- (1.) IN this petition, the petitioner, Power Grid Corporation of INdia Limited, had sought approval of transmission charges for LILO of 400 kV S/C Singrauli-Kanpur transmission line-I, 400 kV sub-station at Allahabad and LILO of 400 kV S/C Singrauli-Kanpur transmission line-II including ICT-I & II at Allahabad with associated bays in Northern Region for the tariff period from 1.4.2004 to 31.3.2009 and for additional capitalization during 2001-04, based on the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulation, 2004 (hereinafter referred to as "the 2004 regulations").
(2.) In this case, assets were declared under commercial operation after 1.4.2001. While awarding tariff for the period 2004-09 vide order dated 9.5.2006, the Commission adopted capital cost, loan, equity, etc considered for determination of tariff for the period ending 31.3.2004 and FERV for the period up to 31.3.2004 was capitalized and apportioned between debt and equity in the same ratio as considered for the period 1.4.2001 to 31.3.2004. The details of capital cost, equity considered at the time of award of tariff and the summary of the tariff awarded are given in Annexure `A' attached.
(3.) TAMIL Nadu Electricity Board (TNEB) filed Appeal No. 135/2005 in the Appellate Tribunal for Electricity (hereinafter referred to as "the Appellate Tribunal") against order dated 30.6.2006 of the Commission in Petition No 40/2002, wherein while fixing transmission tariff in respect of 400 kV D/C Kaiga-Sirsi transmission line along with associated bays for the period 1.4.2001 to 31.3.2004, the methodology similar to that adopted in respect of the various transmission assets was followed as regards apportionment of FERV into debt and equity. TNEB had, inter alia, questioned the methodology of bifurcation of FERV into debt and equity for the purpose of tariff determination. This appeal, along with some other linked appeals were disposed of by the Appellate Tribunal through a common judgment dated 4.10.2006. The Tribunal vide its judgment dated 4.10.2006 held as under: 16. According to Explanation 1 to Clause 4.4 (c), the premium raised by the Transmission Utility while issuing share capital and investment of internal resources created out of free reserve of the existing utility, if any, for the funding of the project, shall also be reckoned as paid up capital for the purpose of computing the return on equity subject to fulfillment of certain conditions. Explanation also makes no provision for increasing the equity beyond 50% of the book value of the transmission system. Once the fixed cost has been agreed to be financed in a certain ratio of debt and equity, the equity can be affected by FERV only if the equity is in foreign exchange. The provision of FERV as a pass through has been kept to ensure that any liability or gain, if any, arising on account of any variation in foreign exchange rates (whether debt or equity) is passed on to the beneficiary. In case there is no FERV liability or gain, as the case may be, there will not be any FERV adjustment. In the instant case the additional liability arising on account of FERV shall have an impact only on the debt liability and not equity capital. In this view of the matter, we hold that FERV adjustment is to be made in respect of debt liability and not in respect of the equity. Accordingly, we hold that the CERC is only to make adjustment in respect of debt liability and not in respect of the equity. 17. In view of the aforesaid discussion, the appeal is partly allowed to the extent indicated above. The Central Electricity Regulatory Commission shall re-calculate the effect of FERV on the debt liability.;