NEYVELI LIGNITE CORPORATION LTD Vs. TAMIL NADU ELECTRICITY BOARD
LAWS(ET)-2005-11-18
CENTRAL ELECTRICITY REGULATORY COMMISSION
Decided on November 02,2005

Appellant
VERSUS
Respondents

JUDGEMENT

- (1.) THE petitioner has filed the petition for approval of tariff based on "gross fixed assets" concept. THE tariff for the period ending 31.3.2001 was governed by the Bulk Power Supply Agreement, which was based on "net fixed assets" concept.
(2.) We heard Shri K. Sekar and Shri R. Suresh for the petitioner and Shri S. Sowmyanarayanan for the first Respondent, TNEB. In the interest of continuity of approach, we have decided that the tariff in the present petition should be determined based on the "net fixed assets" concept.
(3.) ONE of the issues raised is in regard to lignite transfer price. It was submitted on behalf of the petitioner that CMD of the petitioner company had convened a meeting with the Chairmen of the beneficiary utilities to explain the parameters for fixation of lignite price, which was approved by Ministry of Coal. The representative of TNEB submitted that the proposal in the petition relates to approval of tariff for the period 1.4.2001 to 31.3.2004 whereas the transfer price of lignite considered for calculation of tariff was approved by Ministry of Coal only on 21.3.2005. TNEB accordingly questioned the very basis for computation of tariff. The representative of TNEB explained that petitioner was not ready to accept its point of view. The representative of TNEB explained that pooled lignite price as such, according to books of accounts of the petitioner would also be acceptable to them. TNEB can accept lignite transfer price computed on the basis of 85% mine capacity utilisation, but the price so calculated should be applied on lignite production up to 85% mine capacity. Since all fixed costs including O&M are fully recovered by this, price of lignite above 85% mine capacity utilisation should be at marginal cost only. The petitioner submitted that the Ministry of Coal, which is the regulator for their mining operation has decided lignite transfer price, and as such, the petitioner cannot deviate from the price approved by Ministry of Coal.;


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