POWER GRID CORPORATION OF INDIA LTD Vs. MADHYA PRADESH STATE ELECTRICITY BOARD
CENTRAL ELECTRICITY REGULATORY COMMISSION
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(1.) THE main petition was filed by the petitioner for approval of tariff in respect of 400 kV D/C Singrauli-Vindhyachal transmission line along with (2x250 MW) HVDC back-to-back station at Vindhyachal. In the petition, the petitioner claimed tariff based on capital cost of Rs.17712.57 lakh, which included the capital cost of Rs. 17584.90 lakh as on 31.3.2004 and Rs. 127.67 lakh on account of FERV for the period 1.4.2001 to 31.3.2004. THE equity component included in the capital cost was Rs. 5610.02 lakh. THE petitioner published in the newspapers its tariff proposal as required under Sub-section (2) of Section 64 of the Electricity Act, 2003, (the Act) read with the regulations framed by the Commission on the subject, based on the capital cost noted above. THE tariff claimed by the petitioner as also published in the newspapers was as under:
(2.) The Commission by its order dated 15.12.2005 approved tariff as given hereunder:
The transmission assets were declared under commercial operation on 6.6.1989, and tariff for the period prior to 31.3.2001 was notified by the Central Government. The Central Government while notifying tariff adopted the following methodology.
(a) Cumulative depreciation accrued till 31.3.1992 was deducted from capital cost to arrive at Net Asset Value on 31.3.1992. Net Asset Value so obtained, i.e., the book value at which the assets were transferred to the petitioner on 1.4.1992, was divided notionally in debt and equity in the ratio of 50:50.
(b) Thereafter Net Asset Value was determined every year, by deducting depreciation charged in tariff for the previous year. The Net Asset Value so obtained was again divided notionally in debt and equity in the ratio of 50:50.
(c) Net Asset Value was considered for tariff fixation, and return on equity (ROE) was computed on the reduced equity.
(d) Consequent upon progressive reduction of Net Asset Value of the transmission projects over 5 years block period from 1.4.1992 to 31.3.1997, the notional equity also gradually depleted, adversely affecting ROE.
(e) Debt portion was reduced year by year by 50% of the amount of depreciation charged in tariff (irrespective of actual debt repayment).
(3.) THE petitioner felt that the methodology adopted by the Central Government wrongly depleted the aggregate equity of all its assets, which included the transmission assets covered in Petition No. 113/2004, by an amount of Rs. 646 crore. In the view of the petitioner, the depleted equity deserved to be restored since otherwise it would continue to suffer loss on return on equity in perpetuity. THE petitioner made an application before the Commission for restoration of depleted equity which was dismissed by the Commission by its order dated 11.5.2005 as not maintainable. Being aggrieved by the said order dated 11.5.2005; the petitioner filed an appeal before the Appellate Tribunal for Electricity. THE Appellate Tribunal by its judgment dated 16.5.2006 has allowed the appeal, and has remitted the matter to the Commission for re-determination of tariff for the period commencing from 1.4.2004 by considering restoration of the depleted equity.;
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