- (1.) IN these petitions, the petitioner, Power Grid Corporation of INdia Limited, had sought approval of tariff in respect of its various transmission assets in Western Region for the period from 1.4.2001 to 31.3.2004, based on the Central Electricity Regulatory Commission (Terms & Conditions of Tariff) Regulations 2001 (hereinafter referred to as "the 2001 regulations"). On completion of pleadings and after hearing the parties, final tariff in respect of these assets was awarded by different orders. The details of capital cost, equity considered at the time of award of tariff and the summary of the tariff awarded in each case are given in the annexures I to VIII attached.
(2.) Tamil Nadu Electricity Board (TNEB) filed Appeal No. 135/2005 in the Appellate Tribunal for Electricity against order dated 30.6.2006 of the Commission in Petition No 40/2002, vide which 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 Transmission System was followed. TNEB had, inter alia, questioned the methodology of bifurcation of FERV into debt and equity for the purpose of tariff determination. This appeal, as also some other linked appeals were disposed of by the Appellate Tribunal through a common judgment dated 4.10.2006. The Appellate Tribunal 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. The above decision was reiterated by the Appellate Tribunal in its Judgment dated 22.12.2006 in Appeal No 161 0f 2006 (M.P. State Electricity Board v. Power grid Corporation of India and Ors.) which related to transmission tariff for Vindhyachal Stage - I Additional Transmission System in Western Region for the period 1.4.2001 to 31.3.2004.
(3.) THE Judgment of the Appellate Tribunal, involving interpretation of the notification dated 16.12.1997 of Ministry of Power, is considered to be judgment in rem and thereby has universal application in all the cases of similar nature. Accordingly, it has been decided to apply the ratio of the judgment in all similar cases and re-calculate the tariff in accordance with the judgment of the Appellate Tribunal.;