control Period, as given in the Table below:


Control Period for Units 4 to 7

and Hydro Stations (Rs. Crore)

Particulars % RoE FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Regulatory equity at the beginning

of the year 1577.05 1636.91 1705.03 1770.58

Equity portion of the net assets

capitalised during the year 59.86 68.13 65.55 14.21

Regulatory equity at the end of the

year 1636.91 1705.03 1770.58 1784.8

Return on regulatory equity at the

beginning of the year 15.50% 244.44 253.72 264.28 274.44

Return on equity portion of capital

expenditure capitalised during the

year

15.50% 4.64 5.28 5.08 1.1

Total return on equity 249.08 259 269.36 275.54

6.4.10.2 For Unit-8, the RoE is as given in the Table below:




Control Period for Unit-8 (Rs.

Crore)


2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Regulatory equity at the beginning

of the year 350.3 350.92 350.92 354.18


capitalised during the year 0.61 0 3.26 0

Regulatory equity at the end of the

year 350.92 350.92 354.18 354.18




expenditure capitalised during the

year

15.50% 0.05 0 0.25 0

Total return on equity 54.34 54.39 54.64 54.9


6.4.10.3 The Commission has computed RoE at the rate of 15.50% as per Regulation 28 of the

MYT Regulations, 2015, on the opening equity of the year. Regulation 28.3 specifies as

follows:

“28.3 The return on equity shall be computed in the following manner :—

(a) Return at the allowable rate as per this Regulation, applied on the amount of

equity capital at the commencement of the Year; plus

(b) Return at the allowable rate as per this Regulation, applied on 50 per cent of

the equity capital portion of the allowable capital cost, for the investments put to

use in Generation Business or Transmission Business or Distribution Business or

MSLDC, for such Year.”

6.4.10.4 Accordingly, the Commission has considered RoE on 50 per cent of the equity capital

portion of the allowable capital cost for the investments put to use in each year of the 3rd

Control Period.

6.4.10.5 For arriving at the Regulatory Equity at the beginning of FY 2016-17, the Commission

has taken the closing equity at the end of FY 2015-16 as approved in the Provisional

Truing-up for FY 2015-16 earlier in this Order. The RoE as approved by the


Control Period is summarised in the following Table:



Table 147: Return on Equity as approved by the Commission for Units 4 to 7 and Hydro

Generating Stations for 3rd



2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Regulatory equity at the beginning of

the year 1573.87 1619.69 1671.97 1687.91



Regulatory equity at the end of the year 1619.69 1671.97 1687.91 1694.71




expenditure capitalised during the year 15.50% 3.55 4.05 1.23 0.53


6.4.10.6 The Commission approves Return on Equity of Rs. 247.50 Crore for FY 2016-17,

Rs. 255.10 Crore for FY 2017-18, Rs. 260.39 Crore for FY 2018-19 and Rs. 262.15


Table 148: Return on Equity as approved by the Commission for Unit-8 for 3rd

Control

Period (Rs. Crore)


2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Regulatory equity at the beginning of

the year 348.58 348.92 348.92 349.23



Regulatory equity at the end of the year 348.92 348.92 349.23 349.23




expenditure capitalised during the year 15.50% 0.03 0.00 0.02 0.00




6.4.10.7 The Commission approves Return on Equity of Rs. 54.06 Crore for FY 2016-17,


Crore for FY 2019-20 for Unit-8.



6.4.11.1 TPC-G has computed IoWC in accordance with Regulation 31.1 of the MYT

Regulations, 2015, applying an interest rate of 10.80%., and shown in the Table below:

Table 149: Interest on Working Capital as submitted by TPC-G for Units 4 to 7 and Hydro

Stations for 3rd



2 months fuel cost for Unit-5 (Coal) 154.61 158.51 165.01 169.63

2 months fuel cost for Unit-6 (Oil/Coal) 0.00 0.00 0.00 0.00

1 months fuel cost for Unit-7 (Gas) 27.82 31.03 33.13 35.34

2 months fuel cost 182.43 189.54 198.14 204.97

O&M expenses for 1 month 42.19 42.65 43.11 43.58

Maintenance of spares 1% of Opening

GFA for the year 42.76 44.75 47.02 49.21

Receivables for sale of electricity to

BEST 201.75 204.33 216.53 222.99

Less : Payables for fuel 105.12 110.28 115.63 120.15

Total working capital 364.00 370.99 389.17 400.60

Rate of Interest 10.80% 10.80% 10.80% 10.80%


Table 150: Interest on Working Capital as submitted by TPC-G for Unit-8 for 3rd

Control

Period (Rs. Crore)


Cost of coal for 2 months 75.53 77.17 80.05 81.81



GFA for the year 11.69 11.71 11.71 11.81


BEST 51.27 51.83 52.88 53.29






Rate of Interest 10.80% 10.80% 10.80% 10.80%



6.4.11.2 The Commission has computed the total working capital requirement in accordance with

Regulation 31.1. As per the Regulations, the Commission has considered the rate of

IoWC as 10.80%, which is the Base Rate of State Bank of India (SBI) as on the date of

filing of the Petition (9.30%) plus 1.50%.

6.4.11.3 The summary of IoWC approved by the Commission for the 3rd

Control Period is shown

in the Tables below:

Table 151: Interest on Working Capital as approved by the Commission for Units 4 to 7

and Hydro for 3rd



2 months fuel cost for Unit-5 (Coal) 158.16 158.67 159.17 159.23

2 months fuel cost for Unit-6 (Oil/Coal) 0.00 0.00 0.00 0.00

1 months fuel cost for Unit-7 (Gas) 25.16 25.21 25.26 25.24

2 months fuel cost 183.33 183.88 184.43 184.48



GFA for the year 42.66 44.19 45.94 46.50


BEST 147.68 149.36 150.37 150.14



Rate of Interest 10.80% 10.80% 10.80% 10.80%


6.4.11.4 The Commission approves Interest on Working Capital of Rs. 33.69 Crore for FY


34.84 Crore for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.

Table 152: Interest on Working Capital as approved by Commission for Unit-8 for 3rd





Cost of coal for 2 months 87.13 87.13 87.13 87.13



GFA for the year 11.62 11.63 11.63 11.64


BEST 39.68 39.47 39.25 38.93



Rate of Interest 10.80% 10.80% 10.80% 10.80%


6.4.11.5 The Commission approves Interest on Working Capital of Rs. 10.78 Crore for FY

2016-17, Rs. 10.79 Crore for FY 2017-18 and Rs. 10.79 Crore for FY 2018-19 and

Rs. 10.79 Crore for FY 2019-20 for Unit-8.

6.4.12 Income Tax


6.4.12.1 Income Tax has been computed in accordance with Regulation 33 of the MYT

Regulations, 2015, as shown in the Table below:

Table 153: Income Tax for Units 4 to 7 and Hydro Stations as submitted by TPC-G for 3rd


Particulars FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Income Tax 124.24 127.21 131.51 151.26

Table 154: Income Tax for Unit-8 as submitted by TPC-G for 3rd

Control Period (Rs.

Crore)

Particulars FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Income Tax 64.44 67.93 70.50 72.37


6.4.12.2 Regulation 33.1 of the MYT Regulations, 2015 stipulates as follows



“The Commission, in its MYT Order, shall provisionally approve Income Tax

payable for each year of the Control Period based on the actual Income Tax paid

by the Generating Company or Licensee or MSLDC, in case the Generating

Company or Licensee or MSLDC has not engaged in any other regulated or

unregulated Business or Other Business, as allowed by the Commission relating

to the electricity Business regulated by the Commission, as per latest available

Audited Accounts, subject to prudence check.”

6.4.12.3 The Commission has considered the Income Tax approved for FY 2014-15 based on

PBT method as per the audited Annual Accounts as the Income Tax for FY 2016-17 to

FY 2019-20, as shown in the Tables below:

Table 155: Income Tax for Units 4 to 7 and Hydro Stations as approved by TPC-G for 3rd


Particulars FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Income Tax 98.89 98.89 98.89 98.89

6.4.12.4 The Commission approves Income Tax of Rs. 98.89 Crore for each year of the 3rd

Control Period for Units 4 to 7 and Hydro Generating Stations.

Table 156: Income Tax for Unit-8 as approved by TPC-G for 3rd

Control Period (Rs.

Crore)

Particulars FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Income Tax 24.49 24.49 24.49 24.49

6.4.12.5 The Commission approves Income Tax of Rs. 24.49 Crore for each year of the 3rd

Control Period for Unit-8.



6.4.13.1 Regulation 43.1 states the following:

“43.1 The amount of Non-Tariff Income of the Generating Company as approved

by the Commission shall be deducted while determining its Annual Fixed Charge:

Provided that the Generating Company shall submit full details of its

forecast of Non-Tariff Income to the Commission in such form as may be

stipulated by the Commission.”



6.4.13.2 Accordingly, TPC-G has considered the actual recurring and non-recurring items over

the last five years, i.e., from FY 2009-10 to FY 2014-15, for computation of the Non-

Tariff Income. Compounded Annual Growth Rate (CAGR) was considered for the

calculations as shown below:

Table 157: Non-Tariff Income as submitted by TPC-G for Units 4 to 7 and Hydro Stations

for 3rd


Particulars FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 CAGR FY 2015-16

Recurring 4.55 5.51 4.12 5.42 6% 5.77

Non-Recurring 10.51 10.25 17.53 11.45 3% 11.79

Total 15.06 15.76 21.64 16.87 4% 17.55

6.4.13.3 Considering the CAGR, actual Non-Tariff Income at the end of the 2nd

Control Period

and the Base Non-Tariff Income for FY 2015-16, the Non-Tariff Income for the 3rd


Table 158: Non-Tariff Income as submitted by TPC-G for Units 4 to 7 and Hydro Stations

for 3rd



Recurring 6.14 6.54 6.96 7.41

Non-Recurring 12.14 12.50 12.87 13.25


6.4.13.4 The Non-Tariff Income for Unit-8 is shown in the Table below:

Table 159: Non-Tariff Income as submitted by TPC-G for Unit-8 for 3rd

Control Period

(Rs. Crore)


Recurring 0.23 0.20 0.18 0.15

Non-Recurring 2.17 2.97 4.06 5.56





6.4.13.5 The Commission has not considered any escalation in Non-Tariff Income. Accordingly,

the Commission approves the Non-Tariff Income for each year of the 3rd

Control Period

as approved for FY 2015-16, as shown in the Tables below:

Table 160: Non-Tariff Income as approved by the Commission for Units 4 to 7 and Hydro

Stations for 3rd




6.4.13.6 The Commission approves Non-Tariff Income of Rs. 16.73 Crore for each year of

the 3rd


Table 161: Non-Tariff Income as approved by the Commission for Unit-8 for 3rd

Control

Period (Rs. Crore)



6.4.13.7 The Commission approves Non-Tariff Income of Rs. 2.26 Crore for each year of

the 3rd


6.4.14 Fixed Cost of Unit-4


6.4.14.1 Unit-4 has outlived its useful life and is to be retired. It has been operating as a stand-by

Unit for the past few years. Since Unit-4 was not required to generate for considerable

time, it was mutually agreed between TPC-G, BEST and TPC-D that its fixed cost

would no longer be paid from FY 2014-15. Hence, no fixed charges will be collected for

the remaining period of the PPAs.


6.4.14.2 The Commission has noted that Unit-4 has outlived its useful life and has not been in

operation for some time, and the mutual agreement regarding non-payment of its fixed

cost from FY 2014-15. Accordingly, the Commission has reduced the fixed charges

corresponding to Unit-4 from the total ARR to arrive at the net ARR for 3rd

Control

Period.



6.4.15 Summary of Annual Fixed Charges

6.4.15.1 The AFC approved by the Commission for the 3rd

Control Period is as shown in the

Tables below:

Table 162: Annual Fixed Charges for Units 4 to 7 and Hydro Stations for 3rd

Control

Period (Rs. Crore)

Particulars

FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20

TPC-G

Petition

Approv

ed

TPC-G

Petition

Approv

ed

TPC-G

Petition

Approv

ed

TPC-G

Petition

Approv

ed

O&M Charges 506.27 510.44 511.77 525.27 517.33 540.55 522.95 556.28

Other Finance Charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Interest on Long-term Loan 80.22 76.66 80.09 72.97 80.35 65.36 73.87 52.42

Interest on Working Capital 39.31 33.69 40.07 34.20 42.03 34.66 43.26 34.84

Depreciation 147.86 146.59 152.83 149.94 154.51 148.28 150.14 141.41

Return on Equity 249.08 247.50 259.00 255.10 269.36 260.39 275.54 262.15

Incentives 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Income Tax 124.24 98.89 127.21 98.89 131.51 98.89 151.25 98.89

Allocation of shared services (12.50) (12.50) (12.50) (12.50) (12.50) (12.50) (12.50) (12.50)

Gross Fixed Charges 1134.48 1101.27 1158.47 1123.87 1182.59 1135.63 1204.52 1133.49

Less: Non Tariff Income 18.28 16.73 19.04 16.73 19.83 16.73 20.66 16.73

Net Fixed Charges 1116.20 1084.54 1139.43 1107.14 1162.77 1118.90 1183.87 1116.76

Less: Fixed Cost component

of unallocated capacity of

Unit 4

12.03 11.93 11.77 11.56 11.44 11.01 10.96 10.36

Total Fixed Charge for Unit

5-7 and Hydro generating

stations

1104.17 1072.61 1127.66 1095.58 1151.33 1107.90 1172.91 1106.40

6.4.15.2 The Commission approves Annual Fixed Charges of Rs. 1072.61 Crore for FY

2016-17, Rs. 1095.58 Crore for FY 2017-18, Rs. 1107.90 Crore for FY 2018-19 and

Rs. 1106.40 Crore for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.

Table 163: Annual Fixed Charges for Unit-8 for 3rd


Particulars

FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20

TPC-G

Petition Approved

TPC-G

Petition Approved

TPC-G

Petition Approved

TPC-G

Petition Approved

O&M Expenses 59.50 59.50 62.48 62.48 65.60 65.60 68.88 68.88

Other Finance

Charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Interest on Long-

term Loan 50.73 50.16 43.58 42.98 36.77 35.81 30.07 28.77



Particulars

FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20

TPC-G

Petition Approved

TPC-G

Petition Approved

TPC-G

Petition Approved

TPC-G

Petition Approved

Interest on Working

Capital 11.41 10.78 11.59 10.79 11.89 10.79 12.07 10.79

Depreciation 65.31 65.29 65.24 65.19 65.23 64.90 63.40 62.82

Return on Equity 54.34 54.06 54.39 54.08 54.64 54.11 54.90 54.13

Incentives 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Income Tax 64.44 24.49 67.93 24.49 70.50 24.49 72.37 24.49

Allocation of shared

services 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50

Gross Fixed

Charge 318.24 276.78 317.70 272.50 317.13 268.20 314.18 262.38

Less: Non Tariff

Income 2.40 2.26 3.17 2.26 4.24 2.26 5.72 2.26

Net Fixed Charge 315.84 274.52 314.53 270.24 312.89 265.94 308.47 260.12

6.4.15.3 The Commission approves Annual Fixed Charges of Rs. 274.52 Crore for FY 2016-

17, Rs. 270.24 Crore for FY 2017-18, Rs. 265.94 Crore for FY 2018-19 and Rs.

260.12 Crore for FY 2019-20 for Unit-8.



7. MULTI-YEAR TARIFF FOR 3RD CONTROL PERIOD FROM FY 2016-17 TO

FY 2019-20

7.1 AFC for TPC-G

7.1.1.1 Regulation 39 of the MYT Regulations, 2015 states that the Tariff for sale of electricity

shall consist of the AFC and Energy Charges (for recovery of primary and secondary

fuel cost).

7.1.1.2 The year-wise AFC approved by the Commission in the previous Section is as shown in

the Tables below:



Table 164: Annual Fixed Charges as approved by Commission for FY 2016-17 (Rs. Crore)

S.

No. Particulars

Units 4

to 7 plus

Hydro

Thermal

Thermal

Hydro

Hydro

Unit-8 Unit-4 Unit-5 Unit-6 Unit-7 Bhira Bhivpuri Khopoli

1 O&M Expenses 510.44 402.64 0.00 235.50 97.46 69.68 107.79 38.62 25.90 43.28 59.50

2 Other Finance

Charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

3 Interest on Long-

term Loan 76.66 71.58 0.00 42.23 7.98 21.37 5.09 5.09 0.00 0.00 50.16

4 Interest on Working

Capital 33.69 29.29 0.00 21.18 2.49 5.63 4.40 1.73 1.06 1.60 10.78

5 Depreciation 146.59 92.25 7.83 65.11 3.82 15.49 54.34 19.61 14.32 20.40 65.29

6 Return on equity 247.50 169.40 4.10 75.02 33.54 56.73 78.10 33.30 19.86 24.95 54.06

7 Incentives 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

8 Income Tax 98.89 67.16 0.00 30.48 13.63 23.05 31.73 13.53 8.07 10.14 24.49

9 Allocation of shared

services (12.50) (12.50) 0.00 (5.60) (2.36) (4.54) 0.00 0.00 0.00 0.00 12.50

10 Gross Fixed

Charges 1101.27 819.82 11.93 463.93 156.55 187.41 281.45 111.88 69.20 100.37 276.78

11 Less: Non Tariff

Income 16.73 11.13 0.00 4.98 2.10 4.04 5.60 2.30 1.29 2.01 2.26

12 Net Fixed

Charges* 1072.61 796.76 11.93 458.95 154.45 183.37 275.85 109.58 67.91 98.35 274.52

*Fixed Charge for Unit-4 is not considered in the total fixed charges as Unit-4 is not in operation.




S.

No. Particulars

Units 4

to 7 plus

Hydro

Thermal

Thermal

Hydro

Hydro


1 O&M Expenses 525.27 414.34 0.00 242.35 100.29 71.71 110.93 39.74 26.65 44.53 62.48

2 Other Finance

Charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

3 Interest on Long-

term Loan 72.97 68.76 0.00 41.79 7.23 19.74 4.21 4.21 0.00 0.00 42.98


Capital 34.20 29.77 0.00 21.44 2.45 5.88 4.43 1.76 1.06 1.61 10.79

5 Depreciation 149.94 97.56 7.49 70.71 3.60 15.76 52.38 18.56 13.70 20.12 65.19

6 Return on equity 255.10 174.57 4.07 80.39 33.24 56.86 80.54 35.62 19.95 24.97 54.08

7 Incentives 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

8 Income Tax 98.89 67.16 0.00 31.67 13.10 22.40 31.73 14.03 7.86 9.83 24.49

9 Allocation of

shared services (12.50) (12.50) 0.00 (5.96) (2.22) (4.32) 0.00 0.00 0.00 0.00 12.50

10 Gross Fixed

Charges 1123.87 839.67 11.56 482.38 157.70 188.03 284.20 113.92 69.22 101.06 272.50

11 Less: Non Tariff

Income 16.73 11.32 0.00 5.40 2.01 3.91 5.41 2.23 1.24 1.94 2.26

12 Net Fixed

Charges* 1095.58 816.79 11.56 476.98 155.69 184.12 278.79 111.69 67.98 99.13 270.24





S.

No. Particulars

Units 4

to 7 plus

Hydro

Thermal

Thermal

Hydro

Hydro


1 O&M Expenses 540.55 426.39 0.00 249.40 103.21 73.79 114.15 40.90 27.43 45.83 65.60

2 Other Finance

Charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

3 Interest on Long-

term Loan 65.36 61.10 0.00 35.28 6.13 19.69 4.26 4.26 0.00 0.00 35.81


Capital 34.66 30.25 0.00 21.80 2.42 6.03 4.42 1.86 0.98 1.57 10.79

5 Depreciation 148.28 100.74 7.02 72.23 3.36 18.14 47.54 21.28 6.62 19.64 64.90

6 Return on equity 260.39 177.68 3.99 82.64 32.63 58.42 82.71 37.90 19.83 24.99 54.11

7 Incentives 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

8 Income Tax 98.89 66.99 0.00 31.87 12.58 22.53 31.90 14.62 7.65 9.64 24.49

9 Allocation of

shared services (12.50) (12.50) 0.00 (6.13) (2.14) (4.23) 0.00 0.00 0.00 0.00 12.50

10 Gross Fixed

Charges 1135.63 850.65 11.01 487.09 158.18 194.37 284.99 120.81 62.51 101.67 268.20

11 Less: Non Tariff

Income 16.73 11.15 0.00 5.47 1.91 3.77 5.58 2.50 1.21 1.87 2.26

12 Net Fixed

Charges* 1107.90 828.49 11.01 481.62 156.27 190.60 279.41 118.31 61.29 99.81 265.94





S.

No. Particulars

Units 4

to 7 plus

Hydro

Thermal

Thermal

Hydro

Hydro


1 O&M Expenses 556.28 438.80 0.00 256.65 106.21 75.94 117.47 42.09 28.23 47.16 68.88

2 Other Finance

Charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

3 Interest on Long-

term Loan 52.42 50.56 0.00 27.06 5.09 18.42 1.86 1.86 0.00 0.00 28.77


Capital 34.84 30.46 0.00 21.81 2.39 6.26 4.38 1.86 0.97 1.56 10.79

5 Depreciation 141.41 97.47 6.43 68.54 3.09 19.41 43.94 21.26 5.68 17.00 62.82

6 Return on equity 262.15 179.22 3.93 83.43 32.11 59.75 82.93 38.33 19.55 25.05 54.13

7 Incentives 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

7 Income Tax 98.89 67.13 0.00 31.95 12.30 22.88 31.76 14.68 7.49 9.59 24.49

8 Allocation of

shared services (12.50) (12.50) 0.00 (6.08) (2.03) (4.39) 0.00 0.00 0.00 0.00 12.50

9 Gross Fixed

Charges 1133.49 851.14 10.36 483.35 159.16 198.27 282.35 120.07 61.91 100.37 262.38

10 Less: Non Tariff

Income 16.73 11.26 0.00 5.48 1.83 3.95 5.47 2.47 1.17 1.83 2.26

11 Net Fixed

Charges* 1106.40 829.52 10.36 477.87 157.33 194.32 276.88 117.60 60.74 98.53 260.12




7.2 Energy Charges for Thermal Generating Units

7.2.1.1 The summary of Energy Charges as projected by TPC-G and as considered by the


Control Period is given in the Table below:

Table 168: Energy Charges as approved by Commission for Thermal Stations for 3rd

Control Period (Rs./kWh)

Unit Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20


Unit-5 APM Gas 3.31 3.03 3.69 3.08 3.95 3.09 4.22 3.10

Unit-5 Oil- LSHS 12.12 13.25 12.09 13.49 12.16 13.53 12.33 13.57

Unit-5 Coal 2.65 2.84 2.72 2.85 2.83 2.85 2.90 2.86

Unit-6 RLNG 5.40 5.75 6.16 5.76 6.74 5.77 7.33 5.78

Unit-6 Oil- LSHS 12.47 13.01 12.42 13.03 12.48 13.06 12.64 13.08

Unit-7 APM Gas 2.57 2.36 2.86 2.36 3.06 2.36 3.26 2.37

Unit-7 RLNG 4.08 4.55 4.65 4.56 5.09 4.56 5.54 4.57

Unit-8 Coal 2.68 2.83 2.74 2.83 2.84 2.83 2.90 2.83

7.3 Capacity Charges and Energy Charges for Hydro Generating Units


7.3.1.1 Energy Charge for the Hydro Generating Stations is computed in accordance with

Regulation 49 of the MYT Regulations, 2015, as shown in the Tables below:

Table 169: Capacity and Energy Charges for Khopoli Hydro Generating Station as

submitted by TPC-G for 3rd

Control Period

Particulars

FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Annual fixed cost Rs. Crore 101 102 103 103

NAPAF % 90.00% 90.00% 90.00% 90.00%

Actual Availability % 99.53% 99.58% 99.58% 98.12%

Capacity charges Rs. Crore 55.86 56.19 56.81 56.18

Design Energy MU 174.68 174.68 174.68 174.68

Auxiliary Energy

Consumption % 1.00% 1.00% 1.00% 1.00%

Net Design Energy MU 172.93 172.93 172.93 172.93

Energy Charge rate Rs./kWh 2.92 2.94 2.97 2.98



Table 170: Capacity and Energy Charges for Bhira Hydro Generating Station as submitted

by TPC-G for 3rd

Control Period

Particulars

FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20


NAPAF % 90.00% 90.00% 90.00% 90.00%



Design Energy MU 744.12 744.12 744.12 744.12

Auxiliary Energy

Consumption % 1.00% 1.00% 1.00% 1.00%



Table 171: Capacity and Energy Charges for Bhivpuri Hydro Generating Station as

submitted by TPC-G for 3rd

Control Period

Particulars

FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20


NAPAF % 90.00% 90.00% 90.00% 90.00%



Design Energy MU 193.23 193.23 193.23 193.23

Auxiliary Energy

Consumption % 1.00% 1.00% 1.00% 1.00%




7.3.1.2 In accordance with Regulation 49, the Commission has considered the capacity and

Energy Charges for the Hydro Generation Stations as shown in the Tables below:

Table 172: Capacity and Energy Charges for Khopoli Hydro Generating Station as

approved by Commission for 3rd

Control Period

Particulars

FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20

Annual fixed cost Rs. Crore 98.35 99.13 99.81 98.53

NAPAF % 90.00% 90.00% 90.00% 90.00%



Particulars

FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20



Design Energy MU 174.68 174.68 174.68 174.68

Auxiliary Energy

Consumption % 1.56% 1.55% 1.55% 1.55%



Table 173: Capacity and Energy Charges for Bhira Hydro Generating Station as approved

by Commission for 3rd

Control Period

Particulars

FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20


NAPAF % 90.00% 90.00% 90.00% 90.00%



Design Energy MU 744.12 744.12 744.12 744.12

Auxiliary Energy

Consumption % 1.56% 1.55% 1.55% 1.55%



Table 174: Capacity and Energy Charges for Bhivpuri Hydro Generating Station as

approved by Commission for 3rd

Control Period

Particulars

FY

2016-17

FY

2017-18

FY

2018-19

FY

2019-20


NAPAF % 90.00% 90.00% 90.00% 90.00%



Design Energy MU 193.23 193.23 193.23 193.23

Auxiliary Energy

Consumption % 1.56% 1.55% 1.55% 1.55%





8. COMPLIANCE OF DIRECTIVES IN MTR ORDER

In the MTR Order, the Commission had given several directives. In its Petition, TPC-G

has submitted the status of their compliance. The Commission’s directives and TPC-G’s

submissions are set out below, with the Commission’s rulings where relevant.

8.1 Non-DPR Capitalisation

Directive

8.1.1 The Commission restricted the Non-DPR Capitalisation for FY 2008-09 and FY 2009-

10 to 20% of the DPR Capitalisation for FY 2010-11 onwards. The Commission expects

TPC-G to plan and undertake capital expenditure in a more disciplined and systematic

manner. In line with its directions in Case No. 111 of 2008, the Commission directs

TPC-G to club the related Non-DPR schemes, and to submit their DPR formats for post

facto approval within 3 months.

TPC-G Response

8.1.2 The DPRs merged by clubbing related Non-DPR schemes for FY 2008-09 to FY 2011-

12 have been submitted vide letters dated 26 October, 2 November and 26 November,

2015, and 5 January, 2016

8.1.3 The Commission may accord in-principle clearance to all the merged DPRs and approve

the associated capitalisation which was not allowed earlier in the MTR Order due to the

restriction of 20% towards Non-DPR capitalisation. The impact of this capitalisation has

been considered for the Truing-up of FY 2014-15.

Commission’s View

8.1.4 The Commission has examined the merged DPRs submitted and dealt with them earlier

in this Order.

Directive

8.1.5 The Commission has restricted Non-DPR capitalisation to 20% of DPR capitalisation.

The Commission directs TPC-G to club similar Non-DPR schemes and submit the

merged DPR schemes to the Commission within 3 months.

TPC-G Response

8.1.6 These directives pertain to FY 2012-13 and FY 2013-14, and TPC-G’s response is as set

out at para. 8.1.2-3 above. The remaining disallowed capitalisation toward Non-DPR



schemes of FY 2013-14 has been submitted vide letter dated 25 January, 2016. The

details of disallowed capitalisation towards Non-DPR schemes for FY 2012-13 and FY

2013-14 are given in the Tables below.

Table 175: Disallowed Capitalisation towards Non-DPR Schemes as submitted by TPC-G

for FY 2012-13 (Rs. Crore)

FY 2012-13

Unit

Non DPR

Capitalisation

Disallowed in MTR

Order

Coverage of Disallowed Capitalisation

As a part of merged DPR of

Environment, fire, safety,

security and statutory 2013 -

17

Merged DPRs

stated till date

after MTR

Order

Total

Capitalisation

Hydro 11.44

0 2.46

15.75 Units 4 to 7 7.636

3.414

Unit-8 2.73 2.24

Total 14.17 7.636 8.114 15.75

Table 176: Disallowed Capitalisation towards Non-DPR Schemes for FY 2013-14 (Rs.

Crore)

FY 2013-14

Unit

Non DPR

Capitalisation

Disallowed in

MTR Order

Coverage of Disallowed Capitalisation

As a part of

merged DPR of

Environment, fire,

safety, security and

statutory 2013 -17

Merged

DPRs stated

till date

after MTR

Order

Present

Merged

DPR

Total

Capitalisation

Hydro 10.42

0.00 1.90 0.00

27.06 Units 4 to 7 3.95

3.94 16.29

Unit-8 2.54 0.98 0.00

Total 12.96 3.95 6.82 16.29 27.06

Commission’s View

8.1.7 The Commission has dealt with the merged DPRs submitted by TPC-G earlier in this

Order.



8.2 Section 80 IA of Income Tax Act

Directive

8.2.1 The Commission asked TPC-G for the reasons for not deducting the profits as per

Section 80 IA of the Income Tax Act while computing the Income Tax for Unit-8. TPC-

G stated that, on account of lower taxable profitability of Unit-8, it is not in a position to

claim the S. 80 IA tax benefit from the Tax authorities. Section 80 IA provides for

claiming deduction on an amount equal to hundred percent of the profits and gain

derived from such investment for 10 consecutive years out of 15 years for computing

PBT. Accordingly, the Commission directs TPC-G to modify the details of S. 80 IA

benefit eligible for Unit-8 in its subsequent Tariff filing.

TPC-G Response

8.2.2 TPC-G has considered the effect of Section 80 IA during the working of Income Tax in

the present Petition.

Commission’s View

8.2.3 The directive has been complied with.

8.3 BHEL Circular

Directive

8.3.1 BHEL had earlier experienced crack formation in LP blades of similar design and had

shared this information with its customers vide its Circular of October, 2011. BHEL had

also advised certain predictive checks and tests to detect such failures in advance. TPC-

G has not stated any evidence or even a statement regarding compliance of the important

advice issued by BHEL.

TPC-G Response

8.3.2 BHEL’s Technical Circular dated 8 October, 2011 advised as follows:

“To avoid blade failures, it is recommended to conduct the following Non

Destructive Tests at an Interval of 20000 to 25000 hours:

1. Crack detection in free standing blades of LP last stage advanced class blading

by MPI (In Disassembled condition).

2. Measurement of Natural Frequency of all free standing blades of last stages

(LP 3R and LP 3L). The measurement of Natural Frequency of these blades is



to be done by using Technological Pieces after removing existing clamping

pieces. Therefore new clamping pieces are to be fitted in position.”

8.3.3 Learning from the experience of cracks in LP turbine blades of Unit-8 and as

recommended by BHEL subsequently, TPC-G has pro-actively carried out the required

tests well before the recommended interval of 20000 to 25000 operating hours. The

details of inspections carried out between August, 2011 and January, 2014, i.e., before

the incident, are as discussed below:

a. At an interval of around 5200 operating hours since August, 2011: In March, 2012,

during 03 days outage availed (from 18.03.2012 to 21.03.12), i. e. 8 months after

initial inspection, in situ MPI was carried out and no crack was found.

b. At an interval of around 5700 operating hours since March, 2012: During outage in

December, 2012 –January, 2013, the LP rotor was removed, de-bladed and MPI and

NFT was done under the supervision of BHEL. Nothing abnormal was found in the

LP blades.

8.3.4 The next detailed inspection as per the BHEL Circular was scheduled for January, 2015

(approximately 16000 Equivalent Operating Hours (EOH) after January, 2013

inspection, well before the 20000 EOH recommended by the BHEL Technical Circular).

As a pro-active step TPC-G had planned inspection of LP Turbine blades in February,

2014 but the LP blade failure occurred on 9 January, 2014.

8.3.5 The inspections / overhauls of Unit-8 Turbine were carried out under the supervision of

BHEL, for which TPC-G has now submitted the copy of its letter to BHEL for its

supervision in March, 2012 outage for blade inspection, and copies of the Purchase

Orders placed on BHEL for July, 2011 and December, 2012 to January, 2013 outages.

8.3.6 Whereas, as per the BHEL Technical Circular, the LP turbine blades were to be

inspected after every 20000 to 25000 hours, i.e., around every 2.5 years, TPC-G

prudently inspected the blades at an interval of 8-9 months (around 6000 hrs). The LP

blades have failed in spite of adherence to all the recommendations of BHEL. Hence, the

failure of LP blades due to cracks which led to the incident on 9 January, 2014 was

beyond the control of TPC-G.

8.4 Replacement of Blades

Directive-1

8.4.1 The Commission notes that TPC-G has stated that it has meticulously followed

maintenance practices, which has been supported by the BHEL report. However, the



BHEL report has not explicitly commented on maintenance practices followed by TPC-

G.

8.4.2 BHEL had stipulated that certain checks and tests be carried out on the blades at

specified intervals. TPC-G should clarify when these check / tests were due, whether

these were conducted, what were their results, and whether follow-up action was taken

under guidance of the supplier. In 2011, some blades of the LP turbine were replaced.

The Commission notes that replacement of blades in new turbines is not a common

industrial practice. TPC-G should clarify what analysis was carried out after such

failure, and whether the lessons drawn were implemented.

TPC-G Response

8.4.3 TPC-G has provided the Steam Turbine Manual of BHEL with the present Petition. As

per the Section on Instructions for Overhaul, the maintenance schedule of LP turbine

after certain EOH is below:

d. Minor Overhaul (Inspection and Servicing) to be done after 17000 EOH.

e. Medium Overhaul (Inspection, Servicing and Repair) to be done based on long-term

observations, operating experience and manufacturer’s recommendations.

f. Major Overhaul (Inspection, Servicing and Repair) to be done after 50000 EOH.

8.4.4 It is evident from the job scope of the Steam Turbine Manual that overhaul of the

machine involving detailed inspection of LP turbine free standing blades by complete

removal and detailed checks for cracks by MPI and NFT was not due as Unit-8 had not

completed 50000 EOH at the time of the incident.

8.4.5 The recommendation, subsequently issued by BHEL vide its Technical Circular,

superseded the above inspection intervals and TPC-G has adhered to them.

Directive-2

8.4.6 As regards the probable cause of cracks in the failed Unit, the BHEL Report has pointed

out that Unit-8 was often subjected to cyclic load variations between 180 MW and 250

MW on a daily basis, and has concluded that High Cycle fatigue can be considered as

one of the probable causes of crack initiation. TPC-G has commented on the

observations of BHEL. Further, while BHEL considers “fatigue” as one of the prime

reasons for such failure, and has also indicated that the fatigue occurred because the

machine was subjected to cyclic load variation daily, TPC-G does not appear to have

consulted BHEL regarding subjecting the machine to such high cyclic loading

variations.



8.4.7 As per TPC-G’s submission, the 250 MW ThermalUnit-8 was operating on 182 MW

load. BHEL has mentioned that the loading pattern of the Unit showed cyclic variations

between 180 MW to 250 MW on daily basis, which could be conducive to crack

formation in the LP Turbine blades. TPC-G needs to clarify whether the Unit was

designed for such cyclic loading (which may be beyond the standard industry practice),

and whether information regarding high cyclic variations was conveyed to the

manufacturer/ OEM and its observations and recommendations sought.

TPC-G Response

8.4.8 TPC-G had appointed Tata Consulting Engineers (TCE) to define specifications to be

given to BHEL for design of the Unit. Section 14.2 included in Design Specifications on

the Steam Turbine & Accessories and Regenerative Cycle System clearly mentioned that

the turbine should be designed for cyclic loading due to daily load fluctuations:

“1.1.4 Duty: Continuous base load operation of minimum 8000 hrs with 50 starts

per annum. Unit shall also be capable of cyclic loading due to daily load

fluctuations.”

8.4.9 It is evident that the cyclic loading pattern which was expected to be observed on Unit-8

in line with the Maharashtra MOD was informed to BHEL at the design stage and the

Unit has been accordingly designed. BHEL itself has specified the guaranteed

performance of the Unit at 100%, 80% and 60% of full load in the form of Heat Balance

Diagrams (HBD).

8.4.10 In accordance with the technical minimum study undertaken by CPRI (as directed by the

Commission), around 30% load variation is allowed in Unit-8. The BHEL Technical

Circular does not mention cyclic loading as a probable cause of the blade failures it had

observed at other sites, nor did BHEL recommended to restrict the minimum load.

8.4.11 Thus, BHEL was informed about the cyclic loading at the design stage of Unit-8 steam

turbine specifications and Unit-8 is designed for daily cyclic loading pattern. Therefore,

there was no need for separate communication / permission from BHEL for the daily

cyclic loading. The cyclic loading of Thermal Units is as per the MOD, which is not at

all abnormal and is as per the regular industry practice.

8.5 Operating Conditions

Directive-1

8.5.1 Among other causes, BHEL has mentioned “locally aggressive environment that

produces corrosion pits or troughs, localized corrosion, or local dissolution”, as a



probable cause of crack initiation. However, TPC-G has neither contradicted nor

provided any clarification regarding this.

8.5.2 One of the key observations of BHEL in its report is the following:

“For crack initiation to occur fatigue origins should be present. Some of the

possible fatigue origins are given: Locally aggressive environment that produces

corrosion pits or troughs, localized corrosion, or local dissolution.”

8.5.3 As regards BHEL’s observation regarding the probable cause for crack initiation, TPC-

G has not provided any clarification. Hence, TPC-G should elaborate on the above and

provide evidence regarding the existence of the above phenomena in the instant case.

TPC-G Response

8.5.4 Chloride corrosion could be one reason for fatigue leading to crack initiation which can

happen mainly due to higher chloride levels in the steam cycle. The chloride carry-over

can happen only in case of condenser tube leak in the Unit. However, Unit-8 has not

experienced any condenser tube leak in the last two years as can be seen from the

chemical analysis which clearly shows that the chloride content level is much below

permissible limits. Hence, chloride corrosion is ruled out in case of Unit-8.

8.5.5 The LP Turbine blades were changed on account of cracks and even not a single blade

was recommended to be changed on account of corrosion by BHEL. In its RCA report

also, BHEL has indicated corrosion as one of the causes but has not clearly attributed the

failure of blade that in case of Unit-8. The Water Chemistry report was also shared with

BHEL for its recommendations. However, BHEL had not commented on it. It is evident

that TPC-G has maintained the operating conditions of Unit-8 as per the standard

guidelines specified by the OEM.

Directive-2

8.5.6 Submissions based on such Technical Reports are expected to include the Utility’s

detailed comments and views on their observations, findings and conclusions. In the

present case, in the absence of such analysis by TPC-G, many issues remain unanswered

and unresolved.

8.5.7 In the Internal Investigation Report, the column relating to “corrective steps” has been

left blank. In the above background, the Commission notes that, since an exception has

been pleaded for, it was TPC-G’s responsibility to come out with all details in its

support.



TPC-G Response

8.5.8 The Internal Incident Investigation report was documented at an early stage when the

detailed analysis of blade samples was not available and so, the corrective action section

in the internal report was kept blank. However, based on the observations / findings

following corrective actions have been proposed:

a. Revision of Technical Minimum Load to 200 MW by BHEL from the earlier 180

MW. Unit-8 is being operated in line with this recommendation since November,

2014.

b. Blade Vibration Monitoring System (BVMS) has been installed at Unit-8.

c. Crack detection by Phased Array Ultrasonic Testing (PAUT) which is an advanced

nondestructive testing method with better analysis capability.

Commission’s View

8.5.9 Considering TPC-G’s submissions, the Commission has accepted the failure of Unit-8 as

a Force Majeure event as detailed earlier in this Order.



9. SUMMARY OF THE RULINGS

9.1 Carrying Cost on impact of ATE Judgment

9.1.1 The ATE in its Judgment dated 03 June, 2016 in Appeal No. 244 of 2015 has dismissed

all the submissions of TPC-G. The ATE has upheld the Commission’s Order and

accordingly, the Commission has not considered the claims made by TPC-G in its

additional submission..

9.2 True-up for FY 2014-15

9.2.1.1 The Commission approves the normative Fuel Cost of Rs. 1380.23 Crore for FY 2014-

15 for Units 4 to 7, and has considered the actual fuel cost of Rs. 1357.84 Crore

(excluding Fuel Cost of Unit-6 when operated under MSLDC directions) for sharing of

gains as per the MYT Regulations, 2011.

9.2.1.2 The Commission approves the actual Fuel Cost of Rs. 792.11 Crore for Unit-6 for

operation under MSLDC directions during FY 2014-15, as claimed by TPC-G.

9.2.1.3 The Commission has considered the O&M Expenses of Rs. 481.34 Crore for sharing of

gains as per the MYT Regulations, 2011.

9.2.1.4 The Commission approves Capitalisation of Rs. 161.89 Crore for FY 2014-15 for Units

4 to 7 and Hydro Stations, as against Rs. 163.96 Crore claimed by TPC-G.

9.2.1.5 The Commission approves the impact of the merged DPR Capitalisation allowed for FY

2010-11 to FY 2013-14 on Return on Equity, Interest Expenses and Depreciation as Rs.

29.50 Crore for Units 4 to 7 and Hydro Generating Stations. The Commission has

considered this recovery separately along with the recovery of other past Revenue Gaps.

9.2.1.6 The Commission approves Depreciation of Rs. 116.96 Crore for FY 2014-15 for Units 4

to 7 and Hydro Stations, as against Rs. 117.29 Crore claimed by TPC-G.

9.2.1.7 The Commission approves Interest on Long-term Loans for FY 2014-15 as Rs. 80.08

Crore, as against Rs. 82.38 Crore claimed by TPC-G, for Units 4 to 7 and Hydro

Stations.



9.2.1.9 The Commission approves the normative Interest on Working Capital as Rs. 74.37 Crore

for FY 2014-15 for Units 4 to 7 and Hydro Stations, as against Rs. 72.51 Crore claimed

by TPC-G.



9.2.1.10 The Commission approves Income Tax of Rs. 98.89 Crore for Units 4 to 7 and Hydro

Stations for FY 2014-15, as against Rs. 99.24 Crore claimed by TPC-G.

9.2.1.11 The Commission approves Non-Tariff Income of Rs. 32.10 Crore for FY 2014-15 for

Units 4 to 7 and Hydro Stations.

9.2.1.12 The Commission has considered the Revenue from Sale of Power during FY 2014-15 to

BEST and TPC-D as Rs. 1335.66 Crore and Rs. 1274.26 Crore, respectively, and the

total Revenue as Rs. 2609.92 Crore.

9.2.1.13 The Commission approves Incentive for higher Capacity Index for Hydro Stations for

FY 2014-15 as Rs 39.46 Crore, as against Rs. 39.70 Crore claimed by TPC-G.

9.2.1.14 The Commission approves the reduction in AFC for Unit-7 for lower than Target

Availability for FY 2014-15 as Rs. 10.84 Crore, as against Rs. 10.76 Crore submitted by

TPC-G.

9.2.1.15 The Commission approves the efficiency gain as Rs. 7.46 Crore, to be passed on to the

Distribution Licensees, on account of variation in Fuel Cost of Units 4 to 7 and Hydro

Generating Stations for FY 2014-15.

9.2.1.16 The Commission determines an Efficiency Loss of Rs. 4.01 Crore to be passed on to

Distribution Licensees on account of variation in Auxiliary Consumption for Units 4 to

7 and Hydro Stations for FY 2014-15.

9.2.1.17 The Commission approves the efficiency loss of Rs. 1.82 Crore to be passed on to

Distribution Licensees on account of variation in O&M Expenses for Units 4 to 7 and

Hydro Stations for FY 2014-15.

9.2.1.18 The Commission determines a Revenue Surplus of Rs. 196.99 Crore, as against Rs.

176.34 Crore claimed by TPC-G, for FY 2014-15.

9.2.1 Performance of Unit-8

9.2.2.1 The Commission approves the normative Fuel Cost of Rs. 196.78 Crore for FY 2014-15

for Unit-8, and has considered the actual Fuel Cost of Rs. 175.56 Crore for sharing of

efficiency gains as per the MYT Regulations, 2011.

9.2.2.2 The Commission approves the actual O&M Expenses of Rs. 51.99 Crore for Unit-8 for

FY 2014-15, and has considered it for sharing of efficiency gains/ losses.

9.2.2.3 The Commission approves Capitalisation of Rs. 46.89 Crore for Unit-8 for FY 2014-15,

as claimed by TPC-G.



9.2.2.4 The Commission approves the impact of merged DPR Capitalisation now allowed for

FY 2011-12 to FY 2013-14 on RoE, Interest Expenses and Depreciation as Rs. 1.38

Crore for Unit-8. The Commission has considered this recovery separately along with

that of other past Revenue Gaps.

9.2.2.5 The Commission approves Depreciation of Rs. 57.69 Crore for Unit-8, as submitted by

TPC-G, for FY 2014-15.

9.2.2.6 The Commission approves Interest on Long-term Loan for Unit-8 for FY 2014-15 as Rs.

60.86 Crore, as against Rs. 60.95 Crore claimed by TPC-G.


Unit-8, as against Rs. 51.02 Crore claimed by TPC-G.

9.2.2.8 The Commission approves the Interest on Working Capital as Rs. 16.17 Crore in FY

2014-15 for Unit-8, as against Rs. 16.28 Crore claimed by TPC-G.

9.2.2.9 The Commission approves the Income Tax as Rs. 24.49 Crore for FY 2014-15 for Unit-

8, as against TPC-G’s claim of Rs. 25.03 Crore.

9.2.2.10 The Commission approves the Non-Tariff income of Rs. 1.45 Crore, as submitted by

TPC-G.

9.2.2.11 The Commission has considered the total revenue from sale of power in FY 2014-15

from Unit-8 to BEST and TPC-D as Rs. 190.12 Crore and Rs. 285.43 Crore,

respectively, for the purpose of Truing-up.

9.2.2.12 The Commission approves the reduction in AFC for Unit-8 for Availability lower than

the Target Availability for FY 2014-15 to the extent of Rs. 82.19 Crore.


Distribution Licensees on account of variation in Fuel Cost for Unit-8 for FY 2014-15.


Distribution Licensees on account of variation in Auxiliary Energy Consumption of

Unit-8 in FY 2014-15.

9.2.2.15 The Commission approves an Efficiency Loss of Rs. 2.75 Crore to be shared with

Distribution Licensees on account of variation in O&M Expenses of Unit-8 in FY 2014-

15.

9.2.2.16 The Commission approves a Revenue Surplus of Rs. 96.49 Crore for Unit-8 for FY

2014-15, as against Rs. 96.12 Crore stated by TPC-G.



9.3 Provisional True-up for FY 2015-16

9.3.1.1 The Commission has considered Fuel Cost of Rs. 1242.97 Crore, as against Rs. 1245.08

Crore submitted by TPC-G, for Units 4 to 7 for FY 2015-16 (excluding Unit-6 when

operated on MSLDC directions).The Commission has considered the actual fuel cost of

Rs. 448.38 Crore of Unit-8 for FY 2015-16 for the Provisional Truing-up.

9.3.1.2 the Commission approves the actual Fuel Cost of Rs. 24.13 Crore for Unit-6 when

operating under MSLDC directions during FY 2015-16.

9.3.1.3 The Commission approves O&M Expenses of Rs. 503.08 Crore for Units 4 to 7 and


9.3.1.4 The Commission approves Capitalisation of Rs. 187.99 Crore for Units 4 to 7 and Hydro

Stations and Rs. 18.06 Crore for Unit-8 for FY 2015-16.

9.3.1.5 The Commission approves Depreciation of Rs. 141.17 Crore for Units 4 to 7 and Hydro

Stations and Rs. 64.46 Crore for Unit-8 for FY 2015-16.

9.3.1.6 The Commission approves Interest on Long-term Loan of Rs. 79.36 Crore for Units 4 to


9.3.1.7 The Commission approves Return on Equity of Rs. 235.21 Crore for Units 4 to 7 and


9.3.1.8 The Commission approves Interest on Working Capital of Rs.55.29 Crore for Units 4 to


9.3.1.9 The Commission approves Income Tax as Rs. 98.89 Crore for Units 4 to 7 and Hydro

Stations for FY 2015-16 and as Rs. 24.49 Crore for Unit-8 for FY 2015-16.

9.3.1.10 The Commission approves the Non-Tariff Income as Rs. 16.73 Crore for Units 4 to 7

and Hydro Stations and Rs. 2.26 Crore for Unit-8 for FY 2015-16.

9.3.1.11 The Commission approves a Revenue Surplus of Rs. 37.93 Crore for Units 4 to 7 and

Hydro Stations, and Rs. 41.33 Crore for Unit-8, for FY 2015-16. The Commission has

adjusted this Surplus separately against past recoveries.

9.4 Past Recoveries from Distribution Licensees

9.4.1.1 The amounts to be recovered from the Distribution Licensees, as approved by the

Commission, is as shown in the Table below:



Table 177: Past recoveries from Distribution Licensees as approved by Commission (Rs. Crore)

Particulars

Approved in this Order


Gap / (Surplus) of Trombay Station& Hydro for FY 2014-15 Units 4 to 7 and hydro a (100.80) (96.19) 0.00 (196.99)



Unit-6 (Under

MSLDC Directive) b

1.79 2.36 24.52 28.67


Station& Hydro Units 4 to 7 and hydro

c 13.61 8.03 12.36 34.01

Gap / (Surplus) of Unit-8 Unit-8 d (38.60) (57.89) 0.00 (96.49)

Total Gap/ (Surplus) for FY 2014-15 e = a+b+c+d (124.00) (143.70) 36.88 (230.81)

Amount already recovered from Distribution Licensees in the T.O. in Case

06 of 2015 Units 4 to 7 and hydro

f (90.38) (86.26) 0.00 (176.64)

Amount already recovered from Distribution Licensee in the T.O. in Case

06 of 2015 Unit-8

g (45.60) (68.39) 0.00 (113.99)

Total Gap/(Surplus) for Provisional Truing-up for FY 2014-15 allowed to

recovered in T.O.

h = f+g (135.98) (154.65) 0.00 (290.63)

Net Gap /(Surplus) to be recovered for FY 2014-15 i = e-h 11.98 10.95 36.88 59.82

Carrying Cost on Gap / (Surplus) of FY 2014-15 (for 06 Months) 14.75% j = i/2*14.75% 0.88 0.81 2.72 4.41

Carrying Cost for FY 2015-16 14.29% k = i*14.75% 1.71 1.56 5.27 8.55

Total Recovery for FY 2014-15 including carrying Cost l = i+j+k 14.58 13.32 44.87 72.77

Gap / (Surplus) of Trombay Station& Hydro for FY 2015-16 Units 4 to 7 and hydro m (19.42) (18.53) 0.00 (37.93)



Unit-6 (Under

MSLDC Directive)

n 0.97 1.79 0.74 3.50

Entry Tax amount to be recovered pertaining to past period Units 4 to 7 and hydro o 13.39 15.56 7.36 36.31

Gap / (Surplus) of Unit-8 for FY 2015-16 Unit-8 p (16.53) (24.79) 0.00 (41.33)

Recovery for FY 2015-16 w/o carrying cost for future period q=m+n+o+p (21.59) (25.98) 8.10 (39.46)


11 to FY 2013-14 Units 4 to 7 and hydro

r 15.04 14.08 0.38 29.50


12 to FY 2015-16 Unit-8

s 0.55 0.83 0.00 1.38

Total Past Recovery for TPC-G u = i+q+r+s 8.59 2.25 53.35 64.19



9.4.1.2 The Commission approves the net Revenue Gap of Rs. 64.19 Crore as at the end of FY

2015-16, recoverable from the Distribution Licensees, viz. BEST, TPC-D and RInfra-D.

9.4.1.3 The Commission approves the net past Revenue Gaps to be passed on to or recovered from

the Distribution Licensees, viz. BEST, TPC-D and RInfra-D, as shown in Table below:

Table 178: Net Amount to be recovered from Distribution Licensees in FY 2016-17 (Rs.

Crore)

Particulars Approved in this Order

Total BEST TPC-D R-Infra-D

Total Revenue Gap till FY 2014-15

including Carrying cost 30.18 28.23 45.25 103.66

Carrying cost for April, 2016 to August

2016 1.24 1.16 1.68 4.08

Carrying Cost during the recovery period

(September 2016 to November 2016) 0.12 0.12 0.50 0.74

Gap/(Surplus) for Provisional Truing up

for FY 2015-16 (21.59) (25.98) 8.10 (39.47)

Total 9.95 3.53 55.53 69.01

9.4.1.4 The Commission approves the net amount arising out of past period recovery to be

passed on to or recovered from the Distribution Licensees, viz. BEST, TPC-D and

RInfra-D, commencing from September, 2016 to November, 2016, as shown in Table

below:

Table 179: Monthly recovery from Distribution Licensees in FY 2016-17 (Rs. Crore)

Installments BEST TPC-D RInfra-D Total

Sep-16 9.95 3.53 18.62 32.11

Oct-16 0.00 0.00 18.51 18.51

Nov-16 0.00 0.00 18.40 18.40

Total 9.95 3.53 55.53 69.01

9.5 ARR for the 3rd

Control Period from FY 2016-17 TO FY 2019-20



for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.




62.48 Crore for FY 2017-18, Rs. 65.60 Crore for FY 2018-19 and Rs. 68.88 Crore for

FY 2019-20 for Unit-8.

9.5.1.3 The Commission approves Capitalisation of Rs. 152.74 Crore for FY 2016-17, Rs.


FY 2019-20 for Units 4 to 7 and Hydro Generating Stations. Capitalisation of Rs. 1.14

Crore for FY 2016-17, none for FY 2017-18, Rs. 1.01 Crore for FY 2018-19 and none

for FY 2019-20 is approved for Unit-8.




9.5.1.5 The Commission approves Depreciation of Rs. 65.29 Crore for FY 2016-17, Rs. 65.19

Crore for FY 2017-18, Rs. 64.90 Crore for FY 2018-19 and Rs. 62.82 Crore for FY

2019-20 for Unit-8.

9.5.1.6 The Commission approves Interest on Long-term Loan of Rs. 76.66 Crore for FY 2016-

17, Rs. 72.97 Crore for FY 2017-18, Rs. 65.36 Crore for FY 2018-19 and Rs. 52.42


9.5.1.7 The Commission approves Interest on Long-term Loan of Rs. 50.16 Crore for FY 2016-



9.5.1.8 The Commission approves Return on Equity of Rs. 247.50 Crore for FY 2016-17, Rs.



9.5.1.9 The Commission approves Return on Equity of Rs. 54.06 Crore for FY 2016-17, Rs.


FY 2019-20 for Unit-8.

9.5.1.10 The Commission approves Interest on Working Capital of Rs. 33.69 Crore for FY 2016-



9.5.1.11 The Commission approves Interest on Working Capital of Rs. 10.78 Crore for FY 2016-

17, Rs. 10.79 Crore for FY 2017-18 and Rs. 10.79 Crore for FY 2018-19 and Rs. 10.79




9.5.1.12 The Commission approves Income Tax of Rs. 98.89 Crore for all the years of 3rd


9.5.1.13 The Commission approves Income Tax of Rs. 24.49 Crore for all the years of 3rd


9.5.1.14 The Commission approves Non-Tariff Income of Rs. 16.73 Crore for each year of the 3rd


9.5.1.15 The Commission approves Non-Tariff Income of Rs. 2.26 Crore for each year of the 3rd


9.5.1.16 The Commission approves Annual Fixed Charges of Rs. 1072.61 Crore for FY 2016-17,



9.5.1.17 The Commission approves Annual Fixed Charges of Rs. 274.52 Crore for FY 2016-17,





10. DIRECTIVES

10.1 Imported Coal Purchase

10.1.1 Regarding imported coal, the Commission directs TPC-G to ensure that all purchases, as

well as ancillary arrangements such as carriage and transport upto the site, are

undertaken through a transparent process of competitive bidding. All documents relating

to such competitive bidding should be submitted to the Commission along with its next

MTR Petition. TPC-G should also furnish all relevant details to enable scrutiny of the

imported coal cost, including

a. Month-wise details of opening fuel stock, fuel received, fuel consumed and

closing fuel stock.

b. GCV and weighted average price of opening stock of fuel as on April 1 of each

year.

c. Month-wise supplier wise details of GCV and price of fuel received.

d. Month-wise computation of GCV as received and as fired.

e. Copies of all imported coal fuel bills.

10.1.2 While scrutinizing imported coal purchases of Generating Utilities, the Commission has

observed that long-term contracts are generally more economical than short-term

contracts. Accordingly, TPC-G should consider entering into long-term imported coal

contracts linked to a suitable coal index, and in any case to set out the rationale for its

choice among the options available in this regard in its MTR Petition.

10.2 Expiry of PPA

TPC-G has entered into different PPAs with BEST and TPC-D, which are expiring

midway through the 3rd

Control Period. The Commission directs TPC-G to submit its

Petition for approval of its future generation sale arrangements at least 6 months before

the expiry of these PPAs.



11. APPLICABILITY OF ORDER

This Order shall come into effect from 1 August, 2016.

The Petition of M/s Tata Power Company Ltd. (Generation Business) in Case No. 32 of

2016 stands disposed of accordingly.

Sd/- Sd/-

(Deepak Lad)

Member

(Azeez M. Khan)

Member



Appendix – 1:

List of persons at Technical Validation Session on 4 March, 2016

Sr. No. Name Organisation

1. Ms. Swati Mehendale Tata Power

2. Shri M. D. Paranjpe Tata Power

3. Shri V. Raje Tata Power

4. Shri Surjit Dubey Tata Power

5. Shri Deepak Kabdi Tata Power

6. Ms. Shital Khairaya Tata Power

7. Shri Amey Mhapsekar Tata Power

8. Shri S. Baijal Tata Power

9. Shri Anil Jain Tata Power

10. Shri Palash Bardol Tata Power

11. Shri Shirish Kamat Tata Power

12. Shri A. Mukharji Tata Power

13. Shri Kiran Desale Tata Power

14. Shri T.K.Bhaskaran Tata Power

15. Shri A.A. Bhat Tata Power

16. Shri Manoj Kapse Tata Power

17. Shri R.M.Ranade Tata Power

18. Shri Sanjay Kumar Tata Power

19. Shri Kartik Kadle Tata Power

20. Shri Bhaskar Sarkar Tata Power

21. Shri Manish Kumar ICRA

22. Dr. Ashok Pendse Thane-Belapur Industries

Association (Consumer Rep.)



Appendix – 2:

List of persons at the Public Hearing on 26 April, 2016


1 Ms. Swati Mehendale Tata Power

2. Ms. Ann Josey Prayas Energy Group (Consumer Rep.)

3. Dr. Ashok Pendse Thane-Belapur Industries Association

(Consumer Rep.) 4. Shri Kamlakar Shenoy Indian Hotel & Restaurant Association

5. Shri N. Ponrathnam Consumer Representative

6. Shri Guruprasad Shenoy Indian Hotel & Restaurant Association

7. Shri Bhavik Ruparel Indian Hotel & Restaurant Association

8. Shri Bilal Gazdar Indian Hotel & Restaurant Association

9. Shri S. Baijal Tata Power

10. Shri Sanjeev Gupta Tata Power

11. Shri Deepak Kabadi Tata Power

12. Ms. Shital Khiraiya Tata Power

13. Shri A. M. Dharam Tata Power

14. Shri Maneesh Sinha Tata Power

15. Shri. G.S.V.Ramanan Tata Power

16. Shri Ameya Mhapsekar Tata Power

17. Shri R. M. Ranade Tata Power

18. Shir V. Raje Tata Power

19. Shri Anil Jain Tata Power

20 Shri M.D,.Paranjpe Tata Power

21 Shri Arvind Yadav Tata Power

22 Shri Bhaskar Sarkar Tata Power

23 Shri Ashish Bhat Tata Power

24 Shri. S.R. Kanad Tata Power

25 Shri Sanjay Kumar Tata Power

26 Shri G. M. Bhagat BEST Undertaking

27 Shri Kiran Shetty

28 Shri V. M. Kamat BEST Undertaking




29 Shri V. U. Kurade BEST Undertaking

30 Shri S. A. Haveliwala

31 Shri M. N. Baradwala

32 Shri Bharat

33 Shri. I.A. Lakdawala

34 Ms. Ambika Gupta Tata Power

35 Shri Kartik Kadle Tata Power

36 Shri Manoj Kapse Tata Power

37 Shri T.K. Bhaskaran Tata Power

38 Shri Kiran Desai Tata Power

39 Shri A. Mukharaji Tata Power

40 Shri L. R. Rashmia Tata Power

41 Shri Mahendra Shah Tata Power

42 Shri Uday Shenoy Indian Hotel & Restaurant Association

43 Shri Hakim Dasir Indian Hotel & Restaurant Association

44 Shri Mushtaq Ghojrja Indian Hotel & Restaurant Association

45 Shri Altaf Riyaz Khan Indian Hotel & Restaurant Association

46 Shri Jamal Khan Indian Hotel & Restaurant Association

47 Shri S.S. Adhlinge BEST Undertaking

48 Shri S.S. Jadhav BEST Undertaking

49 Shri J. J. Phadnis Aam Aadmi Party

50 Shri M. Hussain Indian Hotel & Restaurant Association

51 Shri Fuzail Indian Hotel & Restaurant Association

52 Shri Sanjay Indian Hotel & Restaurant Association

53 Shri Prapanna Shetty Indian Hotel & Restaurant Association

54 Shri Prasanna Shetty Indian Hotel & Restaurant Association

55 Ms. Bharati Bhandarkar

56 Ms. Shaila Shenoy

57 Ms. Pushpa Bhandarkar

58 Shri J. M. Davar

59 Shri M.B. Shaikh

Documents

Before the MAHARASHTRA ELECTRICITY … 58 42/Order-32 of 2016-08082016.pdf · Shri Deepak Lad, Member ORDER Date: ... Business Plan Order for MYT 2nd Control Period ... 7.2 Energy