Central electricity regulation commission(CERC) is authorized to notify tariff regulations under which Power tariff is fixed payable to Generating and transmission companies by the distribution companies. This Tariff regulations are issued for 5 years period and now draft for the period 2019-24 has been issued.The cost payable to Generating /transmission companies for the period 2019-2024 has been determined under these regulations. We have summerised the changes proposed in these regulation and effects of changes on the distribution companies and indirectly on the consumers.
This regulations can be downloaded from the link given below.
Changes in draft CERC Regulation for2019-2024.
There are no major changes proposed in draft regulation as discussed in the discussion paper. Major disappointment in the draft regulations as under:-
- No Change in return on Equity and the same has been maintained at 16.5 and 15.5 as the case may be.(Reg. 30 Page 65)
- No changes in Debt Equity ratio.(Reg. 17 Page 43)
- No solution provided for breakup of fixed charges.
- Front loading of tariff (Fixed cost) remain as it is as depreciation shall be charged at given rate in first 12 years from COD. (Reg. 33 Page72)
However following Major changes has been proposed in the draft regulations which may have impact on tariff for the said period.
1. Changes in calculation of interest on working capital
- The cost of primary fuel for the non pit head generating station is required to be taken for 20 days from 30 days earlier.(Reg.34 Page73) +ve for Consumers
- Receivable is now to be considered for 45 days from 2 months earlier. However payment due date has also been advanced to 45 days from 60 days earlier.(Reg.34 Page 73) +ve for Consumers
2. Life of the hydro plants has been increased from 35 yrs to 40 yrs.(Reg. 3(79) Page 21)
+ve for Consumers
3.Loss in GCV for TPS after unloading point up to 85 Kcl has been allowed.
-ve for Consumers
4. Only For TPS (Not applicable on HEP):-
Fixed charges has been divided in two parts that are peak hours and off peak hours. Peak hours shall be declared for minimum 4 hours a day by the respective RLDC. Further availability/capacity charges shall be calculated and paid on quarterly basis and no carry forward and set offs are allowed. Further the short fall in charges for capacity charges of peak hours cannot be set off with off peak hours. However shortfall in off peak hours can be settled with peak hours. (Reg. 51 Page.96-100)
+ve for Consumers
5.Incentives and penalties for availability shall also be calculated on quarterly basis.(Reg. 51 Page 96-100) +ve for Consumers
6.1-Incentives for peak load hours shall be 65 paisa and off peak hours shall be 50 paisa and to be calculated on quarterly basis after 85% availability of TPS. +ve for Consumers
6.2-25% more capacity charges to be allocated for peak load availability than off peak load availability. However overall capacity charges remains the same. +ve for Consumers
7.Depreciation shall now be allowed on 95% of the cost of the depreciable asset from earlier 90%.(Reg.33 Page 71) -ve for Consumers
8.No incentive for early completion of the project. Earlier 0.5 incentive was allowed.(Reg.30 Page65) +ve for Consumers
9.Normative generic availability has been reduced to 83% from earlier 85%.(Reg.59 Page118) -ve for Consumers
10.Generic station heat rate for plants up to 250 MW has been reduced from 2450 to 2410.(Reg.59(c(a)) Page 121) +ve for Consumers
11.Auxiliary energy consumption has been increased for plants from 300 MW to 500 MW has been increased by 0.25 to 0.50.(Reg.59(e(a)) Page 127) -ve for Consumers
12.Normative transit loss of quantity for non pit head station having a distance of above 1000 Km has been increased from 0.8% to 1.20%.(Reg.48 Page 93) -ve for Consumers
13.Due date of payment shall be calculated after 45 days from presentation of bill from earlier 60 days. Though the rebate for early payment remains the same(Reg.68 Page 139) i.e.
- 2% - Within 2 days
- 1% - After 2 days within 30 days
And Surcharge rate has been reduced to 1.25%pm from 1.5%pm +ve for Consumers
14.Bank rate has been redefined as 1 yrs MCLR+3.5% from Base Rate.(Reg. 3(7) Page 4) +ve for Consumers
15.Cut off date for investment in new projects shall be last day of calendar month after 3yrs from COD. Earlier it was end of year.(Reg. 3(14) Page 6) +ve for Consumers
16.New provisions for calculation of cost of coal from integrated mine has been introduced.(Ch-9)
17.Cost of consumables for reduction in pollution norms has also been introduced.(Reg. 50 Page 90)
- 15g per Kwh limestone for FGD(Wet)
- 12g Sodium bicarbonate per Kwh for DSI
18.Sharing of non tariff income @ 50:50 has been introduced on account Big +ve for Consumers
(Reg.72 Page 143) of following:-
- Rent from L&B and staff/contractor quarter
- Scrap sale
- Interest from statutory investment/supplier and bank balances.
19.Sharing of CDM benefits introduced.(Reg.73 Page 144) +ve for Consumers
20.For clarity new concept of GCV as received, ARB landed fuel cost, Statutory charges, Unloading point has been redefined. (Clause 3 Ch-10) +ve for Consumers
21 In case of plants where life is completed, the assets approach will be modified GFA approach & to be calculated after adjusting the gross fixed assets with cumulative depreciation.(Clause 17(6) Page 44) +ve for Consumers
22.Return of Equity shall be equal to interest rate on loan if additional capital has been employed after cut of date within or beyond original scope.(Reg. 30(2(i))) +ve for Consumers
23.Operation and Maintenance expenses has been increased only 3% to 5% per Mw basis in case of TPS, HEP/transmission.(Reg. 35 Page 76) +ve for Consumers
24.Security expenses has been additionally allowed besides water charges and capital spares after prudence check. Earlier it was a part of O&M expenses.(Reg.35(6) Page 78) -ve for Consumers
25. GCV, (ARB) shall be measured by third party. +ve for Consumers
26.Cap on the alternative fuel price up to 30% of the base prices of fuel.(Reg. 47 Page 92) +ve for Consumers
27.Energy charges rate shall be allowed on escalation index though the base rate in the starting year shall be determined by commission.(Reg.52(5) Page103) +ve for Consumers
28. GHR for stations achieving COD after 1.4.2019 has been allowed (Reg.59(c(b)) Page 123) as under:-
28.1- 1.05* Designed heat rate (New)
28.2- 1.045*Designed heat rate(Old) -ve for Consumers
29.Normative availability for HEP has been generally revised upwards. .(Reg.60(4) Page 130,131) +ve for Consumers
30.Auxiliary consumption for HEP up to 200 MW has been increased.(Reg.60(6) Page 133) -ve for Consumers