The petitioner seeks approval for incentive for the year 2004-05 for its transmission system in Northern Region, in terms of the Central Electricity Regulatory Commission (Terms & Conditions of Tariff) Regulations, 2004 (hereinafter referred to as "the regulations"). - (1.) 2. Regulation 51 of the 2004 regulations 2004 provides that: 51. Target Availability for recovery of full transmission charges: JUDGEMENT_382_TLET0_20080.htm 3. Regulation 60 of the 2004 regulations, as amended, inter alia, provides that,- 1 The transmission licensee shall be entitled to incentive @ 1% of equity for each percentage point of increase in annual availability beyond the target availability prescribed under regulation 51, in accordance with the following formula: Incentive=Equity x [Annual availability achieved �Target availability]/100 2. Incentive shall be shared by the long-term customers in the ratio of their average allotted transmission capacity for the year. 4. Member-Secretary, NREB (now NRPC) under his letters dated 13.4.2005 and 15.4.2005 certified the availability of intra-regional AC system and HVDC transmission system in Northern Region during 2004-05. It was observed that the availability of bilateral transmission assets was clubbed with availability of intra-regional AC system. Accordingly, by order dated 23.6.2008, the petitioner was directed to approach Member-Secretary, NRPC for separate availability certificates for each of the bilateral transmission asset. Subsequently, the petitioner vide its affidavit dated 22.7.2007 has placed on record revised certificate of availability issued by Member-Secretary, NRPC vide letter dated 2.7.2008. None of the respondents has raised any objection to the revised certificate issued by the Member-Secretary, NRPC. The necessary details of availability based on the Member-Secretary, NRPC's letter dated 2.7.2008, are as under: JUDGEMENT_382_TLET0_20081.htm 5. It is noted that though the availability has been certified for AC portion of the inter-regional HVDC back-to-back link between NR and WR at 100%, the petitioner has claimed incentive based on availability of 98.5995% which is the certified availability of HVDC portion. The petitioner has not considered availability of AC portion separately, perhaps for the reason of its very low cost as compared to the cost of HVDC portion. Availability claimed by the petitioner has been considered by us for the purpose of computation of incentive. 6. The petitioner has claimed incentive as under: JUDGEMENT_382_TLET0_20082.htm 7. In case of Rihand Transmission System and 1x500 MW HVDC back-to-back station at Sasaram tariff for the period 2004-09 has been allowed for the combined transmission lines (AC portion) as well as HVDC System. As per the 2004 regulations, incentive is to be worked out separately for the transmission lines and HVDC System. The petitioner has segregated the equity on pro rata basis on the basis of capital cost of HVAC and HVDC portions. As cost break-up has not been available, segregation as claimed by the petitioner in the present petition in case of the two assets, the correctness of which was confirmed by the representative of the petitioner during the hearing, has been considered. 8. In respect of the transmission assets whose equity has been revised as a result of judgment of the Appellate Tribunal for Electricity, the revised equity has been considered. 9. Incentive has been worked out considering the availability as certified by the Member-Secretary, NRPC in the light of above discussion. Based on the above, the petitioner shall be entitled to incentive as under: JUDGEMENT_382_TLET0_20083.htm 10. The details of calculations in support of the incentive allowed by us are given in the Annexure attached. 11. There is minor difference between the incentive amount claimed by the petitioner and allowed by us. In some of the transmission assets, the petitioner has considered the entire equity corresponding to additional capital expenditure during 2004-05. However, for the purpose of determination of tariff, average equity corresponding to the additional capital expenditure has been taken. Therefore, for computation of incentive also, average equity has been considered. 12. The Commission in its order dated 6.7.2006, had provisionally allowed incentive of 80% of that claimed by the petitioner in this petition. The provisional incentive charged by the petitioner shall be adjusted against final incentive for the year 2004-05 approved by us in this order. 13. It has been noticed that the availability of Sasaram HVDC back-to-back (NRER), an inter-regional asset, was 90.68% during the year 2004-05. Since the actual availability was less than the target availability of 95%, the petitioner shall adjust the transmission charges for the year 2004-05 already recovered based on actual availability, latest by 30.11.2008. 14. The incentive approved shall be shared by the respondents, the beneficiaries in the Northern Region, in proportion of the transmission charges for the year 2004-05 paid by them in the region. 15. This order disposes of Petition No. 162/2005.;