RAJASTHAN ELECTRICITY REGULATORY COMMISSIONrerc.rajasthan.gov.in/TariffOrders/Order266.pdf · determination of ARR and Tariff for FY 2014-15 to FY 2016-17 for its 1080 MW (8 × 135)

Page 1 of 115 RERC/816/16

RAJASTHAN ELECTRICITY REGULATORY COMMISSION Petition No: RERC/816/16

In the matter of determination of Aggregate Revenue Requirement and Tariff for FY 2014-15, FY 2015-16 and FY 2016-17 for Raj West Power Limited for its 1080 MW Lignite based thermal generating station. Coram: Sh. VishvanathHiremath, Chairman

Sh. Vinod Pandya, Member Sh. R. P. Barwar, Member

Petitioner: Raj West Power Limited (RWPL) Respondents:

1. Jaipur Vidyut Vitran Nigam Ltd. (JVVNL) 2. Ajmer Vidyut Vitran Nigam Ltd. (AVVNL) 3. Jodhpur Vidyut Vitran Nigam Ltd. (JdVVNL)

Date of hearing: 05.04.2017 Present:

1. Sh. Aman Anand, Advocate for RWPL 2. Sh. Sudhir Bhandari, AVP, RWPL 3. Sh. P. N. Bhandari, Advocate for Discoms 4. Sh. S. T. Hussain, S.E., JVVNL 5. Sh. G. L. Sharma, Stakeholder 6. Sh. B. M. Sanadhya, Stakeholder

Date of Order: 19.06.2017

ORDER

1. Raj West Power Limited (RWPL) is a Company incorporated under the companies Act, 1956 and is a “Generating Company” within the meaning of


section 2(28) of the Electricity Act, 2003. The aforesaid has filed a petition for determination of Aggregate Revenue Requirement (ARR) & Tariff for its 1080 MW Lignite based thermal generating station for FY 2014-15, FY 2015-16 and FY 2016-17.

2. In exercise of the powers conferred under Sections 62, 64 and other provisions

of Electricity Act 2003, read with RERC (Terms and Conditions for Determination of Tariff) Regulations, 2014, and other enabling Regulations, the Commission has carefully considered the submissions of the Petitioner and suggestions/objections submitted by the various Stakeholders. The Commission has passed the following Order.

3. This Order has been structured in 4 sections, as given under:

(1) Section 1: Summary of Aggregate Revenue Requirement (ARR)

and Tariff determination process. (2) Section 2: Summary of Objections/Comments/Suggestions

received from Stakeholders and RWPL’s response on the instant petition.

(3) Section 3: Additional Capitalisation for FY 2014-15, FY 2015-16 and

FY 2016-17. (4) Section 4: Determination of ARR and Tariff for RWPL (Units 1 to 8)

for FY 2014-15, FY 2015-16 and FY 2016-17.

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SECTION 1

Summary of Aggregate Revenue Requirement and Tariff Determination Process

1.1 The Commission vide its Order dated 24.02.2016 in petition No. 464/14, had

approved the final capital cost of the project based on the capital expenditure incurred as on 31.03.2014.

1.2 In accordance with Regulation 11 of RERC (Terms and Conditions for

Determination of Tariff) Regulations, 2014, (hereinafter referred to as RERC Tariff Regulations, 2014), RWPL filed a petition on 19.07.2016 for approval of ARR and determination of Tariff for its 1080 MW Lignite based thermal power station for FY 2014-15 to FY 2016-17.

1.3 The petition was admitted on 19.09.2016 by the Commission for further

consideration.

1.4 Vide its letter dated 25.10.2016, the Commission communicated the data gaps and deficiencies in the petition. The Petitioner furnished the information vide its letter dated 30.01.2017.

1.5 As required under Section 64(2) of the Electricity Act, 2003, public notice

with salient features of the petition inviting objections/comments/suggestions from any desirous person was published in the following newspapers on the dates mentioned against each:

Table1: Details of Public Notice Sl. No. Name of News Paper Date of publishing

(i) Rajasthan Patrika 28.09.2016

(ii) Punjab Kesari 28.09.2016

(iii) Times of India 29.09.2016


1.6 The petition was also placed on RERC and RWPL websites. The objections/comments/suggestions were received from following Stakeholders:

• Shri G.L. Sharma • Shri Bal Mukund Sanadhya, Samta Power • Jaipur Discom& Ors.

1.7 The Commission forwarded the Objections/Comments/Suggestions of

Stakeholders to RWPL for its replies. The Petitioner replied to the Comments/ Suggestions/ Objections made by the objector vide its letter dated 30.01.2017.

1.8 The public hearing in the matter was held on 05.04.2017.

1.9 To facilitate reference, the abbreviations used in this Order and an index of the issues and points dealt with are placed in Annexure-1 and Annexure-2 respectively.

___________________


SECTION 2 Summary of objections/comments/suggestions on petition filed by RWPL for determination of ARR and Tariff for FY 2014-15 to FY 2016-17 for its 1080 MW (8 × 135) Lignite based thermal generating station.

Disposal of petition Stakeholder’s Comments/Suggestions:

2.1 Stakeholder submitted that the Petitioner at Para 6 of the petition has mentioned that their petitions No. 445/14, 486/14 and 652/15 are still pending before the Commission for their disposal whereas the Commission vide its order dated 04.08.2016 has already disposed-off these petitions and these petitions do not survive in view of their comprehensive petition No. 816/16.

RWPL’s Response

2.2 The Petitioner submitted that the Commission has disposed-off petition nos. 445/14, 486/14 and 652/15 vide its Order dated 04.08.2016 and the present comprehensive petition no. 816/16 was filed by the Petitioner on 19.07.2016 i.e. before the issuance of the Commission’s Order. Therefore, the submissions of the Petitioner regarding the petition nos. 445/14, 486/14 and 652/15 is just a matter of record.

Additional Capitalisation

Stakeholder’s Comments/Suggestions:

2.3 Stakeholder submitted that the Petitioner in the Para 14 of the petition has stated that the Commission has approved capital cost of the station as on 31.03.2014. Further, the Petitioner has considered the additional capitalisation for FY 2014-15 to FY 2016-17. In this respect the Stakeholder has raised the following points:

i) The Stakeholder submitted that the generating station has achieved COD on 16.03.2013 i.e. in the last quarter of FY 2012-13. Hence as per Regulation 2(17) of RERC Tariff Regulations, 2014 the cut-off date of the station is 31.03.2015.

ii) Stakeholder further submitted that any additional capitalisation after the date of Commercial Operation and Upto the cut-off date can only be allowed in accordance with Regulation 17(1). Therefore, in the present


case no additional capitalisation should be allowed and its effect on depreciation and interest element should also be disallowed.

2.4 Stakeholder submitted that in respect to the additional capitalisation for FY 2014-15 the Petitioner has to provide the details of the work included in the original scope of work and also the kind of work i.e. Plant & Machinery, Buildings, Office furniture, Vehicles, IT/Scale software etc. The Petitioner may also provide the information of the amount of expenditure incurred against each unit briefly giving the reason for not incurring such expenditure within the period of achieving the COD of each unit and up to the period of achieving the COD of the Generating station. The Petitioner may also provide the specific expenditure that could not be incurred at the above referred period.

2.5 Stakeholder further submitted that any additional capitalisation may be approved by the Commission after prudence check in the debt: equity ratio of 75:25.

2.6 In replies to the queries raised by the Stakeholder, the Petitioner vide its letter dated 31.01.2017 submitted the package wise details of the additional capitalisation, within original scope of work and beyond original scope of work. After analysing the Petitioner’s submission, the Stakeholder further raised some points on the submission made by the Petitioner. The points raised by the Stakeholder are as follows:

A. Queries related to the additional capitalisation within the scope of original work:

a) Land Cost:

i. The Stakeholder submitted that the Petitioner has claimed the amount of Rs. 0.1 Crore in FY 2014-15 on account of stamp duty on a small piece of land of power plant. Regarding this, the Stakeholder submitted that the Petitioner has not specified the piece of land for which this expenditure has been incurred. Further, the Commission in it order dated 30.08.2013 already allotted 1000 Acre of land for the power plant and the cost of the same had also been approved by the Commission in the same order. Aggrieved by the Commission’s order dated 30.08.2013, the Petitioner approached the APTEL and the APTEL vide its order dated 20.11.2015 dismissed the appeal of the Petitioner. Afterwards, the


Petitioner approached the Supreme Court, where the matter is pending. In view of the above appeal, the above claim of the Petitioner is not admissible.

ii. The Stakeholder further submitted that the Petitioner has claimed the amount of Rs. 2.96 Crore and Rs. 1.16 Crore in FY 2015-16 and FY 2016-17 respectively. From the documents provided by the Petitioner it is revealed that land for a colony having area of 5 Bigha at Gram Panchayat Barmer has been purchased. In this respect, the Stakeholder submitted that the Commission in its order dated 30.08.2013 had already allowed 26 acres of land for colony as was claimed by the Petitioner. Further, in the appeal of APTEL and Supreme Court, the Petitioner has not raised any issue about the land for colony. The Stakeholder further submitted that the colony for which the Petitioner has claimed the additional capitalisation is 60 to 70 km far from the power plant and the Petitioner has also not justified as to how it has been considered within original scope of work. Therefore, no such additional capitalisation towards land is admissible.

b) Steam turbine Generator: Regarding the additional capitalisation claimed towards Steam turbine generator, the Stakeholder submitted that the same is not admissible in accordance with Para 3.76 and 3.79 of the Commission’s order dated 24.02.2016.

c) RW reservoir, WT & DM Plant Civil works: Regarding the additional capitalisation claimed under this head, the Stakeholder submitted that from the justification it is clear that the expenditure has been incurred on the construction of the reservoir. Regarding this, the Stakeholder submitted that the Petitioner has already constructed two reservoirs for storage capacity of water for 60 days instead of 30 days as per the DPR and the cost regarding this had been approved by the Commission in its order dated 30.08.2013. Further, its revised cost has also been approved by the Commission in its order dated 24.02.2016. The Stakeholder further submitted that the Petitioner has not given any justification for the extension of reservoir and how the same has been considered within original scope of work. Therefore, the same is not admissible.


d) Ash handling system, Ash pond and ETP including HCSD-Civil Works: Regarding the additional capitalisation claimed under this head, the Stakeholder submitted that the Petitioner has wrongly quoted the Para 4.102 of the Commission’s order dated 30.08.2013 as the same is the Petitioner’s submissions and not the Commission’s view. Further the Petitioner has not raised any issue related to this in the appeal filed with APTEL. The Stakeholder further submitted that while submitting the comprehensive petition for FY 2009-10 to FY 2013-14, the Petitioner had claimed Rs. 62.00 Crore towards the cost of Ash handling against the cost of Rs. 30 Crore allowed in the in-principle order. The Petitioner also stated that the cost of civil works for ash handling system, ash pond and ETP has decreased by Rs. 3.83 Crore from the earlier estimated cost of Rs. 62 Crore on account of actual allocation of revision in estimates and reallocation of revision in estimates and reallocation of certain expenses as stated in Para 3.233 of the Commission’s order dated 24.02.2016. The Commission in its order dated 24.02.2016 finally allowed Rs. 42.25 Crore up to FY 2013-14 and had not stated for any further consideration. Hence the matter is closed and the additional capitalisation of Rs. 2.15 Crore claimed is not admissible.

e) Main Plant- Civil and Structural works: The Stakeholder submitted that the Petitioner has claimed the amount of Rs. 0.25 Crore in FY 2014-15 under this head. Further, the Petitioner has not provided the justification for considering these expenses under original scope of work and why the same has not been incurred within cut-off date. The Stakeholder further submitted, that the amount of Rs. 0.25 Crore claimed by the Petitioner is not admissible and the same may be considered under O&M cost.

f) Misc. buildings such as workshops, warehouse, administrative building, canteen, fire station etc.: The Stakeholder submitted that the Petitioner has claimed the amount of Rs. 0.47 Crore and Rs. 3.11 Crore in FY 2014-15 and FY 2015-16 under misc. buildings. Regarding this, the Stakeholder submitted that the Petitioner in replies has stated that the above expenditure has been incurred on misc. buildings such as workshops, warehouse, administrative building, canteen, fire station etc. but the details provided in the Annexure 4 of the replies do not talk about any


expenditure on any of the above buildings rather the expenditure of Rs. 0.41 Crore in FY 2014-15 and Rs. 0.63 Crore in FY 2015-16 has been stated towards “Office furniture, Store racks & others”. The Stakeholder further submitted, that the Commission in its order dated 17.10.2016 in case of RVUN has considered such expenses under O&M, therefore the above expenditure is not admissible. Further, the remaining amount of Rs. 2.48 Crore has been stated in respect of plant temple. The Stakeholder submitted that the Petitioner has submitted the false statement regarding the misc, buildings as the expenditure has been incurred on office furniture and not on any of the buildings mentioned by the Petitioner. And this false statement also generates a doubt about other justifications given by the Petitioner. Therefore, the above additional capitalisation of Rs. 0.47 Crore and Rs. 3.11 Crore for FY 2014-15 to FY 2016-17 are not admissible as the temple cannot be the part of the plant.

g) Ash handling plant: Regarding the additional capitalisation of Rs. 18.67 Crore in FY 2014-15 claimed by the Petitioner under this head, the Stakeholder submitted that the Petitioner has not given the justification of considering this expenditure under original scope of work as the original scope of work does not state for additional plant. Therefore, the above additional capitalisation of Rs. 18.67 Crore towards Ash Handling plant is not admissible.

h) Computers and software, time and attendance system: The Stakeholder submitted that under this head, the Petitioner, has claimed the additional capitalisation of Rs. 0.40 Crore and Rs. 0.43 Crore for FY 2014-15 and FY 2015-16 respectively. The Stakeholder further submitted that the Petitioner has not given the justification of considering this expenditure under original scope of work. Further, the same is related to O&M expenses. Therefore, the additional capitalisation of Rs. 0.40 Crore and Rs. 0.43 Crore is not admissible.

i) CW System: The Stakeholder submitted that under this head the Petitioner has claimed the amount of Rs. 0.79 Crore for FY 2014-15. The Petitioner has not provided any justification of considering this expenditure under original scope of work. Therefore, the above additional capitalisation

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of Rs. 0.79 Crore is not admissible.

j) Cranes and hoists for station building and other areas: The Stakeholder submitted that the Petitioner has not provided any justification for the additional capitalisation of Rs. 0.28 Crore claimed under this head. Further, the Commission in its order dated 24.02.2016 has already considered such expenses under BoP- Mechanical and no further expenditure under this head is admissible.

k) Electrical System including shunt reactors: The Stakeholder submitted that under this head the Petitioner has claimed the amount of Rs. 0.19 Crore and Rs.0.06 Crore in FY 2014-15 and FY 2015-16 respectively and has stated the same under original scope of work. In justification of this, the Petitioner has stated that this expenditure was a part of the contract to ABB for switch yard package. The Stakeholder further submitted that the Commission in its order dated 24.02.2016 allowed the amount of Rs. 48.63 Crore against the Petitioner’s claim of Rs. 48.83 Crore towards ABB- Supply switch yard. Further, in accordance with Para 3.151of the Commission’s order dated 24.02.2016, the above additional capitalisation of Rs. 0.19 Crore and Rs. 0.06 Crore for FY 2014-15 and FY 2015-16 respectively are not admissible.

l) Colony: The Stakeholder submitted that under this head the Petitioner has claimed the additional capitalisation of Rs. 1.18 Crore and Rs. 2.61 Crore for FY 2015-16 and FY 2016-17 respectively and the same expenditure has been stated under original scope of work. The Stakeholder submitted that the above additional capitalisation claimed by the Petitioner under this head is after the cur-off date. The Stakeholder further submitted that the reasons for this expenditure given by the Petitioner are as beyond its control including on account of strained cash flow owing to hugely delayed payments by the Discoms and availability of only adhoc tariff restricting full recovery. Regarding this reason given by the Petitioner, the Stakeholder submitted that these reasons are just to make the above additional capitalisation admissible. Stakeholder further submitted that the construction of lift, stage, auditorium and temple cannot be considered under original scope of work. Therefore, the above

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additional claimed under this head is not admissible.

m) Transmission line 33 kV: The Stakeholder submitted that under this head the Petitioner has claimed the additional capitalisation of Rs. 14.73 Crore and Rs. 11.67 Crore in FY 2014-15 and FY 2015-16 respectively, further a sum of Rs. 0.53 Crore has been claimed in FY 2014-15 towards link canal & head regulator through INGP under water pipeline. Regarding this, the Stakeholder submitted that the work related to INGP canal has never been in original scope of work and it appears that the same work has been done for the convenience of the Petitioner itself. Hence, the amount of Rs. 0.53 Crore for FY 2014-15 towards IGNP canal is not admissible. Regarding the expenditure claimed towards transmission line, the Stakeholder submitted that the Commission has already approved the total cost towards this in its order dated 24.02.2016 and allowing amount of Rs. 14.73 Crore and Rs. 11.67 Crore for FY 2014-15 and FY 2015-16 respectively will be a double amount made available. Further, if the earlier transmission line has been dis-mantled, then the refund received has to be mentioned and in both the lines are existing, then the question of expenditure of two lines for the same purpose does not arise.

n) The Stakeholder submitted that on account of above additional capitalisation being not admissible, the Petitioner’s claim in respect to Taxes & Duties, IDC & Finance charges and any erection & Commissioning charges are also not admissible.

o) Regarding the Creditor’s payment claimed by the Petitioner, the Stakeholder submitted that the Petitioner has only provided the vendor name and payments made to them but the Petitioner has not provided the details of works for which such payments have been made, reason for such delayed payments, whether these works are in original scope of work or not, whether these works were admitted by the Commission or not etc., in the absence of such details no comments can be offered. The Commission may obtain such information from the Petitioner and accordingly further decisions may be taken.

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RWPL’s Response

2.7 The Petitioner submitted that its claim for additional capitalisation, both within the original scope of work and beyond the original scope of work is in accordance with the Regulations and should be allowed. The Petitioner further submitted that the Stakeholder has quoted the provisions of Regulation selectively and interpretation of Regulation 2(17) and Regulation 17, as sought by the Stakeholder is incorrect and is based on incomplete reading of the relevant Regulations.

2.8 Regarding the additional capitalisation of FY 2014-15, the Petitioner has submitted the details and justifications for additional capitalisation within the original scope of work as sought by the Stakeholder. Petitioner further submitted that the part of these expenditures has been/will be incurred beyond the cut-off date on account of the uncontrollable factors.

2.9 Regarding the means of finance suggested by the Stakeholder, the Petitioner submitted that it has considered the same Debt: Equity ratio of 75:25 as suggested by the Stakeholder.

Additional capitalisation beyond the original scope of work


2.10 The Stakeholder submitted that the Petitioner at Para 15 of the petition has stated that a sum of Rs. 6.084 Crore and Rs. 7.157 has already been capitalised in FY 2014-15 and FY 2015-16 respectively and in FY 2016-17 a sum of Rs. 23.511 is likely to be capitalised. These capitalisations have been stated as beyond the original scope of work and are made for the efficient and successful operation of the Generating Station. The Petitioner has further stated that the requirement of additional capitalisation was indicated to the Commission in reply to Para A-3 of their submission dated 05.11.2014 on petition No. 464/14.

2.11 In respect to the above submission of the Petitioner, the stakeholder submitted that the petition no. 464/14 has already been disposed-off by the Commission vide its Order dated 24.02.2016. Therefore, the submissions made by the Petitioner in petition no. 464/14 do not survive anymore. The Petitioner has to provide the details of the expenditure again. Further, the Petitioner may also provide the details that how these expenditures will

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improve the operation and efficiency of the station. They may supply such information of Unit wise expenditure and Unit wise efficiency etc.

2.12 In replies to the queries raised by the Stakeholder, the Petitioner vide its letter dated 31.01.2017 submitted the package wise details of the additional capitalisation, within original scope of work and beyond original scope of work. After analysing the Petitioner’s submission, the Stakeholder further raised some points on the submission made by the Petitioner. The points raised by the Stakeholder are as follows:

A. Queries related to the additional capitalisation beyond original scope of work:

a. Land:

(i) The Stakeholder submitted that the Petitioner has claimed the additional capitalisation of Rs. 1.90 Crore under this head towards the cost of land for the construction of additional block of township and a vocational training and development centre. Regarding this, the Stakeholder submitted that earlier the Petitioner itself had reduced the land area for the colony from 62.6 acres to 26 acres and the same area of 26 acres was approved by the Commission, as clearly stated in Para 4.10 and Para 4.15 of the Commission’s order dated 30.08.2013. Stakeholder further submitted, that the Petitioner has not raised any such issue regarding the land in any of the appeals raised before APTEL and Supreme Court. Therefore, the same is not admissible.

(ii) Regarding the additional capitalisation of Rs. 6 Crore claimed for FY 2016-17, the Stakeholder submitted that the Commission in its order dated 30.08.0213 had allowed the land of 1000 acres for the plant after considering all the points and requirements, as the same is clear from Para 4.15 Crore of the Commission’s order dated 30.08. 2013. Further, the Petitioner had filed an Appeal before the APTEL and the APTEL has dismissed the appeal vide its order dated 20.11.2015. The Petitioner further has filed an Appeal before Hon’ble Supreme court and the matter is pending. Therefore, at this stage no additional capitalisation under this head beyond original scope of work is admissible.

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b. Township, Bachelor hostel, Land acquisition & renovation:

Under this head the Petitioner has claimed the amount of Rs. 1.85 Crore in FY 2014-15 and the same is towards the cost of land for building the bachelors’ hostel. Regarding this, the Stakeholder submitted that when the Commission has already allowed the area of land for the colony as per the requirement, then allowing any additional land and building is not appropriate. Further, increase in employees’ satisfaction cannot be a ground for approving the additional capitalisation. Therefore, the same is not admissible.

c. UPS additional battery bank for BTG UPS:

The Stakeholder submitted that the additional capitalisation claimed under this head is towards the purchase of a set required as a backup and the purchase of any part of the backup cannot be a ground for additional capitalisation rather it is to be met from the O&M expanses.

d. Excitation system:

The Stakeholder submitted that the additional capitalisation claimed under this head is not admissible as the same is a part of O&M expenses.

e. Generator Protection up gradation:


f. Bus coupler at 400 kV switchyards:


g. Turbine main oil tank (MOT) lube oil filtration machine:


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h. Portable Oil centrifuge machine for FAN’s/BFP:


i. Online lube oil filter for turbo generator:


j. Cathodic protection for cross country pipeline:


k. Security barracks inside the plant:

The additional capitalisation under this head has been claimed towards providing the barracks to security personals. Regarding this, the Stakeholder submitted that in case the Petitioner wants to provide any facility to their employees the same cannot be the part of additional capitalisation and the same can be done form O&M expenses.

l. Fire tender, CCTV package, SAP software & PI server:

All additional capitalisations claimed under these heads are not admissible as the same are the matter of O&M expenses.

m. Misc Office equipment’s & furniture and vehicles:

The Stakeholder submitted that the Commission in case of RVUN has considered such expenses towards office equipment and furniture as part of O&M expenses. Therefore, in this case also such expenditure cannot be part of capital expenses but are the part of O&M expenses. Therefore, no additional capitalisation is admissible under this head.

n. Civil drains and Misc. Jobs:

The Stakeholder submitted that the additional capitalisation claimed under this head is not admissible as the same is a part of O&M

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expenses.

o. CQQMS air quality monitoring system:


p. Helium leak detection system:


RWPL’s Response

2.13 The Petitioner submitted that the additional capitalisation claimed is in accordance with the RERC Regulations. The Petitioner has submitted the item wise details of capital expenditure incurred/ to be incurred beyond the original scope of work along with its justification.

Annual Accounts


2.14 Stakeholder submitted that the independent Auditor’s Report given on page 20 to 22 of the petition as on 31.03.2015, does not say in specific and clear terms that the Accounts of the Company give a true and fair view. In regard to the other reports as of 31.03.2016 provided on page 54-55 of the petition the Stakeholder has submitted the following:

i) Under the head “Other Matters” it has been mentioned that “The financials up to 31.03.2016 are based on the audited financial statements which are audited by us”. The Petitioner may provide a copy of referred audited financial statements.

ii) The Stakeholder further submitted that on page 55 of the same report, it has been mentioned that “we have also verified the arithmetical accuracy of the statement prepared on the basis of process of capitalisation described under “Process of Capitalisation” and these calculations are attached in Annexure A1, A2, A3 and A4”. Regarding this the Stakeholder has submitted the following points:

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a) The expenditures included in Annexure. A1, A2, A3 and A4 also include the expenditure as of up to FY 2013-14 and regarding the same, the Commission has already taken the decision in its order dated 20.02.2016. A fresh certificate relating to the expenditures desired to be capitalised only for FY 2014-15 and beyond, is required as the auditor’s certificate already provided with the comprehensive petition is dated as 15.06.2016 which is after the date of the Commission’s order (i.e. 20.02.2016).

b) Stakeholder further submitted that the auditor’s certificate is not only

for the arithmetical accuracy, in-fact it should state that the expenditure has actually been incurred and it is within the original scope of work. The auditor’s certificate must also state that all the expenditure incurred has been verified with the relevant documents. Therefore, the auditor’s certificate submitted by the Petitioner cannot be said as reliable.

RWPL’s Response

2.15 The Petitioner submitted that the accounts of the company have been audited and signed by a reputed Charted Accountant firm in accordance with the standard audit procedure prescribed under the prevailing Accounting Standards and the Guidance note on Audit Reports & Certificate for special purpose, issued by the ICAI.

2.16 The Petitioner further submitted that on page 21 of the independent Audit Report, it is clearly indicated that the accounts present a true and fair view of state of company’s affairs. Petitioner further submitted that such objections regarding the alleged deficiencies in the Auditor’s certification has been raised by the Stakeholder in the past also and those objections were rejected by the Commission.

2.17 Regarding the copy of referred audited financial statements, the Petitioner submitted that the Annual Audited Accounts for FY 2015-16 are already available on record as a part of the comprehensive petition.

2.18 The Petitioner submitted that the petition has been filed on the basis of the certification of the charted accountants for actual capital expenditure incurred on the project as on 31.03.2016 in accordance with the RERC

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Regulations, 2014.

2.19 The Petitioner further submitted that the Auditor’s certificate has been prepared on the basis of the capital expenditure incurred as per the audited accounts by following the standard audit procedure. All the required details regarding the capital expenditure till COD and the additional capitalisation for FY 2014-15 and FY 2015-16 have been provided in the Auditor’s certificate.

Compliance of Commissions order


2.20 Stakeholder submitted that the Petitioner at Para 10 of the petition has mentioned that for determination of the final Tariff for FY 2014-15 to FY 2016-17, the capital cost approved by the Commission vide order dated 24.02.2016 has been considered. The Commission vide its order dated 24.02.2016 has approved the capital cost of Rs. 5928.75 Crore as on 31.03.2014 whereas the Petitioner in form No. 6.1 has shown the opening GFA for FY 2013-14 as Rs. 6598.74 Crore and the closing GFA as Rs. 6891.09 Crore. Further the depreciation has also been computed based on the GFA provided in the Form No. 6.1. The Petitioner is required to justify this deviation from the Commission’s approved GFA.

2.21 Stakeholder submitted that the Commission in its order dated 24.02.2014 approved the gross assets of IT equipment’s as Rs. 1.69 Crore but the Petitioner in the Form 6.1 in the petition has mentioned the gross assets of software both at the beginning of FY 2013-14 as well as at the end of the year as Zero. Further the closing GFA for FY 2013-14 must be the opening GFA for FY 2014-15 but this is not the case here. The closing GFA of FY 2013-14 is different from opening GFA for FY 2014-15. The Petitioner may clarify this.

RWPL’s Response

2.22 The Petitioner submitted that the Form G 6.1 has been prepared as per the audited accounts, as this is the requirement of the form itself. But for working out depreciation, interest on loan, return on equity etc., the Petitioner has considered the capital cost of Rs. 5929 Crores. The same has been shown in Annexure-07 and Annexure-13 of the comprehensive tariff

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petition.

2.23 The Petitioner submitted that the accounts have been prepared as per the companies Act. Therefore, in accordance with the Schedule VI of Companies Act, the amount of Rs. 1.69 Core approved by the commission towards IT Equipment is forming the part of the asset head- Plant & Equipment. But for working out the tariff, Petitioner has considered the GFA and GFA heads as approved by the Commission in its Order date 24.20.2016.

Plant Characteristics


2.24 The Stakeholder submitted that the Petitioner has provided the plant characteristics in From No. 2.1. Regarding this the stakeholder has raised following points:

(i) Under the column “special features of plant” and “Special technology features”, the Petitioner has mentioned “Circulating Fluidised Bed Combustion steam generator is envisaged”. The Petitioner may clarify whether the steam generator installed actually have these features or are only envisaged and if the steam generator actually has these features then what does “envisaged” mean.

(ii) The Stakeholder further submitted that this form No. 2.1 is not complete in all respect as the note 8 of the form states that if the guaranteed unit heat rate is not available then furnish the guaranteed turbine cycle heat rate and guaranteed boiler efficiency. Though the Petitioner has provided the boiler efficiency and turbine heat rate but the relevant documents to substantiate the same have not been provided. Hence, the Petitioner may provide the relevant documents.

RWPL’s Response

2.25 The Petitioner regarding the word “envisaged”, requests the Commission to ignore the word “is envisaged” and the Petitioner further confirmed that the power plant is actually using Circulating Fluidized Bed Combustion (CFBC) steam generator.

2.26 Further, the Petitioner provided the relevant documents of the BTG

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supplier to substantiate the guaranteed performance parameters of Turbine Cycle Heat rate and boiler efficiency.

Details of Fuel for computation of energy charges


2.27 Stakeholder submitted that as per note No. 2 of Form No. 5.1 the information of fuel should be furnished for immediately preceding 3 months from the month of filing the petition. In this case the petition has been filed in the month of July 2016. So, the Petitioner should have furnished the detailed information for the month of April 2016, May 2016 and June 2016. But the Petitioner has furnished the details for year 2014. So, the Petitioner may provide the required information as per note No.2.

RWPL’s Response

2.28 The Petitioner submitted that the present Tariff petition is for determination of Tariff for three financial years and accordingly the Petitioner has filed 3 separate forms (G 5.1) for each financial year, considering the data for the preceding three months prior to the commencement of each financial year.

Energy Charges for thermal generation


2.29 Stakeholder submitted that Note No. 3 of Form no. 5.3 clearly states that the operational data is to be submitted separately for each unit. The same is missing in the Form 5.3 submitted by the Petitioner. The Petitioner may provide required information.

RWPL’s Response

2.30 The Petitioner submitted that the orders for setting up and commissioning of the power plant have been placed for the power plant as a whole and accordingly the books of accounts are maintained by the Petitioner for the power plant as a whole not unit wise. Therefore, the Petitioner has provided all the required information in Form G 5.3.

2.31 Petitioner further submitted that all the units of the power plant are identical and connected to the common bus bar. Therefore, the

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declaration of availability scheduling and dispatch of electricity from the generating station has been carried out on the aggregate basis as per the practice been followed in the industry.

Loan repayment and Interest liability


2.32 Stakeholder submitted that the Petitioner has provided two different forms 6.2 for the same financial year and both the forms are containing different values for the same financial year. The Petitioner may clarify this.

RWPL’s Response

2.33 The Petitioner submitted that only one form G 6.2 has been submitted by the Petitioner with the comprehensive petition, which runs on two pages. The Petitioner further submitted that the observation of the Stakeholder regarding the submission of two forms with different figures is misleading.

O&M and Special O&M


2.34 Stakeholder submitted that the normal O&M may be allowed as per the RERC Tariff Regulations, 2014.

2.35 Stakeholder submitted that the two pumping stations namely Mohangarh and Kanod are within the range of 50 KM from IGNP Canal. Therefore, these two pumping stations are not admissible to any kind of special O&M.

2.36 For pumping stations, namely Akalphata and Sangad which are beyond the range of 50 Km, the electricity consumption expenses must be allowed as per actuals. In regards to the special O&M other than electricity charges for Akalphata and Sangad the Petitioner has submitted that they have awarded a contract for the whole pipe line and not separately for pipeline beyond and up to 50 Km. The Petitioner has claimed the special O&M other than electricity charges on the proportional basis. The Petitioner may provide the copy of the contract to substantiate the claim.

2.37 Stakeholder submitted that the Petitioner in replies to the data gap in

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respect to the petition No. 464/14 for FY 2009-10 to FY 2013-14 provided the copy of O&M agreement executed between RWPL and JSW dated 26.11.2009. According to the clause 4.1 of the agreement, the same was effective from the date of execution and remain valid for 10 years unless terminated.

2.38 The Stakeholder further submitted that Article II of the agreement states that “The Operator shall maintain the plant including common facilities of the power plant as defined in the PPA…” Further, the Article 1.1 of the same PPA states that the “Common facilities “means the facilities described in schedule 12 of the same agreement.” Schedule 12 of the agreement also covers the raw water pumping system including pipeline, pumping stations, intermediate reservoir etc. Therefore, in view of this, the Petitioner has not incurred any additional O&M expenses for the maintenance of raw water pipeline. Accordingly, no special O&M other than electricity charges are admissible to the Petitioner for raw water pipeline even for pumping stations beyond the range of 50 Km.

2.39 Stakeholder further submitted that the Special O&M is the additional compensation for pumping raw water beyond 50 km. The Stakeholder further submitted that since expenses on the entire pipeline are being claimed and allowed, therefore, no special O&M expenses should be claimed as the same would result in the double claim. Further, if these expenses are fully allowed under the contract for full pipeline, no additional claim should be made.

2.40 Stakeholder submitted that the contract for the entire pipe line has been awarded to JSW, RWPL’s holding company, on 26.11.2009 for a period of 10 years. In a cost-plus project, the Petitioner cannot claim beyond the cost which it has incurred and since no additional expenses have been incurred for the beyond 50 km, no additional claim under the head “Special O&M charges” should be allowed.

RWPL’s Response

2.41 The Petitioner submitted that it has claimed O&M charges as per the norms specified in RERC Regulations, 2014.

2.42 As regards the special O&M Expenses, the Petitioner submitted that it has only claimed the electricity charges and other special O&M on the basis

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of actual expenses incurred for the pumping stations that are beyond the range of 50 Km. Further, the copies of the electricity bills and details of other expenses are already provided with the comprehensive petition. Further, the Petitioner has provided the supporting documents to substantiate the claim.

2.43 The Petitioner submitted that the O&M contract to the pipeline including the maintenance cost of the pumping station has been awarded for the whole pipeline of 185.97 km and not separately for pipeline upto 50 Km and beyond 50 km. Further, for this petition, the Petitioner has considered O&M charges (Other than electricity charges of the pumping station) for the pipeline beyond 50 Kms on proportionate basis.

2.44 The Petitioner submitted that the O&M agreement with the JSW Energy was terminated after FY 2010-11. Therefore, JSW Energy had carried out the O&M work of the power plant only for FY 2009-10 and FY 2010-11. Thereafter, the O&M of the plant is being carried out by the Petitioner itself.

Depreciation


2.45 The stakeholder submitted that the depreciation should be approved by considering the GFA approved by the Commission vide its order dated 24.02.2016.

RWPL’s Response

2.46 The Petitioner submitted that for computing the depreciation, the Petitioner has considered the capital cost of Rs. 5929 Crore. The same has been shown in Annexure-07 and Annexure-13.

Interest on working capital


2.47 Stakeholder submitted that the interest on working capital should be allowed on normative basis. Further, no element of special O&M should be considered while calculating the interest on working capital.

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RWPL’s Response

2.48 The Petitioner submitted that the Commission has already taken the view on this issue in its Order dated 30.08.2013. Therefore, there is no need to discuss the same issue again and again. The Petitioner also requested the Commission to stop the Objector to raise the same issue again and again on the principles of res-judicata to save the time of all the involved parties.

Interest on long term Loans


2.49 The Stakeholder submitted that while computing the interest on loan, only the debt approved by the Commission vide its order dated 24.02.2016 should be considered. No other loan whether received /obtained or given by the Petitioner should be Considered.

RWPL’s Response

2.50 The Petitioner submitted that the interest on term loans has been worked out and claimed as per the norms specified in the RERC Regulations, 2014 based on the capital cost approved by the Commission in its Order dated 24.02.2016. The same has been submitted in Annexure-13 of the comprehensive petition.

Insurance charges


2.51 The stakeholder submitted that the name of the insurance company and the insurance policy number is not available in the statement provided by the Petitioner on page No. 176 and 177 of the petition. The Petitioner may provide this information.

2.52 The stakeholder submitted that the copies of policies provided by the Petitioner are not complete. Regarding this the Petitioner has raised following points;

i) Policy No. 1101342117000033 – The Stakeholder submitted that for such agencies any insurance charges/premium are not admissible for any additional insured.

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ii) Policy No. 2999200739057400000 – The Stakeholder submitted that, in the information provided by the Petitioner on page No. 180 it is mentioned that for RWPL at Bhadesh, the total value of insurance is Rs. 6898 Crore whereas the Commission has approved the Capital cost of Rs. 5928.65 Crore. Hence any premium for additional sum is not admissible. Any insurance charges/premium are not admissible for any additional insureds. Further the Petitioner has shown the value of risk of Rs. 10 Crore for the RWPL township road at Shivkar and the Premium of the same as Rs. 17662. Stakeholder submitted that the same is not admissible as the township is not in the premises of the plant and it is even very far from the plant. In a similar case the Commission in its order dated 24.02.2016 didn’t allow the cost of the Petitioner’s office as the same is not in the premises of the plant. Even the value of risk for the same when added with the value of risk of the plant is coming out to be more than the approved Capital cost of the plant. The endorsement of the same policy talks about increase in the limit of liability. The Petitioner may clarify how this is related to RWPL as the name of RWPL is not appearing in the name of the insured. The Petitioner may also provide the full copy of the policy. The same issue hold for FY 2015-16 also.

iii) Policy No. 1101342611000036 – Stakeholder submitted that this policy is an

office package policy and has covered the plant address and the Jaipur office located at Mansarovar Plaza. In regard to this the Commission in its order dated 24.02.2016 has clearly mentioned that in the very similar case of NTPC, APTEL gave the judgement that the Common offices are not included in the definition of the generating stations under the provision of Electricity Act. Hence the Commission has not allowed the cost of Rs. 2.62 Crore towards the Office building at Jaipur. Therefore, no expenses including the insurance charges are admissible for Jaipur office. Further, in the same policy terrorism/ burglary has been mentioned but the policy No. 2999200739057400000 also talks about terrorism. So, it’s a duplicity of the same cause. Hence, this policy and its amount should not be considered. Further, this policy also contains the premium in respect of infidelity/ dishonesty of employees. It may be mentioned that employees are covered under O&M expenses. Moreover, employees covered under this policy are of Jaipur office. Same issues arise for FY 2015-16 also.

iv) Policy No. 2412200734046100000 – Stakeholder submitted that a schedule

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of the policy stated as marine cargo open policy. The Petitioner may clarify how this is related the RWPL as in the policy, the name of insured has been mentioned as Rajwest Power Ltd and Subsidiary and Associated and Affiliated Companies and Mortgages and as agents and their appointed and for whom they may have instructions to insure. The Petitioner may also clarify why other agencies are included in this policy. Further, the claims of marine cargo open policy are not admissible. The same issue holds valid with the policy submitted at Page No. 195 of the comprehensive petition.

v) The Stakeholder submitted that RWPL has received some amount from M/s Reliance general insurance company and TATA AIG general insurance company in reference to some settlement done. The Petitioner may provide the details about the settlement that has been made and under which head of account this adjustment has been accounted.

vi) The Stakeholder submitted that the copy of the policy on page No. 198 & 199 mentioned the insured names as RWPL, Raw water pipe line, Four pumping Stations and Other entities. These are not entitled for insurance claim for ARR of RWPL. Further, the purpose of the policy is not clear from the documents provided. The Petitioner may provide the full copy of the policy

vii) The Stakeholder submitted that at page No. 202 & 204, under section 2 it is mentioned as “Business Interruption (FLOP +MLOP). The Petitioner may clarify words FLOP and MLOP. Further, against the column “original insured” besides RWPL other entities are also mentioned. The insurance claim for these entities is not admissible. Further the insurance for the assets outside the plant premises are not admissible. Further the insurance for the excess sum insured is not admissible as the total insured sum mentioned in the policy is more than the total capital cost approved by the Commission.

viii) Regarding Page 214- 215 Stakeholder submitted that the portable electronic equipment cannot form the part of the assets of the power plant. Therefore, no insurance premium is admissible for the same. Further on page No. 211-213 insurance for electronic equipment is provided but when all the assets of the plant are insured under one policy than what is

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the need of this separate insurance policy. The Petitioner may clarify this.

ix) The stakeholder submitted that the policies regarding burglary and housebreaking related to staff quarters of Staff Township situated at Shivkar road, Barmer provided on Page No. 224 and 226 are not admissible.

x) The Stakeholder submitted that the Petitioner on Page No 246 & 247 has provided the receipts of two different amounts for the same period and in respect of the same policy. The Petitioner may clarify this and provide the full copy of the policy.

xi) Stakeholder submitted that the policies attached at Page No. 219-220 and at Page No. 222 contain the same details of the insured and the purpose of the policy. Further, both the policies are for the same period. Therefore, it is duplicity of policies and should be disallowed. Moreover, no insurance claim in respect of staff Tower Township is admissible. Further the claims made by the Petitioner at page no. 227 and 231 are also not admissible.

xii) Regarding the submission of the policy made by the Petitioner at Page no. 233 to 236 and Page no. 255 to 258, the Stakeholder submitted that this policy does not relate in the present circumstances to the power plant.

xiii) Regarding the policy submitted at Page no. 259-260, the Stakeholder submitted that the Petitioner should provide the copy of the complete policy along with the copy of the schedule so referred.

xiv) The Stakeholder submitted that various documents provided by the Petitioner in the petition are not complete. The Petitioner may provide the complete copy of all the insurance policies claimed in the petition.

xv) The Stakeholder submitted that in the policy submitted on Page No. 186 of the petition, four employees have been insured under the infidelity of employees. The same should not be allowed as employees are already covered under O&M expenses. Further, out of the four employees three are of Jaipur office.

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RWPL’s Response

2.53 The Petitioner submitted that the insurance charges claimed for each financial year in the petition is within the cap of 0.2% of the Net Fixed Assets as prescribed in the Regulation 25. Further, the Petitioner submitted that all the relevant portion of the insurance policy has already been submitted in the comprehensive petition and the Stakeholder itself has taken the reference of the submitted details.

2.54 Regarding the objection of the Stakeholder related to the submission of incomplete policies, the Petitioner submitted that to avoid the unnecessary burden of the record, only the relevant portions of the policies have been provided and the same approach was accepted by the Commission during the proceedings of petition 464/16. Further, the Petitioner would file the entire set of insurance policies as and when directed by the Commission.

2.55 Regarding the inclusions of additional insured in various policies, the Petitioner submitted that a mega project is financed through debt from banks/financial institutions. As the lenders have stakes in the project and as per the terms of sanction of loan, their interest is to be taken care of in the insurance policy. They are included as the additional insured in the policy for the benefit of the project. Such clause widens the scope of the risk covered, without any impact on the insurance premium.

2.56 Regarding the queries related to Page No. 179 to 182, the Petitioner submitted that the insurance has been taken on the replacement value of the assets and not on book value of the assets or on the capital cost approved by the Commission. Therefore, comparing the insured sum and approved value of assets in not appropriate. Petitioner, further submitted that the Commission vide its Order dated 24.02.2016 approved Rs. 80.17 Crore towards the township/colony, which clears that this is also a part of the project cost. Accordingly, the insurance charges for the same are admissible in accordance with the Regulation 25 of RERC Tariff Regulations, 2014. The Stakeholder’s point that the insurance charges for assets outside the generation station is baseless because in that case the insurance charges for the water pipeline laid outside the generating stations also cannot be allowed.

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2.57 Regarding the query of endorsement at Page No. 183, the Petitioner submitted that the document submitted at Page No. 183 is an endorsement to the policy no. 2999200739057400000 and is subject to the terms and conditions of the main policy. Further, it is clearly mentioned in the endorsement document that RWPL is a beneficiary.

2.58 In reply to the queries related to Policy No. 1101342611000036, the Petitioner submitted that the policy is for movable assets for power plant and Jaipur office against fire & allied perils, burglary and house breaking, money transfer and cash in safe and has been claimed as per Regulation 20 of the RERC Regulations, 2014. The insurance charges of this policy have been claimed in the petition as the same is not covered under the mega risk policy. Further, infidelity/ dishonesty policy has been taken to cover the financial loss which might occur to the Petitioner on account of any action of the employees which will have direct impact on the movable assets including cash of the company.

2.59 Regarding the marine cargo open policy, the Petitioner submitted that, various machineries are purchased from outside and various machineries are sent outside for repair and maintenance. Therefore, to avoid the transit risk, this policy has been taken and accordingly the insurance premium has been claimed in the petition.

2.60 In regards to the queries raised for Page No. 195, the Petitioner submitted that this is another marine cargo open policy and is not covered in the previous policy. This policy has been taken to cover the transit risk when the turbine is sent from Plant to the repair site i.e. (Medak (Hyderabad). Therefore, the insurance charges for the same have been claimed in the petition.

2.61 The Petitioner submitted that it has received the refund of insurance premium of Rs. 6,75,684 against the loss of profit covered under Mega Risk policy and amount of Rs. 39,010.27 against the marine insurance policy. As the Petitioner, has claimed these premia earlier, the refunds are adjusted against insurance premium charges as mentioned in the petition. Further, the policy at Page No. 198 of the petition is a Mega Risk policy.

2.62 The Petitioner submitted that it has never received an amount of Rs. 5,34,14,449 from Reliance General Insurance Company Limited. The Petitioner has renewed the Mega Risk Policy from the Period 01.01.2016

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instead of 01.04.2016 and accordingly the relevant adjustments of premium paid during the period of 01.01.2016 to 31.03.2016 have been made as shown in the Annexure 10 of the petition.

2.63 Regarding the meaning of words FLOP and MLOP the Petitioner submitted the FLOP means Fire Loss of Profit and MLOP means Machinery Loss of Profit.

2.64 Regarding the queries raised for Page No. 211-213, the Petitioner submitted that this insurance cover is separate from the main insurance policy and covers only electronic equipments which are subject to higher technological obsolesces in separate nature of policy. Further, the Policy submitted at Page 214-215, is for movable electronic equipments at township and as the Commission has considered the township under the project cost, the Petitioner has claimed the insurance charges for this policy in the petition.

2.65 Regarding the queries raised for Page No. 227 & 231, the Petitioner submitted that these claims are as per the RERC Regulations and should be allowed as the Stakeholder has not assigned any reason why the same should be disallowed.

2.66 Regarding the queries raised for Page no. 240 & 241, the Petitioner submitted that the policies premium receipts as referred at Page No. 246 & 247 relate to insurance policies taken for Electronic Equipment Insurance (EEI) and Laptop All Risk (LAR).

2.67 In replies to the queries related to Page No. 219-220, 222, 224 and 226, the Petitioner submitted that the policies submitted at page no. 219-220 and on 222 are for different locations and the sum insured is also different. Both the policies are to cover any loss due to damage in building, fire, electrical installation etc., one policy is for staff township located at Barmer and the other is for staff bachelor hostel located in Barmer. Further, the Petitioner submitted that the Burglar and Housekeeping Insurance Policy is to cover risk of fire, theft & burglary and the same is taken for modular kitchen furniture in Staff Township in Barmer and the same is not covered by any other policy and a similar policy has been taken for furniture in staff bachelor hostel in Barmer. Therefore, it is clear that above policies are for different locations and of different sum insured.

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Variable charges


2.68 The Stakeholder submitted that the assumption of transfer price of lignite of Rs. 2685.38 Crore for FY 2016-17 is based on the latest ICB. Stakeholder submitted that the petition No. 593/16 is still pending before the Commission and till the time bid is approved by the Commission ad-hoc transfer price should be considered. Stakeholder further, submitted that the ICB is based on highly inflated terms and conditions.

2.69 The Stakeholder submitted that the Petitioner may provide the copy of analysis of GCV of lignite i.e. actual GCV.

2.70 Stakeholder submitted that as per RERC Tariff Regulations, 2014 SHR should be limited to the already approved SHR.

2.71 Stakeholder submitted that the Petitioner may provide the copy of analysis of sulphur for Jan, 2014 to March, 2014. Further, for landed cost of limestone the Petitioner may provide the relevant documents to substantiate the claim.

2.72 Stakeholder submitted that the cost of lignite for computation of variable charges for FY 2014-15 to FY 2016-17 must be considered as approved in interim orders by the Commission. Stakeholder further submitted that the Petitioner has been avoiding the finalization of lignite cost and has not submitted the full documents to the commission in spite of the directions of APTEL.

RWPL’s Response

2.73 The Petitioner submitted that all the relevant documents for determination of final transfer price of lignite, including all bidding documents have been filed by BLMCL before the Commission. Further, the Commission has already heard and reserved orders in IA-2 filed in petition No. 593/2016, filed by BLMCL. Therefore, BLMCL is entitled for final determination of lignite transfer price in respect of previous years based on the MDO fee to be approved by the Commission in IA-2 of petition No. 593/2016.

2.74 The Petitioner further submitted that, once the final transfer price of lignite is determined by the Commission, the Petitioner shall have to claim

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differential tariff from Discoms as per the Regulations. Therefore, the Respondent Discom’s comment of not allowing any increase beyond the interim orders granted in the relevant years is not appropriate.

2.75 The Petitioner submitted that the GCV of lignite from Kapurdi Mines for FY 2014-15 to FY 2016-17 has been considered as approved by MOC while approving the mining plan for 7 MTPA, based on the petitions filed by BLMCL for determination of transfer price of lignite for FY 2014-15 to FY 2016-17. The Petitioner further submitted that, the actual GCV certificate is not required at this stage for determination of tariff and the same will be provided at the time of truing-up for Fuel Price Adjustment. Further, for computation of tariff weighted average of GCV of the mine as a whole may be considered as approved by the Ministry of Coal in the mining plan.

2.76 The Petitioner has provided the relevant documents of supplier to substantiate the Turbine Cycle Heat Rate and Boiler efficiency. Further, the SHR has been claimed as per the Regulation 45(3) (b) of the RERC Tariff Regulations, 2014, considering the actual average moisture content of the preceding three months for the respective financial years.

2.77 The Petitioner has provided the test certificate of sulphur content in lignite fired during the month of January to March for the years 2014, 2015 and 2016.

2.78 The Petitioner has provided the details of the actual landed price of lime stone along with the supporting documents for the month of January to March for the year 2014, 2015 and year 2016.

2.79 The Petitioner submitted that all the required documents for determination of final transfer price of lignite have been filed by BLMCL before the Commission and the Commission has already heard and reserved orders in IA-2 filed in petition No. 593/2016 by BLMCL. Therefore, BLMCL is entitled for determination of final transfer price of lignite for previous years, based on the MDO fee to be approved by the Commission in IA-2 of petition No. 593/2016. Accordingly, after determination of final transfer price, the Petitioner may claim differential tariff (Variable cost) from Discoms as per the Regulations.

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Others


2.80 Stakeholder submitted that till 2004 no development was done on the project.

2.81 Stakeholder submitted that in year 2004 the project of RWPL continued with tariff of 2.43 Rs. /Unit but it never discussed about cost plus regime. On the same, the discussion took place at State Government level from the year 2004 to 2006, and then the cabinet gave the approval to start the project. Accordingly, an implementation agreement was signed between Rajwest (West power+ Jindal group) and State Government. Even this agreement does not mention about cost plus regime. This issue needs to be analysed carefully. Cost plus regime was even not discussed in the in-principle cost approved by the Commission. In this in-principle approval, it was also estimated that the tariff of 2.28 Rs. /Unit shall be reduced year on year. But this is not the picture in the current petition. Stakeholder further submitted that the reason and the quantum of hike must be analysed properly and for the same TPM technique by why-why analysis can be very useful and appropriate and if required NARCO test on the related personals can also be done.

2.82 Stakeholder further submitted that if necessary then the current PPA can be terminated and a new PPA can be signed.

RWPL’s Response

2.83 The Petitioner submitted that the Objection regarding no development on the project till 2004 is not relevant to the present petition for determination of final tariff for FY 2014-15 to FY 2016-17.

2.84 In reply to the issue related to the cost-plus regime, the Petitioner submitted that the Commission has already considered this issue in its Order dated 19.10.2006 and directed that the tariff will be determined as per Section 62 of Electricity act, 2003.

2.85 In reply to the issue related to the Total Productive Maintenance (TPM) by why-why analysis and Narco test of various stakeholder, the Petitioner submitted that this issue is not related to the present petition. And the same is also addressed by the Commission during the preceding of

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petition No. 464/14.

2.86 The Petitioner submitted that the Stakeholder has illogically raised the demand for cancellation of the PPA without ascertaining its implications and correctness of the facts.

Commission’s views on Issues Raised by Stakeholders

2.87 The Commission has taken note of all the comments/suggestions/ observations of the Stakeholders raised in writing as well as during the course of hearing and Petitioner’s response to them. The Commission has attempted to capture all the comments/ suggestions/ observations. However, in case any comment/ suggestion/ observation is not specifically elaborated, it does not mean that the same has not been considered. The Commission has considered all the issues raised by the Stakeholders and Petitioner’s response on these issues while carrying out the detailed analysis of ARR & Tariff for FY 2014-15 to FY 2016-17 in accordance with RERC Tariff Regulations, 2014 as detailed in the next Section of the Order.

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SECTION 3

Additional Capitalisation for FY 2014-15, 2015-16 and 2016-17

RWPL’s Submission

3.1 The Petitioner submitted that the total expenditure capitalised as on COD of all the eight units based on the audited accounts as on 31.03.2013 is Rs. 6598.74 Crore. The total capital expenditure incurred up to March 31, 2016 is Rs. 6987.27 Crore as certified by the Statutory Auditor. The Petitioner further submitted that the Commission in its order dated 24.02.2016 has approved the Capital cost of Rs. 5928.65 Crore based on the capital expenditure incurred as on 31.03.2014 and the same is subject to the further revision, on aspects as mentioned in the said order.

3.2 The Petitioner submitted that in the instant petition for determination of ARR and Tariff for FY 2014-15 to FY 2016-17, the approved capital cost has been considered along with the actual additional capitalisation for FY 2014-15 and FY 2015-16 and proposed additional capitalisation for FY 2016-17. The Petitioner has claimed the additional capitalisation comprising of the works within the original scope of work, works beyond the original scope of work and creditors payment.

3.3 The Petitioner in its petition submitted that it has made the payments to the creditors of the amount of Rs. 25.45 Crore in FY 2014-15 and Rs. 15.62 Crore in FY 2015-16 out of the total creditors liability of Rs. 62.3 Crore as on 31.03.2014 and the same may be considered by the Commission in accordance with the Commission’s Order dated 24.02.2016. The Petitioner further submitted that the same amount of the payment made to the creditors has been included in the capitalisation made in FY 2014-15 and FY 2015-16. Petitioner submitted the contractor wise details of the creditor’s payment made in FY 2014-15 and FY 2015-16. Regarding this, the Commission in its data gaps sought the package wise details of the creditor’s payment made to the contractors. In replies to the data gaps, the Petitioner submitted the package wise details of the creditor’s payment made in FY 2014-15 and FY 2015-16. The Commission observed

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that there is variation in the creditor’s payment claimed in the petition and package wise details of creditor’s payment submitted in replies to the data gaps. In replies to the data gaps, the Petitioner submitted the revised figures of creditor’s payment of Rs. 21.03 Crore and Rs. 6.41 Crore for FY 2014-15 and FY 2015-16 respectively. The Commission also observed that the various amounts claimed towards the creditors payments to the contractors submitted in the main petition have been removed in the revised submission. The major difference in FY 2015-16 was towards “Paharpur Cooling Towers Ltd.” of Rs. 6.89 Crore for cooling tower (BoP Mechanical) package which was included in the Main petition but was not shown in revised submissions. Similarly, for FY 2014-15, the major difference was towards “L&T Ltd. (GCW)” of Rs. 2.21 Crore for cooling tower (BoP Mechanical) package which was included in the Main petition but was not shown in revised submissions. As in the revised submissions, the Petitioner has provided the package wise and contract wise details of creditor’s payment, therefore, for further analysis, the Commission has considered the revised submissions of the Petitioner. Hence, the Commission has considered the creditor’s payment of Rs. 21.03 Crore and Rs. 6.41 Crore for FY 2014-15 and FY 2015-16 respectively for further analysis to allow the additional capitalisation on this account.

3.4 The Petitioner regarding the additional capitalisation beyond the original scope of work submitted that the additional capitalisation of Rs. 153 Crore is projected to be incurred in the present control period. Out of the said amount of Rs. 153 Crore, an amount of Rs. 6.08 Crore and Rs. 7.16 Crore has already been capitalised in FY 2014-15 and FY 2015-16 respectively and an amount of Rs. 23.51 Crore is expected to be capitalised in FY 2016-17. The Petitioner further submitted that though the items of additional capitalisation are beyond the original scope of work but are required to be carried out as the same will result in achievement of efficient and successful operations of the generating station. The means of finance has been considered as the same as was approved by the Commission I.e. Debt: Equity of 75:25.

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3.5 The asset class wise additional capitalisation claimed by the Petitioner is as shown in the table below:

Table 2:Asset class wise additional capitalization claimed by RWPL for FY 2014-15 to FY 2016-17 (Rs. Crore)

Particulars FY 2014-15 FY 2015-16 FY 2016-17 Land & Land Development 1.91 2.96 7.16 Plant & Equipment 55.96 30.35 12.12 Building & Civil Engineering Works

30.38 6.40 5.99

IT Equipment 1.83 0.39 0.00 Self-Propelled Vehicles 0.006 -0.06 0.00 Office furniture/Equipment 0.47 0.83 2.00 Total 90.55 40.88 27.28

Commission’s Analysis

3.6 Vide its order dated 24.02.2016 in petition No. 464/14, the Commission had approved the Capital cost as on COD for the project as Rs. 5928.75 Crore.

3.7 The Commission in its order dated 24.02.2016 had allowed the cost of various packages on the basis of actual payment till 31.03.2014. Against the actual payment made till 31.03.2014, the Commission after prudence check had approved cost for various packages, in its order dated 24.02.2016.

3.8 The Commission vide its letter dated 25.10.2016 sought the following information regarding the additional capitalisation claimed in the petition: • Details of payment made to creditors in FY 2014-15 and FY 2015-16

separately for each package as considered by the Commission in its order dated 24.02.2016.

• Details of works proposed for additional capitalisation along with the corresponding amounts, during each year from FY 2014-15 to FY 2016-17.

• Justification for the proposed additional capitalisation during FY 2014-15 to FY 2016-17 in accordance with Regulation 17 of RERC Tariff Regulations, 2014.

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3.9 In reply to the above queries, the Petitioner submitted the package wise details of the additional capitalisation within and beyond original scope of work claimed for FY 2014-15 to FY 2016-17.

3.10 The Commission in this order has considered the additional capitalisation for FY 2014-15 to FY 2016-17 in accordance with Regulation 17 of RERC Tariff Regulations, 2014. Regulation 17 of the RERC Tariff Regulations, 2014 state as under:

“17. Additional Capitalisation (1) The following capital expenditure, actually incurred after the date of

commercial operation and upto the cut-off date and duly audited, may be considered by the Commission against the original scope of work, subject to prudence check:

(a) Due to undischarged liabilities; (b) On works deferred for execution; (c) To meet award of arbitration or satisfaction of order or decree of a court; (d) On account of change in law; (e) On procurement of initial spares included in the original project costs

subject to the ceiling norm laid down in regulation 16. Provided that the details of the work included in the original scope of work along with estimates of expenditure shall be submitted along with the application for provisional tariff: Provided further that a list of the undischarged liabilities and works deferred for execution shall be submitted along with the application for final tariff after the date of commercial operation of the generating station.

(2) The capital expenditure incurred on the following counts after the cut-off date may, at its discretion, be admitted by the Commission, subject to prudence check: (i) Liabilities to meet award of arbitration or for compliance of the order or

decree of a court; (ii) Change in law; (iii) Deferred works relating to ash pond or ash handling system in the

original scope of work; (iv) Any additional works/ services, which have become necessary for

efficient and successful operation of a generating station or transmission system but not included in the original capital cost.

.........”

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3.11 Regulation 2 (17) of the RERC, Tariff Regulations, 2014 states as follows: “2. Definitions

(17) “cut-off date “means 31st march of the year closing after 365 days from the date of commercial operation of the project, and in case the project is declared under commercial operation in the last quarter of a year, the cut-off date shall be 31st march of the year closing after 730 days from the date of commercial operation:

Provided that the cut-off date may be extended by the Commission if it is proved on the basis of documentary evidence that the capitalisation could not be made within the cut-off date for reasons beyond the control of the project developer ”

3.12 The Project got commissioned on 16.03.2013 i.e. in the last quarter of the

year and accordingly in accordance with Regulation 2(17) of RERC, Tariff Regulations, 2014 the cut-off date of the project is 31.03.2015.

3.13 As per the provisions of Regulation 2(17) of RERC, Tariff Regulations, 2014, the cut-off date may be extended by the Commission if it is proved on the basis of documentary evidence that the capitalisation could not be made within the cut-off-date for reasons beyond the project developer. The Petitioner in its petition has not made any request for extension of cut-off date supported with documentary evidence that the capitalisation could not be made within cut-off date for the reasons beyond the control of Project Developer. Hence, the Commission in this order has not approved any additional capitalisation for FY 2015-16 and FY 2016-17, as according to Regulation the cut-off date for the project was 31.03.2015 as discussed above and the additional capitalisation claimed by the Petitioner for FY 2015-16 and FY 2016-17 is falling after the cut-off date.

3.14 The details of the additional capitalisation claimed and approved by the Commission for FY 2014-15 to FY 2016-17 are discussed in the following paragraphs:

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a) Creditor’s payment: RWPL’s Submission:

i) The Petitioner submitted that it has made the payments to the creditors of the amount of Rs. 21.03 Crore in FY 2014-15 and Rs. 6.41 Crore in FY 2015-16 out of the total creditor’s liability of Rs. 62.3 Crore as on 31.03.2014. The same may be considered by the Commission in accordance with the terms of the Commission’s Order dated 24.02.2016. The Petitioner further submitted that the amount of the payment made to the creditors has been included in the capitalisation made in FY 2014-15 and FY 2015-16.

Commission’s Analysis:

ii) The Commission through its data gaps dated 25.10.2016, sought the package wise details of the creditors payment made by the Petitioner in FY 2014-15 and FY 2015-16. The Petitioner in replies to the data gaps dated 31.01.2017 submitted the package wise details of the creditors payment as sought by the Commission.

iii) The Commission in this order has not approved any creditor’s payment for FY 2015-16, as the same is falling after the cut-off date as discussed above.

iv) The Commission in this order for the approval of creditors payment made by the Petitioner in FY 2014-15, has approved the creditors payment for each package by applying the proportion of cost claimed for the package/contractor as on 31.03.2014 and the cost approved by the Commission for the respective package/contractor in its order dated 24.02.2016 on the actual creditors payment made by Petitioner.

v) The contractor and package wise creditors payment claimed by the Petitioner and allowed by the Commission is as shown in the table below:

Page 41 of 115 RERC/816/16

Table 3: Contractor and package wise creditor’s payment approved by the

Commission for FY 2014-15 and FY 2015-16 (Rs. Crore)

S.No.

Packages FY 2014-15 FY 2015-16 Total

RWPL Claim Allowed

RWPL Claim Allowed

RWPL Claim Allowed

BTG Packages Below 10 Crore

1

TRL Krosaki Refractories Ltd.- Supply & Application of Refractory

0.22 0.00 0.00 0.00 0.22 0.00

2 TC Communication Pvt. Ltd. 0.03 0.03 0.00 0.00 0.03 0.03

3 Rotork Controls (India) Pvt. Ltd. 0.13 0.10 0.00 0.00 0.13 0.10

4 Refractories Dynamics 0.14 0.00 0.00 0.00 0.14 0.00

5 Misc. Supplies & Services 0.34 0.27 0.01 0.00 0.35 0.27

Sub-Total 0.86 0.40 0.01 0.00 0.87 0.40

Fire Protection System (BoP Mechanical) Packages above 10 Crore

1 Tyco Fire & Security India Pvt. Ltd 0.16 0.16 0.00 0.00 0.16 0.16

Sub-Total 0.16 0.16 0.00 0.00 0.16 0.16

Effluent treatment plant (BoP Mechanical) Package below 10 Crore

1 Wipro Ltd. Supply & Erection of ETP 0.15 0.15 0.00 0.00 0.15 0.15

2 Crystal Chemical & Engineers 0.32 0.26 0.00 0.00 0.32 0.26 Sub-Total 0.47 0.41 0.00 0.00 0.47 0.41 Cooling Tower (BoP Mechanical) Packages above 10 Crore

1 Paharpur Cooling Towers 0.02 0.02 4.57 0.00 4.59 0.02

2 L&T general Civil Works- apportioned 0.00 0.00 0.00 0.00 0.00 0.00

Sub-Total 0.02 0.02 4.57 0.00 4.59 0.02 Lignite and Limestone handling system (BoP- Mechanical) Packages above 10 Crore

1 Tecpro- Supply of Lignite Handling 0.00 0.00 0.00 0.00 0.00 0.00

2 BSBK- Supply of lime handling 0.32 0.32 0.00 0.00 0.32 0.32

3 Offshore Infrastructure Limited- apportioned 0.09 0.09 0.00 0.00 0.09 0.09

4 Harji Engineering works Pvt. Ltd. - apportioned 0.00 0.00 0.00 0.00 0.00 0.00

Packages Below 10 Crore 5 Misc. Supplies & Services 0.32 0.26 0.01 0.00 0.33 0.26

Sub-Total 0.73 0.67 0.01 0.00 0.74 0.67

Ash handling system- BoP Mechanical

Page 42 of 115 RERC/816/16

S.No.


RWPL Claim Allowed

RWPL Claim Allowed

RWPL Claim Allowed

Packages above 10 Crore

1 Macawber- Supply of ash handling 0.00 0.00 0.02 0.00 0.02 0.00


Sub-Total 0.13 0.10 0.02 0.00 0.15 0.10

CW system Packages above 10 Crore

1 Krikloskar- supply of circulating pump 0.00 0.00 0.00 0.00 0.00 0.00

Packages Below 10 Crore 2 capital Control 0.04 0.03 0.00 0.00 0.04 0.03

Sub-Total 0.04 0.03 0.00 0.00 0.04 0.03

BoP- Mechanical Other Packages 1 LP piping & CW piping 0.00 0.00 0.00 0.00 0.00 0.00

2 Instrumentation and control system 0.31 0.21 0.34 0.00 0.65 0.21

3 Air Conditioning plants 0.00 0.00 0.25 0.00 0.25 0.00

4 Supply of air compressor and accessories 0.00 0.00 0.00 0.00 0.00 0.00

5 Cranes and hoists 0.04 0.04 0.00 0.00 0.04 0.04

Sub-Total 0.35 0.24 0.59 0.00 0.94 0.24

BoP- electrical Packages above 10 Crore

1 ABB- Supply EBOP 0.59 0.59 0.00 0.00 0.59 0.59

2 ABB- Supply PTP 0.08 0.08 0.00 0.00 0.08 0.08 3 ABB- Supply Switch yard 0.20 0.20 0.00 0.00 0.20 0.20

Packages Below 10 Crore 4 ABB Ltd- Faridabad/P 0.01 0.01 0.02 0.00 0.03 0.01 5 Misc. Supplies & Services 0.03 0.02 0.00 0.00 0.03 0.02

Sub-Total 0.91 0.90 0.02 0.00 0.93 0.90 Contract for Civil works other than L&T i RW Reservoir, WT & DM Plant (Civil Works)

1 JR Construction 0.43 0.17 0.09 0.00 0.52 0.17

2 Hi-tech competent builders Pvt. Ltd. 0.07 0.03 0.05 0.00 0.12 0.03

Sub-total 0.50 0.20 0.14 0.00 0.64 0.20 ii Lignite & Limestone handling system (Civil Works)

1 JR Construction 0.34 0.13 0.07 0.00 0.41 0.13 Sub-Total 0.34 0.13 0.07 0.00 0.41 0.13 iii Ash handling system, ash pond and ETP (Civil Works)

Page 43 of 115 RERC/816/16

S.No.


RWPL Claim Allowed

RWPL Claim Allowed

RWPL Claim Allowed

1 Ray Construction Ltd. 0.03 0.01 0.00 0.00 0.03 0.01 2 Jain Construction Company 0.18 0.07 0.00 0.00 0.18 0.07

3 Mohangarh- Ash Dyke & Disposal 0.00 0.00 0.00 0.00 0.00 0.00

Sub-Total 0.21 0.08 0.00 0.00 0.21 0.08 iv Circulating Water System (Civil Works)

1 JR Construction 0.24 0.09 0.05 0.00 0.29 0.09 Sub-Total 0.24 0.09 0.05 0.00 0.29 0.09 v Main Plant- Civil & Structural Works

1 JR Construction 0.39 0.15 0.08 0.00 0.47 0.15 2 K.S Construction Company 0.26 0.10 0.00 0.00 0.26 0.10

3 Kamal Singh Rathore 0.00 0.00 0.00 0.00 0.00 0.00 Sub-Total 0.65 0.25 0.08 0.00 0.73 0.25 vi Miscellaneous Buildings

1 Majisha Construction 0.00 0.00 0.36 0.00 0.36 0.00

2 Pyrotech Workspace Solutions Pvt. Ltd. 0.00 0.00 0.00 0.00 0.00 0.00

3 Bhairav Enterprises 0.10 0.04 0.00 0.00 0.10 0.04 Sub-Total 0.10 0.04 0.36 0.00 0.46 0.04 Total ( i+ii+iii+iv+v+vi) 2.04 0.80 0.70 0.00 2.74 0.80 Site development Packages Below 10 Crore

1 JR Construction 0.07 0.07 0.01 0.00 0.08 0.07 Sub-Total 0.07 0.07 0.01 0.00 0.08 0.07 Raw water reservoir, WT & DM Plant (Civil Works) Packages above 10 Crore

1 YFC Project Ltd 0.00 0.00 0.00 0.00 0.00 0.00


Sub-Total 0.00 0.00 0.00 0.00 0.00 0.00 Lignite and Limestone handling system (Civil Works) Packages above 10 Crore




4 JR Construction 0.70 0.70 0.15 0.00 0.85 0.70 Packages Below 10 Crore

5 Misc. Supplies & Services 0.27 0.22 0.04 0.00 0.31 0.22 Sub-Total 1.44 1.39 0.19 0.00 1.63 1.39

Page 44 of 115 RERC/816/16

S.No.


RWPL Claim Allowed

RWPL Claim Allowed

RWPL Claim Allowed

Miscellaneous (Civil Works) Packages above 10 Crore


Sub-Total 0.00 0.00 0.00 0.00 0.00 0.00 Ash handling system, ash pond and ETP (Civil Works) Packages above 10 Crore



Sub-Total 0.38 0.30 0.06 0.00 0.44 0.30 Circulating Water System (Civil Works) Packages above 10 Crore


Sub-Total 0.00 0.00 0.00 0.00 0.00 0.00 Main Plant- Civil & Structural Works Packages above 10 Crore





Sub-Total 1.85 1.70 0.12 0.00 1.97 1.70 Miscellaneous Buildings Packages above 10 Crore



Sub-Total 0.28 0.22 0.05 0.00 0.33 0.22 Colony Packages above 10 Crore

1 Tan singh Chouhan- Colony 7.44 7.44 0.00 0.00 7.44 7.44

Packages Below 10 Crore 2 Misc. Supplies & Services 0.07 0.06 0.00 0.00 0.07 0.06 3 Surbhi N arts 0.01 0.01 0.00 0.00 0.01 0.01

Sub-Total 7.52 7.50 0.00 0.00 7.52 7.50

Page 45 of 115 RERC/816/16

S.No.


RWPL Claim Allowed

RWPL Claim Allowed

RWPL Claim Allowed

Freight and transit Insurance

1 E2E supply chain - Transportation 0.00 0.00 0.00 0.00 0.00 0.00

Sub-Total 0.00 0.00 0.00 0.00 0.00 0.00 Erection testing and Commissioning i Erection of BTG Packages above 10 Crore

1 L&T BTG 3.09 3.09 0.00 0.00 3.09 3.09 Sub-Total 3.09 3.09 0.00 0.00 3.09 3.09 ii Erection Testing and Commissioning of BoP- Mechanical Packages Below 10 Crore

1 TECPRO Engineers Pvt. Ltd. 0.00 0.00 0.00 0.00 0.00 0.00 2 Misc. Supplies & Services 0.03 0.02 0.00 0.00 0.03 0.02

Sub-Total 0.03 0.02 0.00 0.00 0.03 0.02 Total ( i+ii) 3.12 3.11 0.00 0.00 3.12 3.11 Preoperative, Establishment, Audit & Accounts

1 Preoperative, Establishment, Audit & Accounts 0.05 0.04 0.00 0.00 0.05 0.04

Sub-Total 0.05 0.04 0.00 0.00 0.05 0.04 Design and Engineering

1 Design limited 0.00 0.00 0.04 0.00 0.04 0.00 2 Malhotra & Associates 0.61 0.49 0.00 0.00 0.61 0.49

Sub-Total 0.61 0.49 0.04 0.00 0.65 0.49 Grand Total 21.03 18.56 6.39 0.00 27.42 18.56

b) Land and Land Development RWPL’s Submission: Additional Capitalisation within the Original Scope of Work:

i) The Petitioner submitted that the Commission in its order dated 24.02.2016 had not considered the amount of Rs. 0.33 crore on account of expenses yet to be incurred and an amount of Rs. 0.64 Crore on account of CWIP as a part of the project cost. As against this the Petitioner has claimed Rs. 0.01 Crore in FY 2014-15 on stamp duty on a small piece of power plant land and Rs. 2.96 Crore in FY 2015-16 on 5 bigha land within the boundary of R&R colony, in compliance of the order dated 13.04.2015 of the District Collector, Barmer.

Page 46 of 115 RERC/816/16

ii) Further in FY 2016-17, the Petitioner has proposed an amount of Rs. 1.16 Crore on account of the registration and stamp duty for transferring the plots in favour of land losers.

Additional Capitalisation beyond Original Scope of Work:

iii) The Petitioner submitted that, it has incurred an amount of Rs. 1.79 Crore during FY 2014-15 on account of land for additional blocks at township to accommodate staff which is presently staying outside the colony and this will help to increase the employee satisfaction and finally to retain high calibre employees.

iv) The Petitioner further submitted that it has incurred an amount of Rs. 0.12 Crore during FY 2014-15 towards the cost of land for vocational training centre at village Bhadresh to ensure the well-being of the people residing in surroundings villages. This will help in woman empowerment and satisfaction among the surrounding villagers.

v) The Petitioner has proposed to incur an amount of Rs. 6.00 Crore during FY 2016-17 on account of purchase of land for construction of one more factory gate. The Petitioner submitted that one more factory gate will ease the logistic operations of the plant and will improve the efficiency and safety of the plant.

vi) The additional capitalisation beyond original scope of work and within the original scope of work claimed by the Petitioner for FY 2014-15 to FY 2016-17 for land and land development are as shown in the table below:

Table 4: Additional Capitalization claimed by RWPL for FY 2014-15 to FY 2016-17 under Land and Land development (Rs. Crore)

Particulars

FY 2014-15 FY 2015-16 FY 2016-17 Total Grand Total Within

original scope of work

Beyond Original Scope

of Work

Total Within original scope

of work


of Work


of work


of Work


of work

Beyond Original Scope of Work

Land 0.01 1.90 1.91 2.96 0.00 2.96 1.16 6.00 7.16 4.13 7.90 12.03 Total Land 0.01 1.90 1.91 2.96 0.00 2.96 1.16 6.00 7.16 4.13 7.90 12.03

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vii) The Commission in its order dated 24.02.2016 approved the total land cost of Rs. 19.85 Crore against the RWPL claim of Rs. 22.19 Crore. Out of the total allowed amount of Rs.19.85 Crore towards land cost, an amount of Rs. 0.33 Crore was not considered by the Commission in its order dated 24.02.2016 on account of expenses yet to be incurred and the Commission stated the same amount has to be considered in determination of tariff of the subsequent years. Summary of land cost approved by the Commission in its order dated 24.02.2016 is as shown in the table below:

Table 5: Summary of Land Cost approved by the Commission in its Order dated 24.02.2016 (Rs. Crore)

Particulars RWPL Claim Approved Total Land Cost 22.19 19.85

Less: Balance Expenditure to be incurred -0.33 Net Land Cost 22.19 19.52

viii) The additional capitalisation claimed by the Petitioner and approved by the Commission under Land Cost for FY 2014-15 to FY 2016-17 is discussed below.

Additional capitalisation within Original Scope of Work

ix) The Petitioner has claimed the additional capitalisation of within original scope of works Rs. 4.13 Crore for FY 2014-15 to FY 2016-17.

x) The Commission in this order has approved the cost of Rs. 0.01 Crore incurred in FY 2014-15 on account of stamp duty on a small piece of power plant land.

xi) The Commission observed that the Petitioner has incurred an amount of Rs. 2.96 Crore during FY 2015-16 towards the cost of 5 bigha land within the boundary of R & R colony. The Petitioner has also provided the District Collector’s order. From the submissions made by the Petitioner, the Commission observed that the land for which this cost has been claimed by the Petitioner is not for the R&R colony. The land claimed is for an

Page 48 of 115 RERC/816/16

additional colony. The Collector’s Order is only an allotment letter that too on the request of Petitioner. The Commission in its order dated 24.02.2016 has already approved the permissible land cost for colony. Further, this claim of Rs. 2.96 Crore for FY 2015-16 is falling after the cut-off date. Therefore, no additional capitalisation for FY 2015-16 has been approved.

xii) The Commission in this order has not approved the additional capitalisation of Rs. 1.16 Crore expected to be incurred in FY 2016-17 on account of the registration and stamp duty for transferring the plots in favour of land losers, as the same is falling after the cut-off date as discussed above. Therefore, no additional capitalisation towards land for FY 2016-17 has been approved.

Additional capitalisation beyond Original Scope of Work

xiii) Regarding the additional capitalisation beyond the original scope of work, the Petitioner has not provided any detailed valid justification in accordance with RERC Tariff Regulations, 2014 for incurring such expenses. Therefore, the same cannot be allowed.

xiv) The additional capitalisation within the original scope of work and beyond the original scope of work approved by the Commission are as shown below:

Table:6: Additional Capitalization approved by the Commission for FY 2014-15 to FY 2016-17 under Land and Land development (Rs. Crore)

Particulars

FY 2014-15 FY 2015-16 FY 2016-17 Total Grand Total Within

original scope

of work


of Work


of work


of Work


of work


of Work


of work


of Work Land 0.01 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.0 0.01 0.00 0.01

Total Land 0.01 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00 0.01

xv) Revised Land cost approved by the Commission in this order is as shown in the table below:

Page 49 of 115 RERC/816/16

Table 7: Revised Land Cost approved by the Commission in this Order (Rs. Crore) Particulars RWPL Claim Approved

Cost as approved in the Commission's Order dated 24.02.2016 19.52 19.52

Additional Capitalisation FY 2014-15 1.91 0.01 FY 2015-16 2.96 0.00 FY 2016-17 7.16 0.00 Sub-total 12.03 0.01

Creditor's Payment FY 2014-15 0.00 0.00 FY 2015-16 0.00 0.00 Sub-total 0.00 0.00

Total Cost till 31.03.2017 31.55 19.53

c) Boiler Turbine Generator (BTG) RWPL’s Submission: Additional Capitalisation within the Original Scope of Work:

i) The Petitioner submitted that the Commission in its order dated 24.02.2016 had not considered an amount of Rs. 1.15 Crore on account of expenses yet to be incurred, as a part of the project cost. As against this, the Petitioner has incurred an amount of Rs. 2.16 Crore and Rs. 3.06 Crore in FY 2014-15 and FY 2015-16 respectively towards foreign exchange fluctuation on external borrowing. The Petitioner further submitted that the same amount has been capitalised in accordance with Accounting Standard 11 issued by the Institute of Chartered Accountants of India. Therefore, the same has been claimed under project cost.

ii) The Petitioner has requested the Commission to allow the above cost either under the project cost so that the same can be recovered over the life of assets in the form of assets depreciation etc., or as finance charges on account of FERV under Regulation 28 of the RERC, Tariff Regulations, 2014 in the year of expenditure, as in the present case no hedging was arranged for valid reasons.

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Additional Capitalization beyond Original Scope of Work:

iii) The Petitioner submitted that it has incurred an amount of Rs. 0.36 Crore in FY 2014-15 towards Turbine main oil tank (MOT) lubrication oil filtration machines to maintain the quality of parameters of lub oil as recommended by National Aeronautic Standards (NAS) # 7. This will improve the life of the bearings, reduce the consumption of oil by bearings and oil loss and finally improves the overall efficiency of the plant.

iv) The Petitioner submitted that it has incurred an amount of Rs. 0.14 Crore and Rs. 0.07 Crore in FY 2014-15 and FY 2015-16 respectively towards the cost of oil centrifuge machine model MAB 103 as the current BTG system does not have any inbuilt system inside the coupling to purify the lubrication oil. Therefore, the Petitioner has procured centrifuge to improve the reliability of power plant equipment.

v) The Petitioner further submitted that it is expected to incur an amount of Rs. 0.16 Crore in FY 2016-17 towards the installation of inline Lube oil filters for turbo-generator to avoid entering of any debris or metal or any higher size impurity in the oil into bearing. This will help in increasing the life of turbine and generator bearings and associated journals.

vi) The additional capitalisation beyond original scope of work and within the original scope of work claimed by the Petitioner is as shown in the table below:

Table 8: Additional Capitalization claimed by RWPL for FY 2014-15 to FY 2016-17 under BTG (Rs. Crore)

Particulars

FY 2014-15 FY 2015-16 FY 2016-17 Total

Within original scope

of work


of Work

Total Within original scope of work


of Work



of Work


of work


of Work

Grand Total

Steam turbine and generator

2.16 0.50 2.66 3.06 0.07 3.13 0.00 0.16 0.16 5.22 0.73 5.95

Total BTG 2.16 0.50 2.66 3.06 0.07 3.13 0.00 0.16 0.16 5.22 0.73 5.95

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Commission’s Analysis: vii) The Commission in its order dated 24.02.2016 approved the total BTG cost

of Rs. 1482.39 Crore against the RWPL Claim of Rs. 1771.37 Crore. From this approved cost, an amount of Rs. 1.15 Crore was not considered by the Commission on account of expenses yet to be incurred. Summary of BTG cost approved by the Commission in its Order dated 24.02.2016 is as shown in the table below:

Table 9: BTG cost approved by the Commission in its Order dated 24.02.2016 (Rs. Crore)

Particulars RWPL claim Approved Total BTG Cost 1771.37 1483.54 Less: Balance Expenditure to be incurred 1.15 Net BTG Cost 1771.37 1482.39

viii) The additional capitalisation claimed by the Petitioner and approved by the Commission under BTG for FY 2014-15 to FY 2016-17 is discussed below:

Additional Capitalization within Original Scope of Work:

ix) The amount of Rs. 2.16 Crore and Rs. 3.06 Crore for FY 2014-15 and FY 2015-16 claimed by the Petitioner towards foreign exchange fluctuation has not been approved by the Commission in the capital cost of the project. Further, in accordance with the Accounting Standard 11 issued by the Institute of Chartered Accountants of India it is clear that the foreign exchange differences can be considered as income or as expense in the period in which they arise. Paragraph 13 of the Accounting Standard 13 state as under:

“13. Exchange differences arises on the settlement of monetary items or on reporting an enterprise’s monetary items at the rates different from those at which they were initially recorded during the period, or reported in previous financial statements, should be recognised as income or as expenses in the period in which they arise, with the exception of exchange differences dealt with in accordance with paragraph 15…”

Regulation 28 of RERC Tariff Regulations, 2014 state as under: “28. Foreign Exchange Rate Variation (FERV)

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(1) Cost of hedging for foreign exchange variation towards interest payment and loan repayment shall be allowed on year-to-year basis and shall be payable until due date of payments and be subject to prudence check of the Commission. The Applicant shall provide full particulars of such cost of hedging to the Commission.

(2) In case hedging has not been arranged due to valid reasons, FERV shall be provisionally estimated by the Commission for the purpose of determining tariff and shall be subject to adjustment as per actuals.”

ii) Against the Petitioner’s request of approving the amount towards FERV as a part Capital Cost or as finance charges, the Commission has not approved the same amount under the Capital Cost. The same has been discussed along with ‘Interest on loan’ in this Order.

Additional Capitalization beyond Original Scope of Work:

x) The Petitioner submitted that it has incurred an amount of Rs. 0.36 Crore towards Turbine main oil tank (MOT) Lub oil filtration machines to meet the lub oil quality parameters recommended in National aeronautic standard (NAS) # 7 as the turbine oil getting contaminated by water condensation and dusty surroundings, which is impacting the operating performance of the power plant. The Commission observed that the National Aerospace Standards (NAS) are voluntary standards developed by NASA, USA for aerospace industry, therefore, the same cannot be applicable in this case. Accordingly, the Commission has not allowed the additional capitalisation claimed towards this head.

xi) Regarding the additional capitalisation beyond the original scope of work other than the oil purifying machine as discussed above, the Petitioner has not provided any detailed valid justification in accordance with RERC, Tariff Regulations, 2014 for incurring such expenses. Therefore, the same cannot be allowed.

xii) The Commission has not allowed nay additional capitalisation within and beyond original scope of work in BTG cost for FY 2014-15 to 2016-17.

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xiii) Based on the above discussion the revised BTG cost approved by the Commission in this Order is as shown below:

Table 10: Revised BTG cost approved by the Commission (Rs. Crore)

Particulars RWPL Claim Approved

Cost as approved in the Commission's Order dated 24.02.2016

1482.39 1482.39

Additional Capitalisation FY 2014-15 2.66 0.00 FY 2015-16 3.13 0.00 FY 2016-17 0.16 0.00 Sub-total 5.95 0.00 Creditor's Payment FY 2014-15 0.86 0.40 FY 2015-16 0.01 0.00 Sub-total 0.87 0.40 Total Cost till 31.03.2017 1489.21 1482.79

d) Civil Works:

RWPL’s Submission: Additional Capitalisation within the Original Scope of Work:

i) The Petitioner submitted that the Commission in its order dated 24.02.2016 had not considered the amount of Rs. 0.11 Crore towards Lignite and Lime stone handling system on account of expense yet to be incurred.

ii) Regarding the RW reservoir, WT & DM Plant, the Petitioner has submitted that the Commission in its order dated 24.02.2016 had not considered an amount of Rs. 10.79 Crore on account of expenses yet to be incurred and an amount of Rs. 5.63 Crore on account of CWIP. As against this amount of Rs. 16.42 Crore, the Petitioner has claimed Rs. 15.12 Crore in FY 2014-15 towards the balance works of Raw Water Reservoir. Out of this amount of Rs. 15.12 Crore, expenditure of Rs. 11.12 Crore has been incurred on job works and Rs. 4 Crore has been incurred on purchase of cement and steel for Raw Water Reservoir.

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iii) Petitioner submitted that the Commission in its order dated 24.02.2016, had not considered the amount of Rs. 2.85 Crore on account of expenses yet to be incurred under the head Ash handling system, ash pond and ETP (including HCSD system). As against this amount of Rs. 2.85 Core, the Petitioner has claimed Rs. 2.15 Crore in FY 2014-15 towards civil cost of High Concentration Slurry Disposal (HCSD) package including Steel & Cement.

iv) Regarding the Main Plant, the Petitioner has submitted that the Commission in its order dated 24.02.2016 had not considered the amount of Rs. 8.57 Crore on account of expenses yet to be incurred. As against this amount of Rs. 8.57 Crore, the Petitioner has claimed Rs. 0.25 Crore in FY 2015-16 towards civil work.

v) Regarding the Miscellaneous buildings, the Petitioner submitted that the Commission in its order dated 24.02.0216 had not considered the amount of Rs. 3.89 Crore on account of expenses yet to be incurred. Against this amount of Rs. 3.89 Crore, the Petitioner has claimed Rs. 0.47 Crore and Rs. 3.11 Crore in FY 2014-15 and FY 2015-16 respectively.

vi) The Petitioner further submitted that it had to defer this portion of miscellaneous building, due to reasons beyond its control, including on account of strained cash flow owing to hugely delayed payments by the Discoms and availability of only an adhoc tariff restricting full recovery.

Additional Capitalisation beyond the Original Scope of Work:

vii) Regarding the additional capitalisation beyond the original scope of work the Petitioner submitted that an amount of Rs. 1.90 Crore has been incurred and an amount of Rs. 1.20 Crore is expected to be incurred in FY 2015-16 and FY 2016-17 respectively towards the security barrack for security guards inside the plant. This will help in availability of security forces within the plant premises round the clock, immediate protection in case of emergency and will also help in maintaining isolation of security forces form local villagers.

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viii) The Petitioner submitted that an amount of Rs. 2.19 Crore is expected to be incurred in FY 2016-17 towards civil drain and miscellaneous job to reduce the seepages of storm water during rain fall and water logging.

ix) The Additional Capitalisation claimed by the Petitioner for FY 2014-15 to FY 2016-17 are shown in the table below:

Table 11: Additional Capitalization claimed by RWPL for FY 2014-15 to FY 2016-17 under Civil Works (Rs. Crores)

Particulars FY 2014-15 FY 2015-16 Within

original scope of

work


Total

Within original scope of work


Total

Site development works including site clearing, grading, boundary walls, roads, drains and culverts

0.00 0.00 0.00 0.00 0.00 0.00

Lignite & Lime stone handling system 0.00 0.00 0.00 0.00 0.00 0.00

RW reservoir, WT & DM Plant- Civil works 15.12 0.00 15.12 0.00 0.00 0.00

Multi Fuel Steel Chimneys with RC shell

0.00 0.00 0.00 0.00 0.00 0.00

pipe Racks 0.00 0.00 0.00 0.00 0.00 0.00 Miscellaneous 0.00 0.00 0.00 0.00 0.00 0.00 Ash handling system, ash pond and ETP including HCSD- Civil works

2.15 0.00 2.15 0.00 0.00 0.00

Main Plant- Civil & Structural Works 0.00 0.00 0.00 0.25 1.90 2.15

Circulating water system 0.00 0.00 0.00 0.00 0.00 0.00 Miscellaneous buildings 0.47 0.00 0.47 3.11 0.00 3.11 Total Civil 17.74 0.00 17.74 3.36 1.90 5.26

Particulars FY 2016-17 Total

Grand Total



Total Within original

scope of work

Beyond Original Scope of

Work Site development works including site clearing, 0.00 0.00 0.00 0.00 0.00 0.00

Page 56 of 115 RERC/816/16

Particulars FY 2016-17 Total

Grand Total




scope of work


Work grading, boundary walls, roads, drains and culverts Lignite & Lime stone handling system 0.00 0.00 0.00 0.00 0.00 0.00

RW reservoir, WT & DM Plant- Civil works 0.00 0.00 0.00 15.12 0.00 15.12

Multi Fuel Steel Chimneys with RC shell 0.00 0.00 0.00 0.00 0.00 0.00

pipe Racks 0.00 0.00 0.00 0.00 0.00 0.00 Miscellaneous 0.00 0.00 0.00 0.00 0.00 0.00 Ash handling system, ash pond and ETP including HCSD- Civil works

0.00 0.00 0.00 2.15 0.00 2.15

Main Plant- Civil & Structural Works 0.00 3.39 3.39 0.25 5.29 5.54

Circulating water system 0.00 0.00 0.00 0.00 0.00 0.00 Miscellaneous buildings 0.00 0.00 0.00 3.58 0.00 3.58 Total Civil 0.00 3.39 3.39 21.10 5.29 26.39


x) The Commission in its order dated 24.02.2016 approved the total civil works cost of Rs. 982.89 Crore against the RWPL claim of Rs. 1171.13 Crore. The Commission in its order dated 24.02.2016 had not considered certain amount from various works done under the package Civil works on account of expenses yet to be incurred. The details of above amount are as shown in the table below:

Table 12: Amount not considered in the Order dt.24.02.2016 due to expenditure not incurred upto 31.03.14 (Rs. Crore)

Particulars Amount Site development works including site clearing, grading, boundary walls, roads, drains and culverts

0.00

Lignite & Lime stone handling system 0.11 RW reservoir, WT & DM Plant- Civil works 10.79 Multi Fuel Steel Chimneys with RC shell 0.00 pipe racks 0.00 Miscellaneous 0.00

Page 57 of 115 RERC/816/16

Particulars Amount Ash handling system, ash pond and ETP including HCSD- Civil works 2.91

Main Plant- Civil & Structural Works 8.57 Circulating water system 0.19 Miscellaneous buildings 3.89 Total Civil 26.46

xi) Therefore, the total cost of civil work approved by the Commission in its order dated 24.02.2016 is as shown in the table below:

Table 13: Total Civil cost approved by the Commission in its Order dated 24.02.2016 (Rs. Crore)

Particulars RWPL claim Approved Total Civil Work Cost 1171.13 1009.35 Less: Balance Expenditure to be incurred

26.46

Net Civil Work Cost 1171.13 982.89

xii) The additional capitalisation claimed by the Petitioner and approved by the Commission under Civil works for FY 2014-15 to FY 2016-17 is discussed below.

Additional Capitalisation within the Original Scope of Work:

xiii) Regarding RW reservoir, WT & DM Plant, the Petitioner submitted that it has incurred an amount of Rs. 4 Crore towards the purchase of cement & steel and Rs. 11.12 Crore towards job work in FY 2014-15. In accordance with the approach followed by the Commission in its order dated 24.02.2016, the Commission in this order also has approved the cost towards purchase of cement & steel as claimed by the Petitioner.

xiv) Regarding the cost incurred towards the job work by JR Construction, the Commission has already approved the total admissible cost towards the RW reservoir in its order dated 24.02.2016. No, further construction was required towards RW reservoir. Further, from the Work order provided by the Petitioner, it is clear that that the contract is for the extension of RW reservoir and the Petitioner has not taken any approval of the same form

Page 58 of 115 RERC/816/16

the Commission. Therefore, the Commission in this order has not approved any additional capitalisation towards JR Construction for the extension of RW reservoir. The additional capitalisation towards RW reservoir, WT & DM Plant claimed and approved by the Commission is as shown in the table below:

Table 14. Additional capitalization claimed and approved under RW reservoir, WT & DM Plant

Particulars Additional capitalisation claimed for FY 2014-15

Additional capitalisation approved for

FY 2014-15 JR Constructions 11.12 0.00 Steel & Cement 4.00 4.00 Total 15.12 4.00

xv) Regarding the additional capitalisation claimed towards ash handling system, ash pond and ETP (including HCSD system), the Commission found the claim of the Petitioner of Rs. 2.15 Crore within the limit of Rs. 2.91 Crore i.e. the sum of the amount not considered by the Commission in its order dated 24.02.2016 on account of expenses yet to be incurred and CWIP. Therefore, the Commission in this order has approved the amount of Rs. 2.15 Crore as claimed by the Petitioner.

xvi) Regarding the additional capitalisation of Rs. 0.47 Crore claimed by the Petitioner for FY 2014-15 towards the miscellaneous buildings, the Commission observed that the additional capitalisation is claimed for the construction of temple in the colony and for furniture. It will not be appropriate to consider the capital cost of temple in the colony for the purpose of tariff determination. Therefore, no additional capitalisation for the same can be allowed. Further, regarding the additional capitalisation claimed towards furniture, the Commission has allowed the 80% of the cost claimed by the Petitioner, as the Petitioner has not provided any documents to substantiate the same. Therefore, the Commission in this order has approved the additional capitalisation of Rs. 0.38 Crore towards furniture for FY 2014-15.

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xvii) Regarding the additional capitalisation beyond original scope of work, the Petitioner has not provided any detailed valid justification in accordance with RERC, Tariff Regulations, 2014 for incurring such expenses. Therefore, the same cannot be considered.

xviii) The additional capitalisation approved by the Commission for FY 2014-15 to FY 2016-17 under Civil Works are as shown in the table below:

Table 15: Additional Capitalization approved by the Commission for FY 2014-15 to FY 2016-17 under Civil Works (Rs. Crores)

FY 2014-15 FY 2015-16 FY 2016-17 Total

Grand Total Particulars



of Work

Total


of work


Total


of work


of Work

Total



of Work

Site development works including site clearing, grading, boundary walls, roads, drains and culverts

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Lignite & Lime stone handling system

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

RW reservoir, WT & DM Plant- Civil works

4.00 0.00 4.00 0.00 0.00 0.00 0.00 0.00 0.00 4.00 0.00 4.00

Multi Fuel Steel Chimneys with RC shell

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

pipe racks 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Miscellaneous 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Ash handling system, ash pond and ETP including HCSD- Civil works

2.15 0.00 2.15 0.00 0.00 0.00 0.00 0.00 0.00 2.15 0.00 2.15

Main Plant- Civil & Structural Works

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Circulating water system

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Miscellaneous buildings 0.38 0.00 0.38 0.00 0.00 0.00 0.00 0.00 0.00 0.38 0.00 0.38

Total Civil 6.53 0.00 6.53 0.00 0.00 0.00 0.00 0.00 0.00 6.53 0.00 6.53

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xix) Based on the above discussion, the total revised cost of civil works approved by the Commission in this Order is as shown in the table below:

Table 16: Revised cost of Civil Works approved by the Commission (Rs. Crore) Particulars RWPL Claim Approved


982.89 982.89

Additional Capitalisation FY 2014-15 17.74 6.53 FY 2015-16 5.27 0.00 FY 2016-17 3.39 0.00 Sub-total 26.40 6.53 Creditor's Payment FY 2014-15 6.06 4.48 FY 2015-16 1.13 0.00 Sub-total 7.19 4.48

Total Cost till 31.03.2017 1016.48 993.90

e) Balance of Plant Mechanical:

RWPL’s Submission: Additional Capitalisation within the Original Scope of Work:

i) The Petitioner submitted that the Commission in its order dated 24.02.2016 had not considered the amount of Rs. 0.90 Crore and Rs. 0.05 Crore towards induced draft cooling tower and effluent treatment plant respectively on account of expenses yet to be incurred. Against the above amount of Rs. 0.90 Crore towards induced draft cooling tower, the Petitioner has incurred an amount of Rs. 0.76 Crore towards the same and the recovery of the same has been made during the contract closure of Rs. 7.65 Crore. Further, the Petitioner submitted that the net amount of Rs. 6.88 Crore has been decapitalised from the assets and said amount has been reduced from creditors. Regarding the above amount of Rs. 0.50 Crore towards effluent treatment plant, the Petitioner has not incurred any expenses in FY 2014-15 to FY 2016-17.

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ii) The Petitioner submitted that the Commission in its order dated 24.02.2016 had not considered the amount of Rs. 1.57 Crore towards the lignite and lime handling system on account of expenses yet to be incurred and Rs. 0.14 towards CWIP. The Petitioner further submitted that, it has currently not booked or claimed any expenditure under the same head as the contractor has invoked Arbitration proceeding against the Petitioner. The Petitioner shall claim the same on completion of Arbitration proceedings in case any additional liability occurs under the same head.

iii) The Petitioner submitted that the Commission in its order dated 24.02.2016 had not considered the amount of Rs. 18.25 Crore towards ash handling system on account of expenses yet to be incurred and Rs. 1.69 Crore towards CWIP and the same pertains to High Concentration Slurry Disposal (HCSD) package. The Petitioner further submitted that the Commission in its Order dated 30.08.2013 had already observed that the Petitioner had not envisaged the HCSD package and the same is necessary as per the conditions imposed by MOEFCC. Accordingly, the Petitioner has incurred and capitalised Rs. 18.67 Crore in FY 2014-15 towards HCSD Package cost.

iv) Regarding the other various packages of BOP Mechanical, the Petitioner submitted that the Commission in its order dated 24.02.2016 had not considered the amount of Rs. 1.27 Crore towards other various packages of BOP- mechanical on account of expenses yet to be incurred and Rs. 0.51 Crore on account of CWIP. As against these, the Petitioner has claimed Rs. 1.47 Crore and Rs. 0.53 Crore in FY 2014-15 and FY 2015-16 respectively.

v) The Petitioner further submitted that in FY 2014-15, it has incurred an amount of Rs. 0.79 Core towards chlorination plant under the head CW water treatment, Rs. 0.28 Crore under the head crane & Hoist and Rs. 0.40 Crore under the head Computers & Equipment.

vi) In FY 2015-16, the Petitioner has capitalised Rs. 0.11 Crore under the head Instrumentation and Control system and Rs. 0.43 Crore towards Computers & Equipment.

Page 62 of 115 RERC/816/16

vii) The Petitioner further submitted that it had to defer this portion of the BOP Mechanical -Other package, due to the reasons beyond its control, including on account of strained cash flow owing to hugely delayed payments by the Discoms and availability of only an adhoc tariff restricting full recovery.

Additional Capitalization beyond the Original Scope of Work:

viii) The Petitioner submitted that it had incurred an amount of Rs. 1.66 Crore and Rs. 0.26 Crore in FY 2014-15 and FY 2015-16 respectively towards the cost of SAP software and PI server to bring the ease in interface between different business & Plant maintenance module and to help in maintain the data required by various departments.

ix) The Petitioner further submitted that it has incurred an amount of Rs. 0.17 Crore in FY 2014-15 towards the cost of helium detecting machine. This will help in the improvement in vacuum and finally will bring the efficiency of the power plant.

x) The Petitioner submitted that it has incurred an amount of Rs. 0.59 Crore in FY 2015-16 towards CCTV cameras. Further an amount of Rs. 0.70 Core is expected to be incurred in FY 2016-17 towards the same. This will help in improving the monitoring facility in the Plant.

xi) The Petitioner submitted that an amount of Rs. 1.59 Crore is expected to be incurred in FY 2016-17 towards the installation of 3 nos. of Continuous Ambient Air Quality Monitoring System (CAAQMS). The same is a part of the statutory condition laid by State Pollution Control Board (SPCB) to set up six nos. of CAAQMS for monitoring ambient air quality stations.

xii) The Petitioner submitted that an amount of Rs. 2.00 Crore is expected to be incurred in FY 2016-17 towards miscellaneous office equipment and furniture as there is a need to replace the old office equipment and furniture.

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xiii) The additional capitalisation within original scope of work and beyond original scope of work claimed by the Petitioner under the head BOP-Mechanical are as shows below:

Table 17: Additional Capitalization Claimed by RWPL for FY 2014-15 to FY 2016-17 under BOP- Mechanical (Rs. Crores)

Particulars

FY 2014-15 FY 2015-16



Total Within original scope of

work


Total

Fire Protection System 0.00 0.00 0.00 0.00 0.00 0.00 Effluent treatment system 0.00 0.00 0.00 0.00 0.00 0.00

Induced Draught cooling tower 0.00 0.00 0.00 0.00 0.00 0.00


0.00 0.00 0.00 0.00 0.00 0.00

CW system 0.79 0.00 0.79 0.00 0.00 0.00 Ash handling plant 18.67 0.00 18.67 0.00 0.00 0.00 LP piping & CW piping 0.00 0.00 0.00 0.00 0.00 0.00 Instrumentation and control system

0.00 0.00 0.00 0.11 0.59 0.70

Computers and software, time and attendance system etc.

0.40 1.66 2.06 0.43 0.26 0.69

Emergency DG sets 0.00 0.00 0.00 0.00 0.00 0.00 Water treatment Plant 0.00 0.00 0.00 0.00 0.00 0.00 Air Conditioning Plants 0.00 0.00 0.00 0.00 0.00 0.00 CW treatment Plant 0.00 0.00 0.00 0.00 0.00 0.00 Miscellaneous Pumps 0.00 0.00 0.00 0.00 0.00 0.00

Air compressor and accessories 0.00 0.00 0.00 0.00 0.00 0.00 Cranes and Hoists 0.28 0.00 0.28 0.00 0.00 0.00

Chemical laboratory equipment 0.00 0.17 0.17 0.00 0.54 0.54 Total BOP- Mechanical 20.14 1.83 21.97 0.54 1.39 1.93

Page 64 of 115 RERC/816/16

Particulars

FY 2016-17 Total

Grand Total





Work Fire Protection System 0.00 0.70 0.70 0.00 0.70 0.70 Effluent treatment system 0.00 0.00 0.00 0.00 0.00 0.00 Induced Draught cooling tower

0.00 0.00 0.00 0.00 0.00 0.00


0.00 0.00 0.00 0.00 0.00 0.00

CW system 0.00 0.00 0.00 0.79 0.00 0.79 Ash handling plant 0.00 0.00 0.00 18.67 0.00 18.67 LP piping & CW piping 0.00 0.00 0.00 0.00 0.00 0.00 Instrumentation and control system

0.00 2.29 2.29 0.11 2.88 2.99


0.00 0.00 0.00 0.83 1.92 2.75

Emergency DG sets 0.00 0.00 0.00 0.00 0.00 0.00 Water treatment Plant 0.00 0.00 0.00 0.00 0.00 0.00 Air Conditioning Plants 0.00 0.00 0.00 0.00 0.00 0.00 CW treatment Plant 0.00 0.00 0.00 0.00 0.00 0.00 Miscellaneous Pumps 0.00 0.00 0.00 0.00 0.00 0.00 Air compressor and accessories

0.00 0.00 0.00 0.00 0.00 0.00

Cranes and Hoists 0.00 0.00 0.00 0.28 0.00 0.28 Chemical laboratory equipment

0.00 2.00 2.00 0.00 2.71 2.71

Total BOP- Mechanical 0.00 4.99 4.99 20.68 8.21 28.89


xiv) The Commission in its order dated 24.02.2016 approved the total cost of Rs. 395.02 Crore towards the BoP-mechanical Package against the RWPL claim of Rs. 501.14 Crore. The Commission in its order dated 24.02.2016, had not considered certain amount towards various works done under BoP-Mechanical Package on account of expenses yet to be incurred. The

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details of expenses expected to be incurred and not considered by the Commission in its order dated 24.02.2016 are as shown in the table below:

Table 18: Amount expected to be incurred after 31.03.2014 as per Order dated 24.02.2016 (Rs. Crore)

Particulars

Amount expected to incur after 31.03.2014 as

per Order dated 24.02.2016

Fire Protection System 0.00 Effluent treatment system 0.05 Induced Draught cooling tower 0.90 Lignite & Lime stone handling system 1.57 CW system 0.00 Ash handling plant 18.25 LP piping & CW piping

1.27

Instrumentation and control system Computers and software, time and attendance system etc. Emergency DG sets Water treatment Plant Air Conditioning Plants CW treatment Plant Miscellaneous Pumps Air compressor and accessories Cranes and Hoists Chemical laboratory equipment Total BOP- Mechanical 22.04

xv) Therefore, the cost of BoP- Mechanical approved by the Commission in its order dated 24.02.2016 is as shown in the table below:

Table 19: Total BoP Mechanical Cost approved by the Commission in its Order dated 24.02.2016 (Rs. Crore)

Particulars RWPL claim Approved Total BoP Mechanical Cost 501.14 417.06

Less: Balance Expenditure to be incurred 22.04

Net BoP Mechanical Cost 501.14 395.02

xvi) The additional capitalisation claimed by the Petitioner and approved by the Commission under BoP- Mechanical for FY 2014-15 to FY 2016-17 is discussed below.

Page 66 of 115 RERC/816/16

Additional Capitalisation within original scope of work

xvii) Regarding the additional capitalisation of Rs. 0.79 Crore in FY 2014-15 towards CW system, the Commission observes that the Petitioner’s claim is more than the CWIP considered by the Commission on the proportionate basis in this order. Therefore, the Commission in this order has capped the capitalisation to Rs. 0.40 Crore i.e. equal to the CWIP considered by the Commission in this order under the head CW system against the Petitioner’s claim of Rs. 0.79 Crore.

xviii) Regarding the claim of Rs. 18.67 Crore towards Ash Handling System against High Concentration Slurry Disposal (HCSD) package for FY 2014-15, the commission found this claim of Rs. 18.67 Crore is within the limit of Rs. 19.94 Crore i.e. the sum of the amount not considered by the Commission in its order dated 24.02.2016 on account of expenses yet to be incurred and CWIP considered by the Commission in this order towards Ash handling system. Therefore, the Commission in this order has approved the additional capitalization of Rs. 18.67 Crore for FY 2014-15 towards ash handling system.

xix) Regarding the additional capitalisation of Rs. 0.68 Crore for FY 2014-15 towards Computers and software, time and attendance system etc. and Cranes & Hoists under the head BoP- Mechanical Other Various Packages, the Commission found the total claim of Rs. 0.68 Crore towards BoP Mechanical-other various packages within the limit of Rs. 1.67 Crore i.e. the sum of the amount not considered by the Commission in its order dated 24.02.2016 on account of expenses yet to be incurred and CWIP considered by the Commission in this order towards BoP Mechanical- other various packages. Therefore, the Commission in this order has approved the additional capitalisation of Rs. 0.40 Crore and Rs. 0.28 Crore in FY 2014-15 towards computers & software and Cranes & hoists respectively as claimed by the Petitioner.

xx) As regards to de-capitalisation of Rs. 6.88 Cr. on cooling tower and effluent treatment plant the Petitioner has not provided any details for

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creditors adjustments. Petitioner is directed to submit the details in this regard at the time of true up to justify its stand.

Additional Capitalisation beyond original scope of work

xxi) Regarding the Additional capitalisation beyond original scope of work, the Petitioner has not provided any detailed valid justification in accordance with RERC, Tariff Regulations, 2014 for incurring such expenses. Therefore, the same cannot be considered.

xxii) The Additional capitalisation approved by the Commission for FY 2014-15 to FY 2016-17 under BOP-Mechanical are as shown in the table below:

Table 20: Additional Capitalization approved by the Commission for

FY 2014-15 to FY 2016-17 under BOP- Mechanical (Rs. Crores) FY 2014-15 FY 2015-16 FY 2016-17 Total




of Work

Total


of work


of Work

Total



of Work

Total


of work


of Work Fire Protection System 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Effluent treatment system

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Induced Draught cooling tower

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00


0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

CW system 0.40 0.00 0.40 0.00 0.00 0.00 0.00 0.00 0.00 0.40 0.00 0.40 Ash handling plant 18.67 0.00 18.67 0.00 0.00 0.00 0.00 0.00 0.00 18.67 0.00 18.67 LP piping & CW piping 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Instrumentational and control system

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00


0.40 0.00 0.40 0.00 0.00 0.00 0.00 0.00 0.00 0.40 0.00 0.40

Emergency DG sets 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Water treatment Plant 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Air Conditioning Plants 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 CW treatment Plant 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Miscellaneous Pumps 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Air compressor and accessories

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Page 68 of 115 RERC/816/16

FY 2014-15 FY 2015-16 FY 2016-17 Total




of Work

Total


of work


of Work

Total



of Work

Total


of work


of Work

Cranes and Hoists 0.28 0.00 0.28 0.00 0.00 0.00 0.00 0.00 0.00 0.28 0.00 0.28 Chemical laboratory equipment

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total BOP- Mechanical 19.75 0.00 19.75 0.00 0.00 0.00 0.00 0.00 0.00 19.75 0.00 19.75

xxiii) Based on the above discussion, the total revised cost of BoP- Mechanical approved by the Commission in this order is as shown in the table below:

Table 21: Revised cost of BoP-Mechanical approved by the Commission (Rs. Crore)



Additional Capitalisation FY 2014-15 21.97 19.75 FY 2015-16 1.93 0.00 FY 2016-17 4.99 0.00 Sub-total 28.89 19.75 Creditor's Payment FY 2014-15 1.90 1.63

FY 2015-16 5.19 0.00 Sub-total 7.09 1.63

Total Cost till 31.03.2017 431.00 416.40

f) BoP Electrical RWPL’s Submission: Additional Capitalisation within the Original Scope of Work:

i) The Petitioner submitted that the Commission in its order dated 24.02.2016, had not considered an amount of Rs. 0.20 Crore on account of expenses yet to be incurred and Rs. 0.26 Crore towards CWIP. Against this, the Petitioner has claimed Rs. 0.19 Crore and Rs. 0.06 Crore towards the switchyard of 33 kV Lines in FY 2014-15 and FY 2015-16 respectively.

Page 69 of 115 RERC/816/16

ii) The Petitioner submitted that the amount of Rs. 0.25 Crore was a part of the contact awarded to ABB for switch yard package and the details of the same were provided by the Petitioner with petition No. 311/12 & 340/12.

iii) The Petitioner further submitted that the capitalisation of switchyard of 33 kV lines was deferred as the installation of the 33 kV lines was to be carried out by JdVVNL under depository work; and the Petitioner had no control over it.


iv) The Petitioner submitted that an amount of Rs. 1.91 Crore has been incurred in FY 2015-16 towards the cost of additional battery bank to reduce the shutdown possibilities of units.

v) The Petitioner submitted that an amount of Rs. 1.35 Crore has been incurred in FY 2015-16 towards DAVR system (exciting system). Further, the Petitioner has proposed to procure one set of AVR system of Rs. 0.87 Crore in FY 2016-17. This will improve plant operation time by fast diagnostic during abnormal plant condition as the existing AVR has been replaced with the DAVR controller Unitrol 6800 of ABB. Along with some peripheral equipment/ accessory has also been replaced for the effective working.

vi) The Petitioner submitted that an amount of Rs. 0.54 Crore has been incurred in FY 2015-16 and an amount of Rs. 0.50 Crore is expected to incur in FY 2016-17 towards generator protection up gradation.

vii) The Additional capitalisation within original scope of work and beyond original scope of work claimed by the Petitioner is as shown in the table below:

Page 70 of 115 RERC/816/16

Table 22: Additional Capitalization claimed by the Petitioner for FY 2014-15 to FY 2016-17 under BoP -Electrical (Rs. Crore)

Particulars

FY 2014-15 FY 2015-16 FY 2016-17 Total



of Work


of work


of Work


of work


of Work



of Work

Grand Total

Shunt Reactor 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Electrical System

0.19 0.00 0.19 0.06 3.80 3.86 0.00 4.97 4.97 0.25 8.77 9.02

Total BOP-Electrical

0.19 0.00 0.19 0.06 3.80 3.86 0.00 4.97 4.97 0.25 8.77 9.02


viii) The Commission in its order dated 24.02.2016 approved the cost of Rs. 344.98 Crore towards BoP-Electrical against the RWPL claim of Rs. 369.00 Crore. The Commission in its order dated 24.02.2016 had not considered the amount of Rs. 0.20 Crore on account of expenses yet to be incurred. Summary of BoP-electrical cost approved by the Commission in its order dated 24.02.2016 is as shown in the table below:

Table 23: Summary of BoP-Electrical cost approved by the Commission in its Order dated 24.02.2016 (Rs. Crore)

Particulars RWPL claim Approved Total BoP Electrical Cost 369 345.18 Less: Balance Expenditure to be incurred

0.20

Net BoP Electrical Cost 369 344.98

Additional capitalisation within original scope of work:

ix) The Petitioner submitted that it has incurred an amount of Rs. 0.19 Crore towards switchyard of 33 kV Lines for FY 2014-15, the same amount is a part of the contract awarded to ABB for switch yard package. The commission found this claim of Rs. 0.19 Crore is within the limit of Rs. 0.40 Crore i.e. the sum of the amount not considered by the Commission in its order dated 24.02.2016 on account of expenses yet to be incurred and CWIP

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considered by the Commission in this order towards BoP-Electrical. Therefore, the Commission in this order has approved the additional capitalization of Rs. 0.19 Crore for FY 2014-15 towards BoP-Electrical.

x) Further, from the above approved amount of Rs. 0.19 Crore for FY 2014-15, the Commission has deducted the amount of Rs. 1 Crore towards the insurance claim under BOP-Electrical pending settlement as submitted by the Petitioner in replies to the data gaps. Therefore, the total additional capitalisation approved by the Commission in this order towards BoP-Electrical is Rs. -0.81 Crore.

Additional capitalisation beyond original scope of work:

xi) Regarding the Additional capitalisation beyond original scope of work, the Petitioner has not provided any detailed valid justification in accordance with RERC, Tariff Regulations, 2014 for incurring such expenses. Therefore, the same cannot be considered.

xii) The Additional capitalisation approved by the Commission for FY 2014-15 to FY 2016-17 under BOP-Electrical are as shown in the table below:

Table 24: Additional Capitalization approved by the Commission for FY 2014-15 to FY 2016-17 under BoP- electrical (Rs. Crore)

Particulars

FY 2014-15 FY 2015-16 FY 2016-17 Total

Grand Total


of work



of work


of Work


of work


of Work


of work


Shunt Reactor 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Electrical System

0.19 0.00 0.19 0.00 0.00 0.00 0.00 0.00 0.00 0.19 0.00 0.19

Less: Insurance claim under BoP pending settlement

(1.00) (1.00) (1.00) (1.00)

Total BOP-Electrical

-0.81 0.00 -0.81 0.00 0.00 0.00 0.00 0.00 0.00 -0.81 0.00 -0.81

xiii) Based on the above discussion, the total revised cost of BoP- Electrical approved by the Commission in this order is as shown in the table below:

Page 72 of 115 RERC/816/16

Table 25: Revised cost of BoP-Electrical Approved by the Commission (Rs. Crore)



344.98 344.98

Additional Capitalisation FY 2014-15 0.19 -0.81 FY 2015-16 3.86 0.00 FY 2016-17 4.97 0.00 Sub-total 9.02 -0.81 Creditor's Payment FY 2014-15 0.91 0.90 FY 2015-16 0.02 0.00 Sub-total 0.93 0.90

Total Cost till 31.03.2017 354.93 345.07

g) Colony

RWPL’s Submission Additional Capitalisation within original scope of work

i) The Petitioner submitted that the Commission in its order dated 24.02.2016 had not considered an amount of Rs. 6.36 Crore on account of expenses yet to be incurred. Against this, the Petitioner has claimed Rs. 1.18 Crore in FY 2015-16 and Rs. 2.61 Crore is expected to be incurred in FY 2016-17.

ii) The Petitioner further submitted that it had to defer this portion of the colony, due to the reasons beyond its control, including on account of strained cash flow owing to hugely delayed payments by the Discoms and availability of only an adhoc tariff restricting full recovery.


iii) The Petitioner submitted that an amount of Rs. 1.85 Crore has been incurred in FY 2014-15 towards the cost of land and building for township bachelor hostel.

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iv) Additional capitalisation within original scope of work and beyond original scope of work claimed by the Petitioner under Colony is as shown in the table below:

Table 26: Additional Capitalization claimed by the Petitioner for FY 2014-15 to FY 2016-17 towards Colony (Rs. Colony)

Particulars

FY 2014-15 FY 2015-16 FY 2016-17 Total

Grand Total


of work



of work


of Work


of work


of Work


of work


of Work

Colony 0.00 1.85 1.85 1.18 0.00 1.18 2.61 0.00 2.61 3.79 1.85 5.64

Total 0.00 1.85 1.85 1.18 0.00 1.18 2.61 0.00 2.61 3.79 1.85 5.64


v) The Commission in its order dated 24.02.2016 approved the cost of Rs. 80.17 Crore towards Colony against the RWPL claim of Rs. 91.16 Crore. The Commission in its order dated 24.02.2016 had not considered the amount of Rs. 6.36 Crore on account of expenses yet to be incurred. Summary of cost approved by the Commission towards Colony is as shown in the table below:

Table 27: Summary of Cost approved by the Commission in its Order dated 24.02.2016 (Rs. Crore)


Total Colony Cost 91.16 86.53 Less: Balance Expenditure to be incurred

6.36

Net Colony cost 91.16 80.17


vi) The Petitioner has claimed the expenditure of an amount of Rs. 1.18 Crore in FY 2015-16 and Rs. 2.61 Crore is expected to be incurred in FY 2016-17. The Commission in this order has not approved any additional capitalisation for FY 2015-16 and FY 2016-17, same being beyond cut-off

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date as discussed above and hence the Commission in this order has not allowed any additional capitalisation towards Colony.


vii) Regarding the Additional capitalisation beyond original scope of work, the Petitioner has not provided any detailed valid justification in accordance with RERC, Tariff Regulations, 2014 for incurring such expenses. Therefore, the same cannot be considered.

viii) The Commission has not considered any additional capitalisation within and beyond the original scope of work under colony for FY 2014-15 to FY 2016-17.

ix) Based on the above discussion, the total revised cost of Colony approved by the Commission in this Order is as shown in the table below:

Table 28: Revised cost of Colony approved by the Commission ( Rs. Crore) Particulars RWPL

Claim Approved


Additional Capitalisation FY 2014-15 1.85 0.00 FY 2015-16 1.18 0.00 FY 2016-17 2.61 0.00 Sub-total 5.64 0.00 Creditor's Payment FY 2014-15 7.52 7.50 FY 2015-16 0.00 0.00 Sub-total 7.52 7.50

Total Cost till 31.03.2017 93.33 87.67

Page 75 of 115 RERC/816/16

h) External water supply systems RWPL’s Submission Additional Capitalisation within original scope of work

i) The Petitioner submitted that the Commission in its order dated 24.02.2016 had not considered an amount of Rs. 0.69 Crore on account of expenses yet to be incurred and Rs. 28.38 on account of CWIP. Against the CWIP of Rs. 28.38 Crore, the Petitioner has capitalised Rs. 14.73 Crore in FY 2014-15 and Rs. 11.67 Crore in FY 2015-16 on commissioning of 33 kV lines connected to water pump houses. Further, a sum of Rs. 0.53 Crore was capitalised in FY 2014-15 towards the construction of link canal and head regulator through IGNP under the head of raw water pipe line.

ii) The Petitioner further submitted that the amount of Rs. 14.73 Crore in FY 2014-15 incurred towards 33 kV permanent transmission line connected to 33 kV line from 132 kV Chandan GSS to Akal pumping station, 33kV line from 132 kV Shiv GSS to Sangad Pumping station, 33kV line from 220 kV line from Amarsagar GS to Kanod pumping station.

iii) Further, the amount of Rs. 11.67 Crore in FY 2015-16 incurred on completion of work towards 33 kV permanent transmission line in connected to 220 kV Amarsagar GSS to Mohangarh pumping Station.

iv) The Petitioner submitted that the capitalisation of 33 kV line was deferred as the installation of the 33-kVA line was carried out by JdVVNL under depository work and the Petitioner had no control over it.


v) The Petitioner submitted that the amount of Rs. 4.00 Crore is expected to be incurred in FY 2016-17 towards the installation of cathodic protection system to protect the underground pipelines from corrosion.

vi) The additional capitalisation within original scope of work and beyond original scope of work claimed by the Petitioner is as shown in the table below:

Page 76 of 115 RERC/816/16

Table 29: Additional capitalization claimed by the Petitioner for FY 2015-15 to FY 2016-17 towards external water supply system (Rs. Crore)

Particulars

FY 2014-15 FY 2015-16 FY 2016-17 Total

Grand Total









Transmission Line 33 KV

14.73 0.00 14.73 11.67 0.00 11.67 0.00 0.00 0.00 26.40 0.00 26.40

Water Pipe line

0.53 0.00 0.53 0.00 0.00 0.00 0.00 4.00 4.00 0.53 4.00 4.53

Total 15.26 0.00 15.26 11.67 0.00 11.67 0.00 4.00 4.00 26.93 4.00 30.93


vii) The Commission in its Order dated 24.02.2016 approved the cost of Rs. 348.32 Crore against the RWPL claim of Rs. 389.61 Crore. The Commission in its Order dated 24.02.2016 had not considered the amount of Rs. 0.69 Crore on account of expenses yet to be incurred. The Summary of cost approved by the Commission towards External water supply system is as shown in the table below:

Table 30: Summary of cost approved by the Commission in its Order dated 24.02.2016 (Rs. Crore)

Particulars RWPL Claim Approved Total External water supply system Cost

389.61 349.01

Less: Balance expenditure to be incurred

0.69

Total 389.61 348.32


viii) The Petitioner has claimed the additional capitalisation of Rs. 14.73 Crore and Rs. 11.67 Crore for FY 2014-15 and FY 2015-16 towards the transmission line. It is observed that in the order dt. 24.02.2016 the entire expenditure of Rs. 27.38 cr. claimed on account of 33 kV transmission line was allowed by the Commission. The expected expenditure claimed by the Petitioner was

Page 77 of 115 RERC/816/16

also nil on this head. In view of this, the Commission in this order has not approved any additional capitalisation towards transmission line.

ix) The Petitioner submitted that it has incurred an amount of Rs. 0.53 Crore towards water pipe line for FY 2014-15. The commission found this claim of Rs. 0.53 Crore within the limit of Rs. 1.47 Crore i.e. the sum of the amount not considered by the Commission in its order dated 24.02.2016 on account of expenses yet to be incurred and CWIP considered by the Commission in this order towards external water supply. Therefore, the Commission in this order has approved the additional capitalization of Rs. 0.53 Crore for FY 2014-15 towards external water supply.


x) Regarding the Additional capitalisation beyond original scope of work, the Petitioner has not provided detailed valid justification in accordance with RERC, Tariff Regulations, 2014 for incurring such expenses. Therefore, the same cannot be considered.

xi) The Additional capitalisation approved by the Commission for FY 2014-15 to FY 2016-17 towards external water supply system are as shown in the table below:

Table 31: Additional Capitalization approved by the Commission for FY 2014-15 to FY 2016-17 towards external water supply system (Rs. Crore)

Particulars

FY 2014-15 FY 2015-16 FY 2016-17 Total

Grand Total Within

original scope of work








Transmission Line 33 KV 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Water Pipe line 0.53 0.00 0.53 0.00 0.00 0.00 0.00 0.00 0.00 0.53 0.00 0.53

Total 0.53 0.00 0.53 0.00 0.00 0.00 0.00 0.00 0.00 0.53 0.00 0.53

Page 78 of 115 RERC/816/16

xii) Based on the above discussion, the total revised cost of External water supply system, approved by the Commission in this Order is as shown in the table below:

Table 32: Revised cost approved by the Commission for External water supply system (Rs. Crore)

Particulars RWPL Claim Approved Cost as approved in the Commission's Order dated 24.02.2016

348.32 348.32


i) Taxes and Duties: RWPL’s Submission i) The Petitioner has claimed the amount of taxes and duties of Rs. 1.99 Crore

and 0.20 Crore in FY 2014-15 and FY 2015-16 respectively in accordance with the approach adopted by the Commission in its Order dated 24.02.2016. Accordingly, the tax @10% has been claimed on increase in hard cost. Further, the same is without prejudice to the right and contentious of the Petitioner in Appeal No. 107/2016, pending adjudication before the APTEL.

ii) Taxes and duties claimed by the Petitioner for FY 2014-15 to FY 2016-17 are as shown in the table below:

Page 79 of 115 RERC/816/16

Table 33: Taxes and Duties claimed by the Petitioner for FY 2014-15 to FY 2016-17 (Rs. Crore)

Particulars

FY 2014-15 FY 2015-16 FY 2016-17 Total

Grand Total



Work


of work



scope of work


of Work


of work


of Work Taxes and Duties 1.99 0.00 1.99 0.20 0.00 0.20 0.00 0.00 0.00 2.19 0.00 2.19

Total 1.99 0.00 1.99 0.20 0.00 0.20 0.00 0.00 0.00 2.19 0.00 2.19

Commission’s Analysis iii) The Commission in this Order has approved the taxes and duties in the

same proportion as was claimed by the Petitioner and approved by the Commission in its order dated 24.02.2016.

iv) Taxes and duties approved by the Commission for FY 2014-15 to FY 2016-17 are as shown in the table below:

Table: 34: Taxes and Duties approved by the Commission for FY 2014-15 to FY 2016-17 (Rs. Crore)

Particulars

FY 2014-15 FY 2015-16 FY 2016-17 Total

Grand Total


of work



of work


of Work


of work



scope of work


of Work

Taxes and Duties

1.70 0.00 1.70 0.00 0.00 0.00 0.00 0.00 0.00 1.70 0.00 1.70

Total 1.70 0.00 1.70 0.00 0.00 0.00 0.00 0.00 0.00 1.70 0.00 1.70

v) Based on the above discussion, the revised taxes and duties approved by the Commission in this order is as shown in the table below:

Table 35: Revised taxes and duties approved by the Commission (Rs. Crore)



472.92

472.92

Additional Capitalisation FY 2014-15 1.99 1.70 FY 2015-16 0.20 0.00 FY 2016-17 0.00 0.00

Page 80 of 115 RERC/816/16

Sub-total 2.19 1.70 Creditor's Payment FY 2014-15 0.00 0.00 FY 2015-16 0.00 0.00 Sub-total 0.00 0.00

Total Cost till 31.03.2017 475.11 474.62

j) Overheads: RWPL’s Submission

i) The Petitioner has claimed the overheads @ 5% on the increased hard cost based on the principles set by the Commission in it Order dated 24.02.2016. Further, the same is without prejudice to the right and contentious of the Petitioner in Appeal No. 107/2016, pending adjudication before the APTEL.

ii) The overheads claimed by the Petitioner is as shown in the table below:

Table 36: Overheads claimed by the Petitioner for FY 2014-15 to FY 2016-17 (Rs. Crore)

Particulars

FY 2014-15 FY 2015-16 FY 2016-17 Total

Grand Total









Design Engineering 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Preoperative, Esst., Audit & A/C, contingency

0.39 0.00 0.39 0.03 0.00 0.03 0.00 0.00 0.00 0.42 0.00 0.42

Total 0.39 0.00 0.39 0.03 0.00 0.03 0.00 0.00 0.00 0.42 0.00 0.42


i) Regarding the claim of Rs. 0.39 Crore for FY 2014-15 towards overheads, the Commission observes that the claim of Rs. 0.39 Crore is more than the CWIP approved by the Commission in this order. Therefore, the Commission in this order has capped the approved additional capitalisation to Rs. 0.15 Crore i.e. CWIP approved by the Commission in this order against the claim of Rs. 0.39 Crore.

Page 81 of 115 RERC/816/16

ii) The Overheads approved by the Commission for FY 2015-16 to FY 2016-17 are as shown in the table below:

Table 37: Overheads approved by the Commission for FY 2014-15 to FY 2016-17 (Rs. Crore)

FY 2014-15 FY 2015-16 FY 2016-17 Total

Grand Total

Particulars



Total



Total



Total



Design Engineering 0.15 0.00 0.15 0.00 0.00 0.00 0.00 0.00 0.00 0.15 0.00 0.15

Preoperative, Esst. ,Audit & Acts, contingency

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total 0.15 0.00 0.15 0.00 0.00 0.00 0.00 0.00 0.00 0.15 0.00 0.15

iii) The total revised overhead cost approved by the Commission is as shown in

the table below:

Table 38: Total overhead cost approved by the Commission in this order (Rs. Crore)



237.66 237.66


Page 82 of 115 RERC/816/16

k) IDC and Finance Charges RWPL’s Submission

i) The Petitioner submitted that the Commission in its Order dated 24.02.2016 had not considered the amount of Rs. 3.72 Crore towards the expenses yet to be incurred and Rs. 8.47 Crore towards CWIP.

ii) The Petitioner further submitted that it has claimed the IDC and Finance charges for FY 2014-15 to FY 2016-17 on account of the revised hard cost. Further, the additional IDC and Finance charges may be allowed by the Commission on pro-rata basis as was allowed by the Commission in its Order dated 24.02.2016.

iii) The Petitioner submitted that the same is without prejudice to the right and contentious of the Petitioner in Appeal No. 107/2016, pending adjudication before the APTEL.

iv) The IDC and Finance charges claimed by the Petitioner are as shown in the table below:

Table 39: IDC and Finance charges claimed by the Petitioner for FY 2014-15 to FY 2016-17 (Rs. Crore)

Particulars

FY 2014-15 FY 2015-16 FY 2016-17 Total


of work


of Work


of work


of Work


of work


of Work


of work


of Work

Grand Total

IDC 7.71 0.00 7.71 4.21 0.00 4.21 0.00 0.00 0.00 11.92 0.00 11.92 Finance Charges

0.25 0.00 0.25 0.03 0.00 0.03 0.00 0.00 0.00 0.28 0.00 0.28

Total 7.96 0.00 7.96 4.24 0.00 4.24 0.00 0.00 0.00 12.20 0.00 12.20


v) The Commission in this order has not approved the additional IDC and Finance charges claimed by the Petitioner on account of additional capitalisation approved in this order in accordance provisions of Regulation 16(2)(a) of RERC, Tariff Regulations, 2014. Regulation 16(2) (a) of RERC, Tariff Regulations, 2014 state as under:

Page 83 of 115 RERC/816/16

“16. Capital Cost and capital structure (2). Capital Cost for a project shall include: (a) the expenditure incurred including interest during construction and

financing charges, any gain or loss on account of foreign exchange risk variation on the loan during construction up to the date of commercial operation of the project as admitted by the Commission after prudence check.”

vi) In accordance with the above provision of RERC, Tariff Regulations, 2014, the IDC and Financing Charges are to be allowed only till the COD of the Project and not after the COD of the Project. Hence, the IDC and financing charges cannot be allowed on the Additional Capitalisation beyond COD of the project. Hence, the IDC and FC in this order has been allowed only up to CWIP considered in this order.

vii) The IDC and Finance charges allowed by the Commission for FY 2014-15 to FY 2015-16 is as shown in the table below:

Table 40: IDC and Finance Charges approved by the Commission for FY 2014-15 to FY 2016-17 (Rs. Crore)

Particulars

FY 2014-15 FY 2015-16 FY 2016-17 Total

Grand Total



Total



Total



Total



IDC 6.34 0.00 6.34 0.00 0.00 0.00 0.00 0.00 0.00 6.34 0.00 6.34 Finance Charges 0.22 0.00 0.22 0.00 0.00 0.00 0.00 0.00 0.00 0.22 0.00 0.22

Total 6.57 0.00 6.57 0.00 0.00 0.00 0.00 0.00 0.00 6.57 0.00 6.57

viii) The revised IDC and Finance charges approved by the Commission in this order is as shown in the table below:

Table 41: Revised IDC and Finance Charges approved by the Commission (Rs. Crore)

Particulars IDC Finance Charges

RWPL Claim Approved RWPL

Claim Approved


1119 1119 57 57

Additional Capitalisation

FY 2014-15 7.71 6.34 0.25 0.22 FY 2015-16 4.21 0.00 0.03 0.00

Page 84 of 115 RERC/816/16

FY 2016-17 0.00 0.00 0.00 0.00 Sub-total 11.92 6.34 0.28 0.22 Creditor's Payment FY 2014-15 0.00 0.00 0.00 0.00 FY 2015-16 0.00 0.00 0.00 0.00

Sub-total 0.00 0.00 0.00 0.00 Total Cost till 31.03.2017 1130.92 1125.34 57.28 57.22

3.15 From the above discussion of the Petitioner’s submission and the Commission’s analysis, the additional capitalisation beyond original scope of work, within original scope of work and creditor’s payment claimed and approved by the Commission for FY 2014-15 is as shown in the table below:

Table 42. Package wise additional Capitalization claimed by RWPL and approved by the Commission for FY 2014-15 (Rs. Crore)

Particulars

FY 2014-15 Asset

Addition within

Original Scope of

Work

Approved Asset Addition beyond Original Scope of

Work

Approved Creditor’s Payment Claimed

Approved Total Claimed

Total Approved

Land and Land Development 0.01 0.01 1.90 0.00 0.00 0.00 1.91 0.01

BTG 2.16 0.00 0.50 0.00 0.86 0.40 3.52 0.40 CIVIL Works 17.74 6.53 0.00 0.00 6.06 4.48 23.80 11.01 BOP- Mechanical

20.14 19.75 1.83 0.00 1.90 1.63 23.87 21.38

BOP- Electrical 0.19 -0.81 0.00 0.00 0.91 0.90 1.10 0.09 Colony 0.00 0.00 1.85 0.00 7.52 7.50 9.37 7.50 External Water Supply 15.26 0.53 0.00 0.00 0.00 0.00 15.26 0.53

Taxes and Duties 1.99 1.70 0.00 0.00 0.00 0.00 1.99 1.70 Initial Spares 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Freight & Transit Insurance 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Erection, testing and Commissioning 0.00 0.00 0.00 0.00 3.12 3.11 3.12 3.11

Over Heads 0.39 0.15 0.00 0.00 0.66 0.53 1.05 0.68 Construction Insurance 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

IDC 7.71 6.34 0.00 0.00 0.00 0.00 7.71 6.34 Finance Charges 0.25 0.22 0.00 0.00 0.00 0.00 0.25 0.22

Total 65.84 34.41 6.08 0.00 21.03 18.56 92.95 52.98

Page 85 of 115 RERC/816/16

3.16 The Commission, as discussed in earlier paras, has not approved any additional capitalisation for the FY 2015-16 and 2016-17.

3.17 Regarding the de-capitalisation of assets, the Petitioner in replies to the data gaps submitted that, assets of amount of Rs. 2.40 Crore has been deducted on account of sale of scrap of steel under the head Lignite and Lime Stone handling system (Civil Works) in FY 2014-15. Further, in FY 2014-15, assets of amount of Rs. 0.11 Crore has been deducted on write off of Office equipment. In FY 2015-16, assets of amount of Rs. 0.20 Crore have been deducted on account of sale of vehicle.

3.18 To reconcile the deduction claimed with the accounts, the Petitioner in replies to the data gaps also submitted that the amount of Rs. 4.43 Crore and Rs. 9.21 Crore dis-allowed by the Commission in its Order dated 24.02.2016 towards the creditor’s payment has been decapitalised in accounts books of FY 2014-15 and FY 2015-16 respectively.

3.19 The Commission observed that the Petitioner has decapitalised an amount of Rs. 2.40 Crore in FY 2014-15 on account of sale of scrap of steel under the head Lignite and Lime stone handling system. Therefore, the Commission has approved the de-capitalisation of Rs. 2.40 Crore on sale of scrap of steel under the head lignite and lime handling system as claimed by the Petitioner.

3.20 The Commission finds the submission of the Petitioner in line with the audited accounts for FY 2014-15 and FY 2015-16. Therefore, the total asset deduction approved by the Commission for FY 2014-15 and FY 2015-16 is Rs. 2.51 Crore and Rs. 0.20 Crore respectively.

3.21 The de-capitalisation approved by the Commission for FY 2014-15 and FY 2015-16 is as shown in the table below:

Page 86 of 115 RERC/816/16

Table 43: Asset deduction claimed by RWPL and approved by the Commission for FY 2014-15 and FY 2015-16 (Rs. Crore)

Particulars FY 2014-15 FY 2015-16


Claim Approved

Land and Land Development 0.00 0.00 0.00 0.00 Plant and Equipment 0.00 0.00 0.00 0.00 Buildings & Civil Engineering Works 2.40 2.40 0.00 0.00 IT Equipment 0.00 0.00 0.00 0.00 Self-Propelled Vehicles 0.00 0.00 0.20 0.20 Office Furniture/ Equipment 0.11 0.11 0.00 0.00

Total 2.51 2.51 0.20 0.20

3.22 Therefore, for approving the ARR and Tariff for FY 2014-15 to FY 2016-17, the Commission has considered the Capital Cost approved in its Order dated 24.02.2016 and the additional capitalisation and decapitalisation approved by the Commission in this Order. Accordingly, the year wise GFA approved by the Commission is given in the table below:

Table 44: GFA approved by the Commission for FY 2014-15 to FY 2016-17 (Rs. Crore)

Particulars

FY 2014-15 FY 2015-16 FY 2016-17

Opening

GFA

Closing

GFA*

Opening

GFA

Closing

GFA**

Opening

GFA

Closing

GFA

Land and Land Development 18.19 18.20 18.20 18.20 18.20 18.20

Plant and Equipment 5096.57 5130.54 5130.54 5130.54 5130.54 5130.54

Buildings & Civil Engineering Works 804.28 820.39 820.39 820.39 820.39 820.39

IT Equipment 1.65 2.14 2.14 2.14 2.14 2.14

Self-Propelled Vehicles 1.05 1.05 1.05 0.85 0.85 0.85

Office Furniture/ Equipment 7.00 6.89 6.89 6.89 6.89 6.89

Total 5928.75 5979.22 5979.22 5979.02 5979.02 5979.02

*Including deduction of Rs. 2.51 Crore approved by the Commission ** Including deduction of Rs. 0.20 Crore approved by the Commission

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SECTION 4 Determination of ARR and Tariff for RWPL for FY 2014-15 to FY 2016-17

4.1 Before going into the discussion on Annual Fixed Charges, it is pertinent to discuss the approach to tariff determination in this petition.

4.2 Vide its order dated 30.08.2013, the Commission determined the provisional capital cost of the project which was subject to the determination of final capital cost of the project based on the audited accounts as on the Commercial Operation Date (COD) of the project. Aggrieved by certain points of the Commission’s Order dated 30.08.2013, RWPL filed an Appeal (being Appeal No. 284/2013) before the Hon’ble APTEL. The said Appeal was disposed of by the Hon’ble APTEL vide its Judgment dated 20.11.2015. Further, aggrieved by certain findings and directions of the Hon’ble APTEL in its Judgement dated 20.11.2015, RWPL filed second Appeal (being Civil Appeal No. 2601/2016) under Section 125 of the Electricity Act 2003, before the Hon’ble Supreme Court of India. The aforesaid appeal is pending adjudication.

4.3 Vide its Order dated 24.02.2016, the Commission approved the final capital cost for the generating station along with the final tariff for FY 2009-10 to FY 2013-14 and the True-up for FY 2009-10 and FY 2010-11. Aggrieved by certain points of the Commission’s Order dated 24.02.2016, RWPL filed an Appeal (being Appeal No.107/16) before the Hon’ble APTEL on 18.04.2016. The aforesaid appeal was admitted by APTEL on 13.07.2016 and is pending adjudication.

4.4 RWPL filed the petition No. 445/14, 486/14 and 652/15 for determination of ARR and Tariff for FY 2014-15, FY 2015-16 and FY 2016-17 respectively and the same petitions were pending for disposal before the Commission at the time of filing of the instant petition and the same have been disposed-of by the Commission in its Order dated 04.08.2016, with a direction to file a comprehensive petition.

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4.5 To avoid the duplication and further burdening of records, the Petitioner

vide its application dated 30.05.2016 requested the commission to allow RWPL to file a comprehensive revised petition for determination of final Tariff for FY 2014-15 to FY 2016-17, based on the approved capital cost. The Commission vide its letter dated 08.06.2016 allowed the Petitioner to file a comprehensive tariff petition for determination of final Tariff for FY 2014-15 to FY 2016-17. In compliance to the Commission’s letter dated 08.06.2016, Petitioner filed the instant petition (petition No. 816/16) for determination of ARR and Tariff for its plant for FY 2014-15 to FY 2016-17.

4.6 The Commission in this order for the approval of ARR and Tariff for FY 2014-15 to FY 2016-17 has considered the capital cost approved by the Commission in its Order dated 24.02.2016 along with the additional capitalisation approved by the Commission in this Order for FY 2014-15 to FY 2016-17 in accordance with the RERC Tariff Regulations, 2014.

(A) Annual Fixed Charges 4.7 The Annual Fixed Charges comprises of the following elements:

i. Operation and Maintenance (O&M) Expenses ii. Depreciation iii. Interest on Term loans iv. Return on Equity v. Interest on working capital vi. Insurance charges vii. Less: Non-Tariff income

4.8 Each of annual fixed charges elements has been dealt with in the following paragraphs.

Operation and Maintenance (O&M) Expenses RWPL’s Submission

4.9 The Petitioner submitted that the O&M expenses have been claimed in accordance with Regulation 47 (2) of the RERC Tariff Regulations, 2014. The Petitioner further submitted that the normative O&M expenses of Rs.

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21.16 Lakhs/MW for FY 2014-15 have been escalated at the rate of 5.85% per annum for the subsequent years (i.e. for FY 2015-16 and FY 2016-17) in accordance with Regulation 24(3) of RERC Tariff Regulations, 2014.

4.10 As per Regulation 47 (4) of the RERC Tariff Regulations, 2014, in case the process water is required to be transported over a distance of more than 50 km, appropriate special O&M expenses, subject to prudence check by the Commission, shall be allowed in addition to the normative O&M expenses. The Special O&M shall include O&M expenses related to the pipeline beyond 50 km, the O&M cost of pumping station and electricity consumption cost for pumping stations.

4.11 The Petitioner further submitted that following the same approach adopted by the Commission in its Order dated 24.02.2016, the Petitioner has considered the electricity charges for only two stations i.e. Akal and Sangad. For FY 2014-15 and FY 2015-16, the Petitioner has claimed the actual electricity charges as per Audited Accounts for the respective years and for FY 2016-17, the actual electricity charges of FY 2015-16 have been claimed.

4.12 The Petitioner submitted that the O&M contract for the pipeline including the maintenance cost of pumping stations has been awarded for the whole pipeline and not separately for pipeline beyond 50 km. Therefore, the O&M expenses for the pipeline beyond 50 km for two pumping stations have been claimed on the proportionate basis to the distance of water pumped by each station.

4.13 The total O&M expenses claimed by the Petitioner is as shown in the Table below:

Table 45: Total O&M expenses claimed by RWPL for FY 2014-15 to FY 2016-17 (Rs. Crore)

Particulars FY 2014-15 FY 2015-16 FY 2016-17 Normative O&M expenses

228.53 241.90 256.05

Special O&M expenses 11.18 15.04 15.04 Total O&M expenses 239.71 256.94 271.09

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4.14 Regulation 47(2) of the RERC Tariff Regulations, 2014 specifies the normative O&M expenses of Rs. 21.16 Lakh per MW for FY 2014-15 for lignite based generating stations. Further, Regulation 24(3) of the RERC Tariff Regulations, 2014 specifies that the normative O&M expenses allowed for FY 2014-15 shall be escalated at the rate of 5.85% per annum for each year of the Control Period.

4.15 The Commission has verified RWPL’s computations of normative O&M expenses and found it to be in line with the Regulations and accordingly, the same has been approved.

4.16 Regulation 47 (4) of RERC Tariff Regulations, 2014 specifies as under: “47. Operation and Maintenance expenses (4) In case the process water is required to be transported over a

distance of more than 50 km, then appropriate special O&M expenses, subject to the prudence check by the Commission, shall be allowed in addition to the above O&M expenses. It shall include O&M expenses related to pipe line beyond 50 km and water pumping station operation cost, and additional power consumption for such stations.”

4.17 The Commission observed that the Petitioner has submitted the supporting documents for the electricity consumption of pumping stations for FY 2014-15 and FY 2015-16. Further, the claim of the Petitioner for electricity consumption of pumping stations is in line with the supporting documents. Therefore, the Commission in this Order has approved the electricity charges of pumping station that are beyond the range of 50 km (i.e. Akal and Sangad) as claimed by the Petitioner for FY 2014-15 to FY 2015-16. For FY 2016-17, the actual electricity consumption charges of FY 2015-16 have been considered.

4.18 The Commission observes that the Petitioner submitted the supporting documents for the Special O&M, other than the electricity charges in replies to the Stakeholder’s Suggestions/Objections/Comments. As the

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O&M contract has been given for the entire pipe line and in the absence of actual expenses incurred in segregation for the pipeline that is beyond 50 km range and within 50 km range, the Commission in unable to carry out the prudence check of actual O&M expenses incurred against this pipeline beyond 50 Km. The Commission is of the view that allowing the special O&M on pro-rata basis will not be a correct approach because many overheads may be common for pipeline beyond the range of 50 km and within the range of 50 km. Therefore, in line with the approach adopted by the Commission in its previous Orders, the Commission has not approved any special O&M expenses other than electricity charges for FY 2014-15 to FY 2016-17.

4.19 The Special O&M claimed by the Petitioner and approved by the Commission is as shown in the table below:

Table 46: Special O&M approved by the Commission for FY 2014-15 to FY 2016-17 (Rs. Crore)

Particulars FY 2014-15 FY 2015-16 FY 2016-17 Additional O&M Expenses: RWPL Approved RWPL Approved RWPL Approved A. Power consumption Cost (Akal) 4.67 4.67 6.00 6.00 6.00 6.00

B. Power consumption Cost (Sangad)) 3.34 3.34 4.40 4.40 4.40 4.40

Total power consumption cost (A+B) 8.00 8.00 10.40 10.40 10.40 10.40

C. Repair/ maintenance/ employee cost/Stores & spares (Akal)

1.21 0.00 1.76 0.00 1.76 0.00

D. Repair/ maintenance/ employee cost/Stores & spares (Sangad)

1.97 0.00 2.88 0.00 2.88 0.00

Total (C+D) 3.17 0.00 4.64 0.00 4.64 0.00 Total (A+B+C+D) 11.18 8.00 15.04 10.40 15.04 10.40

4.20 The normative O&M expenses and special O&M expenses allowed by the Commission for FY 2014-15 to FY 2016-17 are as shown in the table below:

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Table47: Total O&M expenses approved by the Commission for FY 2014-15 to FY 2016-17 (Rs. Crore)

Particulars FY 2014-15 FY 2015-16 FY 2016-17

Petitioned Approved Petitioned Approved Petitioned Approved

Normative (Rs. Lakh/MW) 21.16 21.16 22.40 22.40 23.71 23.71

Normative (Rs. Crore) 228.53 228.53 241.90 241.90 256.05 256.05

Special O&M (Rs. Crore) 11.18 8.00 15.04 10.40 15.04 10.40

Total O&M 239.71 236.53 256.94 252.30 271.09 266.45

Depreciation RWPL’s Submissions

4.21 The Petitioner submitted that the depreciation for FY 2014-15 to FY 2016-17 has been claimed as per Regulation 22(4) of RERC Tariff Regulations, 2014 considering the total capital cost of the project and the depreciation rates as provided in the RERC Tariff Regulations, 2014. The Depreciation claimed by the Petitioner for FY 2014-15 to FY 2016-17 is as shown in the table below:

Table 48: Depreciation claimed by RWPL for FY 2014-15 to FY 2016-17 (Rs. Crore)

Particular FY 2014-15 FY 2015-16 FY 2016-17

As per petition 298.67 301.77 303.22


4.22 Regulation 22 of the RERC Tariff Regulations, 2014 specifies as under: “22. Depreciation (1) The value base for the purpose of depreciation shall be the capital

cost of the assets admitted by the Commission. ………………. (4) Depreciation shall be calculated annually based on straight Line

Method (SLM) and at rates specified in Appendix-I to these regulations for the assets of the generating station, transmission system and distribution system:

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………………. (6) Depreciation shall be chargeable from the first year of commercial

operation. In case of commercial operation of the asset for part of the year, depreciation shall be charged on pro-rata basis.

………………..”

4.23 The Commission found that the opening GFA for FY 2014-15 is in variation with the closing GFA of FY 2013-14 as approved by the Commission in its order dated 24.02.2016. The Commission for computing the depreciation for FY 2014-15 has considered the closing GFA of FY 2013-14 as was approved by the Commission in its order dated 24.02.2016.

4.24 The Commission has computed the depreciation for FY 2014-15 to FY 2016-17 in accordance with RERC Tariff Regulations, 2014, based on the Capital cost approved by the Commission in its Order dated 24.02.2016 and the net GFA addition approved in this Order for FY 2014-15 to FY 2016-17.

4.25 The depreciation approved by the Commission for FY 2014-15 to FY 2016-17 is as shown in the Table below:

Table 49: Depreciation approved by the Commission for FY 2014-15 to FY 2016-17 (Rs. Crores)


As per petition 298.67 301.77 303.22

Approved 297.95 299.14 299.13

Interest on Term Loan RWPL’s Submission

4.26 The Petitioner submitted that the Petitioner has availed loans at fixed and floating rates of interest linked to Prime Lending Rates (PLR)/Base Rate (BR) of the concerned banks /FIs etc. For FY 2014-15, FY 2015-16 and FY 2016-17 the Petitioner has considered the rate of interest as the weighted average rate of interest calculated on the basis of the actual loan portfolio at the beginning of each year in accordance with the Regulation 21(5) of RERC Tariff Regulations, 2014. Accordingly, the rate of interest considered for FY

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2014-15, FY 2015-16 and FY 2016-17 work out to be 11.53%, 11.20% and 10.62% respectively.

4.27 Petitioner further submitted that the interest charges have been worked out considering the repayment equal to the depreciation in accordance with the Regulation 21(3) of the RERC Tariff Regulations, 2014.

4.28 The interest charges on term loan claimed by the Petitioner for FY 2014-15 to FY 2016-17 are as shown in the table below:

Table 50: Interest charges on term loan claimed by RWPL for FY 2014-15 to FY 2016-17


As per petition 438.65 397.91 347.87

4.29 The Petitioner further submitted that it has initiated the process of refinancing the existing loans during FY 2013-14 with a view to reduce the net interest on term loans. The Petitioner submitted that the efforts of refinancing have resulted in considerable amount of interest saving in FY 2013-14 to FY 2016-17. The Petitioner requested the Commission to consider the cost of refinancing and sharing of savings of interest for FY 2014-15 to FY 2016-17 as per Regulation 21(7) of RERC Tariff Regulations, 2014. The saving of interest on account of refinancing for FY 2014-15 to FY 2016-17 claimed by the Petitioner is as shown in the table below:

Table 51: Saving of interest on account of refinancing claimed by RWPL for FY 2013-14 to FY 2016-17 (Rs. Crores)

Particulars FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 Total saving 3.82 30.64 33.24 30.93 Passed to Beneficiary 2.55 20.43 22.20 20.62 Retained by Generating Company 1.27 10.22 11.08 10.31

Commission’s Analysis: 4.30 Regulation 21 of the RERC, Tariff Regulations, 2014 specifies as under:

“21. Interest and finance charges on long-term loans (1) The Loans arrived at in the manner indicated in regulation 19 shall be

considered as gross normative loan for calculation of interest on loan.

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…………. (3) The repayment for each year of the Control Period shall be deemed to

be equal to the depreciation allowed to that year. ………….. (5) The rate of interest shall be the weighted average rate of interest

calculated on the basis of the actual loan portfolio at the beginning of each year applicable to the regulated business of the Generation Company or Licensee as the case may be:

…………… (6) The interest on loan shall be calculated on the normative average loan

of the year by applying the weighted average rate of interest.

(7) The Generating Company or the Licensee shall make every effort to re-finance the actual loan as long as it results in net savings on interest and in that event the costs associated with such re-financing shall be borne by the beneficiaries and the net savings on interest shall be shared between the beneficiaries and the Generating Company or Licensee in the ratio of 2:1.

..………”

4.31 The Commission found that the opening loan balance for FY 2014-15 considered by the Petitioner is in variation with the closing loan balance of FY 2013-14 as was approved by the Commission in its Order dated 24.02.2016. The Commission in this order for computing the interest on loan for FY 2014-15 has considered the closing loan balance of FY 2013-14 as was approved by the Commission in its Order dated 24.02.2016.

4.32 The Petitioner in replies to the data gaps of additional capitalisation submitted that in FY 2014-15 and FY 2015-16 it has incurred an amount of Rs. 2.16 Crore and Rs. 3.06 Crore respectively towards foreign exchange fluctuation on external commercial borrowing and the same has been capitalised in accordance with Accounting Standards 11 issued by the Institute of Charted Accountants of India. Further, the Petitioner has requested the Commission to allow the same under the project cost or as finance charges on account of FERV under Regulation 28 of RERC, Tariff Regulations, 2014 in the year of expenditure, as in the present case no

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hedging was arranged for valid reasons. Regulation 28 of RERC, Tariff Regulations, 2014 stipulates as follows:

“28. Foreign Exchange Rate Variation (FERV) (1) Cost of hedging for foreign exchange variation towards interest payment

and loan repayment shall be allowed on year-to-year basis and shall be payable until due date of payments and be subject to prudence check of the Commission. The Applicant shall provide full particulars of such cost of hedging to the Commission.

(2) In case hedging has not been arranged due to valid reasons, FERV shall be provisionally estimated by the Commission for the purpose of determining tariff and shall be subject to adjustment as per actuals.”

4.33 The Commission observed that the amount of FERV claimed by the

Petitioner is towards the entire loan and also towards recast loan, instead of the impact being computed for the interest and repayment made during the year as per the provisions of Tariff Regulations. The Commission as of now has not considered the same. However, the impact of FERV on interest and repayment made during the year shall be considered at the time of truing up for the respective year. The Petitioner is directed to submit the complete details of impact of FERV along with computation for these years solely on account of interest and repayment made during the respective years.

4.34 The Commission has computed the interest on loan for FY 2014-15 to FY 2016-17 in accordance with RERC Tariff Regulations, 2014. Based on the Capital cost approved by the Commission in its order dated 24.02.2016 and the additional capitalisation/ deduction in assets approved by the Commission in this order for FY 2014-15 to FY 2016-17. For Additional Capitalisation / deduction in assets approved by the Commission in this Order, the Commission has considered the debt component of 75% same as taken by the Petitioner in the petition. Regarding the interest rate, the Commission has considered the weighted average rate of interest at the beginning of each year in accordance with the provision of RERC Tariff Regulations, 2014. The allowable depreciation for the year has been

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considered as the normative repayment for the year. The Interest on long term loan approved by the Commission for FY 2014-15 to FY 2016-17 is as shown in the table below:

Table 52: Interest on Loan approved by the Commission for FY 2014-15 to FY 2016-17 (Rs. Crore)


Opening Balance 3918.66 3658.56 3359.27 Receipts during the Year 37.85 -0.15 0.00 Repayment made during the Year 297.95 299.14 299.13 Closing Balance 3658.56 3359.27 3060.14 Weighted Average Interest Rate 11.53% 11.20% 10.62% Interest Paid 436.96 393.05 340.90

4.35 The Commission in its data gaps sought information regarding the refinancing. The Petitioner in replies to the queries sought by the Commission submitted the original and refinanced loan agreements along with the supporting documents to substantiate the cost incurred in refinancing.

4.36 The Commission analysed the information provided by the Petitioner and has approved the net savings in interest cost in proportion of average of opening and closing of debt approved by the Commission for FY 2013-14 to debt refinanced by the Petitioner as per its replies to the data gaps. Saving of interest on account of refinancing approved by the Commission is as shown in the table below:

Table 53: Saving of interest on account of refinancing approved by the Commission (Rs. Crores)

S.No. Particulars

1 Average of opening and closing debt for FY 2013-14 approved by the Commission (A)

3950.34

2 Total debt refinanced by the Petitioner (B) 4953.7

3 Ratio (C = B/A) 0.80

FY 2014-15 FY 2015-16 FY 2016-17

4 Sharing of Savings claimed by the Petitioner to be retained by Generating Company

10.21 11.08 10.31

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S.No. Particulars

5 Sharing of Savings of interest approved by the Commission to be allowed to Generating Company

8.15 8.84 8.22

Return on Equity RWPL’s Submission

4.37 The Petitioner submitted that RoE has been claimed at the rate of 15.50% as per Regulation 20(2) of the RERC Tariff Regulations, 2014.

4.38 The Petitioner submitted that Regulation 29 of the RERC Tariff Regulations, 2014 states that tax on income corresponding to the Return on Equity approved by the Commission shall be recovered from the beneficiary. Further, the Petitioner is eligible to claim deduction u/s 80IA of the Income Tax Act for all its 8 units and also has carried forward loss for set off. Hence, the provisions relating to payment of Minimum Alternative Tax (MAT), as provided in the Income Tax Act are applicable to the Petitioner. MAT rates considered by the Petitioner are 20.96%, 21.34% and 21.34% for FY 2014-15, FY 2015-16 and FY 2016-17 respectively. Accordingly, post-tax Return on Equity has been considered based on the MAT rate applicable on RoE and works out to be 19.61%, 19.71% and 19.71% for FY 2014-15, FY 2015-16 and FY 2016-17 respectively.

4.39 The Return on Equity for FY 2014-15 to FY 2016-17 claimed by the Petitioner is as shown in the table below:

Table 54: Return on Equity Claimed by RWPL for FY 2014-15 to FY 2016-17 (Rs. Crores)

S.No. Particulars FY 2014-15 FY 2015-16 FY 2016-17 1 Equity at the beginning of the year 1482.16 1504.80 1515.02 2 Capitalisation 90.55 40.88 27.28 3 Equity portion of Capitalisation 22.64 10.22 6.82 4 Equity at the end of the year 1504.80 1515.02 1521.84 Return Computation

5 Return on Equity at the beginning of the year 229.74 233.24 234.83

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S.No. Particulars FY 2014-15 FY 2015-16 FY 2016-17

6 Return on Equity portion of capitalisation (On pro-rata basis) 1.75 0.79 0.53

7 Total Return on Equity on actual equity as per books 231.49 234.04 235.36


4.40 Regulation 20 & 29 of the RERC Tariff Regulations, 2014 specifies as under:

“20. Return on Equity (1) Return on Equity shall be computed in rupee terms, on the equity

base determined in accordance with Regulation 19. (2) Return on Equity shall be computed at the base rate of 15.5% for

Generating Companies and Transmission Licensee, and at the base rate of 16% for distribution licensees.”

“29. Tax on Return on Equity (1) Tax on the income corresponding to Return on Equity approved by

the Commission for the generating company or the licensee, as the case may be, shall be directly recovered from the beneficiaries. Tax on the income shall be computed with reference to the total actual income tax paid by the generating company or the licensee as the case may be, on pro-rata basis with respect to return on equity. The tax on any other income stream (including efficiency gains, incentive, etc.) other than Return on Equity shall not be recovered from beneficiaries, and tax on such other income shall be payable by the generating company or licensee, as the case may be.”

4.41 The Commission has approved the Return on Equity for FY 2014-15 to FY

2016-17 in accordance with Regulation 20 & 29 of RERC Tariff Regulations, 2014. For computing the Return on Equity for FY 2014-15 and FY 2016-17, the Commission has considered the rate of 15.5% in accordance with the Regulation 20 of RERC, Tariff Regulations, 2014.

4.42 The Commission in this order has not approved tax on RoE in accordance with Regulation 29 of RERC Tariff Regulations, 2014.

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4.43 For Additional capitalisation/ deduction in assets approved by the Commission in this order, the Commission has considered the equity component at 25% as taken by the Petitioner in the petition. The Return on Equity approved by the Commission for FY 2014-15 to FY 2016-17 is as shown in the table below:

Table 55: RoE approved by the Commission for FY 2014-15 to FY 2016-17 (Rs. Crores)

Particulars FY 2014-15 FY 2015-16 FY 2016-17 Opening Equity 1482.19 1494.80 1494.75 Addition 12.62 -0.05 0 Closing equity 1494.80 1494.75 1494.75 Rate of RoE 15.50% 15.50% 15.50% RoE 230.72 231.69 231.69

Interest on Working Capital RWPL’s Submission

4.44 The Petitioner submitted that the interest on working capital for FY 2014-15 to FY 2016-17 has been claimed as per Regulation 27(1)(i)(a) of RERC Tariff, Regulations, 2014. Further, the rate of interest on working capital has been claimed as per Regulation 27(2) of RERC Tariff Regulations, 2014, i.e. by adding 250 basis points to average of SBI Base Rate prevalent during first half of FY 2013-14, FY 2014-15 and FY 2015-16 and accordingly the rate of interest on working capital for FY 2014-15, FY 2015-16 and FY 2016-17 works out to be 12.2%, 12.45% and 12.26% respectively. The Interest on working capital claimed by the Petitioner for FY 2014-15, FY 2015-16 and FY 2016-17 is as shown in the table below:

Table 56:Interest on Working Capital claimed by Petitioner for FY 2014-15 to FY 2016-17 (Rs. Crores)


As per petition 58.54 60.06 67.15

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4.45 The Commission has computed the interest on working capital in accordance with RERC Tariff Regulations, 2014.

4.46 Regulation 27 of RERC Tariff Regulations, 2014 states that the rate of interest on working capital to be computed on normative basis and shall be 250 basis points higher than the average base rate of State Bank of India prevalent during first six months of the year previous to the relevant year.

4.47 The Commission for the approval of interest on working capital for FY 2014-15 to FY 2016-17 has computed the rate of interest on working capital as per the norms prescribed in the RERC Tariff Regulations, 2014 and it works out to be 12.21%, 12.50%, 12.26% for FY 2014-15, FY 2015-16 FY 2016-17 respectively. The details of Interest on Working capital for FY 2014-15 to FY 2016-17 for RWPL are as shown in the table below:

Table 57: Details of Interest on Working Capital approved for FY 2014-15 to FY 2016-17 (Rs. Crore)

Particulars Duration

FY 2014-15 FY 2015-16 FY 2016-17 Claimed by the

Petitioner

Approved by the

Commission

Claimed by the

Petitioner

Approved by the

Commission

Claimed by the

Petitioner

Approved by the

Commission Lignite cost (pit head)

1/2 months

53.59 37.24 56.77 41.62 73.41 48.69

Limestone Cost

1.5 months 2.12 2.09 3.09 3.05 2.66 2.62

Secondary fuel oil 2 months 7.30 7.30 5.97 5.97 5.08 5.08

O& M expenses 1 month 19.98 19.71 21.41 21.02 22.59 22.20

Maintenance spares

20 % of O&M 47.94 47.31 51.39 50.46 54.22 53.29

Receivables 1.5

months 336.13 277.08 343.96 286.82 389.64 302.51

Working Capital Loan Requirement

467.06 390.72 482.59 408.95 547.60 434.39

Rate of Interest SBI PLR 12.21% 12.21% 12.45% 12.50% 12.26% 12.26%

Interest on working Capital

57.01 47.69 60.06 51.12 67.15 53.27

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4.48 The Interest on Working Capital approved by the Commission for FY 2014-15 to FY 2016-17 is as shown in the table below:

Table 58: Interest on Working Capital approved by the Commission for FY 2014-15 to FY 2016-17 (Rs. Crore)


As per petition 57.01 60.06 67.15

Approved 47.69 51.12 53.27

Insurance Charges RWPL’s Submissions

4.49 The Petitioner submitted that it has availed various policies to cover its operating units. Further, the insurance expenses for FY 2014-15 to FY 2016-17 has been claimed as per Regulation 25 of the RERC Tariff Regulations, 2014, according to which the actual insurance expenses as incurred by the Generating Company shall be allowed subject to a ceiling of 0.20% of the average Net Fixed Assets for the year.

4.50 The Petitioner further submitted that the insurance expenses claimed for FY 2014-15 to FY 2016-17 is lower than the ceiling limit of Rs. 10.59 Crore, Rs. 10.12 Crore and Rs. 9.61 Crore for FY 2014-15, FY 2015-16 and FY 2016-17 respectively based on the estimated net fixed Assets of Rs. 5296.7 Crore, Rs. 5062.2 Crore and Rs. 4793.77 Crore for FY 2014-15, FY 2015-16 and FY 2016-17 respectively.

4.51 The Insurance expenses claimed by the Petitioner is as shown in the Table below:

Table 59: Insurance Expenses claimed by RWPL for FY 2014-15 to FY 2016-17 (Rs. Crores)


As per petition 5.84 5.44 5.17

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4.52 The Petitioner provided the supporting documents for insurance charges claimed for FY 2014-15, FY 2015-16 and FY 2016-17 along with the petition. The Commission wile approving the insurance charges for FY 2014-15, FY 2015-16 and FY 2016-17 has scrutinised the submissions of the Petitioner. The Commission vide its letter dated 31.03.2017 sought some additional information from the Petitioner regarding the insurance expenses claimed by the Petitioner. The additional information sought from the Petitioner are as follows:

Ø Clarification on the basis of claiming the insurance charges for Jaipur office, when the capital cost towards the same was dis-allowed by the Commission in its order dated 24.02.2016.

Ø Clarification on the basis of claiming the Marine cargo policy, when the purpose of this policy i.e. maintenance work of equipment should be the part of O&M expenses.

Ø Reconciliation of other discrepancies in this matter.

4.53 The Petitioner vide its letter dated 08.05.2017 provided the above information sought by the Commission. In replies, the Petitioner provided the breakup of premium of Power plant and Jaipur office in the proportion of total sum insured for power plant and Jaipur office and the total premium of respective years. The breakup provided is as shown below:

Table 60: Breakup of insurance premium of Jaipur office and RWPL plant submitted by RWPL (in Rs.)

Period

Sum Insured Premium

RWPL Plant

Jaipur office

Total RWPL Plant

Jaipur office

Total

FY 2014-15 58,127,457 8,608,347 66,735,804 74,959 11,101 86,060

FY 2015-16 23,699,252 1,821,767 25,521,019 25,738 1,979 27,717

FY 2016-17 21,512,713 821,5151 22,334,228 17,424 665 18,089

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4.54 The Commission in this order has not allowed the premium of Jaipur office and the same has been deducted from the total insurance claimed for each year on the basis of break-up provided by the Petitioner.

4.55 Regarding marine cargo policy, the Petitioner submitted that various machineries are either sent out for repair of purchased from outside. In number of cases, the risk of transit is of Petitioner and accordingly, this policy has been taken and insurance premium has been claimed in the petition. Petitioner further submitted that it has also adjusted the refund amount if any, covered under the marine insurance policy towards insurance premium charges paid for marine policy.

4.56 The Commission in this order for allowing the insurance charges for FY 2014-15 to FY 2016-17 has deducted the insurance premium of Jaipur office as submitted by the petition from the claimed Insurance premium of FY 2014-15 to FY 2016-17.

4.57 The Insurance charges approved by the Commission for FY 2014-15 to FY 2016-17 is as shown in the table below:

Table 61:Insurance Charges approved by the Commission for FY 2014-15 to FY 2016-17 (Rs. Crore)

Particular FY 2014-15 FY 2015-16 FY 2016-17 As per petition 5.84 5.44 5.17 Approved 5.84 5.44 5.17

Non-Tariff Income RWPL’s Submissions

4.58 The Petitioner submitted that the non-tariff income for FY 2014-15 and FY 2015-16 has been claimed based on the actual non-tariff income earned as per the Audited accounts of the respective years. For FY 2016-17, the Petitioner has claimed the estimated non-tariff income. The non-tariff income claimed by the Petitioner for FY 2014-15 to FY 2016-17 is as show in the table below:

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Table 62: Non-Tariff income claimed by RWPL for FY 2014-15 to FY 2016-17 (Rs. Crore)

Particulars FY 2014-15 FY 2015-16 FY 2016-17 Income from sale of Scrap 1.42 0.75 0.75 Insurance Claim Received 0.01 1.43 0.00 Other Miscellaneous receipts 0.02 0.43 0.43

Total 1.45 2.61 1.18


4.59 The Commission found that the Petitioner while claiming the non-tariff income has not considered the interest from FDs whereas as per Regulation 36 (1) of RERC Tariff Regulations, 2014 interest on FDs is a part of Non-tariff income. Therefore, the Commission in this Order has approved the Non-Tariff income for FY 2014-15 to FY 2016-17 in accordance with Regulation 36 (1) of the RERC Tariff Regulations, 2014 considering the annual audited accounts for FY 2014-15 and FY 2015-16. For FY 2016-17, the Commission has approved the non-tariff income as claimed by the Petitioner and further added the interest from FDs equivalent to interest on FDs for FY 2015-16 as per accounts. The Non-Tariff income approved by the Commission is as shown in the table below:

Table 63: Non-Tariff Income approved by the Commission for FY 2014-15 to FY 2016-17 (Rs. Crore)

Particular FY 2014-15 FY 2015-16 FY 2016-17 As per petition 1.45 2.61 1.18 Approved 1.94 6.75 5.32

Annual Fixed Charges

4.60 Based on the above analysis, the approved fixed charges for RWPL for FY 2014-15, FY 2015-16 and FY 2016-17 are as under:

Table 64:Annual Fixed Charges for FY 2014-15 to FY 2016-17 (Rs. Crores)

Parameters Unit

FY 2014-15 FY 2015-16 FY 2016-17


Claim Approved RWPL Claim Approved

Interest on Term Rs Crs 438.65 436.96 397.91 393.05 347.87 340.90

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Parameters Unit

FY 2014-15 FY 2015-16 FY 2016-17


Claim Approved RWPL Claim Approved

Loans

Depreciation Rs Crs 298.67 297.95 301.77 299.14 303.22 299.13 O & M Expenses Rs Crs 228.53 228.53 241.90 241.90 256.05 256.05 Special O&M Rs Crs 11.18 8.00 15.04 10.40 15.04 10.40 Return on Equity Rs Crs 231.49 230.72 234.04 231.69 235.36 231.69 Tax on ROE Rs Crs 61.39 0.00 63.50 0.00 63.86 0.00 Interest on WC Rs Crs 57.01 47.69 60.06 51.12 67.15 53.27

Recovery of ARR & Tariff petition fees Rs Crs 0.54 0.54 0.54 0.54 0.54 0.54

Insurance Charges Rs Crs 5.84 5.84 5.44 5.44 5.17 5.17 Sharing in interest saved on account of re financing

Rs. Crs 10.21 8.15 11.08 8.84 10.31 8.22

Gross Fixed Charges Rs Crs 1343.50 1264.38 1331.27 1242.11 1304.57 1205.37

Non-Tariff Income Rs Crs 1.45 1.94 2.61 6.75 1.18 5.32 Net Fixed Cost (i.e. Capacity Charges) Rs Crs 1342.06 1262.44 1328.66 1235.36 1303.39 1200.05

Per Unit Fixed Cost(Rs/kWh)

Rs/kWh 1.887 1.775 1.814 1.686 1.747 1.608

Determination of Variable Charges for FY 2014-15 to FY 2016-17 Petitioner’s Submissions

4.61 The Petitioner submitted that the normative availability/PLF has been claimed as per Regulation 45 of the RERC Tariff Regulations, 2014 considering the actual COD of the project.

4.62 The Petitioner submitted that, the transfer price of lignite of Rs. 1981.21/MT, Rs. 2037.52/MT and Rs. 2685.38/MT for FY 2014-15, FY 2015-16 and FY 2016-17 respectively has been considered based on the petition no. 609/16 and 593/16 filed by Barmer Lignite Mining Company Limited (BLMCL) for determination of final transfer price of Lignite for the said financial years.

4.63 The Petitioner submitted that the GCV of lignite from Kapurdi mine for FY 2014-15 to FY 2016-17 has been considered as 2692 kcal/kg as approved

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by the MOC while approving the mining plan for 7 MTPA based on the petition No. 609/16 and 593/16 filed by BLMCL for the approval of final transfer price of lignite for FY 2014-15 to FY 2016-17.

4.64 The Petitioner submitted that the Gross Station Heat Rate for FY 2014-15 to FY 2016-17 has been considered as per Regulation 45(3) (b) of the Tariff Regulations, 2014 after considering the moisture content in lignite as the actual average moisture content of preceding three months i.e. January, February and March of year 2014, 2015 and 2016. The SHR claimed by the Petitioner is as shown in the table below:

Table:65: SHR claimed by the Petitioner for FY 2014-15 to FY 2016-17 Particulars Units FY 2014-15 FY 2015-16 FY 2016-17

Gross Turbine Cycle Heat Rate kCal/kWh 2008.16 2008.16 2008.16

Boiler Efficiency % 79.30% 79.30% 79.30%

Design Heat rate of Unit kCal/kWh 2532.36 2532.36 2532.36

Conversion factor as per Regulation 45 (3)(b) 1.045 1.045 1.045

Normative Station Heat Rate kCal/kWh 2646.31 2646.31 2646.31 Multiplying factor for moisture content @ 45% as per Regulation 45 (3) (b) 1.085 1.085 1.085

Design heat rate before multiplying for moisture content kCal/kWh 2439.00 2439.00 2439.00

Actual Average Moisture Content for preceding three months % 38.82% 39.42% 41.10%

Moisture Correction factor for actual moisture 1.066 1.068 1.073 Gross Station Heat Rate after moisture correction kCal/kWh 2601.12 2605.49 2617.81

4.65 The Petitioner submitted that the normative lime stone consumption for FY

2014-15, FY 2015-16 and FY 2016-17 has been considered as per Regulation 45(5) of the RERC, Tariff Regulations, 2014, after considering the average sulphur content of preceding three months i.e. January, February and March of year 2014, 2015 and 2016.

4.66 The Petitioner submitted that the landed cost of lime for FY 2014-15, FY 2015-16 and FY 2016-17 has been considered based on the actual average landed cost of limestone purchased during the month of January, February and March of year 2014, 2015 and 2016.

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4.67 The Petitioner submitted that the weighted average landed cost of LDO for FY 2014-15, FY 2015-16 and FY 2016-17 has been considered based on the actual average landed cost of LDO purchased during the month of January, February and March of year 2014, 2015 and 2016.

4.68 The Petitioner submitted that the GCV of secondary fuel (LDO) for FY 2014-15 and FY 2015-16 has been considered on actual basis and for FY 2016-17 the actual GCV of FY 2015-16 has been considered.


4.69 The Commission has approved the variable charges for FY 2014-15 to FY 2016-17 on the basis of following:

(a) The Commission has approved the auxiliary consumption for FY 2014-15 to FY 2016-17 as per Regulation 45 (6) (d) of the RERC Tariff Regulations, 2014.

(b) The Commission through the data gaps circulated on 25.10.2016 directed the Petitioner to submit the supporting documents for the actual moisture content of lignite, sulphur content of lignite, landed price of limestone, GCV of secondary fuel oil and landed price of LDO for the month of January to March of the year 2014, 2015 and 2016. The Petitioner in reply to the data gaps vide its letter dated 30.01.2017 submitted the supporting documents sought by the Commission. The Commission observed that the details submitted by the Petitioner in “Form 5.1” tally with the details from the supporting documents. Therefore, the Commission has considered the fuel parameters as provided in “Form 5.1” for computation of variable charges for FY 2014-15 to FY 2016-17.

(c) For LDO, the Petitioner in reply to the data gaps, submitted the GCV and rate of LDO for the months of April to March for FY 2014-15 and FY 2015-16. Therefore, for LDO, the Commission has considered the revised submission of the Petitioner.

(d) The Commission has approved the SHR for FY 2014-15 to FY 2016-17 as per the Regulation 45(3)(b) and Annexure- 2, as extracted below:

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“45(3) Gross Station Heat Rate – (a) …….. (b) Gross Station Heat Rate for new Thermal Generating stations/units

achieving COD on or after 01.04.2009 till 31.03.2014: Coal and lignite based thermal power generating stations

= 1.045 X Design Heat Rate (kcal/kWh). Where the Design Heat Rate of a Unit means the Unit heat rate guaranteed by the supplier at conditions of 100% MCR, zero percent make up, design coal and design cooling water temperature/back pressure:

Provided further that where Unit heat rate has not been guaranteed but turbine cycle heat rate and boiler efficiency are guaranteed separately by the same supplier or different suppliers, the Unit design heat rate shall be arrived at by using guaranteed turbine cycle heat rate and boiler efficiency:

Provided further that where Unit heat rate has not been guaranteed and turbine cycle heat rate and boiler efficiency guaranteed by the supplier is also not available the design heat rate shall not exceed the limit as specified under Annexure- 2

In case of lignite-fired generating stations, maximum design heat rate shall be increased using factor for moisture content as given below. (i) For lignite having 50% moisture: Multiplying factor of 1.10 (ii) For lignite having 40% moisture: Multiplying factor of 1.07 (iii) For lignite having 30% moisture: Multiplying factor of 1.04 (iv) For other values of moisture content, multiplying factor shall be pro-rated for moisture content between 30-40 and 40-50 depending upon the rated values of multiplying factor for the respective range given under sub-sub-regulations (i) to (iii) above. (v) Moisture content shall be determined at the stage of firing.

Provided that the heat rate norms computed as per above shall be limited to the heat rate norms approved during FY 2009-10 to FY 2013-14.”

(e) Regarding the design heat rate, the Commission is of the view that design parameters of a plant cannot be changed from time to time and only the moisture content can have its impact on the performance. Therefore, as the Commission vide its order dated 13.11.2009 has already approved the design heat rate of 2300 Kcal/kWh, the same has been considered by the Commission in this order also and thereafter the moisture correction factor has been taken in accordance with RERC Tariff Regulations, 2014 for computing the Station Heat Rate to be allowed. Further, the APTEL in its

Page 110 of 115 RERC/816/16

judgement dated 15.12.2011 under Appeal No. 182 of 2010 filed by the Petitioner against the Commission’s order dated 13.11.2009 ruled as under:

“ 14. …….. (iii) Station Heat Rate: We are in agreement with the findings of the State Commission

that the Design Rate is subject to the ceiling of 2300 kCal/kWh as specified under Regulation 26 (ii)(B)(a) of the Central Commission’s Regulation, 2009. However, the Station Heat Rate has to be corrected for moisture content in coal according to Regulation 43(3)(b) as per the fourth proviso to Appendix 2. “

(f) Therefore, the commission in this order has considered the design heat rate of 2300 kcal/kWh as per the Commission’s order dated 13.11.2009.

(g) The SHR approved by the Commission is as shown in the table below:

Table 66:Normative SHR approved by the Commission for FY 2014-15 to FY 2016-17

Computation of SHR as per regulations as approved by the Commission for FY 2014-15 to FY 2016-17 Particulars Unit Approved

Design Heat Rate kCal/kWh 2300.00 Allowable Design Heat Rate kCal/kWh 2300.00 SHR (1.045* DHR) kCal/kWh 2403.50

(h) The Regulation 45(3)(b) provides the correction factor for moisture content of 30% and above. As per the Petitioner’s submission the actual moisture content is more than 30%. As, the moisture content in this case is more than 30%, so the Commission has considered a correction factor on pro-rata basis. The SHR approved by the Commission is as shown in the table below:

Table 67: SHR including the correction factor for moisture content approved by the Commission for FY 2014-15 to FY 2016-17

Description Unit

As approved

by Commission (FY 2014-15)

As approved


As approved


Allowable SHR kcal/kWh 2403.50 2403.50 2403.50 Moisture Content % 38.82% 39.42% 41.10% Multiplying factor for moisture content 1.06647 1.06826 1.07331

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Description Unit

As approved


As approved


As approved


SHR allowed by the Commission after Considering the Moisture content

kcal/kWh 2563.26 2567.57 2579.71

(i) Petitioner has claimed transfer price of lignite based on the pending petition No. 609/16 and 593/16 filed by BLMCL. However, it is observed that these petitions are yet to be decided, therefore, Commission has considered the adhoc/interim lignite transfer price allowed in respective years.

(j) The variable charges computed by the Commission for FY 2014-15, FY 2015-16 and FY 2016-17 are as shown in the table below:

Table 68: Variable Charges approved by the Commission for FY 2014-15 to FY 2016-17

Particulars Units FY 2014-15 FY 2015-16 FY 2016-17


Petition Approved RWPL Petition Approved

Gross Generation MU 7112.53 7112.53 7325.24 7325.24 7461.07 7461.07

Auxiliary Consumption % 11.50% 11.50% 11.50% 11.50% 11.50% 11.50%

Net Generation MU 6294.58 6294.59 6482.83 6482.83 6603.05 6603.05

SHR kcal/kWh 2601.12 2563.26 2605.49 2567.57 2617.81 2579.71 Average Sulphur Content in Lignite % 0.54% 0.54% 0.73% 0.73% 0.62% 0.62%

Weighted average GCV of Lignite kcal/kg 2839.27 2839.27 2844.11 2844.11 2966.20 2966.20

Weighted average GCV of Oil kcal/ltr. 9411.33 9411.33 9343.15 9343.15 9325.75 9325.75

Secondary fuel oil consumption ml/kWh 1.00 1.00 1.00 1.00 1.00 1.00

Specific Lignite consumption kg/kWh 0.91 0.90 0.91 0.90 0.88 0.87

Lime stone consumption kg/kWh 0.03 0.03 0.04 0.04 0.03 0.03

Price of Oil Rs./kL 61544.09 61544.09 48912.58 48912.58 40884.33 40884.33

Price of Lignite Rs./MT 1981.21 1397 2037.52 1516.15 2685.38 1807.39

Price of Lime stone Rs./MT 866.51 866.51 904.30 904.30 937.84 937.84

Cost of Oil per unit Rs./kWh 0.070 0.070 0.055 0.055 0.046 0.046

Cost of Lignite per unit Rs./kWh 2.043 1.420 2.102 1.541 2.668 1.770

Cost of lime per unit Rs./kWh 0.027 0.027 0.038 0.038 0.032 0.032

Rate of Energy Charge Rs./kWh 2.140 1.516 2.195 1.634 2.747 1.848

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4.70 Accordingly, the tariff for FY 2014-15 to FY 2016-17 for RWPL for the present works out as follows:

Table 69:Approved tariff For FY 2014-15 to FY 2016-17


Petition Approved Petition Approved Petition Approved Fixed Charges (Rs. Crore) 1342.06 1262.44 1328.66 1235.36 1303.39 1200.05

Fixed Charges(Rs./kWh) 2.132 2.006 2.050 1.906 1.974 1.817 Variable Charges (Rs. Crore) 1347.00 954.21 1422.99 1059.20 1813.72 1220.01 Variable Charges(Rs/kWh) 2.140 1.516 2.195 1.634 2.747 1.848 Total Tariff 4.272 3.522 4.245 3.539 4.721 3.665

4.71 The Commission directs RWPL to bill/adjust the difference in tariff

approved by the Commission in this order and the tariff charged by RWPL as provisionally approved by the Commission for the period FY 2014-15 to FY 2016-17.

4.72 A copy of this order may be sent to the Petitioner, Respondents, Objector, CEA and Government of Rajasthan.

(R. P Barwar) (Vinod Pandya) (Vishvanath Hiremath) Member (T) Member (F) Chairman

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Annexure-1 Abbreviations

Abbreviation Act Electricity Act, 2003 AFC Annual Fixed Charges APR Annual Performance Review APTEL Appellate Tribunal for Electricity ARR Aggregate Revenue Requirement AVVNL Ajmer Vidyut Vitran Nigam Limited BoP Balance of Plant BTG Boiler, Turbine & Generator CAG Comptroller & Auditor General CEA Central Electricity Authority CHP Coal Handling Plant CoD Commercial Operation Date DISCOMs Distribution Companies FPA Fuel Price Adjustment FY Financial Year GCV Gross Calorific Value GFA Gross Fixed Assets GoR Government of Rajasthan IDC Interest during Construction JVVNL Jaipur Vidyut Vitran Nigam Limited kCal kilo calorie kL kilo Litre kW kilo Watt kWh kilo Watt hour LD Liquidated Damages LDO Light Diesel Oil MoM Minutes of Meeting MT Metric Ton MU Million Units MW Mega Watt MYT Multi Year Tariff O&M Operation & Maintenance P&L Profit and Loss PLF Plant Load Factor PPA Power Purchase Agreement R&M Repair and Maintenance HCSD High Concentration Slurry Disposal

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RERC Rajasthan Electricity Regulatory Commission ROE Return on Equity RVPNL Rajasthan Rajya Vidyut Prasaran Nigam Limited SBI State Bank of India SCM Standard cubic meter SFOC Secondary Fuel Oil Consumption SHR Station Heat Rate TPS Thermal Power Station YoY Year on Year IGNP Indra Gandhi Nahar Project

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Annexure-2 Index

Section/ Para/ Annexure Particulars Page

No.

Section 1 Summary of Aggregate Revenue Requirement (ARR) and Tariff determination process.

3 - 4

Section 2

Summary of objections/comments/ suggestions received from Stakeholders and RWPL’s response on the instant petition.

5 - 34

Section 3 Additional Capitalisation for FY 2014-15, 2015-16 and 2016-17 35-86

Section 4 Determination of ARR and Tariff for RWPL (Units 1 to 8) for FY 2014-15, FY 2015-16 and FY 2016-17.

87 - 112

Annexure 1 Abbreviations 113-114

Annexure 2 Index 115

Documents

RAJASTHAN ELECTRICITY REGULATORY COMMISSIONrerc.rajasthan.gov.in/TariffOrders/Order266.pdf · determination of ARR and Tariff for FY 2014-15 to FY 2016-17 for its 1080 MW (8 × 135)