By NR Commercial group

Definition of Auxiliary energy consumption

EXISTING PROVISIONS DRAFT CERC REGULATIONS
Energy consumed for supply
of power to housing colony
and other facilities at the
generating station &
construction work not
included
12/12/2013 2
Definition of Cut-off date
EXISTING PROVISIONS
DRAFT CERC REGULATIONS

Cut-off date 2 years from
COD(3 years for COD in Q4).
Same
12/12/2013 3
Useful life (years)
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

Coal-25, Gas-25
Sub-station-25, Hydro- 35
Transmission- 35
Coal-25, Gas-25
Sub-station-35, Hydro- 35
Transmission- 35,
Communication system-15
12/12/2013 4
Date of COD
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

Demonstration of MCR
Trial run at MCR for 72 hours shall
commence after 7 days notice.
Scheduling to commence after
acceptance of test results or within 48
hours after trial run
Certification by CEA
A generating station or unit thereof after
being put into commercial operation
shall demonstrate the plant availability
of not less than the NAPAF in the month
following the date of declaration of
commercial operation. If not able to
demonstrate except for the reasons
beyond the control of generating
company, such generating company or
the unit is said to be put into commercial
service from the month of normative
availability. 12/12/2013 5
Continuation of tariff based on projected
capital cost
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

Tariff based on projected
capital cost
In case, Projected Cap Cost >
105% of Actual Cap cost,
refund to beneficiaries along
with interest @1.20 times
Bank Rate. For, Projected Cap
Cost < 95% of Actual Cap
cost,recovery from
beneficiaries along with
interest @0.8 times Bank
Rate.
12/12/2013 6
Truing up exercise
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

Truing up at the end of the
period and allowed for one
more time in between
Same provision.
Truing up on performance of
controllable parameters such as
heat rate, secondary fuel oil,
Auxiliary energy consumption and
uncontrollable parameters such as
force majeure, change in law,
primary fuel cost.
Sharing of the financial gain due
to controllable factors among
Genco and beneficiary in the ratio
of 3:1.
Financial gain/loss due to
uncontrollable factors to be
passed on to beneficiaries.
12/12/2013 7
Capital Cost
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

Prudence check of capital
cost may be carried out
taking into consideration the
benchmark norms
specified/to be specified by
the Commission from time to
time
Same
For variation of capital cost
from benchmark norms,
reasons to be specified by the
company.
12/12/2013 8
Allowance of IDC/IEDC
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

IDC would consider phasing
of funds upto SCOD. In case
of additional IDC due to
delay, the company would
submit details with reasons.If
delay is due to uncontrollable
factors, IDC/IEDC may be
allowed.
12/12/2013 9
Allowance of IEDC
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

Any revenue earned during
construction period would be
adjusted against the IEDC.
12/12/2013 10
Controllable and Uncontrollable Factors
EXISTING PROVISIONS

DRAFT CERC REGULATIONS


Controllable: time/ cost overrun
due to land acquisition,
efficiency in implementation of
project not involving any change
in scope, delay due to contractor,
supplier etc.
Uncontrollable: force majeure
events, change in law.
Additional impact due to non-
commissioning of generating
station & transmission would be
recovered through
indemnification agreement.
12/12/2013 11
Initial Spares
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

% of original project cost:
Coal- 2.5%
Gas-4.0%
Hydro-1.5%
Transmission- 0.75% to 3.5%
% of plant and machinery
cost:
Coal- 3.0%
Gas- 3.0%
Hydro- 4.0%
Transmission- 1.0% to 4.5%
12/12/2013 12
Special Allowance
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

Rs 5.0 lacs/ MW/ Yr in 2009-
10 with annual escalation of
5.72%
Rs 7.5 lacs/ MW/ Yr in 2014-15
with annual escalation of
6.35%
In case, Special Allowance is
being availed in 2009-14, it is
to be allowed by escalating
the same for 2013-14 @ 6.35%.
Details of Special Allowance
to be kept and made available
to commission as and when
directed.
12/12/2013 13
Compensation allowance (for minor assets)
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

0-10 yrs 0.0 lakh/ MW/year
11-15 yrs- 0.15 lakh/ MW/year
16-20 yrs- 0.35 lakh/
MW/year
21-25 yrs- 0.65 lakh/
MW/year
0-10 yrs 0.0 lakh/ MW/year
11-15 yrs- 0.20 lakh/ MW/year
16-20 yrs- 0.50 lakh/
MW/year
21-25 yrs- 1.0 lakh/ MW/year
12/12/2013 14
Sale of infirm power
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

At UI rate At UI rate
12/12/2013 15
Tariff Structure
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

Capacity charge includes
secondary fuel oil
consumption
Secondary fuel oil
consumption is part of the
energy charge.
12/12/2013 16
Return on Equity (ROE)
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

Thermal, Tx., ROR Hydro -
15.5%
Storage type hydro - 16.5%
Additional 0.5% linked to
project completion as per
specified timeline
Thermal, Tx., ROR Hydro -15.5%
Storage type hydro - 16.5% for
Additional return of 0.5% for
projects commissioned on or
after 01.04.2014 within specified
timelines (no change in timeline
specified)
1% reduction in ROE if unit
declared COD without RGMO /
FGMO, data telemetry and
communication system up to
load despatch centre and
protection system.

12/12/2013 17
Grossing up of tax rate
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

Grossing up by tax rate
Grossing up of ROE with tax rate shall
not be available.Benefits of tax holiday
for new project also NA.
Tax on income corresponding to
approved ROE to be recovered from
the beneficiaries -
If PBT is higher than IT on ROE
approved, IT to be recovered = Total
income tax paid ROE approved by
Commission / PBT.
If PBT is lower than tax on ROE,
Actual income tax to be recovered
from beneficiaries
Annual adjustment of under / over
recovery of IT
Allocation of IT to beneficiaries in
proportion to annual fixed charges
12/12/2013 18
Depreciation
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

Depreciable value - 90%
(excluding land)
Depreciable life:
Thermal - 25 years
Hydro - 35 years
Rate of Depreciation: As per
the Companies Act for 12
years and balance
depreciation spread over the
remaining useful life.
Depreciation disallowed on
account of lower availability
cannot be recovered at a later
stage during the useful life
CERC shall approve
depreciation of proposed
capex beyond 20 yrs from
COD (Fag end) subject to
prudence check.
Other provisions same
12/12/2013 19
Norm for O&M expenses, escalation rate
etc.
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

200/ 500/ 600 MW- 18.2/
13.0/11.70 Lac/MW/ yr in
2009-10; Escalation- 5.72%
200/ 500/ 600 MW-
22.74/16.24/14.62 Lakhs
/MW/ yr in 2013-14.

200/ 500/ 600 MW- 24.07/
16.32/14.68 Lac/ MW/yr in 2014-15;
Escalation- 6.35%
Norms for gas station reduced
from 18.49 in 2013-14 to 16.77 in
2014-15.
Water charges shall be allowed
separately. Not included in
O&M norms.
Impact of wage revision shall be
allowed considering DPE
guidelines and following % of
O&M as employee cost .Coal -
40%, gas- 32% Hydro -46% and Tx
-40%
12/12/2013 20
Station Heat rate
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

200 MW- 2500
500 MW 2425
New coal units- 6.5% deviation
from design value.
BTPS- 2825
Tanda -2825
TTPS 2950
Faridabad &Kayamkulam 2000
Gandhar - 2040
Kawas-2075
Anta, Dadri&Auraiya GPS 2100
200 MW- 2425
500 MW 2375
New coal units- 4.5% deviation from
design value.
BTPS- 2750
Tanda -2750
TTPS 2850
Faridabad - 1975
Gandhar GPS - 2040
Kawas - 2050
Anta - 2075
Dadri -2000
Ratnagiri& Sugen-1850
Auraiya&Kayamkulam no change
12/12/2013 21
Secondary Oil Consumption
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

1.0 ml/ kWhr Pit head 0.5 ml/kwh
Non pit head 1.0 ml/kwh
12/12/2013 22
Auxiliary Power Consumption
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

200 MW 8.5%
500 MW- 6%/ 8.5% for
TDBFP and MDBFP.
BTPS-9.5%,
TTPS-10.5%,
Tanda-12.0%
Gas CC -3.0% OC-1.0%
BTPS -8.5%
Gas CC -2.5%
REST NO CHANGE
12/12/2013 23
Normative Annual Availability
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

DC: 85% for full capacity
charges recovery (except
BTPS &TTPS : 82%)
85%
12/12/2013 24
Transit and Handling Loss
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

0.8% - Non pit head
0.2%- Pit head
No change.
In case of pit head stations
transit loss of 0.8% applicable
in case of rail fed coal
Imported coal 0.2%
12/12/2013 25
Incentives-
Linkage to Fixed Charge, Differential for Old/ New
Plants
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

Incentive linked to Fixed
Charge on Availability

Flat rate of 50 p/kwh
corresponding to scheduled
energy in excess of ex bus
energy corresponding to
NAPLF. PLF for a given
period means the total sent
out energy corresponding to
scheduled generation during
the period, expressed as a
percentage of sent out energy
corresponding to installed
capacity
12/12/2013 26
Use of part or full alternate coal
EXISTING PROVISIONS

DRAFT CERC REGULATIONS


Permitted in case of fuel shortage
or optimization through blending
Prior permission not a pre
condition
Wt avg. use of alternate fuel shall
not exceed 30% of base price of
fuel to be fixed by CERC in 2014-
15 to be escalated on month to
month basis by rates notified for
bidding purpose
If it exceeds 30% of the above or
20% fuel price of previous month,
which ever is lower prior
consultation with beneficiaries
shall be made 3 days in advance
12/12/2013 27
Late payment surcharge
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

1.25% per month beyond 60
days from date of billing
1.5% per month beyond 60
days from date of billing
12/12/2013 28
Method of computation of monthly capacity
charge
EXISTING PROVISIONS

DRAFT CERC REGULATIONS

Monthly Availability Method of computation of
monthly capacity charge
changed from monthly to
cumulating every month
successively.
In case of shutdown due to
R&M, recovery of part of AFC
allowed which shall include
O&M expenses and interest
on loan only.
12/12/2013 29
THANK-YOU

12/12/2013 30