MERC Order in Case No. 32 of 2016 Page 1 of 224
Before the
MAHARASHTRA ELECTRICITY REGULATORY COMMISSION
13th Floor, Centre No.1, World Trade Centre, Cuffe Parade, Mumbai- 400 005
Tel: 022 - 22163964/65/69 Fax: 022 - 22163976
E-mail: [email protected]
Website: www.merc.gov.in / www.mercindia.org.in
CASE No. 32 of 2016
In the matter of
Petition of Tata Power Company Ltd. (Generation) for Truing-up of FY 2014-15,
Provisional Truing-up for FY 2015-16 and ARR and Tariff for the 3rd Control
Period FY 2016-17 to FY 2019-20
CORAM
Shri Azeez M. Khan, Member
Shri Deepak Lad, Member
ORDER
Date: 8 August, 2016
The Tata Power Company Limited (Generation Business) (TPC-G) has, under Regulation 5 of
the MERC (Multi Year Tariff (MYT)) Regulations (‘MYT Regulations’), 2015, filed its Petition
for Truing-up of FY 2014-15, Provisional Truing-up of FY 2015-16 and Aggregate Revenue
Requirement (ARR) and Tariff for the 3rd
Control Period from FY 2016-17 to FY 2019-20. The
Truing-up for FY 2014-15 and Provisional Truing-up for FY 2015-16 is approved under the
MYT Regulations, 2011, while the ARR forecast and Tariff for FY 2016-17 to FY 2019-20 are
as per MYT Regulations, 2015. The original Petition was filed on 11 February, 2016. TPC-G
filed a revised Petition on 24 March, 2016.
The Commission, in exercise of its powers under Sections 61 and 62 of the Electricity Act (EA),
2003 and all other powers enabling it in this behalf, and after considering the submissions made
by TPC-G, suggestions and objections received, issues raised during the Public Hearing and
other relevant material, issues the following Order.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 2 of 224
TABLE OF CONTENTS
1 BACKGROUND AND REGULATORY PROCEEDINGS .............................................................. 16
1.1. Background ................................................................................................................................. 16
1.2. MYT Regulations, 2011 .............................................................................................................. 16
1.3. Business Plan Order for MYT 2nd
Control Period ...................................................................... 16
1.4. Truing-up of FY 2011-12 and ARR for 2nd
Control Period FY 2012-13 to FY 2015-16 ........... 16
1.5. Truing-up of FY 2012-13 and FY 2013-14, Provisional Truing-up of FY 2014-15 and
Projection of ARR and Tariff for FY 2015-16 ........................................................................................ 17
1.6. MYT Regulations, 2015 .............................................................................................................. 17
1.7. Admission of the Petition and Public Consultation Process ....................................................... 17
1.8. Organisation of the Order ........................................................................................................... 19
2 SUGGESTIONS/ OBJECTIONS RECEIVED, TPC-G’S RESPONSE AND COMMISSION’S
VIEW .......................................................................................................................................................... 21
2.1 Fuel Prices ................................................................................................................................... 21
2.2 Competitive Bidding for Power Purchase ................................................................................... 24
2.3 Blended Tariff for Unit-7 ............................................................................................................ 26
2.4 GT Losses ................................................................................................................................... 27
2.5 Colony Consumption .................................................................................................................. 28
2.6 Unit-7 PLF for 3rd
Control Period ............................................................................................... 29
2.7 Foreign Exchange Loss ............................................................................................................... 29
2.8 Income Tax ................................................................................................................................. 30
2.9 Capital Expenditure and Capitalisation ....................................................................................... 31
2.10 O&M Expenses ........................................................................................................................... 33
2.11 Sharing of Unit-6 Fixed Cost ...................................................................................................... 34
2.12 Delayed Payment Charges .......................................................................................................... 35
2.13 Force Majeure in case of Units 7 and 8....................................................................................... 35
2.14 Incentive for Backing Down of Units ......................................................................................... 37
2.15 Property Tax ................................................................................................................................ 37
2.16 Recovery of Fixed Cost for Bhira Hydro Station ........................................................................ 38
2.17 Submissions for 3rd
Control Period ............................................................................................. 39
2.18 Shortcomings in Petition Filing .................................................................................................. 41
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 3 of 224
3 IMPACT OF ATE JUDGMENTS ON PREVIOUS YEARS’ TRUE-UP ......................................... 42
3.1 Appeal challenging MTR Order dated 26 June, 2015 in Case 6 of 2015 ................................... 42
4 TRUING-UP FOR FY 2014-15 .......................................................................................................... 49
4.1 Background ................................................................................................................................. 49
4.2 Performance Parameters ............................................................................................................. 49
4.3 Performance of Units-4 to 7 and Hydro Stations ........................................................................ 49
4.3.1 Availability and Gross Generation ...................................................................................... 49
4.3.2 Auxiliary Energy Consumption .......................................................................................... 52
4.3.3 Gross Station Heat Rate ...................................................................................................... 61
4.3.4 Fuel Cost ............................................................................................................................. 63
4.3.5 Fuel Cost of Unit-6 under MSLDC Directions ................................................................... 66
4.3.6 Entry Tax ............................................................................................................................ 67
4.3.7 Operation and Maintenance Expenses ................................................................................ 68
4.3.8 Capital Expenditure and Capitalisation ............................................................................... 73
4.3.9 Non-DPR Capitalisation for FY 2010-11 to FY 2013-14 ................................................... 75
4.3.10 Depreciation ........................................................................................................................ 79
4.3.11 Interest on Long-term Loans ............................................................................................... 81
4.3.12 Return on Equity ................................................................................................................. 83
4.3.13 Interest on Working Capital ................................................................................................ 84
4.3.14 Income Tax ......................................................................................................................... 85
4.3.15 Non-Tariff Income .............................................................................................................. 87
4.3.16 Revenue from Sale of Power .............................................................................................. 87
4.3.17 PLF Incentive for Thermal Station and Hydro Incentive for Hydro Stations ..................... 88
4.3.18 Reduction of Fixed Charges on account of lower Availability of Unit-7 ........................... 89
4.3.19 Sharing of Gains / Losses for FY 2014-15.......................................................................... 93
4.3.20 Gains / Losses on account of fuel costs .............................................................................. 93
4.3.21 Gains / Losses on account of Auxiliary Consumption ........................................................ 94
4.3.22 Gains / Losses on account of O&M Expenses .................................................................... 95
4.3.23 Net Entitlement, and resultant Gap/ Surplus for Units 4 to 7 and Hydro Stations .............. 97
4.4 Performance of Unit-8 ................................................................................................................ 99
4.4.1 Gross Generation................................................................................................................. 99
4.4.2 Auxiliary Energy Consumption ........................................................................................ 100
4.4.3 Gross Station Heat Rate .................................................................................................... 100
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 4 of 224
4.4.4 Fuel Cost ........................................................................................................................... 101
4.4.5 Operation and Maintenance Expenses .............................................................................. 102
4.4.6 Capital Expenditure and Capitalisation ............................................................................. 103
4.4.7 Non-DPR Capitalisation for FY 2011-12 to FY 2013-14 ................................................. 104
4.4.8 Depreciation ...................................................................................................................... 106
4.4.9 Interest on Long-term Loan .............................................................................................. 107
4.4.10 Return on Equity ............................................................................................................... 109
4.4.11 Interest on Working Capital .............................................................................................. 110
4.4.12 Income Tax ....................................................................................................................... 110
4.4.13 Non-Tariff Income ............................................................................................................ 111
4.4.14 Revenue from Sale of Power ............................................................................................ 111
4.4.15 Reduction of Fixed Charges on account of lower Availability of Unit-8 ......................... 112
4.4.16 Sharing of Gains / Losses for FY 2014-15........................................................................ 119
4.4.17 Gains / Losses on account of fuel cost .............................................................................. 119
4.4.18 Efficiency Gains / Losses on account of Auxiliary Energy Consumption ........................ 119
4.4.19 Efficiency Gains / Losses on account of O&M Expenses ................................................ 120
4.4.20 Net Entitlement, and resultant Revenue Gap/ Surplus for Unit-8 ..................................... 121
5. PROVISIONAL TRUE-UP OF ARR FOR FY 2015-16 .................................................................. 124
5.1 Background ........................................................................................................................... 124
5.2 Performance Parameters ....................................................................................................... 124
5.3 Performance Parameters of TPC-G’s Generating Station/ Units .......................................... 124
5.3.1 Availability ....................................................................................................................... 124
5.3.2 Gross Generation............................................................................................................... 126
5.3.3 Auxiliary Energy Consumption ........................................................................................ 128
5.3.4 Gross Station Heat Rate .................................................................................................... 130
5.3.5 Design Energy for Hydro Generating Stations ................................................................. 132
5.3.6 Fuel Price and Calorific Value .......................................................................................... 134
5.3.7 Fuel Cost ........................................................................................................................... 135
5.3.8 Fuel Cost of Unit-6 operating under MSLDC Directions ................................................. 135
5.3.9 Entry Tax .......................................................................................................................... 136
5.3.10 Operation and Maintenance Expenses .............................................................................. 136
5.3.11 Capital Expenditure and Capitalisation ............................................................................. 137
5.3.12 Depreciation ...................................................................................................................... 141
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 5 of 224
5.3.13 Interest on Long-term Loan .............................................................................................. 142
5.3.14 Return on Equity ............................................................................................................... 144
5.3.15 Interest on Working Capital .............................................................................................. 145
5.3.16 Income Tax ....................................................................................................................... 146
5.3.17 Non-Tariff Income ............................................................................................................ 147
5.3.18 PLF Incentive for Thermal Station ................................................................................... 147
5.3.19 Provisional Truing-up for FY 2015-16 ............................................................................. 148
5.4 Past Recoveries from Distribution Licensees ....................................................................... 149
5.4.1 Incentive for backing down instructions from MSLDC for FY 2011-12 to FY 2013-14 . 149
5.4.2 Fuel Cost of Unit-6 under MSLDC Directions ................................................................. 150
5.4.3 Other Past Recoveries from Distribution Licensees ......................................................... 151
6. ARR FOR 3RD CONTROL PERIOD FROM FY 2016-17 TO FY 2019-20 .................................. 158
6.1 Background ............................................................................................................................... 158
6.2 Performance Parameters ........................................................................................................... 158
6.3 Generating Stations ................................................................................................................... 158
6.4 Performance Parameters ........................................................................................................... 159
6.4.1 Availability ....................................................................................................................... 159
6.4.2 Gross Generation............................................................................................................... 160
6.4.3 Auxiliary Energy Consumption ........................................................................................ 162
6.4.4 Gross Station Heat Rate .................................................................................................... 166
6.4.5 Fuel Cost ........................................................................................................................... 168
6.4.6 Operation and Maintenance Expenses .............................................................................. 172
6.4.7 Capital Expenditure and Capitalisation ............................................................................. 176
6.4.8 Depreciation ...................................................................................................................... 180
6.4.9 Interest on Long-term Loan .............................................................................................. 182
6.4.10 Return on Equity ............................................................................................................... 185
6.4.11 Interest on Working Capital .............................................................................................. 188
6.4.12 Income Tax ....................................................................................................................... 190
6.4.13 Non-Tariff Income ............................................................................................................ 191
6.4.14 Fixed Cost of Unit-4 ......................................................................................................... 193
6.4.15 Summary of Annual Fixed Charges .................................................................................. 194
7. MULTI-YEAR TARIFF FOR 3RD CONTROL PERIOD FROM FY 2016-17 TO FY 2019-20 ... 196
7.1 AFC for TPC-G ......................................................................................................................... 196
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 6 of 224
7.2 Energy Charges for Thermal Generating Units ........................................................................ 201
7.3 Capacity Charges and Energy Charges for Hydro Generating Units ........................................ 201
8. COMPLIANCE OF DIRECTIVES IN MTR ORDER ..................................................................... 204
8.1 Non-DPR Capitalisation ........................................................................................................... 204
8.2 Section 80 IA of Income Tax Act ............................................................................................. 206
8.3 BHEL Circular .......................................................................................................................... 206
8.4 Replacement of Blades.............................................................................................................. 207
8.5 Operating Conditions ................................................................................................................ 209
9. SUMMARY OF THE RULINGS ..................................................................................................... 212
9.1 Carrying Cost on impact of ATE Judgment .............................................................................. 212
9.2 True-up For FY 2014-15 ........................................................................................................... 212
9.2.1 Performance of Unit-8 ...................................................................................................... 213
9.3 Provisional True-up for FY 2015-16 ........................................................................................ 215
9.4 Past Recoveries from Distribution Licensees ........................................................................... 215
9.5 ARR for the 3RD
Control Period from FY 2016-17 TO FY 2019-20 ........................................ 217
10. DIRECTIVES ................................................................................................................................... 220
10.1 Imported Coal Purchase ............................................................................................................ 220
10.2 Expiry of PPA ........................................................................................................................... 220
11. APPLICABILITY OF ORDER ........................................................................................................ 221
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 7 of 224
LIST OF TABLES
Table 1: Potential Impact of ATE Appeal 244 of 2015 as submitted by TPC-G ........................................ 42
Table 2: Potential Impact of ATE Appeal 244 of 2015 as submitted by TPC-G ....................................... 43
Table 3: Potential Impact of ATE Appeal 244 of 2015 including carrying cost as submitted by TPC-G . 45
Table 4: Revised Tax Computation for FY 20-14-15 as submitted by TPC-G .......................................... 46
Table 5: Gross Generation and Availability certified by MSLDC for FY 2014-15 ................................... 50
Table 6: Summary of Availability for Units 4 to 7 and Hydro Stations for FY 2014-15 as approved by
Commission ................................................................................................................................................ 51
Table 7: Summary of Gross Generation for Units 4 to 7 and Hydro Stations for FY 2014-15 as approved
by Commission ........................................................................................................................................... 51
Table 8: Auxiliary Energy Consumption for FY 2014-15 as submitted by TPC-G ................................... 52
Table 9: Unit-4Auxiliary Energy Consumption for FY 2014-15 as submitted by TPC-G ......................... 52
Table 10: Auxiliary Energy Consumption of Hydro Stations for FY 2014-15 as submitted by TPC-G .... 54
Table 11: Auxiliary Energy Consumption for nallah diversion as submitted by TPC-G for FY 2014-15 . 54
Table 12: Actual GT Losses for FY 2014-15 as submitted by TPC-G ....................................................... 55
Table 13: Headworks consumption as submitted by TPC-G ...................................................................... 56
Table 14: Hydro Auxiliary Energy Consumption for FY 2014-15 as submitted by TPC-G ...................... 57
Table 15: Normative Auxiliary Energy Consumption for Hydro Generating Stations as approved by
Commission for FY 2014-15 ...................................................................................................................... 61
Table 16: Auxiliary Energy Consumption for FY 2014-15 as approved by Commission .......................... 61
Table 17: SHR for Unit-6 for FY 2014-15 as submitted by TPC-G ........................................................... 62
Table 18: Actual SHR for Unit-6 under different modes of operation, as submitted by TPC-G for FY
2014-15 ....................................................................................................................................................... 62
Table 19: Unit-wise SHR for 2014-15 approved by Commission .............................................................. 63
Table 20: Break-up of Fuel Cost, as submitted by TPC-G for FY 2014-15 ............................................... 63
Table 21: Fuel Parameters as approved by Commission for FY 2014-15 .................................................. 64
Table 22: Fuel Cost Reconciliation as submitted by TPC-G for FY 2014-15 ........................................... 65
Table 23: Fuel Cost for Units 4 to 7 for FY 2014-15 as approved by Commission .................................. 65
Table 24: Impact of Entry Tax as submitted by TPC-G for FY 2014-15 ................................................... 68
Table 25: Recovery of Entry Tax, as approved by Commission ................................................................ 68
Table 26: Employee Expenses for Trombay Units 4-7 &Hydro Stations for FY 2014-15 ........................ 69
Table 27: Summary of O&M Expenses for FY 2014-15 as approved by Commission ............................. 72
Table 28: Non-DPR Schemes not considered for Capitalisation ............................................................... 74
Table 29: Capitalisation approved by Commission for FY 2014-15 ......................................................... 75
Table 30: Summary of Merged DPRs, as submitted by TPC-G ................................................................ 76
Table 31: Summary of Merged Non-DPR Capitalisation now approved by Commission for Units 4 to 7
and Hydro Generating Stations .................................................................................................................. 78
Table 32: Non-DPR Capitalisation for Units 4 to 7 and Hydro Generating Stations as approved by
Commission for FY 2010-11 to FY 2013-14 ............................................................................................. 78
Table 33: Depreciation as approved by Commission for FY 2014-15 ...................................................... 80
Table 34: Details of Fresh Loans for FY 2014-15 ...................................................................................... 81
Table 35: Allocation of Loans as submitted by TPC-G ............................................................................. 81
Table 36: Interest on Long-term Loans as approved by the Commission for FY 2014-15 ....................... 83
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 8 of 224
Table 37: Return on Equity as approved by the Commission for FY 2014-15 .......................................... 84
Table 38: Interest on Working Capital as approved by Commission for FY 2014-15 .............................. 85
Table 39: Income Tax as approved by Commission for FY 2014-15 ........................................................ 86
Table 40: Non-Tariff Income as approved by Commission for FY 2014-15 ............................................. 87
Table 41: Revenue from Sale of Power for FY 2014-15 ............................................................................ 87
Table 42: Approved Reduction in AFC for Unit-7 for FY 2014-15 ........................................................... 92
Table 43: Gains and Losses due to variation in Fuel Cost, as approved by Commission for FY 2014-15 94
Table 44: Gain/Loss due to variation in Auxiliary Energy Consumption as approved by Commission for
FY 2014-15 ................................................................................................................................................ 95
Table 45: Property Tax Summary as submitted by TPC-G for FY 2014-15 ............................................. 96
Table 46: Gains due to variation in O&M Expenses for Units 4 to 7 and Hydro Stations for FY 2014-15
as approved by Commission ...................................................................................................................... 97
Table 47: Truing-up for FY 2014-15 for Units 4 to 7 and Hydro Stations, including sharing of efficiency
gains/ losses ............................................................................................................................................... 98
Table 48: Unit-8 Performance in FY 2014-15 as submitted by TPC-G...................................................... 99
Table 49: Availability of Unit-8 as approved by Commission for FY 2014-15 ....................................... 100
Table 50: Gross Generation of Unit-8 as approved by the Commission for FY 2014-15 ........................ 100
Table 51: Summary of Auxiliary Energy Consumption of Unit-8 as approved by Commission for FY
2014-15 ..................................................................................................................................................... 100
Table 52: Summary of SHR of Unit-8 as approved by Commission for FY 2014-15 .............................. 101
Table 53: Fuel Cost of Unit-8 for FY 2014-15 as submitted by TPC-G ................................................... 101
Table 54: Fuel Parameters as approved by Commission for Unit-8 for FY 2014-15 ............................... 102
Table 55: Fuel Cost as approved by Commission for Unit-8 for FY 2014-15.......................................... 102
Table 56: Summary of O&M Expenses approved by Commission for Unit-8 for FY 2014-15 .............. 103
Table 57: Capitalisation of Unit-8 as approved by Commission for FY 2014-15 ................................... 104
Table 58: Summary of Non-DPR Capitalisation now approved by Commission for Unit-8 ................... 105
Table 59: Non-DPR Capitalisation for Unit-8 as approved by Commission for FY 2011-12 to FY 2013-14
.................................................................................................................................................................. 106
Table 60: Depreciation for Unit-8 as approved by Commission for FY 2014-15 ................................... 107
Table 61: Interest on Long-term Loan as approved by Commission for FY 2014-15 ............................. 108
Table 62: Return on Equity for Unit-8 as approved by Commission for FY 2014-15 ............................ 109
Table 63: Income Tax for Unit-8 for FY 2014-15 as approved by Commission ..................................... 110
Table 64: Revenue from GenerationofUnit-8 for FY 2014-15, as submitted by TPC-G .......................... 112
Table 65: Summary of Reduction of AFC for Unit-8 for FY 2014-15 as approved by Commission ....... 118
Table 66: Gains/Losses in Fuel Cost as approved by Commission for FY 2014-15 ................................ 119
Table 67: Efficiency Gains/ Losses due to variation in Auxiliary Energy Consumption of Unit-8 in FY
2014-15, as approved by Commission ...................................................................................................... 120
Table 68: Efficiency Gains/ Losses due to variation in O&M Expenses for Unit-8 for FY 2014-15 ....... 121
Table 69: Truing-up for FY 2014-15 for Unit 8, including sharing of Efficiency Gains/ (Losses) ......... 122
Table 70: Availability of Generating Units as submitted by TPC-G for FY 2015-16 .............................. 124
Table 71: Availability of Generating Units as submitted by TPC-G (revised submission) for FY 2015-16
.................................................................................................................................................................. 125
Table 72: Availability as approved by the Commission for FY 2015-16 ................................................. 125
Table 73: Gross Generation and PLF as submitted by TPC-G for FY 2015-16 ...................................... 127
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 9 of 224
Table 74: Gross Generation and PLF as submitted by TPC-G in revised submission for FY 2015-16 .... 127
Table 75: Gross Generation and PLF as approved by Commission for FY 2015-16 ............................... 128
Table 76: Auxiliary Energy Consumption as submitted by TPC-G for FY 2015-16 ............................... 128
Table 77: Auxiliary Energy Consumption as submitted by TPC-G in its revised submission for FY 2015-
16 .............................................................................................................................................................. 129
Table 78: Auxiliary Energy Consumption as approved by Commission for FY 2015-16 ........................ 130
Table 79: SHR for FY 2015-16 as submitted by TPC-G .......................................................................... 130
Table 80: SHR as submitted by TPC-G in its revised submission for FY 2015-16 .................................. 130
Table 81: Revised Normative SHR for Unit-6 for FY 2015-16 ................................................................ 131
Table 82: SHR as approved by the Commission for FY 2015-16 ............................................................ 131
Table 83: Fuel Prices in FY 2015-16, as submitted by TPC-G ................................................................ 134
Table 84: Fuel Prices and Calorific Value as approved by Commission for FY 2015-16 ........................ 134
Table 85: Impact of Entry Tax as submitted by TPC-G for FY 2015-16 ................................................. 136
Table 86: Recovery of Entry Tax, as approved by Commission for FY 2015-16 .................................... 136
Table 87: O&M Expenses as approved by Commission for FY 2015-16 ............................................... 137
Table 88: Schemes with major impact on Capitalisation, as submitted by TPC-G .................................. 137
Table 89: Summary of disallowed DPR Capitalisation for restricted cumulative Capitalisation ............ 139
Table 90: Summary of Capitalisation disallowed by Commission for FY 2015-16 ................................ 140
Table 91: Capitalisation as approved by Commission for FY 2015-16 ................................................... 140
Table 92: Depreciation as approved by Commission for FY 2015-16 .................................................... 142
Table 93: Interest on Long-term Loan as approved by Commission ....................................................... 143
Table 94: Return on Equity as approved by Commission for FY 2015-16 .............................................. 144
Table 95: IoWC for Units 4 to 7 and Hydro Stations as approved by Commission for FY 2015-16 ...... 145
Table 96: IoWC for Unit-8 as approved by Commission for FY 2015-16 .............................................. 146
Table 97: Income Tax as approved by Commission for FY 2015-16 ...................................................... 146
Table 98: Non-Tariff Income as approved by Commission for FY 2015-16 ........................................... 147
Table 99: Incentive as claimed by TPC-G on account of Backing Down in FY 2015-16 ........................ 148
Table 100: Provisional Truing-up for FY 2015-16 as approved by Commission .................................... 148
Table 101: PLF Incentive on account of Backing Down for FY 2011-12 to FY 2013-14, as submitted by
TPC-G ...................................................................................................................................................... 150
Table 102: Fuel Cost for Unit-6 under MSLDC Directions .................................................................... 150
Table 103: Amounts Recoverable from Distribution Licensees as submitted by TPC-G ........................ 152
Table 104: Amounts Recoverable from Distribution Licensees as approved by Commission ................ 154
Table 105: Break up of recoverable amount as approved by the Commission ........................................ 155
Table 106: Carrying Cost on recovery as approved by the Commission ................................................. 156
Table 107: Net Amount to be recovered from Distribution Licensees in FY 2016-17 ............................ 156
Table 108: Monthly recovery from Distribution Licensees in FY 2016-17 ............................................ 157
Table 109: Existing Generation Capacity of TPC-G ................................................................................ 159
Table 110: Availability of Generating Units in 3rd
Control Period as submitted by TPC-G .................... 159
Table 111: Availability of Generating Units in 3rd
Control Period as approved by Commission............. 160
Table 112: Summary of Gross Generation and PLF as submitted by TPC-G for 3rd
Control Period ....... 161
Table 113: Summary of Gross Generation and PLF as approved by the Commission for 3rd
Control Period
.................................................................................................................................................................. 162
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 10 of 224
Table 114: Normative Auxiliary Energy Consumption for Thermal Generating Stations for 3rd
Control
Period as submitted by TPC-G ................................................................................................................. 162
Table 115: Auxiliary Energy Consumption for Nallah Diversion as submitted by TPC-G for 3rd
Control
Period ........................................................................................................................................................ 163
Table 116: Auxiliary Energy Consumption for Thermal Generating Units for 3rd
Control Period as
approved by Commission ......................................................................................................................... 164
Table 117: Auxiliary Energy Consumption for Nallah Diversion as approved by Commission for 3rd
Control Period ........................................................................................................................................... 165
Table 118: Auxiliary Energy Consumption for Hydro Generating Stations as approved by Commission
for 3rd
Control Period ................................................................................................................................ 166
Table 119: Normative SHR for Thermal Generating Stations for 3rd
Control Period as submitted by TPC-
G ................................................................................................................................................................ 166
Table 120: SHR as approved by Commission for 3rd
Control Period ....................................................... 168
Table 121: Fuel proposed for Thermal Generating Stations in 3rd
Control Period as submitted by TPC-G
.................................................................................................................................................................. 168
Table 122: Existing Contracts for APM Gas as submitted by TPC-G ...................................................... 169
Table 123: Fuel Parameters as projected by TPC-G for 3rd
Control Period.............................................. 170
Table 124: Summary of Fuel Parameters as approved by Commission for 3rd
Control Period ................ 171
Table 125: Summary of Energy Charges as approved by Commission for 3rd
Control Period ................ 172
Table 126: O&M Expenses for Base Year as submitted by TPC-G for 3rd
Control Period ..................... 172
Table 127: O&M Expenses as submitted by TPC-G for Units 4 to 7 and Hydro for 3rd
Control Period . 173
Table 128: O&M Expenses as submitted by TPC-G for Unit-8 for 3rd
Control Period ............................ 173
Table 129: Summary of O&M Expense escalation computation for 3rd
Control Period .......................... 175
Table 130: Summary of O&M Expense escalation computation for 3rd
Control Period .......................... 175
Table 131: O&M Expenses as approved by Commission for Units 4 to 7 and Hydro Generating Stations
for 3rd
Control Period ............................................................................................................................... 176
Table 132: O&M Expenses as approved by Commission for 3rd
Control Period for Unit-8 ................... 176
Table 133: Capitalisation for Units 4 to 7 and Hydro Generating Stations for 3rd
Control Period as
submitted by TPC-G ................................................................................................................................ 177
Table 134: Capital Expenditure and Capitalisation as submitted by TPC-G for Unit-8 during 3rd
Control
Period ....................................................................................................................................................... 178
Table 135: Capitalisation disallowed by Commission for FY 2015-16 ................................................... 179
Table 136: Capitalisation approved by Commission for 3rd
Control Period ............................................ 179
Table 137: Depreciation for Units 4 to 7 and Hydro Stations as submitted by TPC-G for 3rd
Control
Period ....................................................................................................................................................... 180
Table 138: Depreciation for Unit-8 as submitted by TPC-G for 3rd
Control Period ................................ 181
Table 139: Depreciation approved by Commission for Units 4 to 7 and Hydro Stations for 3rd
Control
Period ....................................................................................................................................................... 182
Table 140: Summary of Depreciation approved by Commission for Unit-8 for 3rd
Control Period ........ 182
Table 141: Interest on Long-term Loan for Units 4 to 7 and Hydro Stations as submitted by TPC-G for 3rd
Control Period .......................................................................................................................................... 183
Table 142: Interest on Long-term Loan for Unit-8 as submitted by TPC-G for 3rd
Control Period ........ 183
Table 143: Interest on Long-term Loan for Units 4 to 7 and Hydro Stations as approved by Commission
for 3rd
Control Period ............................................................................................................................... 184
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 11 of 224
Table 144: Interest on Long-term Loan for Unit-8 as approved by Commission for 3rd
Control Period 184
Table 145: Return on Equity as submitted by TPC-G for 3rd
Control Period for Units 4 to 7 and Hydro
Stations ..................................................................................................................................................... 185
Table 146: Return on Equity as submitted by TPC-G for 3rd
Control Period for Unit-8 ......................... 186
Table 147: Return on Equity as approved by the Commission for Units 4 to 7 and Hydro Generating
Stations for 3rd
Control Period ................................................................................................................. 187
Table 148: Return on Equity as approved by the Commission for Unit-8 for 3rd
Control Period ........... 187
Table 149: Interest on Working Capital as submitted by TPC-G for Units 4 to 7 and Hydro Stations for 3rd
Control Period .......................................................................................................................................... 188
Table 150: Interest on Working Capital as submitted by TPC-G for Unit-8 for 3rd
Control Period ........ 188
Table 151: Interest on Working Capital as approved by the Commission for Units 4 to 7 and Hydro for 3rd
Control Period .......................................................................................................................................... 189
Table 152: Interest on Working Capital as approved by Commission for Unit-8 for 3rd
Control Period 189
Table 153: Income Tax for Units 4 to 7 and Hydro Stations as submitted by TPC-G for 3rd
Control Period
.................................................................................................................................................................. 190
Table 154: Income Tax for Unit-8 as submitted by TPC-G for 3rd
Control Period ................................. 190
Table 155: Income Tax for Units 4 to 7 and Hydro Stations as approved by TPC-G for 3rd
Control Period
.................................................................................................................................................................. 191
Table 156: Income Tax for Unit-8 as approved by TPC-G for 3rd
Control Period .................................. 191
Table 157: Non-Tariff Income as submitted by TPC-G for Units 4 to 7 and Hydro Stations for 3rd
Control
Period ....................................................................................................................................................... 192
Table 158: Non-Tariff Income as submitted by TPC-G for Units 4 to 7 and Hydro Stations for 3rd
Control
Period ....................................................................................................................................................... 192
Table 159: Non-Tariff Income as submitted by TPC-G for Unit-8 for 3rd
Control Period ...................... 192
Table 160: Non-Tariff Income as approved by the Commission for Units 4 to 7 and Hydro Stations for 3rd
Control Period .......................................................................................................................................... 193
Table 161: Non-Tariff Income as approved by the Commission for Unit-8 for 3rd
Control Period ........ 193
Table 162: Annual Fixed Charges for Units 4 to 7 and Hydro Stations for 3rd
Control Period ............... 194
Table 163: Annual Fixed Charges for Unit-8 for 3rd
Control Period ....................................................... 194
Table 164: Annual Fixed Charges as approved by Commission for FY 2016-17 ................................... 197
Table 165: Annual Fixed Charges as approved by Commission for FY 2017-18 ................................... 198
Table 166: Annual Fixed Charges as approved by Commission for FY 2018-19 ................................... 199
Table 167: Annual Fixed Charges as approved by Commission for FY 2019-20 ................................... 200
Table 168: Energy Charges as approved by Commission for Thermal Stations for 3rd
Control Period ... 201
Table 169: Capacity and Energy Charges for Khopoli Hydro Generating Station as submitted by TPC-G
for 3rd
Control Period ................................................................................................................................ 201
Table 170: Capacity and Energy Charges for Bhira Hydro Generating Station as submitted by TPC-G for
3rd
Control Period ...................................................................................................................................... 202
Table 171: Capacity and Energy Charges for Bhivpuri Hydro Generating Station as submitted by TPC-G
for 3rd
Control Period ................................................................................................................................ 202
Table 172: Capacity and Energy Charges for Khopoli Hydro Generating Station as approved by
Commission for 3rd
Control Period ........................................................................................................... 202
Table 173: Capacity and Energy Charges for Bhira Hydro Generating Station as approved by
Commission for 3rd
Control Period ........................................................................................................... 203
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Table 174: Capacity and Energy Charges for Bhivpuri Hydro Generating Station as approved by
Commission for 3rd
Control Period ........................................................................................................... 203
Table 175: Disallowed Capitalisation towards Non-DPR Schemes as submitted by TPC-G for FY 2012-
13 ............................................................................................................................................................. 205
Table 176: Disallowed Capitalisation towards Non-DPR Schemes for FY 2013-14 .............................. 205
Table 177: Past recoveries from Distribution Licensees as approved by Commission ........................... 216
Table 178: Net Amount to be recovered from Distribution Licensees in FY 2016-17 ............................ 217
Table 179: Monthly recovery from Distribution Licensees in FY 2016-17 ............................................. 217
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List of Abbreviations
Abbreviations Definitions
A&G Administrative and General
AFC Annual Fixed Charges
APR Annual Performance Review
ARR Aggregate Revenue Requirement
ATE Appellate Tribunal for Electricity
BEST BEST Undertaking
BHEL Bharat Heavy Electricals Limited
BPCL Bharat Petroleum Corporation Limited
CAGR Compounded Annual Growth Rate
CAPEX Capital Expenditure
CAT Conservation Action Trust
CERC Central Electricity Regulatory Commission
CFR Cost and Freight
COD Commercial Operation Date
CPI Consumer Price Index
CPRI Central Power Research Institute
CRZ Coastal Regulation Zone
Cu. M Cubic meter
GCV Gross Calorific Value
DPC Delayed Payment Charges
DPR Detailed Project Report
EA Electricity Act
FAC Fuel Adjustment Charge
FCCB Foreign Currency Convertible Bond
FGD Flue Gas De-sulphurisation
FOB Free On Board
FY Financial Year
GAIL Gas Authority India Limited
GFA Gross Fixed Assets
GoI Government of India
GoM Government of Maharashtra
GT Generator Transformer
HBA Index Harga Patokan Batubara Index
HOSS Head Office and Support Services
HPCL Hindustan Petroleum Corporation Limited
IDC Interest During Construction
IOC Indian Oil Corporation Limited
IWC Interest on Working Capital
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Abbreviations Definitions
IDBI Industrial Development Bank of India Limited
IDFC Infrastructure Development Finance Company Limited
kCal kilo Calories
kW kilo Watt
kWh kilo Watt hour
LCC Load Control Centre
LSHS Low Sulphur Heavy Stock
MAT Minimum Alternative Tax
MbPT Mumbai Port Trust
MCGM Municipal Corporation of Greater Mumbai
MCM Million Cubic Meters
MERC or the Commission Maharashtra Electricity Regulatory Commission
MoD Merit Order Despatch
MoEF Ministry of Environment & Forest
MoPNG Ministry of Petroleum and Natural Gas
MPCB Maharashtra Pollution Control Board
MT Metric Tonnes
MTR Mid-Term Review
MU Million Units
MW Mega Watt
MWRRA Maharashtra Water Resources Regulatory Authority
MYT Multi Year Tariff
NAPAF Normative Annual Plant Availability Factor
NGT National Green Tribunal
OEM Original Equipment Manufacturer
O&M Operation and Maintenance
ONGC Oil and Natural Gas Corporation Limited
PLF Plant Load Factor
PPA Power Purchase Agreement
RBI Reserve Bank of India
RLNG Re-gasified Liquefied Natural Gas
RTL Rupee Term Loan
RoE Return on Equity
RPM Rotations Per Minute
R&M Repair and Maintenance
SBAR State Bank of India Advance Rate
SBI State Bank of India
SBI-PLR State Bank of India-Prime Lending Rate
SHR Station Heat Rate
SLP Special Leave Petition
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Abbreviations Definitions
STU State Transmission Utility
SBAR State Bank Advance Rate
TPC The Tata Power Company Ltd.
TPC-D Tata Power Company-Distribution
TPC-G Tata Power Company-Generation
TPC-T Tata Power Company-Transmission
TVS Technical Validation Session
UMPP Ultra Mega Power Project
USD US Dollar
WPI Wholesale Price Index
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1 BACKGROUND AND REGULATORY PROCEEDINGS
1.1. Background
1.1.1 TPC is a Company with its registered office at Bombay House, 24, Homi Mody Street,
Fort, Mumbai. TPC has various regulated and non-regulated business verticals. TPC
(Distribution Business) (TPC-D), TPC (Transmission Business) (TPC-T) and TPC-G
(Generation Business) are regulated businesses under the provisions of the EA, 2003.
TPC-G’s installed generation capacity is 2027 MW, comprising 447 MW of Hydro
Generation and 1580 MW of Thermal Generation. However, the 150 MW Unit-4
Generating Capacity is no longer in use, and hence the operational Thermal Generation
Capacity is 1430 MW. The entire generation capacity of TPC-G is tied up on a long-
term basis with two Distribution Licensees of Mumbai, namely TPC-D and
Brihanmumbai Electric Supply and Transport Undertaking (BEST).
1.1.2 This Order relates to TPC-G’s Petition for Truing-up of FY 2014-15, Provisional
Truing-up of FY 2015-16 and approval of ARR and determination of Tariff for the 3rd
Control Period from FY 2016-17 to FY 2019-20.
1.2. MYT Regulations, 2011
The Commission notified its MYT Regulations, 2011 on 4 February, 2011, applicable
for determination of Tariff for the 2nd
Control Period from FY 2011-12 to FY 2015-16.
1.3. Business Plan Order for MYT 2nd
Control Period
In its Order dated 9 August, 2012 in Case No. 166 of 2011 on TPC-G’s Business Plan
Petition, the Commission directed TPC-G to file a MYT Petition for the 2nd
Control
Period from FY 2012-13 to FY 2015-16. However, for FY 2011-12, the Commission
directed it to file the ARR as per the Tariff Regulations, 2005. On TPC-G’s Appeal
against that directive, the Appellate Tribunal for Electricity (ATE), in its Order dated 28
November, 2013, entitled it to claim ARR based on the MYT Regulations, 2011 for FY
2011-12.
1.4. Truing-up of FY 2011-12 and ARR for 2nd
Control Period FY 2012-13 to FY 2015-
16
In its Order dated 5 June, 2013 in Case No. 177 of 2011 (‘previous MYT Order’), the
Commission undertook the Truing-up of FY 2011-12 and approved the Tariff for FY
2012-13 to FY 2015-16. Aggrieved on issues relating to wrongful computation of
Operation and Maintenance (O&M) expenses, considering income from gain/losses on
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Foreign Exchange as a part of Non-Tariff Income, disallowance of Auxiliary Energy
Consumption of Unit-6 and non-allowance of carrying cost on past recovery, TPC-G
filed an Appeal No. 212 of 2013. In its Judgment dated 27 October, 2014, the ATE
entitled TPC-G to claim some of the earlier disallowed expenditure.
1.5. Truing-up of FY 2012-13 and FY 2013-14, Provisional Truing-up of FY 2014-15
and Projection of ARR and Tariff for FY 2015-16
On TPC-G’s Mid-Term Review (MTR) Petition for the 2nd
Control Period (Case No. 6
of 2015) for Truing-up of FY 2012-13 and FY 2013-14, Provisional Truing-up of FY
2014-15 and projection of ARR and Tariff for FY 2015-16, the Commission issued its
Order on 26 June, 2015 (‘MTR Order’).
1.6. MYT Regulations, 2015
1.6.1 The Commission notified the MYT Regulations, 2015 on 8 December, 2015. These
Regulations are applicable for determination of Tariff for the 3rd
Control Period, i.e., FY
2016-17 to FY 2019-20.
1.6.2 TPC-G requested the Commission to extend the time for filing of MYT Petition stating
its difficulties in collecting the data and preparation of MYT Petition within the due
date. Considering the requests of various Generating Companies and Licensees,
including TPC-G, vide Order dated 15 January, 2016 the Commission allowed TPC-G to
file its Petition by 31 January, 2016.
1.7. Admission of the Petition and Public Consultation Process
1.7.1 TPC-G filed its MYT Petition on 11 February, 2016. Preliminary data gaps were
forwarded to TPC-G on 24 and 29 February and 4 March, 2016. TPC-G stated its replies
on 3 March, 2016.
1.7.2 The Commission conducted a Technical Validation Session (TVS) on 4 March, 2016.
The list of persons who participated in the TVS is at Appendix - 1. TPC-G made a
presentation on the salient features of the Petition.
1.7.3 The Commission sought additional information and clarifications on the issues raised
during the TVS. TPC-G stated replies to the pending data gaps and issues raised during
the TVS vide its letters dated 10, 17, and 18 March 2016. Thereafter, TPC-G filed a
revised Petition on 24 March, 2016 incorporating the changes pointed out through data
gaps.
1.7.4 TPC-G’s prayers are as follows:
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“
I. Accept the Truing-up for FY 2014-15, Provisional Truing-up of FY 2015-16 and past
Gap / (Surplus) thereof in accordance with the guidelines & principles outlined in
MYT Regulations, 2011;
II. Accept the Projections for FY 2016-17 to FY 2019-20 in accordance with the
guidelines & principles outlined in MYT Regulations, 2015;
III. Allow determination of normative Auxiliary Energy Consumption in Standby Mode
for Unit 6.
IV. Allow Heat Rate and Auxiliary Energy Consumption for Unit 6 under Technical
Minimum operation.
V. Allow Heat Rate and Auxiliary Energy Consumption for Unit 7 in open cycle mode
for the Third Control Period, similar to that approved in the Business Plan Order in
Case 166 of 2011 for the Second Control Period.
VI. To treat the release of 30 MCM water from Mulshi dam for drinking water purpose
as uncontrollable over and above that of low rainfall during FY 2015-16 and allow us
to apply the appropriate regulatory mechanisms provided in the Regulations in the
future years to enable the recovery of the entire fixed cost of the Generating Stations.
VII. Condone any inadvertent omissions / errors / rounding off differences / shortcomings
and permit Tata Power- G to add / change / modify / alter this filing and make further
submissions as may be required at a future date;
VIII. Pass such further and other orders, as the Hon’ble Commission may deem fit and
proper, keeping in view the facts and circumstances of the case.”
1.7.5 The Commission admitted the revised Petition on 29 March, 2016, directed TPC-G to
publish it Petition in an abridged form by 1 April, 2016, and to reply expeditiously to all
suggestions and objections received on its Petition.
1.7.6 TPC-G published the Public Notice in the daily newspapers Hindustan Times and Indian
Express (English), and Loksatta and Saamna (Marathi) on 31 March, 2016. Copies of
the Petition and its Executive Summary were made available at TPC’s offices and on
TPC-G’s website (www.tatapower.com). The Public Notice and Executive Summary of
the Petition were also made available on the websites of the Commission
(www.mercindia.org.in / www.merc.gov.in) in downloadable format.
1.7.7 A Public Hearing was held on 26 April, 2016 in the Office of the Commission, 13th
Floor, Centre No. 1, World Trade Centre, Cuffe Parade, Colaba, Mumbai. The list of
persons at the Public Hearing is atAppendix-2.
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1.7.8 Two more sets of data gaps were sent to TPC-G on 20 and 25 April, 2016, seeking
additional information relating to fuel purchase and revised actual unaudited data of FY
2015-16 (since the year was over). TPC-G stated its replies vide letters dated 5, 6, 10
and 13 May, 2016.
1.7.9 TPC-G made additional submission on Plant Load Factor (PLF) incentive on account of
backing down instructions for FY 2011-12 to FY 2015-16 vide letters dated 25 April and
23 May, 2016.
1.7.10 The Commission has ensured that the due process contemplated under the law to ensure
transparency and public participation was followed at every stage, and adequate
opportunity was given to all to submit their views.
1.7.11 The Commission received written suggestions and objections, and oral submissions at
the Public Hearing.
1.8. Organisation of the Order
This Order is organised in the following Sections:
Section 1 provides a brief history of the quasi-judicial regulatory process undertaken
by the Commission. A list of abbreviations with their expanded forms has been
included.
Section 2 discusses the suggestions and objections given in writing as well as those
presented during the Public Hearing. The suggestions and objections have been
summarised, followed by the response of TPC-G and the views of the Commission
on each issue.
Section 3 details the impact of ATE Judgments on the previous years' Truing-up.
Section 4 details the Truing-up of the ARR for FY 2014-15, including sharing of
efficiency gains/ losses.
Section 5 details the approval of the Provisional Truing-up for FY 2015-16.
Section 6 details the ARR and Tariff for the 3rd
Control Period.
Section 7 deals with summary of approved Tariff for the 3rd
Control Period
Section 8 covers the directives given in the MTR Order, TPC-G's responses and new
directives.
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Section 9 summarises the rulings of the Commission.
Section 10 deals with Directives to TPC-G.
Section 11 sets out the applicability of this Order
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2 SUGGESTIONS/ OBJECTIONS RECEIVED, TPC-G’S RESPONSE AND
COMMISSION’S VIEW
2.1 Fuel Prices
Suggestions/Objections
2.1.1 The Indian Hotel and Restaurant Association, Shri Kamlakar Shenoy, Shri Guruprasad
Shetty and Shri Lalit Vashista stated that TPC-G has inflated the purchase price of fuel.
TPC-G has projected LSHS price of Rs. 47211 per MT for the 3rd
Control Period, while
the same is sold by Bharat Petroleum at Rs. 15678 per MT. Similarly TPC-G has
projected coal purchase price as Rs. 4747 per MT, while it is being sold by Coal India
Ltd. (CIL) at Rs. 1600 per MT. TPC-G has projected purchase of Administered Pricing
Mechanism (APM) Gas at Rs. 16138 per MT, while the APM rate of Gas Authority of
India Ltd. (GAIL) is $2.32 MMBTU which works out to Rs. 6669 per MT. TPC-G has
also projected the price of imported coal as Rs 4747 per MT, which has in fact crashed
to $ 45 per MT or Rs 2992 per MT. Thus, TPC-G has inflated fuel prices by almost 3
times, thereby inflating the ARR. TPC-G is able to inflate its costs as it has the
monopoly of supplying to two major power Distribution Licensees, namely BEST and
TPC-D, who in turn charge high Tariff to their consumers.
2.1.2 Shri Kamlakar Shenoy and Shri Lalit Vashista further stated that this act of inflating the
fuel costs on affidavit filed before the Commission is a gross misrepresentation of facts,
and that such false declaration is an offence under the Indian Penal Code, IPC and hence
the Commission is duty bound to register a First Information Report (FIR) against
TPC’s Directors and concerned officials. Such deterrent actions are required to stop such
Companies from inflating expenses and thereby causing wrongful loss to consumers.
2.1.3 They also questioned why the cost of electricity has not come down as expected after the
enactment of the EA, 2003. The cost in the neighboring States is almost one third of
what is paid by electricity consumers of Mumbai. Further, verification by the
Commission of the cost of raw materials and expenses incurred was necessary before
fixing the Tariff.
TPC-G’s Response
2.1.4 TPC-G has projected the fuel prices based on its analysis of the market and to the best of
its knowledge. As per the Regulations, the fuel price gets charged at actuals by way of
the Fuel Adjustment Charge (FAC). The assumptions for fuel-wise price projections are
as below:
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Oil
2.1.5 The fuel oil prices have gone down recently, and thus the projections of future prices are
in line with this trend. TPC-G uses oil in its 500 MW Unit-6, which is operated
intermittently. This intermittent operation requires it to maintain a certain inventory of
fuel oil in order to be available for generation as per requirements. As the Unit was
under economic shutdown, the fuel oil procured earlier is part of the inventory.
Accordingly, the price of fuel oil includes the weighted price of fuel oil procured earlier
at the then prevailing rates. Hence, the fuel oil price projections for the 3rd
Control
Period appear to be slightly higher.
2.1.6 As per Bharat Petroleum Corporation Ltd. (BPCL), the current price of LSHS with Low
Sulphur content of 0.5-0.65 % is Rs. 21639 per MT, which is higher than the projected
oil prices of future purchases, i.e., Rs. 20998 per MT indicated in the MYT Petition.
Coal
2.1.7 For the Trombay Generating Station, TPC-G has to abide by the stringent emission
norms on Sulphur and Ash stipulated by the Maharashtra Pollution Control Board
(MPCB). Accordingly, TPC-G has to use coal with Sulphur content below 0.3% and
Ash below 5%, which is sourced from Indonesia as Indian coal of the required
specifications is not available. Even washed domestic coal has an ash content of 34%.
2.1.8 It is not stated whether the imported coal price of USD 42 per MT cited by the objectors
is Free On Board (FOB) or Cost and Freight (CFR), and the type of coal has also not
been mentioned. Thus, TPC-G is not in a position to comment on the price of coal cited.
It appears that the price referred to is the FOB price and does not include sea freight,
local logistics, taxes and duties to arrive at the landed cost. TPC-G’s projections of FOB
price is also in the range of USD 35 to 37.5 per MT, based on the market view on
imported coal and the current FOB prices. Considering this FOB price, the landed cost
of coal works out to Rs. 4747 per MT for FY 2016-17, as stated in the Petition.
APM Gas
2.1.9 The price of APM gas is governed by the Ministry of Petroleum & Natural Gas
(MoPNG), and the gas prices indicated in the MYT Petition are based on its pricing
guidelines.
2.1.10 Thus, the projections of fuel prices are not inflated.
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Commission’s View
2.1.11 The Commission has examined the data stated by TPC-G and sought additional
information, viz. imported coal contracts and bills, details of quantity, price and Gross
Calorific Value (GCV) of fuel, details of process followed for competitiveness, etc. The
GCV, price and quantity of fuel have been approved based on scrutiny, as summarized
below
a. Regarding imported coal, the Commission asked for the Letter of Award (LoA)
for contracts relating to imported coal and asked TPC-G to clarify whether the
procurement was through competitive bidding. TPC-G has provided all the bills
for imported coal for FY 2014-15 and FY 2015-16. The Commission analyzed
these contracts, bills and submissions. The Commission found that the payments
for coal-related invoices were made to the agencies with whom the LoAs were
signed. The quantity of fuel claimed in the Petition matched the totals of the
quantity in the bills for imported coal. The Commission sought details of the
process followed for entering into supply agreements for imported coal for the
Trombay Station. TPC-G stated that the annual coal requirement is about 2.70
MMT. The Trombay Station requires low sulphur, low ash and medium GCV coal
to meet the stringent environment norms. TPC-G had existing contracts for 1.3
MMT per annum with P. T Adaro, Indonesia. For the balance 1.4 MMT, global
competitive bids were invited on 25 March, 2015 in EXIM (Weekly newsletter)
and Platts International Coal Trader (Daily News Letter). In response, three
bidders submitted their interest:
i. P.T. Adaro, Indonesia
ii. Samtan Co. Ltd., Korea
iii. P.T. Mitrabara, Indonesia
b. After technical evaluation and quality checks, two bidders, viz. P.T. Adaro and
Samtan Co. were found to be technically suitable and were invited for price
negotiations. Thereafter, in order to have two sources for better operational
flexibility, the contract was awarded to both these bidders at the same negotiated
price (P.T. Adaro 0.6 MMT per annum and Samtan 0.8 MMT per annum). The
Commission noted that the negotiated price was linked the international coal
index.
c. The Commission sought details of month-wise opening stock (quantity and price),
procurement and closing stock of each fuel. The Commission has also considered
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the month-wise weighted average price calculations for fuel based on existing
stock and new purchases.
d. The Commission also cross-checked the fuel cost claim for FY 2014-15 with the
audited allocation statement of accounts.
2.1.12 The Commission has approved the fuel prices and GCV for the 3rd
Control Period as per
the MYT Regulations, 2015, i.e., considering the actual weighted average fuel price as
considered above and the GCV of the past three months. The landed price of coal is also
adjusted for the variation in Clean Environment Cess (earlier known as Clean Energy
Cess). The Commission has not allowed any year-wise escalation in fuel prices as the
future variations upwards or downwards are taken into account through the FAC
charges.
2.2 Competitive Bidding for Power Purchase
Suggestions/Objections
2.2.1 The Indian Hotel and Restaurant Association and Shri Guruprasad Shetty stated that the
object of the EA, 2003 is to bring in competition. The Govt. of India (GoI) has issued
guidelines that power procured by the Distribution Licensees should be through
competitive bidding. Many Licensees, i.e., from Gujarat, Goa, Madhya Pradesh,
Karnataka, etc. have benefited by competitive bidding, lowering their power purchase
cost. M/s Torrent, Adani, National Thermal Power Corporation (NTPC), Videocon,
Reliance Infrastructure Ltd. (RInfra) and TPC have opted for competitive bidding and
have obtained at lower cost. RInfra’s Sasan Ultra Mega Power Project (UMPP) has
publicized the cost of Rs 1.19/ kWh. To be fair to the consumers, TPC-G should not be
given the comfort of monopoly supply and Distribution Utilities should undertake
transparent competitive bidding for price discovery. Further, if electricity generation and
distribution are two separate businesses of the same Company, it should be ensured that
there is no conflict of interest.
2.2.2 Shri Guruprasad Shetty further stated that, in the recent past, the prices of raw material
required for power generation have substantially decreased. Coal, oil and gas are now
amply available at rates which are one third of the rates prevailing a few years back. The
electricity prices in the open market have crashed, and electricity in the open market is
now available at around Rs. 2.00 per Unit whereas the Tariff proposed by TPC-G is
nearly double that. As TPC-G’s cost of generation is more than the rates at which power
is being sold through competitive bidding and in the open market, TPC should buy
power from the open market instead of generating itself. Alternatively, the Distribution
Licensee can buy power through competitive bidding from the open market. Further,
Comptroller & Auditor General (CAG) audits have revealed that some of the biggest
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scams occurred when competitive bidding was bypassed. Even the Supreme Court has
reprimanded the authorities for not calling for competitive tenders.
2.2.3 Shri Kamlakar Shenoy and Shri Lalit Vashista also stated that Sections 61(c) and (d) of
the EA, 2003 regarding encouraging competition and safeguarding of consumers'
interest have not been complied with while determining Tariff in the past. The final cost
borne by electricity consumers in neighboring States is around Rs. 4.00/kWh to Rs.
5.00/kWh whereas it is around Rs. 17.00/kWh for Mumbai consumers. Hence, gross
injustice is caused to the electricity consumers of Mumbai due to non-compliance of
Section 61.
TPC-G’s Response
2.2.4 The objections pertain to the Distribution Business, and hence no response is required
from TPC-G.
Commission’s View
2.2.5 The issues raised relate to the procurement modalities of the Mumbai Distribution
Licensees in general and TPC-D in particular, and whether at all they should buy
apparently costly power from TPC-G. TPC-D and BEST, both Mumbai Distribution
Licensees, have entered into a long-term Power Purchase Agreements (PPA) for power
procurement from TPC-G (in addition to sourcing a smaller quantum from elsewhere).
This PPA procurement is at Tariffs approved by the Commission from time to time after
examination and in accordance with Section 62 and other provisions of the EA, 2003
and the MYT Regulations.
2.2.6 Long-term power procurement through PPA and short-term power procurement from the
open market both have certain merits and demerits. While short-term power
procurement from the open market appears to be beneficial and cheaper at present (and
is, indeed, being resorted to from time to time), Distribution Licensees cannot depend
upon it for the bulk of their requirements considering variations in availability and price
(which is also influenced by the extent of their purchases), and stable long-term
arrangements are required which also enable better transmission system planning.
2.2.7 Moreover, sourcing of power from outside for Mumbai, in particular, is still constrained
by transmission availability. This also limits the quantum of power which can be
procured through competitive bidding. Hence, the power purchase costs of Distribution
Licensees in other States cannot be compared with that of Licensees in Mumbai. On the
other hand, along with stand-by arrangements with Maharashtra State Electricity
Distribution Co. Ltd. (MSEDCL), sourcing from Mumbai’s ‘embedded’ generation also
provides security advantages by facilitating the ‘islanding’ of Mumbai.
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2.2.8 In this background, and as explained above, the Commission has approved the Tariff
after due examination. Further, with the PPAs of TPC-D and BEST with the embedded
generation of TPC-G expiring in March, 2018, the Commission would be addressing the
issue of their future procurements in its forthcoming MYT Orders in respect of those
Distribution Licensees.
2.3 Blended Tariff for Unit-7
Suggestions/Objections
2.3.1 With regard to TPC-G’s justification for a blended rate for Unit-7 despatch, Shri R. G.
Sonawane stated that TPC-G has considered an average power purchase rate of Rs.
3.49/kWh. The Commission should verify the proposed rates with the actual short-term
power purchase cost, and accept the proposal only if TPC-G commits not to charge more
than the rate cited in its cost-benefit analysis.
2.3.2 Shri Ashok Pendse, for Thane-Belapur Industries Association (TBIA), an authorised
Consumer Representative (CR) stated that Unit-7 generation from RLNG comes at Rs.
3.49/kWh and hence is not likely to come within the Merit Order Despatch (MOD).
Some Units of National Thermal Power Corporation (NTPC) are also facing a similar
situation (Kawas and Gandhar). Due to the high cost of RLNG-based generation and
lower position in MOD, they are not able to generate around 3800 MU yearly. No
different treatment should be given to Unit-7, which should be operated as per the MOD
criteria.
TPC-G’s Response
2.3.3 TPC-G has proposed that Unit-7 run with blended gas for the following benefits:
Unit-7 will run to its full capacity and, thus, be efficient on account of Heat Rate and
Auxiliary Consumption being within the normative parameters.
On account of higher generation, the fixed cost of the Generating Unit will be spread
over a larger generation quantum, reducing the overall per Unit cost.
The probability of running Unit-6 under the directions of Maharashtra State Load
Despatch Centre (with significantly higher cost of generation) may reduce, as Unit-7
RLNG generation will become available.
2.3.4 Further, this blending will ensure assured demand, providing better leverage to TPC-G
for tying up fuel gases at better contractual terms.
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2.3.5 It is possible to achieve the same per Unit rate by using a combination of APM gas and
RLNG for Unit-7 as with only APM gas including fixed cost, i.e., there would be no
extra burden on the consumer from power purchase from Unit-7. TPC-G has sought in-
principle clearance for use of blended gas with ‘must run’ status, and would run it when
such blending would maintain the same overall cost for the Unit.
Commission’s View
2.3.6 The Commission observes that, if the blending of RLNG and APM gas for Unit-7 is
done in the ratio of 1:2, the blended variable cost comes to around Rs. 3.10/ kWh. The
Commission is of the view that, with such a high blended rate, the Unit will not be under
MOD for a significant period, leading to loss of generation even on APM gas. Further,
with a blended rate, on many occasions power costlier than Unit-7 APM but cheaper
than the Unit-7 blended rate would get scheduled at the cost of Unit-7 APM generation,
thereby overburdening consumers. Considering these factors, the Commission is not
determining any blended rate for Unit-7. The fuel wise Tariff for Unit-7 will be as
determined at para.7.2 of this Order.
2.4 GT Losses
Suggestions/Objections
2.4.1 Shri Ashok Pendse (TBIA) urged that GT losses should be considered as per the Central
Power Research Institute (CPRI) report.
2.4.2 Shri R. G. Sonawane stated that TPC-G has sought review of the Commission’s decision
on the transformation loss and Headworks for Hydro Stations. However, the
Commission had rejected the claim for additional losses in recent Order. Since TPC-G
has not filed any Appeal on this issue, the Commission cannot give any ruling on it
contrary to its earlier rejection. Moreover, the Bombay High Court, in its recent Order in
case of MERC vs. Reliance, has expressed its displeasure over the abuse of legal process
by Utilities in order to obtain the desired reliefs. Hence, the proposal should be rejected
on legal grounds alone.
TPC-G’s Response
2.4.3 TPC-G agrees with Shri. Ashok Pendse that GT losses be considered as per the CPRI
report.
2.4.4 As regards Shri R. G. Sonawane’s point, at the time of the MTR Petition TPC-G had
sought approval for the actual GT losses for Truing-up of FY 2012-13 and FY 2013-14.
Thereafter, TPC-G had approached the Commission in Case No. 52 of 2015 seeking
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approval of revised norms for Auxiliary Consumption of Hydro Generating Stations for
FY 2015-16. In the present MYT Petition, TPC-G has sought reassessment of the actual
GT Losses and Headworks for Truing-up for FY 2014-15 and FY 2015-16. This is in
line with the approach suggested in the Order in Case No. 52 of 2015, and also includes
a request for change in norms for the 3rd
Control Period. In this regard, TPC-G has also
made some additional submissions to the Commission. Hence, there has been no
violation of the legal process on this matter, as the periods in question are not the same.
Commission’s View
2.4.5 The Commission has analysed the Auxiliary Consumption for Hydro Generating
Stations in subsequent Sections of this Order.
2.5 Colony Consumption
Suggestions/Objections
2.5.1 Shri R. G. Sonawane stated that TPC-G has proposed its colony consumption as part of
the Auxiliary Consumption. This is contrary to the MYT Regulations, 2011 which
specify that the colony consumption of a Generating Station shall not be included in the
Auxiliary Consumption. The MYT Regulations, 2015 also specify that the electricity
supply to housing colonies of operating staff and construction works at the Generating
Station shall be metered and billed separately, at the Tariff approved for the respective
consumer categories of the concerned Distribution Licensee.
TPC-G’s Response
2.5.2 TPC-G has not proposed colony consumption as part of Auxiliary Consumption. In fact,
it has been reduced from the total hydro Auxiliary Consumption of 2.71% for FY 2014-
15, and the total hydro Auxiliary Consumption claim of 2.54% is net of the colony
consumption. The treatment of hydro colony consumption proposed is in line with the
methodology approved in the MTR Order.
Commission’s View
2.5.3 The Commission has not considered colony consumption as a part of Auxiliary
Consumption. It has considered its cost as a part of O&M expenses, based on the
methodology in the MTR Order. However, as per the MYT Regulations, 2015, the
electricity supplied to the housing colonies of operating staff and for construction works
at the Generating Station are to be metered and billed separately at the Tariff approved
for the respective consumer categories of the Distribution Licensee for that area of
supply. Accordingly, the Commission has not considered colony consumption as a part
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of O&M expenses for the 3rd
Control Period. Actual colony consumption and
corresponding revenue at the rate stipulated in the Regulations will be considered as part
of Non Tariff Income at the time of Truing-up.
2.6 Unit-7 PLF for 3rd
Control Period
Suggestions/Objections
2.6.1 Shri R. G. Sonawane stated that TPC-G has projected Plant Load Factor (PLF) of 54%
for Unit-7 for the 3rd
Control Period. However, for computing the working capital
requirement, it has considered PLF of 85%. Since TPC-G itself has projected a lower
PLF, the working capital requirement should be restricted to the projected PLF as per
Regulation 31 of the MYT Regulations, 2015.
TPC-G’s Response
2.6.2 As per Regulation 31, the actual generation has to be considered at the time of Truing-up
for working capital computation. As the present submission is part of projections and not
at actuals, TPC-G has considered the normative PLF of 85%.
Commission’s View
2.6.3 The Availability projected by TPC-G for Unit-7 is more than 85% even though the PLF
projected is around 54%. TPC-G has computed Interest on Working Capital (IoWC) for
this projected Availability. Further, Regulation 31 of MYT Regulations, 2015 states that
working capital requirement shall be based on target Availability. The Commission has
computed IoWC accordingly.
2.7 Foreign Exchange Loss
Suggestions/Objections
2.7.1 Shri R. G. Sonawane stated that TPC-G has considered foreign exchange loss as part of
fuel cost, which is a complete departure from its earlier practice and the disclosure made
before the ATE and the Commission. In its earlier Order, the Commission has not
considered the buyer’s credit and corresponding hedge contracts under Non-Tariff
Income, as they are in the nature of working capital funding. Hence, the Commission
should disallow such cost. Only the dollar variation of the fuel price may be allowed as
part of the fuel cost and not the dollar to rupee Depreciation, if any.
TPC-G’s Response
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2.7.2 The foreign exchange loss shown under the fuel cost pertains to the difference in foreign
exchange rate prevailing on the date of bill of lading and the date of actual payment. The
portion of fuel for which buyer’s credits have been availed and its associated foreign
exchange is not claimed in the Petition.
Commission’s View
2.7.3 The Commission has considered the claim relating to foreign exchange rate variations
(FERV) on payment of fuel as per the methodology approved in the MTR Order.
2.8 Income Tax
Suggestions/Objections
2.8.1 Shri R. G. Sonawane stated that TPC-G should disclose the year-wise Corporate Tax
and Minimum Alternate Tax (MAT) applicable in previous years and clearly establish
the available MAT credits of those years. From the Petition, it is not possible to
ascertain whether the entire accrued MAT credit has been claimed by TPC-G. Further,
the previous Order directed TPC-G to utilize the initial year’s business loss while
computing the Income Tax for Unit-8. These details should be obtained before
approving the Income Tax for Unit-8.
2.8.2 He further stated that, despite the Commission’s direction to utilize Section 80 IA
(Income Tax Act) benefit for Unit-8, TPC-G has considered it as ‘nil’ during the 3rd
Control Period. Details may be obtained before approving the Income Tax for True-up
and the 3rd
Control Period.
2.8.3 Shri R. G. Sonawane also sought that the Commission verify the computation of
reduction of efficiency gains from income while computing Income Tax. It appears that
the efficiency gain amount that is shared with consumers has been deducted against the
requirement of deduction of amount to be retained by consumers.
TPC-G’s Response
2.8.4 TPC-G has adopted the methodology approved in the MTR Order and considered the
actual revenue and expenditure approved in the various Tariff Orders. Accordingly, if
the Generation Business is coming under Normal Tax and MAT credit is available of
previous years, the same has been adjusted to arrive at the Income Tax payable. For
example, FY 2014-15 MAT credit of Rs. 29.97 Crore has been adjusted against the Tax
payable. The details of MAT credit have been provided in response to data gaps raised.
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2.8.5 TPC-G will be considering the 80 IA benefit, if applicable, for the respective years, at
the time of Truing-up. Hence, TPC-G has not considered it for the future period at
present.
2.8.6 As regards the consideration of efficiency gains, the suggestion is addressed to the
Commission.
Commission’s View
2.8.7 The Commission has scrutinized the Income Tax computations of TPC-G, and had
asked for the detailed break-up of various components, namely, MAT Credits, other
disallowances while computing it, Other Expenses allowed, deductions under Section 80
IA and disallowance under Income Tax. The Commission has computed Income Tax in
accordance with Regulation 34.1 of the MYT Regulations, 2011, and has arrived at
Income Tax paid on Regulatory Profit Before Tax (PBT) basis. Further, no efficiency
gains and incentive earned are considered for computation of the Tax on PBT basis.
2.9 Capital Expenditure and Capitalisation
Suggestions/Objections
2.9.1 Shri R. G. Sonawane stated that other Utilities like BEST and Reliance do not claim any
capitalisation towards Head Office and other non-regulated Business. The Commission
may disallow such expenses. CERC also does not allow such expenses for NTPC.
2.9.2 The Commission has to assess the need for capex for new Units like Unit-8. Since, for
new Stations, no capex needs to be allowed after the cut-off date. The Commission may
analyse the capex of NTPC’s new Stations and compare the type of capitalisation
incurred by them with that sought by TPC-G in its Petition.
2.9.3 TPC-G has proposed Non-Detailed Project Report (DPR) capitalisation for the
Generation Business as a whole, by which such capitalisation comes within the limit of
20%. However, for all other purposes like sharing of incentive, Income Tax, etc. TPC-G
proposes to consider the business of Units 4 to 7 and Hydro and Unit-8 on an isolated
basis. No such request should be considered.
2.9.4 TPC-G has not disclosed whether it has incurred actual Interest During Construction
(IDC) or not for capitalisation of FY 2014-15 and FY 2015-16. The Commission may
obtain a reconciliation statement with audited accounts for IDC. As observed from TPC-
G’s submission, out of a total debt requirement of Rs. 830 Crore, the actual loan
available was Rs. 580 Crore. Therefore, it is possible that TPC-G has claimed notional
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IDC on the capitalisation amount. Notional IDC, if any, must be disallowed as it is
permissible under the law.
2.9.5 TPC-G has considered reduction in equity by 30% for de-capitalisation, as against the
higher equity contribution, i.e., more than 30%, approved by the Commission in the first
Tariff Order. Such working may be reviewed by the Commission.
2.9.6 TPC-G should disclose whether capitalisation of Rs. 830 Crore for FY 2014-15 is on
cash basis or also includes un-discharged liabilities. In case of any un-discharged
liability, the Commission should allow Return on Equity (RoE), interest and
Depreciation only corresponding to expenses incurred on cash basis.
2.9.7 In its previous Order, the Commission had directed to merge the Non-DPR schemes and
submit the DPR for post facto approval within 3 months. TPC-G has delayed its
submission. Considering its submission, it is most likely that approval would be granted
in FY 2016-17. Therefore, the impact of capitalisation in FY 2014-15 should not be
considered since carrying cost would also accrue to TPC-G as a result, which would be
contrary to the ruling in the previous Order. Hence, the Commission should consider the
impact only in FY 2016-17 onwards.
TPC-G’s Response
2.9.8 As regards the capitalisation towards Head Office and other non-regulated Business, the
capitalisation proposed is in line with the principles applied by the Commission in its
various Orders on the ARR of TPC-G.
2.9.9 The capital expenditure requirement of Unit-8 is proposed as per Regulation 28.1 (f) of
the MYT Regulations, 2011.
2.9.10 As regards the Non-DPR capitalisation, certain costs are common for Unit-5 to 7 and
Unit-8. These costs are allocated based on the methodology approved in the previous
Orders. Since a considerable portion of the capitalisation in FY 2014-15 is common to
the entire Trombay Station area, the Commission may consider the ratio of Non-DPR /
DPR as a whole. However, as the performance parameters are approved separately for
each Unit, they cannot be combined for the Trombay Station as whole.
2.9.11 As regards IDC, as per the MYT Regulations, 2011 and 2015, the loan and equity are to
be considered on a normative basis. If the equity actually deployed is more than 30% of
the capital cost, the excess is to be treated as a normative loan for the determination of
Tariff. The capitalisation amount claimed is inclusive of IDC. IDC has been determined
on the normative debt portion associated with the capitalized amount, in accordance
with the methodology in the MTR Order.
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2.9.12 As regards the reduction in equity for de-capitalisation, TPC-G has considered the
deletion in equity based on the methodology approved in previous Orders. In case equity
actually deployed is more than 30% of the capital cost, the excess is treated as normative
loan as per the Regulations.
2.9.13 As regards whether capitalisation is on cash basis or also includes un-discharged
liability, TPC-G fails to understand the query. However, the capitalisation details given
in the MYT Petition and RoE claimed on are as per the MYT Regulations, 2015.
2.9.14 As for the merged DPR, the merging of Non-DPR schemes pertaining the years starting
from FY 2008-09 is a humongous task. Accordingly, TPC-G had sought extension of
time for submission of the merged DPRs, well before the submission of this MYT
Petition.
Commission’s View
2.9.15 The Commission has approved capitalisation as per the provisions of the Regulations
and approach in earlier Orders, as set out at paras. 4.3.8, 4.4.6, 5.1.1a.5.3.11 and 6.4.7 of
this Order.
2.9.16 Capitalisation towards Head Office has been considered in proportion to the allocation
made to the Generation Business as per the methodology in the MTR Order.
2.9.17 Regarding Capex, the Commission has approved DPR schemes in principle as per its
2005 Guidelines for “In-Principle Clearance of Proposed Investment Schemes”. Non-
DPR capitalisation has been restricted to 20%, as per the MYT Regulations, 2011.
2.9.18 The Commission has considered a Debt:Equity ratio of 70:30 to arrive at the normative
debt and equity portion. Interest on Long-term Loan, IDC and RoE have been calculated
as per the normative Debt:Equity ratio.
2.9.19 After seeking extension of time, TPC-D has submitted the merged DPRs, which have
been considered by the Commission.
2.10 O&M Expenses
Suggestions/Objections
2.10.1 Shri R. G. Sonawane stated that TPC-G has claimed salary review of Head Office and
Support Services (HOSS) on provisional basis. However, actual payment would be
made once the review is finalized, but TPC-G is claiming the additional expenses now
as well as the carrying cost, whereas no employee has been paid salary arrears with
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carrying cost. Such expenses may be allowed once actual expenses are incurred and not
on a provision basis, as per the principle applied by the Commission to MSLDC.
2.10.2 Shri R. G. Sonawane stated that TPC-G has not provided any reason why the Central
Civil and Central Construction Department services, from FY 2015 onwards, will not be
availed by other Departments. In such case, the manpower requirement should be
assessed and reduced.
TPC-G’s Response
2.10.3 The claim towards the salary review of HOSS has been made based on the entries in the
books of accounts and as audited by the statutory auditors. Any revision in the provision
made will be adjusted in the subsequent Truing-up process. Details regarding the salary
review as a part of HOSS expenses have been provided in response to queries of the
Commission. The expenses are claimed according to the principles of the MYT
Regulations, 2011 and the methodology of the Commission in previous Orders.
2.10.4 TPC-G has given a detailed response to the queries raised by the Commission vide letter
dated 10 March, 2016. The consequent additional increase in employee expenses is
insignificant compared to the total O&M expenses, i.e., Rs 0.28 Crore for the Generation
Business.
Commission’s View
2.10.5 The amount of Rs. 8.62 for FY 2014-15 pertaining to the salary review has not been
actually incurred by TPC-G. Accordingly, the Commission has not allowed this amount
in the present Order. It will be considered once the cost is actually incurred.
2.11 Sharing of Unit-6 Fixed Cost
Suggestions/Objections
2.11.1 BEST stated that, when generation from Unit-6 is required for meeting Mumbai
demand, it is shared among all Distribution Licensees in the ratio of sharing of
transmission costs, as per the arrangement arrived at the meeting held by Principal
Secretary (Energy), GoM on 24 March, 2014. Unit-6 generated 636 MU during FY
2014-15 and also to some extent in FY 2015-16 during transmission constraints. This
arrangement may be continued in the 3rd
Control Period. The fixed cost of Unit-6 is
being shared by TPC-D and BEST in the ratio stipulated in their respective PPAs. Since
Unit-6 is being primarily run for meeting the demand of Mumbai during transmission
constraints, its fixed cost in this constraint scenario should also be shared in the ratio of
the transmission capacity among BEST, TPC-D and RInfra-D, as the Unit-6 power
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during such period will be utilized to meet the demand of all three Licensees. This will
reduce the burden of costly power to consumers.
TPC-G’s Response
2.11.2 The present mechanism of payment of fixed cost of Unit-6 is as per the existing PPA
with Distribution Licensees as approved by the Commission. The Commission may
decide to change the methodology of recovery of the fixed cost in the event of its
operation under MSLDC directions provided there is no financial impact on TPC-G.
Commission’s View
2.11.3 The recovery of fixed cost is linked with the PPAs of the respective Generating Units.
Even if Unit-6 is not operational, its fixed cost has to be borne by TPC-D and BEST.
Thus, the fact of the Unit running mostly to meet the transmission constraints has no
bearing on the fixed cost-sharing mechanism.
2.12 Delayed Payment Charges
Suggestions/Objections
2.12.1 Shri R. G. Sonawane stated that TPC-G should disclose whether the full income from
delayed payment charges (DPC), including interest thereon, has been considered as part
of Non-Tariff Income.
TPC-G’s Response
2.12.2 The income from DPC and Interest on DPC has been considered as a part of Non-Tariff
Income. The component-wise Non-Tariff Income is set out in Form 11.
Commission’s View
2.12.3 The Commission has considered DPC and Interest on DPC as a part of Non-Tariff
Income.
2.13 Force Majeure in case of Units 7 and 8
Suggestions/Objections
2.13.1 Shri R. G. Sonawane stated that the reduced Availability for Unit-7 is being ascribed to
Force Majeure. The Commission should appoint the Central Electricity Authority (CEA)
or other technical body to verify the claim. On the one hand, TPC-G is claiming the
benefit of better Auxiliary Consumption and Heat Rate. On the other hand, it is asking
for relaxation in the reduction in fixed cost due to low Availability. TPC-G may perform
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better in one year and may not in another year. Hence, if TPC-G has gained because of
higher Availability in the past, such benefit should be first adjusted to offset the losses
and the balance loss, if any, may be considered, if the event is attributable to Force
Majeure.
2.13.2 Regulation 49 of the MYT Regulations, 2011 requires payment of Annual Fixed
Charges (AFC) on monthly basis in equal installments, subject to adjustment at the end
of the year, with respect to target Availability. Unit-7 & 8 have not achieved target
Availability and so, for billing purposes, AFC should have been reduced automatically.
The MYT Regulations do not empower the Generating Company to bill more in case it
has not achieved target Availability. The result of doing so is that the power purchase
cost for that year has increased artificially. Hence, for Truing- purposes, the revenue of
TPC-G should be reduced and, correspondingly, the power purchase cost of Distribution
Licensees should also be reduced for FY 2014-15.
TPC-G’s Response
2.13.3 Operating efficiency and Force Majeure are two separate matters in the Regulations, the
former being within the control of the Generating Company while the latter is not. All
the necessary details have been provided to prove that the fault could not have been
detected even after regular testing and inspections of the machine as per the Original
Equipment Manufacturer (OEM). The Force Majeure clause is intended to protect the
Utility from such unforeseen conditions even after performing better during the year.
Hence, these two situations are distinct and cannot be clubbed together.
2.13.4 The methodology followed for recovery of AFC of Unit-7 and Unit-8 on monthly basis
in equal installments is in line with the MYT Regulations, 2011, and also considering
the reduced AFC as approved in the MTR Order.
Commission’s View
2.13.5 Regarding the outage of Unit-7, the Commission has gone through TPC-G’s
submissions and the root cause analysis carried out by M/s. Siemens in the Incident
Analysis Report. The Commission notes that TPC-G had adhered to the maintenance
schedule stipulated by the OEM during minor and major outages. According to the
Incident Analysis Report, the probable contributor to the failure was mechanical stress
strain condition at the J-Strap and radial bolt. The Commission also notes that, in order
to reduce the down-time of the machine outage, TPC-G arranged for a spare rental rotor
from the OEM, which was installed in Unit-7 and the machine taken in service.
Considering these, the Commission is of the view that the occurrence in Unit-7 which
led to its tripping, considerable damage and subsequent outage for repairs was beyond
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the reasonable control of TPC-G, and qualifies as a Force Majeure condition. The
detailed analysis is at para. 4.3.18 of this Order.
2.13.6 Regarding the outage of Unit-8, TPC-G has given detailed responses to the directives in
the MTR Order and provided supporting material. Considering these, the Commission is
of the view that the forced outage of Unit-8 on 9 January, 2014 was a Force Majeure
event beyond the control of TPC-G, as detailed at para. 4.4.15 of this Order.
2.13.7 Incentives are calculated on a yearly basis as per the Regulations, and hence there is no
provision for adjusting past incentives against the current claim.
2.13.8 For Truing-up, the actual revenue recovered by TPC-G is considered for arriving at
gains/ (surplus), and holding cost is charged on any excess recovery (gains). Thus, there
is no incentive for any Generator or Licensee to charge more than permitted under the
Regulations.
2.14 Incentive for Backing Down of Units
Suggestions/Objections
2.14.1 Shri R. G. Sonawane stated that there is no provision in the MYT Regulations for
incentive for backing down of Hydro Plants, and this is provided only for Thermal
Plants. The incentive for Hydro Units, if worked out, would be Rs. 1.57/kWh on energy
generated over and above Design Energy, as compared to Rs. 0.25/kWh for a Thermal
Plant.
TPC-G’s Response
2.14.2 TPC-G has not claimed any deemed PLF for backing down of Hydro Generating
Stations.
Commission’s View
2.14.3 Incentive corresponding to generation loss on account of backing down instructions is
considered only for Thermal generation. Since, in FY 2014-15, none of the Generating
Units achieved PLF exceeding 85%, such incentive has not been claimed by TPC-G.
2.15 Property Tax
Suggestions/Objections
2.15.1 Shri R. G. Sonawane stated that TPC-G has claimed Property Tax and actual expenses,
being more than normative O&M expenses, as uncontrollable. The sharing of gains and
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losses has to be as per the Regulations. The ATE in case of Torrent Power has held that
it should be allowed on normative basis and the sharing of gains and losses should be as
per the Regulations. The Commission has also ruled in previous Order that O&M
expense is normative and cannot be segregated into individual items. The Commission
may see whether TPC-G has raised the Property Tax issue before ATE or not. Since
such disallowance by the Commission was an issue of principle, TPC-G cannot seek a
review of the Commission’s decision in the current proceedings. Since TPC-G has not
challenged it before the ATE, the issue has achieved finality.
TPC-G’s Response
2.15.2 TPC-G has provided detailed justification regarding the treatment of Property Tax at
page no. 82, 83 and 84 of Section 4.1.18 of its Petition. The increase in the total O&M
expenses is claimed as a consequence of uncontrollable increase in individual
components and is based on the principles in the MTR Order. Hence, TPC-G is not
seeking any review.
Commission’s View
2.15.3 Normative O&M expenses are derived based on the methodology specified in the MYT
Regulations. Therefore, the normative O&M expenses are being approved on a
composite basis, without segregation of costs into employee, A&G and R&M expenses,
which is also in keeping with earlier Orders. An average escalation of 5.72% is being
allowed by the Commission on different components of O&M expenses. These
components may have different escalation rates, and are not individually considered for
Truing-up. Increases in any type of taxes are also subsumed in the composite escalation
rate. In the present case, the actual expenses are higher than the normative O&M
expenses based on the MYT Regulations. The gains and losses due to the variation in
O&M expenses have been computed based on the normative O&M expenses and the
approved actual O&M expenses.
2.16 Recovery of Fixed Cost for Bhira Hydro Station
Suggestions/Objections
2.16.1 Shri R. G. Sonawane stated that, as regards the lower rainfall resulting in lower recovery
of fixed cost for Bhira Hydro Station, the Commission should see whether the combined
revenue of all Hydro Plants would be sufficient to recover the fixed cost. On the other
hand, for Non-DPR capitalisation, TPC-G has requested the Commission to consider all
its Units as a whole. The Commission may deal appropriately with the selective
treatment of different issues by TPC-G.
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TPC-G’s Response
2.16.2 The Commission has approved separate Design Energy for each Hydro Generating
Station of TPC-G and has also determined capacity and Energy Charges separately.
Since the revenue recovery is separate for all Units based on the respective approved
capacity and Energy Charges, combining recovery of all the Units would be incorrect.
Further, TPC-G has requested treatment of the Energy Charge shortfall of FY 2015-16
as being due to uncontrollable factors as per MYT Regulations, 2011 as well as 2015.
Commission’s View
2.16.3 The Commission recognizes the fact of low rainfall in FY 2015-16, and notes that TPC-
G had to additional release 30 MCM water in Mulshi dam for drought-affected areas as
per the Order of the Maharashtra Water Resources Regulatory Authority (MWRRA).
This has led to generation lower than Design Energy. The Commission has approved the
fixed cost recovery as per the provisions of MYT Regulations, 2011.
2.17 Submissions for 3rd
Control Period
Suggestions/Objections
2.17.1 Shri R. G. Sonawane stated that TPC-G has sought different performance parameters
norms for the 3rd
Control Period. This amounts to a review of the Regulations, which
cannot be allowed in the current proceedings.
2.17.2 TPC-G has not considered the O&M expenses for FY 2012-13 to FY 2014-15 in the true
spirit to derive the normative expenses for the 3rd
Control Period as per Regulation
45.1(b), i.e., excluding abnormal O&M expenses, if any. Hence, the Commission should
take a re-look at the claims of TPC-G.
2.17.3 TPC-G should be directed to display on its website in easy downloadable format,
i. Copies of the fuel bills
ii. Details of GCV and price of fuel, i.e., domestic coal, imported coal, e-
auction coal, lignite, natural gas, RLNG, liquid fuel, etc.
iii. Details of blending ratio
iv. Proportion of e-auction coal.
2.17.4 In the past, Utilities have only provided a summary sheet which does not give any
details to enable scrutiny. The Commission may also make public the FAC details of
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 40 of 224
Generating and Distribution Companies before post facto approval so that consumers
may make suggestions, if any.
TPC-G’s Response
2.17.5 The norm sought for Unit-7 in open cycle operation mode is not a revised norm but one
which was approved in the Order dated 5 June, 2013 in Case No. 177 of 2011 for the 2nd
Control Period. Hence TPC-G has sought that it be considered for open cycle operation
of Unit-7 during the 3rd
Control Period. The request for a norm for Unit-6 is new based
on its current operating condition. In case of Hydro Generating Stations, the request for
GT Losses and Headworks energy consumption is based on the CPRI Report and a
genuine requirement of the Hydro Generating Stations in view of their unique
operational set up and geographical spread. Under Regulation 102 of the MYT
Regulations, 2015 the Commission has the power to specify such norms.
2.17.6 TPC it has computed O&M expenses in accordance with the MYT Regulations, 2015.
2.17.7 All the relevant data as required by the Commission is uploaded on its website as a part
of the MYT Petition.
2.17.8 As regards publishing FAC data, the suggestion is addressed to the Commission.
Commission’s View
2.17.9 The Commission notes the suggestion for providing more details on the website.
However, if any relevant additional data/information is not available on the website, it
can also be sought from the Commission as per the Conduct of Business Regulations.
2.17.10 FAC is a mechanism for pass through of variation in cost of fuel and power purchase.
The idea is to allow the recovery of variations on account of uncontrollable factors so
that the gap at the time of Truing-up and the consequent carrying cost is minimized. Any
variations in actual revenue recovery and actual cost incurred is Trued-up and the
gap/surplus adjusted in future ARR. Further, during the Truing-up, audited accounts
with the details of audited fuel cost is available, and the Commission reconciles the fuel
cost and related information (GCV, price, blending ratio etc.) from the data in the
audited statement of accounts. Such annual fuel-related information is part of the Tariff
Petition and is made available to the public for providing objections and suggestions.
2.17.11 TPC-G has provided its justification for any claim beyond that allowed in the MYT
Regulations. The Commission has scrutinized all the claims and rationale for any
approval or disapproval of such claims is given in the relevant Sections of this Order.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 41 of 224
2.18 Shortcomings in Petition Filing
Suggestions/Objections
2.18.1 Shri R. G. Sonawane stated that TPC-G’s Petition is incomplete, as neither the audited
accounts have been made available on TPC-G’s website as part of the Petition, nor has
TPC-G replied to all the queries raised by the Commission. Instead TPC-G has stated in
various replies that it would submit the replies shortly. Further, the reconciliation
statement on its website is not legible, and so it is impossible to verify or analyse the
details. TPC-G may be asked to provide documents in legible form on its website. The
Commission may postpone the Public Hearing till all documents sought by it are made
available to the public. Moreover, for this default, appropriate deductions in the carrying
cost should be done and penalty imposed.
2.18.2 If there has been any delay in filing the Petition, as per the principle settled by the ATE,
consumers should not be required to bear the carrying cost for that period.
TPC-G’s Response
2.18.3 TPC-G has submitted its Petition with all relevant documents as the Commission may
require for assessing the variations in financial performance from the approved forecast
of ARR and expected revenue from Tariff and charges. Further, responses to all queries
raised by the Commission have been provided. In some instances, it had been stated that
TPC-G would provide the responses shortly, which have been provided in subsequent
submissions. With respect to clarity in the documents uploaded, TPC-G has checked the
soft copies and found them to be legible and usable for analysis. The contact details of
concerned officials were provided in the Public Notice to enable the general public to
seek additional information and clarifications regarding the Petition.
2.18.4 As regards the delay in submission, the ARR submission involves enormous activity and
large amount of data. TPC-G had sought extension of 10 days for filing the MYT
Petition vide letter dated 1 February, 2016 and had submitted the Petition on 10
February, 2016. Hence, there is no delay beyond the committed date.
Commission’s View
2.18.5 The Commission has admitted the Petition after replies to all data gaps were received.
TPC-G had sought extension of time for filing its Petition, which was granted by the
Commission.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 42 of 224
3 IMPACT OF ATE JUDGMENTS ON PREVIOUS YEARS’ TRUE-UP
3.1 Appeal challenging MTR Order dated 26 June, 2015 in Case 6 of 2015
TPC-G’s Submission
3.1.1 TPC-G had filed Appeal No. 244 of 2015 before the ATE challenging the MTR Order
with respect to certain disallowances. In the Appeal, TPC-G had claimed the following
amounts along with applicable carrying costs.
Table 1: Potential Impact of ATE Appeal 244 of 2015 as submitted by TPC-G
S. No. Issue Disallowance
1
Disallowance of actual Auxiliary Energy Consumption of Unit-6,
despite the fact that the Unit was not operating for approximately 8
months due to economic shutdown
14.23
2 Disallowance of Carrying Cost 156.34
3
Disallowance of Income Tax on incentive and efficiency gains,
considering it on actual basis instead of accrual basis, and failing to
consider entire income while computing Profit before Tax
To be determined
4 Incorrect treatment of delayed payment charges 18.56
3.1.2 TPC-G had submitted in its Petition that the ATE Judgment is expected during the 3rd
Control Period. If it is in favour of TPC-G, it will be entitled to recover an additional
amount from the Distribution Licensees with whom it has PPAs.
3.1.3 The ATE passed its Judgment in Appeal No. 244 of 2015 on 3 June, 2016 dismissing the
Appeal and upholding the Order of the Commission.
3.1.4 Subsequently, TPC-G has made an additional submission on 18 July, 2016 stating the
following:
TPC-G’s Submission
3.1.5 In its MTR Petition, TPC-G had sought recovery of approved Gap / (Surplus) in the
same year in which it was approved for the purpose of Income Tax calculation. The
Commission had however, set out different principles for computing the Income Tax
based on actual income. In its Judgment dated 3 June, 2016 in Appeal No 244 of 2015,
the ATE has upheld the methodology of the Commission for computation of Income
Tax based on actual income. On account of this Judgment, TPC-G is entitled to
additional Income Tax for the period FY 2007-08 to FY 2013-14, and has recalculated
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 43 of 224
the Income Tax as per the actual "billed" revenue allowed to be recovered through its
various Tariff Orders.
3.1.6 The impact has been submitted without prejudice to the rights of TPC-G to seek
appropriate relief and adjustment in view of the pendency of Review Petition No 13 of
2016, against the above Judgment of the ATE. The impact computed by TPC-G is as
under:
Table 2: Potential Impact of ATE Appeal 244 of 2015 as submitted by TPC-G (Rs. Crore)
Particulars FY
2007-08
FY
2008-09
FY
2009- 10
FY
2010-11
FY
2011-12
FY
2012-13
FY
2013-14
FY
2013-14
Total
Unit 4 to 7 plus Hydro Unit 8
Revenue Considered
in the MTR T.O. Case
No 6 of 2015
A 4152.59 4963.52 3688.52 3030.91 4194.54 4662.83 3114.23 756.20
Revenue allowed to
be recovered
separately
(pertaining to past
period)
A1 85.00 15.31 716.30 -47.34
Revised Revenue
amount A2 4152.59 4963.52 3773.52 3046.22 4194.54 4662.83 3830.53 708.86
Less: Incentive and
efficiency gains B 95.52 106.56 92.35 40.35
Total Expenses C 3685.27 4661.23 3414.9 2815.61 3941.84 4406.54 2644.87 584.55
Profit before Tax D = A
2- B - C 467.32 302.29 358.62 230.61 157.17 149.73 1093.31 83.96
Tax adjustment
Add
Depreciation
considered in
Expenses
E 47.7 57.21 77.59 69.43 104.04 101.77 114.24 57.14
Other disallowance
while computing
Income Tax
F 28.61 35.89 25.67 18.93 17.53 46.15 59.06 20.28
Total Tax
disallowances
G = E +
F 76.31 93.1 103.26 88.36 121.57 147.91 173.29 77.41
Less
Tax Depreciation H 69.98 107 134.54 133.46 124.74 148.98 204.94 73.44
Other expenses
allowed for computing
Income Tax
I 23.86 14.69 10.57 18.36 25.62 48.97 57.53 16.66
Deduction - U/s 80 IA J 112.32 82.14 24.9 53.74 82.96 68.51 35.26
Total Tax allowances K = H +
I + J 206.17 203.84 170.01 205.56 233.32 266.46 297.72 90.10
Total Taxable Income L = D +
G - K 337.46 191.55 291.87 113.41 45.43 31.18 968.88 71.27
Corporate Tax Rate M 33.99% 33.99% 33.99% 33.22% 32.45% 32.445% 33.99% 33.99%
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 44 of 224
Particulars FY
2007-08
FY
2008-09
FY
2009- 10
FY
2010-11
FY
2011-12
FY
2012-13
FY
2013-14
FY
2013-14
Total
Tax Payable at
Normal rate
N =
L*M 114.70 65.11 99.21 37.67 14.74 10.12 329.32 24.22
MAT Computation
Profit before Tax O=D 467.32 302.29 358.62 230.61 157.17 149.73 1093.31 83.96
Add: Disallowances
under Income Tax (U/s
14 A, provision for
doubtful debt)
P 0.00 0.01 1.70 -0.93 -0.21 0.14 -0.05 0.00
Less: Deduction under
Income Tax (Exempt
Income, FBT, Wealth
Tax, Withdrawal from
Income)
Q 1.19 0.95 -0.49 0.15 0.00 0.00 0.00 0.00
Book Profit R = O +
P – Q 466.13 301.36 360.81 229.52 156.97 149.87 1093.25 83.96
MAT Rate S 11.33% 11.33% 16.995% 19.93% 20.01% 20.0077
% 20.961% 20.961%
Tax payable under
MAT T = R*S 52.81 34.14 61.32 45.75 31.41 29.99 229.15 17.60
Tax applicable U= max
(N,T) 114.70 65.11 99.21 45.75 31.41 29.99 329.32 24.22 739.70
V Normal Normal Normal MAT MAT MAT Normal Normal
MAT Credit
Available
if V =
MAT,
then
W=U-N
0.00 0.00 0.00 8.07 16.67 19.87 0.00 0.00
Cumulative MAT
Credit Available x 0.00 0.00 8.07 24.74 44.61 44.61
Tax Payable
y= if(v=
Normal,
v-x)
114.70 65.11 99.21 45.75 31.41 29.99 284.71 24.22
Tax Approved in
MTR T.O. / Claimed
in MYT for FY 2014-
15
X 114.70 65.11 69.29 42.69 31.41 29.99 85.85 40.32 479.35
Impact due to ATE
Judgment 0.00 0.00 29.92 3.06 0.00 0.00 198.86 -16.09 215.75
Note: Revenue of FY 2009-10 is considered as per the T.O. 105of 2011 dated 15th February, 2012 (P.No.113 of 234)
3.1.7 TPC-G has also claimed carrying cost on this additional claim of Rs. 215.75 Crore as
per the methodology of the Commission. The Commission may allow the revised
Revenue Gap of Rs. 299.50 Crore along with the carrying cost due to the consequential
tax impact as shown in the Table below:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 45 of 224
Table 3: Potential Impact of ATE Appeal 244 of 2015 including carrying cost as submitted
by TPC-G (Rs. Crore)
S.
No. Particulars Year
SBI
PLR
rate
Approved
in the MTR
T.O
Additional
Impact
1
Impact of Hon'ble ATE
Judgment in Appeals 182 of
2012 and 212 of 2013
including Carrying Cost
Unit 4 to 7
and Hydro 66.30 0.00
2
Impact of Hon'ble ATE
Judgment in Appeals 182 of
2012 including Carrying Cost
Unit 8 7.27 0.00
3
Impact of Hon'ble ATE
Judgment in Appeals 105 of
2012 including Carrying Cost
Unit 4 to 7
and Hydro 139.65 32.97
4
Impact of Hon'ble ATE
Judgment in Appeals 18 of
2011 w.r.t disallowed
capitalization including
Carrying Cost
Unit 4 to 7
and Hydro 38.90 0.00
5 Carrying Cost allowed for past
recovery in Appeal 212 of 2013 64.99 0.00
6 Total ATE Impact
317.11 32.97
12 Truing-up gap for FY 2012-13
Unit 4 to 7
and Hydro 133.50 0.00
13 Truing-up gap for FY 2012-13
Unit 8 -6.17 0.00
14 Total
127.32 0.00
15 Carrying Cost FY 2012-13 14.61%
9.30 0.00
16 Carrying Cost FY 2013-14 14.58%
18.57 0.00
17 Carrying Cost FY 2014-15 14.75%
18.78 0.00
18 Total with Carrying Cost
173.98 0.00
19 Truing-up gap for FY 2013-14
Unit 4 to 7
and Hydro -75.14 198.86
20 Truing-up gap for FY 2013-14
Unit 8 -29.14 -16.09
21 Total
-104.28 182.77
22 Carrying Cost FY 2013-14 14.58%
-7.60 13.33
23 Carrying Cost FY 2014-15 14.75%
-15.38 26.96
24 Total with Carrying Cost
-127.27 223.06
25 Fuel Cost recovery pertaining
to past period -14.36 0.00
26 Total amount to be passed on
in FY 2015-16 349.44 256.03
27 Carrying Cost for FY 2015-16 FY 2015-16 14.75%
27.00 31.82
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 46 of 224
S.
No. Particulars Year
SBI
PLR
rate
Approved
in the MTR
T.O
Additional
Impact
28 Total Recovery allowed with
Carrying Cost till FY 2015-16 376.44 287.85
29 Carrying Cost for FY 2016-17
for 6 months FY 2016-17 10.80%
11.65
30 Total Impact of ATE Judgment
376.44 299.50
3.1.8 Since the MAT credit gets utilised by FY 2013-14, there is no MAT credit available for
FY 2014-15. Accordingly, the revised Tax computation for FY 2014-15 is as shown in
the Table below:
Table 4: Revised Tax Computation for FY 2014-15 as submitted by TPC-G (Rs. Crore)
Particulars FY 2014-15
Revenue Considered in the MTR T.O. Case No 6 of 2015 A 2641.56
Revenue allowed to be recovered separately (pertaining to
past period)
A1 0.00
Revised Revenue amount A2 2641.56
Less: Incentive and efficiency gains B 46.12
Total Expenses C 2133.56
Profit before Tax D = A 2- B - C 461.87
Tax adjustment
Add
Depreciation considered in Expenses E 117.29
Other dissallowance while computing Income Tax F 73.36
Total Tax disallowances G = E + F 190.65
Less
Tax Depreciation H 178.40
Other expenses allowed for computing Income Tax I 79.21
Deduction - U/s 80 IA J 14.77
Total Tax allowances K = H + I + J 272.38
Total Taxable Income L = D + G - K 380.14
Corporate Tax Rate M 0.34
Tax Payable at Normal rate N = L*M 129.21
MAT Computation
Profit before Tax O=D 461.87
Add: Disallowances under Income Tax (U/s 14 A, provision
for doubtful debt)
P 0.17
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 47 of 224
Particulars FY 2014-15
Less: Deduction under Income Tax (Exempt Income, FBT,
Wealth Tax, Withdrawal from Income)
Q 0.00
Book Profit R = O + P - Q 462.04
MAT Rate S 20.961%
Tax payable under MAT T = R*S 96.85
Tax applicable U = max(N,T) 129.21
V Normal
MAT Credit Available if V = MAT, then
W=U-N 0.00
Cumulative MAT Credit Available x 0.00
Tax Payable y= if(v=Nor,v-x) 129.21
Tax Approved in MTR T.O. / Claimed in MYT for FY
2014-15
X 99.24
Impact due to ATE Judgment 29.97
Commission’s Analysis and Ruling
3.1.9 The submission of TPC-G pertains to Income Tax calculation for the period FY 2007-08
to FY 2013-14. The MTR Order had reassessed the Income Tax for the period FY 2007-
08 to FY 2010-11 on PBT method as per the ATE Judgment in Appeal No. 105 of 2012.
Further, the Commission undertook the revised Truing-up of FY 2011-12 and Truing-up
of FY 2012-13 and FY 2013-14 and determined the Income Tax based on PBT method
as per the data and information submitted by TPC-G.
3.1.10 TPC-G had filed an Appeal No. 244 of 2015 in ATE against the MTR Order challenging
the methodology of computation of Income Tax calculation. In its Judgment dated 3
June, 2016, the ATE has dismissed all the submissions of TPC-G on the issues relating
to Income Tax calculation. The ATE has upheld the Commission’s Order, and there is
no direction from ATE for revised calculation of Income Tax for the past periods which
have attained finality. The relevant para. of ATE Judgement reads as follows:
“The State Commission has rightly disallowed income tax on accrual basis by giving
clear reasons in the Impugned Order stating that for computing income tax liability it
has considered the regulated PBT on the income less permissible expense and other
provisions of the Income Tax Act. The State Commission has considered only revenue
from sale of power. Since income booked as tariff adjustment has not been considered
for truing up purposes and State Commission has not considered income tax as payable
on such income which is yet to be approved by the Commission and yet to be billed or
recovered.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 48 of 224
After going through the case law, cited by the appellant, the said case laws are not
applicable to the facts of the matter in hand. They are on different aspects with which we
are not concerned in these appeals. We are clearly of the view that income tax based on
regulated PBT is payable on the actual income in such situation. In view of the above
discussion, on this issue we approve the findings and view expressed by the State
Commission in the Impugned Order. This issue is also decided against the appellant in
each of the appeals.”
3.1.11 The Commission, has therefore, not considered the claims made by TPC-G in its
additional submission.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 49 of 224
4 TRUING-UP FOR FY 2014-15
4.1 Background
TPC-G has sought final Truing-up of FY 2014-15 based on the actual expenditure and
revenue as per the audited Annual Accounts, in accordance with MYT Regulations,
2011. It has also stated the reasons for differences between the actual expenses for FY
2014-15 and those approved in the MTR Order. The detailed analysis of the True-up
undertaken by the Commission is provided below.
4.2 Performance Parameters
In the MTR Order, the Commission had approved the provisional performance
parameters for TPC-G for FY 2014-15. TPC-G has now given the actual performance
parameters for FY 2014-15, which are different from those approved earlier. TPC-G’s
submissions regarding the actual performance parameters for FY 2014-15 and the
Commission’s analysis and rulings are detailed below.
4.3 Performance of Units-4 to 7 and Hydro Stations
4.3.1 Availability and Gross Generation
TPC-G’s Submission
4.3.1.1 TPC-G has achieved a total gross generation of 6745.71 MU. The Unit-wise
performance is detailed below.
Unit-4: It is a stand-by Unit. In FY 2014-15, it was not required to be brought into
service and the generation was nil.
Unit-5: Generation for FY 2014-15 was as per that approved in the MTR Order.
Unit-6: Cost of generation from Unit-6 is higher due to running on oil and RLNG. While
determining the Tariff for the 2nd
Control Period, the Commission had not considered
Unit-6 generation. Considering this, both the Distribution Licensees had asked TPC-G to
stop generation from this Unit. TPC-G has kept Unit-6 under economic shutdown.
However, the Unit is operated when there is a requirement from the Distribution
Licensees or under the directions of MSLDC to address system constraints. When
generation from Unit-6 is as per MSLDC directions for meeting Mumbai’s demand, it is
shared by all Mumbai Distribution Licensees in the ratio of sharing of transmission
costs, as per the arrangement arrived at in the meeting held by Principal Secretary
(Energy), GoM on 24 March, 2014. Generation from Unit-6 during FY 2014-15 under
the PPAs (as per the requirement of Distribution Licensees) was 201.80 MU.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 50 of 224
Additionally, Unit-6 generated 636.40 MU under the directions of MSLDC to meet
system constraints.
Unit-7: The generation in FY 2014-15 was as approved in the MTR Order.
Hydro generation: The overall Hydro power generation in FY 2014-15 was as approved
in the MTR Order.
Commission’s Analysis and Ruling
4.3.1.2 The Commission asked TPC-G for the MSLDC certificate in support of the Availability
claimed for FY 2014-15. TPC-G provided the MSLDC certification showing
Availability and gross generation for FY 2014-15, summarized as follows:
Table 5: Gross Generation and Availability certified by MSLDC for FY 2014-15
Year
Unit-5 Unit-6 Unit-7 Bhira Khopoli Bhivpuri
Gross
Generati
on (MU)
Availabili
ty (%)
Gross
Generati
on (MU)
Availabili
ty (%)
Gross
Genera
tion
(MU)
Availabili
ty (%)
Availabili
ty (%)
Availabili
ty (%)
Availabili
ty (%)
FY
2014-15 3316.29 85.07% 838.20 99.96% 1148.48 77.34% 99.30% 96.99% 99.47%
4.3.1.3 The Commission notes that the Availability calculated by MSLDC is based on declared
Availability and normative Auxiliary Energy Consumption. Further, the Availability for
Bhira Hydro Generating Station is shown as 99.46% whereas the Availability as per the
MSLDC Certificate is 99.30%. For Truing-up, the Commission has considered
Availability as per the MSLDC Certificate.
4.3.1.4 Actual Availability as certified by MSLDC for Unit-5 and Unit-6 is higher than the
normative level of 85%, whereas the Availability of Unit-7 is lower than the normative.
Accordingly, the Commission allows recovery of full AFC for Unit-5 and Unit-6.
4.3.1.5 Regulation 49.2 of the MYT Regulations, 2011 states that the recovery of AFC below
the target Availability shall be provided on pro rata basis. Accordingly, the Commission
has approved the AFC for Unit-7 on pro rata to its actual Availability as detailed in
para.4.3.18.19 of this Order.
4.3.1.6 The Commission verified the actual gross generation achieved by Thermal Generating
Stations of TPC-G from the MSLDC certificate and found it to be in order, and
considered it accordingly.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 51 of 224
4.3.1.7 The Commission has considered gross generation from Unit-6 as per TPC-G’s
submission, i.e., 201.80 MU under the PPAs (as per the requirement of Distribution
Licensees) and 636.40 MU under the directions of MSLDC to meet system constraints.
4.3.1.8 The summary of Unit-wise gross generation and Availability considered by the
Commission for Truing-up is shown in the Table below:
Table 6: Summary of Availability for Units 4 to 7 and Hydro Stations for FY 2014-15 as
approved by Commission
Generating
Station MTR Order TPC-G Petition
Normative
Availability
Considered for
Truing-up
Hydro Stations
Khopoli 99.09% 96.99% 90.00% 96.99%
Bhivpuri 97.64% 99.47% 90.00% 99.47%
Bhira 98.60% 99.46% 90.00% 99.30%
Trombay
Thermal Station
Unit-5, Trombay 85.00% 85.07% 85.00% 85.07%
Unit-6, Trombay 100.00% 99.96% 85.00% 99.96%
Unit-7, Trombay 77.00% 77.34% 85.00% 77.34%
Table 7: Summary of Gross Generation for Units 4 to 7 and Hydro Stations for FY 2014-15
as approved by Commission (MU)
Generating Station MTR Order TPC-G Petition Approved in this
Order
Hydro Stations
Khopoli 276.00 275.62 275.62
Bhivpuri 330.00 330.02 330.02
Bhira 837.00 837.11 837.11
Total Hydro 1443.00 1442.75 1442.75
Trombay Thermal
Station
Unit-4, Trombay 0.00 0.00 0.00
Unit-5, Trombay 3316.00 3316.29 3316.29
Unit-6, Trombay-
Regulated 838.00
201.80 201.80
Unit-6, Trombay
(MSLDC Directions) 636.40 636.40
Unit-7, Trombay 1148.00 1148.48 1148.48
Total Thermal 5302.00 5302.96 5302.96
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 52 of 224
Generating Station MTR Order TPC-G Petition Approved in this
Order
Grand Total 6745.00 6745.71 6745.71
4.3.2 Auxiliary Energy Consumption
TPC-G’s Submission
4.3.2.1 Auxiliary Energy Consumption for Units 4 to 7 and Hydro Generating Stations is as
shown in the Table below:
Table 8: Auxiliary Energy Consumption for FY 2014-15 as submitted by TPC-G
Generating Station MTR Order TPC-G Petition
Hydro-w/o Colony Consumption 1.78% 2.54%
Unit-4, Trombay* 5.11 2.11
Unit-5, Trombay 6.00% 5.69%
Unit-6, Trombay 3.50% 6.88%
Unit-7, Trombay 3.00% 2.54%
Note:*: Unit-4 is in stand-by mode. Hence, Auxiliary Energy Consumption is shown in MU
as per MYT Order
Unit-4
4.3.2.2 The Commission has approved monthly Auxiliary Energy Consumption of 0.426 MU
for Unit-4 in stand-by mode in the MTR Order. Considering that the Unit was in stand-
by mode throughout FY 2014-15, the Auxiliary Energy Consumption is within the
normative level approved by the Commission. Further, TPC-G has not claimed any gain/
loss on account of this better Auxiliary Energy Consumption. The Auxiliary Energy
Consumption claimed for FY 2014-15 for Unit-4 is as shown in the Table below:
Table 9: Unit-4Auxiliary Energy Consumption for FY 2014-15 as submitted by TPC-G
Particulars Unit
Unit-4Auxiliary Energy Consumption as approved in
the Business Plan under S/B mode for 150 MW
capacity
MU 0.426
Number of months Months 12
Total Auxiliary Energy Consumption MU 3.68
Actual Auxiliary Energy Consumption for FY 2014-15 MU 2.11
Difference in Auxiliary Energy Consumption MU (1.57)
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 53 of 224
Unit-5
4.3.2.3 Auxiliary Energy Consumption of Unit-5 is within the normative Auxiliary Energy
Consumption approved in the MTR Order.
Unit-6
4.3.2.4 Auxiliary Energy Consumption of Unit-6 is higher due to part-load operation and factors
beyond the reasonable control of TPC-G and may, therefore, be considered as
uncontrollable.
4.3.2.5 The relationship between generation and Auxiliary Energy Consumption is non-linear.
This is because some auxiliaries such as cooling water pump, ACW pump, DM Plant,
and fuel oil pump system are essential for the Unit and remain in service even if it is
running at lower PLF. In support, TPC-set out the trend of Unit-6 Auxiliary Energy
Consumption at various PLFs showing a variation of 5.43% Auxiliary Energy
Consumption at 47% PLF vis-à-vis 2.73% at 94% PLF.
4.3.2.6 To determine the quantum of essential auxiliaries and the impact of lower PLF, CPRI
was engaged by TPC-G. On the basis of the CPRI test observation also, the percentage
of Auxiliary Energy Consumption increases with reduction in the load.
4.3.2.7 In view of the above, the Commission may approve actual Auxiliary Energy
Consumption of 6.88% for Unit-6 for to the extent operating under PPA. TPC-G has
considered this Auxiliary Energy Consumption for sharing of gains/losses.
4.3.2.8 Unit-6 has generated 636.40 MUs under the directions of MSLDC, for which Auxiliary
Energy Consumption was 42.34 MUs, i.e., 6.65%. TPC-G has not considered this
Auxiliary Energy Consumption for sharing of gains/losses.
4.3.2.9 Auxiliary Energy Consumption for the period when the Unit was on stand-by mode is
11.78 MU. Unlike Unit-4, the Commission has not notified any normative value for
Auxiliary Energy Consumption for Unit-6 under stand-by mode. Accordingly, the
calculation for Auxiliary Energy Consumption under stand-by mode has been done
based on the electricity consumption of the essential equipment required for keeping the
Unit operational. The equipment-wise annual electricity consumption estimate of such
equipment has been submitted. Accordingly, the Commission may provide norms for
Auxiliary Energy Consumption under stand-by mode for the period of economic
shutdown of Unit-6. TPC-G has not considered this Auxiliary Energy Consumption for
sharing of gains/losses.
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Unit-7
4.3.2.10 Auxiliary Energy Consumption of Unit-7 is within the normative Auxiliary Energy
Consumption approved in the MTR Order.
Hydro Stations
4.3.2.11 The Auxiliary Energy Consumption for Hydro Stations in FY 2014-15 is as under:
Table 10: Auxiliary Energy Consumption of Hydro Stations for FY 2014-15 as submitted
by TPC-G
Particulars TPC-G Petition
Auxiliary Energy Consumption including static excitation 0.79%
Pumping energy for nallah diversion 0.39%
GT losses 1.15%
Headworks 0.18%
Condenser mode of operation 0.02%
Total 2.54%
Colony consumption 0.18%
Total 2.71%
Auxiliary Energy Consumption, including Static Excitation
4.3.2.12 Auxiliary Energy Consumption under this head is lower than the approved value.
Pumping energy for nallah diversion
4.3.2.13 TPC-G has computed the Auxiliary Energy Consumption for nallah diversion based on
the methodology in the MYT Order. Accordingly, TPC-G has considered the average of
the latest five year period, i.e., FY 2009-10 to FY 2013-14 to arrive at the average
Auxiliary Energy Consumption for the water pumped. The normative Auxiliary Energy
Consumption for 78.33 MCM of water pumped during FY 2014-15 is worked out as
under:
Table 11: Auxiliary Energy Consumption for nallah diversion as submitted by TPC-G for
FY 2014-15
Particulars Unit
TPC-G Petition
Average Auxiliary Energy Consumption for last five years MU a 5.03
Average water pumped for last five years MCM b 59.86
Actual flow of water in FY 2014-15 MCM c 78.33
MUs based on MCM water flow for FY 2014-15 MU d=a*c/b 6.59
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MERC Order in Case No. 32 of 2016 Page 55 of 224
Particulars Unit
TPC-G Petition
Gross generation MU e 1442.75
Normative Auxiliary Energy Consumption % f=d/e 0.46%
Actual Auxiliary Energy Consumption MU g 5.68
Actual Auxiliary Energy Consumption % h=g/e 0.39%
4.3.2.14 Even if the prorated Auxiliary Energy Consumption is considered based on the norm in
the Business Plan Order, the Auxiliary Energy Consumption works out to 5.68 MU
(0.39%), which is equivalent to the actual Auxiliary Energy Consumption. Accordingly,
the Commission may approve the actual Auxiliary Energy Consumption of 5.68 MU
towards nallah diversion schemes for FY 2014-15.
GT Losses
4.3.2.15 The MTR Order had disallowed the Auxiliary Energy Consumption towards GT Losses
stating that the CPRI reports do not justify the impact of the small Generating Units on
transformation losses. The Commission had opined, that based on the CPRI
observations, the transformation losses are within the control of TPC-G.
4.3.2.16 In this regard, TPC-G has taken measures like correction of metering errors in all the
locations of Hydro Stations. This has reduced GT Losses over the years, which have
now settled near the minimum recommended level certified by CPRI, as shown in the
Table below:
Table 12: Actual GT Losses for FY 2014-15 as submitted by TPC-G
Particulars Approved As Per CPRI Actual Difference
Khopoli 0.50% 1.19% 1.07% -0.12%
Bhivpuri 0.50% 1.17% 1.18% 0.01%
Bhira 0.50% 1.09% 1.16% 0.07%
Hydro Total 0.50% 1.13% 1.15% 0.02%
4.3.2.17 Accordingly, the Commission may approve the norms for GT losses of 1.13% as against
the approved value of 0.50%.
Headworks
4.3.2.18 The MTR Order had disallowed the Auxiliary Energy Consumption towards
Headworks, opining that the requirement of the Headworks distribution system is
common to almost all Hydro Stations and is not a special case.
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MERC Order in Case No. 32 of 2016 Page 56 of 224
4.3.2.19 TPC-G’s Headworks distribution system is unique because of
a. Large geographical spread as compared to the generating capacity
b. Complex water system consisting of gate operations at multiple lake reservoirs,
inter-lake water transfer systems, valve houses at various locations, open canal
water conductor system, fore bay, tunnels and penstocks.
c. Various control points at critical locations requiring significant Auxiliary Energy
Consumption for all head works distribution systems
d. Distribution transformers for providing power supply for operation at various
locations, also requiring significant Auxiliary Energy Consumption
4.3.2.20 In order to show the distinctive nature of the hydro projects, TPC-G has provided the
layouts of the individual Hydro Stations.
4.3.2.21 The Headworks Auxiliary Energy Consumption has reduced over the past few years
(0.30% in FY 2012-13 to 0.18% in FY 2014-15) due to efforts like installation of energy
savers and the replacement of old pumps. The Headworks Auxiliary Energy
Consumption as shown in the Table below:
Table 13: Headworks consumption as submitted by TPC-G
Particulars Approved As Per CPRI Actual Difference
Khopoli - 0.67% 0.37% -0.30%
Bhivpuri - 0.07% 0.08% 0.01%
Bhira - 0.30% 0.15% -0.15%
Hydro Total - 0.33% 0.18% -0.15%
4.3.2.22 The Commission may approve the normative Auxiliary Energy Consumption under this
head based on the CPRI study report, i.e., 0.33% on overall Hydro Generation. TPC-G
has claimed actual Auxiliary Energy Consumption of 0.18% for Truing-up purpose.
Colony Consumption
4.3.2.23 TPC-G has excluded the colony consumption from the total Auxiliary Energy
Consumption and included it in O&M expenses by multiplying the colony consumption
in MUs with the average energy rate for FY 2014-15.
4.3.2.24 Based on the above, the Auxiliary Energy Consumption for Hydro Generating Stations
is as follows:
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MERC Order in Case No. 32 of 2016 Page 57 of 224
Table 14: Hydro Auxiliary Energy Consumption for FY 2014-15 as submitted by TPC-G
Particulars TPC-G Petition
Auxiliary Energy Consumption for Hydro Generating Stations 2.54%
Colony consumption 0.18%
Commission’s Analysis and Ruling
4.3.2.25 As regards the Auxiliary Energy ConsumptionofUnit-4, the Commission had approved it
as 0.426 MU per month for stand-by mode in its MYT Order for the 2nd
Control Period.
This works out as 5.112 MU Auxiliary Energy Consumption yearly. The Commission
observed that the actual Auxiliary Energy Consumption for Unit-4 was 2.11 MU, which
is within the approved value, and accordingly considered it for the purpose of Truing-up.
4.3.2.26 The actual Auxiliary Energy Consumption for Unit-5 during FY 2014-15 was 5.69% as
against the normative level of 6.00%. As the actual Auxiliary Energy Consumption was
lower than the normative, the Commission has considered it.
4.3.2.27 As regards the Auxiliary Energy Consumption of Unit-6 (when not operating under
MSLDC directions), TPC-G has considered the actual Auxiliary Energy Consumption
on account of part-load operation, stating that the actual Auxiliary Consumption is high
due to factors beyond its control. TPC-G also sought separate norms for Auxiliary
Consumption of Unit-6 under the stand-by mode. TPC-G had earlier also sought
relaxation in the performance parameters of Unit-6 in Case Nos. 40 of 2012 and 6 of
2015. In its MTR Order (Case No. 6 of 2015), the Commission held as under:
“4.1.2.19 The Commission notes that there is no provision in the MYT
Regulations for lowering the performance norms for operation of the plant at low
PLF. Accordingly, the Commission has specified the norm of Auxiliary Energy
Consumption for Unit-6 as 3.5% in the MYT Order. Further, the Commission
notes that TPC-G has filed an Appeal No. 212 of 2013 challenging the norm of
Auxiliary Energy Consumption of Unit-6 specified in the MYT Order. In its
Judgment dated 27 October 2014, the ATE has upheld the view of the
Commission.”
4.3.2.28 TPC-G filed Appeal No. 244 of 2015 challenging the methodology in the MTR Order of
sharing of gains/losses on account of Auxiliary Consumption of Unit-6 and asking for
separate norms for Auxiliary Consumption in the standby mode. In its Judgment dated 3
June, 2016, the ATE has upheld the view of the Commission:
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MERC Order in Case No. 32 of 2016 Page 58 of 224
“From the Impugned Order we find that the State Commission in 5.1.2.13 of the
Impugned Order (which is subject matter of Appeal No.244 of 2015), has clearly
observed that there is no provision in MYT Regulations 2011 for lowering the
performance for plant operation at low PLF and the State Commission has
specified the norm of auxiliary consumption for Unit-6 as 3.5% in the MYT order.
The said view of the State Commission has been upheld by this Appellate
Tribunal’s judgment dated 27.10.2014 in Appeal No.212 of 2013. Accordingly,
the State Commission has considered the approved normative auxiliary
consumption of Unit-6 of 3.5% for truing up purposes.
…After going through various provisions of law, counter submissions of the
parties and going through the judgment of this Appellate Tribunal in Appeal
No.212 of 2013, we are of the view that this issue is clearly covered by the
judgment in Appeal No.212 of 2013 pronounced by this Appellate Tribunal. We
find merits and substance in the submissions put forth by the respondent State
Commission. There is no merit in any of the contentions made by appellant on this
issue. This issue is decided against the appellant.”
4.3.2.29 Considering the above, the Commission has approved the normative Auxiliary Energy
Consumption of Unit-6 (when not operating under MSLDC directions) as 3.50%. It has
not considered separate norms for Auxiliary Consumption under stand-by mode for the
purpose of Truing-up, in accordance with the methodology followed in the MTR Order
and keeping in view the ATE Judgments in Appeal Nos. 212 of 2013 and 244 of 2015.
4.3.2.30 However, the Commission notes that Unit-6 operation under MSLDC directions is a
special mode of operation. It does not arise from the demand of Distribution Licensees
but is required to meet system constraints. In such eventuality, the Unit normally runs at
low load with intermittent operation as and when required, resulting in higher
uncertainties in operation. Vide instructions dated 26 March, 2014, the MSLDC directed
TPC-G to operate Unit-6 for some period to avoid load shedding, subsequent to
decisions taken at a meeting chaired by the Principal Secretary (Energy), GoM.
Considering the exceptional nature of operation of Unit-6 under MSLDCs direction on
intermittent load, the Commission considers this a fit case for exercising its power under
the MYT Regulations, 2011 to remove difficulties. Accordingly, the Commission now
approves the actual Auxiliary Consumption of 42.34 MU for the period in FY 2014-15
when Unit-6 was running as per MSLDC directions, after prudence check of meter
reading data of 15 minute time block submitted by TPC-G.
4.3.2.31 The actual Auxiliary Energy Consumption for Unit-7 in FY 2014-15 was 2.54% as
against the normative level of 3.00%. As the actual Auxiliary Energy Consumption of
was lower than the normative, the Commission has considered it.
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MERC Order in Case No. 32 of 2016 Page 59 of 224
4.3.2.32 The MYT Regulations, 2011 specify the norms of Auxiliary Energy Consumption of
Hydro Generating Stations. The norm applicable for machines with static excitation
systems is 1% with an additional 0.50% for transformation losses. In the MYT Order for
the 2nd
Control Period, the Commission had considered additional Auxiliary Energy
Consumption to the extent of 0.28% on account of pumping energy for nallah diversion.
Accordingly, the Commission stipulated the normative Auxiliary Energy Consumption
of 1.78% for Hydro Stations in that Order. Further, the Commission has not considered
any additional Auxiliary Energy Consumption on account of Condenser mode of
operation, and colony consumption is considered as part of O&M expenses.
4.3.2.33 As regards the GT Losses, the MTR Order reads as follows:
“4.1.2.26 The Commission is of the view that the CPRI reports do not justify the
impact of the small Generating Units on the transformation losses, as contended
by TPC-G. Moreover, based on the observations made, it may be noted that the
transformation losses are within the control of TPC-G. The Commission finds no
merit in considering the transformation losses over and above the normative
losses of 0.50%. The Commission has considered the GT losses of 0.5% for the
Hydro Stations.”
4.3.2.34 The Commission notes that TPC-G has taken measures that reduced the GT losses, and
that now the GT losses are near the minimum recommended by CPRI. However,
notwithstanding this reduction in GT losses, the CPRI reports do not support TPC-G’s
contention regarding the impact of small Generating Units on transformation losses.
Moreover, considering the observations made in the CPRI report, the transformation
losses are within the control of TPC-G. Therefore, the Commission finds no merit in
considering the transformation losses over and above the normative losses of 0.50%.
4.3.2.35 Moreover, at the TVS, TPC-G was asked to submit the Cost Benefit Analysis (CBA) of
GT replacement recommended by CPRI. The CBA submitted in response shows that
TPC-G has considered a benefit over 15 years. However, the Commission is of the view
that the existing transformers are very old and are unlikely to perform at the desired
level for next 15 years, as considered by TPC-G in the CBA. Hence, it would be more
prudent to replace the transformers and get the benefit of reduced Auxiliary Energy
Consumption, as also suggested by CPRI. Accordingly, the Commission has not
considered any additional GT Losses, but only the normative GT losses of 0.50% for
Hydro Generating Stations.
4.3.2.36 The MTR Order stated that the Headworks distribution system loss cannot be included
in Auxiliary Energy Consumption as such requirements are common to almost all Hydro
Stations. In this regard, TPC-G has made fresh submissions with additional supporting
data and information. From the layouts of the individual Hydro Stations provided, TPC-
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MERC Order in Case No. 32 of 2016 Page 60 of 224
G’s system is apparently different from the usual Headworks distribution system in
terms of large geographical spread, a water system consisting of gate operations at
multiple lake reservoirs, inter-lake water transfer systems, valve houses at various
locations, open canal water conductor system, fore bay, tunnels and penstocks. Further,
the system has control points and distribution network of HT and LT Lines and
transformers along the pen stock, requiring significant Auxiliary power consumption.
TPC-G also provided details of the layout and pictorial representations of its Hydro
Generating Stations to show the unique design of the Headworks distribution system.
4.3.2.37 On the basis of the material now provided, the Commission is clear that the Hydro
Generating Station is spread over a large geographical area (particularly between the
dam site and the Generating Plant) out of proportion to the generating capacity.
Consequently, several control points, distribution network of HT and LT Lines and
distribution transformers are required at different locations. This requires significant
Auxiliary Energy Consumption. Considering that the difference in design necessitates
such additional Auxiliary Energy Consumption, the Commission is now of the view that
the additional Auxiliary Energy Consumption on account of Headworks should be
allowed.
4.3.2.38 The Commission asked for details of the transformers used for various requirements of
the Headworks distribution system. From TPC-G’s response, the Commission notes that
there are 47 transformers in the three Hydro Generating Stations, with total
transformation capacity of more than 100 MVA.
4.3.2.39 The Commission also notes that TPC-G has taken measures to reduce Headworks
Auxiliary Energy Consumption to 0.18% as compared to 0.33% stipulated in the CPRI
Report.
4.3.2.40 Considering these aspects, the Commission is of the view that the requirements of the
Headworks distribution system of TPC-G represent a special case. Accordingly, in
exercise of its power under Regulation 100of the MYT Regulations, 2011 to remove
difficulties, the Commission approves the actual Auxiliary Energy Consumption of
0.18% on account of Headworks distribution systems.
4.3.2.41 In the light of the above discussion, the Commission has considered the normative
Auxiliary Energy Consumption of 1.96% for Hydro Generating Stations for Truing-up
purposes as shown in the Table below:
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MERC Order in Case No. 32 of 2016 Page 61 of 224
Table 15: Normative Auxiliary Energy Consumption for Hydro Generating Stations as
approved by Commission for FY 2014-15
Particulars
TPC-G Petition Normative as
approved in this
Order
Auxiliary Energy Consumption including static
excitation
0.79% 1.00%
Condenser mode of operation 0.02% 0.00%
Pumping Energy from nallah diversion 0.39% 0.28%
GT Losses 1.15% 0.50%
Headworks 0.18% 0.18%
Total 2.54% 1.96%
4.3.2.42 The summary of Unit-wise actual Auxiliary Energy Consumption in FY 2014-15 and
that considered by the Commission for sharing of gains/losses is as shown in the Table
below:
Table 16: Auxiliary Energy Consumption for FY 2014-15 as approved by Commission
Generating Station Actuals Approved in this Order
Hydel Stations (%) 2.54% 1.96%
Unit-4, Trombay (MU) 2.11 2.11
Unit-5, Trombay (%) 5.69% 6.00%
Unit-6, Trombay- Regulated (%) 6.88% 3.50%
Unit-7, Trombay (%) 2.54% 3.00%
Note:*: Unit-4 is in stand-by mode. Hence, Auxiliary Energy Consumption is shown in MU
4.3.2.43 The Commission has considered the Auxiliary Energy Consumption as a controllable
parameter. Hence, the difference between the actual Auxiliary Energy Consumption as
submitted by TPC-G and the normative Auxiliary Energy Consumption as approved by
the Commission in this Order has been considered for computing the sharing of
efficiency gains.
4.3.3 Gross Station Heat Rate
TPC-G’s Submission
4.3.3.1 Station Heat Rate (SHR) of Unit-5 and Unit-7 are lower than approved in the MTR
Order.
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MERC Order in Case No. 32 of 2016 Page 62 of 224
4.3.3.2 For Unit-6, SHR depends upon the mix of oil:gas firing used. In line with the
methodology in the MYT Tariff Order for the 2nd
Control Period, TPC-G has considered
SHR based on the actual ratio of fuels used in FY 2014-15 as shown in the Table below:
Table 17: SHR for Unit-6 for FY 2014-15 as submitted by TPC-G (kCal/kWh)
Particulars Normative SHR for FY 2014-15
Full gas firing 2656
Full oil firing 2411
Normative SHR as per MYT
Regulations @ 50:50 Mix 2534
Normative SHR Approved in
MTR (Provisional Fuel Mix)
Normative SHR as
per Actual Fuel Mix
Actual gas % 90.39% 96.13%
Actual oil % 9.61% 3.87%
Revised Normative Heat Rate 2632 2647
4.3.3.3 Unit-6 is in economic shutdown mode owing to its high generation cost. Generation
from Unit-6 is intermittent, with multiple start-ups and shut downs, high variation in
generation and frequent ramping up/down. These factors and lower PLF have led to a
higher SHR of Unit-6 in FY 2014-15.
4.3.3.4 The actual SHR of Unit-6 in different modes of operation is as shown in the Table
below:
Table 18: Actual SHR for Unit-6 under different modes of operation, as submitted by TPC-
G for FY 2014-15
Mode of Operation Station Heat Rate (kCal/kWh)
Under PPA mode of operation 2846
As per MSLDC directions 2831
Commission’s Analysis and Ruling
4.3.3.5 The MTR Order approved the SHR for Unit-6 as per the Regulations based on the
provisional gas: oil ratio of 90.39:9.61 for FY 2014-15. The Regulations specify that the
SHR for Unit-6 be based on the actual fuel mix if the variation in gas and oil mix is
more than ± 5% of a 50:50 ratio. From the data furnished by TPC-G, the actual gas and
oil mix for FY 2014-15 was in the ratio of 96.13:3.87, i.e. beyond the permissible
variation of ± 5%. Hence, the Commission has considered a revised normative SHR for
Unit-6 (when not operating under MSLDC directions) for FY 2014-15 based on the
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actual fuel mix, which comes as 2647 kCal/kWh. The Commission notes that the SHR
of Unit-5 and Unit-7 are lower than approved in the MTR Order. The summary of Unit-
wise actual and normative SHR considered for Truing-up and sharing of gains and
losses is as under:
Table 19: Unit-wise SHR for 2014-15 (kCal/kWh) approved by Commission
Generating Station Actuals Normative approved in this Order
Unit-5, Trombay 2507 2573
Unit-6, Trombay- Regulated 2846 2647
Unit-7, Trombay 1968 2021
4.3.3.6 The Commission has considered the SHR as a controllable parameter. Hence, the
difference between the actual SHR as submitted by TPC-G and normative SHR as
approved by the Commission in this Order has been considered for computing the
sharing of efficiency gains.
4.3.4 Fuel Cost
TPC-G’s Submission
4.3.4.1 The total fuel cost for FY 2014-15 was Rs 1357.85 Crore. Various fuel price parameters
were provisionally Trued-up in the MTR Order. Hence, there is no major difference
between the parameters approved in the MTR Order and the actuals. The fuel cost
includes the cost on account of minor fuels used, fuel handling charges and other
adjustments. The fuel-wise break-up is given in the Table below:
Table 20: Break-up of Fuel Cost, as submitted by TPC-G for FY 2014-15
Particulars FY 2014-15 (Actual)
Consumption (MT)
Gas – APM 195971
Gas – RLNG + NAPM 35025
Coal 1671995
Oil 2744
GCV (kCal/kg)
Gas – APM 13124
Gas – RLNG 12988
Coal 4840
Oil 10501
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Particulars FY 2014-15 (Actual)
Price (Rs./MT)
Gas – APM 15884
Gas – RLNG 44842
Coal 5414
Oil 51365
Fuel cost in Rs. Crore
Gas – APM 311.28
Gas – RLNG + NAPM 127.08
Coal 905.39
Oil 14.10
Total 1357.85
Commission’s Analysis and Ruling
4.3.4.2 The Commission has gone through the details of fuel receipts, calorific value and price.
The variation in fuel price and calorific value in FY 2014-15 has been considered as part
of FAC, and has already been passed through monthly under that mechanism.
4.3.4.3 The Commission sought additional information and material, viz. imported coal
contracts and bills, details of quantity, price and GCV of fuel, procedure followed for
competitive procurement, etc. The GCV, price and quantity of fuel has been approved
after scrutiny. The Commission also verified the fuel cost claim with the audited
allocation statement of accounts. On this basis, for the Truing-up of fuel costs, the
Commission has considered the actual fuel prices and calorific value as given in the
Table below:
Table 21: Fuel Parameters as approved by Commission for FY 2014-15
Particulars TPC-G Petition Approved in this Order
GCV (kCal/kg)
Gas – APM 13124 13124
Gas – RLNG 12988 12988
Coal 4840 4840
Oil 10501 10501
Price (Rs./MT)
Gas – APM 15884 15884
Gas – RLNG 44842 44842
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Particulars TPC-G Petition Approved in this Order
Coal 5414 5414
Oil 51365 51365
4.3.4.4 The fuel cost for Units 4 to 7 and Unit-8 as per the audited allocation statement is Rs.
1529.10 Crore, whereas TPC-G has claimed Rs. 1533.29 Crore. In reply to the
clarification sought, TPC-G stated that it has considered fuel adjustment on account of
exchange rate variation for Units-4 to 8. It has considered adjustment of Rs. 4.31 Crore
for Units-4 to 8 on account of exchange rate change and foreign exchange fluctuation on
payment for fuel. TPC-G submitted the reconciliation of the fuel cost for Units 4 to 7and
Unit-8 as shown in the Table below:
Table 22: Fuel Cost Reconciliation as submitted by TPC-G for FY 2014-15 (Rs. Crore)
Fuel Units 4 to 7 Unit-8
APM Gas 311.28 -
RLNG + NAPM Gas 127.08 -
Coal 905.39 170.34
Oil 14.10 5.23
Total 1357.85 175.56
4.3.4.5 The Commission notes that the actual fuel cost for Units 4 to 7 as per the audited
statement is Rs. 1355.69 Crore, and the reconciled fuel cost, including foreign exchange
rate adjustment, as submitted by TPC-G is Rs. 1357.85 Crore. Accordingly, the
Commission has considered Rs. 2.16 Crore (1357.85 -. 1355.69) for Units 4 to 7on
account of exchange rate change and foreign exchange fluctuation on payment of fuel.
The adjustment pertaining to Unit-8 has been considered in the subsequent Section.
4.3.4.6 Based on the SHR, fuel prices and fuel calorific value as discussed earlier, the total fuel
cost for FY 2014-15 is as summarised in the Table below:
Table 23: Fuel Cost for Units 4 to 7 for FY 2014-15 as approved by Commission (Rs.
Crore)
Particulars Actual Normative approved in this Order
Unit-5, Trombay 948.39 973.23
Unit-6, Trombay* 139.70 129.91
Unit-7, Trombay 269.75 277.08
Total 1357.84 1380.23
*Note: Unit-6 fuel cost is after excluding fuel cost of operation under MSLDC
directions
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 66 of 224
4.3.4.7 The Commission approves the normative Fuel Cost of Rs. 1380.23 Crore for FY
2014-15 for Units 4 to 7, and has considered the actual fuel cost of Rs. 1357.84
Crore (excluding Fuel Cost of Unit-6 when operated under MSLDC directions) for
sharing of gains as per the MYT Regulations, 2011.
4.3.5 Fuel Cost of Unit-6 under MSLDC Directions
TPC-G’ Submission
4.3.5.1 Fuel cost for Unit-6 operation under MSLDC directions was Rs. 792.11 Crore.
Commission’s Analysis and Ruling
4.3.5.2 TPC-G has considered the actual SHR while computing the fuel cost of Unit-6 for
operation under MSLDC directions, while the MTR Order had considered it based on
the normative SHR. However, the Order also states that the Commission would consider
all material and information afresh during the final Truing-up for Unit-6 for FY 2014-
15:
“Fuel Cost of Unit 6
…6.2.2.5 The above is for provisional Truing up of Unit 6 only considering the
circumstances of operation of Unit 6, which may also recur, and not the final
dispensation. The Commission shall consider all material and information afresh
while carrying out the final truing up for Unit 6 for FY 2014-15.”
4.3.5.3 As explained earlier with regard to the Auxiliary Consumption of Unit-6 under MSLDC
directions, the Commission is of the view that its operation in these circumstances is of
an exceptional nature and requires the Unit to run on low and intermittent load.
Considering this, the Commission approves the actual SHR of 2831 kCal/kWh for FY
2014-15, after prudence check of the month-wise fuel cost calculation submitted by
TPC-G.
4.3.5.4 Based on actual Auxiliary Consumption and SHR, the Commission approves the
actual Fuel Cost of Rs. 792.11 Crore for Unit-6 for operation under MSLDC
directions during FY 2014-15, as claimed by TPC-G.
4.3.5.5 The Commission is separately considering the protocol to resort to idle capacity and
apportionment and commercial settlement of Unit-6 operating under MSLDC directions
in Case No. 133 of 2015, which would apply prospectively.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 67 of 224
4.3.6 Entry Tax
TPC-G’s Submission
4.3.6.1 TPC-G had challenged the Entry Tax liability, introduced in 2002 by GoM, in the
Bombay High Court. The High Court, in its Order dated 16 January, 2004, held the levy
of this Tax as unauthorised and unconstitutional. The GoM filed a Special Leave
Petition (SLP) in the Supreme Court, and in the meantime amended the Sales Tax Act.
The Supreme Court dismissed the SLP on the ground that GoM had removed the levy of
Entry Tax, which in fact it had not actually removed but allowed only to be partially set
off.
4.3.6.2 As only partial set off was allowed, TPC-G has now received a demand notice from
GoM for Rs 326.40 Crore and Rs 458.96 Crore against Entry Tax liabilities, including
interest and penalty, for FY 2005-06 and 2008-09 respectively, under the Maharashtra
Tax on the Entry of Goods into Local Areas Rules, 2002. Against this demand notice,
TPC appealed to the Joint Commissioner of Sales Tax (Appeals) V, Mumbai. However,
for admission of the Appeal, TPC-G had to pay the amount due after set off, which it
paid under protest. Finally, the Joint Commissioner of Sales Tax dismissed the Appeal.
4.3.6.3 TPC-G had appealed against this dismissal to the Maharashtra Sales Tax Tribunal,
which admitted the Appeal considering the partial payment already made. However, the
Tribunal also rejected the Appeal.
4.3.6.4 TPC-G has now approached the Bombay High Court in Writ Petition 1321 of 2015 and
Appeals 20 and 21 of 2015 against the above decision and demand. These Appeals and
Writ were also admitted by the Bombay High Court on the basis of part payment already
made under protest, and are pending. However, the High Court has stayed the disputed
demand, which is being extended from time to time.
4.3.6.5 The Deputy Commissioner of Sales Tax issued a demand notice for FY 2006-07 and FY
2009-10. TPC-G made part payment after making adjustment for Value Added Tax
(VAT) refund of Rs. 25.62 Crore and Rs. 8.39 Crore for FY 2006-07 and FY 2009-10
respectively. On Appeal, the Joint Commissioner of Sales Tax (Appeals) V, Mumbai has
granted stay till the final Judgment of the Bombay High Court for FY 2005-06 and
2008-09. In the present Petition, TPC-G has claimed the amount which has been paid
under protest.
4.3.6.6 As per the Entry Tax Act, set off is allowed on payment of Entry Tax. Hence, though the
gross tax is 12.5%, the effective rate after set-off against VAT is 3% to 4%. TPC-G has,
therefore, paid the amount after the set off, which works out to Rs. 34.01 Crore.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 68 of 224
4.3.6.7 TPC-G has paid this net liability to the Tax Department on 28 July, 2014 and 17 March,
2015. As per the demand made by GoM, TPC-G has made a provision of around Rs. 200
Crore in its books of accounts. The Commission may permit its recovery in future years,
in case it becomes payable.
4.3.6.8 The Entry Tax amount pertains to FY 2006-07 and FY 2009-10, when TPC-G was
supplying power to three Distribution Licensees, i.e., TPC-D, RInfra-D and BEST.
Hence, this amount is to be charged in the ratio of sales to these Licensees in the
respective years. The computation is as given below:
Table 24: Impact of Entry Tax as submitted by TPC-G for FY 2014-15
Particulars TPC-D RInfra-D BEST Total
Entry Tax (Rs. Crore) 8.03 12.36 13.62 34.01
Commission’s Analysis and Ruling
4.3.6.9 The Commission has examined the material furnished by TPC-G, and has accordingly
considered the Entry Tax amount to be recovered from the Distribution Licensees, i.e.,
TPC-D, RInfra-D and BEST. This recovery is considered separately along with the
recovery of the other past Revenue Gaps.
Table 25: Recovery of Entry Tax, as approved by Commission
Particulars TPC-D RInfra-D BEST Total
Entry Tax (Rs. Crore) 8.03 12.36 13.62 34.01
4.3.7 Operation and Maintenance Expenses
TPC-G’s Submission
4.3.7.1 The actual O&M expenses were Rs. 489.78 Crore for FY 2014-15. The break-up of the
O&M expenses is detailed below.
Employee Expenses
4.3.7.2 TPC-G has incurred Rs. 209.61 Crore towards employee related expenditure in FY
2014-15 as compared to Rs. 163.91 Crore in FY 2013-14. The break-up as under:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 69 of 224
Table 26: Employee Expenses for Trombay Units 4-7 &Hydro Stations for FY 2014-15 (Rs.
Crore)
Particulars FY 2013-14 (Actuals) FY 2014-15 (Actuals)
Salary, wages and staff welfare 176.09 230.46
Terminal benefits 13.43 0.00
VRS expenses 0.46 0.82
Fringe benefit tax 0.00 0.00
Less: expenses capitalised -26.07 -21.67
Total 163.91 209.61
4.3.7.3 The employee expenses have increased on account of the increase in allocation of the
HOSS cost to the Generation, Transmission and Distribution Businesses. Further, salary
review of a set of employees is being considered which will have retrospective effect
and liability, and its impact has been provisioned as Rs. 8.62 Crore. There has been a
slight increase in manpower at HOSS and increase in staff welfare expenses on account
of Mediclaim insurance premium. Also, additional provision of Rs. 5 Crore has been
made towards pension and gratuity based on the actuarial report, and Rs. 0.28 Crore on
account of change in the cost allocation methodology among different Businesses of
TPC.
Commission’s Analysis and Ruling
4.3.7.4 The increase in actual employee expenses is mainly on account of salary, wages and
staff welfare. As regards the increase in manpower at HOSS and increase in staff welfare
expenses, the Commission asked TPC-G to submit the exact amounts. TPC-G has stated
that the HOSS allocation towards medical insurance premium to Generation Business in
FY 2013-14 was Rs. 0.76 Crore, and in FY 2014-15 was Rs. 1.26 Crore.
4.3.7.5 TPC-G has clarified that the provision for salary review has been made on account of
projected cost increase in salary cost for non-management staff ,which is Rs. 21.33
Crore for FY 2014-15 out of which the impact on TPC-G is Rs. 8.62 Crore. The
Commission notes that the increase in salary cost is due to the provisioned amount of
Rs. 8.62 Crore which has not been actually incurred by TPC-G. Accordingly, the
Commission has not allowed this increase of Rs. 8.62 Crore in the present Order. It will
be considered once the cost is actually incurred.
4.3.7.6 As regards Rs. 0.28 Crore on account of change in the cost allocation methodology
among the different Businesses of TPC, the Commission asked TPC-G to submit the
amount which has been shared within the Licence area. TPC-G has submitted that, out
of the total Rs. 5.72 Crore employee cost of Central Civil and Central Construction
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 70 of 224
Departments, Rs. 4.16 Crore would have been allotted to the Licence area as per the
earlier practice. However, on account of change in cost allocation, the entire amount of
Rs. 5.72 Crore is allotted to the Licence area only, resulting in increase of Rs. 0.28 Crore
in employee expenses.
4.3.7.7 On the basis of the details provided, the Commission has considered the actual employee
expenses of Rs. 200.99 Crore for FY 2014-15 for the Truing-up and sharing of O&M
expenses on composite basis.
A&G Expenses
TPC-G’s Submission
4.3.7.8 TPC-G has incurred Rs. 107.34 Crore towards A&G expenses for FY 2014-15, which is
11% higher than in FY 2013-14. The major increase is on account of water charges,
Rent and Taxes and Insurance. The increase in Property Tax of Rs. 15 Crore has led to
an increase under the head of rent, rates and taxes, and the increase in insurance
premium has led to increase in insurance costs. The community and welfare expenses
have been deducted while computing the total A&G expenses, in line with the ATE
Judgment dated 31 August, 2012 in Appeal No. 18 of 2011.
Commission’s Analysis and Ruling
4.3.7.9 TPC-G has claimed Rs. 12.85 Crore as an uncontrollable expense on account of revision
in the Property Tax rates. The Commission asked TPC-G for documentary evidence in
support of its claims and detailed computations for Property Tax paid along with the
difference between the previous and present Property Tax rates. TPC-G submitted the
documentary evidence along with the detailed computations sought.
4.3.7.10 Considering the details furnished, the Commission has considered the actual A&G
expenses of Rs. 107.34 Crore for FY 2014-15 for the Truing-up and sharing of O&M
expenses on composite basis.
R&M Expenses
TPC-G’s Submission
4.3.7.11 TPC-G has incurred Rs. 172.82 Crore towards R&M expenses for FY 2014-15, which is
14% higher than in FY 2013-14. The main reason for the increase is because expense of
Rs. 7.00 Crore on account of work relating to forced outage of Unit-7 and Rs. 5.00 Crore
on account of work carried out during Unit-5 outage.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 71 of 224
Commission’s Analysis and Ruling
4.3.7.12 The Commission notes that Rs. 7.00 Crore was on account of works relating to the
forced outage of Unit-7, rotor removal and transportation, etc. Rs. 5.00 Crore was
incurred on works carried out during Unit-5 outage arising out of the findings.
Considering the details provided and the audited allocation statement, the Commission
has considered the actual R&M expenses of Rs. 172.82 Crore for FY 2014-15 for the
Truing-up and sharing of O&M expenses on composite basis.
Brand Equity Expenses
TPC-G’s Submission
4.3.7.13 The Commission had directed that Brand Equity expenses be computed based on the
revenue earned in the previous year. In view of this, there is a difference between the
actual amount and that arrived at as directed by the Commission. TPC-G has adjusted
O&M expenses on account of Brand Equity to the extent of the expenses computed on
the basis of revenue earned in the previous year, and has accordingly considered Rs.
8.92 Crore towards Brand Equity expenses.
Commission’s Analysis and Ruling
4.3.7.14 In its Order in Case No. 105 of 2011, the Commission had noted that the Brand Equity
Agreement states that payment towards Brand Equity has to be computed on the basis of
annual net income of the financial year immediately preceding the year in which the use
occurs, and had directed TPC-G to compute the Brand Equity expenses accordingly.
4.3.7.15 TPC-G has provided the computation of Brand Equity expenses for FY 2014-15 on the
basis of Annual Net Income of FY 2013-14. Accordingly, the Commission has
considered the amount of Rs. 8.92 Crore.
Corporate Social Responsibility Expenditure
TPC-G’s Submission
4.3.7.16 The Commission, in previous Orders, had disallowed the Corporate Social
Responsibility (CSR) expenditure. Considering this, TPC-G has adjusted the O&M
expenses to exclude the CSR expenditure.
Commission’s Analysis and Ruling
4.3.7.17 The Commission has considered the amount as submitted by TPC-G, and the CSR
expenditure has been excluded from the actual O&M expenses.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 72 of 224
Load Control Centre Expenditure
TPC-G’s Submission
4.3.7.18 The Load Control Centre (LCC)/ PSCC expenditure has not been allocated separately
for FY 2014-15, and is part of the O&M expenses.
Commission’s Analysis and Ruling
4.3.7.19 The Commission has considered LCC / PSCC expenditure for FY 2014-15 as part of the
O&M expenses.
Colony Consumption for Hydro Stations
TPC-G’s Submission
4.3.7.20 The colony consumption cost based on the energy rate for FY 2014-15 is Rs. 0.56
Crore.
Commission’s Analysis and Ruling
4.3.7.21 The Commission has considered the cost towards the colony consumption of Hydro
Stations considering the revised AFC based on the methodology in the MTR Order as
Rs. 0.55 Crore for FY 2014-15.
Total O&M Expenses
TPC-G’s Submission
4.3.7.22 The total O&M expenses for FY 2014-15, considering all the above adjustments, is Rs.
490.52 Crore.
Commission’s Analysis and Ruling
4.3.7.23 Considering all adjustments, the Commission has taken the O&M expenses for Truing-
up as under:
Table 27: Summary of O&M Expenses for FY 2014-15 as approved by Commission (Rs.
Crore)
Particulars TPC-G Petition Approved in this
Order
Employee expenses 209.61 200.99
R&M expenses 172.82 172.82
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 73 of 224
Particulars TPC-G Petition Approved in this
Order
A&G expenses 107.34 107.34
Sub-Total 489.78 481.16
Less: actual Brand Equity expenses 8.73 8.73
Add: Brand Equity expenses as per approved
methodology 8.92 8.92
Total O&M expenses 489.96 481.34
Add: hydro colony consumption 0.56 0.55
Total 490.52 481.89
4.3.7.24 The Commission has considered the O&M Expenses of Rs. 481.34 Crore for
sharing of gains as per the MYT Regulations, 2011.
4.3.8 Capital Expenditure and Capitalisation
TPC-G’s Submission
4.3.8.1 TPC-G has carried out capitalisation of Rs. 163.96 Crore in FY 2014-15 as against Rs.
124.02 Crore approved in the MTR Order. Of this, the capitalisation on account of DPR
schemes (including merged DPRs) is Rs. 134.91 Crore. The balance is on account of
Non-DPR schemes, i.e., Rs. 29.05 Crore, which is about 22% of the DPR scheme
capitalisation.
4.3.8.2 The increase in the DPR to Non-DPR ratio is primarily because, generally, the Hydro
Generating Stations spread over a large area have a large number of small capital
expenditure schemes. As they are at various locations, merging them to form a DPR
with a common theme is difficult. Of the total non-DPR capitalisation of 22%, the
contribution of capitalisation towards non-DPR schemes of Hydro Stations is 9%.
Further, the capitalisation of HOSS schemes allocated to the Generation Business is also
of a Non-DPR nature, thus increasing the Non-DPR capitalisation. For the Generation
Business as a whole, i.e., including Unit-8, the proportion is within 20%.
4.3.8.3 The Commission may consider capitalisation for the Generation Business as a whole and
allow the entire capitalisation towards Non-DPR schemes.
Commission’s Analysis and Ruling
4.3.8.4 The Commission has gone through the details of scheme-wise capitalisation provided by
TPC-G.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 74 of 224
4.3.8.5 For the DPR schemes, the Commission has examined the CBA Reports. The
Commission notes that all the DPR schemes proposed by TPC-G have been approved
in-principle except for four new schemes, viz. a) Environment, fire, safety, security and
statutory requirements 2013-17, b) Unit-5 Reliability Schemes, c) Refurbishment of SET
1 and d) Replacement of Unit-5 condenser tubes. The Commission has reviewed the
justification and CBA as per its Guidelines of 2005. Based on this analysis, the
Commission has considered the impact of these four Capex schemes for capitalisation.
4.3.8.6 Regarding Non-DPR schemes, TPC-G has also included the capitalisation of some Non-
DPR schemes that are of O&M nature or are for common employee facilities, such as
procurement of tools and tackles, procurement of safety equipment, swimming pool
renovation, mobiles and canteen equipment for staff, etc. The Commission has deducted
such schemes from the Non-DPR schemes capitalisation as below:
Table 28: Non-DPR Schemes not considered for Capitalisation (Rs. Crore)
Sche
me
Code
Particulars
FY
2010-
11
FY
2011-
12
FY
2012-
13
FY
2013-
14
FY
2014-
15
FY
2015-
16
FY
2016-
17
FY
2017-
18
FY
2018-
19
FY
2019-
20
G.075
1012
Procurement of
safety equipments
for hydro
0.49 0.25 0.44 0.35 0.02 0.00 0.00 0.00 0.00 0.00
G.073
1020
Procurement of
tools &tackles 0.00 0.19 0.21 0.01 0.00 0.00 0.10 0.24 0.00 0.00
G.040
1006
Misc. emergency
budget for hydro 0.07 0.08 0.08 0.08 0.07 0.00 0.00 0.00 0.00 0.00
G.072
1134
Procurement of
modular furniture/
lockers
0.00 0.00 0.00 0.16 0.06 0.00 0.00 0.00 0.00 0.00
G.072
1193
Procurement of
unforeseen items –
Trombay
0.00 0.14 0.15 0.20 0.29 0.25 0.15 0.00 0.00 0.00
G.072
1211
Procurement of
tools &equipment 0.00 0.00 0.00 0.21 -0.01 0.00 0.00 0.00 0.00 0.00
G.072
1234
Mobiles &canteen
equipment for staff 0.00 0.00 0.11 0.18 0.11 0.14 0.12 0.12 0.00 0.00
G.100
19116
015
Safety Tool &
Tackle & Testing
Instruments
0.00 0.00 0.00 0.00 0.00 0.00 0.55 0.56 0.00 0.00
G.110
30117
080
Swimming pool
renovation 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.00 0.00 0.00
Total 0.57 0.66 1.00 1.18 0.54 0.39 0.92 1.91 0.00 0.00
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 75 of 224
4.3.8.7 In line with the Commission’s previous Orders, the Commission has restricted Non-DPR
capitalisation to 20% of DPR capitalisation. TPC-G is directed to club similar Non-DPR
schemes and submit such merged schemes to the Commission if it seeks their
consideration in future.
4.3.8.8 The summary of the capitalisation approved for FY 2014-15 is as shown in the Table
below:
Table 29: Capitalisation approved by Commission for FY 2014-15 (Rs. Crore)
Particulars TPC-G Petition Approved in
this Order
DPR capitalisation 134.91 134.91
Non-DPR capitalisation including HOSS 29.05 26.98
Total Capitalisation 163.96 161.89
4.3.8.9 The Commission approves Capitalisation of Rs. 161.89 Crore for FY 2014-15 for
Units 4 to 7 and Hydro Stations, as against Rs. 163.96 Crore claimed by TPC-G.
4.3.9 Non-DPR Capitalisation for FY 2010-11 to FY 2013-14
TPC-G’s Submission
4.3.9.1 The Commission in its Order dated 8 September, 2010 in Case No. 96 of 2009 for
Truing-up for FY 2008-09, APR for FY 2009-10 and ARR for FY 2010-11 had
restricted the Non-DPR capitalisation to 20% of the DPR capitalisation, and accordingly
disallowed certain amounts towards Non-DPR schemes. In its Judgment on TPC-G’s
Appeal No. 18 of 2011, the ATE ruled that:
“In view of the judgment in Appeal No.199 of 2010, TPC-G should submit
justification of non-DPR schemes to the Commission and the Commission should
consider the same for capitalisation subject to prudence check.”
4.3.9.2 In view of this Judgment, in its MTR Petition TPC-G had provided details of Non-DPR
schemes for FY 2008-09 to FY 2010-11, along with CBA Reports, and requested the
Commission to allow the disallowed capitalisation of Rs. 53.14 Crore, Rs. 58.25 Crore
and Rs. 39.58 Crore for Unit-4 to 8 and Hydro Generating Stations pertaining to each of
these 3 years, respectively. However, in its MTR Order the Commission has not
considered certain capitalisation towards Non-DPR schemes from FY 2010-11 to FY
2011-12, and directed TPC-G to club these Non-DPR schemes and submit a merged
DPR for prudence check. For FY 2012-13 and FY 2013-14, the Commission restricted
the Non-DPR capitalisation to 20% and gave similar directions.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 76 of 224
4.3.9.3 The summary of merged DPRs is as shown in the Table below:
Table 30: Summary of Merged DPRs, as submitted by TPC-G (Rs. Crore)
Particulars
FY
2008-09
FY
2009-10
FY
2010-11
FY
2011-12
FY
2012-13
FY
2013-14
Capitalisation claimed by TPC-G
in MTR Petition (Units 4 to 7&
Hydro)
a 53.14 57.76 39.58 151.85 158.09 327.65
Capitalisation approved by
Commission. b 50.14 53.67 0 128.26 146.46 317.06
Balance Capitalisation claimed c=a-b 3.00 4.09 39.58 23.59 11.63 10.59
Capitalisation Claimed by TPC-G
in MTR Petition (Unit-8) d 17.07 12.90 11.95
Capitalisation approved by
Commission. e 15.63 10.10 9.42
Balance Capitalisation claimed f=d-e 1.44 2.80 2.53
Total Balance Capitalisation to
be claimed g=c+f 3.00 4.09 39.58 25.03 14.43 13.12
Submission of (Part 1) Merged
DPR (Trombay) h 0.72 4.89 15.18 14.95 3.16 0.67
Submission of (Part 2) Merged
DPR (Hydro) i 0.16 0.29 5.77 4.23 1.15 1.17
Submission of (Part 3) Merged
DPR (Hydro) j 4.06 3.34 8.01 5.95 0.92 0.42
Submission of (Part 4) Merged
DPR (Trombay) k 0.48 1.18 5.12 0.77 0.28 0.06
Merged DPR of Environment,
fire, safety, security and statutory
2013 -17
l 7.63 3.96
Submission of (Part 5) Merged
DPR (Trombay) m 16.29
Total Submission of Merged
DPR
(n = h + i + j + k + l + m) n 5.43 9.70 34.08 25.91 13.14 22.57
20% of Merged DPR Value o = n *
20% 1.09 1.94 6.82 5.18 2.63 4.51
Balance Capitalisation p = g-
n-o 0 0 0 0 0 0
Commission’s Analysis and Ruling
4.3.9.4 TPC-G submitted the Non-DPR capitalisation of merged DPRs vide letters dated 26
October, 2015, 2 November, 2015, 26 November, 2015, 5 January, 2016 and 25 January,
2016.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 77 of 224
4.3.9.5 The MTR Order had disallowed Non-DPR capitalisation for certain schemes for FY
2008-09 and FY 2009-10:
“3.1.2.6 The Commission has examined the schemes and the CBA as submitted by
TPC-G, and has scrutinised the Non-DPR schemes implemented by TPC-G in FY
2008-09 and FY 2009-10. The Commission notes that some of the schemes were
executed for replacement of old assets which have outlived their useful life. The
assets were replaced for repeated failures due to ageing. Other reasons for their
replacement were up-gradation of technology, non-Availability of spares and
Original Equipment Manufacturer (OEM) support. These were one-time
replacements and non-recurring expenditure.
3.1.2.7 In reply to the Commission’s query, TPC-G stated that the assets, which
are replaced, are normally very old/obsolete. Such assets are decapitalised and
retired, and have been removed from the Gross Fixed Assets (GFA) after
replacement. In very rare cases, such assets could be used at some other location
and hence may be included in GFA.
3.1.2.8 The Commission notes that TPC-G could not furnish adequate
justification for capitalisation of some schemes. Hence, capitalisation towards
these schemes has been disallowed. The details of such schemes are tabulated
below:…
…
3.1.2.10 In view of the above, as regards the capitalisation for FY 2010-11
onwards, the TPC-G was bound by the directions given in Case No. 111 of 2008
to club the related Non-DPR schemes for In–Principle approval by the
Commission and restrict the capitalisation towards such schemes to 20%.”
4.3.9.6 Thus, the issue of approval of capitalisation for FY 2008-09 and FY 2009-10 was settled
in the MTR Order after scrutiny and prudence check. The Commission had also stated
that TPC-G was bound to club the related Non-DPR schemes for in–principle approval
and restrict the capitalisation towards such schemes to 20% for FY 2010-11.
Accordingly, the present Order has not considered the merged Non-DPR capitalisation
claimed by TPC-G for FY 2008-09 and FY 2009-10, and has considered the merged
Non-DPR capitalisation only from FY 2010-11 onwards.
4.3.9.7 At para. 4.3.8.6 of this Order, the Commission has disallowed certain Non-DPR
schemes that are of O&M nature or are for common employee facilities. Since the
schemes are disallowed, the Commission has not considered their yearly capitalisation
from FY 2010-11 to FY 2019-20. Accordingly, the Commission has adjusted the yearly
capitalisation under these schemes till FY 2013-14 in the merged Non-DPR
capitalisation submitted by TPC-G.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 78 of 224
4.3.9.8 In view of the above discussion and scrutiny, the Commission has now approved certain
merged Non-DPR capitalisation for Units 4 to 7 and Hydro Generating Stations for FY
2010-11 to FY 2013-14, as summarised in the Table below:
Table 31: Summary of Merged Non-DPR Capitalisation now approved by Commission for
Units 4 to 7 and Hydro Generating Stations (Rs. Crore)
Particulars FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14
DPR Capitalisation as approved in
MTR Order 52.49 106.88 122.05 264.22
Non-DPR Capitalisation as
approved in MTR Order 10.50 21.38 24.41 52.84
Total Capitalisation as approved
in MTR Order 62.99 128.26 146.46 317.06
Merged Non-DPR Schemes as
submitted by TPC-G 39.58 23.59 11.63 10.59
Less: Non-DPR Capitalisation
before FY 2013-14 now
disallowed for selected schemes as
in para.4.3.8.6
0.57 0.66 1.00 1.18
Approved Merged Non-DPR
Capitalisation 39.01 22.93 10.63 9.41
4.3.9.9 The Commission has reviewed the justification and CBA submitted for these merged
DPR Capex proposals. On that basis, the Commission has considered the impact of these
capitalisations in the 3rd
Control Period. Accordingly, the Commission has approved the
impact of merged DPR capitalisation on the opening Gross Fixed Assets (GFA),
opening Loan and opening Equity for FY 2014-15. It has considered the impact of
yearly RoE, Interest on Long-term Loan and Depreciation disallowed on account of
subsequent approval of these capital expenditures in the past years. Further, as set out in
the MTR Order, the Commission has not considered any carrying cost on the now
approved merged Non-DPR capitalisation. The summary of the Non-DPR capitalisation
approved by the Commission is as shown in the Table below:
Table 32: Non-DPR Capitalisation for Units 4 to 7 and Hydro Generating Stations as
approved by Commission for FY 2010-11 to FY 2013-14 (Rs. Crore)
Particulars FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 Total
Units 4 to 7 and Hydro
Depreciation Computations
Opening GFA 0.00 39.01 61.94 72.58
Addition 39.01 22.93 10.63 9.41
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 79 of 224
Particulars FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 Total
Units 4 to 7 and Hydro
Closing GFA 39.01 61.94 72.58 81.99
Depreciation rate 2.09% 3.04% 2.87% 3.03%
Depreciation 0.41 1.54 1.93 2.34 6.21
Interest Expenses Computations
Opening loan 0.00 26.90 41.42 46.93
Addition 27.31 16.05 7.44 6.59
Repayment 0.41 1.54 1.93 2.34
Closing loan 26.90 41.42 46.93 51.18
Interest rate 9.63% 10.67% 11.06% 10.99%
Interest on Long-term
Loan 1.29 3.65 4.88 5.39 15.21
RoE Computation
Opening equity 0.00 11.70 18.58 21.77
Addition 11.70 6.88 3.19 2.82
Closing equity 11.70 18.58 21.77 24.60
Rate of return 14.00% 15.50% 15.50% 15.50%
Return on equity 0.00 1.81 2.88 3.37 8.07
Grand Total 1.70 7.00 9.69 11.11 29.50
4.3.9.10 The Commission approves the impact of the merged DPR Capitalisation allowed
for FY 2010-11 to FY 2013-14 on Return on Equity, Interest Expenses and
Depreciation as Rs. 29.50 Crore for Units 4 to 7 and Hydro Generating Stations.
The Commission has considered this recovery separately along with the recovery of
other past Revenue Gaps.
4.3.10 Depreciation
TPC-G’s Submission
4.3.10.1 TPC-G has computed Depreciation as Rs. 117.29 Crore for FY 2014-15 by applying the
rates specified under the MYT Regulations, 2011.
Commission’s Analysis and Ruling
4.3.10.2 As discussed at para.4.3.9.10 of this Order, the Commission has considered the impact
of merged DPR capitalisation on the opening GFA for FY 2014-15. The opening GFA
as submitted by TPC-G in Form-5 of the Petition does not match the sum of approved
closing GFA for FY 2013-14 in the MTR Order and the merged DPR capitalisation
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 80 of 224
allowed in this Order. When asked to clarify, TPC-G provided a revised Form-5 along
with reconciliation with the merged DPR submission.
4.3.10.3 The Petition sets out the opening GFA as Rs. 4013.79 Crore and Depreciation as Rs.
117.29 Crore. However, in the formats annexed, opening GFA is Rs. 4018.07 Crore. The
Commission also noted that TPC-G had provided asset-wise Depreciation computations
resulting in Depreciation of Rs. 117.29 Crore. To the clarification sought, TPC-G stated
that there was an error in the opening GFA in the formats, and submitted revised formats
showing opening GFA of Rs. 4013.79 Crore.
4.3.10.4 The Commission has considered the opening GFA for FY 2014-15 taking the closing
GFA for FY 2013-14 in the MTR Order, plus the merged DPR capitalisation from FY
2010-11 to FY 2013-14 approved in para. 4.3.9.8 of this Order. The Commission has
also considered the assets added during the year, subject to the actual capitalisation
approved for FY 2014-15 in this Order.
4.3.10.5 Regulation 31.2 of the MYT Regulations, 2011 specifies that the Generating Company
may recover Depreciation on the value of fixed assets, computed annually based on the
straight-line method at the specified rates. The Commission has determined the
Depreciation on opening GFA for the full operational period, and on additional
capitalisation from the date of capitalisation, for various classes of assets at the rates as
per the MYT Regulations, 2011.
4.3.10.6 The summary of Depreciation claimed by TPC-G and as approved by the Commission
for FY 2014-15 is as under:
Table 33: Depreciation as approved by Commission for FY 2014-15 (Rs. Crore)
Particulars MTR Order TPC-G Petition Approved in this
Order
Opening GFA 3921.28 4013.79 4003.29
Asset Addition during the year 124.02 163.96 161.89
Asset Retirement during the year (10.02) (9.23) (9.23)
Closing GFA 4,035.28 4,168.52 4,155.95
Depreciation 126.38 117.29 116.96
4.3.10.7 The Commission approves Depreciation of Rs. 116.96 Crore for FY 2014-15 for
Units 4 to 7 and Hydro Stations, as against Rs. 117.29 Crore claimed by TPC-G.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 81 of 224
4.3.11 Interest on Long-term Loans
TPC-G’s Submission
4.3.11.1 TPC-G has taken various loans in the past to finance the capitalization, and availed fresh
loan from HDFC Bank (Rs. 350 Crore) and Kotak Mahindra Bank (Rs. 250 Crore). It
has also drawn from the previous sanctioned loans from HDFC Bank (Sanctioned
amount – Rs. 300 Crore, Amount drawn – Rs. 101 Crore), Kotak Mahindra Bank
(Sanctioned amount – Rs. 300 Crore, Amount drawn – Rs. 101 Crore) and BNP Paribas
(Sanctioned amount – Rs. 55.1 Crore, Amount drawn – Rs. 44.48 Crore). The details of
new loans are set out below:
4.3.11.2 TPC has raised a loan of Rs. 350 Crore from HDFC Bank and Rs 250 Crore from Kotak
Mahindra Bank for funding its capital expenditure on the terms set out in the Table
below:
Table 34: Details of Fresh Loans for FY 2014-15
Particulars Terms and Conditions
HDFC loan
Amount Rs. 350 Crore
Repayment schedule 2 years moratorium, Quarterly Repayment with 7.5% of total amount
every year for the first ten years and 25% in the last year
Interest rate 10.15% p.a. pm linked to Base Rate
Kotak loan
Amount Rs. 250 Crore
Repayment schedule 2 years moratorium, with Repayment of 65% over 10 years and 35% in
the last year
Interest rate 10.30% p.a. pm linked to Base Rate
4.3.11.3 Loans from various banks have been allocated to different Business Areas (Generation,
Transmission and Distribution) based on the ratio of capitalisation in FY 2014-15. The
balance loan is assumed to be financed through normative loan. The allocation of loan
for various Businesses is as shown in the Table below:
Table 35: Allocation of Loans as submitted by TPC-G (Rs. Crore)
Particulars Unit4-7
& Hydro Unit-8 Total Transmission Distribution
Total
GTD
Capitalisation 163.95 46.89 210.84 481.26 494.27 1186.37
Debt 114.77 32.82 147.59 336.88 345.99 830.46
% 14% 4% 18% 41% 42% 100%
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 82 of 224
Particulars Unit4-7
& Hydro Unit-8 Total Transmission Distribution
Total
GTD
HDFC - Rs. 300
Crore 13.96 3.99 17.95 40.97 42.08 101.00
Kotak - Rs. 300
Crore 13.96 3.99 17.95 40.97 42.08 101.00
BNP Paribas - Rs.
55 Crore 6.15 1.76 7.90 18.04 18.53 44.48
HDFC - Rs. 350
Crore 48.37 13.83 62.20 141.98 145.82 350.00
HDFC - Rs. 250
Crore 3.97 1.14 5.11 11.67 11.98 28.76
Normative 28.36 8.11 36.47 83.25 85.50 205.22
4.3.11.4 TPC-G has computed the interest expenses for FY 2014-15 as Rs. 82.38 Crore after
considering the above loan drawals, repayment equal to Depreciation claimed and
weighted average interest rate of 10.94%.
4.3.11.5 TPC-G has considered Other Finance Charges of Rs. 0.21 Crore attributable to Trombay
Station and Hydro Stations.
Commission’s Analysis and Ruling
4.3.11.6 TPC-G has furnished details of loan allocation along with interest rates of loans from
various banks as on 1 April for FY 2014-15. As discussed at para. 4.3.9.8 of this Order,
the Commission has considered the impact of merged DPR capitalisation on the opening
loan for FY 2014-15. The Commission has considered 70% of the merged DPR
capitalisation as funded through debt. Accordingly, the opening balance of loan for FY
2014-15 has been arrived at by adding the closing balance for FY 2013-14 as approved
in the MTR Order with the debt portion of the merged DPR capitalisation approved in
this Order. Further, in accordance with Regulation 33.3, loan repayment has been
considered as equal to the Depreciation allowed for FY 2014-15 in this Order.
4.3.11.7 While computing RoE, TPC-G has considered reduction in equity capital on account of
retirement of assets. However, while computing Interest on Long-term Loan, TPC-G has
not considered reduction in loan on account of retirement of assets. To the clarification
sought, TPC-G stated that the book value and entire normative loan relating to retired
assets is repaid, and no further reduction is required to be made in the computation of
Interest on Long-term Loan.
4.3.11.8 Regulation 33.5 of the MYT Regulations, 2011 specifies the rate of interest as the
weighted average rate of the actual loan portfolio at the beginning of the year applicable
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 83 of 224
to TPC-G. Based on this, TPC-G has submitted the weighted average rate of interest for
FY 2014-15 as 10.94%. The Commission has checked the interest rates from the loan
document copies provided, and considered the weighted average interest rate as
submitted by TPC-G for computation of Interest on Long-term Loans.
4.3.11.9 The Commission also approves the Other Finance Charges of Rs. 0.21 Crore as sought
by TPC-G based on the basis of the audited allocation statement of accounts.
4.3.11.10 The summary of the Interest on Long-term Loans as submitted by TPC-G and as
approved by the Commission after Truing-up is shown in the Table below:
Table 36: Interest on Long-term Loans as approved by the Commission for FY 2014-15
(Rs. Crore)
Particulars MTR Order TPC-G Petition Approved in this Order
Opening loan balance of the year 682.85 754.51 734.03
Loan addition during the year 86.81 114.77 113.32
Repayment during the year 126.38 117.29 116.96
Closing balance of the year 643.29 752.00 730.39
Interest rate 10.93% 10.94% 10.94%
Interest expense 72.49 82.38 80.08
Other Finance Charges
0.21 0.21
4.3.11.11 The Commission approves Interest on Long-term Loans for FY 2014-15 as Rs.
80.08 Crore, as against Rs. 82.38 Crore claimed by TPC-G, for Units 4 to 7 and
Hydro Stations.
4.3.12 Return on Equity
TPC-G’s Submission
4.3.12.1 The RoE based on the opening balance of equity and reduction of equity on account of
de-capitalisation of certain assets, at 15.5%, works out to Rs. 228.82 Crore.
Commission’s Analysis and Ruling
4.3.12.2 RoE has been taken at the rate of 15.5% of the equity, in accordance with Regulation
32.2.1 of the MYT Regulations, 2011, on the opening equity of the year. The
Commission has considered 30% of the merged DPR capitalisation, as discussed in para.
4.3.9.8 of this Order, as funded through equity. Accordingly, the regulatory equity at the
beginning of FY 2014-15 has been arrived at by adding the approved regulatory equity
at the end of FY 2013-14 in the MTR Order and the equity portion of the merged DPR
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 84 of 224
capitalisation. The Commission has considered addition to equity considering the
capitalisation approved for FY 2014-15 in this Order and the debt: equity ratio of 70:30.
Reduction in equity has been considered at 30% of the value of retirement/de-
capitalisation of assets.
4.3.12.3 The RoE as claimed by TPC-G and approved by the Commission for FY 2014-15 after
Truing-up is summarised in the following Table:
Table 37: Return on Equity as approved by the Commission for FY 2014-15 (Rs. Crore)
Particulars MTR
Order
TPC-G
Petition
Approved in this
Order
Opening equity of the year 1447.08 1476.23 1471.68
Equity addition for asset addition during the
year 37.21 49.19 48.57
Equity reduction for asset de-capitalised
during the year (3.01) (2.77) (2.77)
Closing equity for the year 1481.28 1522.65 1517.48
Rate of return 15.50% 15.50% 15.50%
Return on equity 224.30 228.82 228.11
4.3.12.4 The Commission approves Return on Equity for FY 2014-15 of Rs. 228.11 Crore
for Units 4 to 7 and Hydro Stations, as against Rs. 228.82 Crore claimed by TPC-G.
4.3.13 Interest on Working Capital
TPC-G’s Submission
4.3.13.1 The IoWC has been computed considering the elements specified in the MYT
Regulations, 2011. Interest rate of 14.75% has been considered, as in the MTR Order.
The IoWC works out to Rs. 65.37 Crore for Thermal Units and Rs. 7.14 Crore for Hydro
Stations, amounting to Rs. 72.51 Crore for FY 2014-15.
Commission’s Analysis and Ruling
4.3.13.2 Regulation 35.1(e) stipulates that the rate of interest should be the State Bank of India
Advance Rate (SBAR) as on the date of filing of the Petition. Accordingly, the
Commission has considered the interest rate of 14.75%, as approved in the MTR Order,
for working out the IoWC for FY 2014-15.
4.3.13.3 TPC-G has considered 2 months’ fuel cost for Unit-6 based on actual PLF, which the
Commission has accepted in line with the methodology in previous Orders.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 85 of 224
4.3.13.4 TPC-G has computed the fuel cost for Unit-6 based on the GCV and fuel price as
approved in the MYT Order. For Truing-up, the Commission has considered the fuel
price and GCV as approved for FY 2014-15 in this Order, in accordance with the MYT
Regulations, 2011.
4.3.13.5 The IoWC as claimed by TPC-G and approved by the Commission for FY 2014-15 after
Truing-up is summarised in the following Table:
Table 38: Interest on Working Capital as approved by Commission for FY 2014-15 (Rs.
Crore)
Particulars TPC-G Approved in this Order
Working capital requirement 491.62 504.19
Interest rate 14.75% 14.75%
Interest on working capital 72.51 74.37
4.3.13.6 The Commission approves the normative Interest on Working Capital as Rs. 74.37
Crore for FY 2014-15 for Units 4 to 7 and Hydro Stations, as against Rs. 72.51
Crore claimed by TPC-G.
4.3.14 Income Tax
TPC-G’s Submission
4.3.14.1 TPC-G has computed the Income Tax as per the methodology of the MTR Order, at Rs.
99.24 Crore.
Commission’s Analysis and Ruling
4.3.14.2 The Commission has scrutinized the Income Tax computations, and asked for the break-
up of various components such as MAT Credits, Other Disallowances, Other Expenses
allowed, Deductions u/s 80 IA and Disallowance under Income Tax.
4.3.14.3 TPC-G provided the information sought on Income Tax computations. TPC-G has
followed the methodology of the MTR Order. However, the Commission has re-
computed the Income Tax based on the revenue and expenses approved in this Order.
The summary of the Income Tax claimed by TPC-G and approved by the Commission is
shown in the Table below:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 86 of 224
Table 39: Income Tax as approved by Commission for FY 2014-15 (Rs. Crore)
Particulars TPC-G Petition Approved in this Order
Total Revenue 2641.56 2642.02
Less: Incentive and efficiency gains 46.12 54.38
Total expenses 2133.56 2126.46
Profit before tax 461.87 461.18
Add
Depreciation considered in expenses 117.29 116.96
Other disallowance while computing IT 73.36 73.36
Total tax disallowances 190.65 190.32
Less
Tax Depreciation 178.4 178.40
Other expenses allowed for computing IT 79.21 79.21
Deduction - U/s 80 IA 14.77 14.77
Total tax allowances 272.38 272.38
Total taxable income 380.14 379.11
Corporate Tax rate 33.99% 33.99%
Tax payable at normal rate 129.21 128.86
MAT computation
Profit before tax 461.87 461.18
Add: Disallowances under Income Tax
(U/s 14 A, provision for doubtful debt) 0.17 0.17
Less: Deduction under Income Tax
(Exempt Income, FBT, Wealth Tax,
Withdrawal from Income)
0.00 0.00
Book profit 462.04 461.34
MAT rate 20.96% 20.96%
Tax payable under MAT 96.85 96.70
MAT credit available 29.97 29.97
Tax applicable 129.21 128.86
Tax applicable after MAT credit 99.24 98.89
4.3.14.4 The Commission approves Income Tax of Rs. 98.89 Crore for Units 4 to 7 and
Hydro Stations for FY 2014-15, as against Rs. 99.24 Crore claimed by TPC-G.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 87 of 224
4.3.15 Non-Tariff Income
TPC-G’s Submission
4.3.15.1 The Non-Tariff Income for FY 2014-15 works out to Rs. 31.64 Crore, consisting of
recurring items of Rs. 5.42 Crore and non-recurring items of Rs. 26.21 Crore.
Commission’s Analysis and Ruling
4.3.15.2 The Non-Tariff Income claimed by TPC-G in the Petition was different from the
Audited Allocation Statement. To the reconciliation sought, TPC-G stated that it had
inadvertently shown Non-Tariff Income as Rs. 31.64 Crore instead of Rs. 32.10 Crore
due to an incorrect figure of Rs. 1.99 Crore considered for Sale of Scrap instead of the
correct figure of Rs. 2.46 Crore.
4.3.15.3 Accordingly, the Commission has considered the Non-Tariff Income of Rs. 32.10 Crore.
The Non-Tariff Income as claimed by TPC-G and approved by the Commission for FY
2014-15 after Truing-up is summarised in the following Table:
Table 40: Non-Tariff Income as approved by Commission for FY 2014-15 (Rs. Crore)
Particulars
TPC-G Petition Approved in this Order
Non-Tariff Income 31.64 32.10
4.3.15.4 The Commission approves Non-Tariff Income of Rs. 32.10 Crore for FY 2014-15
for Units 4 to 7 and Hydro Stations.
4.3.16 Revenue from Sale of Power
TPC-G’s Submission
4.3.16.1 TPC-G has earned revenue of Rs. 2609.92 Crore from TPC-D and BEST for FY 2014-
15. The break-up is as below:
Table 41: Revenue from Sale of Power for FY 2014-15
Particulars Unit BEST TPC-D Total
Energy MU 2980.18 2844.37 5824.55
Fixed charges Rs. Crore 546.06 521.09 1067.15
Incentive Rs. Crore 0 0 0
Energy Charges Rs. Crore 787.23 751.23 1538.46
Revenue from FBSM final
settlement
Rs. Crore 2.37 1.94 4.31
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 88 of 224
Particulars Unit BEST TPC-D Total
Considered for ARR Rs. Crore 1335.66 1274.26 2609.92
Commission’s Analysis and Ruling
4.3.16.2 Based on the details furnished, the Commission has considered the Revenue from
Sale of Power during FY 2014-15 to BEST and TPC-D as Rs. 1335.66 Crore and
Rs. 1274.26 Crore, respectively, and the total Revenue as Rs. 2609.92 Crore.
4.3.17 PLF Incentive for Thermal Station and Hydro Incentive for Hydro Stations
TPC-G’s Submission
4.3.17.1 Regulation 44.1 of the MYT Regulations, 2011 permit Incentive on Thermal generation
with PLF higher than 85%. No Thermal Generating Units exceeded the target PLF of
85%, and no incentive is due. However, TPC-G has claimed an incentive of Rs. 39.70
Crore for Hydro generation being higher than the Design Energy, and actual Availability
being higher than the normative.
Commission’s Analysis and Ruling
4.3.17.2 The Commission asked for the actual Plant Availability Factor, PLF and actual ex-bus
generation for FY 2014-15 as certified by MSLDC. TPC-G has furnished these, the
Commission has considered the same for Truing-up.
4.3.17.3 While computing the incentive for Hydro Generating Stations, TPC-G has considered
the revised AFC based on the Truing-up proposed in its Petition. The Commission has
computed the incentive for Hydro Generating Stations considering the AFC for FY
2014-15 as approved in this Order after Truing-up.
4.3.17.4 TPC-G made an additional submission regarding incentives considering the backing
down of Generating Stations for in FY 2011-12 to FY 2015-16. For FY 2014-15, no
incentive on account of backing down instructions has been claimed by TPC-G.
Accordingly, the Commission has also not allowed any additional incentive.
4.3.17.5 The Commission approves Incentive for higher Capacity Index for Hydro Stations
for FY 2014-15 as Rs 39.46 Crore, as against Rs. 39.70 Crore claimed by TPC-G.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 89 of 224
4.3.18 Reduction of Fixed Charges on account of lower Availability of Unit-7
TPC-G’s Submission
4.3.18.1 The Availability of Unit-7 for FY 2014-15 was 77.34%. Unit-7 was taken out at 20:51
hours on 11 December, 2014 for boiler certification and minor inspection of gas turbine.
After the inspection and other outage related jobs, the gas turbine machine was rolled for
synchronization in presence of the OEM (M/s Siemens) on 15 December, 2014, but the
machine tripped on ‘Generator bearing high vibration’.
4.3.18.2 On 16 December, 2014, the machine was again rolled at 600 RPM, and the speed was
raised manually up to 690 RPM. However, the machine was tripped manually as the rate
of rise of vibration was high. In consultation with the OEM, electrical testing of the
GTG rotor revealed an inter-turn fault on rotor winding. After threading out the rotor on
18 December, 2014, it was seen that its Current Carrying (CC) bolts and J-Strap were
melted on Pole-2, due to which Unit-7 had to be kept out of service for rotor repair. The
Unit came back in service on 28 February, 2015.
4.3.18.3 Since Unit-7 was shut from 16 December, 2014 to 27 February, 2015, its Availability of
in FY 2014- 15 was 77.34%. The occurrence on Unit-7 which led to its tripping on
account of damage to the GTG rotor was something which was beyond TPC-G’s control
due to the following reasons:
Adherence to maintenance schedule stipulated by OEM
4.3.18.4 TPC-G had adhered to the maintenance schedule stipulated by the OEM during minor
and major outages as shown below:
During minor outage:
a. Visual inspection.
b. Proper cleaning.
c. Inspection of slip rings and carbon brushes.
d. Electrical tests on stator &rotor.
e. Inspection and replacement of shaft grounding brush if required.
During major outage:
a. Threading out / in of rotor.
b. Internal visual inspection.
c. Proper cleaning & varnishing if require.
d. Inspection of generator accessories like, coolers, bearings etc.
e. Electrical tests on stator & rotor.
f. Inspection of brush assembly.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 90 of 224
No prior indication of Fault
4.3.18.5 The rotor of Unit-7 had never given any prior indication of fault during its health checks
on previous occasions, and the Unit was running without any problem before taking the
outage for works on the mechanical side. Hence, there was no possibility of TPC-G
getting any prior indication so as to avoid this rotor earth fault.
4.3.18.6 The physical location of the CC Bolt is below the overhang windings of the rotor (all
slots). This overhang portion is covered with retaining rings on either side of the rotor
and hence visual inspection of the CC Bolt is not possible. Thus, any problem or defect
relating to the CC Bolt can only be identified in electrical tests.
4.3.18.7 The results of the electrical tests on the GTG Rotor in 2008 and 2013were found to be
within the permissible limits, and the test reports have been submitted with the Petition.
This rotor was rewound in 2008 as per the OEM’s recommendations, and all the
electrical tests were carried out and were found satisfactory.
Incident Investigation by OEM
4.3.18.8 The OEM has also carried out the incident investigation at its end, and the Incident
Analysis Report has been submitted with the Petition. The Report shows that the root
cause of the damage was the crack initiation at J-Strap and also that the existing
protection system was designed for multiple start ups.
Efforts by TPC-G for minimizing non-availability of the Machine
4.3.18.9 The OEM had indicated a repair time of 6 months for the machine. However, to reduce
the down time, TPC-G arranged a spare rental rotor from the OEM and the machine was
taken in service on 28 February, 2015. Further, the original rotor was repaired as per the
recommendations of OEM and was put back into service in July, 2015. This has saved a
down time of 744 hours, i.e., 8.3 % of Availability for FY 2014-15.
4.3.18.10 Regulation 49.2 of the MYT Regulations, 2011 specifies the following regarding
recovery of Fixed Charges with respect to Availability:
“The full AFC shall be recoverable at target availability specified in Regulation
44.1, recovery of AFC below the level of Target Availability shall be on pro rata
basis. At zero Availability, no Capacity Charges shall be payable.”
4.3.18.11 In the context of Regulation 2(29), the occurrence on Unit-7 which led to its tripping,
considerable damage and subsequent outage for repairs was beyond TPC-G’s control,
and hence a Force Majeure condition.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 91 of 224
4.3.18.12 Considering the outage as a Force Majeure event, TPC-G proposes to deduct Employee
expenses, Interest on Long-term Loan and Depreciation from the AFC (i.e. the
expenditures of Unit-7 which anyway had to be incurred independent of the operation /
outage of the Unit) to arrive at the AFC as applicable for Unit-7 for pro rata reduction.
On the basis of this computation, reduction in Fixed Cost for Unit-7of Rs. 10.76 Crore is
sought.
4.3.18.13 Rs. 5.82 Crore was spent towards restoration of Unit-7 and Rs. 5.68 Crore towards
arrangement of spare rotor from M/s Siemens. TPC-G has a Mega Insurance Policy for
Trombay Unit-7 covering Machine Loss of Profit (MLOP). TPC-G has accordingly
raised a claim for the total amount of Rs. 11.50 Crore (5.82 + 5.68) to the insurance
company. The insurance claim is still under process, and accordingly TPC-G has not
considered the impact of this claim. TPC-G has also not considered any claim towards
capitalisation or retirement of assets, if any, for Truing-up of FY 2014-15.
Commission’s Analysis and Ruling
4.3.18.14 The Siemens (OEM) Incident Analysis Report states that the most probable contributor
to the failure was mechanical stress strain condition at the J-Strap and radial bolt. The
mechanical stress strain condition at the J-Strap and the radial bolt has been examined in
the Siemens Laboratory in Muelheim, Germany by experienced material experts to
ascertain whether the J-Strap failed first or the radial bolt.
4.3.18.15 The Siemens Report states further that:
“As per the material related summary below, a crack developed first at the 90°
bend area of the J-Strap which led first to a separation in that area and as
consequence by the flowing electrical current, during start up operation, to a
overheating and melting of the J-Strap.
As a second effect, the overheated and melted area grew larger by the electrical
arcing until it reached the radial bolt, damaged the electrical insulation of the
radial bolt and J-Strap. This has led to the electrical arcing between radial bolt
and shaft material which has caused overheating and melting there, too.
The conclusion… is that during the start up of the Gas turbine the voltage applied
in the generator comes from the start up convertor. It has less than 10% of
generator nominal voltage and a frequency of maximally 35 Hz (see below). This
means that during GT start up the rotor earth fault protection relay –F48 / 7UR22
is not operational due to low auxiliary voltage (needed are 110V and a frequency
of 50Hz).”
4.3.18.16 The Commission notes that the final conclusion and recommendation of the Siemens
Report are as follows:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 92 of 224
“Conclusion: The original J Strap was a state-of-the art system in the past. The
root cause of the rotor damage is the crack initiation at the 90° bend area of the
J-strap at one pole of the rotor, for the old design J-Strap. Overheating and
melting induced by electrical arcing then spread out and led to the damage at the
radial bolt and melting at the surrounding area at the rotor body.
Existing Protection system was a state-of-the art system at the time of installation
and it was inhibited as designed, during start up condition voltages and
frequencies and therefore did not prevent multiple start up attempts.
Recommendation is to replace the J-strap with the newest J-strap design. Also it
is recommended to update the generator rotor earth fault protection and
neighboring systems involving static frequency start up converter (SFC / SEE)
with the latest technology (see below recommendations).”
4.3.18.17 The Commission has examined TPC-G’s submissions and the root cause analysis carried
out by M/s. Siemens in its Incident Analysis Report. The Commission notes that TPC-G
had adhered to the maintenance schedule as specified by the OEM during minor and
major outages. The Commission also notes that the Siemens Report identifies the most
probable contributor to the failure as mechanical stress strain condition at the J-Strap and
radial bolt. TPC-G also made efforts to reduce the down time of the machine outage and
obtained a spare rental rotor from the OEM, which was installed in Unit-7 and the
machine taken in service.
4.3.18.18 Considering the above, the Commission is of the view that the occurrence on Unit-7
which led to its tripping, considerable damage and subsequent outage for repairs was
beyond the control of TPC-G. Accordingly, the Commission considers it as a Force
Majeure event and allows the reduction in the AFC for Unit-7 based on the methodology
in the MTR Order in the case of Unit-8.
Table 42: Approved Reduction in AFC for Unit-7 for FY 2014-15
Particulars Unit TPC-G
Petition
Approved in
this Order
Employee expenses Rs. Crore 22.37 21.45
Interest on Long-term Loan Rs. Crore 24.90 24.23
Depreciation Rs. Crore 13.93 13.89
Total Rs. Crore 61.20 59.57
AFC Rs. Crore 180.65 178.62
AFC without employee cost, interest and
Depreciation
Rs.
Crore 119.45 119.05
Normative Availability % 85.00% 85.00%
Actual Availability % 77.34% 77.34%
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 93 of 224
Particulars Unit TPC-G
Petition
Approved in
this Order
Revised fixed cost Rs. Crore 108.68 108.32
Reduction in fixed cost Rs. Crore 10.76 10.73
4.3.18.19 The Commission approves the reduction in AFC for Unit-7 for lower than Target
Availability for FY 2014-15 as Rs. 10.73 Crore, as against Rs. 10.76 Crore
submitted by TPC-G.
4.3.19 Sharing of Gains / Losses for FY 2014-15
TPC-G’s Submission
4.3.19.1 The MYT Regulations, 2011 specify the methodology for treatment of sharing of gains
and losses, and categories the various heads of expenditure as (i) controllable and (ii)
uncontrollable. After such categorisation, the gains / losses for controllable expenditure
have been computed, and sharing between the consumers and TPC- G has been
proposed.
Commission’s Analysis and Ruling
4.3.19.2 Regulation 12 specifies the controllable factors to be considered in case of Generation
and Regulation 14 specifies the treatment of sharing of gain or loss on account of such
controllable factors.
4.3.19.3 Sharing in case of Generation ARR components is to be done in terms of fuel cost,
revenue due to variation in Auxiliary Energy Consumption, O&M expenses and IoWC
only. The ATE in its Judgment dated 31 August, 2012 in Appeal No. 18 of 2011 has
ruled that the Commission may frame Regulations for evaluation of cost of internal
accruals used as working capital for arriving at the actual IoWC and efficiency gain. The
Commission has filed an Appeal against this Judgment regarding the sharing of gain/
loss on IoWC before the Supreme Court, which is pending. In the meantime, in view of
the ATE Judgment, the Commission has not considered the sharing of gains or losses on
IoWC.
4.3.20 Gains / Losses on account of fuel costs
TPC-G’s Submission
4.3.20.1 As per the MYT Regulations, 2011 one third of the efficiency gains on account of
variation in the Unit SHR of Rs. 7.46 Crore has been considered to be passed on to the
Distribution Licensees.
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MERC Order in Case No. 32 of 2016 Page 94 of 224
Commission’s Analysis and Ruling
4.3.20.2 For computing the efficiency gain/ loss, the Commission has considered the SHR as
approved in this Order. Accordingly, it has determined the total efficiency gain on
account of approved fuel cost. The summary of the approved efficiency gain on account
of fuel cost has been shown in the Table below:
Table 43: Gains and Losses due to variation in Fuel Cost, as approved by Commission for
FY 2014-15 (Rs. Crore)
Particulars Unit-5 Unit-6 Unit-7 Total
Fuel cost (Rs. Crore) 948.39 139.70 269.75 1357.84
Actual SHR (kcal/kWh) 2507.32 2845.84 1967.53
Normative SHR (kcal/kWh) 2573.00 2646.52 2021.00
Fuel cost applying normative SHR(Rs.
Crore) 973.23 129.91 277.08 1380.23
Net gains/ (loss) (Rs. Crore) 24.84 (9.78) 7.33 22.39
Passed on to the Distribution Licensees
(Rs. Crore) 8.28 (3.26) 2.44 7.46
4.3.20.3 The Commission approves the efficiency gain as Rs. 7.46 Crore, to be passed on to
the Distribution Licensees, on account of variation in Fuel Cost of Units 4 to 7 and
Hydro Generating Stations for FY 2014-15.
4.3.21 Gains / Losses on account of Auxiliary Consumption
TPC-G’s Submission
4.3.21.1 The loss of Rs. 0.63 Crore on account of Auxiliary Energy Consumption has been
passed on to the Distribution Licensees. TPC-G has not considered the Auxiliary Energy
Consumption of Unit-4 for any gain and loss computations.
Commission’s Analysis and Ruling
4.3.21.2 The Commission has computed the variation in revenue on account of the variation in
Auxiliary Energy Consumption considering the Tariff approved in the MYT Order.
TPC-G had not considered Auxiliary Energy Consumption of Unit-4 for gain and loss
computations. The Commission has also not done so as the Unit was in stand-by mode
the whole year. The summary of the approved efficiency gain/ loss on account of
Auxiliary Energy Consumption is as shown in the Table below:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 95 of 224
Table 44: Gain/Loss due to variation in Auxiliary Energy Consumption as approved by
Commission for FY 2014-15 (Rs. Crore)
Particulars Unit-5 Unit-6 Unit-7 Hydro Total
Gross generation (MUs) 3316.29 201.80 1148.48 1442.75 6109.31
Actual Auxiliary Energy Consumption
(%) 5.69% 6.88% 2.54% 2.54%
Norm Auxiliary Energy Consumption (%) 6.00% 3.50% 3.00% 1.96%
Difference in net generation (MUs) 10.35 (18.61) 5.25 (8.35) (11.36)
Rate (Rs./kWh) 3.90 8.62 2.01 1.30 3.90
Auxiliary Energy Consumption gain /
(loss) (Rs. Crore) 4.04 (16.04) 1.06 (1.08) (12.03)
Passed on to Distribution Licensees (Rs.
Crore) (4.01)
4.3.21.3 The Commission determines an Efficiency Loss of Rs. 4.01 Crore to be passed on to
Distribution Licensees on account of variation in Auxiliary Consumption for Units
4 to 7 and Hydro Stations for FY 2014-15.
4.3.22 Gains / Losses on account of O&M Expenses
TPC-G’s Submission
4.3.22.1 Property Tax, levied by Municipal Corporation of Greater Mumbai (MCGM) and
governed by the Mumbai Municipal Corporation Act, 1888 (MMC Act) is an
uncontrollable expenditure. Vide Maharashtra Act 11 of 2009, GoM amended the MMC
Act, enabling MCGM to levy Property Tax based on ‘capital value’ of properties as
against their rateable value as per the earlier provision. Section 140A of the MMC Act
now reads as below:
“Property Taxes to be levied on capital value and the rate thereof.—
Notwithstanding anything contained in Section 140 or any other provisions of this
Act, the Corporation may pass a resolution to adopt levy of Property Tax on
buildings and lands in Brihan Mumbai on the basis of capital value of the
buildings and lands on and from such date and at such rates, as the Corporation
may determine in accordance with the provisions of Section 128;……”
4.3.22.2 As per this amendment, the Property Tax paid for FY 2014-15 is set out in the Table
below, along with the amount payable prior to the amendment:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 96 of 224
Table 45: Property Tax Summary as submitted by TPC-G for FY 2014-15 (Rs. Crore)
S. No. Expenditure as reflected in Accounts FY 2014-15
1 Actual Tax paid in year 17.94
2 Property Tax paid/payable prior to MCGM Revision 5.09
3 Uncontrollable, to be claimed in Truing-up 12.85
4.3.22.3 Accordingly, TPC-G has claimed Rs. 12.85 Crore as an uncontrollable expense towards
payment of Property Tax while calculating the sharing of gains/losses on account of
O&M expenses.
4.3.22.4 The net O&M expenses after sharing of gains/ losses have been considered as Rs. (1.24)
Crore. The total amount to be passed on to the Distribution Licensees is Rs (0.41) Crore.
Commission’s Analysis and Ruling
4.3.22.5 Regulation 48 of MYT Regulations, 2011 specifies the norms for O&M expenses,
considering escalation of 5.72% on the expenses determined for FY 2009-10 as the
average of actual O&M expenses of the last 3 years. Accordingly, the Commission had
computed the normative O&M expenses for FY 2014-15 in the MYT Order.
4.3.22.6 The Commission asked TPC-G to submit the documentary evidence in support of its
claims and detailed computations for Property Tax paid, along with the difference
between the previous and revised rates. TPC-G has furnished the required information.
4.3.22.7 The Commission also asked whether the increased Property Tax value is a settled value
or if TPC-G had approached MCGM for revising or recalculating the amount. TPC-G
stated that it has challenged the increase in Property Tax with regard to the rules fixing
the capital value of storage tanks vide Writ Petition No. 1906 of 2015 in the Bombay
High Court. This Petition has been tagged along with Petition No. 2592 of 2013
(Property Owners Association V/s. State of Maharashtra). However, in line with the
High Court’s Order dated 24 February, 2014 in respect of Writ Petition no 2592 of 2013,
TPC-G has paid the Tax at the pre-amended rates.
4.3.22.8 The normative O&M expenses are derived through the methodology specified in the
MYT Regulations. Therefore, the normative O&M expenses are being approved on a
composite basis, without segregation of costs into employee, A&G and R&M expenses,
in line with the earlier Orders. An average escalation of 5.72% is being allowed on
different components of O&M expenses. These components may have different
escalation rates, and are not individually considered for Truing-up. Increase in any type
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 97 of 224
of taxation is also subsumed as part of the composite escalation rate. In the present case,
the actual expenses are higher than the normative O&M expenses as per the MYT
Regulations.
4.3.22.9 Considering the normative and the approved actual O&M expenses, the gains and losses
due to the variation have been computed. The Commission has not considered the Hydro
Station colony consumption for sharing of efficiency gains and losses. The summary of
sharing of gains/ losses for O&M expenses is given in the Table below:
Table 46: Gains due to variation in O&M Expenses for Units 4 to 7 and Hydro Stations for
FY 2014-15 as approved by Commission (Rs. Crore)
Particulars TPC-G Petition Approved in this Order
Approved O&M Expenses 475.87 475.87
Actual O&M 489.96 481.34
Less: Expenditure considered as uncontrollable 12.85 0.00
Actual O&M Expenses 477.11 481.34
O&M Expense gain / (loss) (1.24) (5.47)
Passed on to the Distribution Licensee (0.41) (1.82)
Net entitlement of O&M Expense 489.13 477.69
4.3.22.10 The Commission approves the efficiency loss of Rs. 1.82 Crore to be passed on to
Distribution Licensees on account of variation in O&M Expenses for Units 4 to 7
and Hydro Stations for FY 2014-15.
4.3.23 Net Entitlement, and resultant Gap/ Surplus for Units 4 to 7 and Hydro Stations
4.3.23.1 Based on the Truing-up of various elements of expenses and revenue and TPC-G’s share
of efficiency gains/ losses, the Commission has determined the total Revenue
Gap/Surplus as against that estimated by TPC-G. The summary of the net ARR and
sharing of efficiency gains/losses as approved by the Commission for FY 2014-15 is
given in the following Table:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 98 of 224
Table 47: Truing-up for FY 2014-15 for Units 4 to 7 and Hydro Stations, including sharing
of efficiency gains/ losses (Rs. Crore)
Particulars TPC-G
Petition
Approved
after
Truing-up
Entitlement
as per
Regulations
/ Order
Efficiency
Gains /
(Losses)
Efficiency
Gains
/(Losses)
shared with
Distribution
Licensees
Net
Entitlement
after
sharing of
gains/
(losses)
approved
Fuel related expenses 1372.76 1357.84 1380.23 22.39 7.46 1372.76
Auxiliary benefit (1.26) (12.03) (12.03) (4.01) (8.02)
O&M expenses 489.13 481.34 475.87 (5.47) (1.82) 477.69
Depreciation expenses 117.29 116.96 116.96
Interest on Long-term
Loan 82.38 80.08 80.08
Interest on working capital 72.51 74.37 74.37
Other expenses (finance
charges) 0.21 0.21 0.21
Income Tax 99.24 98.89 98.89
Add: Colony consumption
of hydro 0.56 0.55 0.55
Incentive (PLF, Hydro
Incentive) 39.70 39.46 39.46
Total revenue
expenditure 2272.53 2237.66 2252.95
Add: Return on equity
capital 228.82 228.11 228.11
Less : Unallocated fixed
cost portion of Unit-4 12.86 12.80 12.80
Less : Allocation from
Unit-8 for Shared Capacity 12.50 12.50 12.50
ARR 2475.98 2440.47 2455.76
Reduction in fixed cost
due to lower Availability
of Unit-7
10.76 10.73 10.73
Revenue
Revenue from sale of
electricity 2609.92 2609.92 2609.92
Non-Tariff Income 31.64 32.10 32.10
Revenue Gap/(surplus) (176.34) (212.28) (196.99)
4.3.23.2 The Commission determines a Revenue Surplus of Rs. 196.99 Crore, as against Rs.
176.34 Crore claimed by TPC-G, for FY 2014-15.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 99 of 224
4.4 Performance of Unit-8
4.4.1 Gross Generation
TPC-G’s Submission
4.4.1.1 The 250 MW Unit-8 tripped on 9 January, 2014, and was under Force Majeure outage
for the rest of FY 2013-14. It was brought back in service after major repairs on 21
November, 2014. Even after repairs, the Unit was gradually loaded to full load, leading
to generation lower than approved in the MTR Order.
4.4.1.2 The SHR in FY 2014-15 was 2275 kcal/kWh as against the approved normative value of
2450 kcal/kWh, while Auxiliary Energy Consumption was 6.48% as against the
approved value of 8.50%.
4.4.1.3 The performance of Unit-8 in FY 2014-15 is as tabulated below:
Table 48: Unit-8 Performance in FY 2014-15 as submitted by TPC-G
Particulars Unit MTR Order TPC-G
Petition
Gross generation MU 795.71 715.47
Auxiliary Energy Consumption % 8.50% 6.48%
Net generation MU 728.07 669.14
SHR kCal/kWh 2450 2275
Availability % 37.00% 36.61%
PLF % 36.00% 33.00%
Commission’s Analysis and Ruling
4.4.1.4 The Commission has examined the gross generation and Availability certified by
MSLDC. The Commission has considered each of the performance parameters as under:
Gross Generation
4.4.1.5 The actual gross generation achieved by Unit-8 during FY 2014-15 is 715.47 MU, as
against 795.71 MU approved in the MTR Order. The actual PLF of 33% for FY 2014-15
is lower than the normative PLF of 85%. The Availability, as certified by MSLDC, was
36.61%, which is significantly lower than the normative Availability of 85%.
4.4.1.6 The Commission verified the actual gross generation achieved by Unit-8 of TPC-G from
the MSLDC certificate and found the same to be in order. Since the actual Availability is
lower than the normative, the Commission has considered disallowance of AFC in
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 100 of 224
accordance with the MYT Regulations, 2011 in subsequent Sections of this Order.
Accordingly, the Commission has considered the gross generation as per the MSLDC
Certificate for the Truing-up of 2014-15 as shown in the Table below:
Table 49: Availability of Unit-8 as approved by Commission for FY 2014-15
Particulars Unit MTR
Order
TPC-G
Petition Normative
Considered for
Truing-up
Availability % 37.00% 36.61% 85.00% 36.61%
Table 50: Gross Generation of Unit-8 as approved by the Commission for FY 2014-15
Particulars Unit MTR Order TPC-G Petition Approved in this Order
Gross generation MU 795.71 715.47 715.47
4.4.2 Auxiliary Energy Consumption
4.4.2.1 The actual Auxiliary Energy Consumption achieved by Unit-8 during FY 2014-15 is
6.48% as against the normative level of 8.50%. As the actual Auxiliary Energy
Consumption is lower than the normative, the Commission has considered the normative
Auxiliary Energy Consumption for the Truing-up of FY 2014-15 and sharing of
efficiency gains and losses as shown in the Table below:
Table 51: Summary of Auxiliary Energy Consumption of Unit-8 as approved by
Commission for FY 2014-15
Particulars Unit Normative TPC-G
Petition
Normative approved in
this Order
Auxiliary Energy
Consumption % 8.50% 6.48% 8.50%
4.4.3 Gross Station Heat Rate
4.4.3.1 The actual SHR for Unit-8 in FY 2014-15 was 2275 kcal/kWh, which is lower than the
normative SHR of 2450 kcal/kWh specified in the MYT Regulations, 2011. Hence, for
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 101 of 224
Truing-up and sharing of gains/losses, the Commission has considered the normative
SHR as shown in the Table below:
Table 52: Summary of SHR of Unit-8 as approved by Commission for FY 2014-15
Particulars Unit MTR Order TPC-G Petition Normative Approved in this
Order
SHR kCal/kWh 2450.00 2274.91 2450.00
4.4.4 Fuel Cost
TPC-G’s Submission
4.4.4.1 Fuel cost of coal and support oil in FY 2014-15 for Unit-8 works out to Rs. 175.56
Crore, as given in the Table below:
Table 53: Fuel Cost of Unit-8 for FY 2014-15 as submitted by TPC-G
Particulars FY 2014-15 (Actuals)
Consumption (MT)
Coal 325058
Oil 926
GCV (kCal/kg)
Coal 4975
Oil 10495
Prices (Rs./MT)
Coal 5240
Oil 52653
Total Cost (Rs. Crore) 175.56
Commission’s Analysis and Ruling
4.4.4.2 The Commission has examined the details of month-wise receipt of fuel, its calorific
value and price. The variation in fuel price and calorific value during FY 2014-15 has
been considered as part of FAC and has already been passed through to consumers
monthly under the FAC mechanism.
4.4.4.3 The Commission also verified the fuel cost claim with the audited allocation statement
of accounts. Considering the above, for the purpose of Truing-up of fuel costs, the
Commission has taken the actual fuel prices and calorific value as given in the Table
below:
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MERC Order in Case No. 32 of 2016 Page 102 of 224
Table 54: Fuel Parameters as approved by Commission for Unit-8 for FY 2014-15
Particulars MTR Order TPC-G
Petition
Approved in this
Order
Calorific Value (kCal/kg)
Coal 4862 4975 4975
Oil 10500 10495 10495
Prices (Rs./MT)
Coal 5386 5240 5240
Oil 51707 52653 52653
4.4.4.4 As explained in para. 4.3.4.5 of this Order, the actual fuel cost for Unit-8 as per the
audited statement is Rs. 173.41 Crore, and the reconciled fuel cost, including foreign
exchange rate adjustment, as submitted by TPC-G is Rs. 175.56 Crore. Accordingly, the
Commission has considered Rs. 2.15 Crore (Rs. 175.56 Crore less Rs. 173.41 Crore) for
Unit-8 on account of exchange rate change and foreign exchange fluctuation on payment
for fuel.
4.4.4.5 Based on the SHR, fuel prices and fuel calorific value as discussed above, the total fuel
cost for Unit-8 FY 2014-15 is as summarised in the Table below:
Table 55: Fuel Cost as approved by Commission for Unit-8 for FY 2014-15
Particulars Actuals
(Rs. Crore)
Normative Fuel Cost
approved in this Order
(Rs. Crore)
Fuel cost 175.56 196.78
4.4.4.6 The Commission approves the normative Fuel Cost of Rs. 196.78 Crore for FY
2014-15 for Unit-8, and has considered the actual Fuel Cost of Rs. 175.56 Crore for
sharing of efficiency gains as per the MYT Regulations, 2011.
4.4.5 Operation and Maintenance Expenses
TPC-G’s Submission
4.4.5.1 Actual O&M expenses for FY 2014-15 were Rs. 51.99 Crore, which is higher than Rs.
43.75 Crore approved in the MTR Order.
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MERC Order in Case No. 32 of 2016 Page 103 of 224
4.4.5.2 TPC-G has computed the Brand Equity based on the revenue of the previous year, in
accordance with the methodology approved by the Commission in its previous Orders.
Commission’s Analysis and Ruling
4.4.5.3 The Commission has approved the O&M expenses for Unit-8 on the basis of the per
MW norms specified in the MYT Regulations, 2011 for the capacity of 250 MW.
4.4.5.4 Based on the details submitted by TPC-G of employee expenses, A&G expenses and
R&M expenses, the Commission has considered the actual O&M expenses for Truing-
up purpose.
4.4.5.5 In its Order dated in Case No. 105 of 2011, the Commission had noted that the Brand
Equity Agreement states that payment towards Brand Equity has to be computed on the
basis of Annual Net Income of the year immediately preceding the year in which the use
occurs, and had directed TPC-G to compute the Brand Equity expenses accordingly.
4.4.5.6 Considering the adjustments towards Brand Equity expenses, the Commission has
considered the O&M expenses for the Truing-up as shown in the Table below:
Table 56: Summary of O&M Expenses approved by Commission for Unit-8 for FY 2014-15
(Rs. Crore)
Particulars MTR Order TPC-G
Petition
Approved in
this Order
Employee expenses
43.75
10.39 10.39
R&M expenses 35.23 35.23
A&G expenses 4.82 4.82
Less: Actual Brand Equity expenses 0.38 0.38
Add: Brand Equity expenses as per
approved methodology 1.93 1.93
Total O&M Cost 51.99 51.99
4.4.5.7 The Commission approves the actual O&M Expenses of Rs. 51.99 Crore for Unit-8
for FY 2014-15, and has considered it for sharing of efficiency gains/ losses.
4.4.6 Capital Expenditure and Capitalisation
TPC-G’s Submission
4.4.6.1 The total capitalisation for Unit-8 in FY 2014-15, including HOSS expenses, is Rs.
46.89 Crore, compared with the approved capitalisation of Rs 37.55 Crore in the MTR
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MERC Order in Case No. 32 of 2016 Page 104 of 224
Order. The capitalisation on account of DPR schemes is Rs. 40.00 Crore. The balance is
on account of Non-DPR Schemes, constituting 17% of the DPR schemes.
Commission’s Analysis and Ruling
4.4.6.2 The capitalisation for Non-DPR Schemes is 17% of that of the DPR schemes, which is
within 20%. Accordingly, the Commission has approved the capitalisation of Rs. 6.89
Crore towards Non-DPR Schemes.
4.4.6.3 For the DPR schemes, the Commission has examined the CBA reports provided by
TPC-G. All the DPR schemes proposed by TPC-G have already been approved in-
principle, except for the scheme of Facility for online data transfer to Maharashtra
Pollution Control Board (MPCB). The Commission has reviewed the justification and
CBA stated for this new scheme as per its 2005 Guidelines for In-Principle Clearance of
Proposed Investment Schemes, and has considered the impact of this new Capex scheme
for capitalisation. The Commission has allowed the capitalisation of Rs. 40.00 Crore for
DPR Schemes as submitted by the TPC-G. Accordingly, for the Truing-up of FY 2014-
15, the Commission approves the following capitalisation:
Table 57: Capitalisation of Unit-8 as approved by Commission for FY 2014-15 (Rs. Crore)
Particulars MTR Order TPC-G Petition Approved in this Order
DPR schemes 31.29 40.00 40.00
Non-DPR schemes 6.26 6.89 6.89
Total 37.55 46.89 46.89
4.4.6.4 The Commission approves Capitalisation of Rs. 46.89 Crore for Unit-8 for FY
2014-15, as claimed by TPC-G.
4.4.7 Non-DPR Capitalisation for FY 2011-12 to FY 2013-14
TPC-G’s Submission
4.4.7.1 The Commission, in the Order dated 8 September, 2010 in Case No. 96 of 2009 for
Truing-up for FY 2008-09, APR for FY 2009-10 and ARR for FY 2010-11, had
restricted the Non-DPR capitalisation to 20% of the DPR capitalization, and accordingly
disallowed a certain amount towards the Non-DPR schemes. TPC-G filed Appeal No. 18
of 2011 before the ATE. The ATE ruled that:
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MERC Order in Case No. 32 of 2016 Page 105 of 224
“…In view of the judgment in Appeal No.199 of 2010, TPC-G should submit
justification of non-DPR schemes to the Commission and the Commission should
consider the same for capitalisation subject to prudence check.”
4.4.7.2 In view of that Judgment, TPC-G in its MTR Petition had provided the details of Non-
DPR schemes for FY 2008-09 to FY 2010-11, along with the CBA Reports and
requested the Commission to allow the disallowed capitalisation of Rs. 53.14 Crore, Rs.
58.25 Crore and Rs. 39.58 Crore for Units 4 to 8 and Hydro Generating Stations
pertaining to each of these 3 years, respectively. The Commission in its MTR Order did
not consider certain capitalisation towards Non-DPR schemes from FY 2008-09 to FY
2011-12, and directed TPC-G to club them and submit a separate merged DPR for
prudence check. Similarly, for FY 2012-13 and FY 2013-14, the Commission restricted
the Non-DPR capitalisation to 20% and directed TPC-G to club these Non-DPR
schemes and submit a separate merged DPR.
4.4.7.3 The summary of merged DPRs submitted by TPC-G is as shown at Table 30 earlier in
this Order.
Commission’s Analysis and Ruling
4.4.7.4 TPC-G has submitted the Non-DPR Capitalisation as merged DPRs through its letters
listed at para. 4.3.9.4 earlier in this Order.
4.4.7.5 The Commission has examined the submissions made by TPC-G for Non-DPR
capitalisation for Unit-8 and found them to be in order. Accordingly, the Commission
has now approved certain Non-DPR capitalisation for Unit-8 for FY 2011-12 to FY
2013-14. The summary of the Non-DPR capitalisation as approved by the Commission
is as shown in the Table below:
Table 58: Summary of Non-DPR Capitalisation now approved by Commission for Unit-8
(Rs. Crore)
Particulars FY
2011-12
FY
2012-13
FY
2013-14
DPR Capitalisation as approved in MTR Order 13.03 8.42 7.85
Non-DPR Capitalisation as approved in MTR Order 2.61 1.68 1.57
Total Capitalisation as approved in MTR Order 15.64 10.10 9.42
Merged DPR Schemes as submitted by TPC-G 1.44 2.80 2.53
Approved Non-DPR Capitalisation 1.44 2.80 2.53
4.4.7.6 As discussed at para. 4.3.9.8, the Commission has considered the impact of
capitalisation on account of merged DPRs submitted by TPC-G in the 3rd
Control
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MERC Order in Case No. 32 of 2016 Page 106 of 224
Period. The Commission has also considered the impact of yearly RoE, Interest on
Long-term Loan and Depreciation disallowed on account of subsequent approval of
these capital expenditures in past years as shown in the Table below:
Table 59: Non-DPR Capitalisation for Unit-8 as approved by Commission for FY 2011-12
to FY 2013-14 (Rs. Crore)
Particulars FY 2011-12 FY 2012-13 FY 2013-14 Total
Unit-8
Depreciation Computations
Opening GFA 0.00 1.44 4.24
Addition 1.44 2.80 2.53
Closing GFA 1.44 4.24 6.77
Depreciation Rate 5.22% 5.23% 5.26%
Depreciation 0.04 0.15 0.29 0.48
Interest Expenses Computations
Opening loan 0.00 0.97 2.78
Addition 1.01 1.96 1.77
Repayment 0.04 0.15 0.29
Closing loan 0.97 2.78 4.26
Interest rate 10.32% 10.73% 11.09%
Interest on Long-term Loan 0.05 0.20 0.39 0.64
RoE Computations
Opening equity 0.00 0.43 1.27
Addition 0.43 0.84 0.76
Closing equity 0.43 1.27 2.03
Rate of Return 15.50% 15.50% 15.50%
Return on Equity 0.00 0.07 0.20 0.26
Grand Total 0.09 0.42 0.88 1.38
4.4.7.7 The Commission approves the impact of merged DPR Capitalisation now allowed
for FY 2011-12 to FY 2013-14 on RoE, Interest Expenses and Depreciation as Rs.
1.38 Crore for Unit-8. The Commission has considered this recovery separately
along with that of other past Revenue Gaps.
4.4.8 Depreciation
TPC-G’s Submission
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4.4.8.1 The Depreciation for Unit-8, based on the rates specified under the MYT Regulations,
2011 is Rs. 57.69 Crore.
Commission’s Analysis and Ruling
4.4.8.2 As discussed at para. 4.3.9.10, the Commission has considered the opening GFA for FY
2014-15 as the closing GFA for FY 2013-14 as approved in the MTR Order, plus the
merged DPR capitalisation till FY 2013-14 as approved earlier in this Order. The
Commission has considered the assets added during the year, subject to the actual
capitalisation approved for FY 2014-15.
4.4.8.3 Regulation 31.2 of the MYT Regulations, 2011 allows recovery of Depreciation on the
value of Fixed Assets, computed annually on the straight-line method at the specified
rates. The Commission determines the Depreciation on opening GFA for the full
operational period, and on additional capitalisation from the date of capitalisation, for
various classes of assets at the rates as per the Regulations.
4.4.8.4 The summary of Depreciation claimed by TPC-G and approved by the Commission for
FY 2014-15 is as under:
Table 60: Depreciation for Unit-8 as approved by Commission for FY 2014-15 (Rs. Crore)
Particulars MTR Order TPC-G Petition Approved in this Order
Opening GFA 1090.66 1098.16 1097.42
Asset Addition during the year 37.548 46.89 46.89
Asset Retirement during the year 0.00 -0.43 -0.43
Closing GFA 1128.20 1144.63 1143.88
Depreciation 59.95 57.69 57.69
4.4.8.5 The Commission approves Depreciation of Rs. 57.69 Crore for Unit-8, as submitted
by TPC-G, for FY 2014-15.
4.4.9 Interest on Long-term Loan
TPC-G’s Submission
4.4.9.1 Interest on Long-term Loan of Rs. 60.95 Crore has been computed in accordance with
the MYT Regulations, 2011 by considering interest rate of 11.08%.
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Commission’s Analysis and Ruling
4.4.9.2 As discussed in para. 4.3.9.8 of this Order, the Commission has considered the impact of
merged DPR capitalisation on the opening loan balance for FY 2014-15. The
Commission has taken 70% of the merged DPR capitalisation as funded through debt.
The opening loan balance for FY 2014-15 has been arrived at by adding the closing
balance of FY 2013-14, as approved in the MTR Order, and the debt portion of the
merged DPR capitalisation approved in this Order. As per Regulation 33.3, loan
repayment has been considered equal to the Depreciation allowed for FY 2014-15 in this
Order.
4.4.9.3 Regulation 33.5 specifies the rate of interest as the weighted average rate of interest
calculated on the basis of the actual loan portfolio at the beginning of the year. TPC-G
has submitted the weighted average rate of interest for FY 2014-15 to be 11.08%,
considering the outstanding loan balances at the beginning of the year. The Commission
has checked the rates from the loan document copies and taken the weighted average
interest rate as submitted by TPC-G for computation of the Interest on Long-term Loan.
4.4.9.4 The Commission also approves the Other Finance Charges of Rs. 0.02 Crore as
submitted by TPC-G based on the audited allocation statement of accounts.
4.4.9.5 The summary of the Interest on Long-term Loan as submitted by TPC-G and as
approved by the Commission after Truing-up is shown in the Table below:
Table 61: Interest on Long-term Loan as approved by Commission for FY 2014-15 (Rs.
Crore)
Particulars MTR Order TPC-G
Petition
Approved in this
Order
Opening balance of the year 557.31 562.47 561.58
Loan addition during the year 26.28 32.82 32.82
Repayment during the year 59.95 57.69 57.69
Closing balance of the year 523.64 537.60 536.70
Interest rate 11.08% 11.08% 11.08%
Interest on Long-term Loan 59.89 60.95 60.86
Other Finance Charges
0.02 0.02
4.4.9.6 The Commission approves Interest on Long-term Loan for Unit-8 for FY 2014-15
as Rs. 60.86 Crore, as against Rs. 60.95 Crore claimed by TPC-G.
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4.4.10 Return on Equity
TPC-G’s Submission
4.4.10.1 The RoE based on the opening balance of equity and reduction of equity on account of
de-capitalisation of certain assets, at 15.5%, works out to Rs. 51.02 Crore.
Commission’s Analysis and Ruling
4.4.10.2 RoE has been taken at 15.5% of the equity, as per Regulation 32.2.1, on the opening
equity of the year. 30% of the merged DPR capitalization has been considered, as
discussed in para. 4.3.9.8, as funded through equity. The regulatory equity at the
beginning of FY 2014-15 has been arrived at by adding the regulatory equity at the end
of FY 2013-14 as approved in the MTR Order and the equity portion of the merged DPR
capitalisation. The Commission has considered addition to equity considering
capitalisation approved for FY 2014-15 in this Order and the debt: equity ratio of 70:30.
Reduction in equity has been considered at 30% of the value of retirement/de-
capitalisation of assets.
4.4.10.3 The RoE as claimed by TPC-G and approved by the Commission for FY 2014-15 after
Truing-up is summarised in the following Table:
Table 62: Return on Equity for Unit-8 as approved by Commission for FY 2014-15 (Rs.
Crore)
Particulars MTR
Order
TPC-G
Petition
Approved
in this
Order
Opening equity of the year 327.19 329.18 329.22
Equity addition for asset addition during the year 11.26 14.07 14.07
Equity reduction for asset de-capitalised during the year 0.00 (0.13) (0.13)
Closing equity of the year 338.46 343.12 343.16
Rate of return 15.50% 15.50% 15.50%
Return on equity 50.71 51.02 51.03
4.4.10.4 The Commission approves Return on Equity for FY 2014-15 of Rs. 51.03 Crore for
Unit-8, as against Rs. 51.02 Crore claimed by TPC-G.
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4.4.11 Interest on Working Capital
TPC-G’s Submission
4.4.11.1 IoWC of Rs. 16.28 Crore has been computed based on the elements specified in the
MYT Regulations, 2011 and an interest rate of 14.75% (i.e., average SBAR for FY
2014-15).
Commission’s Analysis and Ruling
4.4.11.2 Regulation 35.1(e) stipulates that the rate of interest be the SBAR as on the date of filing
of the Petition. Accordingly, the Commission has taken 14.75%, as approved in the
MTR Order, for working out the IoWC for FY 2014-15.
4.4.11.3 The Commission approves the Interest on Working Capital as Rs. 16.17 Crore in
FY 2014-15 for Unit-8, as against Rs. 16.28 Crore claimed by TPC-G.
4.4.12 Income Tax
TPC-G’s Submission
4.4.12.1 Income Tax for Unit-8 for FY 2014-15 has been worked out as Rs. 25.03 Crore on the
basis of the MYT Regulations, 2011.
Commission’s Analysis and Ruling
4.4.12.2 In line with the methodology set out in this Order for Income Tax computation for FY
2014-15 for Units 4 to 7 and Hydro Stations, the Commission has computed the Income
Tax for Unit-8 for FY 2014-15 as shown in the Table below:
Table 63: Income Tax for Unit-8 for FY 2014-15 as approved by Commission (Rs. Crore)
Particulars TPC-G Petition Approved in this Order
Revenue 477.00 477.00
Less: Incentive and efficiency gains 6.19 8.93
Total expenses 369.87 368.71
Profit before tax 100.94 99.36
Add
Depreciation considered in expenses 57.69 57.69
Other disallowance while computing IT 20.80 20.80
Total tax disallowances 78.49 78.49
Less
Tax Depreciation 84.19 84.19
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Particulars TPC-G Petition Approved in this Order
Other expenses allowed for computing IT 21.61 21.61
Deduction - U/s 80 IA 0.00
Total tax allowances 105.79 105.79
Total taxable Income 73.64 72.06
Corporate Tax rate 33.99% 33.99%
Tax Payable at normal rate 25.03 24.49
MAT computation
Profit before tax 100.94 102.10
Add: Disallowances under Income Tax (U/s
14 A, provision for doubtful debt) 0.14 0.14
Less: Deduction under Income Tax (Exempt
Income, FBT, Wealth Tax, Withdrawal from
Income)
0.00 0
Book profit 101.08 102.24
MAT rate 20.96% 20.96%
Tax payable under MAT 21.19 21.43
Tax applicable 25.03 24.49
4.4.12.3 The Commission approves the Income Tax as Rs. 24.49 Crore for FY 2014-15 for
Unit-8, as against TPC-G’s claim of Rs. 25.03 Crore.
4.4.13 Non-Tariff Income
TPC-G’s Submission
4.4.13.1 The Non-Tariff Income for Unit-8 for FY 2014-15 is Rs. 1.45 Crore, of which Rs. 0.29
Crore is towards Recurring Items and the balance is towards Non-Recurring Items.
Commission’s Analysis and Ruling
4.4.13.2 Based on the audited allocation statement, the Commission approves the Non-
Tariff income of Rs. 1.45 Crore, as submitted by TPC-G.
4.4.14 Revenue from Sale of Power
TPC-G’s Submission
4.4.14.1 TPC-G has earned Rs. 475.55 Crore from TPC-D and BEST from sale of power in FY
2014-15 as shown in the Table below:
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Table 64: Revenue from GenerationofUnit-8 for FY 2014-15, as submitted by TPC-G
Particulars Unit BEST TPC-D Total
Energy MU 267.65 401.48 669.14
Fixed charges Rs. Crore 112.47 168.7 281.17
Incentive Rs. Crore 0 0 0
Energy Charges Rs. Crore 77.33 115.99 193.31
Cash discount Rs. Crore 0.33 0.74 1.06
Considered for ARR Value Rs. Crore 190.12 285.43 475.55
Commission’s Analysis and Ruling
4.4.14.2 Based on the details furnished by TPC-G, the Commission has considered the total
revenue from sale of power in FY 2014-15 from Unit-8 to BEST and TPC-D as Rs.
190.12 Crore and Rs. 285.43 Crore, respectively, for the purpose of Truing-up.
4.4.15 Reduction of Fixed Charges on account of lower Availability of Unit-8
TPC-G’s Submission
4.4.15.1 Availability of Unit-8 was 36.61%, which is lower than the target Availability of 85%
for recovery of AFC. Unit-8 tripped on 9 January, 2014 and was under Force Majeure
outage for the remaining period of FY 2013-14 and part of FY 2014-15. TPC-G had
provided the details of the occurrence and the relevant reports as part of its MTR
Petition in Case 6 of 2015.
4.4.15.2 The MTR Order made certain observations on the data and reports submitted on the
Unit-8 outage. The Commission had directed TPC-G to submit the details and
supporting material required to determine whether the circumstances leading to the
occurrence were uncontrollable or otherwise, in the next Tariff filing. Accordingly, the
present Petition includes a detailed response.
4.4.15.3 Considering the outage as a Force Majeure event, TPC-G has deducted Employee
expenses, Interest on Long-term Loan and Depreciation from the AFC (the expenses of
Unit-8 which had anyway to be incurred independent of the operation / outage of the
Unit) to arrive at the AFC for pro rata reduction. On this basis, reduction in fixed cost
for Unit-8 is proposed to the extent of Rs. 82.55 Crore
4.4.15.4 Rs. 173.11 Crore was spent towards restoration of the Unit-8 till March, 2015 and TPC-
G had raised a claim for the total amount of Rs. 173.11 Crore to the insurance company
for the expenses incurred till that date. As on 31March, 2015, TPC-G has received a
total refund of Rs. 100.35 Crore from the insurance company. Hence, as on that date, the
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capital expenditure of Rs. 63.87 Crore has been capitalized. As some remaining work
was in progress, the insurance claim could not be settled and is expected in FY 2016-17.
Accordingly, TPC-G has not considered the impact on capitalisation and the retirement
of assets for Truing-up of FY 2014-15. TPC-G will approach the Commission during the
Truing-up of FY 2015-16 with the final impact of the above.
Commission’s Analysis and Ruling
4.4.15.5 The Commission had discussed this matter in the MTR Order and had directed TPC-G
to submit all the details in the next Tariff filing for determining whether the
circumstances leading to the occurrence were uncontrollable or otherwise. TPC-G has
now provided point-wise replies to the Commission’s observations and directives. These
are discussed below:
BHEL Circular
4.4.15.6 The MTR Order had stated as follows:
“BHEL had earlier experienced crack formation in LP blades of similar design
and had shared this information with its customers vide its Circular of October,
2011. BHEL had also advised certain predictive checks and tests to detect such
failures in advance. TPC-G has not stated any evidence or even a statement
regarding compliance of the important advice issued by BHEL.”
4.4.15.7 TPC-G stated that BHEL’s Technical Circular dated 8 October, 2011 advised as follows:
“To avoid blade failures, it is recommended to conduct the following Non
Destructive Tests at an Interval of 20000 to 25000 hours:
1. Crack detection in free standing blades of LP last stage advanced class blading
by MPI (In Disassembled condition).
2. Measurement of Natural Frequency of all free standing blades of last stages
(LP 3R and LP 3L). The measurement of Natural Frequency of these blades is
to be done by using Technological Pieces after removing existing clamping
pieces. Therefore new clamping pieces are to be fitted in position.”
4.4.15.8 TPC-G stated that, learning from the experience of cracks in LP turbine blades of Unit-8
and as recommended by BHEL subsequently, it carried out the required tests well before
the interval of 20000 to 25000 operating hours stipulated by BHEL. TPC-G has also
provided the details of inspections carried out between August, 2011 and January, 2014,
as discussed below:
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MERC Order in Case No. 32 of 2016 Page 114 of 224
a. At an interval of around 5200 operating hours since August, 2011: In March, 2012,
during 3 days outage availed (from 18 to 23 March, 2012), i.e. 8 months after the
initial inspection, in situ MPI was carried out and no crack was found.
b. At an interval of around 5700 operating hours since March, 2012: During outage in
December, 2012 –January, 2013, the LP rotor was removed, de-bladed and MPI and
Natural Frequency Testing (NFT) was done under the supervision of BHEL. Nothing
abnormal was found in the LP blades.
4.4.15.9 TPC-G stated that the next detailed inspection as per the BHEL Circular was scheduled
in January, 2015 (approximately 16000 operating hours after the January, 2013
inspection, well before the recommended 20000 EOH). However, as a proactive step,
TPC-G had planned inspection of LP Turbine blades in February, 2014. However, the
LP blade failure occurred on 9 January, 2014.
4.4.15.10 TPC-G stated that the inspections / overhauls of Unit-8 Turbine were carried out under
the supervision of BHEL. Copies of its letter to BHEL for supervision of blade
inspection and of the purchase orders placed on BHEL for the planned inspection have
been submitted.
4.4.15.11 In view of the above, TPC-G contends that it is evident that, whereas the BHEL
Technical Circular advised that the LP turbine blades be inspected after every 20000 to
25000 hours, i.e., around every 2.5 years, TPC-G had inspected the blades every 8-9
months (after around 6000 hrs). TPC-G submitted that the LP blades failed in spite of
adherence to all the recommendations of BHEL. Hence, the failure of LP blades due to
cracks which led to the incident on 9 January, 2014 was beyond the control of TPC-G.
Replacement of Blades
4.4.15.12 The Commission in the MTR Order had observed as follows:
“The Commission notes that TPC-G has submitted that it has meticulously
followed maintenance practices, which has been supported by the BHEL report.
However, the BHEL report has not explicitly commented on maintenance
practices followed by TPC-G…
BHEL had stipulated that certain checks and tests be carried out on the blades at
specified intervals. TPC-G should clarify when these check / tests were due,
whether these were conducted, what were their results, and whether follow-up
action was taken under guidance of the supplier. In 2011, some blades of the LP
turbine were replaced. The Commission notes that replacement of blades in new
turbines is not a common industrial practice. TPC-G should clarify what analysis
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was carried out after such failure, and whether the lessons drawn were
implemented.”
4.4.15.13 TPC-G has submitted the Steam Turbine Manual provided by BHEL. TPC-G has stated
that, as per the section on Instructions for Overhaul, the maintenance schedule of LP
turbine after certain Equivalent Operating Hours (EOH) is as below:
a. Minor Overhaul (Inspection and Servicing) to be done after 17000 EOH.
b. Medium Overhaul (Inspection, Servicing and Repair) to be done based on long-term
observations, operating experience and manufacturer’s recommendations.
c. Major Overhaul (Inspection, Servicing and Repair) to be done after 50000 EOH.
4.4.15.14 According to TPC-G, it is evident from the job scope of the Steam Turbine Manual that
overhaul of the Machine involving detailed inspection of LP turbine free standing blades
by complete removal and detailed checks for cracks by MPI and NFT was not due as
Unit-8 had not completed 50000 EOH at the time of the incident.
4.4.15.15 TPC-G has stated that the recommendation, subsequently issued by BHEL vide
Technical Circular dated 8 October, 2011, superseded the above inspection intervals and
that it has adhered to them.
Replacement of Blades
4.4.15.16 The Commission, in the MTR Order, had observed as follows:
“As regards the probable cause of cracks in the failed Unit, the BHEL Report has
pointed out that Unit-8 was often subjected to cyclic load variations between 180
MW and 250 MW on a daily basis, and has concluded that High Cycle fatigue can
be considered as one of the probable causes of crack initiation. TPC-G has
commented on the observations of BHEL. Further, while BHEL considers
“fatigue” as one of the prime reasons for such failure, and has also indicated that
the fatigue occurred because the machine was subjected to cyclic load variation
daily, TPCG does not appear to have consulted BHEL regarding subjecting the
machine to such high cyclic loading variations.
As per TPC-G’s submission, the 250 MW ThermalUnit-8 was operating on 182
MW load. BHEL has mentioned that the loading pattern of the Unit showed cyclic
variations between 180 MW to 250 MW on daily basis, which could be conducive
to crack formation in the LP Turbine blades. TPC-G needs to clarify whether the
Unit was designed for such cyclic loading (which may be beyond the standard
industry practice), and whether information regarding high cyclic variations was
conveyed to the manufacturer/ OEM and its observations and recommendations
sought.”
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4.4.15.17 TPC-G has stated that it had appointed Tata Consulting Engineers (TCE) to define the
specifications to be given to BHEL for design of the Unit. Section 14.2 included in the
Design Specifications on the Steam Turbine & Accessories and Regenerative Cycle
System clearly mentioned that the turbine should be designed for cyclic loading due to
daily load fluctuations. Design specifications on Duty forUnit-8 mentions as follows:
“1.1.4 Duty: Continuous base load operation of minimum 8000 hrs with 50 starts
per annum. Unit shall also be capable of cyclic loading due to daily load
fluctuations.”
4.4.15.18 According to TPC-G, it is evident that the cyclic loading pattern which was expected to
be observed on Unit-8 in line with the MOD was indicated to BHEL at the design stage
and the Unit was designed accordingly. TPC-G stated further that BHEL itself has
specified the guaranteed performance of the Unit at 100%, 80% and 60% of full load in
the form of Heat Balance Diagrams (HBD).
4.4.15.19 TPC-G has also submitted that, in accordance with the technical minimum study
undertaken by CPRI (as directed by the Commission), around 30% load variation is
allowed on Unit-8. The BHEL Technical Circular does not mention cyclic loading as a
probable cause of blade failure observed at other sites, nor did it recommend restricting
the minimum load.
4.4.15.20 Based on the above, TPC-G has stated that BHEL was informed about cyclic loading at
the design stage of the Unit-8 Steam turbine specifications, and that Unit-8 is designed
for daily cyclic loading pattern. Therefore, there was no need for any separate
communication / permission from BHEL for the daily cyclic loading. The cyclic loading
of the Unit is as per the MOD, which is not at all abnormal and is as per the regular
industry practice.
Operating Conditions
4.4.15.21 The MTR Order stated as follows:
“Among other causes, BHEL has mentioned “locally aggressive environment that
produces corrosion pits or troughs, localized corrosion, or local dissolution”, as
a probable cause of crack initiation. However, TPC-G has neither contradicted
nor provided any clarification regarding this.
One of the key observations of BHEL in its report is the following:
“For crack initiation to occur fatigue origins should be present. Some of
the possible fatigue origins are given: Locally aggressive environment
that produces corrosion pits or troughs, localized corrosion, or local
dissolution.”
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As regards the above said BHEL’s observation regarding the probable cause for
crack initiation, TPC-G has not provided any clarification. Hence, TPC-G should
elaborate on the above and provide evidence regarding the existence of the above
phenomena in the instant case.””
4.4.15.22 TPC-G has stated that chloride corrosion could be one reason for fatigue origin leading
to crack initiation, which can happen due to higher chloride levels in the steam cycle.
The chloride carry-over can happen only in case of condenser tube leak in the Unit.
However, Unit-8 has not experienced any condenser tube leak in the last two years, as
can be seen from the chemical analysis of Unit-8 which clearly shows that the chloride
content level is much below permissible limits. Hence, chloride corrosion is ruled out.
4.4.15.23 TPC-G has further stated that the LP Turbine blades were changed on account of the
crack, and not even a single blade was recommended to be changed by BHEL on
account of corrosion. In its RCA report also, BHEL has indicated corrosion as one of
such causes but has not clearly attributed the failure of the blade to this in case of Unit-8.
The Water Chemistry report was also shared with BHEL for its recommendations, but,
BHEL had not commented on it. TPC-G contended that it is evident that it has
maintained the operating conditions of the Unit-8 as per the standard guidelines
specified by the OEM.
Corrective Actions
4.4.15.24 The Commission in the MTR Order had observed as follows:
“Submissions based on such Technical Reports are expected to include the
Utility’s detailed comments and views on their observations, findings and
conclusions. In the present case, in the absence of such analysis by TPC-G, many
issues remain unanswered and unresolved.
In the Internal Investigation Report, the column relating to “corrective steps” has
been left blank. In the above background, the Commission notes that, since an
exception has been pleaded for, it was TPC-G’s responsibility to come out with
all details in its support.”
4.4.15.25 TPC-G has clarified that the Internal Incident Investigation Report was documented at
an early stage when the detailed analysis of blade samples was not available, and hence
the corrective action section was kept blank. However, based on the observations /
findings, the following corrective actions have been taken/proposed:
a. Revision by BHEL of Technical Minimum Load to 200 MW by BHEL from the
earlier 180 MW. Unit-8 is being operated in line with this recommendation since
November, 2014.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 118 of 224
b. Blade Vibration Monitoring System (BVMS) has been installed at Unit-8.
c. Crack detection by Phased Array Ultrasonic Testing (PAUT), which is an
advanced non-destructive testing method with better analysis capability.
4.4.15.26 As regards the insurance claim, the Commission notes that, since some work is still in
progress, the final claim settlement is not possible at this stage. Accordingly, the
Commission has not considered the amount pertaining to this while computing the gains
and losses for FY 2014-15. It would take it up issue in the subsequent MTR exercise, at
which time TPC-G should submit the details of expenditure incurred on restoration of
Unit-8, insurance claimed, insurance received and other relevant information.
4.4.15.27 The Commission notes that TPC-G has provided detailed responses to the directives in
the MTR Order along with supporting material. After examining these, the Commission
is of the view that the forced outage of Unit-8 on 9 January, 2014 was a Force Majeure
event beyond the control of TPC-G. Accordingly, the Commission allows the pro rata
reduction in the AFC for Unit-8 based on the methodology in the MTR Order.
Table 65: Summary of Reduction of AFC for Unit-8 for FY 2014-15 as approved by
Commission
Particulars Unit TPC-G
Petition
Approved in
this Order
Employee expenses Rs. Crore 10.39 10.39
Interest on Long-term Loan Rs. Crore 60.95 60.86
Depreciation Rs. Crore 57.69 57.69
Total Rs. Crore 129.04 128.94
AFC Rs. Crore 274.05 273.31
AFC without employee cost, interest and
Depreciation Rs. Crore 145.00 144.36
Normative Availability % 85% 85%
Actual Availability % 37.00% 36.61%
Revised fixed cost Rs. Crore 62.45 62.18
Reduction in fixed cost Rs. Crore 82.55 82.19
4.4.15.28 The Commission approves the reduction in AFC for Unit-8 for Availability lower
than the Target Availability for FY 2014-15 to the extent of Rs. 82.19 Crore.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 119 of 224
4.4.16 Sharing of Gains / Losses for FY 2014-15
4.4.16.1 As discussed earlier for Units 4 to 7 and Hydro Stations, the Commission has considered
the sharing of efficiency gain or losses in case of fuel cost, revenue due to variation in
Auxiliary Energy Consumption and O&M expenses for Unit-8.
4.4.17 Gains / Losses on account of fuel cost
TPC-G’s Submission
4.4.17.1 TPC-G has considered normative SHR, normative secondary fuel oil consumption, fuel
prices and calorific value. Efficiency gains/ losses of Rs. 7.07 Crore on account of
variation in the SHR have been passed on to the Distribution Licensees.
Commission’s Analysis and Ruling
4.4.17.2 For computing the efficiency gains/ losses, the Commission has considered the SHR as
approved in the MTR Order. Accordingly, it has considered the total efficiency gain on
account of fuel cost, one third of which has been passed on to the Distribution
Licensees, as under:
Table 66: Gains/Losses in Fuel Cost as approved by Commission for FY 2014-15
Particulars Units Unit-8
Fuel cost Rs Crore 175.56
Cost of generation (Normative) Rs/kWh 2.75
Gross generation MU 715.47
Fuel cost applying normative SHR Rs Crore 196.78
Net gains/ (loss) Rs Crore 21.22
Passed on to the Distribution Licensees Rs Crore 7.07
4.4.17.3 The Commission approves Efficiency Gain of Rs. 7.07 Crore to be passed on to
Distribution Licensees on account of variation in Fuel Cost for Unit-8 for FY 2014-
15.
4.4.18 Efficiency Gains / Losses on account of Auxiliary Energy Consumption
TPC-G’s Submission
4.4.18.1 There are variations in the actual Auxiliary Energy Consumption of the Unit vis-à-vis
the approved parameters, and TPC-G has computed the total gain as Rs. 1.86 Crore to be
passed on to the Distribution Licensees.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 120 of 224
Commission’s Analysis and Ruling
4.4.18.2 The Commission has computed the variation in revenue on account of the variation in
Auxiliary Energy Consumption, considering the Tariff as approved in the MYT Order,
for FY 2014-15 as under:
Table 67: Efficiency Gains/ Losses due to variation in Auxiliary Energy Consumption of
Unit-8 in FY 2014-15, as approved by Commission
Particulars Units TPC-G
Petition
Approved in this
Order
Gross generation MU 715.47 715.47
Actual Auxiliary Energy Consumption % 6.48% 6.48%
Norm Auxiliary Energy Consumption % 8.50% 8.50%
Difference in net generation MU 14.48 14.48
Rate Rs/kWh 3.85 3.85
Auxiliary Energy Consumption gain /
(loss) Rs Crore 5.58 5.58
Passed on to Distribution Licensees Rs Crore 1.86 1.86
4.4.18.3 The Commission approves Efficiency Gain of Rs. 1.86 Crore to be passed on to
Distribution Licensees on account of variation in Auxiliary Energy Consumption of
Unit-8 in FY 2014-15.
4.4.19 Efficiency Gains / Losses on account of O&M Expenses
TPC-G’s Submission
4.4.19.1 TPC-G has computed the efficiency loss for FY 2014-15 on account of O&M expenses
as Rs.2.75 Crore to be shared with the Distribution Licensees.
Commission’s Analysis and Ruling
4.4.19.2 The MYT Order had approved the normative O&M expenses for Unit-8 by considering
the per MW norms in the MYT Regulations, 2011. TPC-G has not considered any
uncontrollable expense for sharing of gains and losses. It has stated that Unit-8 was shut
down up to November, 2014 on account of a major fire in January, 2014. Hence,
additional activities such as site weld joints of economizer were radio graphed and
repaired, boiler was inspected, burner overhaul was carried out and RAPH elements
were cleaned considering the outage availability, which increased the expenditure by
around Rs. 9 Crore.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 121 of 224
4.4.19.3 The normative O&M expenses are derived as per the MYT Regulations, 2011. Hence,
the normative O&M expenses are being approved on a composite basis, without
segregation of costs into employee, A&G and R&M expenses, in line with earlier
Orders. The Commission is of the view that employee, A&G and R&M expenses are a
part and parcel of the O&M expenses as a whole, which is derived on the basis of norms
from which deviation is not justified considering that TPC-G has not shown that it has
suffered any loss because of those expenses claimed to be uncontrollable.
4.4.19.4 Considering the difference between the normative and the approved actual O&M
expenses, the efficiency gains/ losses due to variation in O&M expenses has been
computed, and there is summarized in the Table below:
Table 68: Efficiency Gains/ Losses due to variation in O&M Expenses for Unit-8 for FY
2014-15(Rs. Crore)
Particulars TPC-G Petition As Approved in this
Order
Approved O&M expenses 43.75 43.75
Actual O&M expenses 51.99 51.99
Less: Uncontrollable expenses as claimed by
TPC-G 0.00 0.00
Net actual O&M expenses 51.99 51.99
O&M expenses gain /(loss) (8.24) (8.24)
Passed on to Distribution Licensees (2.75) (2.75)
Net entitlement of O&M Expense 46.50 46.50
4.4.19.5 The Commission approves an Efficiency Loss of Rs. 2.75 Crore to be shared with
Distribution Licensees on account of variation in O&M Expenses of Unit-8 in FY
2014-15.
4.4.20 Net Entitlement, and resultant Revenue Gap/ Surplus for Unit-8
4.4.20.1 Based on the Truing-up of various elements of expenses and revenue and TPC-G’s share
of efficiency gains/losses, the Commission has determined the total Revenue
Gap/Surplus as against that estimated by TPC-G for Unit-8 for FY 2014-15. The
summary of the net ARR and sharing of efficiency gains/losses as approved by the
Commission for FY 2014-15 is as shown in the Table below:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 122 of 224
Table 69: Truing-up for FY 2014-15 for Unit 8, including sharing of Efficiency Gains/ (Losses) (Rs. Crore)
Particulars TPC-G
Petition
Approved
after
Truing-up
Entitlement
as per
Regulations /
Order
Efficiency
Gains
/(Losses)
Efficiency Gains
/(Losses) shared
with Distribution
Licensees
Net
Entitlement
after sharing of
gains/(losses)
Fuel Related Expenses (Based on
Normative SHR) 189.71 175.56 196.78 21.22 7.07 189.71
Aux. Benefit 3.72 5.58 5.58 1.86 3.72
Operation & Maintenance Expenses 46.50 51.99 43.75 (8.24) (2.75) 46.50
Depreciation Expenses 57.69 57.69 57.69
Interest on Long-term Loan 60.95 60.86 60.86
Interest on working capital 16.28 16.17 16.17
Other expenses 0.02 0.02 0.02
Income Tax 25.03 24.49 24.49
Reduction in AFC on account of lower
Availability (82.55) (82.19) (82.19)
Total Revenue Expenditure 317.35 310.18 316.97
Add: Return on equity capital 51.02 51.03 51.03
Less: Non-Tariff Income 1.45 1.45 1.45
Aggregate Revenue Requirement 368.37 359.76 366.55
Revenue
Revenue from sale of electricity 475.55 475.55 475.55
Gap / (Surplus) (108.62) (115.79) (108.99)
Expenditure towards shared capacity of
Units 4 to 7 12.50 12.50 12.50
Total Revenue Gap/(Surplus) (96.12) (96.49)
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 123 of 224
4.4.20.2 The Commission approves a Revenue Surplus of Rs. 96.49 Crore for Unit-8 for FY
2014-15, as against Rs. 96.12 Crore stated by TPC-G.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 124 of 224
5. PROVISIONAL TRUE-UP OF ARR FOR FY 2015-16
5.1 Background
TPC-G has sought Provisional Truing-up of ARR for FY 2015-16. The detailed analysis
undertaken by the Commission is set out below.
5.2 Performance Parameters
The MTR Order had approved the revised performance parameters for TPC-G for FY
2015-16. TPC-G has submitted the actual performance parameters for the first half (H1)
of FY 2015-16 and estimated them for the remaining 6 months (H2). Subsequently,
TPC-G furnished the actual performance parameters for the whole year. TPC-G’s
submissions and the Commission’s analysis and rulings are detailed below.
5.3 Performance Parameters of TPC-G’s Generating Station/ Units
5.3.1 Availability
TPC-G’s Submission
5.3.1.1 Based on the actual performance for H1 and estimated performance for H2 of FY 2015-
16, the Availability of all the Thermal Generating Units and Hydro Generating Stations
is estimated to be more than the normative Availability of 85%, as shown in the Table
below:
Table 70: Availability of Generating Units as submitted by TPC-G for FY 2015-16
Unit 2015-16 H1 2015-16 H2 FY 2015-16
Unit-5 95.72% 92.32% 94.02%
Unit-6 100.00% 80.53% 90.26%
Unit-7 86.35% 99.32% 92.84%
Unit-8 98.95% 91.43% 95.19%
Hydro
Khopoli 99.82% 99.59% 99.58%
Bhira 81.63% 99.40% 91.24%
Bhivpuri 100.00% 92.50% 96.00%
Commission’s Analysis and Ruling
5.3.1.2 The Commission had asked TPC-G for details of actual performance parameters for
entire FY 2015-16 since the year was now over. TPC-G provided the details of actual
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 125 of 224
un-audited performance parameters for FY 2015-16, and thereafter revised figures and
MSLDC certificate for Availability and PLF of Thermal Generating Stations vide letter
dated 23 May, 2016.
5.3.1.3 The actual Availability as per the MSLDC certificate submitted by TPC-G for FY 2015-
16 is as shown in the Table below:
Table 71: Availability of Generating Units as submitted by TPC-G (revised submission) for
FY 2015-16
Unit FY 2015-16
Unit-5 95.25%
Unit-6 92.99%
Unit-7 93.69%
Unit-8 94.72%
5.3.1.4 The MTR Order had approved the Availability for the Thermal Generating Units and
Hydro Generating Stations for FY 2015-16 as projected by TPC-G as it was in line with
the Availability approved in the previous MYT Order.
5.3.1.5 For the Provisional Truing-up for FY 2015-16, the Commission has considered the
Availability for Thermal Generating Stations as per the MSLDC certificate and
Availability for Hydro Generating Stations as per the revised submission of TPC-G, as
shown in the Table below:
Table 72: Availability as approved by the Commission for FY 2015-16
Unit MTR Order Approved in this Order
Unit-5 97.00% 95.25%
Unit-6 99.00% 92.99%
Unit-7 97.00% 93.69%
Unit-8 99.00% 94.72%
Hydro
Khopoli 98.44% 99.58%
Bhira 99.98% 91.24%
Bhivpuri 98.99% 96.00%
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 126 of 224
5.3.2 Gross Generation
TPC-G’s Submission
5.3.2.1 Considering the actual performance in H1 and estimated performance for H2 of FY
2015-16, TPC-G has achieved a total gross generation of 5728.88 MU. The Unit-wise
performance is detailed below.
Unit-4 is under stand-by and has not been in service for the past three years due to its
high cost of power. Accordingly, no generation from Unit-4 has been considered by
TPC-G.
Unit-5 generation has been computed based on its projected Availability in H2 of FY
2015-16 and its position in the MoD.
Unit-6 has a high cost of generation and is higher in the MoD. Further, Unit-6 is under
economic shutdown at the request of its beneficiaries, TPC-D and BEST. Hence, TPC-G
has projected the gross generation based only on actual generation in H1 and assuming
no likelihood of any planned generation in H2. However, the Unit may be required to
run on directions of MSLDC in case there is a system constraint.
Unit-7estimated generation is lower than that approved in the MTR Order. This is
mainly on account of lower gas availability and forced shutdown during July – August,
2015 due to STG Exciter failure.
Unit-8 estimated generation is less than that approved in the MTR Order. The reason for
lower generation from Unit-8 in H2 FY 2015-16 is the planned outage for blade
inspection. However, the overall generation is in the range of the gross generation
approved in the MTR Order.
Hydro Stations
5.3.2.2 The Hydro Generation during FY 2015-16 is expected to be lower than the MTR figures
because of significantly low rainfall in the catchment areas of the Hydro Generating
Stations and allocation of 30 MCM water from Mulshi dam for drought-affected areas as
per the Order of the MWRRA. The rainfall recorded at the Hydro Generating Station has
been lower by 30% as compared to the average rainfall over the last 10 years.
5.3.2.3 Based on the above, the estimation for H2 and actual performance inH1 is as follows:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 127 of 224
Table 73: Gross Generation and PLF as submitted by TPC-G for FY 2015-16
Unit
Gross Generation PLF
2015-16 H1 2015-16 H2 FY 2015-16 2015-16 H1 2015-16 H2 FY 2015-16
MU MU MU % % %
Unit-5 1869.15 1627.16 3496.31 85.12% 74.00% 79.61%
Unit-6 42.13 0.00 42.13 0.96% 0.00% 0.96%
Unit-7 496.83 581.77 1078.61 62.85% 73.59% 68.22%
Unit-8 1032.17 927.34 1959.51 94.00% 84.46% 89.23%
Hydro
Khopoli 132.17 109.72 241.93
Bhira 348.97 292.85 641.82
Bhivpuri 118.84 109.25 228.09
Commission’s Analysis and Ruling
5.3.2.4 On 20 April, 2016, the Commission had sought details of actual performance parameters
for the entire FY 2015-16, since the year was over. TPC-G has provided the actual un-
audited performance details for FY 2015-16. The actual gross generation and PLF
submitted by TPC-G for FY 2015-16 is as shown in the Table below:
Table 74: Gross Generation and PLF as submitted by TPC-G in revised submission for FY
2015-16
Unit Gross Generation (MUs) PLF (%)
Unit-5 3503.45 79.77%
Unit-6 42.13 0.96%
Unit-7 1179.73 74.61%
Unit-8 1883.34 85.76%
5.3.2.5 Being on stand-by, Unit-4 has not been operated in the last three years. Accordingly, the
Commission has not considered any generation from Unit-4 in FY 2015-16.
5.3.2.6 The Commission recognizes that rainfall in FY 2015-16 was low and TPC-G had to
allocate 30 MCM water from Mulshi dam for drought-affected areas considering the
Order of the MWRRA. This has led to lower generation than Design Energy.
5.3.2.7 The Commission has considered the actual gross generation and PLF for FY 2015-16 as
submitted by TPC-G in reply to the data gaps raised on 20 April, 2016. The summary of
Gross Generation and PLF considered for FY 2015-16 is as shown in the Table below:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 128 of 224
Table 75: Gross Generation and PLF as approved by Commission for FY 2015-16
Unit
Gross Generation PLF
MTR Order Approved in this
Order MTR Order
Approved in this
Order
MU MU % %
Unit-5 3294.00 3503.45 75.20% 79.99%
Unit-6 0.00 42.13 0.00% 0.96%
Unit-7 1454.00 1179.73 92.20% 74.61%
Unit-8 1958.00 1883.34 89.40% 85.76%
Hydro
Khopoli 267.00 241.93
Bhira 883.00 641.82
Bhivpuri 300.00 228.09
5.3.3 Auxiliary Energy Consumption
TPC-G’s Submission
5.3.3.1 The annual Auxiliary Energy Consumption for Unit-5 and Units 7 and 8 is projected to
be lower than approved in the MTR Order. Also, Unit-6 remains under stand-by mode
most of the year and operates only intermittently, which results in higher Auxiliary
Energy Consumption.
5.3.3.2 The CPRI study on GT Losses and Head Works Losses found the GT Losses to be
1.13% instead of the normative 0.50%. The Commission may consider a higher
Auxiliary Energy Consumption for Hydro Generating Station than approved in the MTR
Order. Auxiliary Energy Consumption for FY 2015-16 is as follows:
Table 76: Auxiliary Energy Consumption as submitted by TPC-G for FY 2015-16
Unit 2015-16 H1 2015-16 H2 FY 2015-16
Unit-5 5.74% 6.01% 5.86%
Unit-6* 16.23 12.31 28.54
Unit-7 2.70% 2.85% 2.78%
Unit-8 6.13% 6.20% 6.16%
Hydro
Khopoli 4.21% 2.50% 3.44%
Bhira 3.02% 2.64% 2.85%
Bhivpuri 2.28% 3.06% 2.65%
*Note: Unit-6Auxiliary Energy Consumption is shown in MU
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 129 of 224
Commission’s Analysis and Ruling
5.3.3.3 The Commission had sought details of actual performance parameters for the entire FY
2015-16, since the year was over. TPC-G provided the actual un-audited performance
parameters for FY 2015-16. The actual Auxiliary Energy Consumption of Thermal
Generating Stations as submitted by TPC-G for FY 2015-16 is as shown in the Table
below:
Table 77: Auxiliary Energy Consumption as submitted by TPC-G in its revised submission
for FY 2015-16
Unit Auxiliary Energy Consumption
Unit-5 5.87%
Unit-6 27.16
Unit-7 2.63%
Unit-8 6.20%
5.3.3.4 The Auxiliary Energy Consumption of Units 5, 7 and 8 is within the limits approved in
the MTR Order. Accordingly, the Commission approves the actual Auxiliary Energy
Consumption for these Units as submitted by TPC-G for Provisional Truing-up. The
Commission will compute the sharing of efficiency gains/losses based on normative
parameters at the time of Truing-up.
5.3.3.5 As regards the Auxiliary Energy Consumption of Unit-6, its gross generation when
operating under the PPAs and when operating under MSLDC directions was 13.8 MU
and 28.33 MU respectively. As discussed at para. 4.3.2.29, the Commission has
approved the normative Auxiliary Energy Consumption of Unit-6 (when not operating
under MSLDC directions) as 3.50% for Provisional Truing-up.
5.3.3.6 As regards the Auxiliary Energy Consumption of Unit-6 under MSLDC directions, as
discussed at para. 4.3.2.30, considering the exceptional nature of the operation of Unit-6
on intermittent load, the Commission approves the actual Auxiliary Consumption of
1.85 MU for FY 2015-16.
5.3.3.7 TPC-G has sought approval of Auxiliary Energy Consumption for Hydro Generating
Stations higher than approved in the MTR Order. The MTR Order considered the
normative Auxiliary Energy Consumption of Hydro Generating Stations as 1.78% for
FY 2015-16. As discussed in para.4.3.2.36 of this Order, the Commission has now
considered the Headworks losses of 0.18%. Accordingly, the Commission approves the
Auxiliary Energy Consumption for Hydro Generating Stations as 1.96% for FY 2015-
16.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 130 of 224
5.3.3.8 The summary of the Auxiliary Energy Consumption as approved by the Commission for
FY 2015-16 is as shown in the Table below:
Table 78: Auxiliary Energy Consumption as approved by Commission for FY 2015-16
Unit MTR Order Approved in this Order
Unit-5 6.00% 5.87%
Unit-6-Regulated 3.50% 3.50%
Unit-7 3.00% 2.63%
Unit-8 8.50% 6.20%
Hydro
Khopoli 1.78% 1.96%
Bhira 1.78% 1.96%
Bhivpuri 1.78% 1.96%
5.3.4 Gross Station Heat Rate
TPC-G’s Submission
5.3.4.1 Unit-6 remains under stand-by mode most of the year and operates only intermittently
which results in higher SHR. The SHR for Unit-7 is also higher than normative because
of lower gas availability. The SHR for FY 2015-16 is as shown in the Table below:
Table 79: SHR for FY 2015-16 as submitted by TPC-G
Unit 2015-16 H1 2015-16 H2 FY 2015-16
Unit-5 2505 2549 2526
Unit-6-Regulated 3054 0.00 2944
Unit-7 2320 2083 2192
Unit-8 2281 2299 2290
Commission’s Analysis and Ruling
5.3.4.2 The Commission had sought details of actual performance parameters for the entire FY
2015-16 after the year was over. TPC-G provided the actual un-audited performance
parameters for FY 2015-16. The actual SHR as submitted by TPC-G is as shown in the
Table below:
Table 80: SHR as submitted by TPC-G in its revised submission for FY 2015-16
Unit SHR (Kcal/kWh)
Unit-5 2520
Unit-6-Regulated 3054
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 131 of 224
Unit SHR (Kcal/kWh)
Unit-7 2136
Unit-8 2300
5.3.4.3 The SHR for Units 5, 7 and 8 are within limits approved in the MTR Order.
Accordingly, the Commission approves the SHR these Units as submitted by TPC-G for
Provisional Truing-up. The Commission will compute the sharing of efficiency
gains/losses based on normative parameters at the time of Truing-up.
5.3.4.4 The Commission has considered the revised normative SHR of 2594 kCal/kWh of Unit-
6 (when not operating under MSLDC directions) based on the actual fuel mix for FY
2015-16, as per the methodology of the MTR Order.
Table 81: Revised Normative SHR for Unit-6 for FY 2015-16
Particulars Normative SHR for FY 2015-16 (Kcal/kWh)
Full gas firing 2661
Full oil firing 2416
Normative SHR as per MYT
Regulations @ 50:50 Mix 2539
Normative SHR Approved in
MTR (Provisional Fuel Mix)
Normative SHR as
per Actual Fuel Mix
Actual gas % 50% 72.80%
Actual oil % 50% 27.20%
Revised Normative SHR 2539 2594
5.3.4.5 The summary of SHR as approved by the Commission for FY 2015-16 is as shown in
the Table below:
Table 82: SHR as approved by the Commission for FY 2015-16
Unit MTR Order (Kcal/kWh) Approved in this Order (Kcal/kWh)
Unit-5 2581 2520
Unit-6-Regulated 2539 2594
Unit-7 2025 2136
Unit-8 2450 2300
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 132 of 224
5.3.5 Design Energy for Hydro Generating Stations
TPC-G’s Submission
5.3.5.1 Rainfall in FY 2015-16 was very low in the catchment areas of the Hydro Generating
Stations because of which the generation is likely to be lower than the Design Energy.
5.3.5.2 Further, low rainfall has resulted in a shortage of drinking water in the State.
Consequently, in compliance with the MWRRA Order dated 26 October, 2015 and
subsequent letter from the Pune Irrigation Circle dated 3 November, 2015, TPC-G was
required to allocate 30 MCM water from the Mulshi dam for the drought-affected areas.
This has reduced the generation from Bhira Generating Station to that extent in FY
2015-16.
5.3.5.3 In view of this loss of generation from the Hydro Stations, TPC–G filed a Petition in
Case No. 144 of 2015 requesting the Commission to consider the release of 30 MCM
water as uncontrollable over and above the low rainfall during FY 2015-16.
Accordingly, TPC-G sought to be allowed recovery of the entire fixed cost as per the
mechanism in Regulation 49.7 of MYT Regulations, 2015 for recovery of Energy
Charge of FY 2015-16 and future years.
Commission’s Analysis and Ruling
5.3.5.4 In its Order dated 6 April, 2016, in Case No. 144 of 2015, the Commission allowed
TPC-G to withdraw its Petition and raise the issues in its revised MYT Petition. TPC-G
has accordingly included the issue of release of 30 MCM of water and low rainfall in FY
2015-16 in the present Petition.
5.3.5.5 The Commission notes that the MWRRA held a Public Hearing on 8 October, 2015 in
Case No. 5 of 2015 regarding release of water for equitable distribution in the Bhima
sub-basin upto the Ujjani Reservoir. TPC-G was asked to divert 30 MCM water from
Mulshi reservoir into the Bhima sub-basin considering the drought situation. TPC-G
agreed to do so considering the larger public cause and interest.
5.3.5.6 The Commission recognizes that rainfall during FY 2015-16 was unusually low in the
catchment areas of the Hydro Generating Stations, because of which their generation has
been lower than the Design Energy. The release of 30 MCM water from Mulshi dam to
provide relief in the drought-affected areas was also beyond the control of TPC-G.
Accordingly, the Commission has considered the impact on the gross generation of the
Hydro Generating Stations as submitted by TPC-G.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 133 of 224
5.3.5.7 The MYT Regulations, 2011 specify the treatment to be given in case the actual energy
generated is less than the Design Energy:
“50.5 In case actual total energy generated by a Hydro Generating Station
during a year is less than the Design Energy for reasons beyond the control of the
Generating Company, the following treatment shall be applied on a rolling
basis:—
(i) In case the energy shortfall occurs within ten years from the date of
commercial operation of a Generating Station, the ECR for the year following the
year of energy shortfall shall be computed based on the formula specified in
Regulation 50.4 with the modification that the DE for the year shall be considered
as equal to the actual energy generated during the year of the shortfall, till the
Energy Charge shortfall of the previous year has been made up, after which
normal ECR shall be applicable :
Provided that in case actual generation from a hydel Generating Station is
less than the Design Energy for a continuous period of 4 years on account of
hydrology factor, the Generating Station shall approach the Central Electricity
Authority with relevant hydrology data for revision of Design Energy of the
Station.
(ii) In case the energy shortfall occurs after ten years from the date of commercial
operation of a Generating Station, the following shall apply : —
Explanation—Suppose the specified annual Design Energy (DE) for the
Station is DE MWh, and the actual energy generated during the concerned
(first) and the following (second) Years is A1 and A2 MWh, respectively,
A1 being less than DE. Then, the Design Energy to be considered in the
formula in Regulation 49.6 of these Regulations for calculating the ECR
for the third Year shall be moderated as (A1 + A2 – DE) MWh, subject to
a maximum of DE MWh and a minimum of A1 MWh.
(iii) Actual energy generated (e.g., A1, A2) shall be arrived at by multiplying the
net metered energy sent out from the Station by 1 / (1 – AUX).
50.6 In case the Energy Charge Rate (ECR) for a Hydro Generating Station, as
computed in Regulation 50.5, exceeds eighty paise per kWh, and the actual
saleable energy in a Year exceeds { DE x ( 1 – AUX ) } kWh, the Energy Charge
for the energy in excess of the above shall be billed at eighty (80) paise per kWh
only :
Provided that in a year following a year in which total energy generated
was less than the Design Energy for reasons beyond the control of the Generating
Company, the Energy Charge Rate shall be reduced to eighty (80) paise per kWh
after the Energy Charge shortfall of the previous year has been made up.”
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 134 of 224
5.3.5.8 In accordance with the Regulations, the Commission will consider the impact of lower
generation than the Design Energy for computing the future Energy Charge at the time
of final True-up of the respective years of the 3rd
Control Period.
5.3.6 Fuel Price and Calorific Value
TPC-G’s Submission
5.3.6.1 While the APM Gas price has remained the same as in the MTR Order, the price of Oil
has declined marginally by about 2%. Coal and RLNG Gas prices have fallen by 9% and
18%, respectively, on account of steep decline in commodity prices. The fuel prices for
H2 of FY 2015-16 have been considered accordingly. The fuel prices are as shown in
the Table below:
Table 83: Fuel Prices in FY 2015-16, as submitted by TPC-G (Rs./MT)
Fuel 2015-16 H1 2015-16 H2 FY 2015-16
GAS-APM 16936 14491 15789
Gas-NAPM 17628 17628
Gas-RLNG 36461 37767 36679
Coal 5113 4717 4928
Oil 50881 50746 50668
Commission’s Analysis and Ruling
5.3.6.2 The Commission had sought details of actual performance parameters for the entire FY
2015-16 since the year was now over. TPC-G provided the details of actual landed fuel
price and calorific value of fuels for the entire year. The Commission has considered
actual landed fuel price and calorific value of fuels as submitted by TPC-G for
Provisional Truing-up.
5.3.6.3 The summary of fuel prices and calorific value as approved by the Commission for FY
2015-16 is given in the Table below:
Table 84: Fuel Prices and Calorific Value as approved by Commission for FY 2015-16
Fuel
Revised Submission Approved in this Order
GCV
(kCal/Kg)
Price (Rs./MT,
Rs./KL)
GCV
(kCal/Kg)
Price (Rs./MT,
Rs./KL)
APM Gas 13.13 15760.61 13.13 15760.61
Non-APM Gas 13.16 16045.49 13.16 16045.49
RLNG 13.02 36387.61 13.02 36387.61
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 135 of 224
Fuel
Revised Submission Approved in this Order
GCV
(kCal/Kg)
Price (Rs./MT,
Rs./KL)
GCV
(kCal/Kg)
Price (Rs./MT,
Rs./KL)
Coal 4828.27 4978.36 4828.27 4978.36
LSHS 10461.62 50651.36 10461.62 50651.36
Kerosene 8937.94 49267.09 8937.94 49267.09
HSD 9216.21 34300.60 9216.21 34300.60
5.3.7 Fuel Cost
5.3.7.1 As sought by the Commission, TPC-G had submitted the actual fuel cost as Rs. 1245.08
Crore for Units 4 to 7 for FY 2015-16, excluding Unit-6 operated on the directions of
MSLDC, and Rs. 448.38 Crore for Unit-8.
5.3.7.2 As discussed in para. 5.3.4.4, the Commission has considered the normative SHR for
Unit-6 when it was not operating under MSLDC directions. Accordingly, the fuel cost
works out to Rs. 11.85 Crore, as against Rs. 13.95 Crore submitted by TPC-G.
5.3.7.3 The Commission has considered Fuel Cost of Rs. 1242.97 Crore, as against Rs.
1245.08 Crore submitted by TPC-G, for Units 4 to 7 for FY 2015-16 (excluding
Unit-6 when operated on MSLDC directions).The Commission has considered the
actual fuel cost of Rs. 448.38 Crore of Unit-8 for FY 2015-16 for the Provisional
Truing-up.
5.3.8 Fuel Cost of Unit-6 operating under MSLDC Directions
TPC-G’s Submission
5.3.8.1 Fuel cost for Unit-6 operation under MSLDC directions for FY 2015-16 was Rs. 24.13
Crore.
Commission’s Analysis and Ruling
5.3.8.2 As explained at para. 4.3.5, considering the exceptional nature of operation of Unit-6
under MSLDC directions, the Commission approves the actual SHR of 2890.13
kCal/kWh for FY 2015-16, after prudence check of the month-wise fuel cost calculation
submitted by TPC-G. Also, the Commission has considered actual Auxiliary Energy
Consumption while computing the fuel cost of Unit-6 when operating under MSLDC
directions, after prudence check of meter reading data of 15 minute time block submitted
by TPC-G.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 136 of 224
5.3.8.3 In view of the above, the Commission approves the actual Fuel Cost of Rs. 24.13
Crore for Unit-6 when operating under MSLDC directions during FY 2015-16.
5.3.9 Entry Tax
TPC-G’s Submission
5.3.9.1 As discussed at para. 4.3.6 of this Order, TPC-G has paid some amount towards Entry
Tax as per the tax rates applied by GoM. TPC-G has stated that it has paid Rs. 36.31
Crore for FY 2015-16. It also stated that the Entry Tax amount pertains to FY 2005-06
to FY 2009-10, when it was supplying power to three Distribution Licensees, i.e., TPC-
D, R Infra-D and BEST. Hence, this amount is to be charged in the ratio of sales to these
Licensees in the respective years. The computation is as given below:
Table 85: Impact of Entry Tax as submitted by TPC-G for FY 2015-16(Rs. Crore)
Particulars TPC-D RInfra-D BEST Total
Entry Tax 15.56 7.36 13.39 36.31
Commission’s Analysis and Ruling
5.3.9.2 The Commission has examined the supporting documents provided by TPC-G, and has
accordingly considered the Entry Tax amount to be recovered from TPC-D, RInfra-D
and BEST. The Commission has computed the recovery of Entry Tax as submitted by
TPC-G and has considered it separately along with the recovery of the other past
Revenue Gaps.
Table 86: Recovery of Entry Tax, as approved by Commission for FY 2015-16(Rs. Crore)
Particulars TPC-D RInfra-D BEST Total
Entry Tax 15.56 7.36 13.39 36.31
5.3.10 Operation and Maintenance Expenses
TPC-G’s Submission
5.3.10.1 For Units 4 to 7 and Hydro, TPC-G has considered the normative O&M expenses for FY
2015-16 as in the MTR Order. Accordingly O&M expenses for FY 2015-16 for Units 4
to 7 and Hydro are Rs. 503.08 Crore.
5.3.10.2 For Unit-8, TPC-G has considered the normative O&M expenses for FY 2015-16 as
considered in the MTR Order. Accordingly O&M expenses for Unit-8 are Rs. 46.25
Crore.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 137 of 224
Commission’s Analysis and Ruling
5.3.10.3 The Commission had asked for details of actual performance parameters for the entire
FY 2015-16 since the year was now over. TPC-G in its reply stated that the normative
O&M expense for the Trombay Station plus Hydro Stations was Rs. 503.08 Crore, and
Rs. 46.25 Crore for Unit-8. The provisional actual O&M expense for the former Stations
is around Rs. 486 Crore, and Rs. 40.97 crore for Unit-8. However, as this is a
Provisional Truing-up for FY 2015-16, TPC-G has not considered any gain or loss on
these.
5.3.10.4 TPC-G has considered the O&M expenses for FY 2015-16 as approved in the MTR
Order. Accordingly, the Commission approves the O&M expenses as submitted by
TPC-G and as shown in the Table below:
Table 87: O&M Expenses as approved by Commission for FY 2015-16 (Rs. Crore)
Unit MTR Order TPC-G Petition Approved in this Order
Unit-4-7 & Hydro 503.08 503.08 503.08
Unit-8 46.25 46.25 46.25
5.3.10.5 The Commission approves O&M Expenses of Rs. 503.08 Crore for Units 4 to 7 and
Hydro Stations and Rs. 46.25 Crore for Unit-8 for FY 2015-16.
5.3.11 Capital Expenditure and Capitalisation
TPC-G’s Submission
5.3.11.1 The Commission had approved capitalisation of Rs. 252.98 Crore in the MTR Order.
Against this, Rs. 181.33 Crore is estimated for FY 2015-16. Out of this total revised
estimate, Rs. 155.24 Crore is on account of DPR schemes and the balance Rs. 26.09
Crore is on account of Non-DPR Schemes.
5.3.11.2 The main reasons for the reduction in capitalisation are as below
Table 88: Schemes with major impact on Capitalisation, as submitted by TPC-G
Particulars Reason
Refurbishment of ESP
of Trombay for Unit-
5:
Mainly due to delay in completion of refurbishment of ESP streams.
The refurbishment of one stream has been completed. The Project is
delayed as the work has to be executed on running Unit and
simultaneous work cannot be taken up for the balance 3 streams.
Steel Scaffold for The Commission-approved phasing for FY 2015-16 is Rs. 4.95 Crore
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 138 of 224
Particulars Reason
Trombay of capitalization, and TPC-G’s FY 2015-16 estimate would be nil as
this project has not been started and is planned to be dropped.
5.3.11.3 The total capitalisation for Unit-8 for FY 2015-16 is estimated to be Rs. 23.95 Crore as
against the approved capitalisation of Rs. 2.93 Crore in the MTR Order, of which the
capitalisation on DPR schemes (including merged DPRs) is Rs.22.25 Crore. The
remaining Rs.1.70 Crore is on account of Non-DPR Schemes, i.e. about 7.64% of the
capitalization of DPR schemes.
Commission’s Analysis and Ruling
5.3.11.4 The Commission had sought details of actual capitalisation for the entire FY 2015-16
after the year was over, which TPC-G has provided.
5.3.11.5 The Commission has examined the capital expenditure schemes submitted for FY 2015-
16 for Units 4 to 7 and Hydro. TPC-G has proposed capitalisation of Rs. 190.41 Crore
for FY 2015-16 for these, as against Rs. 252.98 Crore approved in the MTR Order. The
difference is on account of the deferment of some schemes, such as refurbishment of
ESP for Unit-5, and also because some projects are being dropped, such as Steel
Scaffold for the Trombay Station.
5.3.11.6 For Unit-8, TPC-G has proposed capitalisation of Rs. 18.06 Crore for FY 2015-16, as
against Rs. 2.93 Crore approved in the MTR Order.
5.3.11.7 While approving the revised estimates of capitalisation for FY 2015-16, the Commission
has considered the previous performance of TPC-G in actual capitalisation as against
that approved.
5.3.11.8 The Commission notes that TPC-G has also included capitalisation of schemes not yet
submitted for in-principle approval. Hence, the Commission has not considered such
capitalisation.
5.3.11.9 For the DPR schemes, the Commission has examined the CBA reports provided by
TPC-G. All the DPR schemes proposed by TPC-G have already been approved in-
principle except for 4 new schemes, viz. a) Environment, fire, safety, security and
statutory 2013-17, b) Unit-5 Reliability Schemes, c) Refurbishment of SET 1 and d)
Replacement of Unit-5 condenser tubes. The Commission has reviewed the justification
and CBA reports submitted for these new schemes as per its Guidelines of 2005. Based
on the CBA reports submitted, the Commission has considered the impact of these four
Capex schemes for capitalisation.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 139 of 224
5.3.11.10 TPC-G has also included the capitalisation of some Non-DPR schemes that are of O&M
nature or are for common employee facilities, such as procurement of tools and tackles,
procurement of safety equipments, swimming pool renovation, mobiles and canteen
equipment for staff, etc. Hence, the Commission has deducted these from the
capitalisation. The details of such Non-DPR schemes not considered for capitalisation
are set out at para. 4.3.8.6 of this Order.
5.3.11.11 The Non-DPR capitalisation is approved as submitted by TPC-G, considering this is
within the limit of 20% of DPR capitalisation as stipulated by the Commission in
previous Orders. For the scheme of ‘Replacement of FGD-II GGH’, TPC-G has
presented a cumulative capitalisation which is around 0.02 Crore more than the
approved cost. Accordingly, its capitalisation has been restricted to the approved
amount. The details of such DPR schemes whose capitalisation has been restricted to the
approved amount are as shown in the Table below:
Table 89: Summary of disallowed DPR Capitalisation for restricted cumulative
Capitalisation (Rs. Crore)
Particulars FY
2014-15
FY
2015-16
FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
As submitted by TPC-G
Up-gradation of Protection
system 0.26 0.30 0.30 0.30 0.55 0.00
Unified SCADA System for
Trombay 5.74 0.83 3.98 6.00 0.00 0.00
Replacement of FGD-II GGH 14.08 1.22 0.00 0.00 0.00 0.00
Replacement of Unit 5 FD & PA
Fans blades 0.00 0.09 5.00 0.00 1.02 0.00
Fire hydrant system up-gradation
CLP 0.00 1.00 14.90 0.00 0.00 0.00
Rotary Compressors for Unit 0.00 4.17 0.32 0.00 0.00 0.00
Total 20.08 7.60 24.51 6.30 1.57 0.00
As Approved in this Order
Up-gradation of Protection
system 0.26 0.30 0.30 0.30 0.25 0.00
Unified SCADA System for
Trombay 5.74 0.83 3.98 5.95 0.00 0.00
Replacement of FGD-II GGH 14.08 1.20 0.00 0.00 0.00 0.00
Replacement of Unit 5 FD & PA
Fans blades 0.00 0.09 5.00 0.00 0.93 0.00
Fire hydrant system up-gradation
CLP 0.00 1.00 10.60 0.00 0.00 0.00
Rotary Compressors for Unit 0.00 4.17 0.00 0.00 0.00 0.00
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 140 of 224
Particulars FY
2014-15
FY
2015-16
FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Total 20.08 7.58 19.88 6.25 1.18 0.00
Disallowed Capitalisation 0.00 0.02 4.62 0.05 0.39 0.00
5.3.11.12 The summary of the capitalisation disallowed by the Commission is as shown in the
Table below:
Table 90: Summary of Capitalisation disallowed by Commission for FY 2015-16 (Rs.
Crore)
Particulars Capitalisation
Disallowed
Units 4 to 7 and Hydro
Disallowed DPR capitalisation for yet to be submitted schemes 2.01
Disallowed Non-DPR capitalisation for O&M nature schemes 0.39
Disallowed DPR capitalisation for restricted cumulative capitalisation 0.02
Total Disallowed Capitalisation 2.42
Units 8
Disallowed DPR capitalisation for yet to be submitted schemes 0.00
Disallowed Non-DPR capitalisation for O&M nature schemes 0.00
Disallowed DPR capitalisation for restricted cumulative capitalisation 0.00
Total Disallowed Capitalisation 0.00
5.3.11.13 The capitalisation as proposed by TPC-G and as approved by the Commission for FY
2015-16 is as shown below:
Table 91: Capitalisation as approved by Commission for FY 2015-16 (Rs. Crore)
Particulars MTR Order TPC-G
Petition
Revised
Submission
Approved in
this Order
Units 4 to 7& Hydro Stations
DPR Capitalisation 210.85 155.24 167.15 165.11
Non-DPR Capitalisation 42.13 26.09 23.27 22.87
Total 252.98 181.33 190.41 187.99
Unit-8
DPR Capitalisation 2.44 22.25 17.17 17.17
Non-DPR Capitalisation 0.49 1.70 0.89 0.89
Total 2.93 23.95 18.06 18.06
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 141 of 224
5.3.11.14 The Commission approves Capitalisation of Rs. 187.99 Crore for Units 4 to 7 and
Hydro Stations and Rs. 18.06 Crore for Unit-8 for FY 2015-16.
5.3.12 Depreciation
TPC-G’s Submission
5.3.12.1 For existing assets of Units 4 to 7 and Hydro Stations, TPC-G has computed
Depreciation at the rates specified in the MYT Regulations, 2011. For the assets added
during FY 2015-16, Depreciation has been computed based on the estimated
capitalisation and considering a gross Depreciation rate of 5.28%. Accordingly, the
Depreciation for FY 2015-16 has been worked out as Rs. 141.39 Crore.
5.3.12.2 For existing assets of Unit-8, Depreciation is computed based at the rates specified in the
Regulations. For the assets added during FY 2015-16, Depreciation has been computed
based on the estimated capitalisation and considering a gross Depreciation rate of
5.28%. Accordingly, the Depreciation has been worked out as Rs. 64.62 Crore.
Commission’s Analysis and Ruling
5.3.12.3 The Commission had asked for details of actual performance parameters for the entire
FY 2015-16 since the year was now over. TPC-G submitted that, based on the actual
capitalisation in FY 2015-16, the Depreciation for Units 4 to 7 and Hydro Stations is Rs.
141.63 Crore, and for Unit-8 is Rs. 64.46 Crore.
5.3.12.4 Regulation 31.2 of the MYT Regulations, 2011 specifies that the Generating Company
can recover Depreciation on the value of fixed assets, computed annually on the straight-
line method at the specified rates. The Commission determines the Depreciation on
opening GFA for the full operational period, and on additional capitalisation from the
date of capitalisation for various classes of assets based on the rates of Depreciation as
per the Regulations.
5.3.12.5 The Commission has considered the closing GFA of FY 2014-15 as approved in this
Order as the opening GFA for FY 2015-16 for computation of Depreciation. The
Commission has not considered any retirement of assets, as submitted by TPC-G.
5.3.12.6 The summary of Depreciation as claimed by TPC-G and as approved by the
Commission for FY 2015-16 is summarised in the following Table:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 142 of 224
Table 92: Depreciation as approved by Commission for FY 2015-16 (Rs. Crore)
Particulars MTR
Order
TPC-G
Petition
Revised
Submission
Approved in
this Order
Units 4 to 7& Hydro
Opening GFA 4035.28 4172.80 4172.80 4155.95
Asset Addition during the year 252.98 181.33 190.41 187.99
Asset retirement during the year (6.15) 0.00 0.00 0.00
Closing GFA 4282.11 4354.13 4363.21 4343.94
Depreciation during the year 132.05 141.39 141.63 141.17
Unit-8
Opening GFA 1128.20 1144.62 1144.62 1143.88
Asset Addition during the year 2.93 23.95 18.06 18.06
Asset retirement during the year 0.00 0.00 0.00 0.00
Closing GFA 1131.13 1168.58 1162.68 1161.94
Depreciation during the year 60.73 64.62 64.46 64.46
5.3.12.7 The Commission approves Depreciation of Rs. 141.17 Crore for Units 4 to 7 and
Hydro Stations and Rs. 64.46 Crore for Unit-8 for FY 2015-16.
5.3.13 Interest on Long-term Loan
TPC-G’s Submission
5.3.13.1 For Units 4 to 7 and Hydro Stations, TPC-G has proposed the financing of the estimated
capitalisation in the debt: equity ratio of 70:30. After considering the closing balance of
loan for FY 2014-15 and the additional capitalisation estimated for FY 2015-16, TPC-G
has computed the Interest on Long-term Loan capital for FY 2015-16 as Rs. 81.45
Crore.
5.3.13.2 For Unit-8, TPC-G has computed the interest charges for FY 2015-16 as Rs. 56.92
Crore.
Commission’s Analysis and Ruling
5.3.13.3 The Commission had sought information on the actual performance parameters for the
entire FY 2015-16 since the year was now over. TPC-G submitted that, based on the
actual capitalisation for FY 2015-16, the Interest on Long-term Loan for Units 4 to 7 and
Hydro Stations is Rs. 81.79 Crore, and Rs. 56.71 Crore for Unit-8.
5.3.13.4 For the Interest on Long-term Loan for FY 2015-16, the Commission has taken the
approved closing balance of loan for FY 2014-15 considered in this Order. Loan
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 143 of 224
repayment has been considered equal to the Depreciation allowed for FY 2015-16 in this
Order, in accordance with Regulation 33.3.
5.3.13.5 TPC-G has not submitted the Interest on Long-term Loan considering the weighted
average interest rate of the actual loan portfolio for FY 2015-16. TPC-G has stated that it
has not considered any revision in the interest rate for FY 2015-16 based on the actual
loan data as the loan drawn by TPC-G is for the entire License area and allocation will
be possible only after the actual capitalisation figures for Generation, Transmission and
Distribution businesses are finalized. The Commission has checked the interest rates
from the loan documents provided, and has considered the weighted average interest rate
as submitted by TPC-G for computing the Interest on Long-term Loan.
5.3.13.6 The summary of the Interest on Long-term Loan as submitted by TPC-G and as
approved by the Commission for FY 2015-16 is shown in the Table below:
Table 93: Interest on Long-term Loan as approved by Commission (Rs. Crore)
Particulars MTR
Order
TPC-G
Petition
Revised
Submission
Approved in
this Order
Units 4 to 7& Hydro
Opening loan 643.29 751.99 751.99 730.39
Loan addition during the year 177.09 126.93 133.29 131.59
Loan repayment during the year 132.05 141.39 141.63 141.17
Closing loan balance 688.33 737.53 743.65 720.81
Interest rate (%) 10.92% 10.94% 10.94% 10.94%
Interest on Long-term Loan 72.72 81.45 81.79 79.36
Unit-8
Opening Loan 523.64 537.60 537.60 536.70
Loan addition during the year 2.05 16.77 12.64 12.64
Loan repayment during the year 60.73 64.62 64.46 64.46
Closing loan balance 464.97 489.74 485.78 484.89
Interest rate (%) 11.08% 11.08% 11.08% 11.08%
Interest on Long-term Loan 54.77 56.92 56.71 56.61
5.3.13.7 The Commission approves Interest on Long-term Loan of Rs. 79.36 Crore for Units
4 to 7 and Hydro Stations and Rs. 56.61 Crore for Unit-8 for FY 2015-16.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 144 of 224
5.3.14 Return on Equity
TPC-G’s Submission
5.3.14.1 For Units 4 to 7 and Hydro Stations, RoE based on the opening balance of equity and
reduction of equity on account of de-capitalisation of certain assets, at 15.5%, works out
to Rs. 236.01 Crore for FY 2015-16, and to Rs. 53.18 Crore for Unit-8.
Commission’s Analysis and Ruling
5.3.14.2 The Commission had asked for the actual performance parameter data for the entire FY
2015-16 once the year was over. TPC-G stated that, based on the actual capitalisation for
FY 2015-16, the RoE for Units 4 to 7 and Hydro Stations is Rs. 236.01 Crore, and Rs.
53.18 Crore for Unit-8.
5.3.14.3 The Commission has computed RoE at 15.50% of the equity, in accordance with
Regulation 32.2.1, on the opening equity of the year.
5.3.14.4 For arriving at the Regulatory Equity at the beginning of the year for FY 2015-16, the
Commission has considered the closing equity at the end of FY 2014-15 as approved
while Truing-up for that year earlier in this Order.
5.3.14.5 The RoE as claimed by TPC-G and approved by the Commission for FY 2015-16 after
Provisional Truing-up is as summarised in the following Table:
Table 94: Return on Equity as approved by Commission for FY 2015-16 (Rs. Crore)
Particulars MTR
Order
TPC-G
Petition
Revised
Submission
Approved in
this Order
Units 4 to 7& Hydro
Opening equity 1481.26 1522.65 1522.65 1517.48
Equity addition during the year 75.89 54.40 57.12 56.40
Equity reduction during the year (1.85) 0.00 0.00 0.00
Closing equity 1555.30 1577.05 1579.77 1573.87
Rate of return (%) 15.50% 15.50% 15.50% 15.50%
Return on equity 229.60 236.01 236.01 235.21
Unit-8
Opening equity 338.46 343.12 343.12 343.16
Equity addition during the year 0.88 7.19 5.42 5.42
Equity reduction during the year 0.00 0.00 0.00 0.00
Closing equity 339.34 350.30 348.54 348.58
Rate of return (%) 15.50% 15.50% 15.50% 15.50%
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 145 of 224
Particulars MTR
Order
TPC-G
Petition
Revised
Submission
Approved in
this Order
Return on equity 52.46 53.18 53.18 53.19
5.3.14.6 The Commission approves Return on Equity of Rs. 235.21 Crore for Units 4 to 7
and Hydro Stations and Rs. 53.19 Crore for Unit-8 for FY 2015-16.
5.3.15 Interest on Working Capital
TPC-G’s Submission
5.3.15.1 IoWC is computed based on the MYT Regulations, 2011. TPC-G has considered an
interest rate of 14.75% (equivalent to the SBAR). The total IoWC for Units 4 to 7 and
Hydro Stations for FY 2015-16 is Rs. 54.83 Crore, and estimated as Rs. 15.29 Crore for
Unit-8.
Commission’s Analysis and Ruling
5.3.15.2 The Commission had asked for details of actual performance parameters for the entire
FY 2015-16 since the year was over. TPC-G submitted that, based on the actual fuel
cost, actual capitalisation, revised Interest on Long-term Loan, revised RoE and revised
Depreciation for FY 2015-16, the IoWC for Units 4 to 7 and Hydro Stations is Rs. 54.99
Crore and Rs. 15.66 Crore for Unit-8.
5.3.15.3 As sought by the Commission, TPC-G submitted material for consideration of the
SBAR for computation of IoWC. The Commission has computed the working capital
requirement in accordance with the MYT Regulations, 2011 and the IoWC by applying
the SBAR rate of 14.75% as on the date of filing of this Petition. The IoWC approved by
the Commission is shown in the Tables below:
Table 95: IoWC for Units 4 to 7 and Hydro Stations as approved by Commission for FY
2015-16 (Rs. Crore)
Particulars TPC-G
Petition
TPC-G Revised
Submission
Approved in this
Order
Working capital requirement 371.70 372.79 374.83
Interest rate 14.75% 14.75% 14.75%
Interest on working capital 54.83 54.99 55.29
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 146 of 224
Table 96: IoWC for Unit-8 as approved by Commission for FY 2015-16 (Rs. Crore)
Particulars TPC-G
Petition
TPC-G Revised
Submission
Approved in this
Order
Working capital requirement 103.69 106.17 104.03
Interest rate 14.75% 14.75% 14.75%
Interest on working capital 15.29 15.66 15.34
5.3.15.4 The Commission approves Interest on Working Capital of Rs.55.29 Crore for Units
4 to 7 and Hydro Stations and Rs. 15.34 Crore for Unit-8 for FY 2015-16.
5.3.16 Income Tax
TPC-G’s Submission
5.3.16.1 In accordance with Regulations 34.1 and 34.2 of the MYT Regulations, 2011, Income
Tax for the future period is considered based on the actual Income Tax payable as per
the latest Audited Accounts, as allowed by the Commission subject to prudence check.
Accordingly, TPC-G has presented the Income Tax approved in the MTR Order for FY
2013-14 as the Income Tax for FY 2015-16, i.e., Rs. 85.85 Crore for Units 4 to 7 and
Hydro and Rs. 40.32 Crore for Unit-8.
Commission’s Analysis and Ruling
5.3.16.2 While approving the Income Tax for FY 2014-15, Income Tax payable was worked out
considering the Truing-up amounts as per the audited accounts. Therefore, in accordance
with Regulations 34.1 and 34.2, the Commission approves the Income Tax for FY 2015-
16 as equivalent to that approved in this Order for FY 2014-15.
5.3.16.3 The Income Tax estimation as submitted by TPC-G and as approved by the Commission
for FY 2015-16 is as summarised in the Table below:
Table 97: Income Tax as approved by Commission for FY 2015-16 (Rs. Crore)
Unit MTR Order TPC-G Petition Approved in this Order
Unit-4-7 & Hydro 104.17 85.85 98.89
Unit-8 20.25 40.32 24.49
5.3.16.4 The Commission approves Income Tax as Rs. 98.89 Crore for Units 4 to 7 and
Hydro Stations for FY 2015-16 and as Rs. 24.49 Crore for Unit-8 for FY 2015-16.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 147 of 224
5.3.17 Non-Tariff Income
TPC-G’s Submission
5.3.17.1 TPC-G has considered Non-Tariff Income for FY 2015-16 as provisionally approved in
the MTR Order.
Commission’s Analysis and Ruling
5.3.17.2 The Commission approves the Non-Tariff Income as in the MYT Order, which has also
been proposed by TPC-G, as under:
Table 98: Non-Tariff Income as approved by Commission for FY 2015-16 (Rs. Crore)
Unit MTR Order TPC-G Petition Approved in this Order
Unit-4-7 & Hydro 16.73 16.73 16.73
Unit-8 2.26 2.26 2.26
5.3.17.3 The Commission approves the Non-Tariff Income as Rs. 16.73 Crore for Units 4 to
7 and Hydro Stations and Rs. 2.26 Crore for Unit-8 for FY 2015-16.
5.3.18 PLF Incentive for Thermal Station
TPC-G’s Submission
5.3.18.1 The first proviso of Regulation 49.8 of the MYT Regulations, 2011 states as follows:
“Provided that the actual generation shall also consider the generation loss on
account of any backing down instruction from the Maharashtra State Load
Despatch Centre.”
5.3.18.2 TPC-G has computed the incentive including the impact of the generation loss on
account of backing down instructions from MSLDC. Considering the deemed
generation, TPC-G would be eligible for additional PLF incentive of Rs. 12.42 Crore for
FY 2015-16 as shown in the Table below:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 148 of 224
Table 99: Incentive as claimed by TPC-G on account of Backing Down in FY 2015-16
Unit
Actual Net
Generation
with
Normative
Auxiliary
Consumpti
on (MU)
Ex-Bus
MU
Eligible
due to
Backin
g Down
Total Net
Generatio
n, incl.
deemed
Generatio
n (MU)
Net
Generatio
n at 85%
PLF (MU)
Energy
eligible
for
Incentiv
e (MU)
Rate of
Incentive
(Rs/kWh
)
Total
Incentive
(Rs
Crore)
Incentiv
e
claimed
(Rs.
Crore)
Balance
Incentiv
e to be
claimed
(Rs.
Crore)
A C D E = C + D F G = E-F H I =
H*G/10 J K = I – J
Unit-5 3293.24 555.29 3848.53 3509.21 339.32 0.25 8.48 0.00 8.48
Unit-6 808.86 99.30 908.16 3602.54 0.00 0.25 0.00 0.00 0.00
Unit-7 1144.34 197.77 1342.10 1303.63 38.47 0.25 0.96 0.00 0.96
Unit-8 1723.25 119.19 1842.44 1707.94 134.50 0.25 3.36 0.38 2.98
Total 6969.69 971.55 7941.23 10123.32 512.29 1.00 12.80 0.38 12.42
Commission’s Analysis and Ruling
5.3.18.3 In this Order, the Commission is undertaking the Provisional Truing-up for FY 2015-16
based on unaudited data. Accordingly, at this stage it is not considering any incentive on
account of higher PLF or sharing of efficiency gains/ losses. These shall be considered
at the time of Truing-up based on actual audited data.
5.3.19 Provisional Truing-up for FY 2015-16
5.3.19.1 The Commission has computed the Revenue Gap/ Surplus for FY 2015-16 as under:
Table 100: Provisional Truing-up for FY 2015-16 as approved by Commission (Rs. Crore)
Particulars
Units 4-7 & Hydro Unit-8
TPC-G
Petition
Approved in
this Order
TPC-G
Petition
Approved in
this Order
Expenditure
Fuel related expenses 1245.08 1242.97 448.38 448.38
O&M expenses 503.08 503.08 46.25 46.25
Depreciation 141.63 141.17 64.46 64.46
Interest on Long-term Loan 81.79 79.36 56.71 56.61
Interest on working capital 54.99 55.29 15.66 15.34
Income Tax 85.85 98.89 40.32 24.49
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 149 of 224
Particulars
Units 4-7 & Hydro Unit-8
TPC-G
Petition
Approved in
this Order
TPC-G
Petition
Approved in
this Order
Total Revenue Expenditure 2112.41 2120.76 671.78 655.54
Add: Return on equity 236.01 235.21 53.18 53.19
Less : Unallocated fixed cost
portion of Unit-4 12.75 12.75 0.00 0.00
Less : Allocation from Unit-8 for
Shared Capacity 12.50 12.50 (12.50) (12.50)
Total Including Expenditure+
RoE 2323.17 2330.76 737.46 721.23
Revenue
Revenue from sale of electricity 2351.97 2351.97 760.30 760.30
Non-Tariff Income 16.73 16.73 2.26 2.26
Total Revenue 2368.70 2368.70 762.56 762.56
Total Revenue Gap/(Surplus) (45.52) (37.93) (25.10) (41.33)
5.3.19.2 The Commission approves a Revenue Surplus of Rs. 37.93 Crore for Units 4 to 7
and Hydro Stations, and Rs. 41.33 Crore for Unit-8, for FY 2015-16. The
Commission has adjusted this Surplus separately against past recoveries.
5.4 Past Recoveries from Distribution Licensees
5.4.1 Incentive for backing down instructions from MSLDC for FY 2011-12 to FY 2013-
14
TPC-G’s Submission
5.4.1.1 In the background of the 1st proviso of Regulation 49.8 quoted above, the impact of PLF
incentive on account of backing down instructions was not considered by TPC-G while
calculating the applicable incentives for the Thermal Generating Units during the 2nd
Control Period and FY 2015-16. TPC-G has now computed the revised incentive
including the impact of the generation loss on account of backing down instructions
from MSLDC.
5.4.1.2 Considering the deemed generation, TPC-G would be eligible for additional PLF
incentive of Rs. 41.96 Crore for FY 2011-12 to FY 2013-14 as shown in the Table
below:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 150 of 224
Table 101: PLF Incentive on account of Backing Down for FY 2011-12 to FY 2013-14, as
submitted by TPC-G (Rs. Crore)
Unit FY 2011-12 FY 2012-13 FY 2013-14
Unit-5 1.38 10.07 12.79
Unit-6 13.35 3.10 0.00
Unit-7 0.00 0.00 0.00
Unit-8 0.00 1.26 0.00
Total 14.73 14.43 12.79
Grand Total 41.96
Commission’s Analysis and Ruling
5.4.1.3 TPC-G has sought additional incentive considering the backing down of Generating
Stations for FY 2011-12 to FY 2013-14. This claim for FY 2011-12 to FY 2013-14
cannot be considered since the True-up for these past years has already been completed
taking into account the submissions of TPC-G at that time.
5.4.2 Fuel Cost of Unit-6 under MSLDC Directions
5.4.2.1 The Commission has approved the actual fuel cost of Rs. 792.11 Crore and Rs. 24.13
Crore for Unit-6 for operation under MSLDC directions during FY 2014-15 and FY
2015-16 respectively. This approved fuel cost has been allocated between the
Distribution Licensees in the ratio of MUs of power allocated to them for FY 2014-15
and FY 2015-16. The gap/ surplus between this allocated fuel cost and the actual
revenue recovered from the Distribution Licensees is considered under the past period
recovery in para. 5.4.3. The computations for the same is as shown in Table below:
Table 102: Fuel Cost for Unit-6 under MSLDC Directions (Rs. Crore)
Particulars
BEST TPC-D RInfra-D Total
FY 2014-15
Actual Fuel Cost A 217.25 288.05 286.81 792.11
Actual Revenue Recovered B 215.46 285.69 262.29 763.44
Gap/ (Surplus) c=a-b 1.79 2.36 24.52 28.67
FY 2015-16
Actual Fuel Cost A 6.58 8.62 8.93 24.13
Actual Revenue Recovered B 5.61 6.83 8.19 20.63
Gap/ (Surplus) c=a-b 0.97 1.79 0.74 3.50
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 151 of 224
5.4.3 Other Past Recoveries from Distribution Licensees
TPC-G’s Submission
5.4.3.1 The recoveries of the past periods of FY 2014-15 and FY 2015-16 pertaining to the
Revenue Gap / Surplus, along with interest up to FY 2015-16, taking into account the
Truing-up of those previous years.
5.4.3.2 The recoveries of the past periods are as shown in the Table below:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 152 of 224
Table 103: Amounts Recoverable from Distribution Licensees as submitted by TPC-G (Rs. Crore)
Particulars TPC-G Petition
BEST TPC-D R Infra Total
Gap / (Surplus) of Trombay Station& Hydro for FY 2014-15 Trombay Station& Hydro (90.23) (86.11)
(176.34)
Gap / (Surplus) of Unit-6 based on Revenue Billed as per MTR
Petition for Unit-6 generation based on MSLDC directions
Unit-6 (Under MSLDC
Directive) 1.79 2.35 24.52 28.67
Entry Tax amount to be recovered pertaining to past period Trombay
Station& Hydro Trombay Station& Hydro 13.61 8.03 12.36 34.01
Gap / (Surplus) of Unit-8 for FY 2014-15 Unit-8 (38.45) (57.67) 0.00 (96.12)
Total Gap Surplus for FY 2014-15 (113.28) (133.40) 36.88 (209.78)
Amount already recovered from Distribution Licensees in the T.O. in
Case 06 of 2015 Trombay Station& Hydro (90.38) (86.26) 0.00 (176.64)
Amount already recovered from Distribution Licensee in the T.O. in
Case 06 of 2015 Unit-8 (45.60) (68.39) 0.00 (113.99)
Total Gap/(Surplus) for Provisional Truing-up for FY 2014-15
allowed to recovered in T.O. (135.98) (154.65) 0.00 (290.63)
Net Gap /(Surplus) to be recovered for FY 2014-15 22.72 21.25 36.89 80.85
Carrying Cost on Gap / (Surplus) of FY 2014-15 (for 06 Months) 14.75% 1.68 1.57 2.72 5.96
Carrying Cost for FY 2015-16 14.29% 3.25 3.04 5.27 11.55
Total Recovery for FY 2014-15 including carrying cost 27.64 25.85 44.88 98.36
Gap / (Surplus) of Trombay Station& Hydro for FY 2015-16 Trombay Station& Hydro (11.43) (10.91)
(22.33)
Gap / (Surplus) of Unit-6 based on Revenue Billed as per MTR
Petition for Unit-6 generation based on MSLDC directions
Unit-6 (Under MSLDC
Directive) 0.97 1.79 0.74 3.50
Entry Tax amount to be recovered pertaining to past period Trombay Station& Hydro 13.39 15.56 7.36 36.31
Gap / (Surplus) of Unit-8 for FY 2015-16 Unit-8 (14.72) (22.08)
(36.81)
Recovery for FY 2015-16 w/o carrying cost for future period (11.79) (15.64) 8.10 (19.33)
Total Past Recovery for TPC-G 15.85 10.21 52.98 79.03
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 153 of 224
5.4.3.3 TPC-G has proposed recovery of Rs.79.03 Crore within one month of the Order in this
Case. It has also sought carrying cost in case the Commission allows such recovery in
installments.
Commission’s Analysis and Ruling
5.4.3.4 In earlier Sections, the Commission has computed the past Revenue Gap arising from
the Truing-up of past years. Accordingly, the amounts to be recovered from the
Distribution Licensees, as approved by the Commission, are as shown in the Table
below:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 154 of 224
Table 104: Amounts Recoverable from Distribution Licensees as approved by Commission (Rs. Crore)
Particulars
Approved in this Order
BEST TPC-D R Infra Total
Gap / (Surplus) of Trombay Station& Hydro for FY 2014-15 Units 4 to 7 and hydro a (100.80) (96.19) 0.00 (196.99)
Gap / (Surplus) of Unit-6 based on Revenue Billed as per MTR Petition for
Unit-6 generation based on MSLDC directions
Unit-6 (Under
MSLDC Directive) b
1.79 2.36 24.52 28.67
Entry Tax amount to be recovered pertaining to past period Trombay
Station& Hydro Units 4 to 7 and hydro
c 13.61 8.03 12.36 34.01
Gap / (Surplus) of Unit-8 Unit-8 d (38.60) (57.89) 0.00 (96.49)
Total Gap/ (Surplus) for FY 2014-15 e = a+b+c+d (124.00) (143.70) 36.88 (230.81)
Amount already recovered from Distribution Licensees in the T.O. in Case
06 of 2015 Units 4 to 7 and hydro
f (90.38) (86.26) 0.00 (176.64)
Amount already recovered from Distribution Licensee in the T.O. in Case
06 of 2015 Unit-8
g (45.60) (68.39) 0.00 (113.99)
Total Gap/(Surplus) for Provisional Truing-up for FY 2014-15 allowed to
recovered in T.O.
h = f+g (135.98) (154.65) 0.00 (290.63)
Net Gap /(Surplus) to be recovered for FY 2014-15 i = e-h 11.98 10.95 36.88 59.82
Carrying Cost on Gap / (Surplus) of FY 2014-15 (for 06 Months) 14.75% j = i/2*14.75% 0.88 0.81 2.72 4.41
Carrying Cost for FY 2015-16 14.29% k = i*14.29% 1.71 1.56 5.27 8.55
Total Recovery for FY 2014-15 including carrying Cost l = i+j+k 14.58 13.32 44.87 72.77
Gap / (Surplus) of Trombay Station& Hydro for FY 2015-16 Units 4 to 7 and hydro m (19.42) (18.53) 0.00 (37.93)
Gap / (Surplus) of Unit-6 based on Revenue Billed as per MTR Petition for
Unit-6 generation based on MSLDC directions
Unit-6 (Under
MSLDC Directive)
n 0.97 1.79 0.74 3.50
Entry Tax amount to be recovered pertaining to past period Units 4 to 7 and hydro o 13.39 15.56 7.36 36.31
Gap / (Surplus) of Unit-8 for FY 2015-16 Unit-8 p (16.53) (24.79) 0.00 (41.33)
Recovery for FY 2015-16 w/o carrying cost for future period q=m+n+o+p (21.59) (25.98) 8.10 (39.46)
Recovery towards of impact of merged DPR capitalisation from FY 2010-
11 to FY 2013-14 Units 4 to 7 and hydro
r 15.04 14.08 0.38 29.50
Recovery towards of impact of merged DPR capitalisation from FY 2011-
12 to FY 2015-16 Unit-8
s 0.55 0.83 0.00 1.38
Total Past Recovery for TPC-G u = l+q+r+s 8.59 2.25 53.35 64.19
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 155 of 224
5.4.3.5 The Commission approves the net Revenue Gap of Rs. 64.19 Crore as at the end of
FY 2015-16, recoverable from the Distribution Licensees, viz. BEST, TPC-D and
RInfra-D.
5.4.3.6 TPC-G has requested the recovery of revenue gap in one month from the issuance of the
Order or in installments along with carrying cost. The Commission is of the view that
the recovery from Rinfra-D is substantial and recovery of such amount in one month
will impact the cash flow of the distribution licensee. Hence, the Commission allows
TPC-G to recover this approved amount, on account of past recoverable, from BEST
and TPC-D within one month of issue of this Order and from Rinfra-D in 3 equal
monthly installments from September 2016 to November 2016, unless agreed by Rinfra-
D for early payment. The Commission has considered the carrying cost on monthly basis
on reducing balance on such recoverable amount.
5.4.3.7 The total approved recoverable amount of Rs. 64.19 Crore includes the Revenue Gap of
Rs. 90.70 Crore till FY 2014-15, carrying cost of Rs. 12.96 Crore and Provisional
Truing-up amount of Rs. (39.46) Crore as shown in table below:
Table 105: Break up of recoverable amount as approved by the Commission (Rs. Crore)
Particulars Revenue
Gap
Carrying
Cost
Total
Recoverable
Amount
Net Gap /(Surplus) to be recovered for FY 2014-15 59.82 12.96 72.77
Recovery towards of impact of merged DPR
capitalisation from FY 2010-11 to FY 2013-14 29.50 - 29.50
Recovery towards of impact of merged DPR
capitalisation from FY 2011-12 to FY 2015-16 1.38 - 1.38
Total Revenue Gap till FY 2014-15 90.70 12.96 103.66
Total Recovery for FY 2015-16 w/o carrying Cost for
future period (39.46) (39.46)
5.4.3.8 The Commission had considered the Revenue Gap of Rs. 90.70 Crore till FY 2014-15
for computation of carrying cost. The Commission has also considered the carrying cost
on such revenue gap for April 2016 to August 2016, since the recovery is applicable
from September 2016. The carrying cost amount payable by each Distribution Licensee
is as under:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 156 of 224
Table 106: Carrying Cost on recovery as approved by the Commission (Rs. Crore)
Installment Opening
Balance Recovery
Closing
Balance
Interest
@10.80% BEST TPC-D R-Infra-D
Apr-16 90.70 0.00 90.70 0.82 0.25 0.23 0.34
May-16 90.70 0.00 90.70 0.82 0.25 0.23 0.34
Jun-16 90.70 0.00 90.70 0.82 0.25 0.23 0.34
Jul-16 90.70 0.00 90.70 0.82
0.25 0.23 0.34
Aug-16 90.70 0.00 90.70 0.82 0.25 0.23 0.34
Sep-16 90.70 65.85 24.84 0.52 0.12 0.12 0.28
Oct-16 24.84 12.42 12.42 0.17 0.00 0.00 0.17
Nov-16 12.42 12.42 0.00 0.06 0.00 0.00 0.06
Total
90.70
4.82 1.37 1.28 2.18
5.4.3.9 The Commission approves the net past Revenue Gaps to be passed on to or
recovered from the Distribution Licensees, viz. BEST, TPC-D and RInfra-D, as
shown in Table below:
Table 107: Net Amount to be recovered from Distribution Licensees in FY 2016-17 (Rs.
Crore)
Particulars Approved in this Order
Total BEST TPC-D R-Infra-D
Total Revenue Gap till FY 2014-15 including
Carrying cost 30.18 28.23 45.25 103.66
Carrying cost for April, 2016 to August 2016 1.24 1.16 1.68 4.08
Carrying Cost during the recovery period
(September 2016 to November 2016) 0.12 0.12 0.50 0.74
Gap/(Surplus) for Provisional Truing up for FY
2015-16 (21.59) (25.98) 8.10 (39.47)
Total 9.95 3.53 55.53 69.01
5.4.3.10 The Commission approves the net amount arising out of past period recovery to be
passed on to or recovered from the Distribution Licensees, viz. BEST, TPC-D and
RInfra-D, commencing from September, 2016 to November, 2016, as shown in
Table below:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 157 of 224
Table 108: Monthly recovery from Distribution Licensees in FY 2016-17 (Rs. Crore)
Installments BEST TPC-D RInfra-D Total
Sep-16 9.95 3.53 18.62 32.11
Oct-16 0.00 0.00 18.51 18.51
Nov-16 0.00 0.00 18.40 18.40
Total 9.95 3.53 55.53 69.01
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 158 of 224
6. ARR FOR 3RD CONTROL PERIOD FROM FY 2016-17 TO FY 2019-20
6.1 Background
6.1.1.1 TPC-G has sought the ARR and Multi Year Tariff determination for the 3rd
Control
Period from FY 2016-17 to FY 2019-20. The analysis undertaken by the Commission is
set out below.
6.1.1.2 Further, TPC-G has submitted that its PPAs with TPC-D and BEST are valid till 31st
March, 2018. Therefore, with respect to the 3rd
Control Period of FY 2016-17 to FY
2019-20, TPC-G has valid PPAs for the first two years of the Control Period.
Subsequent to that, TPC-D has requested off-take on a long term basis from TPC-G for
a similar capacity as is tied up now from Units 5, 7 and 8 and Hydro Stations.
Considering this, TPG-G has proposed the Tariff for all years of the 3rd
Control Period.
6.1.1.3 Considering TPC-G submissions regarding determination of Tariff for FY 2018-19 and
FY 2019-20 after the expiry of PPAs, the Commission has determined the Tariff for the
period assuming a business as usual situation. However, such Tariff will actually apply
only depending on whether and at what rate and terms and conditions the PPAs are
extended with the approval of the Commission.
6.2 Performance Parameters
6.2.2.1 The MYT Regulations, 2015 specify the normative performance parameters for
Generating Stations for the 3rd
Control Period. TPC-G’s submissions and the
Commission’s analysis are detailed below.
6.3 Generating Stations
TPC-G’s Submission
6.3.1.1 The existing installed generation capacity is 2027 MW, comprising 447 MW Hydro and
1580 MW Thermal.
6.3.1.2 Unit-4 (150 MW) has outlived its useful life and is to be retired. It has been operating as
a stand-by Unit for the past few years. It was mutually agreed between TPC-G, BEST
and TPC-D that the fixed cost of Unit-4 will no longer be paid from FY 2014-15. Hence,
no fixed charges for Unit-4 will be collected for the remaining period of the PPA. TPC-
G is in the process of retiring this Unit and selling it. Any profit / loss on account of sale
of the plant and machinery would be shared with TPC-D and BEST.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 159 of 224
6.3.1.3 The Station-wise and Unit-wise break up of total capacity of TPC-G is given in the
Table below:
Table 109: Existing Generation Capacity of TPC-G
Station/ Unit Type of Fuel Installed Capacity (MW)
Thermal - Trombay
Unit-5 Coal, Oil and Gas 500
Unit-6 Oil and Gas 500
Unit-7 Gas 180
Unit-8 Coal 250
Total Thermal Capacity 1430
Hydro
Bhira Hydro 300
Bhivpuri Hydro 75
Khopoli Hydro 72
Total Hydro Capacity 447
Total TPC-G 1877
6.4 Performance Parameters
6.4.1 Availability
TPC-G’s Submission
6.4.1.1 Availability of the Thermal and Hydro Generating Units has been estimated considering
the outage plan during the 3rd
Control Period, as shown in the Table below:
Table 110: Availability of Generating Units in 3rd
Control Period as submitted by TPC-G
Station/ Unit FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Thermal Generating Units
Unit-5 87.02% 97.40% 87.83% 96.86%
Unit-6 97.38% 92.45% 97.38% 92.47%
Unit-7 97.40% 97.40% 86.51% 97.40%
Unit-8 92.66% 97.21% 93.21% 97.05%
Hydro Generating Stations
Bhira 97.64% 96.39% 98.06% 98.26%
Bhivpuri 99.58% 98.18% 98.18% 99.58%
Khopoli 99.53% 99.58% 99.58% 98.12%
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 160 of 224
Commission’s Analysis and Ruling
6.4.1.2 The Availability projected by TPC-G is based on the outage plan and is higher than the
normative target Availability of 85% (for Thermal Generation) and 90% (for Hydro
Generation) specified in Regulations 44.1 and 46.1, respectively, of the MYT
Regulations, 2015. Accordingly, the Commission has approved the Availability as
projected by TPC-G.
6.4.1.3 The summary of the Availability for the 3rd
Control Period as approved by the
Commission is shown in the Table below:
Table 111: Availability of Generating Units in 3rd
Control Period as approved by
Commission
Station/ Unit FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Thermal Generating Units
Unit-5 87.02% 97.40% 87.83% 96.86%
Unit-6 97.38% 92.45% 97.38% 92.47%
Unit-7 97.40% 97.40% 86.51% 97.40%
Unit-8 92.66% 97.21% 93.21% 97.05%
Hydro Generating Stations
Bhira 97.64% 96.39% 98.06% 98.26%
Bhivpuri 99.58% 98.18% 98.18% 99.58%
Khopoli 99.53% 99.58% 99.58% 98.12%
6.4.1.4 Although the Commission has considered Availability higher than the target
Availability, TPC-G will be entitled to recover the full fixed charges at target
Availability of 85% and 90% for Thermal and Hydro Generating Units, respectively, as
stipulated in the Regulations. Further, as mentioned in para. 5.3.5 of this Order, the
impact of change in future Design Energy of Hydro Stations on account 30 MCM of
water being reserved for drinking water purposes and low rainfall in FY 2015-16 shall
be considered at the time of Truing-up.
6.4.2 Gross Generation
TPC-G’s Submission
6.4.2.1 Gross Generation and PLF projections are based on the requirement of consumers and
Availability of the Generating Units. The projected generation from Units 6 and 7 is
lower than the scheduled generation, mainly because of their position in the MOD.
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MERC Order in Case No. 32 of 2016 Page 161 of 224
6.4.2.2 Since the Distribution Licensees have requested economic shutdown of Unit-6 on
account of its high generation cost, TPC-G has considered ‘nil’ generation in the 3rd
Control Period. However, from the experience of the past Control Period, it is expected
that Unit-6 generation will be required during outages of other Generating Units and
during system constraints on MSLDC directions. As such requirements are difficult to
project, any generation as per such request would be dealt with separately during the
Truing-up.
6.4.2.3 The gross generation and PLF for various Generating Units for the 3rd
Control Period are
shown in the Table below:
Table 112: Summary of Gross Generation and PLF as submitted by TPC-G for 3rd
Control
Period
Station/ Unit
Gross Generation (MU) PLF (%)
FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
FY
2016-
17
FY
2017-
18
FY
2018-
19
FY
2019-
20
Thermal Generating Units
Unit-5 3723.00 3723.00 3722.76 3723.00 85.00% 85.00% 84.99% 84.77%
Unit-6 0.00 0.00 0.00 0.00 0.00% 0.00% 0.00% 0.00%
Unit-7 884.12 884.12 782.86 884.12 56.07% 56.07% 49.65% 55.92%
Unit-8 1862.59 1863.00 1863.00 1863.00 85.05% 85.07% 85.07% 84.84%
Hydro Generating Stations
Bhira 875.00 899.00 896.00 896.00
Bhivpuri 279.00 297.00 300.00 300.00
Khopoli 271.00 274.00 274.00 274.00
Commission’s Analysis and Ruling
6.4.2.4 TPC-G has projected gross generation for the 3rd
Control Period based on projected
Availability and demand. In this Order, the Commission has approved the gross
generation as projected by TPC-G. However, the target Availability for the recovery of
total AFC shall be calculated as stipulated in para.6.4.1.4 of this Order.
6.4.2.5 TPC-G has not projected any generation from Unit-6 for the entire 3rd
Control Period.
The Commission has also not considered any generation from Unit-6 in view of the
nature of the Unit and the uncertainties involved. However, Unit-6 may have to operate
during outages of other Generating Units and during system constraints as directed by
MSLDC. The allocation of generation among Distribution Licensees and issues relating
to commercial settlements in such an event is being separately considered in Case No.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 162 of 224
133 of 2015, and would be subject to the dispensation that may be provided by the
Commission in its Order in that Case.
6.4.2.6 The gross generation and PLF for Generating Units of TPC-G for the 3rd
Control Period
as approved by the Commission are shown in the Table below:
Table 113: Summary of Gross Generation and PLF as approved by the Commission for 3rd
Control Period
Station/ Unit
Gross Generation (MU) PLF (%)
FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
FY
2016-
17
FY
2017-
18
FY
2018-
19
FY
2019-
20
Thermal Generating Units
Unit-5 3723.00 3723.00 3722.76 3723.00 85.00% 85.00% 84.99% 84.77%
Unit-6 0.00 0.00 0.00 0.00 0.00% 0.00% 0.00% 0.00%
Unit-7 884.12 884.12 782.86 884.12 56.07% 56.07% 49.65% 55.92%
Unit-8 1862.59 1863.00 1863.00 1863.00 85.05% 85.07% 85.07% 84.84%
Hydro Generating Stations
Bhira 875.00 899.00 896.00 896.00
Bhivpuri 279.00 297.00 300.00 300.00
Khopoli 271.00 274.00 274.00 274.00
6.4.3 Auxiliary Energy Consumption
TPC-G’s Submission
6.4.3.1 TPC-G has submitted the normative Auxiliary Energy Consumption for the 3rd
Control
Period as shown in the Table below:
Table 114: Normative Auxiliary Energy Consumption for Thermal Generating Stations for
3rd
Control Period as submitted by TPC-G
Station/ Unit FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Unit-5 6.00% 6.00% 6.00% 6.00%
Unit-6 3.50% 3.50% 3.50% 3.50%
Unit-7
Combined Cycle 3.00% 3.00% 3.00% 3.00%
Unit-7
Open Cycle 1.00% 1.00% 1.00% 1.00%
Unit-8 8.50% 8.50% 8.50% 8.50%
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 163 of 224
6.4.3.2 The MYT Regulations, 2015 specify the norms for Auxiliary Energy Consumption of
Hydro Generating Stations. The norm applicable to TPC-G is 1% (for machines with
static excitation systems). This is not adequate considering the peculiarities and
geographical spread of TPC-G’s Hydro Stations. TPC-G asked for the following
additional components to be included in Auxiliary Energy Consumption:
GT Losses
6.4.3.3 As mentioned at paras. 4.3.2.15-17 earlier in this Order, the CPRI report has established
the minimum required Auxiliary Energy Consumption represented as GT losses of the
Hydro Generating Station. TPC-G has taken measures like correction of metering errors
at all the locations of Hydro Stations, which has led to the reduction of GT losses over
the years. GT losses have now settled near the minimum recommended GT losses
certified by CPRI. Accordingly, the Commission may approve Auxiliary Energy
Consumption towards GT losses as 1.13% as per the CPRI Report.
Headworks
6.4.3.4 The unique and distinct features of the Headworks distribution system in TPC-G’s
Hydro Generating Stations, as described by TPC-G, have been set out at paras. 4.3.2.19-
22 of this Order, and detailed layouts of the individual Hydro Stations have been
submitted to the Commission. As stated earlier, the Headworks Auxiliary Energy
Consumption has reduced due to the measures taken by TPC-G. Accordingly, the
Commission may consider Auxiliary Energy Consumption towards Headworks as
0.33% as stipulated in the CPRI Report.
Auxiliary Energy Consumption for nallah diversion
6.4.3.5 Auxiliary Energy Consumption towards nallah diversion may be computed in the
manner approved for the 2nd
Control Period in the Business Plan Order in Case No. 166
of 2011, in which an additional 0.28% had been provided towards pumping for nallah
diversion schemes. TPC-G has considered the average of the latest 5 year period, i.e.,
FY 2010-11 to FY 2014-15, to arrive at the average Auxiliary Energy Consumption for
the water pumped. The Auxiliary Energy Consumption computations for nallah
diversion scheme is as shown in the Table below:
Table 115: Auxiliary Energy Consumption for Nallah Diversion as submitted by TPC-G
for 3rd
Control Period
Particulars Unit FY
2010-11
FY
2011-12
FY
2012-13
FY
2013-14
FY
2014-15
Water pumping for nallah
diversion MCM 45.52 76.82 76.85 53.98 78.33
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 164 of 224
Particulars Unit FY
2010-11
FY
2011-12
FY
2012-13
FY
2013-14
FY
2014-15
Pumping energy for nallah
diversion MU 3.82 7.56 5.79 4.10 5.69
Average water quantity
pumped from FY 2011 to
FY 2015
MCM 66.30
Average energy
consumption towards nallah
diversion FY 2011 to FY
2015
MU 5.39
Commission’s Analysis and Ruling
6.4.3.6 The Auxiliary Energy Consumption projected by TPC-G for Units 5 and 8 is lower than
the normative, while that of Units 6 and 7 are equal to the normative.
6.4.3.7 Since the Auxiliary Energy Consumption of all the Thermal Generating Units as
projected by TPC-G for the 3rd
Control Period is either within norms or in line with the
norms specified in the MYT Regulations, 2015, the Commission has taken the
normative Auxiliary Energy Consumption as shown in the Table below:
Table 116: Auxiliary Energy Consumption for Thermal Generating Units for 3rd
Control
Period as approved by Commission
Station/ Unit FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Unit-5 6.00% 6.00% 6.00% 6.00%
Unit-6 3.50% 3.50% 3.50% 3.50%
Unit-7 (Combined Cycle) 3.00% 3.00% 3.00% 3.00%
Unit-7 (Open Cycle) 1.00% 1.00% 1.00% 1.00%
Unit-8 8.50% 8.50% 8.50% 8.50%
6.4.3.8 As regards the Auxiliary Energy Consumption towards GT losses in respect of the
Hydro Generating Stations, the Commission has set out its views and decision at paras.
4.3.2.33-35 earlier in this Order, which are equally applicable to the 3rd
Control Period.
Moreover, the MYT Regulations, 2015 do not provide for any transformation losses.
Accordingly, the Commission has not considered any additional transformation losses
for Hydro Generating Stations for the 3rd
Control Period.
6.4.3.9 As discussed at paras. 4.3.2.36-40 of this Order, the Commission has considered the
Auxiliary Energy Consumption towards Headworks as 0.18% for the 3rd
Control Period.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 165 of 224
6.4.3.10 As regards the Auxiliary Energy Consumption for nallah diversion, the Commission in
its Business Plan Order dated 9 August, 2012 in Case No. 166 of 2011 held as under:
“The Commission is of the view that such energy on account of the nallah
diversions is being consumed for improving the inflow of water into the lakes and
enables additional generation, which benefits the consumers. The Commission
has hence, considered the relaxation in the Auxiliary Energy Consumption norms
for Hydro Stations to the extent of 0.28% as proposed by TPC-G.”
6.4.3.11 The Commission again dealt with the issue of Auxiliary Energy Consumption for nallah
diversion in its earlier MYT Order dated 5 June, 2013 in Case No. 177 of 2011 as
follows:
“…Further, the Commission in its Business Plan Order in Case No. 166 of 2011
has additionally allowed the Auxiliary Energy Consumption of 0.28% for energy
consumption for nallah diversion considering the last five year average
consumption of 3.78 MU. TPC-G stated that in the last five years, i.e., from 2007
to 2011 average of 52.46 MCM water was pumped. However, during FY 2011-12
since the rainfall was very high, the quantum of water pumped was 76.82 MCM.
In view of the same, the Commission has considered the energy consumption of
5.54 MU on pro rata basis considering the water pumping of 76.82 MCM.
Further, considering the total Gross Generation of 1532.05 MU the Commission
has allowed the additional Auxiliary Energy Consumption of 0.36%.”
6.4.3.12 Accordingly, in line with the methodology adopted for the 2nd
Control Period for the
Auxiliary Energy Consumption towards nallah diversion, the Commission has
considered the average water pumped and average energy consumption during the
period FY 2010-11 to FY 2014-15. Thus, the Commission has considered the average
energy consumption of 5.39 MU for 66.30 MCM of water pumped. Considering the total
gross generation for each year of the 3rd
Control Period, the Commission has allowed the
additional Auxiliary Energy Consumption as shown in the Table below:
Table 117: Auxiliary Energy Consumption for Nallah Diversion as approved by
Commission for 3rd
Control Period
Particulars Unit Value
Average water quantity pumped from
FY 2011 to FY 2015 MCM 66.30
Average energy consumption towards
nallah diversion FY 2011 to FY 2015 MU 5.39
FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Gross generation during 3rd Control
Period MU 1425.00 1470.00 1470.00 1470.00
% Normative Auxiliary Energy
Consumption % 0.38% 0.37% 0.37% 0.37%
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 166 of 224
6.4.3.13 The Commission approves the Auxiliary Energy Consumption for Hydro Generating
Stations by applying the normative level 1.00%, Headworks of 0.18% and additional
Auxiliary Energy Consumption towards nallah diversion as 0.38% for FY 2016-17 and
0.37% for the remaining years of the 3rd
Control Period. The summary of the Auxiliary
Energy Consumption as approved by the Commission is as shown in the Table below:
Table 118: Auxiliary Energy Consumption for Hydro Generating Stations as approved by
Commission for 3rd
Control Period
Station FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Normative Auxiliary Energy Consumption 1.00% 1.00% 1.00% 1.00%
Headworks distribution losses 0.18% 0.18% 0.18% 0.18%
Auxiliary Energy Consumption towards nallah
diversion 0.38% 0.37% 0.37% 0.37%
Total Auxiliary Energy Consumption 1.56% 1.55% 1.55% 1.55%
6.4.4 Gross Station Heat Rate
TPC-G’s Submission
6.4.4.1 The normative SHR for the 3rd
Control Period is as shown in the Table below:
Table 119: Normative SHR for Thermal Generating Stations for 3rd
Control Period as
submitted by TPC-G
Station/ Unit FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Unit-5 2525 2533 2541 2549
Unit-6 2666 2671 2676 2681
Unit-7 CC 2023 2027 2031 2035
Unit-7 OC 2900 2900 2900 2900
Unit-8 2450 2450 2450 2450
Note: CC – Combined Cycle, OC – Open Cycle
6.4.4.2 As per the MYT Regulations, 2015, the SHR for Unit-6 would be decided on an annual
basis considering the fuel mix used for firing in Unit-6, similar to the practice followed
in the 2nd
Control Period.
6.4.4.3 Unit-7 is sometimes required to be operated in Open Cycle condition. This typically
happens when there are some operational exigencies on the steam turbine side of the
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MERC Order in Case No. 32 of 2016 Page 167 of 224
CCGT or incidences of inadequate gas pressure due to tripping of the ONGC platforms
from where the gas is supplied. The Unit had operated in Open Cycle mode in the 2nd
Control Period as well.
6.4.4.4 In the 2nd
Control Period, TPC-G had approached the Commission regarding SHR for
Open Cycle operation of Unit-7. In the Business Plan Order in Case No. 166 of 2011,
the Commission had considered its request to approve a SHR of 2900 kCal/kWh for
Unit-7 in Open Cycle mode for the 2nd
Control Period. Accordingly, the Commission
may consider the SHR and Auxiliary Energy Consumption for Unit-7 in Open Cycle
mode, as approved in the Business Plan Order.
Commission’s Analysis and Ruling
6.4.4.5 The SHR as submitted by TPC-G for Units 5 and 8 for the 3rd
Control Period is within
the normative SHR. The Commission approves the SHR as specified in the MYT
Regulations, 2015 accordingly.
6.4.4.6 The MYT Regulations, 2015 specify the SHR norms of Unit-6 for the 3rd
Control Period
with oil and gas mix in the proportion of 50:50. Accordingly, the Commission approves
the SHR for Unit-6 for the 3rd
Control Period as specified in the Regulations. In case the
variation is more than +/-5%, the SHR shall be approved considering the actual oil and
gas mix at the time of Truing-up.
6.4.4.7 The Regulations specify the SHR norm for Unit-7 operating in the Combined Cycle
mode. The SHR projected by TPC-G for the 3rd
Control Period is in line with the
normative SHR, and the Commission approves it accordingly.
6.4.4.8 For the Open Cycle mode operations of Unit-7, the norm has not been specified in the
MYT Regulations, 2015. However, for the 2nd
Control Period, in its Order dated 9
August, 2012 in Case No. 166 of 2011 the Commission had approved this SHR as 2900
kCal/kWh:
“….Further, for the open cycle mode operations, the norm for heat rate for Unit#
7 has not been specified in the MERC MYT Regulations. However, in the first
control period the Commission, as per the MERC Tariff Regulations, 2005 had
been approving the heat rate norm of 1950 kcal/kWh and 2830 kcal/kWh for the
combined cycle operation and the open cycle operation, respectively, of the
CCGT Units. In the said Regulations, the Commission had considered a
deterioration of 880 kcal/kWh towards operation in open cycle mode, considering
such deterioration, the open cycle Heat Rate for the second Control Period (FY
2012-13 to FY 2015-16) would be in the range of 2893 kcal/kWh to 2905
kcal/kWh. Further, Central Electricity Regulatory Commission (Terms and
Conditions of Tariff) Regulations, 2009 has stipulated open cycle Heat Rate norm
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 168 of 224
of 2900 kcal/kWh for the Faridabad GPS and Kayamkulam GPS with the
combined cycle heat rate norm of 2000 kcal/kWh, which is close to the combined
cycle heat rate norm of Unit# 7. The Commission, in line with the same, approves
the heat rate norm under open cycle operation of Unit# 7 as 2900 kcal/kWh for
the second Control Period…”
6.4.4.9 In this context, the Commission notes that the CERC (Terms and Conditions of Tariff)
Regulations, 2014 have not revised the normative Open Cycle SHR of 2900 kcal/kWh
for the Faridabad GPS and Kayamkulam GPS. Hence, the Commission approves the
SHR norm under Open Cycle mode operation for Unit-7 as 2900 kCal/kWh for the 3rd
Control Period.
6.4.4.10 In light of the above discussions, the SHR for the Thermal Generating Units as approved
by the Commission for the 3rd
Control Period is as shown in the Table below:
Table 120: SHR as approved by Commission for 3rd
Control Period (kCal/kWh)
Station/ Unit FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Unit-5 2525 2533 2541 2549
Unit-6 2544 2549 2554 2559
Unit-7 (Combined Cycle) 2023 2027 2031 2035
Unit-7 (Open Cycle) 2900 2900 2900 2900
Unit-8 2450 2450 2450 2450
6.4.5 Fuel Cost
TPC-G’s Submission
6.4.5.1 The type of fuel proposed to be used in the Thermal Generating Units in the 3rd
Control
Period is as shown in the Table below:
Table 121: Fuel proposed for Thermal Generating Stations in 3rd
Control Period as
submitted by TPC-G
Station/ Unit Type of Fuel
Unit-5 Coal, Oil and Gas
Unit-6 Oil and Gas
Unit-7 Gas
Unit-8 Coal
6.4.5.2 TPC-G uses imported coal, domestic natural gas (under APM), oil (LSHS) and imported
RLNG for its Generating Units at Trombay. The coal is imported from Indonesia under
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 169 of 224
long-term contracts, the gas and RLNG are supplied by GAIL, and oil (LSHS) is
sourced from local oil refineries. The fuel forecast is based on TPC-G’s view of the fuel
market based on market interactions and internal research.
6.4.5.3 Coal prices for the 3rd
Control Period are forecasted as per Global Coal and Platts
reports, and the HBA Indonesian Index of Government of Indonesia is taken as per the
benchmark index. TPC-G has escalated the logistics cost annually by 5% and the
exchange rate is assumed as per the Consensus report. Other current statutory payments
are considered, viz., custom duty of 2%, Clean Energy Cess of Rs 412/MT, and
wharfage of Rs 22/ MT. As per the Union Budget for FY 2016-17, Service Tax @ 15%
has been taken on the freight cost component.
6.4.5.4 TPC-G has been procuring oil through imports or through local refineries. The quantity
of imports as well as local off-take has been reducing as Unit-6 generation on oil has
reduced. For the oil projections, TPC-G has considered that LSHS would be sourced
from local suppliers. However, this supply would be available at an import parity price.
6.4.5.5 TPC-G has projected the fuel oil price from a forecast from a leading oil Trading House,
and taken for the entire 3rd
Control Period. For the transportation of fuel oil, TPC-G has
taken the transportation cost corresponding to Low Sulphur premium oil corresponding
to the freight for 25000 MT shipments. Based on this computation, the freight charges
have been assumed as 75 USD/ MT for the entire 3rd
Control Period.
6.4.5.6 For APM gas, the Ministry of Petroleum & Natural Gas (MoPNG) pricing mechanism is
expected to be same as in last year, i.e., the variation in six monthly weighted average of
four indices, i.e., Henry Hub, Alberta, NBP Gas, Russian natural gas, are applied to the
existing price. With the current movement in international gas prices, it is estimated that
the variation in gas prices would be a nominal +/-3%. TPC-G has the following
contracts for APM gas:
Table 122: Existing Contracts for APM Gas as submitted by TPC-G
Source Quantity Duration
Remarks MCM per Day
GAIL 1.50 1 Jan 2016 - 31 Dec 2020
Actual supplies may depend on day-to-
day availability from ONGC Uran gas
fields
GAIL 0.50 1 Jan 2015 - 31 Dec 2018
Spot Gas E-bidding fortnightly. Supply
on best endeavour basis. Supply may
increase as per operational requirement
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 170 of 224
6.4.5.7 Imported RLNG gas prices are linked to crude oil. With the fall in crude oil prices,
RLNG prices have also fallen. RLNG prices are based on the prevalent RLNG contracts,
and are subject to change depending on market conditions. The long-term contracts are
‘take or pay’. However, if spot procurement is done instead of a take or pay
arrangement, the prices may vary depending on supply and demand of RLNG in India
and may not be in line with the current RLNG contract prices.
6.4.5.8 The fuel price projections for various fuels for the 3rd
Control Period are as shown in the
Table below:
Table 123: Fuel Parameters as projected by TPC-G for 3rd
Control Period
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Fuel Price (Rs./MT)
APM Gas 16138 17965 19145 20381
RLNG 25393 28895 31565 34281
Oil 47211 46930 47073 47582
Coal 4747 4831 4992 5080
Calorific Value (kCal/Kg)
APM Gas 13109 13109 13109 13109
RLNG 13085 13085 13085 13085
Oil 10462 10462 10462 10462
Coal 4960 4940 4920 4900
Commission’s Analysis and Ruling
6.4.5.9 The Commission had asked TPC-G for details of the actual fuel-related parameters for
the entire FY 2015-16 once the year was over. TPC-G has provided the actual fuel cost
calculations for FY 2015-16, based on the actual un-audited fuel parameters (GCV,
landed cost and fuel cost).
6.4.5.10 The Commission sought the LoAs for coal imports and asked whether the procurement
was through competitive bidding. TPC-G has provided all the bills for imported coal for
FY 2014-15 and FY 2015-16. The Commission has analyzed these contracts, bills and
submissions. From these, the Commission found that the payment for coal related
invoices were made to the agencies with whom the LoAs were signed. Further, the
quantities of fuel claimed in the Petition match the quantities in the bills for imported
coal. Further, on the data gap raised by the Commission, TPC-G clarified that
procurement of imported coal was done through international competitive bidding as
detailed in para. 2.1.11 of this Order.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 171 of 224
6.4.5.11 The Commission has considered the landed cost of fuel for the 3rd
Control Period as
specified in the MYT Regulations, 2015:
“48.5 Energy Charge Rate (ECR) in Rs/kWh
…Provided that the landed cost of primary fuel and secondary fuel for tariff
determination shall be based on actual weighted average cost of primary fuel and
secondary fuel of the three preceding months, and in the absence of landed costs
for the three preceding months, latest procurement price of primary fuel and
secondary fuel for the Generating Station, preceding the first month for which the
Tariff is to be determined for existing Stations and immediately preceding three
months in case of new Generating Stations shall be taken into account…”
6.4.5.12 As per the Regulations, the Commission has considered the weighted average fuel price
and GCV of the past three months as submitted by TPC-G and arrived at the landed cost
of primary and secondary fuel for the 3rd
Control Period. The Commission has
considered the stacking loss as 150 Kcal/kg in accordance with Regulations, as
submitted by TPC-G. The landed price of coal is also adjusted for the variation in Clean
Environment Cess (earlier known as Clean Energy Cess).
6.4.5.13 The Commission has not considered any escalation in fuel prices as the adjustments for
variation in fuel prices is allowed through the Fuel Surcharge Adjustment mechanism
under Regulation 48.6.
6.4.5.14 The Commission approves the fuel parameters for FY 2016-17 to FY 2019-20 based on
the above assumptions for the 3rd
Control Period, as summarised in the Table below:
Table 124: Summary of Fuel Parameters as approved by Commission for 3rd
Control
Period (Rs./MT)
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Fuel Prices (Rs./MT)
APM Gas 14857 14857 14857 14857
Non-APM Gas 15217 15217 15217 15217
Oil- LSHS 51605 51605 51605 51605
Coal 5003 5003 5003 5003
RLNG 28526 28526 28526 28526
Calorific Value (kCal/Kg)
APM Gas 13157 13157 13157 13157
Non-APM Gas 13163 13163 13163 13163
Oil- LSHS 10459 10459 10459 10459
Coal 4888 4888 4888 4888
RLNG 13085 13085 13085 13085
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 172 of 224
6.4.5.15 Based on the approved performance parameters, i.e., Gross Generation, SHR and
Auxiliary Energy Consumption, and considering the fuel prices and calorific value as
discussed in above, the summary of Energy Charges as projected by TPC-G and as
considered by the Commission for the 3rd
Control Period is given in the Table below:
Table 125: Summary of Energy Charges as approved by Commission for 3rd
Control
Period (Rs./kWh)
Unit Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Petition Approved Petition Approved Petition Approved Petition Approved
Unit-5 APM Gas 3.31 3.03 3.69 3.08 3.95 3.09 4.22 3.10
Unit-5 Oil- LSHS 12.12 13.25 12.09 13.49 12.16 13.53 12.33 13.57
Unit-5 Coal 2.65 2.84 2.72 2.85 2.83 2.85 2.90 2.86
Unit-6 RLNG 5.40 5.75 6.16 5.76 6.74 5.77 7.33 5.78
Unit-6 Oil- LSHS 12.47 13.01 12.42 13.03 12.48 13.06 12.64 13.08
Unit-7 APM Gas 2.57 2.36 2.86 2.36 3.06 2.36 3.26 2.37
Unit-7 RLNG 4.08 4.55 4.65 4.56 5.09 4.56 5.54 4.57
Unit-8 Coal 2.68 2.83 2.74 2.83 2.84 2.83 2.90 2.83
6.4.6 Operation and Maintenance Expenses
TPC-G’s Submission
6.4.6.1 TPC-G has considered the O&M Expenses in accordance with Regulation 45.1 of the
MYT Regulations, 2015 for the Trombay Thermal Generating Units 4 to 7 and the
Hydro Stations with actual Commercial Operation Date (COD) prior to 26 August,
2005.
6.4.6.2 In accordance with the Regulations, TPC-G has considered the actual O&M Expenses
for the period from FY 2012-13 to FY 2014-15, and the average base cost for FY 2013-
14 was derived. An escalation rate of 5.72% was applied to arrive at the base O&M
expenses in FY 2015-16. The detailed working is as shown in the Table below:
Table 126: O&M Expenses for Base Year as submitted by TPC-G for 3rd
Control Period
(Rs. Crore)
Particulars 2012-13 2013-14 2014-15
Actual O&M Expenses 419.79 437.49 489.13
Actual Water Charges 12.51 10.33 11.46
Actual O&M Expenses excluding Water
Charges 407.28 427.16 477.67
Average O&M - base for FY 2013-14 437.37
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 173 of 224
Particulars 2012-13 2013-14 2014-15
Escalation Rate 5.72%
FY 2014-15 462.39
FY 2015-16 488.84
6.4.6.3 These O&M expenses of FY 2015-16 would be escalated by a factor comprising 60%
weightage of the actual point to point inflation over the Wholesale Price Index (WPI)
numbers (as per the Office of Economic Advisor, Government of India (GoI)) in the
concerned year and 40% weightage of the actual Consumer Price Index (CPI) for
Industrial Workers (All India) as per the Labour Bureau, GoI in the current year. The
combined inflation rate works out to 1.11%. The Regulations also specify an efficiency
factor of 1% to be reduced from this inflation factor. However, TPC-G has considered
efficiency factor as nil because the inflation rates have been lower only in the past few
months and the average inflation rates have been above 1.11% in previous years.
6.4.6.4 Considering the base year O&M expenses and the inflation factor, the O&M expenses
for FY 2016-17 to FY 2019-20 are computed as shown in the Table below:
Table 127: O&M Expenses as submitted by TPC-G for Units 4 to 7 and Hydro for 3rd
Control Period (Rs. Crore)
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Normative O&M Expenses 494.28 499.78 505.34 510.96
Water Charges + Hydro Colony
Consumption of 0.53 Crore 11.99 11.99 11.99 11.99
Total O&M Expense 506.27 511.77 517.33 522.95
6.4.6.5 Unit-8 has achieved COD after August 26, 2005 and hence the O&M expense norms for
new Generating Stations are applicable to it. In accordance with Regulation 45.2, TPC-
G has computed the O&M expenses as shown in the Table below:
Table 128: O&M Expenses as submitted by TPC-G for Unit-8 for 3rd
Control Period
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
O&M Norms for 250 MW Unit (Rs.
Lakh/MW) 23.8 24.99 26.24 27.55
Projected O&M Expenses as per
Norms (Rs. Crore) 59.50 62.48 65.60 68.88
Commission’s Analysis and Ruling
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 174 of 224
6.4.6.6 The Commission has examined the submissions made by TPC-G with respect to O&M
expenses.
6.4.6.7 The Commission has considered the three year average of actual Trued-up base O&M
expenses to arrive at the base O&M expenses for the year ending 31 March, 2014. That
is then escalated by 5.72% as per the MYT Regulations, 2015 to arrive at the expenses
in FY 2015-16.
6.4.6.8 As regards the O&M escalation rate, Regulation 45.1(d) stipulates as follows:
“The O and M expenses for each subsequent year shall be determined by
escalating the base expenses determined above for FY 2015-16, at the inflation
factor considering 60% weightage for the actual point to point inflation over
Wholesale Price Index numbers a per Office of Economic Advisor of Government
of India in the previous year and 40% weightage for the actual Consumer Price
Index for Industrial Workers(all India) as per Labour Bureau, Government of
India in the previous year, as reduced by an efficiency factor of 1%, to arrive at
permissible O and M expenses for each year of the Control Period.”
6.4.6.9 From the WPI and CPI data for the previous year FY 2015-16, it is seen that, by
applying 60% weightage to WPI and 40% weightage to CPI, the escalation rate works
out to 0.76%. Applying the efficiency factor of 1%, the inflation factor to be considered
for projecting O&M expenses from FY 2016-17 onwards works out to (-) 0.24%.
6.4.6.10 The escalation rates based on actual WPI and CPI have reduced significantly during the
last 2 years as compared to previous years. The Commission is of the view that it may
not be appropriate to consider this negative inflation factor for projecting O&M
expenses from FY 2016-17 onwards since some O&M expenses are likely to increase
from year to year.
6.4.6.11 The Commission also analysed the approach of the CERC for O&M expenses in its
Tariff Regulations, 2014. The CERC considered the escalation rate based on 5 years
average WPI and CPI indices from FY 2008-09 to FY 2012-13 considering 60%
weightage to WPI and 40% weightage to CPI, and compared them with the actual
increase in such expenses.
6.4.6.12 The inflation factor based on the MYT Regulations, 2015 is negative due to the
reduction in average WPI in FY 2015-16 over FY 2014-15. The Commission is of the
view that, at this stage, it would be more appropriate to consider the WPI and CPI
variation over a longer period so that wide fluctuations in any one particular year are
smoothened while arriving at the inflation factor. Hence, the Commission has
considered the three year average variation in WPI and CPI to arrive at the inflation
factor for projecting the O&M expenses from FY 2016-17 onwards. Based on this
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 175 of 224
approach, the escalation rate considering 60% weightage to WPI and 40% weightage to
CPI works out to 3.97%. After applying the efficiency factor of 1%, the escalation factor
considered for projecting O&M expenses from FY 2016-17 to FY 2019-20 is 2.97%.
6.4.6.13 In view of the above, and in exercise of its power to remove difficulties under
Regulation 102, the Commission has computed the O&M expenses for the 3rd
Control
Period applying the inflation factor of 2.97% as worked out above.
6.4.6.14 The computation of O&M expense escalation considered accordingly in this Order is as
shown in the Table below:
Table 129: Summary of O&M Expense escalation computation for 3rd
Control Period
Month
WPI CPI
FY
2012-13
FY
2013-14
FY
2014-15
FY
2015-16
FY
2012-13
FY
2013-14
FY
2014-15
FY
2015-16
April 163.5 171.3 180.8 176.4 205 226 242 256
May 163.9 171.4 182 178 206 228 244 258
June 164.7 173.2 183 179.1 208 231 246 261
July 165.8 175.5 185 177.6 212 235 252 263
August 167.3 179 185.9 176.5 214 237 253 264
September 168.8 180.7 185 176.5 215 238 253 266
October 168.5 180.7 183.7 176.9 217 241 253 269
November 168.8 181.5 181.2 177.5 218 243 253 270
December 168.8 179.6 178.7 176.8 219 239 253 269
January 170.3 179 177.3 175.4 221 237 254 269
February 170.9 179.5 175.6 174.1 223 238 253 267
March 170.1 180.3 176.1 174.6 224 239 254 268
Average 168 178 181 177 215 236 251 265
YoY Increase
% 5.98% 2.00% -2.52%
9.68% 6.29% 5.65%
Table 130: Summary of O&M Expense escalation computation for 3rd
Control Period
Average of Three
year CPI Growth %
Average of Three
year WPI Growth %
Escalation rate with
60% WPI and 40%
CPI
Escalation
Considering 1%
Efficiency Factor
7.21% 1.82% 3.97% 2.97%
6.4.6.15 TPC-G has considered the Hydro Station colony consumption of 0.53 Crore for each
year of the 3rd
Control Period in the O&M expenses. Regulation 43.2 of the MYT
Regulations, 2015 specifies that the Hydro colony consumption should be considered in
the Non-Tariff Income. Accordingly, the Commission has not considered such
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 176 of 224
consumption as a part of O&M expenses. Further, the Commission approves the water
charges for the 3rd
Control Period as per the actual charges for FY 2015-16 submitted by
TPC-G.
6.4.6.16 In view of the above discussion, O&M expenses for Units 4 to 7 and Hydro Stations for
the 3rd
Control Period approved by the Commission are as shown in the Table below:
Table 131: O&M Expenses as approved by Commission for Units 4 to 7 and Hydro
Generating Stations for 3rd
Control Period (Rs. Crore)
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
O&M Expenses 498.98 513.81 529.09 544.82
Water Charges 11.46 11.46 11.46 11.46
Total O&M Expenses 510.44 525.27 540.55 556.28
6.4.6.17 The Commission approves O&M Expenses of Rs. 510.44 Crore for FY 2016-17, Rs.
525.27 Crore for FY 2017-18, Rs. 540.55 Crore for FY 2018-19 and Rs. 556.28
Crore for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.
6.4.6.18 The O&M expenses of Unit-8 as computed by TPC-G are in line with the normative
expenses as per the MYT Regulations, 2015. Accordingly, the Commission approves
O&M expenses for Unit-8 as submitted by TPC-G as shown in the Table below:
Table 132: O&M Expenses as approved by Commission for 3rd
Control Period for Unit-8
(Rs. Crore)
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
O&M Norms for 250 MW Unit (Rs.
Lakh/MW) 23.8 24.99 26.24 27.55
Projected O&M Expenses as per
Norms (Rs. Crore) 59.50 62.48 65.60 68.88
6.4.6.19 The Commission approves O&M Expenses of Rs. 59.50 Crore for FY 2016-17, Rs.
62.48 Crore for FY 2017-18, Rs. 65.60 Crore for FY 2018-19 and Rs. 68.88 Crore
for FY 2019-20 for Unit-8.
6.4.7 Capital Expenditure and Capitalisation
TPC-G’s Submission
6.4.7.1 The capital expenditure and capitalisation proposed for Units 4 to 7 and Hydro
Generating Stations during the 3rd
Control Period is as shown in the Table below:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 177 of 224
Table 133: Capitalisation for Units 4 to 7 and Hydro Generating Stations for 3rd
Control
Period as submitted by TPC-G (Rs. Crore)
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
DPR 176.24 200.90 187.25 41.94
Non-DPR 23.28 26.19 31.25 5.44
TOTAL 199.52 227.09 218.50 47.38
Non-DPR : DPR Ratio 13% 13% 17% 13%
6.4.7.2 A detailed description of the major capital expenditure projects planned during the 3rd
Control Period is provided below:
Condenser Tube Replacement of Unit-5
6.4.7.3 Unit-5 condenser, which utilizes sea water for cooling purposes, has started
experiencing problems in the condenser tubes since FY 1999-00 which has affected
generation from FY 2002-03 onwards. TPC-G proposes to replace half the condenser
tubes over outages (20 days each) planned during FY 2016-17 and FY 2018-19. The
proposed capital expenditure is around Rs. 21.16 Crore in each year.
Unit-7 Life Extension
6.4.7.4 Optimized Life Time Extension (LTE) of Unit-7 is proposed involving GT overhaul,
compressor partial blade replacement, refurbishment of turbine stage 1 and 2 blades,
replacement of heat shields in combustion chamber, weld repairs of diffuser and turbine
exhaust and replacement of all diverter damper seals. The proposed capital expenditure
is estimated at around Rs. 80 Crore for 5 years extension, which would restore the gas
turbine to full operating condition.
Heater Nos. 5 and 6 Replacement of Unit-5
6.4.7.5 High pressure heater nos. 5 & 6 of Unit-5 have been experiencing tube failures due to
chloride induced corrosion cracking. The repeated tube failures indicate that the extent
of damage caused to the tubes due to chloride induced corrosion is very high. The failure
trend indicates that the heaters will not be able to give reliable service for a long period
and it cannot be ensured by attending to tube leaks. As the numbers of plugged tubes are
more, there is additional risk of tube failures due to highly stressed tubes. Replacement
of the high pressure heaters nos. 5 & 6 is proposed at an estimated cost of Rs. 30 Crore.
Replacement of 25 MW Unit-1 at Bhira
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 178 of 224
6.4.7.6 Unit-1 of 25 MW at Bhira has completed more than 60 years, and most of its major
components like hydraulic systems, main inlet valve, needle, deflector, electrical
systems, and turbine have outlived their useful life. Hence, to avoid the possibility of
major breakdown or failure of the machine and associated non-availability of Hydro
generation, it is proposed to replace the Unit-1 at Bhira. This will also result in
additional generation due to installation of runner with higher efficiency. The project is
estimated to cost Rs. 65.50 Crore.
Unit-8
6.4.7.7 The capital expenditure and capitalisation proposed for Unit-8 during the 3rd
Control
Period is as shown in the Table below:
Table 134: Capital Expenditure and Capitalisation as submitted by TPC-G for Unit-8
during 3rd
Control Period (Rs. Crore)
Particulars
Capital Expenditure Capitalisation
FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
DPR 1.33 0.04 9.81 0.00 2.04 0.00 10.86 0.00
Non-DPR 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total 1.33 0.04 9.81 0.00 2.04 0.00 10.86 0.00
Commission’s Analysis and Ruling
6.4.7.8 In its Petition, TPC-G has included the capitalisation of 48 schemes that are yet to be
submitted for in-principle approval to the Commission. The Commission has not
considered the capitalisation for these schemes.
6.4.7.9 For the DPR schemes, the Commission has examined the CBA reports provided by
TPC-G. All the DPR schemes proposed for capitalisation have already been approved
in-principle except for four new schemes, viz. a) Environment, fire, safety, security and
statutory 2013-17, b) Unit-5 Reliability Schemes, c) Refurbishment of SET 1 and d)
Replacement of Unit-5 condenser tubes. The Commission has reviewed the justification
and CBA submitted for these four new schemes as per its Guidelines of 2005. Based on
this review, the Commission has considered the impact of these four capex schemes for
capitalisation.
6.4.7.10 The Petition includes capitalisation of some Non-DPR schemes that are in the nature of
O&M or for common employee facilities, such as procurement of tools and tackles,
procurement of safety equipment, swimming pool renovation, mobiles and canteen
equipments for staff, etc. Hence, the Commission has not considered such Non-DPR
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 179 of 224
schemes for capitalisation. The details of these schemes are at para. 4.3.8.6 of this Order.
Further, In line with the Commission’s previous Orders, the Commission has restricted
Non-DPR capitalisation to 20% of DPR capitalisation.
6.4.7.11 The cumulative capitalisation of some schemes during the 3rd
Control Period exceeds
their approved cost. Their capitalisation has been restricted by the Commission to that
extent. Details of these schemes are at para. 5.3.11.11 of this Order.
6.4.7.12 The summary of the capitalisation disallowed by the Commission is as shown in the
Table below:
Table 135: Capitalisation disallowed by Commission for FY 2015-16 (Rs. Crore)
Particulars
Capitalisation Disallowed
FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Units 4 to 7 and Hydro
Disallowed DPR capitalisation for yet to be
submitted schemes 41.24 50.87 142.60 23.04
Disallowed Non-DPR capitalisation for O&M
nature schemes 0.92 1.91 0.00 0.00
Disallowed DPR capitalisation for restricted
cumulative capitalisation 4.62 0.05 0.39 0.00
Total Disallowed Capitalisation 46.78 52.83 142.99 23.04
Unit-8
Disallowed DPR capitalisation for yet to be
submitted schemes 0.90 0.00 9.85 0.00
Disallowed Non-DPR capitalisation for O&M
nature schemes 0.00 0.00 0.00 0.00
Disallowed DPR capitalisation for restricted
cumulative capitalisation 0.00 0.00 0.00 0.00
Total Disallowed Capitalisation 0.90 0.00 9.85 0.00
6.4.7.13 The summary of the capitalisation as submitted by TPC-G and as approved by the
Commission for the 3rd
Control Period is as shown in the Table below:
Table 136: Capitalisation approved by Commission for 3rd
Control Period (Rs. Crore)
Particulars 2016-17 2017-18 2018-19 2019-20
Petition Approved Petition Approved Petition Approved Petition Approved
Units 4 to 7 and Hydro Generating Stations
DPR Schemes 176.24 130.38 200.90 149.98 187.25 44.26 41.94 18.90
Non-DPR Schemes 23.28 22.36 26.19 24.28 31.25 8.85 5.44 3.78
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 180 of 224
Particulars 2016-17 2017-18 2018-19 2019-20
Petition Approved Petition Approved Petition Approved Petition Approved
Total 199.52 152.74 227.09 174.26 218.50 53.11 47.38 22.68
Unit-8
DPR Schemes 2.04 1.14 0.00 0.00 10.86 1.01 0.00 0.00
Non-DPR Schemes 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total 2.04 1.14 0.00 0.00 10.86 1.01 0.00 0.00
6.4.7.14 The Commission approves Capitalisation of Rs. 152.74 Crore for FY 2016-17, Rs.
174.26 Crore for FY 2017-18, Rs. 53.11 Crore for FY 2018-19 and Rs. 22.68 Crore
for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations. Capitalisation of
Rs. 1.14 Crore for FY 2016-17, none for FY 2017-18, Rs. 1.01 Crore for FY 2018-19
and none for FY 2019-20 is approved for Unit-8.
6.4.8 Depreciation
TPC-G’s Submission
6.4.8.1 For existing assets of Units 4 to 7 and Hydro Stations, TPC-G has computed
Depreciation based on the rates in the MYT Regulations, 2015. For the assets added
during the 3rd
Control Period TPC-G has computed Depreciation based on estimated
capitalisation and considering the Depreciation rate for plant and machinery, i.e., 5.28%.
Depreciation computations are shown in the Table below:
Table 137: Depreciation for Units 4 to 7 and Hydro Stations as submitted by TPC-G for 3rd
Control Period (Rs. Crore)
Particulars Depreciation Rate FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Depreciation on account of
assets as on FY15 133.02 126.72 116.64 105.25
Depreciation on account of
assets added in FY16 9.57 9.57 9.57 9.57
Depreciation on account of
assets added inFY17 5.28% 5.27 10.53 10.53 10.53
Depreciation on account of
assets added inFY18 5.28% 6 11.99 11.99
Depreciation on account of
assets added inFY19 5.28% 5.77 11.54
Depreciation on account of
assets added inFY20 5.28% 1.25
Total Depreciation 147.86 152.83 154.51 150.14
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 181 of 224
6.4.8.2 For existing assets of Unit-8, TPC-G has computed Depreciation as per the rates in the
Regulations. For the assets added during the 3rd
Control Period TPC-G has computed
Depreciation based on estimated capitalisation and considering Depreciation rate for
plant and machinery, i.e., 5.28% for the 3rd
Control Period. Depreciation computations
are as shown in the Table below:
Table 138: Depreciation for Unit-8 as submitted by TPC-G for 3rd
Control Period (Rs.
Crore)
Particulars Depreciation Rate FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Depreciation on account of
assets as on FY15 63.99 63.86 63.57 61.46
Depreciation on account of
assets added in FY16 1.26 1.26 1.26 1.26
Depreciation on account of
assets added in FY17 5.28% 0.05 0.11 0.11 0.11
Depreciation on account of
assets added in FY18 5.28%
0.00 0.00 0.00
Depreciation on account of
assets added in FY19 5.28%
0.29 0.57
Depreciation on account of
assets added in FY20 5.28%
0.00
Total Depreciation 65.31 65.24 65.23 63.40
Commission’s Analysis and Ruling
6.4.8.3 For computing Depreciation for the 3rd
Control Period, the Commission has considered
closing GFA for FY 2015-16 as provisionally Trued-up earlier in this Order and assets
added during the year, subject to the capitalisation approved for the 3rd
Control Period in
this Order.
6.4.8.4 Regulation 27 of the MYT Regulations, 2015 permits recovery of Depreciation on the
value of fixed assets, computed annually on the straight-line method at the specified
rates. The Commission determines Depreciation on the opening GFA for the full
operational period and on additional capitalisation, from the date of capitalisation, for
various classes of assets at the rates as per the Regulations.
6.4.8.5 On this basis, the Commission has computed Depreciation for Units 4 to 7 and Hydro
Generating Stations for the 3rd
Control Period as shown in the Table below:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 182 of 224
Table 139: Depreciation approved by Commission for Units 4 to 7 and Hydro Stations for
3rd
Control Period (Rs. Crore)
Particulars FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Opening GFA 4343.94 4496.68 4670.94 4724.05
Asset Addition During the Year 152.74 174.26 53.11 22.68
Asset Retirement During the Year 0.00 0.00 0.00 0.00
Closing GFA 4496.68 4670.94 4724.05 4746.73
Depreciation 146.59 149.94 148.28 141.41
6.4.8.6 The Commission approves Depreciation of Rs. 146.59 Crore for FY 2016-17, Rs.
149.94 Crore for FY 2017-18, Rs. 148.28 Crore for FY 2018-19 and Rs. 141.41
Crore for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.
6.4.8.7 The Commission has computed Depreciation for Unit-8 in line with the MYT
Regulations, 2015 as shown in the Table below:
Table 140: Summary of Depreciation approved by Commission for Unit-8 for 3rd
Control
Period (Rs. Crore)
Particulars FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Opening GFA 1161.94 1163.09 1163.09 1164.10
Asset Addition During the Year 1.14 0.00 1.01 0.00
Asset Retirement During the Year 0.00 0.00 0.00 0.00
Closing GFA 1163.09 1163.09 1164.10 1164.10
Depreciation 65.29 65.19 64.90 62.82
6.4.8.8 The Commission approves Depreciation of Rs. 65.29 Crore for FY 2016-17, Rs.
65.19 Crore for FY 2017-18, Rs. 64.90 Crore for FY 2018-19 and Rs. 62.82 Crore
for FY 2019-20 for Unit-8.
6.4.9 Interest on Long-term Loan
TPC-G’s Submission
6.4.9.1 Based on the closing balance of loans for FY 2015-16 and the additional capitalisation
during the 3rd
Control Period, the Interest on Long-term Loan has been computed
considering the weighted average rate of interest of the actual loan portfolio for FY
2014-15. As provided in the MYT Regulations, 2015, the repayment of loans is
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 183 of 224
considered equal to the Depreciation for the year. The Interest on Long-term Loan for
the 3rd
Control Period is as shown in the Table below:
Table 141: Interest on Long-term Loan for Units 4 to 7 and Hydro Stations as submitted by
TPC-G for 3rd
Control Period (Rs. Crore)
Particulars FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Opening Loan Balance 737.54 729.34 735.48 733.91
Loan addition for asset addition during
the year 139.66 158.96 152.95 33.16
Loan Repayment during the year 147.86 152.83 154.51 150.14
Closing Loan Balance 729.34 735.48 733.91 616.94
Weighted Average Interest Rate 10.94% 10.94% 10.94% 10.94%
Interest Expense 80.22 80.10 80.35 73.87
Table 142: Interest on Long-term Loan for Unit-8 as submitted by TPC-G for 3rd
Control
Period (Rs. Crore)
Particulars FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Opening Loan Balance 489.75 425.87 360.63 303.01
Loan addition for asset addition during
the year 1.43 0.00 7.60 0.00
Loan Repayment during the year 65.31 65.24 65.23 63.4
Closing Loan Balance 425.87 360.63 303.01 239.6
Weighted Average Interest Rate 11.08% 11.08% 11.08% 11.08%
Interest Expense 50.73 43.58 36.77 30.06
Commission’s Analysis and Ruling
6.4.9.2 For the interest expenses, the Commission has considered the approved closing balance
of loan for FY 2015-16 considered in this Order as the opening balance of FY 2016-17.
The loan repayment has been considered equal to the Depreciation allowed during the
respective years of the 3rd
Control Period in this Order, in accordance with Regulation
29.3 of MYT Regulations, 2015. The loan addition during the year has been considered
at 70% of the capitalisation approved in this Order, based on the debt:equity ratio of
70:30.
6.4.9.3 Regulation 29.5 of MYT Regulations, 2015 specifies as follows:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 184 of 224
“The rate of interest shall be the weighted average rate of interest computed on
the basis of the actual loan portfolio at the beginning of each year:
…Provided also that if the Generating Company or the Licensee or the
MSLDC, as the case may be, does not have actual loan even in the past, the
weighted average rate of interest of its other Businesses regulated by the
Commission shall be considered…”
6.4.9.4 TPC-G has computed Interest on Long-term Loan considering the weighted average rate
of interest of the actual loan portfolio for FY 2014-15 as discussed in para. 5.3.13.5. The
Commission has considered that rate for computation of interest expenses for the 3rd
Control Period as shown in the Tables below:
Table 143: Interest on Long-term Loan for Units 4 to 7 and Hydro Stations as approved by
Commission for 3rd
Control Period (Rs. Crore)
Particulars FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Opening Loan Balance 720.81 681.14 653.18 542.08
Asset Addition during the year 0.00 0.00 0.00 0.00
Loan addition for asset addition during the
year 106.92 121.98 37.18 15.88
Loan reduction for asset addition during the
year 0.00 0.00 0.00 0.00
Loan Repayment during the year 146.59 149.94 148.28 141.41
Closing Loan Balance 681.14 653.18 542.08 416.54
Weighted Average Interest Rate 10.94% 10.94% 10.94% 10.94%
Interest Expense 76.66 72.97 65.36 52.42
6.4.9.5 The Commission approves Interest on Long-term Loan of Rs. 76.66 Crore for FY
2016-17, Rs. 72.97 Crore for FY 2017-18, Rs. 65.36 Crore for FY 2018-19 and Rs.
52.42 Crore for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.
Table 144: Interest on Long-term Loan for Unit-8 as approved by Commission for 3rd
Control Period (Rs. Crore)
Particulars FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Opening Loan Balance 484.89 420.40 355.21 291.02
Asset Addition during the year 0.00 0.00 0.00 0.00
Loan addition for asset addition during the
year 0.80 0.00 0.71 0.00
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 185 of 224
Particulars FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Loan reduction for asset addition during the
year 0.00 0.00 0.00 0.00
Loan Repayment during the year 65.29 65.19 64.90 62.82
Closing Loan Balance 420.40 355.21 291.02 228.19
Weighted Average Interest Rate 11.08% 11.08% 11.08% 11.08%
Interest Expense 50.16 42.98 35.81 28.77
6.4.9.6 The Commission approves Interest on Long-term Loan of Rs. 50.16 Crore for FY
2016-17, Rs. 42.98 Crore for FY 2017-18, Rs. 35.81 Crore for FY 2018-19 and Rs.
28.77 Crore for FY 2019-20 for Unit-8.
6.4.10 Return on Equity
TPC-G’s Submission
6.4.10.1 TPC-G has computed RoE based on Regulation 28 of the MYT Regulations, 2015 and
projections of capitalisation during the 3rd
Control Period, as given in the Table below:
Table 145: Return on Equity as submitted by TPC-G for 3rd
Control Period for Units 4 to 7
and Hydro Stations (Rs. Crore)
Particulars % RoE FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Regulatory equity at the beginning
of the year 1577.05 1636.91 1705.03 1770.58
Equity portion of the net assets
capitalised during the year 59.86 68.13 65.55 14.21
Regulatory equity at the end of the
year 1636.91 1705.03 1770.58 1784.8
Return on regulatory equity at the
beginning of the year 15.50% 244.44 253.72 264.28 274.44
Return on equity portion of capital
expenditure capitalised during the
year
15.50% 4.64 5.28 5.08 1.1
Total return on equity 249.08 259 269.36 275.54
6.4.10.2 For Unit-8, the RoE is as given in the Table below:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 186 of 224
Table 146: Return on Equity as submitted by TPC-G for 3rd
Control Period for Unit-8 (Rs.
Crore)
Particulars % RoE FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Regulatory equity at the beginning
of the year 350.3 350.92 350.92 354.18
Equity portion of the net assets
capitalised during the year 0.61 0 3.26 0
Regulatory equity at the end of the
year 350.92 350.92 354.18 354.18
Return on regulatory equity at the
beginning of the year 15.50% 54.3 54.39 54.39 54.9
Return on equity portion of capital
expenditure capitalised during the
year
15.50% 0.05 0 0.25 0
Total return on equity 54.34 54.39 54.64 54.9
Commission’s Analysis and Ruling
6.4.10.3 The Commission has computed RoE at the rate of 15.50% as per Regulation 28 of the
MYT Regulations, 2015, on the opening equity of the year. Regulation 28.3 specifies as
follows:
“28.3 The return on equity shall be computed in the following manner :—
(a) Return at the allowable rate as per this Regulation, applied on the amount of
equity capital at the commencement of the Year; plus
(b) Return at the allowable rate as per this Regulation, applied on 50 per cent of
the equity capital portion of the allowable capital cost, for the investments put to
use in Generation Business or Transmission Business or Distribution Business or
MSLDC, for such Year.”
6.4.10.4 Accordingly, the Commission has considered RoE on 50 per cent of the equity capital
portion of the allowable capital cost for the investments put to use in each year of the 3rd
Control Period.
6.4.10.5 For arriving at the Regulatory Equity at the beginning of FY 2016-17, the Commission
has taken the closing equity at the end of FY 2015-16 as approved in the Provisional
Truing-up for FY 2015-16 earlier in this Order. The RoE as approved by the
Commission for the 3rd
Control Period is summarised in the following Table:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 187 of 224
Table 147: Return on Equity as approved by the Commission for Units 4 to 7 and Hydro
Generating Stations for 3rd
Control Period (Rs. Crore)
Particulars % RoE FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Regulatory equity at the beginning of
the year 1573.87 1619.69 1671.97 1687.91
Equity portion of the net assets
capitalised during the year 45.82 52.28 15.93 6.80
Regulatory equity at the end of the year 1619.69 1671.97 1687.91 1694.71
Return on regulatory equity at the
beginning of the year 15.50% 243.95 251.05 259.16 261.63
Return on equity portion of capital
expenditure capitalised during the year 15.50% 3.55 4.05 1.23 0.53
Total return on equity 247.50 255.10 260.39 262.15
6.4.10.6 The Commission approves Return on Equity of Rs. 247.50 Crore for FY 2016-17,
Rs. 255.10 Crore for FY 2017-18, Rs. 260.39 Crore for FY 2018-19 and Rs. 262.15
Crore for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.
Table 148: Return on Equity as approved by the Commission for Unit-8 for 3rd
Control
Period (Rs. Crore)
Particulars % RoE FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Regulatory equity at the beginning of
the year 348.58 348.92 348.92 349.23
Equity portion of the net assets
capitalised during the year 0.34 0.00 0.30 0.00
Regulatory equity at the end of the year 348.92 348.92 349.23 349.23
Return on regulatory equity at the
beginning of the year 15.50% 54.03 54.08 54.08 54.13
Return on equity portion of capital
expenditure capitalised during the year 15.50% 0.03 0.00 0.02 0.00
Total return on equity 54.06 54.08 54.11 54.13
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 188 of 224
6.4.10.7 The Commission approves Return on Equity of Rs. 54.06 Crore for FY 2016-17,
Rs. 54.08 Crore for FY 2017-18, Rs. 54.11 Crore for FY 2018-19 and Rs. 54.13
Crore for FY 2019-20 for Unit-8.
6.4.11 Interest on Working Capital
TPC-G’s Submission
6.4.11.1 TPC-G has computed IoWC in accordance with Regulation 31.1 of the MYT
Regulations, 2015, applying an interest rate of 10.80%., and shown in the Table below:
Table 149: Interest on Working Capital as submitted by TPC-G for Units 4 to 7 and Hydro
Stations for 3rd
Control Period (Rs. Crore)
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
2 months fuel cost for Unit-5 (Coal) 154.61 158.51 165.01 169.63
2 months fuel cost for Unit-6 (Oil/Coal) 0.00 0.00 0.00 0.00
1 months fuel cost for Unit-7 (Gas) 27.82 31.03 33.13 35.34
2 months fuel cost 182.43 189.54 198.14 204.97
O&M expenses for 1 month 42.19 42.65 43.11 43.58
Maintenance of spares 1% of Opening
GFA for the year 42.76 44.75 47.02 49.21
Receivables for sale of electricity to
BEST 201.75 204.33 216.53 222.99
Less : Payables for fuel 105.12 110.28 115.63 120.15
Total working capital 364.00 370.99 389.17 400.60
Rate of Interest 10.80% 10.80% 10.80% 10.80%
Interest on working capital 39.31 40.07 42.03 43.26
Table 150: Interest on Working Capital as submitted by TPC-G for Unit-8 for 3rd
Control
Period (Rs. Crore)
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Cost of coal for 2 months 75.53 77.17 80.05 81.81
O&M expenses for 1 month 4.96 5.21 5.47 5.74
Maintenance of spares 1% of Opening
GFA for the year 11.69 11.71 11.71 11.81
Receivables for sale of electricity to
BEST 51.27 51.83 52.88 53.29
Less : Payables for fuel 37.76 38.58 40.03 40.90
Total working capital 105.67 107.33 110.08 111.75
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 189 of 224
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Rate of Interest 10.80% 10.80% 10.80% 10.80%
Interest on working capital 11.41 11.59 11.89 12.07
Commission’s Analysis and Ruling
6.4.11.2 The Commission has computed the total working capital requirement in accordance with
Regulation 31.1. As per the Regulations, the Commission has considered the rate of
IoWC as 10.80%, which is the Base Rate of State Bank of India (SBI) as on the date of
filing of the Petition (9.30%) plus 1.50%.
6.4.11.3 The summary of IoWC approved by the Commission for the 3rd
Control Period is shown
in the Tables below:
Table 151: Interest on Working Capital as approved by the Commission for Units 4 to 7
and Hydro for 3rd
Control Period (Rs. Crore)
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
2 months fuel cost for Unit-5 (Coal) 158.16 158.67 159.17 159.23
2 months fuel cost for Unit-6 (Oil/Coal) 0.00 0.00 0.00 0.00
1 months fuel cost for Unit-7 (Gas) 25.16 25.21 25.26 25.24
2 months fuel cost 183.33 183.88 184.43 184.48
O&M expenses for 1 month 42.54 43.77 45.05 46.36
Maintenance of spares 1% of Opening
GFA for the year 42.66 44.19 45.94 46.50
Receivables for sale of electricity to
BEST 147.68 149.36 150.37 150.14
Less : Payables for fuel 104.25 104.55 104.85 104.86
Total working capital 311.96 316.66 320.94 322.61
Rate of Interest 10.80% 10.80% 10.80% 10.80%
Interest on working capital 33.69 34.20 34.66 34.84
6.4.11.4 The Commission approves Interest on Working Capital of Rs. 33.69 Crore for FY
2016-17, Rs. 34.20 Crore for FY 2017-18, Rs. 34.66 Crore for FY 2018-19 and Rs.
34.84 Crore for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.
Table 152: Interest on Working Capital as approved by Commission for Unit-8 for 3rd
Control Period (Rs. Crore)
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 190 of 224
Cost of coal for 2 months 87.13 87.13 87.13 87.13
O&M expenses for 1 month 4.96 5.21 5.47 5.74
Maintenance of spares 1% of Opening
GFA for the year 11.62 11.63 11.63 11.64
Receivables for sale of electricity to
BEST 39.68 39.47 39.25 38.93
Less : Payables for fuel 43.56 43.56 43.56 43.56
Total working capital 99.82 99.87 99.91 99.88
Rate of Interest 10.80% 10.80% 10.80% 10.80%
Interest on working capital 10.78 10.79 10.79 10.79
6.4.11.5 The Commission approves Interest on Working Capital of Rs. 10.78 Crore for FY
2016-17, Rs. 10.79 Crore for FY 2017-18 and Rs. 10.79 Crore for FY 2018-19 and
Rs. 10.79 Crore for FY 2019-20 for Unit-8.
6.4.12 Income Tax
TPC-G’s Submission
6.4.12.1 Income Tax has been computed in accordance with Regulation 33 of the MYT
Regulations, 2015, as shown in the Table below:
Table 153: Income Tax for Units 4 to 7 and Hydro Stations as submitted by TPC-G for 3rd
Control Period (Rs. Crore)
Particulars FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Income Tax 124.24 127.21 131.51 151.26
Table 154: Income Tax for Unit-8 as submitted by TPC-G for 3rd
Control Period (Rs.
Crore)
Particulars FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Income Tax 64.44 67.93 70.50 72.37
Commission’s Analysis and Ruling
6.4.12.2 Regulation 33.1 of the MYT Regulations, 2015 stipulates as follows
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 191 of 224
“The Commission, in its MYT Order, shall provisionally approve Income Tax
payable for each year of the Control Period based on the actual Income Tax paid
by the Generating Company or Licensee or MSLDC, in case the Generating
Company or Licensee or MSLDC has not engaged in any other regulated or
unregulated Business or Other Business, as allowed by the Commission relating
to the electricity Business regulated by the Commission, as per latest available
Audited Accounts, subject to prudence check.”
6.4.12.3 The Commission has considered the Income Tax approved for FY 2014-15 based on
PBT method as per the audited Annual Accounts as the Income Tax for FY 2016-17 to
FY 2019-20, as shown in the Tables below:
Table 155: Income Tax for Units 4 to 7 and Hydro Stations as approved by TPC-G for 3rd
Control Period (Rs. Crore)
Particulars FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Income Tax 98.89 98.89 98.89 98.89
6.4.12.4 The Commission approves Income Tax of Rs. 98.89 Crore for each year of the 3rd
Control Period for Units 4 to 7 and Hydro Generating Stations.
Table 156: Income Tax for Unit-8 as approved by TPC-G for 3rd
Control Period (Rs.
Crore)
Particulars FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Income Tax 24.49 24.49 24.49 24.49
6.4.12.5 The Commission approves Income Tax of Rs. 24.49 Crore for each year of the 3rd
Control Period for Unit-8.
6.4.13 Non-Tariff Income
TPC-G’s Submission
6.4.13.1 Regulation 43.1 states the following:
“43.1 The amount of Non-Tariff Income of the Generating Company as approved
by the Commission shall be deducted while determining its Annual Fixed Charge:
Provided that the Generating Company shall submit full details of its
forecast of Non-Tariff Income to the Commission in such form as may be
stipulated by the Commission.”
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 192 of 224
6.4.13.2 Accordingly, TPC-G has considered the actual recurring and non-recurring items over
the last five years, i.e., from FY 2009-10 to FY 2014-15, for computation of the Non-
Tariff Income. Compounded Annual Growth Rate (CAGR) was considered for the
calculations as shown below:
Table 157: Non-Tariff Income as submitted by TPC-G for Units 4 to 7 and Hydro Stations
for 3rd
Control Period (Rs. Crore)
Particulars FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 CAGR FY 2015-16
Recurring 4.55 5.51 4.12 5.42 6% 5.77
Non-Recurring 10.51 10.25 17.53 11.45 3% 11.79
Total 15.06 15.76 21.64 16.87 4% 17.55
6.4.13.3 Considering the CAGR, actual Non-Tariff Income at the end of the 2nd
Control Period
and the Base Non-Tariff Income for FY 2015-16, the Non-Tariff Income for the 3rd
Control Period is as shown in the Table below:
Table 158: Non-Tariff Income as submitted by TPC-G for Units 4 to 7 and Hydro Stations
for 3rd
Control Period (Rs. Crore)
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Recurring 6.14 6.54 6.96 7.41
Non-Recurring 12.14 12.50 12.87 13.25
Non-Tariff Income 18.28 19.04 19.83 20.66
6.4.13.4 The Non-Tariff Income for Unit-8 is shown in the Table below:
Table 159: Non-Tariff Income as submitted by TPC-G for Unit-8 for 3rd
Control Period
(Rs. Crore)
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Recurring 0.23 0.20 0.18 0.15
Non-Recurring 2.17 2.97 4.06 5.56
Non-Tariff Income 2.40 3.17 4.24 5.72
Commission’s Analysis and Ruling
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 193 of 224
6.4.13.5 The Commission has not considered any escalation in Non-Tariff Income. Accordingly,
the Commission approves the Non-Tariff Income for each year of the 3rd
Control Period
as approved for FY 2015-16, as shown in the Tables below:
Table 160: Non-Tariff Income as approved by the Commission for Units 4 to 7 and Hydro
Stations for 3rd
Control Period (Rs. Crore)
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Non-Tariff Income 16.73 16.73 16.73 16.73
6.4.13.6 The Commission approves Non-Tariff Income of Rs. 16.73 Crore for each year of
the 3rd
Control Period for Units 4 to 7 and Hydro Generating Stations.
Table 161: Non-Tariff Income as approved by the Commission for Unit-8 for 3rd
Control
Period (Rs. Crore)
Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Non-Tariff Income 2.26 2.26 2.26 2.26
6.4.13.7 The Commission approves Non-Tariff Income of Rs. 2.26 Crore for each year of
the 3rd
Control Period for Unit-8.
6.4.14 Fixed Cost of Unit-4
TPC-G’s Submission
6.4.14.1 Unit-4 has outlived its useful life and is to be retired. It has been operating as a stand-by
Unit for the past few years. Since Unit-4 was not required to generate for considerable
time, it was mutually agreed between TPC-G, BEST and TPC-D that its fixed cost
would no longer be paid from FY 2014-15. Hence, no fixed charges will be collected for
the remaining period of the PPAs.
Commission’s Analysis and Ruling
6.4.14.2 The Commission has noted that Unit-4 has outlived its useful life and has not been in
operation for some time, and the mutual agreement regarding non-payment of its fixed
cost from FY 2014-15. Accordingly, the Commission has reduced the fixed charges
corresponding to Unit-4 from the total ARR to arrive at the net ARR for 3rd
Control
Period.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 194 of 224
6.4.15 Summary of Annual Fixed Charges
6.4.15.1 The AFC approved by the Commission for the 3rd
Control Period is as shown in the
Tables below:
Table 162: Annual Fixed Charges for Units 4 to 7 and Hydro Stations for 3rd
Control
Period (Rs. Crore)
Particulars
FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
TPC-G
Petition
Approv
ed
TPC-G
Petition
Approv
ed
TPC-G
Petition
Approv
ed
TPC-G
Petition
Approv
ed
O&M Charges 506.27 510.44 511.77 525.27 517.33 540.55 522.95 556.28
Other Finance Charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Interest on Long-term Loan 80.22 76.66 80.09 72.97 80.35 65.36 73.87 52.42
Interest on Working Capital 39.31 33.69 40.07 34.20 42.03 34.66 43.26 34.84
Depreciation 147.86 146.59 152.83 149.94 154.51 148.28 150.14 141.41
Return on Equity 249.08 247.50 259.00 255.10 269.36 260.39 275.54 262.15
Incentives 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Income Tax 124.24 98.89 127.21 98.89 131.51 98.89 151.25 98.89
Allocation of shared services (12.50) (12.50) (12.50) (12.50) (12.50) (12.50) (12.50) (12.50)
Gross Fixed Charges 1134.48 1101.27 1158.47 1123.87 1182.59 1135.63 1204.52 1133.49
Less: Non Tariff Income 18.28 16.73 19.04 16.73 19.83 16.73 20.66 16.73
Net Fixed Charges 1116.20 1084.54 1139.43 1107.14 1162.77 1118.90 1183.87 1116.76
Less: Fixed Cost component
of unallocated capacity of
Unit 4
12.03 11.93 11.77 11.56 11.44 11.01 10.96 10.36
Total Fixed Charge for Unit
5-7 and Hydro generating
stations
1104.17 1072.61 1127.66 1095.58 1151.33 1107.90 1172.91 1106.40
6.4.15.2 The Commission approves Annual Fixed Charges of Rs. 1072.61 Crore for FY
2016-17, Rs. 1095.58 Crore for FY 2017-18, Rs. 1107.90 Crore for FY 2018-19 and
Rs. 1106.40 Crore for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.
Table 163: Annual Fixed Charges for Unit-8 for 3rd
Control Period (Rs. Crore)
Particulars
FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
TPC-G
Petition Approved
TPC-G
Petition Approved
TPC-G
Petition Approved
TPC-G
Petition Approved
O&M Expenses 59.50 59.50 62.48 62.48 65.60 65.60 68.88 68.88
Other Finance
Charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Interest on Long-
term Loan 50.73 50.16 43.58 42.98 36.77 35.81 30.07 28.77
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 195 of 224
Particulars
FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
TPC-G
Petition Approved
TPC-G
Petition Approved
TPC-G
Petition Approved
TPC-G
Petition Approved
Interest on Working
Capital 11.41 10.78 11.59 10.79 11.89 10.79 12.07 10.79
Depreciation 65.31 65.29 65.24 65.19 65.23 64.90 63.40 62.82
Return on Equity 54.34 54.06 54.39 54.08 54.64 54.11 54.90 54.13
Incentives 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Income Tax 64.44 24.49 67.93 24.49 70.50 24.49 72.37 24.49
Allocation of shared
services 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50
Gross Fixed
Charge 318.24 276.78 317.70 272.50 317.13 268.20 314.18 262.38
Less: Non Tariff
Income 2.40 2.26 3.17 2.26 4.24 2.26 5.72 2.26
Net Fixed Charge 315.84 274.52 314.53 270.24 312.89 265.94 308.47 260.12
6.4.15.3 The Commission approves Annual Fixed Charges of Rs. 274.52 Crore for FY 2016-
17, Rs. 270.24 Crore for FY 2017-18, Rs. 265.94 Crore for FY 2018-19 and Rs.
260.12 Crore for FY 2019-20 for Unit-8.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 196 of 224
7. MULTI-YEAR TARIFF FOR 3RD CONTROL PERIOD FROM FY 2016-17 TO
FY 2019-20
7.1 AFC for TPC-G
7.1.1.1 Regulation 39 of the MYT Regulations, 2015 states that the Tariff for sale of electricity
shall consist of the AFC and Energy Charges (for recovery of primary and secondary
fuel cost).
7.1.1.2 The year-wise AFC approved by the Commission in the previous Section is as shown in
the Tables below:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 197 of 224
Table 164: Annual Fixed Charges as approved by Commission for FY 2016-17 (Rs. Crore)
S.
No. Particulars
Units 4
to 7 plus
Hydro
Thermal
Thermal
Hydro
Hydro
Unit-8 Unit-4 Unit-5 Unit-6 Unit-7 Bhira Bhivpuri Khopoli
1 O&M Expenses 510.44 402.64 0.00 235.50 97.46 69.68 107.79 38.62 25.90 43.28 59.50
2 Other Finance
Charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
3 Interest on Long-
term Loan 76.66 71.58 0.00 42.23 7.98 21.37 5.09 5.09 0.00 0.00 50.16
4 Interest on Working
Capital 33.69 29.29 0.00 21.18 2.49 5.63 4.40 1.73 1.06 1.60 10.78
5 Depreciation 146.59 92.25 7.83 65.11 3.82 15.49 54.34 19.61 14.32 20.40 65.29
6 Return on equity 247.50 169.40 4.10 75.02 33.54 56.73 78.10 33.30 19.86 24.95 54.06
7 Incentives 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
8 Income Tax 98.89 67.16 0.00 30.48 13.63 23.05 31.73 13.53 8.07 10.14 24.49
9 Allocation of shared
services (12.50) (12.50) 0.00 (5.60) (2.36) (4.54) 0.00 0.00 0.00 0.00 12.50
10 Gross Fixed
Charges 1101.27 819.82 11.93 463.93 156.55 187.41 281.45 111.88 69.20 100.37 276.78
11 Less: Non Tariff
Income 16.73 11.13 0.00 4.98 2.10 4.04 5.60 2.30 1.29 2.01 2.26
12 Net Fixed
Charges* 1072.61 796.76 11.93 458.95 154.45 183.37 275.85 109.58 67.91 98.35 274.52
*Fixed Charge for Unit-4 is not considered in the total fixed charges as Unit-4 is not in operation.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 198 of 224
Table 165: Annual Fixed Charges as approved by Commission for FY 2017-18 (Rs. Crore)
S.
No. Particulars
Units 4
to 7 plus
Hydro
Thermal
Thermal
Hydro
Hydro
Unit-8 Unit-4 Unit-5 Unit-6 Unit-7 Bhira Bhivpuri Khopoli
1 O&M Expenses 525.27 414.34 0.00 242.35 100.29 71.71 110.93 39.74 26.65 44.53 62.48
2 Other Finance
Charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
3 Interest on Long-
term Loan 72.97 68.76 0.00 41.79 7.23 19.74 4.21 4.21 0.00 0.00 42.98
4 Interest on Working
Capital 34.20 29.77 0.00 21.44 2.45 5.88 4.43 1.76 1.06 1.61 10.79
5 Depreciation 149.94 97.56 7.49 70.71 3.60 15.76 52.38 18.56 13.70 20.12 65.19
6 Return on equity 255.10 174.57 4.07 80.39 33.24 56.86 80.54 35.62 19.95 24.97 54.08
7 Incentives 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
8 Income Tax 98.89 67.16 0.00 31.67 13.10 22.40 31.73 14.03 7.86 9.83 24.49
9 Allocation of
shared services (12.50) (12.50) 0.00 (5.96) (2.22) (4.32) 0.00 0.00 0.00 0.00 12.50
10 Gross Fixed
Charges 1123.87 839.67 11.56 482.38 157.70 188.03 284.20 113.92 69.22 101.06 272.50
11 Less: Non Tariff
Income 16.73 11.32 0.00 5.40 2.01 3.91 5.41 2.23 1.24 1.94 2.26
12 Net Fixed
Charges* 1095.58 816.79 11.56 476.98 155.69 184.12 278.79 111.69 67.98 99.13 270.24
*Fixed Charge for Unit-4 is not considered in the total fixed charges as Unit-4 is not in operation.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 199 of 224
Table 166: Annual Fixed Charges as approved by Commission for FY 2018-19 (Rs. Crore)
S.
No. Particulars
Units 4
to 7 plus
Hydro
Thermal
Thermal
Hydro
Hydro
Unit-8 Unit-4 Unit-5 Unit-6 Unit-7 Bhira Bhivpuri Khopoli
1 O&M Expenses 540.55 426.39 0.00 249.40 103.21 73.79 114.15 40.90 27.43 45.83 65.60
2 Other Finance
Charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
3 Interest on Long-
term Loan 65.36 61.10 0.00 35.28 6.13 19.69 4.26 4.26 0.00 0.00 35.81
4 Interest on Working
Capital 34.66 30.25 0.00 21.80 2.42 6.03 4.42 1.86 0.98 1.57 10.79
5 Depreciation 148.28 100.74 7.02 72.23 3.36 18.14 47.54 21.28 6.62 19.64 64.90
6 Return on equity 260.39 177.68 3.99 82.64 32.63 58.42 82.71 37.90 19.83 24.99 54.11
7 Incentives 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
8 Income Tax 98.89 66.99 0.00 31.87 12.58 22.53 31.90 14.62 7.65 9.64 24.49
9 Allocation of
shared services (12.50) (12.50) 0.00 (6.13) (2.14) (4.23) 0.00 0.00 0.00 0.00 12.50
10 Gross Fixed
Charges 1135.63 850.65 11.01 487.09 158.18 194.37 284.99 120.81 62.51 101.67 268.20
11 Less: Non Tariff
Income 16.73 11.15 0.00 5.47 1.91 3.77 5.58 2.50 1.21 1.87 2.26
12 Net Fixed
Charges* 1107.90 828.49 11.01 481.62 156.27 190.60 279.41 118.31 61.29 99.81 265.94
*Fixed Charge for Unit-4 is not considered in the total fixed charges as Unit-4 is not in operation.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 200 of 224
Table 167: Annual Fixed Charges as approved by Commission for FY 2019-20 (Rs. Crore)
S.
No. Particulars
Units 4
to 7 plus
Hydro
Thermal
Thermal
Hydro
Hydro
Unit-8 Unit-4 Unit-5 Unit-6 Unit-7 Bhira Bhivpuri Khopoli
1 O&M Expenses 556.28 438.80 0.00 256.65 106.21 75.94 117.47 42.09 28.23 47.16 68.88
2 Other Finance
Charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
3 Interest on Long-
term Loan 52.42 50.56 0.00 27.06 5.09 18.42 1.86 1.86 0.00 0.00 28.77
4 Interest on Working
Capital 34.84 30.46 0.00 21.81 2.39 6.26 4.38 1.86 0.97 1.56 10.79
5 Depreciation 141.41 97.47 6.43 68.54 3.09 19.41 43.94 21.26 5.68 17.00 62.82
6 Return on equity 262.15 179.22 3.93 83.43 32.11 59.75 82.93 38.33 19.55 25.05 54.13
7 Incentives 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
7 Income Tax 98.89 67.13 0.00 31.95 12.30 22.88 31.76 14.68 7.49 9.59 24.49
8 Allocation of
shared services (12.50) (12.50) 0.00 (6.08) (2.03) (4.39) 0.00 0.00 0.00 0.00 12.50
9 Gross Fixed
Charges 1133.49 851.14 10.36 483.35 159.16 198.27 282.35 120.07 61.91 100.37 262.38
10 Less: Non Tariff
Income 16.73 11.26 0.00 5.48 1.83 3.95 5.47 2.47 1.17 1.83 2.26
11 Net Fixed
Charges* 1106.40 829.52 10.36 477.87 157.33 194.32 276.88 117.60 60.74 98.53 260.12
*Fixed Charge for Unit-4 is not considered in the total fixed charges as Unit-4 is not in operation.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 201 of 224
7.2 Energy Charges for Thermal Generating Units
7.2.1.1 The summary of Energy Charges as projected by TPC-G and as considered by the
Commission for the 3rd
Control Period is given in the Table below:
Table 168: Energy Charges as approved by Commission for Thermal Stations for 3rd
Control Period (Rs./kWh)
Unit Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Petition Approved Petition Approved Petition Approved Petition Approved
Unit-5 APM Gas 3.31 3.03 3.69 3.08 3.95 3.09 4.22 3.10
Unit-5 Oil- LSHS 12.12 13.25 12.09 13.49 12.16 13.53 12.33 13.57
Unit-5 Coal 2.65 2.84 2.72 2.85 2.83 2.85 2.90 2.86
Unit-6 RLNG 5.40 5.75 6.16 5.76 6.74 5.77 7.33 5.78
Unit-6 Oil- LSHS 12.47 13.01 12.42 13.03 12.48 13.06 12.64 13.08
Unit-7 APM Gas 2.57 2.36 2.86 2.36 3.06 2.36 3.26 2.37
Unit-7 RLNG 4.08 4.55 4.65 4.56 5.09 4.56 5.54 4.57
Unit-8 Coal 2.68 2.83 2.74 2.83 2.84 2.83 2.90 2.83
7.3 Capacity Charges and Energy Charges for Hydro Generating Units
TPC-G’s Submission
7.3.1.1 Energy Charge for the Hydro Generating Stations is computed in accordance with
Regulation 49 of the MYT Regulations, 2015, as shown in the Tables below:
Table 169: Capacity and Energy Charges for Khopoli Hydro Generating Station as
submitted by TPC-G for 3rd
Control Period
Particulars
FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Annual fixed cost Rs. Crore 101 102 103 103
NAPAF % 90.00% 90.00% 90.00% 90.00%
Actual Availability % 99.53% 99.58% 99.58% 98.12%
Capacity charges Rs. Crore 55.86 56.19 56.81 56.18
Design Energy MU 174.68 174.68 174.68 174.68
Auxiliary Energy
Consumption % 1.00% 1.00% 1.00% 1.00%
Net Design Energy MU 172.93 172.93 172.93 172.93
Energy Charge rate Rs./kWh 2.92 2.94 2.97 2.98
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 202 of 224
Table 170: Capacity and Energy Charges for Bhira Hydro Generating Station as submitted
by TPC-G for 3rd
Control Period
Particulars
FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Annual fixed cost Rs. Crore 113 116 124 127
NAPAF % 90.00% 90.00% 90.00% 90.00%
Actual Availability % 97.64% 96.39% 98.06% 98.26%
Capacity charges Rs. Crore 61.53 62.12 67.81 69.19
Design Energy MU 744.12 744.12 744.12 744.12
Auxiliary Energy
Consumption % 1.00% 1.00% 1.00% 1.00%
Net Design Energy MU 736.68 736.68 736.68 736.68
Energy Charge rate Rs./kWh 0.77 0.79 0.84 0.86
Table 171: Capacity and Energy Charges for Bhivpuri Hydro Generating Station as
submitted by TPC-G for 3rd
Control Period
Particulars
FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Annual fixed cost Rs. Crore 70 70 64 64
NAPAF % 90.00% 90.00% 90.00% 90.00%
Actual Availability % 99.58% 98.18% 98.18% 99.58%
Capacity charges Rs. Crore 38.76 38.25 34.68 35.59
Design Energy MU 193.23 193.23 193.23 193.23
Auxiliary Energy
Consumption % 1.00% 1.00% 1.00% 1.00%
Net Design Energy MU 191.30 191.30 191.30 191.30
Energy Charge rate Rs./kWh 1.83 1.83 1.66 1.68
Commission’s Analysis and Ruling
7.3.1.2 In accordance with Regulation 49, the Commission has considered the capacity and
Energy Charges for the Hydro Generation Stations as shown in the Tables below:
Table 172: Capacity and Energy Charges for Khopoli Hydro Generating Station as
approved by Commission for 3rd
Control Period
Particulars
FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Annual fixed cost Rs. Crore 98.35 99.13 99.81 98.53
NAPAF % 90.00% 90.00% 90.00% 90.00%
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 203 of 224
Particulars
FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Actual Availability % 99.53% 99.58% 99.58% 98.12%
Capacity charges Rs. Crore 54.38 54.84 55.21 53.71
Design Energy MU 174.68 174.68 174.68 174.68
Auxiliary Energy
Consumption % 1.56% 1.55% 1.55% 1.55%
Net Design Energy MU 171.96 171.98 171.98 171.98
Energy Charge rate Rs./kWh 2.86 2.88 2.90 2.86
Table 173: Capacity and Energy Charges for Bhira Hydro Generating Station as approved
by Commission for 3rd
Control Period
Particulars
FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Annual fixed cost Rs. Crore 109.58 111.69 118.31 117.60
NAPAF % 90.00% 90.00% 90.00% 90.00%
Actual Availability % 97.64% 96.39% 98.06% 98.26%
Capacity charges Rs. Crore 59.44 59.81 64.45 64.20
Design Energy MU 744.12 744.12 744.12 744.12
Auxiliary Energy
Consumption % 1.56% 1.55% 1.55% 1.55%
Net Design Energy MU 732.52 732.61 732.61 732.61
Energy Charge rate Rs./kWh 0.75 0.76 0.81 0.80
Table 174: Capacity and Energy Charges for Bhivpuri Hydro Generating Station as
approved by Commission for 3rd
Control Period
Particulars
FY
2016-17
FY
2017-18
FY
2018-19
FY
2019-20
Annual fixed cost Rs. Crore 67.91 67.98 61.29 60.74
NAPAF % 90.00% 90.00% 90.00% 90.00%
Actual Availability % 99.58% 98.18% 98.18% 99.58%
Capacity charges Rs. Crore 37.57 37.08 33.43 33.60
Design Energy MU 193.23 193.23 193.23 193.23
Auxiliary Energy
Consumption % 1.56% 1.55% 1.55% 1.55%
Net Design Energy MU 190.22 190.24 190.24 190.24
Energy Charge rate Rs./kWh 1.79 1.79 1.61 1.60
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 204 of 224
8. COMPLIANCE OF DIRECTIVES IN MTR ORDER
In the MTR Order, the Commission had given several directives. In its Petition, TPC-G
has submitted the status of their compliance. The Commission’s directives and TPC-G’s
submissions are set out below, with the Commission’s rulings where relevant.
8.1 Non-DPR Capitalisation
Directive
8.1.1 The Commission restricted the Non-DPR Capitalisation for FY 2008-09 and FY 2009-
10 to 20% of the DPR Capitalisation for FY 2010-11 onwards. The Commission expects
TPC-G to plan and undertake capital expenditure in a more disciplined and systematic
manner. In line with its directions in Case No. 111 of 2008, the Commission directs
TPC-G to club the related Non-DPR schemes, and to submit their DPR formats for post
facto approval within 3 months.
TPC-G Response
8.1.2 The DPRs merged by clubbing related Non-DPR schemes for FY 2008-09 to FY 2011-
12 have been submitted vide letters dated 26 October, 2 November and 26 November,
2015, and 5 January, 2016
8.1.3 The Commission may accord in-principle clearance to all the merged DPRs and approve
the associated capitalisation which was not allowed earlier in the MTR Order due to the
restriction of 20% towards Non-DPR capitalisation. The impact of this capitalisation has
been considered for the Truing-up of FY 2014-15.
Commission’s View
8.1.4 The Commission has examined the merged DPRs submitted and dealt with them earlier
in this Order.
Directive
8.1.5 The Commission has restricted Non-DPR capitalisation to 20% of DPR capitalisation.
The Commission directs TPC-G to club similar Non-DPR schemes and submit the
merged DPR schemes to the Commission within 3 months.
TPC-G Response
8.1.6 These directives pertain to FY 2012-13 and FY 2013-14, and TPC-G’s response is as set
out at para. 8.1.2-3 above. The remaining disallowed capitalisation toward Non-DPR
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 205 of 224
schemes of FY 2013-14 has been submitted vide letter dated 25 January, 2016. The
details of disallowed capitalisation towards Non-DPR schemes for FY 2012-13 and FY
2013-14 are given in the Tables below.
Table 175: Disallowed Capitalisation towards Non-DPR Schemes as submitted by TPC-G
for FY 2012-13 (Rs. Crore)
FY 2012-13
Unit
Non DPR
Capitalisation
Disallowed in MTR
Order
Coverage of Disallowed Capitalisation
As a part of merged DPR of
Environment, fire, safety,
security and statutory 2013 -
17
Merged DPRs
stated till date
after MTR
Order
Total
Capitalisation
Hydro 11.44
0 2.46
15.75 Units 4 to 7 7.636
3.414
Unit-8 2.73 2.24
Total 14.17 7.636 8.114 15.75
Table 176: Disallowed Capitalisation towards Non-DPR Schemes for FY 2013-14 (Rs.
Crore)
FY 2013-14
Unit
Non DPR
Capitalisation
Disallowed in
MTR Order
Coverage of Disallowed Capitalisation
As a part of
merged DPR of
Environment, fire,
safety, security and
statutory 2013 -17
Merged
DPRs stated
till date
after MTR
Order
Present
Merged
DPR
Total
Capitalisation
Hydro 10.42
0.00 1.90 0.00
27.06 Units 4 to 7 3.95
3.94 16.29
Unit-8 2.54 0.98 0.00
Total 12.96 3.95 6.82 16.29 27.06
Commission’s View
8.1.7 The Commission has dealt with the merged DPRs submitted by TPC-G earlier in this
Order.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 206 of 224
8.2 Section 80 IA of Income Tax Act
Directive
8.2.1 The Commission asked TPC-G for the reasons for not deducting the profits as per
Section 80 IA of the Income Tax Act while computing the Income Tax for Unit-8. TPC-
G stated that, on account of lower taxable profitability of Unit-8, it is not in a position to
claim the S. 80 IA tax benefit from the Tax authorities. Section 80 IA provides for
claiming deduction on an amount equal to hundred percent of the profits and gain
derived from such investment for 10 consecutive years out of 15 years for computing
PBT. Accordingly, the Commission directs TPC-G to modify the details of S. 80 IA
benefit eligible for Unit-8 in its subsequent Tariff filing.
TPC-G Response
8.2.2 TPC-G has considered the effect of Section 80 IA during the working of Income Tax in
the present Petition.
Commission’s View
8.2.3 The directive has been complied with.
8.3 BHEL Circular
Directive
8.3.1 BHEL had earlier experienced crack formation in LP blades of similar design and had
shared this information with its customers vide its Circular of October, 2011. BHEL had
also advised certain predictive checks and tests to detect such failures in advance. TPC-
G has not stated any evidence or even a statement regarding compliance of the important
advice issued by BHEL.
TPC-G Response
8.3.2 BHEL’s Technical Circular dated 8 October, 2011 advised as follows:
“To avoid blade failures, it is recommended to conduct the following Non
Destructive Tests at an Interval of 20000 to 25000 hours:
1. Crack detection in free standing blades of LP last stage advanced class blading
by MPI (In Disassembled condition).
2. Measurement of Natural Frequency of all free standing blades of last stages
(LP 3R and LP 3L). The measurement of Natural Frequency of these blades is
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 207 of 224
to be done by using Technological Pieces after removing existing clamping
pieces. Therefore new clamping pieces are to be fitted in position.”
8.3.3 Learning from the experience of cracks in LP turbine blades of Unit-8 and as
recommended by BHEL subsequently, TPC-G has pro-actively carried out the required
tests well before the recommended interval of 20000 to 25000 operating hours. The
details of inspections carried out between August, 2011 and January, 2014, i.e., before
the incident, are as discussed below:
a. At an interval of around 5200 operating hours since August, 2011: In March, 2012,
during 03 days outage availed (from 18.03.2012 to 21.03.12), i. e. 8 months after
initial inspection, in situ MPI was carried out and no crack was found.
b. At an interval of around 5700 operating hours since March, 2012: During outage in
December, 2012 –January, 2013, the LP rotor was removed, de-bladed and MPI and
NFT was done under the supervision of BHEL. Nothing abnormal was found in the
LP blades.
8.3.4 The next detailed inspection as per the BHEL Circular was scheduled for January, 2015
(approximately 16000 Equivalent Operating Hours (EOH) after January, 2013
inspection, well before the 20000 EOH recommended by the BHEL Technical Circular).
As a pro-active step TPC-G had planned inspection of LP Turbine blades in February,
2014 but the LP blade failure occurred on 9 January, 2014.
8.3.5 The inspections / overhauls of Unit-8 Turbine were carried out under the supervision of
BHEL, for which TPC-G has now submitted the copy of its letter to BHEL for its
supervision in March, 2012 outage for blade inspection, and copies of the Purchase
Orders placed on BHEL for July, 2011 and December, 2012 to January, 2013 outages.
8.3.6 Whereas, as per the BHEL Technical Circular, the LP turbine blades were to be
inspected after every 20000 to 25000 hours, i.e., around every 2.5 years, TPC-G
prudently inspected the blades at an interval of 8-9 months (around 6000 hrs). The LP
blades have failed in spite of adherence to all the recommendations of BHEL. Hence, the
failure of LP blades due to cracks which led to the incident on 9 January, 2014 was
beyond the control of TPC-G.
8.4 Replacement of Blades
Directive-1
8.4.1 The Commission notes that TPC-G has stated that it has meticulously followed
maintenance practices, which has been supported by the BHEL report. However, the
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 208 of 224
BHEL report has not explicitly commented on maintenance practices followed by TPC-
G.
8.4.2 BHEL had stipulated that certain checks and tests be carried out on the blades at
specified intervals. TPC-G should clarify when these check / tests were due, whether
these were conducted, what were their results, and whether follow-up action was taken
under guidance of the supplier. In 2011, some blades of the LP turbine were replaced.
The Commission notes that replacement of blades in new turbines is not a common
industrial practice. TPC-G should clarify what analysis was carried out after such
failure, and whether the lessons drawn were implemented.
TPC-G Response
8.4.3 TPC-G has provided the Steam Turbine Manual of BHEL with the present Petition. As
per the Section on Instructions for Overhaul, the maintenance schedule of LP turbine
after certain EOH is below:
d. Minor Overhaul (Inspection and Servicing) to be done after 17000 EOH.
e. Medium Overhaul (Inspection, Servicing and Repair) to be done based on long-term
observations, operating experience and manufacturer’s recommendations.
f. Major Overhaul (Inspection, Servicing and Repair) to be done after 50000 EOH.
8.4.4 It is evident from the job scope of the Steam Turbine Manual that overhaul of the
machine involving detailed inspection of LP turbine free standing blades by complete
removal and detailed checks for cracks by MPI and NFT was not due as Unit-8 had not
completed 50000 EOH at the time of the incident.
8.4.5 The recommendation, subsequently issued by BHEL vide its Technical Circular,
superseded the above inspection intervals and TPC-G has adhered to them.
Directive-2
8.4.6 As regards the probable cause of cracks in the failed Unit, the BHEL Report has pointed
out that Unit-8 was often subjected to cyclic load variations between 180 MW and 250
MW on a daily basis, and has concluded that High Cycle fatigue can be considered as
one of the probable causes of crack initiation. TPC-G has commented on the
observations of BHEL. Further, while BHEL considers “fatigue” as one of the prime
reasons for such failure, and has also indicated that the fatigue occurred because the
machine was subjected to cyclic load variation daily, TPC-G does not appear to have
consulted BHEL regarding subjecting the machine to such high cyclic loading
variations.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 209 of 224
8.4.7 As per TPC-G’s submission, the 250 MW ThermalUnit-8 was operating on 182 MW
load. BHEL has mentioned that the loading pattern of the Unit showed cyclic variations
between 180 MW to 250 MW on daily basis, which could be conducive to crack
formation in the LP Turbine blades. TPC-G needs to clarify whether the Unit was
designed for such cyclic loading (which may be beyond the standard industry practice),
and whether information regarding high cyclic variations was conveyed to the
manufacturer/ OEM and its observations and recommendations sought.
TPC-G Response
8.4.8 TPC-G had appointed Tata Consulting Engineers (TCE) to define specifications to be
given to BHEL for design of the Unit. Section 14.2 included in Design Specifications on
the Steam Turbine & Accessories and Regenerative Cycle System clearly mentioned that
the turbine should be designed for cyclic loading due to daily load fluctuations:
“1.1.4 Duty: Continuous base load operation of minimum 8000 hrs with 50 starts
per annum. Unit shall also be capable of cyclic loading due to daily load
fluctuations.”
8.4.9 It is evident that the cyclic loading pattern which was expected to be observed on Unit-8
in line with the Maharashtra MOD was informed to BHEL at the design stage and the
Unit has been accordingly designed. BHEL itself has specified the guaranteed
performance of the Unit at 100%, 80% and 60% of full load in the form of Heat Balance
Diagrams (HBD).
8.4.10 In accordance with the technical minimum study undertaken by CPRI (as directed by the
Commission), around 30% load variation is allowed in Unit-8. The BHEL Technical
Circular does not mention cyclic loading as a probable cause of the blade failures it had
observed at other sites, nor did BHEL recommended to restrict the minimum load.
8.4.11 Thus, BHEL was informed about the cyclic loading at the design stage of Unit-8 steam
turbine specifications and Unit-8 is designed for daily cyclic loading pattern. Therefore,
there was no need for separate communication / permission from BHEL for the daily
cyclic loading. The cyclic loading of Thermal Units is as per the MOD, which is not at
all abnormal and is as per the regular industry practice.
8.5 Operating Conditions
Directive-1
8.5.1 Among other causes, BHEL has mentioned “locally aggressive environment that
produces corrosion pits or troughs, localized corrosion, or local dissolution”, as a
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 210 of 224
probable cause of crack initiation. However, TPC-G has neither contradicted nor
provided any clarification regarding this.
8.5.2 One of the key observations of BHEL in its report is the following:
“For crack initiation to occur fatigue origins should be present. Some of the
possible fatigue origins are given: Locally aggressive environment that produces
corrosion pits or troughs, localized corrosion, or local dissolution.”
8.5.3 As regards BHEL’s observation regarding the probable cause for crack initiation, TPC-
G has not provided any clarification. Hence, TPC-G should elaborate on the above and
provide evidence regarding the existence of the above phenomena in the instant case.
TPC-G Response
8.5.4 Chloride corrosion could be one reason for fatigue leading to crack initiation which can
happen mainly due to higher chloride levels in the steam cycle. The chloride carry-over
can happen only in case of condenser tube leak in the Unit. However, Unit-8 has not
experienced any condenser tube leak in the last two years as can be seen from the
chemical analysis which clearly shows that the chloride content level is much below
permissible limits. Hence, chloride corrosion is ruled out in case of Unit-8.
8.5.5 The LP Turbine blades were changed on account of cracks and even not a single blade
was recommended to be changed on account of corrosion by BHEL. In its RCA report
also, BHEL has indicated corrosion as one of the causes but has not clearly attributed the
failure of blade that in case of Unit-8. The Water Chemistry report was also shared with
BHEL for its recommendations. However, BHEL had not commented on it. It is evident
that TPC-G has maintained the operating conditions of Unit-8 as per the standard
guidelines specified by the OEM.
Directive-2
8.5.6 Submissions based on such Technical Reports are expected to include the Utility’s
detailed comments and views on their observations, findings and conclusions. In the
present case, in the absence of such analysis by TPC-G, many issues remain unanswered
and unresolved.
8.5.7 In the Internal Investigation Report, the column relating to “corrective steps” has been
left blank. In the above background, the Commission notes that, since an exception has
been pleaded for, it was TPC-G’s responsibility to come out with all details in its
support.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 211 of 224
TPC-G Response
8.5.8 The Internal Incident Investigation report was documented at an early stage when the
detailed analysis of blade samples was not available and so, the corrective action section
in the internal report was kept blank. However, based on the observations / findings
following corrective actions have been proposed:
a. Revision of Technical Minimum Load to 200 MW by BHEL from the earlier 180
MW. Unit-8 is being operated in line with this recommendation since November,
2014.
b. Blade Vibration Monitoring System (BVMS) has been installed at Unit-8.
c. Crack detection by Phased Array Ultrasonic Testing (PAUT) which is an advanced
nondestructive testing method with better analysis capability.
Commission’s View
8.5.9 Considering TPC-G’s submissions, the Commission has accepted the failure of Unit-8 as
a Force Majeure event as detailed earlier in this Order.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 212 of 224
9. SUMMARY OF THE RULINGS
9.1 Carrying Cost on impact of ATE Judgment
9.1.1 The ATE in its Judgment dated 03 June, 2016 in Appeal No. 244 of 2015 has dismissed
all the submissions of TPC-G. The ATE has upheld the Commission’s Order and
accordingly, the Commission has not considered the claims made by TPC-G in its
additional submission..
9.2 True-up for FY 2014-15
9.2.1.1 The Commission approves the normative Fuel Cost of Rs. 1380.23 Crore for FY 2014-
15 for Units 4 to 7, and has considered the actual fuel cost of Rs. 1357.84 Crore
(excluding Fuel Cost of Unit-6 when operated under MSLDC directions) for sharing of
gains as per the MYT Regulations, 2011.
9.2.1.2 The Commission approves the actual Fuel Cost of Rs. 792.11 Crore for Unit-6 for
operation under MSLDC directions during FY 2014-15, as claimed by TPC-G.
9.2.1.3 The Commission has considered the O&M Expenses of Rs. 481.34 Crore for sharing of
gains as per the MYT Regulations, 2011.
9.2.1.4 The Commission approves Capitalisation of Rs. 161.89 Crore for FY 2014-15 for Units
4 to 7 and Hydro Stations, as against Rs. 163.96 Crore claimed by TPC-G.
9.2.1.5 The Commission approves the impact of the merged DPR Capitalisation allowed for FY
2010-11 to FY 2013-14 on Return on Equity, Interest Expenses and Depreciation as Rs.
29.50 Crore for Units 4 to 7 and Hydro Generating Stations. The Commission has
considered this recovery separately along with the recovery of other past Revenue Gaps.
9.2.1.6 The Commission approves Depreciation of Rs. 116.96 Crore for FY 2014-15 for Units 4
to 7 and Hydro Stations, as against Rs. 117.29 Crore claimed by TPC-G.
9.2.1.7 The Commission approves Interest on Long-term Loans for FY 2014-15 as Rs. 80.08
Crore, as against Rs. 82.38 Crore claimed by TPC-G, for Units 4 to 7 and Hydro
Stations.
9.2.1.8 The Commission approves Return on Equity for FY 2014-15 of Rs. 228.11 Crore for
Units 4 to 7 and Hydro Stations, as against Rs. 228.82 Crore claimed by TPC-G.
9.2.1.9 The Commission approves the normative Interest on Working Capital as Rs. 74.37 Crore
for FY 2014-15 for Units 4 to 7 and Hydro Stations, as against Rs. 72.51 Crore claimed
by TPC-G.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 213 of 224
9.2.1.10 The Commission approves Income Tax of Rs. 98.89 Crore for Units 4 to 7 and Hydro
Stations for FY 2014-15, as against Rs. 99.24 Crore claimed by TPC-G.
9.2.1.11 The Commission approves Non-Tariff Income of Rs. 32.10 Crore for FY 2014-15 for
Units 4 to 7 and Hydro Stations.
9.2.1.12 The Commission has considered the Revenue from Sale of Power during FY 2014-15 to
BEST and TPC-D as Rs. 1335.66 Crore and Rs. 1274.26 Crore, respectively, and the
total Revenue as Rs. 2609.92 Crore.
9.2.1.13 The Commission approves Incentive for higher Capacity Index for Hydro Stations for
FY 2014-15 as Rs 39.46 Crore, as against Rs. 39.70 Crore claimed by TPC-G.
9.2.1.14 The Commission approves the reduction in AFC for Unit-7 for lower than Target
Availability for FY 2014-15 as Rs. 10.84 Crore, as against Rs. 10.76 Crore submitted by
TPC-G.
9.2.1.15 The Commission approves the efficiency gain as Rs. 7.46 Crore, to be passed on to the
Distribution Licensees, on account of variation in Fuel Cost of Units 4 to 7 and Hydro
Generating Stations for FY 2014-15.
9.2.1.16 The Commission determines an Efficiency Loss of Rs. 4.01 Crore to be passed on to
Distribution Licensees on account of variation in Auxiliary Consumption for Units 4 to
7 and Hydro Stations for FY 2014-15.
9.2.1.17 The Commission approves the efficiency loss of Rs. 1.82 Crore to be passed on to
Distribution Licensees on account of variation in O&M Expenses for Units 4 to 7 and
Hydro Stations for FY 2014-15.
9.2.1.18 The Commission determines a Revenue Surplus of Rs. 196.99 Crore, as against Rs.
176.34 Crore claimed by TPC-G, for FY 2014-15.
9.2.1 Performance of Unit-8
9.2.2.1 The Commission approves the normative Fuel Cost of Rs. 196.78 Crore for FY 2014-15
for Unit-8, and has considered the actual Fuel Cost of Rs. 175.56 Crore for sharing of
efficiency gains as per the MYT Regulations, 2011.
9.2.2.2 The Commission approves the actual O&M Expenses of Rs. 51.99 Crore for Unit-8 for
FY 2014-15, and has considered it for sharing of efficiency gains/ losses.
9.2.2.3 The Commission approves Capitalisation of Rs. 46.89 Crore for Unit-8 for FY 2014-15,
as claimed by TPC-G.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 214 of 224
9.2.2.4 The Commission approves the impact of merged DPR Capitalisation now allowed for
FY 2011-12 to FY 2013-14 on RoE, Interest Expenses and Depreciation as Rs. 1.38
Crore for Unit-8. The Commission has considered this recovery separately along with
that of other past Revenue Gaps.
9.2.2.5 The Commission approves Depreciation of Rs. 57.69 Crore for Unit-8, as submitted by
TPC-G, for FY 2014-15.
9.2.2.6 The Commission approves Interest on Long-term Loan for Unit-8 for FY 2014-15 as Rs.
60.86 Crore, as against Rs. 60.95 Crore claimed by TPC-G.
9.2.2.7 The Commission approves Return on Equity for FY 2014-15 of Rs. 51.03 Crore for
Unit-8, as against Rs. 51.02 Crore claimed by TPC-G.
9.2.2.8 The Commission approves the Interest on Working Capital as Rs. 16.17 Crore in FY
2014-15 for Unit-8, as against Rs. 16.28 Crore claimed by TPC-G.
9.2.2.9 The Commission approves the Income Tax as Rs. 24.49 Crore for FY 2014-15 for Unit-
8, as against TPC-G’s claim of Rs. 25.03 Crore.
9.2.2.10 The Commission approves the Non-Tariff income of Rs. 1.45 Crore, as submitted by
TPC-G.
9.2.2.11 The Commission has considered the total revenue from sale of power in FY 2014-15
from Unit-8 to BEST and TPC-D as Rs. 190.12 Crore and Rs. 285.43 Crore,
respectively, for the purpose of Truing-up.
9.2.2.12 The Commission approves the reduction in AFC for Unit-8 for Availability lower than
the Target Availability for FY 2014-15 to the extent of Rs. 82.19 Crore.
9.2.2.13 The Commission approves Efficiency Gain of Rs. 7.07 Crore to be passed on to
Distribution Licensees on account of variation in Fuel Cost for Unit-8 for FY 2014-15.
9.2.2.14 The Commission approves Efficiency Gain of Rs. 1.86 Crore to be passed on to
Distribution Licensees on account of variation in Auxiliary Energy Consumption of
Unit-8 in FY 2014-15.
9.2.2.15 The Commission approves an Efficiency Loss of Rs. 2.75 Crore to be shared with
Distribution Licensees on account of variation in O&M Expenses of Unit-8 in FY 2014-
15.
9.2.2.16 The Commission approves a Revenue Surplus of Rs. 96.49 Crore for Unit-8 for FY
2014-15, as against Rs. 96.12 Crore stated by TPC-G.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 215 of 224
9.3 Provisional True-up for FY 2015-16
9.3.1.1 The Commission has considered Fuel Cost of Rs. 1242.97 Crore, as against Rs. 1245.08
Crore submitted by TPC-G, for Units 4 to 7 for FY 2015-16 (excluding Unit-6 when
operated on MSLDC directions).The Commission has considered the actual fuel cost of
Rs. 448.38 Crore of Unit-8 for FY 2015-16 for the Provisional Truing-up.
9.3.1.2 the Commission approves the actual Fuel Cost of Rs. 24.13 Crore for Unit-6 when
operating under MSLDC directions during FY 2015-16.
9.3.1.3 The Commission approves O&M Expenses of Rs. 503.08 Crore for Units 4 to 7 and
Hydro Stations and Rs. 46.25 Crore for Unit-8 for FY 2015-16.
9.3.1.4 The Commission approves Capitalisation of Rs. 187.99 Crore for Units 4 to 7 and Hydro
Stations and Rs. 18.06 Crore for Unit-8 for FY 2015-16.
9.3.1.5 The Commission approves Depreciation of Rs. 141.17 Crore for Units 4 to 7 and Hydro
Stations and Rs. 64.46 Crore for Unit-8 for FY 2015-16.
9.3.1.6 The Commission approves Interest on Long-term Loan of Rs. 79.36 Crore for Units 4 to
7 and Hydro Stations and Rs. 56.61 Crore for Unit-8 for FY 2015-16.
9.3.1.7 The Commission approves Return on Equity of Rs. 235.21 Crore for Units 4 to 7 and
Hydro Stations and Rs. 53.19 Crore for Unit-8 for FY 2015-16.
9.3.1.8 The Commission approves Interest on Working Capital of Rs.55.29 Crore for Units 4 to
7 and Hydro Stations and Rs. 15.34 Crore for Unit-8 for FY 2015-16.
9.3.1.9 The Commission approves Income Tax as Rs. 98.89 Crore for Units 4 to 7 and Hydro
Stations for FY 2015-16 and as Rs. 24.49 Crore for Unit-8 for FY 2015-16.
9.3.1.10 The Commission approves the Non-Tariff Income as Rs. 16.73 Crore for Units 4 to 7
and Hydro Stations and Rs. 2.26 Crore for Unit-8 for FY 2015-16.
9.3.1.11 The Commission approves a Revenue Surplus of Rs. 37.93 Crore for Units 4 to 7 and
Hydro Stations, and Rs. 41.33 Crore for Unit-8, for FY 2015-16. The Commission has
adjusted this Surplus separately against past recoveries.
9.4 Past Recoveries from Distribution Licensees
9.4.1.1 The amounts to be recovered from the Distribution Licensees, as approved by the
Commission, is as shown in the Table below:
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 216 of 224
Table 177: Past recoveries from Distribution Licensees as approved by Commission (Rs. Crore)
Particulars
Approved in this Order
BEST TPC-D R Infra Total
Gap / (Surplus) of Trombay Station& Hydro for FY 2014-15 Units 4 to 7 and hydro a (100.80) (96.19) 0.00 (196.99)
Gap / (Surplus) of Unit-6 based on Revenue Billed as per MTR Petition for
Unit-6 generation based on MSLDC directions
Unit-6 (Under
MSLDC Directive) b
1.79 2.36 24.52 28.67
Entry Tax amount to be recovered pertaining to past period Trombay
Station& Hydro Units 4 to 7 and hydro
c 13.61 8.03 12.36 34.01
Gap / (Surplus) of Unit-8 Unit-8 d (38.60) (57.89) 0.00 (96.49)
Total Gap/ (Surplus) for FY 2014-15 e = a+b+c+d (124.00) (143.70) 36.88 (230.81)
Amount already recovered from Distribution Licensees in the T.O. in Case
06 of 2015 Units 4 to 7 and hydro
f (90.38) (86.26) 0.00 (176.64)
Amount already recovered from Distribution Licensee in the T.O. in Case
06 of 2015 Unit-8
g (45.60) (68.39) 0.00 (113.99)
Total Gap/(Surplus) for Provisional Truing-up for FY 2014-15 allowed to
recovered in T.O.
h = f+g (135.98) (154.65) 0.00 (290.63)
Net Gap /(Surplus) to be recovered for FY 2014-15 i = e-h 11.98 10.95 36.88 59.82
Carrying Cost on Gap / (Surplus) of FY 2014-15 (for 06 Months) 14.75% j = i/2*14.75% 0.88 0.81 2.72 4.41
Carrying Cost for FY 2015-16 14.29% k = i*14.75% 1.71 1.56 5.27 8.55
Total Recovery for FY 2014-15 including carrying Cost l = i+j+k 14.58 13.32 44.87 72.77
Gap / (Surplus) of Trombay Station& Hydro for FY 2015-16 Units 4 to 7 and hydro m (19.42) (18.53) 0.00 (37.93)
Gap / (Surplus) of Unit-6 based on Revenue Billed as per MTR Petition for
Unit-6 generation based on MSLDC directions
Unit-6 (Under
MSLDC Directive)
n 0.97 1.79 0.74 3.50
Entry Tax amount to be recovered pertaining to past period Units 4 to 7 and hydro o 13.39 15.56 7.36 36.31
Gap / (Surplus) of Unit-8 for FY 2015-16 Unit-8 p (16.53) (24.79) 0.00 (41.33)
Recovery for FY 2015-16 w/o carrying cost for future period q=m+n+o+p (21.59) (25.98) 8.10 (39.46)
Recovery towards of impact of merged DPR capitalisation from FY 2010-
11 to FY 2013-14 Units 4 to 7 and hydro
r 15.04 14.08 0.38 29.50
Recovery towards of impact of merged DPR capitalisation from FY 2011-
12 to FY 2015-16 Unit-8
s 0.55 0.83 0.00 1.38
Total Past Recovery for TPC-G u = i+q+r+s 8.59 2.25 53.35 64.19
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 217 of 224
9.4.1.2 The Commission approves the net Revenue Gap of Rs. 64.19 Crore as at the end of FY
2015-16, recoverable from the Distribution Licensees, viz. BEST, TPC-D and RInfra-D.
9.4.1.3 The Commission approves the net past Revenue Gaps to be passed on to or recovered from
the Distribution Licensees, viz. BEST, TPC-D and RInfra-D, as shown in Table below:
Table 178: Net Amount to be recovered from Distribution Licensees in FY 2016-17 (Rs.
Crore)
Particulars Approved in this Order
Total BEST TPC-D R-Infra-D
Total Revenue Gap till FY 2014-15
including Carrying cost 30.18 28.23 45.25 103.66
Carrying cost for April, 2016 to August
2016 1.24 1.16 1.68 4.08
Carrying Cost during the recovery period
(September 2016 to November 2016) 0.12 0.12 0.50 0.74
Gap/(Surplus) for Provisional Truing up
for FY 2015-16 (21.59) (25.98) 8.10 (39.47)
Total 9.95 3.53 55.53 69.01
9.4.1.4 The Commission approves the net amount arising out of past period recovery to be
passed on to or recovered from the Distribution Licensees, viz. BEST, TPC-D and
RInfra-D, commencing from September, 2016 to November, 2016, as shown in Table
below:
Table 179: Monthly recovery from Distribution Licensees in FY 2016-17 (Rs. Crore)
Installments BEST TPC-D RInfra-D Total
Sep-16 9.95 3.53 18.62 32.11
Oct-16 0.00 0.00 18.51 18.51
Nov-16 0.00 0.00 18.40 18.40
Total 9.95 3.53 55.53 69.01
9.5 ARR for the 3rd
Control Period from FY 2016-17 TO FY 2019-20
9.5.1.1 The Commission approves O&M Expenses of Rs. 510.44 Crore for FY 2016-17, Rs.
525.27 Crore for FY 2017-18, Rs. 540.55 Crore for FY 2018-19 and Rs. 556.28 Crore
for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 218 of 224
9.5.1.2 The Commission approves O&M Expenses of Rs. 59.50 Crore for FY 2016-17, Rs.
62.48 Crore for FY 2017-18, Rs. 65.60 Crore for FY 2018-19 and Rs. 68.88 Crore for
FY 2019-20 for Unit-8.
9.5.1.3 The Commission approves Capitalisation of Rs. 152.74 Crore for FY 2016-17, Rs.
174.26 Crore for FY 2017-18, Rs. 53.11 Crore for FY 2018-19 and Rs. 22.68 Crore for
FY 2019-20 for Units 4 to 7 and Hydro Generating Stations. Capitalisation of Rs. 1.14
Crore for FY 2016-17, none for FY 2017-18, Rs. 1.01 Crore for FY 2018-19 and none
for FY 2019-20 is approved for Unit-8.
9.5.1.4 The Commission approves Depreciation of Rs. 146.59 Crore for FY 2016-17, Rs.
149.94 Crore for FY 2017-18, Rs. 148.28 Crore for FY 2018-19 and Rs. 141.41 Crore
for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.
9.5.1.5 The Commission approves Depreciation of Rs. 65.29 Crore for FY 2016-17, Rs. 65.19
Crore for FY 2017-18, Rs. 64.90 Crore for FY 2018-19 and Rs. 62.82 Crore for FY
2019-20 for Unit-8.
9.5.1.6 The Commission approves Interest on Long-term Loan of Rs. 76.66 Crore for FY 2016-
17, Rs. 72.97 Crore for FY 2017-18, Rs. 65.36 Crore for FY 2018-19 and Rs. 52.42
Crore for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.
9.5.1.7 The Commission approves Interest on Long-term Loan of Rs. 50.16 Crore for FY 2016-
17, Rs. 42.98 Crore for FY 2017-18, Rs. 35.81 Crore for FY 2018-19 and Rs. 28.77
Crore for FY 2019-20 for Unit-8.
9.5.1.8 The Commission approves Return on Equity of Rs. 247.50 Crore for FY 2016-17, Rs.
255.10 Crore for FY 2017-18, Rs. 260.39 Crore for FY 2018-19 and Rs. 262.15 Crore
for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.
9.5.1.9 The Commission approves Return on Equity of Rs. 54.06 Crore for FY 2016-17, Rs.
54.08 Crore for FY 2017-18, Rs. 54.11 Crore for FY 2018-19 and Rs. 54.13 Crore for
FY 2019-20 for Unit-8.
9.5.1.10 The Commission approves Interest on Working Capital of Rs. 33.69 Crore for FY 2016-
17, Rs. 34.20 Crore for FY 2017-18, Rs. 34.66 Crore for FY 2018-19 and Rs. 34.84
Crore for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.
9.5.1.11 The Commission approves Interest on Working Capital of Rs. 10.78 Crore for FY 2016-
17, Rs. 10.79 Crore for FY 2017-18 and Rs. 10.79 Crore for FY 2018-19 and Rs. 10.79
Crore for FY 2019-20 for Unit-8.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 219 of 224
9.5.1.12 The Commission approves Income Tax of Rs. 98.89 Crore for all the years of 3rd
Control Period for Units 4 to 7 and Hydro Generating Stations.
9.5.1.13 The Commission approves Income Tax of Rs. 24.49 Crore for all the years of 3rd
Control Period for Unit-8.
9.5.1.14 The Commission approves Non-Tariff Income of Rs. 16.73 Crore for each year of the 3rd
Control Period for Units 4 to 7 and Hydro Generating Stations.
9.5.1.15 The Commission approves Non-Tariff Income of Rs. 2.26 Crore for each year of the 3rd
Control Period for Unit-8.
9.5.1.16 The Commission approves Annual Fixed Charges of Rs. 1072.61 Crore for FY 2016-17,
Rs. 1095.58 Crore for FY 2017-18, Rs. 1107.90 Crore for FY 2018-19 and Rs. 1106.40
Crore for FY 2019-20 for Units 4 to 7 and Hydro Generating Stations.
9.5.1.17 The Commission approves Annual Fixed Charges of Rs. 274.52 Crore for FY 2016-17,
Rs. 270.24 Crore for FY 2017-18, Rs. 265.94 Crore for FY 2018-19 and Rs. 260.12
Crore for FY 2019-20 for Unit-8.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 220 of 224
10. DIRECTIVES
10.1 Imported Coal Purchase
10.1.1 Regarding imported coal, the Commission directs TPC-G to ensure that all purchases, as
well as ancillary arrangements such as carriage and transport upto the site, are
undertaken through a transparent process of competitive bidding. All documents relating
to such competitive bidding should be submitted to the Commission along with its next
MTR Petition. TPC-G should also furnish all relevant details to enable scrutiny of the
imported coal cost, including
a. Month-wise details of opening fuel stock, fuel received, fuel consumed and
closing fuel stock.
b. GCV and weighted average price of opening stock of fuel as on April 1 of each
year.
c. Month-wise supplier wise details of GCV and price of fuel received.
d. Month-wise computation of GCV as received and as fired.
e. Copies of all imported coal fuel bills.
10.1.2 While scrutinizing imported coal purchases of Generating Utilities, the Commission has
observed that long-term contracts are generally more economical than short-term
contracts. Accordingly, TPC-G should consider entering into long-term imported coal
contracts linked to a suitable coal index, and in any case to set out the rationale for its
choice among the options available in this regard in its MTR Petition.
10.2 Expiry of PPA
TPC-G has entered into different PPAs with BEST and TPC-D, which are expiring
midway through the 3rd
Control Period. The Commission directs TPC-G to submit its
Petition for approval of its future generation sale arrangements at least 6 months before
the expiry of these PPAs.
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 221 of 224
11. APPLICABILITY OF ORDER
This Order shall come into effect from 1 August, 2016.
The Petition of M/s Tata Power Company Ltd. (Generation Business) in Case No. 32 of
2016 stands disposed of accordingly.
Sd/- Sd/-
(Deepak Lad)
Member
(Azeez M. Khan)
Member
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 222 of 224
Appendix – 1:
List of persons at Technical Validation Session on 4 March, 2016
Sr. No. Name Organisation
1. Ms. Swati Mehendale Tata Power
2. Shri M. D. Paranjpe Tata Power
3. Shri V. Raje Tata Power
4. Shri Surjit Dubey Tata Power
5. Shri Deepak Kabdi Tata Power
6. Ms. Shital Khairaya Tata Power
7. Shri Amey Mhapsekar Tata Power
8. Shri S. Baijal Tata Power
9. Shri Anil Jain Tata Power
10. Shri Palash Bardol Tata Power
11. Shri Shirish Kamat Tata Power
12. Shri A. Mukharji Tata Power
13. Shri Kiran Desale Tata Power
14. Shri T.K.Bhaskaran Tata Power
15. Shri A.A. Bhat Tata Power
16. Shri Manoj Kapse Tata Power
17. Shri R.M.Ranade Tata Power
18. Shri Sanjay Kumar Tata Power
19. Shri Kartik Kadle Tata Power
20. Shri Bhaskar Sarkar Tata Power
21. Shri Manish Kumar ICRA
22. Dr. Ashok Pendse Thane-Belapur Industries
Association (Consumer Rep.)
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 223 of 224
Appendix – 2:
List of persons at the Public Hearing on 26 April, 2016
Sr. No. Name Organisation
1 Ms. Swati Mehendale Tata Power
2. Ms. Ann Josey Prayas Energy Group (Consumer Rep.)
3. Dr. Ashok Pendse Thane-Belapur Industries Association
(Consumer Rep.) 4. Shri Kamlakar Shenoy Indian Hotel & Restaurant Association
5. Shri N. Ponrathnam Consumer Representative
6. Shri Guruprasad Shenoy Indian Hotel & Restaurant Association
7. Shri Bhavik Ruparel Indian Hotel & Restaurant Association
8. Shri Bilal Gazdar Indian Hotel & Restaurant Association
9. Shri S. Baijal Tata Power
10. Shri Sanjeev Gupta Tata Power
11. Shri Deepak Kabadi Tata Power
12. Ms. Shital Khiraiya Tata Power
13. Shri A. M. Dharam Tata Power
14. Shri Maneesh Sinha Tata Power
15. Shri. G.S.V.Ramanan Tata Power
16. Shri Ameya Mhapsekar Tata Power
17. Shri R. M. Ranade Tata Power
18. Shir V. Raje Tata Power
19. Shri Anil Jain Tata Power
20 Shri M.D,.Paranjpe Tata Power
21 Shri Arvind Yadav Tata Power
22 Shri Bhaskar Sarkar Tata Power
23 Shri Ashish Bhat Tata Power
24 Shri. S.R. Kanad Tata Power
25 Shri Sanjay Kumar Tata Power
26 Shri G. M. Bhagat BEST Undertaking
27 Shri Kiran Shetty
28 Shri V. M. Kamat BEST Undertaking
MERC Order on approval of Multi Year Tariff for TPC-G for the 3rd Control Period
MERC Order in Case No. 32 of 2016 Page 224 of 224
Sr. No. Name Organisation
29 Shri V. U. Kurade BEST Undertaking
30 Shri S. A. Haveliwala
31 Shri M. N. Baradwala
32 Shri Bharat
33 Shri. I.A. Lakdawala
34 Ms. Ambika Gupta Tata Power
35 Shri Kartik Kadle Tata Power
36 Shri Manoj Kapse Tata Power
37 Shri T.K. Bhaskaran Tata Power
38 Shri Kiran Desai Tata Power
39 Shri A. Mukharaji Tata Power
40 Shri L. R. Rashmia Tata Power
41 Shri Mahendra Shah Tata Power
42 Shri Uday Shenoy Indian Hotel & Restaurant Association
43 Shri Hakim Dasir Indian Hotel & Restaurant Association
44 Shri Mushtaq Ghojrja Indian Hotel & Restaurant Association
45 Shri Altaf Riyaz Khan Indian Hotel & Restaurant Association
46 Shri Jamal Khan Indian Hotel & Restaurant Association
47 Shri S.S. Adhlinge BEST Undertaking
48 Shri S.S. Jadhav BEST Undertaking
49 Shri J. J. Phadnis Aam Aadmi Party
50 Shri M. Hussain Indian Hotel & Restaurant Association
51 Shri Fuzail Indian Hotel & Restaurant Association
52 Shri Sanjay Indian Hotel & Restaurant Association
53 Shri Prapanna Shetty Indian Hotel & Restaurant Association
54 Shri Prasanna Shetty Indian Hotel & Restaurant Association
55 Ms. Bharati Bhandarkar
56 Ms. Shaila Shenoy
57 Ms. Pushpa Bhandarkar
58 Shri J. M. Davar
59 Shri M.B. Shaikh