before the maharashtra electricity ... - reliance energy · shri deepak lad, member order ... 1.6...

Before the

MAHARASHTRA ELECTRICITY REGULATORY COMMISSION

World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai – 400 005

Tel. 22163964/ 65/ 69 Fax 22163976

Email: [email protected]

Website: www.mercindia.org.in/www.merc.gov.in

CASE No. 13 of 2016

In the matter of

Petition of Reliance Infrastructure Ltd. (Transmission Business) for Truing-up of

ARR for FY 2014-15, Provisional Truing-up of FY 2015-16 and approval of ARR

for the MYT Third Control Period from FY 2016-17 to FY 2019-20

Coram

Shri Azeez M. Khan, Member

Shri Deepak Lad, Member

ORDER

Date: 22 June, 2016

Reliance Infrastructure Ltd.’s Transmission Business (RInfra-T), Devidas Lane , Off SVP Road ,

Borivali Mumbai has filed a Petition on 28 January, 2016 for Truing-up for FY 2014-15,

provisional Truing-up of FY 2015-16 and approval of Aggregate Revenue Requirement (ARR)

for the 3rd

MYT Control Period from FY 2016-17 to FY 2019-20 under the MERC (Multi Year

Tariff) Regulations (‘MYT Regulations’), 2015. Thereafter, a revised Petition was filed on 8

March, 2016. The Commission, in exercise of the powers vested in it under Sections 61 and 62

of the Electricity Act (EA), 2003 and all other powers enabling it in this behalf, and after taking

into consideration the submissions made during these proceedings and the public consultation

process, and all other relevant material, has approved the Truing-up for FY 2014-15, provisional

Truing-up for FY 2015-16 and, ARR for FY 2016-17 to FY 2019-20 in this Order.

mailto:[email protected]

http://www.mercindia.org.in/

MERC Order on MYT Petition of RInfra-T for MYT 3rd Control Period from FY 2016-17 to FY 2019-20

MERC Order - Case No. 13 of 2016 of 118

TABLE OF CONTENTS

1 BACKGROUND AND BRIEF HISTORY ................................................................... 11

1.1 Background .........................................................................................................................11

1.2 Regulatory Regime for Transmission Pricing .....................................................................11

1.3 MERC (Multi Year Tariff) Regulations, 2011 ....................................................................12

1.4 MERC (MYT) (First Amendment) Regulations, 2011 .......................................................13

1.5 Order on ARR of RInfra-T for FY 2011-12 ........................................................................13

1.6 Order on Business Plan of RInfra-T for 2nd

Control Period ................................................13

1.7 Order on RInfra-T’s Petition for Truing-up of FY 2010-11 and FY 2011-12 ....................13

1.8 Order on approval of ARR for 2nd

Control Period FY 2012-13 to FY 2015-16 .................13

1.9 MTR Order for FY 2012-13 to FY 2015-16 .......................................................................14

1.10 MERC (Multi Year Tariff) Regulations, 2015 ....................................................................14

1.11 Truing-up of ARR for FY 2014-15, provisional Truing-up of FY 2015-16 and ARR

approval for 3rd

Control Period from FY 2016-17 to FY 2019-20 ......................................14

1.12 Admission of Petition and Public Consultation Process .....................................................15

1.13 Organization of the Order ....................................................................................................15

2 SUGGESSIONS/OBJECTIONS RECEIVED, RINFRA-T’S RESPONSE AND

COMMISSION’S VIEW ................................................................................................ 17

3 IMPACT OF ATE JUDGMENTS ................................................................................. 18

3.1 RInfra-T’s Appeal against MTR Order dated 26 June, 2015 in Case No. 221 of 2014 ......18

4 TRUE-UP OF ARR FOR FY 2014-15 ........................................................................... 19

4.1 Background .........................................................................................................................19

4.2 Capital Expenditure and Capitalisation ...............................................................................19

4.3 Unutilised Bays ...................................................................................................................26

4.4 Interest on Long Term Loans ..............................................................................................30

4.5 Depreciation ........................................................................................................................32

4.6 Return on Equity .................................................................................................................33



4.7 Operation and Maintenance Expenses ................................................................................34

4.8 Interest on Working Capital ................................................................................................38

4.9 Contribution to Contingency Reserves ................................................................................40

4.10 Income Tax ..........................................................................................................................42

4.11 Revenue from Transmission Charges ..................................................................................43

4.12 Non-Tariff Income ..............................................................................................................44

4.13 Income from Other Business ...............................................................................................45

4.14 Incentive on Availability of RInfra-T Network ..................................................................46

4.15 Sharing of Gains and Losses for FY 2014-15 .....................................................................47

4.16 Revenue Gap/Surplus for FY 2014-15 ................................................................................50

5 PROVISIONAL TRUE-UP OF ARR FOR FY 2015-16 .............................................. 54

5.1 Background .........................................................................................................................54



5.4 Depreciation ........................................................................................................................59

5.5 Return on Equity .................................................................................................................61



5.8 Contribution to Contingency Reserves ................................................................................68

5.9 Income Tax ..........................................................................................................................69

5.10 Revenue from Transmission Charges ..................................................................................70

5.11 Non-Tariff Income ..............................................................................................................71

5.12 Income from Other Business ...............................................................................................73

5.13 Provisional Revenue Gap/ Surplus for FY 2015-16 ............................................................73

6 MULTI YEAR TARIFF FOR FY 2016-17 TO FY 2019-20 ........................................ 76

6.1 Background .........................................................................................................................76





6.4 Depreciation ........................................................................................................................88

6.5 Return on Equity .................................................................................................................90



6.8 Contribution to Contingency Reserves ..............................................................................100

6.9 Income Tax ........................................................................................................................101

6.10 Non-Tariff Income ............................................................................................................102

6.11 Income from Other Business .............................................................................................103

6.12 Carrying/ Holding Cost on Revenue Gap / Surplus for FY 2014-15 ................................104

6.13 ARR for FY 2016-17 to FY 2019-20 ................................................................................106

7 DIRECTIVES IN MTR ORDER, AND COMPLIANCE STATUS ......................... 109

7.1 Background .......................................................................................................................109

7.2 Timely Completion of Project ...........................................................................................109

8 SUMMARY OF COMMISSION RULING ................................................................ 111

8.1 Impact of ATE Judgment ..................................................................................................111

8.2 True-up for FY 2014-15 ....................................................................................................111

8.3 Provisional True-up for FY 2015-16 .................................................................................112

8.4 Multi Year Tariff for FY 2016-17 to FY 2019-20 ............................................................113

9 RECOVERY OF TRANSMISSION CHARGES ....................................................... 115

10 APPLICABILITY OF THE ORDER .......................................................................... 116

11 APPENDIX-1: LIST OF PERSONS AT THE TVS HELD ON 24 FEBRUARY, 2016

.............................................................................................................................. 117

12 APPENDIX-2: LIST OF PERSONS AT THE PUBLIC HEARING HELD ON 13

APRIL, 2016 ................................................................................................................... 118



List of Tables

Table 1: Capitalisation for FY 2014-15, as submitted by RInfra-T .............................................. 19

Table 2: Reasons for Time Over-run provided by RInfra-T ......................................................... 21

Table 3: Scheme-wise DPR Cost and Actual Cost including and excluding IDC, with completion

reports ........................................................................................................................................... 23

Table 4: Scheme-wise DPR Cost and Actual Cost, including and excluding IDC, pending for

completion reports ........................................................................................................................ 24

Table 5: Capitalisation claimed by RInfra-T and approved by Commission for FY 2014-15 ..... 26

Table 6: Unutilised Bays in Transmission System of RInfra-T .................................................... 27

Table 7: Impact of Unutilised Bays on Opening Balance of FY 2014-15 .................................... 29

Table 8: Interest on Long Term Loans for FY 2014-15, as submitted by RInfra-T ..................... 30

Table 9: Interest on Long Term Loans for FY 2014-15, as approved by Commission ................ 31

Table 10: Depreciation for FY 2014-15, as submitted by RInfra-T ............................................. 32

Table 11: Depreciation Cost for FY 2014-15, as approved by Commission ................................ 33

Table 12: Return on Equity for FY 2014-15, as submitted by RInfra-T ...................................... 33

Table 13: Return on Equity for FY 2014-15, as approved by Commission ................................. 34

Table 14: Summary of O&M Expenses for FY 2014-15, as submitted by RInfra-T ................... 35

Table 15: O&M Expenses for FY 2014-15, as approved by Commission ................................... 38

Table 16: Interest on Working Capital for FY 2014-15, as submitted by RInfra-T ..................... 39

Table 17: Interest on Working Capital for FY 2014-15, as approved by Commission ................ 40

Table 18: Contribution to Contingency Reserves for FY 2014-15, as submitted by RInfra-T .... 40

Table 19: Contribution to Contingency Reserves for FY 2014-15, as approved by Commission 41

Table 20: Income Tax for FY 2014-15, as submitted by RInfra-T ............................................... 42

Table 21: Income Tax for FY 2014-15, as approved by Commission .......................................... 43

Table 22: Revenue from Transmission Charges for FY 2014-15, as approved by Commission . 44

Table 23: Non-Tariff Income for FY 2014-15, as submitted by RInfra-T ................................... 44

Table 24: Non-Tariff Income for FY 2014-15, as approved by Commission .............................. 45

Table 25: Income from Other Business for FY 2014-15, as submitted by RInfra-T .................... 45

Table 26: Income from Other Business for FY 2014-15, as approved by Commission ............... 46

Table 27: Incentive on Availability for FY 2014-15, as approved by Commission ..................... 47

Table 28: Normative O&M Expenses for FY 2014-15, as submitted by RInfra-T ...................... 48

Table 29: Sharing of Efficiency Gain for O&M Expenses for FY 2014-15, as submitted by

RInfra-T ........................................................................................................................................ 48

Table 30: Normative O&M Expenses for FY 2014-15, approved by Commission ..................... 48

Table 31: Net Entitlement of O&M Expenses for FY 2014-15, as approved by Commission .... 49

Table 32: Summary of True-up for FY 2014-15, including sharing of efficiency gains/losses, as

submitted by RInfra-T................................................................................................................... 50

Table 33: Summary of True-up for FY 2014-15, including sharing of efficiency gains/losses, as

approved by Commission ............................................................................................................. 51

Table 34: Scheme-wise Capitalisation for FY 2015-16, as submitted by RInfra-T ..................... 55



Table 35: Capitalisation for FY 2015-16, as submitted by RInfra-T ............................................ 55

Table 36: Capitalisation for FY 2015-16, as approved by Commission ....................................... 57

Table 37: Interest on Long Term Loans for FY 2015-16, as submitted by RInfra-T ................... 58

Table 38: Interest on Long Term Loans for FY 2015-16, as approved by Commission .............. 58

Table 39: Depreciation for FY 2015-16, as submitted by RInfra-T ............................................. 59

Table 40: Depreciation Expenses for FY 2015-16, as approved by Commission ........................ 60

Table 41: Return on Equity for FY 2015-16, as submitted by RInfra-T ...................................... 61

Table 42: Return on Equity for FY 2015-16, as approved by Commission ................................. 62

Table 43: Summary of O&M Expenses for FY 2015-16, as submitted by RInfra-T ................... 63

Table 44: Normative O&M Expenses for FY 2015-16, as approved by Commission ................. 63

Table 45: O&M Expenses for FY 2015-16, as approved by Commission ................................... 66

Table 46: Interest on Working Capital for FY 2015-16, as submitted by RInfra-T ..................... 67

Table 47: Interest on Working Capital for FY 2015-16, as approved by Commission ................ 67

Table 48: Contribution to Contingency Reserves for FY 2015-16, as submitted by RInfra-T .... 68

Table 49: Contribution to Contingency Reserves for FY 2015-16, as approved by Commission 69

Table 50: Income Tax for FY 2015-16, as submitted by RInfra-T ............................................... 69

Table 51: Income Tax for FY 2015-16, as approved by Commission .......................................... 70

Table 52: Revenue from Transmission Charges for FY 2015-16, as approved by Commission . 70

Table 53: Non-Tariff Income for FY 2015-16, as submitted by RInfra-T ................................... 71

Table 54: Non-Tariff Income for FY 2015-16, as approved by Commission .............................. 72

Table 55: Income from Other Business for FY 2015-16, as approved by Commission ............... 73

Table 56: Summary of provisional True-up for FY 2015-16, as submitted by RInfra-T ............. 73

Table 57: Summary of provisional True-up for FY 2015-16, as approved by Commission ........ 74

Table 58: Capitalisation for FY 2016-17 to FY 2019-20, as projected by RInfra-T .................... 77

Table 59: Capitalisation for FY 2012-13 to FY 2015-16, as approved by Commission in last

MYT Order ................................................................................................................................... 78

Table 60: Comparison of Capitalisation approved for FY 2012-13 to FY 2015-16 – Original vis-

à-vis revised approval ................................................................................................................... 79

Table 61: Methodology for approving Capitalisation for FY 2016-17 to FY 2019-20 ................ 79

Table 62: Capitalisation for FY 2016-17 to FY 2019-20, approved by Commission .................. 84

Table 63: Interest on Long Term Loans for FY 2016-17 to FY 2019-20, as submitted by RInfra-

T .................................................................................................................................................... 85

Table 64: Opening and closing Loan Balance for FY 2015-16, as submitted by RInfra-T .......... 86

Table 65: Weighted Average Interest Rate for FY 2016-17 to FY 2019-20, as approved by

Commission .................................................................................................................................. 87

Table 66: Interest on Long Term Loans for FY 2016-17 to FY 2019-20, as approved by

Commission .................................................................................................................................. 88

Table 67: Depreciation for FY 2016-17 to FY 2019-20, as submitted by RInfra-T ..................... 89

Table 68: Depreciation for FY 2016-17 to FY 2019-20, as approved by Commission ................ 90

Table 69: Return on Equity for FY 2016-17 to FY 2019-20, as submitted by RInfra-T .............. 91



Table 70: Return on Equity for FY 2016-17 to FY 2019-20, as approved by Commission ......... 92

Table 71: Summary of O&M Expenses for FY 2016-17 to FY 2019-20, as submitted by RInfra-T

....................................................................................................................................................... 93

Table 72: Summary of O&M Expense norms in Draft MYT Regulations, 2015 ......................... 94

Table 73: Summary of O&M Expense norms for FY 2016-17 to FY 2019-20 ............................ 95

Table 74: List of Ckt. Km. of Lines and number of Bays to be added in FY 2016-17 to FY 2019-

20, as submitted by RInfra-T and as approved by Commission ................................................... 95

Table 75: O&M Expenses for FY 2016-17 to FY 2019-20 approved by Commission ................ 97

Table 76: Interest on Working Capital for FY 2016-17 to FY 2019-20, as submitted by RInfra-T

....................................................................................................................................................... 98

Table 77: Interest on Working Capital for FY 2016-17 to FY 2019-20, as approved by

Commission .................................................................................................................................. 99

Table 78: Contribution to Contingency Reserves for FY 2016-17 to FY 2019-20, as submitted by

RInfra-T ...................................................................................................................................... 100

Table 79: Contribution to Contingency Reserves for FY 2016-17 to FY 2019-20, as approved by

Commission ................................................................................................................................ 101

Table 80: Income Tax for FY 2016-17 to FY 2019-20 3rd

Control Period, as submitted by RInfra-

T .................................................................................................................................................. 101

Table 81: Income Tax for FY 2016-17 to FY 2019-20, as approved by Commission ............... 102

Table 82: Non-Tariff Income for FY 2016-17 to FY 2019-20, as submitted by RInfra-T ......... 103

Table 83: Non-Tariff Income for FY 2016-17 to FY 2019-20, as approved by Commission .... 103

Table 84: Income from Other Business for FY 2016-17 to FY 2019-20, as approved by

Commission ................................................................................................................................ 104

Table 85: Carrying Cost on Gap of FY 2014-15, as submitted by RInfra-T .............................. 105

Table 86: Holding Cost on Revenue Surplus of FY 2014-15, as approved by Commission ..... 106

Table 87: ARR for FY 2016-17 to FY 2019-20, as submitted by RInfra-T ............................... 107

Table 88: ARR for FY 2016-17 to FY 2019-20, as approved by Commission .......................... 108

Table 89: Total recovery approved by Commission for MYT 3rd Control Period through

Transmission Charges (Rs Crore) ............................................................................................... 114



List of Abbreviations

AC Alternating Current

A&G Administrative and General

APR Annual Performance Review

ARR Aggregate Revenue Requirement

ATE Appellate Tribunal for Electricity

CERC Central Electricity Regulatory Commission

CFO Chief Fire Office

COD Commercial Operation Date

Commission/MERC Maharashtra Electricity Regulatory Commission

Capex Capital Expenditure

CWIP Capital Works In Progress

DISCOM Distribution Company

DPR Detailed Project Report

DTPS Dahanu Thermal Power Station

EA, 2003 Electricity Act, 2003

EHV Extra High Voltage

GFA Gross Fixed Assets

GIS Gas Insulated Sub-station

HVDC High Voltage Direct Current

InSTS Intra-State Transmission System

ISTS Inter State Transmission System



kV Kilo Volt

LILO Line In Line Out

MBMC Mira Bhayander Municipal Corporation

MCGM Municipal Corporation of Greater Mumbai

MMR Mumbai Metropolitan Region

MSEDCL Maharashtra State Electricity Distribution Company Limited

MSETCL Maharashtra State Electricity Transmission Company Limited

MSLDC Maharashtra State Load Dispatch Centre

MVA Mega Volt Amperes

MYT Multi Year Tariff

O&M Operation & Maintenance

PLR Prime Lending Rate

R&M Repair & Maintenance

REL Reliance Energy Limited

RInfra Reliance Infrastructure Limited

RInfra-D Reliance Infrastructure Limited - Distribution Business

RInfra-T Reliance Infrastructure Limited - Transmission Business

RoE Return on Equity

ROW Right of Way

SBI State Bank of India

SCADA Supervisory Control and Data Acquisition

SERC State Electricity Regulatory Commission



SLDC State Load Despatch Centre

STU State Transmission Utility

SWOT Strength Weakness Opportunity and Threat

TPC-T Tata Power Company Limited – Transmission Business

TSU Transmission System Users

TTSC Total Transmission System Cost

TVS Technical Validation Session



1 BACKGROUND AND BRIEF HISTORY

1.1 Background

1.1.1 RInfra is a vertically integrated Utility undertaking, inter alia, the generation,

transmission, wheeling and distribution of electricity in the suburbs of Mumbai. Its

Transmission Network consists of 538.66 circuit-kilometres (ckt.km) of 220 kV overhead

Lines and underground cables, including Transmission Lines for evacuation of power

from its Dahanu Thermal Power Station (DTPS) located outside Mumbai, and

connectivity between the EHV Sub-stations, directly with each other or through LILO

arrangements. It also has eight 220 kV EHV Sub-stations with firm transformation

capacity of 3000 MVA and associated infrastructure at Aarey, Goregaon, Gorai,

Ghodbunder, Saki, Versova, Chembur and Borivali.

1.1.2 RInfra-T has been granted Transmission Licence No. 1 of 2011 vide Order dated 11

August, 2011 in Case No. 70 of 2011, under Alternative 2 as per the MERC

(Transmission Licence Conditions) Regulations, 2004 as amended in 2006

(‘Transmission Licence Regulations’), for 25 years from 16 August, 2011.

1.1.3 RInfra-T had applied on 2 February, 2015 under Section 18 of the EA, 2003 and the

Transmission Licence Regulations for amendment of its Transmission Licence to include

the following Transmission Network:

220 kV RInfra Saki - TPC – 1 Transmission Line from RInfra-T’s 220 kV Saki

Sub-station to Tata Power Co. Ltd. (TPC)’s 220 kV Saki Sub-station~1.5 km

length

220 kV RInfra Saki - TPC – 2 Transmission Line from RInfra-T’s 220 kV Saki

Sub-station to TPC-T’s 220 kV Saki Sub-station~1.5kmlength

1.1.4 Vide Order dated 14 March, 2016 in Case No. 24 of 2015, the Commission amended the

Transmission Licence to include the above.

1.2 Regulatory Regime for Transmission Pricing

1.2.1 The Commission notified the MERC (Terms and Conditions of Tariff) Regulations, 2005

(‘the Tariff Regulations’) in August, 2005. Considering requests made by various

Utilities, in December, 2005, the Commission provided a dispensation to the effect that it

would determine the Tariff under the MYT framework from April, 2007 instead of from

April, 2006 as had been stipulated in the Tariff Regulations. Accordingly, the 1st Control

Period for the MYT framework would be the 3 financial years from FY 2007-08.



1.2.2 At the start of the 1st Control Period, the Commission issued the MYT Orders for the

Utilities in the State, approving their ARR for each year of the Control Period. The

Commission thereafter issued Annual Performance Review (APR) Orders, which

included Truing-up of the ARR of the past year, provisional Truing-up of the ARR of the

current year, and determination of revised ARR/ Tariff for the ensuing year. The

Transmission Licensees for which such Orders were issued constituted the Intra-State

Transmission System (InSTS) of Maharashtra.

1.2.3 The principles of Transmission Pricing Framework for Maharashtra for the First Control

Period were stipulated in the Commission’s Order dated 27 June, 2006 in Case No. 58 of

2005. Accordingly, the Intra-State Transmission Tariffs were determined for the

respective years on the basis of Total Transmission System Cost (TTSC), which was

derived by pooling the ARRs of each Transmission Licensee forming part of the InSTS.

This pooled TTSC was recovered from the Transmission System Users (TSUs) in the

State, mainly the Distribution Licensees. The Commission also specified the basis for

sharing of these costs between the TSUs. The Commission has issued Orders determining

Transmission Tariff from time to time on an annual basis. The last Order was issued on

26 June, 2015 in Case No. 57 of 2015, which determined the InSTS Tariff for FY 2015-

16.

1.3 MERC (Multi Year Tariff) Regulations, 2011

1.3.1 The MYT Regulations, 2011 were applicable for the 2nd

Control Period from FY 2011-12

to FY 2015-16.

1.3.2 In Case No. 45 of 2011, RInfra sought deferment of the MYT framework by a year for

the following reasons:-

(a) Uncertainties in RInfra (Distribution Business) (RInfra-D)’s area of supply on

account of possibility of the following:

i. Parallel Distribution Licensees;

ii. Redefining Licence area boundaries post 15 August, 2011;

iii. Uncertainty on recovery of lost cross-subsidy and regulatory assets;

iv. New framework of operation for Parallel Licensees and

v. Non-approval of Power Purchase Agreements (PPAs) executed by RInfra-

D for the medium and long-term.

(b) Operational difficulties due to certain provisions in the MYT Regulations, 2011.



1.3.3 Vide Order dated 2 September, 2011, the Commission exempted RInfra from

determination of Tariff under the MYT framework till 31 March, 2012 (i.e., for one year)

by invoking the provisions of Regulation 4.1 of the MYT Regulations, 2011.

1.4 MERC (MYT) (First Amendment) Regulations, 2011

The MYT Regulations, 2011 were amended in October, 2011. The amended Regulations

specified that, if an exemption is given under Regulation 4.1, the Utility shall file its

Petition for approval of ARR for the period of such exemption as per the Tariff

Regulations, 2005.

1.5 Order on ARR of RInfra-T for FY 2011-12

RInfra-T had filed a Petition for approval of ARR for FY 2011-12 in accordance with the

Tariff Regulations, 2005. The Commission’s Order dated 17 May, 2012 in Case No. 167

of 2011 was challenged by RInfra-T on issues of interest on long term loan and Income

Tax before the Appellate Tribunal for Electricity (ATE) (Appeal No.139 of 2012). ATE

allowed the Appeal on 2 December, 2013, and the impact of its Judgment has been

considered in the Mid-Term Review (MTR) Order dated 26 June, 2016.

1.6 Order on Business Plan of RInfra-T for 2nd

Control Period

As per the MYT Regulations, 2011, RInfra-T filed its Petition in Case No. 159 of 2011

for approval of its Business Plan for the 2nd

Control Period from FY 2012-13 to FY 2015-

16. The Commission’s Order dated 23 October, 2012 was challenged by RInfra-T on

issues of interest on long term loan and Income Tax before the ATE (Appeal No.3 of

2013). The ATE allowed the Appeal on 8 April, 2015.

1.7 Order on RInfra-T’s Petition for Truing-up of FY 2010-11 and FY 2011-12

1.7.1 RInfra-T had filed a Petition for approval of True-up for FY 2010-11 and FY 2011-12 in

accordance with the Tariff Regulations, 2005 in Case No. 123 of 2012, which the

Commission decided vide Order dated 2 April, 2013.

1.7.2 Since the ATE has allowed Appeal No. 139 of 2012 on issues of Income Tax and interest

on long term loan, the impact of its Judgment was considered in the MTR Order dated 26

June, 2015.

1.8 Order on approval of ARR for 2nd

Control Period FY 2012-13 to FY 2015-16

Pursuant to approval of its Business Plan, RInfra-T had filed a Petition for approval of

ARR for FY 2012-13 to FY 2015-16, which was disposed by the Commission on 13

June, 2013 in Case No. 141 of 2012.



1.9 MTR Order for FY 2012-13 to FY 2015-16

RInfra-T had filed a Petition for MTR, including Truing-up of FY 2012-13 and FY 2013-

14 and revised ARR for FY 2014-15 and FY 2015-16. The Commission issued the MTR

Order on 26 June, 2015 in Case No. 221 of 2014.

1.10 MERC (Multi Year Tariff) Regulations, 2015

The Commission notified the MYT Regulations, 2015 in December, 2015, applicable for

the 3rd

Control Period from FY 2016-17 to FY 2019-20.

1.11 Truing-up of ARR for FY 2014-15, provisional Truing-up of FY 2015-16 and

ARR approval for 3rd

Control Period from FY 2016-17 to FY 2019-20

1.11.1 In accordance with Regulation 5.1 (a) of the MYT Regulations, 2015, RInfra-T has filed

the present Petition for Truing-up of ARR for FY 2014-15, provisional Truing-up of FY

2015-16 and approval of ARR for the 3rd

Control Period from FY 2016-17 to FY 2019-20

on 28 January, 2016.

1.11.2 Vide letters dated 11 and 22 February, 2016, the Commission raised certain data gaps.

RInfra-T responded to these data gaps on 18, 23 and 29 February 2016. The Technical

Validation Session (TVS) was held on 24 February, 2016. The list of persons who

attended the TVS is at Appendix-1. The Commission raised a third set of data gaps on 25

February, 2016 based on the discussions during the TVS. RInfra-T responded to the gaps

on 4 March, 2016 and subsequently filed a revised MYT Petition on 8 March, 2016.

1.11.3 RInfra-T’s prayers in the revised Petition are as follows:

“

Admit this Petition as submitted herewith;

Approve the actual revenue gap/surplus arising on account of Truing-up for FY

2014-15 along with the carrying cost as worked out in this Petition;

Approve the provisional revenue gap/surplus for FY 2015-16 as worked out in

this Petition;

Approve the ARR for FY 2016-17 to FY 2019-20, as projected in this Petition;

Allow additions /alterations /modifications /changes to the Petition at a future

date;

Allow any other relief, Order or direction, which the Hon’ble Commission deems

fit to be issued;



Condone any inadvertent errors/inconsistencies/omissions/rounding off

differences, etc. as may be there in Petition.”

1.12 Admission of Petition and Public Consultation Process

1.12.1 The Commission admitted the Petition on 10 March, 2016 and directed RInfra-T to

publish a Public Notice in accordance with Section 64 of the EA, 2003, in the prescribed

abridged form and manner, and to reply expeditiously to any suggestions and objections

received.

1.12.2 RInfra-T published a Public Notice inviting suggestions and objections on its Petition.

The Public Notice was published in English in Hindustan Times and The Indian Express,

and in Marathi in Loksatta and Saamna, all daily newspapers, on 15 March, 2016. The

Petition and its summary were made available for inspection/purchase at RInfra-T’s

offices and website (www.rinfra.com). The Public Notice and Executive Summary of the

Petition were also made available on the websites of the Commission

(www.mercindia.org.in, www.merc.gov.in) in downloadable format.

1.12.3 The Commission did not receive any written suggestions or objections on the Petition. A

Public Hearing was held on 13 April, 2016 at which RInfra-T made a presentation on its

Petition. No oral submissions were made at the Public Hearing either in response to the

Public Notice. The list of persons who attended the Public Hearing is at Appendix 2.

1.12.4 The Commission has ensured that the due process contemplated under law to ensure

transparency and public participation was followed at every stage and adequate

opportunity was given to all concerned to express their views.

1.13 Organization of the Order

1.13.1 The Order is organized in the following Sections:

Section 1 of the Order provides a brief history and the quasi-judicial regulatory process

undertaken by the Commission. A list of abbreviations with their expanded forms has

been included.

Section2 sets out the suggestions and objections received, the responses of RInfra-T and

the Commission’s views.

Section 3 deals with the impact of ATE Judgments on Appeals filed by RInfra-T

challenging earlier Orders of the Commission.

Section 4 deals with the approval of Truing-up for FY 2014-15.

Section 5 deals with the provisional Truing-up for FY 2015-16.

Section 6 deals with the ARR for FY 2016-17 to FY 2019-20

http://www.rinfra.com/

http://www.mercindia.org.in/

http://www.merc.gov.in/



Section 7 summarises the directives given by the Commission in its MTR Order, their

compliance and the Commission view’s thereon.

Section 8 summarises the rulings of the Commission

Section 9 deals with recovery of Transmission Charges

Section 10 deals with the applicability of the present Order.



2 SUGGESSIONS/OBJECTIONS RECEIVED, RINFRA-T’S

RESPONSE AND COMMISSION’S VIEW

No written or oral suggestions or objections were received on the Petition during the

public consultation process in response to the Public Notice.



3 IMPACT OF ATE JUDGMENTS

3.1 RInfra-T’s Appeal against MTR Order dated 26 June, 2015 in Case No. 221

of 2014

3.1.1 RInfra-T has filed an Appeal No. 223 of 2015 before the ATE against the Commission’s

Order dated 26 June, 2015 in Case No. 221 of 2014. ATE has admitted the Appeal and

the matter was posted for hearing on 2 March, 2016. The issue-wise potential impact as

submitted by RInfra-T is discussed in the following paragraphs.

RInfra-T’s Submission

3.1.2 The MTR Order dated 26 June, 2015 had disallowed carrying cost on Income Tax, which

was earlier disallowed by the Commission but subsequently allowed by the ATE for the

period FY 2009-10 to FY 2011-12. The impact on account of this is approximately Rs.

0.41 Crore.

3.1.3 The MTR Order had disallowed levy of carrying cost on compounded interest basis with

respect to the interest on loan and Revenue Gap, and allowed it on simple interest basis.

The impact is approximately Rs. 4.99 Crore.

3.1.4 The MTR Order had wrongly treated the Delayed Payment Charge (DPC) as Non-Tariff

Income (NTI). The impact is Rs. 35.02 Crore. In its present Petition, RInfra-T has not

considered this amount as NTI.

3.1.5 The Commission had not considered the Income Tax as part of ARR for computing

Availability incentive for FY 2013-14. The impact is approximately Rs. 0.02 Crore.

3.1.6 The total impact of the above components of the MTR Order dated 26 June, 2015, till the

end of FY 2015-16, is Rs. 5.42 Crore, excluding the DPC amount of Rs. 35.02 Crore

which has been treated as NTI by the Commission. In the event of ATE ruling in favor of

RInfra-T, the impact of the same would be considered in a subsequent Petition or through

the ZOUC factor of FAC, as per the MYT Regulations, 2015.There would also be an

incremental carrying cost beyond FY 2015-16 till the time of recovery.

Commission’s Analysis and Ruling

3.1.7 The Commission has not considered the potential impact of ATE Appeal No. 223 of 2015

at this stage as submitted by RInfra-T since the Appeal has yet to be decided.



4 TRUE-UP OF ARR FOR FY 2014-15

4.1 Background

4.1.1 RInfra-T has sought final Truing-up of FY 2014-15 based on the actual expenditure and

revenue as per the audited annual accounts. It has also presented the comparison of

expenditure and revenues approved by the Commission vide the MTR Order in Case No.

221 of 2014 vis-à-vis the audited performance.

4.1.2 The detailed analysis for approval of Truing-up for FY 2014-15 by the Commission is set

out below.

4.2 Capital Expenditure and Capitalisation

RInfra-T’s submission

4.2.1 RInfra-T has incurred Rs. 37.42 Crore towards capital expenditure and Rs. 34.60 Crore

has been capitalized. The capitalisation includes interest and expenses capitalized. The

total capitalization includes Detailed Project Report (DPR) schemes approved in-

principle by the Commission and Non-DPR schemes.

4.2.2 Comparison of capitalisation as approved by the Commission in the MTR Order and as

submitted by RInfra-T in the present Petition is as below.

Table 1: Capitalisation for FY 2014-15, as submitted by RInfra-T

Particulars (Rs. Crore) MTR Order Actual

Capitalisation

DPR 24.26 29.65

Non-DPR 2.19 4.94

Total 26.45 34.60


4.2.3 The Commission had approved capitalisation of Rs. 242.61 Crore for FY 2014-15 in the

MYT Order dated 13 June, 2013 in Case No. 141 of 2012. The Commission had

scrutinized all the capital expenditure schemes submitted by RInfra-T in its MYT Petition

along with the DPR schemes, and approved the capitalisation as submitted considering

that all the schemes would again be reviewed at the time of MTR.

4.2.4 During the MTR proceedings, the Commission observed that most of the schemes

approved in the MYT Order were not capitalized as per the time schedule proposed by

RInfra-T.



4.2.5 In the MTR Order, the Commission had analyzed the capitalisation schedule as submitted

by RInfra-T in the light of the MYT Order and the details provided in the MTR Petition.

The Commission observed that there was significant under-capitalisation in most of the

schemes.

4.2.6 While analyzing the schemes in the MTR Order, it was held view that, in order to

consider the capitalisation as submitted by RInfra-T, the Commission needs to be

convinced that the time over-run was on account of factors which were not within its

reasonable control.

4.2.7 The relevant extracts of the MTR Order dated 26 June, 2015 in Case No. 221 of 2014 are

as follows:

“…In order that the Commission can consider the capitalization as submitted by

RInfra-T, the Commission needs to be convinced that the time over-run is on account

of factors which are not within the reasonable control of RInfra-T.

6.2.10. For this purpose, RInfra-T is directed to submit documentary evidence to

support the claim of uncontrollability. These may include but not be limited to

applications to statutory authorities, key correspondence, approvals received, etc.

The supporting documents should be submitted for each scheme where significant

time over-run has been reported on an aggregate basis over the MYT period, and

show uncontrollability. These directions are elaborated in Section 9 of this Order.”

4.2.8 The Commission had asked RInfra-T to submit documentary proof in support of its claim

of uncontrollability and explain why the Commission should admit any capitalisation

beyond the cut-off date.

4.2.9 The Commission had provisionally approved capitalization of Rs. 26.45 Crore subject to

prudence check to be carried out during the Truing-up of FY 2014-15, and thereby

disallowed Rs. 6.33 Crore against DPR schemes as submitted by RInfra-T in its Petition.

4.2.10 In compliance with the directives of the Commission, RInfra-T has submitted a detailed

review report vide letters dated 30 September, 2015 and 5 April, 2016. The report sets out

the reasons for delay in execution of the schemes along with efforts made by RInfra-T for

their completion, along with relevant documents. RInfra-T stated that there is no cost

over-run in any of the schemes, and that the time over-run is due to extraneous factors. A

summary of the report was also provided with the present Petition. The reasons for delay

cited by RInfra-T are summarized in the Table below.



Table 2: Reasons for Time Over-run provided by RInfra-T

Name of Scheme Reasons for delay in commissioning provided by RInfra-T

220 kV Borivali

EHV

Sub-station

Delay in statutory approvals from Municipal Corporation of Greater

Mumbai (MCGM), Chief Fire Office (CFO), and Forest Department

for cable laying.

Delay in bus bar strengthening work at MSETCL Borivali Sub-

station and outage permissions from MSLDC.

Delay in relocation of RInfra-D assets before and after

commissioning for space optimization.

220 kV Goregaon

EHV Sub-station

Delay in statutory approvals from MCGM.



220 kV Saki EHV

Sub-station

Delay in statutory approvals from MCGM, change in civil contractor

resulting in a dispute, which is under arbitration.

Space constraints for construction activities.



220 kV Chembur

EHV Sub-station

Delay in statutory approvals from MCGM for Sub-station building

and cable route approval of Tata Power Company (TPC), Hindustan

Petroleum Corporation Limited (HPCL), Rashtriya Chemicals &

Fertilizers Ltd. (RCF), Mumbai Metropolitan Region Development

Authority (MMRDA), etc.

Delay in construction of compound wall due to hindrances from

adjacent plot owners.


Setting up of Unified Control Room at MSETCL.



220 kV Gorai

EHV Sub-station

Delay in statutory approvals from Forest Department for cable

connectivity.


High water table of the plot due to nearby creek.

Delay in outage approval for bus bar strengthening at MSETCL,

Borivali Sub-station

Refurbishment of

220 kV

Transmission

Lines

Uncontrollable factors of water logging, paddy cultivation and

delayed monsoon making it difficult to approach the towers.

Further, hot line activities could be carried out in rainy season only

and this also caused delay in scheme completion.

Security

improvement

of220 kV EHV

Sub-station

Delayed permissions received from Maharashtra Housing and

Development Authority (MHADA), Aarey Colony, Forest

Department, Mira Bhayander Municipal Corporation (MBMC) and

MCGM authorities for construction of compound wall.

Procurement of Equipment was not required initially as it was made available from



Name of Scheme Reasons for delay in commissioning provided by RInfra-T

Tools and Plants

for EHV Sub-

stations

vendors.

Subsequently, after vendors removed the equipment provided by

them, RInfra-T collated information and optimization specifications

were floated for their procurement.

4.2.11 After detailed scrutiny, the Commission observes that most of the schemes have been

delayed due to statutory approvals from various authorities like MBMC, MHADA,

MCGM, MMRDA, Forest Department, etc.

4.2.12 The Commission also sought the detailed scope of work approved under the DPR for

each scheme as against the actual scope of work executed by RInfra-T. The Commission

observed that RInfra-T has executed the works as approved by the Commission in the

DPR with minor modifications as per the technical requirements of the system.

4.2.13 However, the Commission also observed that RInfra-T has commissioned 2 power

Transformers as against the approved scope of 3 Transformers at the 220 kV Borivali

Sub-station. While this is a significant deviation from the approved scope of work, the

Commission is allowing it as it does not lead to any extra cost as compared to the

approved DPR.

4.2.14 RInfra-T has submitted scheme completion reports for the 220 kV GIS EHV Sub-station

at Saki, 220 kV GIS EHV Sub-station at Chembur, 220 kV GIS EHV Sub-station at

Goregaon, Refurbishment of 220 kV Transmission Line, Security Improvement of 220

kV EHV Sub-station and Procurement of Tools and Plants for EHV Sub-stations.

4.2.15 The Commission has analyzed the scheme-wise project costs as approved in the DPRs

and the cumulative capitalisation claimed by RInfra-T till the closure of the schemes. The

following Table shows the scheme-wise approved DPR cost and the actual cost,

including and excluding Interest during Construction (IDC), incurred by RInfra-T till the

commissioning/completion of the schemes.



Table 3: Scheme-wise DPR Cost and Actual Cost including and excluding IDC, with

completion reports

Sr.

No.

Name of

Scheme

DPR

Approved

Cost

without

IDC (Rs.

Crore)

Actual

Cumulative

Capitalisation

up to

Completion of

Scheme

excluding IDC

(Rs. Crore)

Actual

Cumulative

Capitalisation

up to

Completion of

Scheme

including IDC

(Rs. Crore)

Status of Scheme

1.

Installation of

220 kV GIS

EHV Sub-

station at

Chembur

220.00 206.22 226.41

Scheme

commissioned and

closed. Completion

report submitted

vide letter dated 15

January 2016

2.

220 kV GIS at

Saki EHV Sub-

station

186.41 158.04 163.50

Scheme

commissioned and

closed. Completion

report submitted


January, 2016

3.

220 kV GIS

Goregaon EHV

Station

107.44 89.64 93.11

Scheme

commissioned and

closed. Completion

report submitted


January, 2016

4.

Refurbishment

of 220 kV

Transmission

Line

27.48 21.78 22.19

Scheme

commissioned and

closed. Completion

report submitted


September, 2015

5.

Procurement of

Tools and

Plants

for EHV Sub-

stations

11.57 10.63 10.80

Scheme

commissioned and

closed in March

2016. Completion

report submitted


May, 2016

6.

Security

improvements

at 220 kV

Aarey, Versova

7.91 7.07 7.35

Scheme

commissioned and

closed in March

2016. Completion



Sr.

No.

Name of

Scheme

DPR

Approved

Cost

without

IDC (Rs.

Crore)

Actual

Cumulative

Capitalisation

up to

Completion of

Scheme

excluding IDC

(Rs. Crore)

Actual

Cumulative

Capitalisation

up to

Completion of

Scheme

including IDC

(Rs. Crore)

Status of Scheme

and

Ghodbunder

EHV Sub-

stations

report submitted


May, 2016

4.2.16 RInfra-T has submitted the completion reports for all the above schemes along with the

cost benefit analysis. The Commission accepts the actual cumulative capitalisation for

these schemes as shown in the Table above, and considers these schemes as completed

and closed. Hence, no further capitalisation will be allowed against these schemes.

4.2.17 In order to assess the increase in Interest during Construction (IDC) because of time over-

run of the schemes vis-à-vis the actual IDC claimed, the Commission has worked out a

normative IDC on the DPRs’ cost and capital expenditure phasing as approved by the

Commission. It is observed that, although there is a time over-run in all the schemes, the

actual IDC claimed by RInfra-T is less than the normative IDC had the projects been

completed within the time approved by the Commission.

4.2.18 The actual IDC claimed by RInfra-T for the 220 kV Chembur Sub-station is less than the

normative IDC, and hence the Commission approves the capital cost as claimed by

RInfra-T.

4.2.19 The following Table shows the schemes which are commissioned but yet to be closed

(the completion reports of which are awaited).

Table 4: Scheme-wise DPR Cost and Actual Cost, including and excluding IDC, pending

for completion reports

Sr.

No.

Name of

Scheme

DPR

Approved

Cost

without

IDC (Rs.

Crore)

Actual

Cumulative

Capitalisation

up to

Completion of

Scheme

excluding IDC

(Rs. Crore)

Actual

Cumulative

Capitalisation

up to

Completion of

Scheme

including IDC

(Rs. Crore)

Status of Scheme

1. 220 kV GIS

Borivali EHV 179.53 135.25 143.63

Scheme

commissioned in



Sr.

No.

Name of

Scheme

DPR

Approved

Cost

without

IDC (Rs.

Crore)

Actual

Cumulative

Capitalisation

up to

Completion of

Scheme

excluding IDC

(Rs. Crore)

Actual

Cumulative

Capitalisation

up to

Completion of

Scheme

including IDC

(Rs. Crore)

Status of Scheme

Scheme March 2016.

Completion report

awaited from

RInfra-T.

2.

220 kV GIS

Gorai EHV

Sub-station

262.36 214.27 238.17

Scheme

commissioned in

March 2016.

Completion report

awaited from

RInfra-T.

3.

Relocation /

Modification of

220 kV Line &

tower in

MBMC Area

14.10* 12.43 14.38

Scheme

commissioned in

March 2016.

Completion report

awaited from

RInfra-T.

*DPR Cost approved including IDC

4.2.20 The approved DPR costs are exclusive of IDC, and hence a comparison of actual cost has

been made after excluding the actual IDC claimed by RInfra-T.

4.2.21 The Commission observed that, in the case of the 220 kV GIS Borivali EHV and 220 kV

GIS Gorai EHV Sub-stations, there is no cost over-run in the actual cumulative

capitalisation as compared to the approved DPR cost. The Commission accepts the

capitalisation claimed by RInfra-T for these schemes.

4.2.22 With regards to Relocation / Modification of 220 kV Line and tower in the MBMC Area,

the approved DPR cost included IDC and there is a marginal escalation in actual

cumulative capitalisation as submitted by RInfra-T. Some amount of capitalization has

also been proposed in FY 2016-17. The Commission considers the capitalisation claimed

by RInfra-T under this scheme and will take a final view once the completion report is

received.

4.2.23 Considering the reasons for delay in execution set out above, the fact of no cost over-run

and the lower IDC claim, the Commission approves the scheme-wise capitalisation as

below.



Table 5: Capitalisation claimed by RInfra-T and approved by Commission for FY 2014-15

Name of Scheme

Capitalisation as

submitted by RInfra-T

(Rs. Crore)

Capitalisation as approved

by Commission (Rs. Crore)

220 kV GIS Borivali 9.02 9.02

220 kV GIS EHV Sub-station

Goregaon 0.05 0.05


Saki 5.76 5.76


Chembur 4.58 4.58


Gorai 5.66 5.66

Refurbishment of 220 kV

Transmission Line 0.54 0.54

Security improvements 2.73 2.73

T&P procurement 1.31 1.31

Non-DPR schemes 4.94 4.94

Total Capitalisation 34.60 34.60

4.2.24 From the report and the supporting documents, the Commission is of the view that

the over-run in each of these schemes is largely not attributable to RInfra-T.

Accordingly, the actual Capitalisation of Rs. 34.60 Crore is approved for FY 2014-

15, as submitted by RInfra-T.

4.2.25 The Commission expects RInfra-T to expedite the remaining works under the schemes, to

follow up the approvals pending with the concerned authorities and diligently address the

other factors affecting their timely commissioning.

4.2.26 RInfra-T needs to submit the closure reports for schemes commissioned but not closed

because minor works are pending. The closure reports should include details of the scope

of work approved by the Commission and that actually executed, with reasons for any

difference.

4.3 Unutilised Bays

4.3.1 The Commission had asked for details of unutilised Bays, their capital cost and year of

commissioning. RInfra-T submitted that there are 11 x 220 kV Bays and 5 x 33 kV Bays

which are commissioned but currently unutilised.



4.3.2 RInfra-T also stated that an assessment of schemes was carried out by the State

Transmission Utility (STU). Accordingly, the scope of work was decided considering a

5-year time horizon.

4.3.3 RInfra-T submitted the following reasons for erection of additional 220 kV GIS Bays at

the outset, even though they might be required only in future:

a) If additional 220 kV GIS Bays are installed later, 220 kV GIS Bus needs to be

extended through adaptor which would require additional floor space;

b) Design and engineering of an adaptor is critical as it involves matching of old GIS

bus configuration with the new proposed 220 kV GIS;

c) Manufacturers are reluctant to take up such GIS extension work later due to

difficulty in matching of inter-connection of 220 kV bus because of the need for

OEM proprietary data of the existing GIS switchgear;

d) Ensuring civil structural stability because of the addition of Bays in future will be

a challenge due to the requirement of additional cut-out in RCC slab;

e) Due to rapid changes in technology, availability of compatible GIS switchgear

would be difficult in future;

f) HV side acceptance test for integrated existing and additional 220 kV GIS system

cannot be conducted;

g) Additional spares are required to be maintained, if the extension of Bays is of a

different make; and

h) For future installation, long outage of the entire EHV system would be required,

which is difficult to obtain

4.3.4 The information in respect of unutilised Bays submitted by RInfra-T in response to the

data gaps is as shown in the Table below:

Table 6: Unutilised Bays in Transmission System of RInfra-T

EHV/ HV Sub-

station

No. of

Bays

Capital

Cost per

Bay (Rs.

Crore)

Total Cost

(Rs.

Crore)

Year of

Commissioning

Tentative year

of put-to-use

MSETCL Borivali 2 1.44 2.88 FY 2011-12 FY 2017-18

Aarey 2 1.42 2.84 FY 2011-12 FY 2017-18

Saki 2 1.44 2.88 FY 2010-11 FY 2016-17

Goregaon 1 1.45 1.45 FY 2010-11 FY 2017-18



EHV/ HV Sub-

station

No. of

Bays

Capital

Cost per

Bay (Rs.

Crore)

Total Cost

(Rs.

Crore)

Year of

Commissioning

Tentative year

of put-to-use

Borivali 1 1.42 1.42 FY 2011-12 FY 2018-19

Gorai 1 1.39 1.39 FY 2011-12 FY 2020-21

Chembur 2 1.45 2.90 FY 2012-13 FY 2018-19

Total 220 kV 11

15.76

Ghodbunder 1 0.03 0.03 FY 1994-95 FY 2017-18

Versova 4 0.03 0.10 FY 1994-95 FY 2017-18

Total 33 kV 5

0.13

Total 16

15.89

4.3.5 The Commission notes that the 33 kV Bays at 220 kV Ghodbunder and Versova Sub-

stations have been idle since the commissioning of the 220 kV Gorai (FY 2011-12), 220

kV Borivali (FY 2011-12) and 220 kV Goregaon (FY 2010-11) Sub-stations, as RInfra-T

rearranged its 33 kV network for load management. However, the 220 kV Bays at the

220 kV Aarey, Saki, Goregaon, Borivali, Gorai and Chembur Sub-stations have been idle

since their commissioning.

4.3.6 In this context, the stand taken by the Commission in its Order dated 18 May, 2012 in

Case No. 169 of 2011 in respect of the Maharashtra State Electricity Transmission Co.

Ltd. (MSETCL) is relevant:

“5.1.2. The Commission feels that the above reasons do not justify the non-utilization

of assets commissioned by the utilities, as these have associated costs which are

borne by the consumers through Tariff. It is also true that the utilities undertaking the

electricity business need to do forward planning. Investments in assets need to be

planned keeping in mind the long term requirement, for example a horizon of 5-10

years, instead of short term requirements. This need is greater for transmission

utilities which has to plan for huge network expansion arising out of the generation

evacuation and supply to the load centres. However, it is necessary to create a

balance between long term planned investments and burdening the consumers with

the associated cost of that planning. The consumer doesn’t get benefit out of these

unutilised bays/ assets, though they are required to pay for it….”

The Commission had accordingly disallowed capitalization of unutilised Bays in

MSETCL’s MTR Order in Case No. 207 of 2014. The Commission has been of the view

that, when the addition of unutilised assets financially burdens consumers without any

assured benefit to them in a reasonable time, capitalisation of such assets should

generally not be considered.



4.3.7 The Commission is aware that, due to the Right of Way (RoW) and land constraints in

Mumbai, GIS Sub-stations are installed by the Licensees. Installation of GIS units is

technically feasible and economically viable due to the space constraints and the future

requirement of Bays.

4.3.8 RInfra-T has installed/commissioned GIS Bays for all 220 kV Sub-stations as planned,

but these Bays are unutilised because of delay in commissioning of the Transmission

Lines for which they were proposed.

4.3.9 The Commission notes the reasons cited by RInfra-T in para. 4.3.3 for erection of

additional Bays at the beginning of execution of the GIS Sub-station. They include the

difficulties that may arise later in the availability of matching configurations of GIS bus

and inter-connection of 220 kV bus, compatibility of GIS switchgear, structural stability

of additional Bays, additional spares of the same make, etc. Hence, the Commission is

not disallowing the capitalisation against these 220 kV GIS Bays. However, these

constraints do not apply to Air Insulated Sub-station (AIS) Bays, including 33 kV Bays,

and an appropriate treatment is given to them accordingly.

4.3.10 5 x 33 kV AIS Bays were commissioned/ capitalized in FY 1994-95 and are more than 20

years old. Hence, the capital cost of these Bays would have already depreciated and there

would be no outstanding loan corresponding to them in FY 2014-15. Based on this

assessment, the Commission has not given any treatment for these Bays in the opening

gross block and opening loan balances for FY 2014-15. However, the equity portion of

these Bays needs to be removed from the opening balance of equity while computing the

Return on Equity (RoE).

4.3.11 The following Table shows the revised opening balances of Gross Fixed Assets (GFA),

loan and equity worked out by the Commission on account of unutilised Bays for Truing-

up of FY 2014-15.

Table 7: Impact of Unutilised Bays on Opening Balance of FY 2014-15

Particulars (Rs.

Crore)

Approved as per

MTR Order

Adjustment on

account of unutilised

Bays

Approved in this

Order

Opening GFA 1399.88 - 1399.88

Opening loan balance 635.59 - 635.59

Opening equity

Balance 461.23 0.04 461.20

4.3.12 The revised opening balances as derived in the above Table are considered for Truing-up

of FY 2014-15.



4.3.13 However, the Commission is of the view that the claim for O&M expenses by RInfra-T

against the unutilised AIS and GIS Bays is not justified. Even though the capitalisation

for the unutilised GIS Bays has been allowed, they are not in use or remain idle in the

network. Hence, allowing O&M expenses corresponding to these Bays would tantamount

to approval of expenses without any benefits accruing to consumers. Therefore, the

Commission has considered the impact of unutilised GIS as well as AIS Bays while

calculating the normative O&M expenses for FY 2014-15. The normative O&M

expenses for FY 2014-15 are worked out by reducing 11 x 220 kV Bays and 5 x 33 kV

Bays. The detailed explanation is set out in para 4.7 while approving O&M expenses.

4.4 Interest on Long Term Loans


4.4.1 Till FY 2010-11, RInfra-T had been funding capital expenditure through internal

accruals. However, from FY 2011-12, it has been contracting loans from funding

institutions for capital expenditure planned under the Mumbai Transmission

strengthening schemes.

4.4.2 RInfra-T has availed loans from various Banks for a tenure of 5 to 6 years and maintained

a debt-equity ratio of 70:30. RInfra-T has considered the opening loan balance for FY

2014-15 as equal to the closing loan balance of FY 2013-14. Loan addition equal to 70%

of the capitalisation and repayments equal to annual depreciation have been considered.

4.4.3 RInfra-T intends to refinance the actual loans when they become due for repayment so as

to ensure that loan repayments are managed through depreciation.

4.4.4 The weighted average interest rate of 11.93% has been worked out on the basis of the

actual loan portfolio as per the MYT Regulations, 2011, and applied to the average of

opening and closing loan balances to work out the interest on long term loan for FY

2014-15.

Table 8: Interest on Long Term Loans for FY 2014-15, as submitted by RInfra-T

Particulars (Rs. Crore) Actual MTR Difference

Interest on long-term loan 73.74 73.40 0.34


4.4.5 In its MYT Order dated 13June, 2013 in Case No. 141 of 2012 had scrutinized the actual

loan portfolio of RInfra-T and observed that their repayment was over a tenure of 5.5

years or less, making refinancing necessary. This would expose the consumers to



refinancing risk. The Commission had also observed that the actual interest rates of these

loans were much higher than of normative loans, increasing the burden on the consumers.

Hence, the Commission had not considered the actual loan portfolio of RInfra-T and had

approved the interest based on the weighted average interest rate of RInfra as a whole.

4.4.6 However, during the MTR, the Commission had considered the actual loan portfolio of

RInfra-T and computed interest rate according to the actual loan balances in the light of

the ATE Judgment in Appeal No. 139 of 2012.

4.4.7 In the present proceedings, the Commission had asked for documentary proof regarding

the loan balances from Banks as claimed in the Petition. In response, RInfra-T has

provided details of actual loan balances, loan additions, repayments and closing loan

balances for FY 2014-15.

4.4.8 The Commission considered the opening loan balance for FY 2014-15 as the approved

closing balance for FY 2013-14 in its MTR Order dated 26 June, 2015. The loan

additions are considered as 70% of the approved capitalisation for FY 2014-15.

4.4.9 The repayments are taken as equal to depreciation allowed during the year. The weighted

average interest rate has been worked out based on the actual loan portfolio of RInfra-T

as submitted in the Petition.

4.4.10 The weighted average interest rate is then applied on the average of opening and closing

loan balance for the year to calculate the interest expenses for FY 2014-15.

Table 9: Interest on Long Term Loans for FY 2014-15, as approved by Commission

Particulars (Rs. Crore) MTR RInfra-T

Submission

Approved in this

Order

Opening balance of debt 635.69 635.69 635.69

Addition 18.51 24.22 24.22

Repayment 59.57 59.57 59.57

Closing debt 594.64 600.34 600.34

Interest rate 11.93% 11.93% 11.93%

Interest on long term loan 73.40 73.74 73.74

4.4.11 The Commission approves Interest on Long Term Loans of Rs. 73.74 Crore for the

Truing-up of FY 2014-15.



4.5 Depreciation


4.5.1 RInfra-T has claimed depreciation in line with Regulation 31 of MYT Regulations, 2011,

applying depreciation up to 70% of the original cost of asset and spreading the remaining

depreciable value of the assets over the balance useful life.

4.5.2 RInfra-T has adopted the useful life as specified in the Companies Act for those assets for

which the useful life has not been specified in the MYT Regulations, 2011. It has

provided the computations for each of its assets as on 1 April, 2014 and claimed

depreciation only on those assets which have not been depreciated up to 90%.

Table 10: Depreciation for FY 2014-15, as submitted by RInfra-T


Depreciation 59.57 59.57 0.00


4.5.3 The Commission had provisionally approved depreciation as submitted by RInfra-T for

FY 2014-15 in its earlier MYT Order, and stated that a final view on the depreciation

expenses would be taken at the time of MTR.

4.5.4 In its subsequent MTR Petition, RInfra-T submitted the revised depreciation for FY

2014-15 based on the capitalisation considered for FY 2014-15. It had considered the

opening balance of assets as on 1 April, 2014 and depreciation rates as specified in MYT

Regulations, 2011.

4.5.5 In the MTR Order, the Commission had considered the opening GFA for FY 2014-15

equal to the closing GFA for FY 2013-14, and the assets added during the year were

taken as equal to the capitalisation approved for FY 2014-15 in that Order.

4.5.6 In the present Petition, RInfra-T has claimed depreciation expenses in line with

Regulation 31 of the MYT Regulations, 2011. The Commission has gone through the

details of computation of asset-wise depreciation expenses provided by RInfra-T.

4.5.7 For computing the depreciation for FY 2014-15, the Commission has considered the

opening GFA as per the closing GFA for FY 2013-14 as approved in the MTR Order.

The capitalisation considered is as approved in the present Order for FY 2014-15. The

Commission has computed depreciation on each of the asset classes as provided by

RInfra-T.



4.5.8 The summary of depreciation for FY 2014-15 as submitted by RInfra-T and as approved

by the Commission is as per the Table below.

Table 11: Depreciation Cost for FY 2014-15, as approved by Commission


Submission

Approved in

this Order

Opening gross fixed assets 1,399.88 1,399.88

Addition of gross fixed Assets 34.60 34.60

Asset retirement - -

Closing gross fixed assets 1,434.47 1,434.47


4.5.9 The Commission approves Depreciation of Rs. 59.57 Crore for the Truing-up of FY

2014-15.

4.6 Return on Equity


4.6.1 RoE has been computed based on Regulation 32.2 of the MYT Regulations, 2011, i.e., at

the rate of 15.5% on the equity capital at the beginning of the year plus 50% of the equity

portion for the assets capitalized during the year.

4.6.2 There is no retirement of assets in FY 2014-15 and no consequential treatment is

provided in the equity balance.

Table 12: Return on Equity for FY 2014-15, as submitted by RInfra-T

Particulars (Rs. Crore) Actual MTR Order Difference

Regulatory equity at the beginning of

the year 461.23 461.23 0.00

Equity portion of expenditure

capitalized 10.38 7.94 2.44

Equity portion of asset retired during

the year 0.00 0.00 0.00

Regulatory equity at the end of the

year 471.61 469.17 2.44

RoE computation

RoE at the beginning of the year 71.49 71.49 0.00

RoE on capitalisation during the year 0.80 0.62 0.19

Total Return on Equity 72.30 72.11 0.19




4.6.3 The Commission has considered the regulatory equity at the beginning of the year, as

approved in the MTR Order dated 26 June, 2015, as the closing equity for FY 2013-14

after considering the impact of unutilised Bays as set out in para. 4.3 of this Order. The

additions are taken as equal to the equity portion of assets capitalized during FY 2014-15

as approved in this Order.

4.6.4 RoE has been computed at 15.50 % of the equity, in accordance with Regulation 32.2.1,

on the opening equity of the year and on 30% of the equity portion of the approved

capitalisation in FY 2014-15.

4.6.5 The summary of RoE for FY 2014-15 as submitted by RInfra-T and as approved by the

Commission is provided in the Table below.

Table 13: Return on Equity for FY 2014-15, as approved by Commission


Submission

Approved in this

Order


the year 461.23 461.23 461.20


capitalized 7.94 10.38 10.38


the year 0.00 0.00 0.00


year 469.17 471.61 471.57

RoE computation


RoE on capitalisation during the year 0.62 0.80 0.80

Total Return on Equity 72.11 72.30 72.29

4.6.6 The Commission approves Return on Equity of Rs. 72.29 Crore upon Truing-up for

FY 2014-15.

4.7 Operation and Maintenance Expenses


4.7.1 O&M expenses have been submitted as per the norms for FY 2014-15 computed based

on the actual number of Bays and Transmission Lines in ckt.km. The O&M expenses

worked out based on norms is similar to that approved in the MTR Order, i.e., Rs. 40.90

Crore.



4.7.2 In addition, RInfra-T has also set out the actual O&M expenses for FY 2014-15 with the

breakup of employee expenses, repairs and maintenance (R&M) and administration and

general (A&G) expenses.

4.7.3 The actual O&M expenses claimed for FY 2014-15 are Rs. 40.81 Crore, which is less

than the normative. Accordingly, efficiency gains have been claimed on the difference

between the actual and normative O&M expenses as per the MYT Regulations, 2011.

4.7.4 In addition to the above O&M expenses, certain other expenses, such as Corporate

expense allocation, Energy Charges, SCADA charges, land usage charges and rental for

cable laying, have been claimed in addition as part of O&M expenses.

4.7.5 The following Table shows the O&M expenses claimed by RInfra-T for FY 2014-15

along with the efficiency gains as against the normative expenses.

Table 14: Summary of O&M Expenses for FY 2014-15, as submitted by RInfra-T


Base O&M expenses (excluding

Corporate expense allocation) 40.81 40.90 (0.09)

Efficiency gains retained by RInfra-T

as per MYT Regulations, 2011 (2/3rd

of savings in base expenses of Rs. 0.09

Crore)

0.06 - 0.06

Corporate allocation 2.25 2.27 (0.01)

Energy Charges 3.99 4.15 (0.16)

SCADA charges 1.01 1.06 (0.05)

Land usage charges 3.68 3.68 -

Total O&M expenses allowable 51.80 52.05 (0.25)


4.7.6 The Commission sought the actual expenses incurred under various heads of O&M

expenses, which RInfra-T has provided. The Commission analyzed the actual O&M

expenditure as submitted by RInfra-T for each of the components, including employee

expenses, R&M and A&G expenses. The Commission has also compared the expenses

with FY 2013-14, as approved in the MTR Order, and found the actual expenses for FY

2014-15 to be in order.

4.7.7 The Commission sought Sub-station-wise details of unutilised Bays which have been

commissioned but not put to use. RInfra-T provided the list of unutilised Bays which

have been commissioned and capitalized. The Commission has carried out a prudence

check of the number of Bays and ckt. Km. of Transmission Lines as on 31 March, 2015.



It has excluded 11 x 220 kV and 5 x 33 kV unutilised Bays, as submitted by RInfra-T, for

computing the normative O&M expenses for FY 2014-15.

4.7.8 The MYT Order dated 13 June, 2013 had approved additional O&M expenses pertaining

to Energy Charges, rental charges for cable laying, SCADA charges and land usage

charges over and above the normative O&M expenses.

4.7.9 The Commission has analyzed each of these expenses separately, and approved them in

this Order. The details of additional O&M expenses are provided in the following

paragraphs.

Energy Charges

4.7.10 RInfra-T has claimed Energy Charges for FY 2014-15 in line with the actual expenses

paid to other Licensees for such Auxiliary Consumption.

4.7.11 The Commission has been allowing the Energy Charges as Auxiliary Consumption of

EHV Sub-stations as an additional charge over and above normative O&M expenses.

These charges have been approved since the norms specified in the MYT Regulations,

2011 did not include such expenses but these are legitimate expenses of RInfra-T. The

Commission had accordingly considered these expenses over and above the O&M

expenses derived as per norms while Truing-up of FY 2012-13 and FY 203-14 in the

MTR Order.

4.7.12 The Commission had sought details of such expenses incurred in FY 2014-15. RInfra-T

has provided the Sub-station-wise Energy Charges paid to other Licensees. The

Commission has verified these expenses and found them to be in order. Accordingly, the

Commission approves Rs. 3.99 Crore towards Energy Charges for FY 2014-15.

Land Usage Charges

4.7.13 RInfra-T has claimed land usage charges of Rs. 3.68 Crore for FY 2014-15, based on the

Ready Reckoner rate of FY 2012-13 and a formalized arrangement with RInfra-D for

land usage charges through Minutes of Meeting (MoM). RInfra-T has stated that such

expenditure has incurred towards usage of land of RInfra-D for commissioning of 5 EHV

Sub-stations at Goregaon, Gorai, Saki, Borivali and Chembur.

4.7.14 In the MYT Order dated 13 June, 2013, the Commission had acknowledged that such

expenses are not covered under the norms in the MYT Regulations, 2011 and approved

them over and above the normative O&M expenses. This was reiterated in the MTR

Order dated 26 June, 2015, and land usage charges of Rs. 3.68 Crore were approved

based on the formalized arrangement with RInfra-D.



4.7.15 In the present Petition, RInfra-T has claimed the land usage charges as per the MoM, in

line with the MTR Order approval.

4.7.16 As sought by the Commission, RInfra-T has provided documentary evidence of the

Ready Reckoner rate for FY 2012-13 for each Sub-station.

4.7.17 Based on the above analysis and facts, the Commission approves land usage charges of

Rs. 3.68 Crore for FY 2014-15.

SCADA Charges

4.7.18 In the MYT Order, the Commission had acknowledged the necessity of Supervisory

Control and Data Acquisition (SCADA) charges with regard to managing and operating

the networks of both Transmission and Distribution Businesses, and approved them over

and above the normative O&M expenses.

4.7.19 RInfra-T has stated that all its EHV Sub-stations and associated Lines are directly

connected to the SCADA Centre. This also enables it to provide various reports relating

to the Transmission system, as specified in the State Grid Code.

4.7.20 The SCADA employee expenses have been allocated based on the ratio of desks allotted

to Transmission and Distribution functions and other expenses based on the actual data

points handled by the respective Businesses.

4.7.21 In the MTR Order, the Commission had approved SCADA charges based on a similar

allocation, after ensuring that the total cost is equal to the cost apportioned against the

Transmission and Distribution Businesses of RInfra taken together.

4.7.22 Considering the above facts, the Commission approves SCADA charges of Rs 1.01 Crore

for FY 2014-15, as submitted by RInfra-T.

Corporate Expenses Allocation

4.7.23 The MTR Order dated 26 June, 2015 had approved Corporate expenses as submitted by

RInfra-T in the Truing-up of FY 2012-13 and FY 2013-14 after ensuring that such

allocation does not lead to increase in ARR of the Transmission and Distribution

businesses taken together.

4.7.24 During provisional Truing-up of FY 2014-15, the Commission had approved Corporate

expenses allocation for FY 2014-15 based on the actual Corporate expenses for the first

half (H1) of the financial year and estimates for the second half (H2).



4.7.25 In the present Petition, RInfra-T has provided the actual Corporate expenses for FY 2014-

15 and the allocation statement of such expenses to the Generation, Transmission and

Distribution Businesses of RInfra along with the Auditor’s certificate.

4.7.26 The Commission approves the Corporate expense allocation of Rs. 2.25 Crore based on

actual expenses for FY 2014-15.

4.7.27 The following Table shows the total O&M expenses are approved by the Commission for

FY 2014-15.

Table 15: O&M Expenses for FY 2014-15, as approved by Commission

Particulars (Rs. Crore) MTR Order

(Normative)

RInfra-T

Submission

(Actual O&M

expenses)

Approved in

this Order

(Actual O&M

expenses)

Base O&M expenses (excluding

Corporate expense allocation) 40.90 40.81 40.81

Corporate expense allocation 2.27 2.25 2.25

Energy Charges 4.15 3.99 3.99

SCADA charges 1.06 1.01 1.01

Land usage charges 3.68 3.68 3.68

Total O&M expenses allowable 52.05 51.74 51.74

4.7.28 The Commission approves actual base O&M Expenses of Rs. 40.81 Crore

pertaining to Employee, R&M and A&G expenses. The Commission also approves

Corporate expense allocation of Rs. 2.25 Crore, Energy Charges of Rs. 3.99 Crore,

SCADA charges of Rs. 1.01 Crore and land usage charges of Rs. 3.68 Crore, in

addition to the base O&M Expenses, for the Truing-up of FY 2014-15.

4.8 Interest on Working Capital


4.8.1 Interest on Working Capital (IoWC) has been computed as per Regulation 35.2 of the

MYT Regulations, 2011 by applying the norms to the actuals.

4.8.2 Month-wise closing inventory of book value of stores for FY 2014-15 has been

presented, and the average of all months has been considered in the calculation of

working capital for the sum of book value of stores.

4.8.3 Revenue from Transmission Charges has been considered based on the combination of

charges approved in the Order dated 13 May, 2013 in Case No. 56 of 2013 for the first 5



months and charges approved in Order dated 14 August, 2014 in Case No. 123 of 2014

for the remaining 7 months.

4.8.4 RInfra-T has not claimed any efficiency gain on IoWC, in line with the Judgments of the

ATE in Appeal No. 203 of 2010 and Appeal Nos. 17, 18, 19 of 2011.

4.8.5 The following Table shows the IoWC as submitted by RInfra-T.

Table 16: Interest on Working Capital for FY 2014-15, as submitted by RInfra-T


Interest on working capital 6.77 6.81 (0.04)


4.8.6 Regulation 35.2 of the MYT Regulations, 2011 specifies the methodology for assessment

of working capital requirement by a Transmission Licensee as follows:

“35.2 (a) The Transmission Licensee shall be allowed interest on the estimated level

of working capital for the financial year, computed as follows:

(i) One-twelfth (1/12) of the amount of operation and maintenance expenses for such

financial year; plus

(ii) One-twelfth (1/12) of the sum of the book value of stores, materials and supplies

including fuel on hand at the end of each month of such financial year; plus

(iii) One and a half (11/2) months equivalent of the expected revenue from

Transmission Charges at the prevailing tariffs;

minus

(iv) Amount, if any, held as security deposits from Transmission System Users.”

4.8.7 The Commission has approved O&M expenses for one month based on the normative

base O&M expenses approved (Rs 38.48 Crore) in this Order (Table 30) and other

expenses. The approved base O&M expenses are considering RInfra-T funds its working

capital requirement from internal funds/accruals, and the prudent expenditure towards

O&M base expenses is approved for the purpose of working capital borrowing. The

Commission has also scrutinized the closing inventory as provided by RInfra-T and the

revenue earned from Transmission Charges.



4.8.8 The MYT Regulations, 2011 stipulate that the rate of IoWC shall be considered on

normative basis and shall be equal to the State Bank of India Advance Rate (SBAR) as on

the date of application for determination of Tariff. The Commission has computed

interest as per the rate approved in the MYT Order, which is 14.50%. The summary of

IoWC for FY 2014-15 as submitted by RInfra-T and as approved by the Commission is

shown in the Table below.

Table 17: Interest on Working Capital for FY 2014-15, as approved by Commission

Particulars (Rs. Crore) MTR Order RInfra-T

Submission

Approved in

this Order

Operations and maintenance expenses

for one month 4.31 4.12

One-twelfth of the sum of book value

of stores, materials and supplies at end

of each month

2.69 2.69

One and a half months of the expected

revenue from Transmission Charges at

the prevailing Tariffs

39.68 39.68

Less: Amount of security deposit from

Transmission System Users - -

Total working capital requirement 46.68 46.48

Interest Rate (%) - State Bank

Advance Rate 14.50% 14.50%

Interest on working capital 6.81 6.77 6.74

4.8.9 The Commission approves Interest on Working Capital of Rs. 6.74 Crore for


4.9 Contribution to Contingency Reserves


4.9.1 Regulation 36.1 of the MYT Regulations, 2011 provides for contribution to Contingency

Reserves of between 0.25 and 0.5 per cent of the original cost of fixed assets.

4.9.2 RInfra-T has considered the contribution to Contingency Reserves at 0.25% of the

original cost of fixed assets as on 1 April, 2014.

Table 18: Contribution to Contingency Reserves for FY 2014-15, as submitted by RInfra-T


Contribution to Contingency Reserves 3.50 3.50 0




4.9.3 RInfra-T had provided documentary evidence for investments made in specified

securities for Contingency Reserves. Upon scrutiny, the Commission observed some

discrepancies in figures between these and the Petition. The Commission sought

reconciliation of the investments made with the calculations provided for arriving at

contribution to Contingency Reserves. The details of investment in securities were

provided. On detailed scrutiny, the Commission has considered the investments made in

approved securities.

4.9.4 Regulation 36.1 of MYT Regulations, 2011 provides as follows:

“36.1 Where the Transmission Licensee or Distribution Licensee has made an

appropriation to the Contingency Reserve, a sum not less than 0.25 per cent and not

more than 0.5 per cent of the original cost of fixed assets shall be allowed annually

towards such appropriation in the calculation of aggregate revenue requirement:

Provided that where the amount of such Contingencies Reserves exceeds five (5)

per cent of the original cost of fixed assets, no such appropriation shall be allowed

which would have the effect of increasing the reserve beyond the said maximum:

Provided further that the amount so appropriated shall be invested in securities

authorized under the Indian Trusts Act, 1882 within a period of six months of the

close of the financial year.”

4.9.5 In accordance with the above Regulation, the Commission has approved the contribution

to Contingency Reserves as 0.25% of the opening GFA as approved in this Order for FY

2014-15.

Table 19: Contribution to Contingency Reserves for FY 2014-15, as approved by

Commission

Particulars (Rs. Crore) MTR Order Actual Approved in this

Order

Opening balance of Contingency

Reserves - 13.25 13.25

Opening gross fixed assets - 1,399.88 1,399.88


Reserves as % of opening GFA - 0.95% 0.95%

Contribution to Contingency

Reserves during the year 3.50 3.50 3.50

4.9.6 The Commission approves Contribution to Contingency Reserves of Rs. 3.50 Crore

for the Truing-up of FY 2014-15.



4.10 Income Tax


4.10.1 The Commission had provisionally approved Income Tax for FY 2014-15 based on the

actual Income Tax paid in FY 2013-14, in the MTR Order dated 26 June, 2015.

4.10.2 In the present Petition, RInfra-T has computed Income Tax for FY 14-15 based on stand-

alone Regulatory Profit Before Tax (PBT) for the Transmission business.

4.10.3 RInfra-T has not considered contribution to Contingency Reserves as an expense while

calculating regulatory PBT since it is not a tax deductible item. Income from Other

Business is also not considered as part of revenue for the computation of Income Tax.

Table 20: Income Tax for FY 2014-15, as submitted by RInfra-T


Income Tax 29.09 1.01 28.08


4.10.4 Regulation 34 of MYT Regulations, 2011 stipulates the computation of Income Tax as

follows:

“34.1 The Commission, in its MYT Order, shall provisionally approve Income Tax

payable for each year of the Control Period, if any, based on the actual income tax

paid on permissible return as allowed by the Commission relating to the electricity

business regulated by the Commission, as per latest Audited Accounts available for

the applicant, subject to prudence check:

Provided that no Income Tax shall be considered on the amount of efficiency

gains and incentive earned by the Generating Companies, Transmission Licensees

and Distribution Licensees.

Provided further that the Generating Company, Transmission Licensee and

Distribution Licensee shall bill the Income Tax under a separate head called "Income

Tax Reimbursement" in their respective bills

34.2 Variation between Income Tax actually paid and approved, if any, on the income

stream of the regulated business of Generating Companies, Transmission Licensees

and Distribution Licensees shall be reimbursed to/recovered from the Generating

Companies, Transmission Licensees and Distribution Licensees, based on the

documentary evidence submitted at the time of Mid-term Performance Review and

MYT Order of 3rd Control Period, subject to prudence check…..”



4.10.5 The Commission has allowed Income Tax on PBT basis after reducing gains/losses and

incentives, as in the True-up Orders for FY 2012-13 and FY 2013-14. The Commission

has also considered other allowances and disallowances, such as provision for leave

encashment, gratuity and contingencies which are provided under the Income Tax Act, to

arrive at the total taxable income. The Commission has accordingly computed Income

Tax for FY 2014-15 as shown in the Table below:

Table 21: Income Tax for FY 2014-15, as approved by Commission

Particulars (Rs. Crore) MTR Order Actual Approved in

this Order

Profit Before Tax 128.08 124.70

Add: Depreciation as per ARR 59.57 59.57

Add: Other disallowances 3.64 3.64

Less: Depreciation as per Income Tax Act 103.63 103.63

Less: Other expenses allowed 2.09 2.09

Total taxable income 85.58 82.19

Tax payable at normal rate (Corporate Tax

rate, i.e., 33.99%) 1.01 29.09 27.94

4.10.6 The Commission approves Income Tax of Rs. 27.94 Crore in the Truing-up for FY

2014-15.

4.11 Revenue from Transmission Charges


4.11.1 The revenue from Transmission Charges has been considered as a combination of

charges approved in the Order dated 13 May, 2013 in Case No. 56 of 2013 for the first 5

months, and those approved in the Order dated 14 August, 2014 in Case No. 123 of 2014

for the remaining 7 months of FY 2014-15.

4.11.2 There is no direct income accruing from Open Access charges.


4.11.3 The Transmission Charges presented are in line with the respective InSTS Tariff Orders

in Case No. 56 of 2013 and Case No. 123 of 2014 in respect of FY 2014-15.The

Commission approves the revenue from Transmission Charges as submitted by RInfra-T.

4.11.4 The following Table shows the revenue from Transmission Charges approved by the

Commission for FY 2014-15.



Table 22: Revenue from Transmission Charges for FY 2014-15, as approved by

Commission


submission

Approved in

this Order

Revenue from Transmission Charges 317.42 317.42 317.42

4.11.5 The Commission approves revenue from Transmission Charges of Rs. 317.42 Crore

in the Truing-up for FY 2014-15.

4.12 Non-Tariff Income


4.12.1 The major heads of Non-Tariff Income claimed in FY 2014-15 have been set out.

4.12.2 RInfra-T has been earning income from interest on investment made for Contingency

Reserves, and provided the details.

4.12.3 Liquidated Damages received from vendors on account of delay in delivery of equipment

are also treated as Non-Tariff Income.

4.12.4 Non-Tariff Income also includes realization of exchange loss, sale of scrap, rental income

from land usage charges and income from staff quarters.

4.12.5 RInfra-T has claimed the following towards Non-Tariff Income.

Table 23: Non-Tariff Income for FY 2014-15, as submitted by RInfra-T


Non-Tariff Income 2.55 2.32 0.23


4.12.6 The Commission has scrutinized the income under each head claimed by RInfra-T,

including the income from investments made for contribution to Contingency Reserves,

and found it to be in order.

4.12.7 Income from land usage charges receivable from RInfra-D is in line with the Ready

Reckoner rates and MoM provided.

4.12.8 The Commission has also considered the submission of RInfra-T regarding income from

rental of staff quarter.



Table 24: Non-Tariff Income for FY 2014-15, as approved by Commission


submission

Approved in

this Order


4.12.9 The Commission approves Non-Tariff Income of Rs. 2.55 Crore for the Truing-up

of FY 2014-15.

4.13 Income from Other Business


4.13.1 RInfra-T has let out space on its Sub-station rooftops for installation of BTS towers of

Reliance Communication Ltd. The income from such other businesses should be

considered net of tax, and one-third of such income net of tax should be reduced from the

ARR. Accordingly, Income from Other Business net of tax has been computed, and one-

third of the amounts net of tax has been considered for passing through in the ARR.

4.13.2 RInfra-T has submitted Income from Other Business for FY 2014-15 as follows.

Table 25: Income from Other Business for FY 2014-15, as submitted by RInfra-T


Income from Other Business 0.02 0.04 (0.01)


4.13.3 The Commission has verified the calculation of Income from Other Business. Regulation

63.1 of the MYT Regulations, 2011 specifies as follows:

“63.1 Where the Transmission Licensee has engaged in any Other Business, an

amount equal to one-third of the revenues from such Other Business after deduction

of all direct and indirect costs attributed to such Other Business shall be deducted

from the aggregate revenue requirement in calculating the annual Transmission

Charges of the Transmission Licensee:

Provided that the Transmission Licensee shall follow a reasonable basis for

allocation of all joint and common costs between the Transmission Business and the

Other Business and shall submit the Allocation Statement to the Commission along

with its application for determination of tariff: Provided further that where the sum

total of the direct and indirect costs of such Other Business exceed the revenues from

such Other Business, no amount shall be allowed to be added to the aggregate



revenue requirement of the Transmission Licensee on account of such Other

Business.”

4.13.4 In line with Regulation 63.1, the Commission approves the Income from Other Business

in the ARR of FY 2014-15 as shown in the following Table.

Table 26: Income from Other Business for FY 2014-15, as approved by Commission


submission

Approved in

this Order

Income from Other Business 0.04 0.02 0.02

4.13.5 The Commission approves Income from Other Business of Rs. 0.02 Crore in the

Truing-up for FY 2014-15.

4.14 Incentive on Availability of RInfra-T Network


4.14.1 RInfra-T has claimed incentive on achieving annual Availability beyond the target

Availability, in line with Regulation 60.1 of the MYT Regulations, 2011.

4.14.2 The MSLDC certificate for the Transmission System Availability for RInfra-T at 99.81%

for FY 2014-15 is provided.

4.14.3 In the MTR Order, the Commission did not consider Income Tax as a part of the ARR for

calculating the incentive on Availability of the Transmission Network. On the same lines,

Income Tax has not been considered as a part of ARR for calculation of incentives in this

Order.

4.14.4 RInfra-T has separately taken up the issue before the ATE also.


4.14.5 Regulation 60.2 of MYT Regulations, 2011 specifies the following:

“60.2 The Transmission Licensee shall be entitled to incentive on achieving annual

availability beyond the target availability, in accordance with the following formula:

Incentive = Annual Transmission Charges x [Annual availability achieved – Target

Availability] / Target Availability;



Where, Annual Transmission Charges shall correspond to Aggregate Revenue

Requirement for each year of the Control Period for the particular Transmission

Licensee within the State:….”

Provided that no incentive shall be payable above the availability of 99.75% for

AC system and 98.5% for HVDC system:

Provided further that the computation of incentive/disincentive shall be

undertaken during mid-term performance review and at the end of Control Period.”

4.14.6 The Commission has determined the incentive with respect to Availability based on

Regulation 60.2. Further, the MTR Order had approved incentive on ARR after excluding

Income Tax. In this Order also, the Commission has also not considered Income Tax as a

component of ARR for calculating incentive.

4.14.7 The actual Availability as per the MSLDC certificate is 99.81%, which is higher than the

ceiling of 99.75% specified in the Regulations. For the calculation of incentive, the

Commission has considered Availability of 99.75%.

4.14.8 The following Table shows the computation of RInfra-T and the incentive worked out by

the Commission for FY 2014-15.

Table 27: Incentive on Availability for FY 2014-15, as approved by Commission


submission

Approved in

this Order

Net ARR excluding Income Tax, Non- Tariff

Income and Income from Other Business 265.11 263.46

Actual Availability as per MSLDC (%)

99.81% 99.81%

Availability for the purpose of Incentive (%) 99.75% 99.75%

Normative Availability (%) 98.00% 98.00%

Incentive on Availability - 4.73 4.70

4.14.9 The Commission approves Incentive on Availability of Rs. 4.70 Crore in the Truing-

up for FY 2014-15.

4.15 Sharing of Gains and Losses for FY 2014-15

4.15.1 O&M expenses have been computed as per the norms in Regulation 61.6 of the MYT

Regulations, 2011and on the basis of the actual number of Bays and Transmission Line

length (average of their opening and closing balance) for FY 2014-15 as below:



Table 28: Normative O&M Expenses for FY 2014-15, as submitted by RInfra-T

Particulars (Rs. Crore) FY 2014-15

Length of Line in ckt. Km 538.66

Norms as per MYT Regulations, 2011 (Rs. Lakh/ckt. km) 0.43

Total expenses (Rs. Crore) 2.32

Number of Bays above 66 kV 115.00

Norms as per MYT Regulations, 2011 (Rs. Lakh/bay) 20.03

Number of Bays at and below 66 kV 371.00

Norms as per MYT Regulations, 2011 (Rs. Lakh/bay) 4.19

Total expenses (Rs. Crore) 38.58

Total normative O&M expenses (Rs. Crore) 40.90

4.15.2 Actual O&M expenses amount to Rs. 40.81 Crore for FY 2014-15 (as shown at para.4.7

above), and sharing of efficiency gains has been claimed as follows.

Table 29: Sharing of Efficiency Gain for O&M Expenses for FY 2014-15, as submitted by

RInfra-T

Particulars (Rs. Crore) FY 2014-15

Actual O&M expenses as claimed in the Petition 40.81

Normative O&M expenses as per MYT Regulations, 2011 40.90

Gains on account of O&M expenses 0.09

Net Entitlement for RInfra-T for sharing of gains on O&M

expenses 0.06


4.15.3 The Commission has calculated the normative O&M expenses excluding 11 x 220 kV

and 5 x 33 kV Bays which were not put to use. The actual O&M expenses as approved by

the Commission in para 4.7 of this Order are Rs. 40.81 Crore. The normative O&M

expenses for FY 2014-15 as worked out by the Commission are shown in the Table

below.

Table 30: Normative O&M Expenses for FY 2014-15, approved by Commission

Particulars As submitted

by RInfra-T

As approved in

this Order

220 kV Transmission Line length in ckt. Km 538.66 538.66

Applicable O&M cost norm for 220 kV Transmission 0.43 0.43




by RInfra-T

As approved in

this Order

Lines (Rs Lakh / ckt. km)

Normative O&M expenses for Transmission Lines (Rs.

Crore) 2.32 2.32

Number of 220 kV Bays 115.00 104.00*

Number of 33 kV Bays 371.00 366.00*

Applicable O&M norm for 220 kV Bays (Rs. Lakh / bay) 20.03 20.03

Applicable O&M norm for 33 kV Bays (Rs. Lakh / bay) 4.19 4.19

Normative O&M expenses for Bays (Rs. Crore) 38.58 36.17

Total normative O&M expenses 40.90 38.48 * Reduction in number of bays on account of non-utilisation as discussed earlier in this Order

4.15.4 The Commission has shown the impact of the unutilised Bays as set out in para 4.3 of this

Order. The normative O&M expenses, after considering the impact of unutilised Bays,

works out to Rs. 38.48 Crore, which is lower than the actual O&M expenses approved in

this Order for FY 2014-15.

4.15.5 There is an efficiency loss on account of actual O&M expenses being higher than the

normative, as computed out by the Commission for FY 2014-15.

4.15.6 Regulation 14.2 of the MYT Regulations, 2011 specifies the following

“14.2 The approved aggregate loss to the Generating Company or Transmission

Licensee or Distribution Licensee on account of controllable factors shall be dealt

with in the following manner:

(a) One-third of the amount of such loss may be passed on as an additional charge in

tariff over such period as may be stipulated in the Order of the Commission under

Regulation 11.6; and

(b) The balance amount of loss shall be absorbed by the Generating Company or

Transmission Licensee or Distribution Licensee…”

4.15.7 Accordingly, the summary of the net entitlement of O&M expenses, including efficiency

loss for FY 2014-15, as approved by the Commission is shown below:

Table 31: Net Entitlement of O&M Expenses for FY 2014-15, as approved by Commission

Particulars (Rs. Crore) MTR

Order

RInfra-T

submission

Approved in

this Order

Actual O&M expenses (excluding Corporate

expense allocation, Energy Charges, land usage

charges and SCADA charges)

- 40.81 40.81



Particulars (Rs. Crore) MTR

Order

RInfra-T

submission

Approved in

this Order

Normative O&M expenses 40.90 40.90 38.48

Efficiency gain / (losses) on O&M expenses - 0.09 (2.33)

Efficiency gain / (losses) to be adjusted in tariff - 0.06 (1.55)





Total O&M expenses 52.05 51.80 50.19

4.15.8 The Commission approves O&M Expenses of Rs. 50.19 Crore for FY 2014-15, after

sharing of efficiency losses, for the Truing-up of FY 2014-15.

4.16 Revenue Gap/Surplus for FY 2014-15


4.16.1 The break-up of expenses for FY 2014-15, along with adjustment on account of sharing

of gains and losses, is given in the following Table:

Table 32: Summary of True-up for FY 2014-15, including sharing of efficiency gains/losses,

as submitted by RInfra-T

Sr.

No. Particulars

MTR

Order Actual

Deviati

on

Controlla

ble

Uncontrolla

ble

Net

Entitlement

after

sharing of

gains/(losses

)

1

Operation

&maintenance

expenses

52.05 51.74 (0.31) (0.31) 51.80

2 Depreciation expenses 59.57 59.57 0.00 0.00 59.57

3 Interest on long-term

long term loans 73.40 73.74 0.34 0.34 73.74

4

Interest on working

capital and on security

deposits

6.81 6.77 (0.04)

(0.04) 6.77

5 Income Tax 1.01 29.09 28.08 28.08 29.09

6 Contribution to

Contingency Reserves 3.50 3.50 - - 3.50

7 Total revenue

expenditure 196.34 224.41 28.07 (0.31) 28.38 224.47

8 Return on equity 72.11 72.30 0.19 0.19 72.30



Sr.

No. Particulars

MTR

Order Actual

Deviati

on

Controlla

ble

Uncontrolla

ble

Net

Entitlement

after

sharing of

gains/(losses

)

capital

9 Aggregate Revenue

Requirement 268.45 296.71 28.26 (0.31) 28.57 296.76

10 Less: Non-Tariff

Income 2.32 2.55 0.23 0.23 2.55

11 Less: Income from

Other Business 0.04 0.02 (0.01) (0.01) 0.02

12

Aggregate Revenue

Requirement from

Transmission Tariff

266.09 294.14 28.05 (0.31) 28.35 294.19

13 Availability incentive - 4.73 4.73 4.73 4.73

14 Revenue from

Transmission Tariff

a Long-term TSUs

including Distribution

Licensees

317.42 317.42 - - 317.42

b Medium-term OA

users

c Short-term OA Users

14 Revenue

Gap/(surplus) (51.33) (18.55) 32.78 (0.31) 33.09 (18.49)


4.16.2 Based on the discussion on the various cost components in this Section, the Commission

has computed the total ARR and Revenue Gap/ (surplus) for FY 2014-15 as detailed in

the Table below.

Table 33: Summary of True-up for FY 2014-15, including sharing of efficiency gains/losses,

as approved by Commission

Sr.

No. Particulars

MTR

Order

Approved

after

True-up

Deviation Controll

able

Uncontrol

lable

Net

Entitlement

after sharing

of

gains/(losses)

1

Operation

&maintenance

expenses

52.05 51.74 (0.31) (0.31) 50.19

2 Depreciation 59.57 59.57 (0.00) (0.00) 59.57



Sr.

No. Particulars

MTR

Order

Approved

after

True-up

Deviation Controll

able

Uncontrol

lable

Net

Entitlement

after sharing

of

gains/(losses)

expenses

3 Interest on long-

term loan Capital 73.40 73.74 0.34 0.34 73.74

4

Interest on

working capital

and on security

deposits

6.81 6.74 (0.07) (0.07) 6.74

5 Income Tax 1.01 27.94 26.93 26.93 27.94

6

Contribution to

Contingency

Reserves

3.50 3.50 0.00 0.00 3.50

7 Total revenue

expenditure 196.34 223.23 26.89 (0.31) 27.20 221.68

8 Return on equity

capital 72.11 72.29 0.18 0.18 72.29

9

Aggregate

Revenue

Requirement

268.45 295.52 27.07 (0.31) 27.38 293.97

10 Less: Non-Tariff

Income 2.32 2.55 0.23 0.23 2.55

11

Less: Income

from Other

Business

0.04 0.02 (0.01) (0.01) 0.02

12

Aggregate

Revenue

Requirement

from

Transmission

Tariff

266.09 292.95 26.86 (0.31) 27.17 291.40

13 Availability

incentive - 4.70 4.70

4.70 4.70

14 Revenue from

Transmission

Tariff

a Long-term TSUs

including

Distribution

Licensees

317.42 317.42 - - 317.42

b Medium-Term

OA users

c Short-term OA

users

14 Revenue

Gap/(surplus) (51.33) (19.77) 31.56 (0.31) 31.87 (21.32)



4.16.3 After Truing-up of various elements for FY 2014-15, the ARR for FY 2014-15 works

out to Rs 293.97 Crore. Considering revenue of Rs 317.42 Crore from Transmission

Charges, Availability incentive of Rs 4.70 Crore, Non-Tariff Income of Rs. 2.55

Crore and Income from Other Business of Rs. 0.02 Crore, the Commission approves

a revenue surplus of Rs. 21.32 Crore for FY 2014-15 for adjustment in the Tariff of

subsequent years.



5 PROVISIONAL TRUE-UP OF ARR FOR FY 2015-16

5.1 Background

5.1.1 RInfra-T has sought provisional Truing-up of FY 2015-16 based on the unaudited actual

figures for H1 and estimates for H2. RInfra-T has explained the reasons for revision in

the forecast of FY 2015-16 vis-à-vis the figures approved in the MTR Order dated 26

June, 2015 in Case No. 221 of 2014.

5.1.2 The analysis underlying the provisional Truing-up for FY 2015-16 by the Commission is

set out below.



5.2.1 RInfra-T had estimated capitalisation of Rs. 146.02 Crore towards DPR schemes and Rs.

21.26 Crore towards Non-DPR schemes for FY 2015-16 in its MTR Petition. The

Commission approved capitalisation of Rs. 113.02 Crore for DPR schemes and Rs. 21.26

Crore for Non-DPR schemes in the MTR Order.

5.2.2 The MTR Order had disallowed capitalization of those schemes whose cumulative

capitalisation exceeded the DPR cost as approved by the Commission. RInfra-T was

directed to give reasons for time over-run, cost over-run and the scheme-wise IDC for all

such schemes whose cumulative capitalisation exceeded the approved DPR cost. RInfra-

T has submitted a review report on each of the schemes, elaborating the reasons for time

and cost over-run beyond the cut-off date along with documentary support, vide letters

dated 30 September, 2015 and 5 April, 2016. The report shows that the time over-run

and/or expenditure beyond the cut-off date is due to extraneous factors. Moreover, there

is no cost over-run in any of the schemes.

5.2.3 RInfra-T has incurred Rs. 14.91 Crore towards capital expenditure and Rs. 10.16 Crore

towards capitalisation during H1 of FY 2015-16.

5.2.4 RInfra-T has projected capital expenditure and capitalisation during H2 of FY 2015-16

considering the progress of individual schemes. Capitalisation of Rs. 54.78 Crore during

H2 has been projected, resulting in total estimated capitalisation of Rs. 64.94 Crore for

FY 2015-16, as shown in the Table below.



Table 34: Scheme-wise Capitalisation for FY 2015-16, as submitted by RInfra-T

Particulars (Rs. Crore)

Actual

Capitalisation

(H1)

Estimated

Capitalisation

(H2)


220 kV GIS EHV Sub-station Gorai 0.66 14.82

Refurbishment of 220 kV Transmission Line 0.48 -



System Improvements 1.15 6.78

220 kV cable RInfra-Saki to TPC-Saki - -

Relocation of 220 kV tower - 10.49

220 kV Nagari Niwara - -

Non-DPR 0.12 9.88

Total 10.16 54.78

5.2.5 A brief description of the major capitalisation in H1 and projected in H2, showing the

status of ongoing works, has been given.

5.2.6 A comparison of the capitalisation approved in the MTR Order and as submitted by

RInfra-T is provided in the Table below.

Table 35: Capitalisation for FY 2015-16, as submitted by RInfra-T

Particulars (Rs. Crore) MTR Order Estimated

Capitalisation

DPR 113.02 54.94

Non-DPR 21.26 10.00

Total 134.28 64.94

5.2.7 Reasons for significant under-capitalisation in FY 2015-16 as compared to that approved

in the MTR Order have also been given.


5.2.8 The Commission had approved capitalisation of Rs. 741.08 Crore for FY 2015-16 in the

MYT Order dated 13 June, 2013 based on the status of each scheme as submitted by

RInfra-T. It had scrutinized all the schemes for capital expenditure submitted by RInfra-T

in its MYT Petition along with the DPR schemes, and approved capitalisation as

proposed considering that all the schemes would be reviewed at the time of the MTR.

5.2.9 In the MTR Order, however, the Commission observed that most of the approved

schemes envisaged in the MYT Order had not been capitalized in the expected time

frame. The Commission analyzed the capitalisation schedule submitted by RInfra-T in



the light of the MYT Order and other details given in the MTR Petition, and observed

significant under-capitalisation in most of the schemes. The Commission was of the view

that, in order to consider the capitalisation as submitted by RInfra-T, it needed to be

convinced that the time over-run was on account of factors not within the reasonable

control of RInfra-T. The ruling of the Commission in MTR Order dated 26 June, 2015

has been quoted at para. 4.2.7 of this Order.

5.2.10 The Commission had provisionally approved capitalisation of Rs. 134.28 Crore, subject

to prudence check during the Truing-up of FY 2015-16, thereby disallowing Rs. 33.00

Crore from the amount proposed by RInfra-T in its MTR Petition on account of

cumulative capitalisation exceeding the approved DPR cost.

5.2.11 In its present Petition, RInfra-T has submitted capitalisation of Rs. 64.94 Crore, which is

significantly lower than that provisionally approved by the Commission in the MTR

Order for FY 2015-16. Actual capitalisation of Rs. 10.16 Crore in H1 has been claimed,

and Rs. 54.78 Crore is estimated in H2, which is significantly higher.

5.2.12 As sought by the Commission, since the financial year was over, RInfra-T submitted

actual unaudited capitalisation for FY 2015-16 of Rs 50.09 Crore, including IDC of Rs.

0.05 Crore.

5.2.13 The Commission has scrutinized the schemes against which capitalisation is claimed for

FY 2015-16. The detailed analysis of each scheme, along with their present status, is set

out in the Truing-up of FY 2014-15 at para 4.2 of this Order.

5.2.14 It is observed that all the schemes for which capitalisation is claimed in FY 2015-16 are

completed as per the approved DPR scope of work, with minor modifications. Moreover,

there is no cost over-run in any of the schemes at their closure as compared to the

approved DPR cost.

5.2.15 Most of the schemes for which capitalisation has been claimed by RInfra-T for FY 2015-

16 have been completed, but the completion reports for some are awaited.

5.2.16 The work under the scheme for System Improvement of EHV Sub-stations and

Transmission Lines is in progress. For FY 2015-16, RInfra-T has claimed capitalisation

of Rs. 9.87 Crore as against the approved DPR cost of Rs. 64.34 Crore.

5.2.17 Accordingly, the Commission approves the capitalization proposed by RInfra-T in its

revised submission for FY 2015-16 based on unaudited actuals. The following Table

shows the scheme-wise capitalisation submitted by RInfra-T and approved by the




Table 36: Capitalisation for FY 2015-16, as approved by Commission

Name of Scheme

Capitalisation as


(Rs. Crore)

Capitalisation approved by

Commission (Rs. Crore)



Gorai 15.48 2.94

Refurbishment of 220 kV

Transmission Line 0.48 0.50



System Improvements 7.93 9.87

Relocation of 220 kV tower 10.49 10.89

Non-DPR 10.00 8.00

Total capitalisation 64.94 50.09

5.2.18 The Commission provisionally approves Capitalisation of Rs. 50.09 Crore, as

presented by RInfra-T in its revised submission, on which it will take a final view in

the Truing-up for FY 2015-16.



5.3.1 At the close of FY 2014-15, RInfra-T had a regulatory debt balance from various funding

agencies.

5.3.2 RInfra-T has not taken any further loans for fresh capex or for refinancing the opening

CWIP during FY 15-16 till the submission of its Petition. Accordingly, the entire capital

investment during FY 2015-16 is proposed to be financed through normative debt and

equity in the ratio of 70:30 as per the MYT Regulations, 2011.

5.3.3 RInfra-T is in discussion with some of the Banks for exploring the possibility of

refinancing some of its existing loans in order to reduce the interest cost, and will

appraise the Commission in this regard at the appropriate time. The actual borrowings

during FY 2015-16 will be intimated during the Truing-up of FY 2015-16.

5.3.4 RInfra-T has considered the opening loan balance for FY 2015-16 as equal to the closing

loan balance of FY 2014-15. Loan addition has been considered as equal to 70% of the

capitalization, and repayments as equal to depreciation.



5.3.5 No assets have been retired during H1 of FY 2015-16 and no retirements are proposed

during H2. Hence, no consequential treatments are considered in the loan balances.

5.3.6 The weighted average interest rate of 11.94% has been worked out based on the actual

loan portfolio in accordance with Regulation 33.5, and applied on the weighted average

loan balance to claim interest on long term loans for FY 2015-16.

Table 37: Interest on Long Term Loans for FY 2015-16, as submitted by RInfra-T

Particulars (Rs. Crore) Estimates MTR Difference

Interest on long-term loans 70.70 72.83 (2.13)


5.3.7 The MTR Order had considered the weighted average rate of interest computed on the

basis of the actual loan portfolio at the beginning of the year for arriving at the interest

cost for FY 2015-16.

5.3.8 The Commission sought documentary support to substantiate the loan balances from each

of the banks. In response, RInfra-T provided details of actual loan balances, loan

additions, repayments and closing loan balances for FY 2014-15. The Commission

scrutinized these details to arrive at the interest rate equivalent to the weighted average

interest of the actual loan portfolio at the beginning of the year.

5.3.9 Accordingly, the Commission has considered the normative opening loan balance for FY

2015-16 as the same as that approved as the closing loan balance for FY 2014-15. The

loan additions are taken as 70% of the provisionally approved capitalisation for FY 2015-

16.The repayments are taken as the depreciation approved during the year. The weighted

average interest rate of the actual loan portfolio at the beginning of the year is then

applied to the average of opening and closing loan balances for the year to compute the

interest expense for FY 2015-16.

Table 38: Interest on Long Term Loans for FY 2015-16, as approved by Commission


Submission

Approved in

this Order

Opening balance of debt 594.64 600.34 600.34

Addition 94.00 45.46 35.06

Repayment 63.12 61.79 61.18

Closing debt 625.51 584.00 574.22

Interest rate 11.94% 11.94% 11.94%

Interest on long term loan 72.83 70.70 70.11



5.3.10 The Commission approves Interest on Long Term Loans of Rs. 70.11 Crore, as

against Rs. 70.70 Crore submitted by RInfra-T, for the provisional Truing-up of FY

2015-16.

5.4 Depreciation


5.4.1 RInfra-T has considered the opening GFA for FY 2015-16 as equal to the closing GFA of

FY 2014-15. The asset addition during FY 2015-16 has been considered as the unaudited

actual asset addition during H1 and the estimates for H2.

5.4.2 RInfra-T has submitted that no assets were retired during H1 and has not proposed any

asset retirement during H2.

5.4.3 To arrive at the depreciation for FY 2015-16, RInfra-T has considered depreciation on the

opening balance of assets as on 1 April, 2015 with the rates specified in the MYT

Regulations, 2011, but only up to 70% of the original cost. In case of any asset being

depreciated to 70% of the original cost during FY 2015-16, the balance value is spread

over the balance useful life of that asset.

5.4.4 RInfra-T has considered the useful life as specified in the Companies Act for assets

whose useful life has not been provided in the MYT Regulations, 2011. It has considered

depreciation on the addition based on the actual date of capitalisation for H1 and mid-

point addition for H2.

5.4.5 RInfra-T has provided detailed calculation of depreciation for each of its assets as on 1

April, 2015 and claimed depreciation only on those assets which have not been

depreciated up to 90%.

Table 39: Depreciation for FY 2015-16, as submitted by RInfra-T


Depreciation 61.79 63.12 (1.33)


5.4.6 The Commission had provisionally approved depreciation as submitted by RInfra-T for

FY 2015-16 in the MYT Order, stating that a view on the depreciation expenses would be

taken at the time of MTR.



5.4.7 In its MTR Petition, RInfra-T had submitted the revised depreciation for FY 2014-15

based on the capitalisation considered during that year. The opening balance of assets had

been considered as on 1 April, 2015, and the depreciation rates as specified in the

Regulations.

5.4.8 In the MTR Order, the Commission had considered opening GFA for FY 2015-16 as

equal to the closing GFA for FY 2014-15, and the assets added during the year were

taken as equal to the capitalisation approved for FY 2015-16 in that Order.

5.4.9 In the present Petition, RInfra-T has submitted depreciation expenses claimed in line with

Regulation 31 of MYT Regulations, 2011. The Commission has scrutinized the

calculation of asset-wise depreciation expenses provided by RInfra-T.

5.4.10 The Commission sought details of actual unaudited depreciation for FY 2015-16 since

the financial year was already over, which RInfra-T provided.

5.4.11 The Commission observed that the depreciation submitted by RInfra-T is in line with the

methodology specified in the MYT Regulations, 2011 and was based on the actual

capitalization presented in its revised submission.

5.4.12 The Commission has considered the opening GFA for FY 2015-16 as per the closing

GFA of FY 2014-15 approved in this Order. The addition to GFA is based on the

capitalisation approved in para. 5.2 of this Order. The Commission has also considered

reduction of Rs. 2.02 Crore from GFA on account of retirement of assets as presented by

RInfra-T in its revised submission for FY 2015-16.

5.4.13 The Commission has worked out the depreciation based on the asset-class-wise

depreciation rate specified in the MYT Regulations, 2011.

5.4.14 The summary of depreciation for FY 2015-16 as submitted by RInfra-T and as approved

by the Commission is shown in the Table below.

Table 40: Depreciation Expenses for FY 2015-16, as approved by Commission


Submission

Approved in

this Order


Addition of gross fixed Assets 64.94 50.09

Asset retirement 2.02

Closing gross fixed assets 1,499.41 1,482.54




5.4.15 The Commission approves Depreciation of Rs. 61.18 Crore, as against Rs. 61.79

Crore proposed by RInfra-T, for the provisional Truing-up of FY 2015-16.



5.5.1 RoE has been computed based on Regulation 32.2 of the MYT Regulations, 2011, i.e.,

15.5% on the equity capital at the beginning of the year plus 50% of the equity portion

for the assets capitalized during the year.

5.5.2 No assets have been retired in FY 2015-16, and no consequential treatment needs to be

provided in the equity balance. Actual retirement, if any, will be presented during the


5.5.3 The following Table shows the RoE as submitted by RInfra-T.

Table 41: Return on Equity for FY 2015-16, as submitted by RInfra-T

Particulars (Rs. Crore) Estimates MTR Order Difference


the year 471.61 469.17 2.44


capitalized 19.48 40.28 (20.80)


the year - - -


year 491.09 509.45 (18.36)

Return computation


RoE on capitalisation during the year 1.51 3.12 (1.61)

Total return on equity 74.61 75.84 (1.23)


5.5.4 The Commission has considered the regulatory equity at the beginning of the year as the

same as that approved in this Order for FY 2014-15. The additions are taken as the equity

portion of assets capitalized during FY 2015-16 as approved in this Order.

5.5.5 RoE has been computed at 15.50 % of the equity, in accordance with Regulation 32.2.1,

on the opening equity of the year and on 50% of the equity portion of the approved

capitalisation in FY 2015-16.



5.5.6 The summary of RoE for FY 2015-16 as submitted by RInfra-T and as approved by the

Commission is provided in the Table below.

Table 42: Return on Equity for FY 2015-16, as approved by Commission


Submission

Approved in this

Order

Regulatory equity at the

beginning of the year 469.17 471.61 471.57


capitalized 40.28 19.48 15.03

Equity portion of asset retired

during the year - - 0.61

Regulatory equity at the end of

the year 509.45 491.09 485.99

Return computation


RoE on capitalisation during the

year 3.12 1.51 1.12

Total return on equity 75.84 74.61 74.21

5.5.7 The Commission approves Return on Equity of Rs. 74.21 Crore, as against Rs. 74.61

Crore claimed by RInfra-T, for the provisional Truing-up of FY 2015-16.



5.6.1 O&M expenses have been submitted as per norms for FY 2015-16, based on the actual

number of Bays and Transmission Lines in ckt. Km. These O&M expenses are the same

as approved in the MTR Order dated 26 June, 2015, i.e., Rs. 43.22 Crore.

5.6.2 Despite the under-capitalisation, there is very little difference between the normative base

O&M expenses approved in the MTR Order and those estimated by RInfra-T for FY

2015-16 in the present Petition. This is because of major reduction in capitalisation in the

System Improvement Scheme and Non-DPR schemes which do not involve construction

of Transmission Lines and Bays.

5.6.3 RInfra-T has also claimed additional expenses relating to operations, as in its previous

Petitions. These claims relate to expenses pertaining to SCADA charges, land use

charges, Energy Charges, etc., as set out in para 4.7 of this Order dealing with the Truing-

up of FY 2014-15.



5.6.4 These expenses were not included in the base expenses which were considered for

developing the norms of O&M expenses in the MYT Regulations, 2011.

5.6.5 The following Table shows the O&M expenses claimed by RInfra-T for FY 2015-16.

Table 43: Summary of O&M Expenses for FY 2015-16, as submitted by RInfra-T


Normative O&M expenses 43.22 43.22 (0.01)


Land usage charges 3.86 3.86 -

Energy Charges 3.98 4.15 (0.17)

Corporate expense allocation 2.34 2.48 (0.14)

Total O&M expenses 54.67 54.88 (0.20)


5.6.6 The Commission has analyzed the normative O&M expenditure as submitted by RInfra-T

based on the norms specified in the MYT Regulations, 2011.

5.6.7 The Commission sought the scheme-wise number of unutilised Bays and the expected

date from which they would be put to use. RInfra-T provided the scheme-wise number of

Bays that are currently not in use and the expected date from which they would be put to

use.

5.6.8 The issue of unutilised Bays has been discussed at para. 4.3.of this Order. The

Commission has accordingly excluded such unutilised Bays while estimating the

normative O&M expenses for FY 2015-16. The following Table shows the normative

O&M expenses worked out by the Commission for FY 2015-16.

Table 44: Normative O&M Expenses for FY 2015-16, as approved by Commission


by RInfra-T

As approved in

this Order

220 kV Transmission Line length in ckt. km 538.66 538.66

Applicable O&M cost norm for 220 kV Transmission

Lines (Rs Lakh / ckt. km) 0.45 0.45

Normative O&M expenses for Transmission Lines (Rs.

Crore) 2.42 2.42

Number of 220 kV Bays 115.00 104.00*

Number of 33 kV Bays 371.00 366.00*

Applicable O&M Cost norm for 220 kV Bays (Rs. Lakh /

bay) 21.18 21.18




by RInfra-T

As approved in

this Order

Applicable O&M Cost norm for 33 kV Bays (Rs. Lakh /

bay) 4.43 4.43

Normative O&M expenses for Bays (Rs. Crore) 40.79 38.24

Total normative O&M expenses 43.22 40.66 * Reduction in number of bays on account of unutilised bays

5.6.9 The Commission approves the normative base O&M Expenses as Rs. 40.66 Crore,

as against Rs. 43.22 Crore submitted by RInfra-T, for the provisional Truing-up of

FY 2015-16.

5.6.10 The MYT Order dated 13 June, 2013 in Case No. 141 of 2012 had also approved

additional O&M expenses pertaining to Energy Charges, rental charges for cable laying,

SCADA charges and land usage charges over and above the normative O&M expenses.

5.6.11 The Commission has analyzed each of the expenses separately for approval. The details

are set out below.

Energy Charges

5.6.12 The Commission has been allowing Energy Charges as Auxiliary Consumption of EHV

Sub-stations as an additional charge in O&M expenses. These charges have been

approved since the norms specified in the MYT Regulations, 2011 do not provide for

such expenses but these are legitimate expenses for the Transmission Licensee. The

Commission has acknowledged this fact and considered these expenses over and above

the O&M expenses derived as per norms in the Truing-up for FY 2012-13 and FY 2013-

14 in the MTR Order.

5.6.13 In the present Petition, RInfra-T has provided Sub-station-wise Energy Charges for H1 of

FY 2015-16 and claimed them in line with the actual expenses paid to other Licensees for

such Auxiliary Consumption. The estimates for H2 of FY 2015-16 were also provided.

5.6.14 As sought by the Commission, RInfra-T subsequently submitted the unaudited actual

expenses for FY 2015-16 since the financial year was over.

5.6.15 After scrutiny, the Commission approves the Energy Charges based on the unaudited

actual as provided by RInfra-T in its submission. The Commission will take a final view

on these expenses at the time of Truing-up of FY 2015-16.



Land Usage Charges

5.6.16 RInfra-T has claimed land usage charges of Rs. 3.86 Crore for FY 2015-16 based on the

Ready Reckoner rate of FY 2012-13 and a formalized arrangement for land usage

charges through the MoM.

5.6.17 The MYT Order dated 13 June, 2013 in Case No. 141 of 2012 acknowledged the fact that

such expenses are not covered in the norms specified in the MYT Regulations, 2011, and

they were approved over and above the normative O&M expenses.

5.6.18 The Commission had approved Rs. 3.86 Crore as land usage charges in the MTR Order

dated 26 June, 2015 based on the formalized arrangement for land usage charges through

a MoM.

5.6.19 The Commission scrutinized the documents provided by RInfra-T in this regard and

observed that the charges are in line with the documentary proof provided. The

Commission approves land usage charges of Rs. 3.86 Crore for FY 2015-16.

SCADA Charges

5.6.20 The MYT Order had acknowledged that SCADA charges relating to managing and

operating the networks of both Transmission and Distribution Businesses are necessary,

and approved them over and above the normative O&M expenses.

5.6.21 RInfra-T has stated that all its EHV Sub-stations and associated Lines are directly

connected to the SCADA Centre, which also enables it to provide various reports of the

Transmission System as required under the State Grid Code.

5.6.22 RInfra-T has allocated the SCADA charges between Transmission and Distribution

functions based on the allocation adopted in FY 2014-15 as mentioned in the earlier

Section. RInfra-T has considered the actual expenses for H1 of FY 2015-16 and estimates

for H2 of FY 2015-16.In the MTR Order, the Commission had approved SCADA

charges based on a similar allocation subject to such allocation not resulting in any

increase in the ARR of the Transmission and Distribution Business of RInfra taken

together.

5.6.23 As sought by the Commission, RInfra-T submitted the actual unaudited expenses on

SCADA charges.

5.6.24 Considering the above facts, the Commission approves the SCADA charges for FY 2015-

16 as submitted by RInfra-T in its revised submission, based on unaudited actual figures.

The Commission will take a final view on these charges while Truing-up for FY 2015-16.



Corporate Expense Allocation

5.6.25 In the MTR Order, the Commission had approved Corporate expenses allocation as

submitted by RInfra-T in the Truing of FY 2012-13 and FY 2013-14, subject such

expense allocation not leading to any increase in the ARR of the Transmission and

Distribution Businesses taken together.

5.6.26 In the present Petition, RInfra-T has provided the actual Corporate expenses for H1 of FY

2015-16 and estimates for H2 of FY 2015-16.

5.6.27 The Commission had sought details of the actual Corporate expense allocation for the

entire FY 2015-16. RInfra-T could not provide provisional unaudited actuals for such

allocation. The Commission has considered the Corporate expense allocation as

submitted in the Petition, subject to truing-up.

5.6.28 The following Table shows the O&M expenses submitted by RInfra-T in its Petition and

that approved by the Commission in this Order.

Table 45: O&M Expenses for FY 2015-16, as approved by Commission


Submission

Approved in this

Order

Normative O&M expenses 43.22 43.22 40.66





Total O&M expenses 54.88 54.67 51.85

5.6.29 The Commission approves the base normative O&M Expenses of Rs. 40.66 Crore

considering the norms specified in the MYT Regulations, 2011. The Commission

also approves Corporate expense allocation of Rs. 2.34 Crore, Energy Charges of

Rs. 3.81 Crore, SCADA charges of Rs. 1.17 Crore and land usage charges of Rs. 3.86

Crore in addition to the base normative O&M Expenses for the provisional Truing-

up of FY 2015-16.



5.7.1 IoWC has been calculated as per Regulation 35.2 of the MYT Regulations, 2011.

5.7.2 The month-wise closing inventory of book value of stores has been presented for H1 of

FY 2015-16, with estimates for H2.



5.7.3 Revenue from Transmission Charges has been considered based on the combination of

charges approved in the InSTS Tariff Order dated 14 August, 2014 in Case No. 123 of

2014 for the first two months, and the charges approved in Order dated 26 June, 2015 in

Case No. 57 of 2015 for the remaining months of FY 2015-16.

5.7.4 The rate of IoWC for FY 2015-16 is considered as that approved by the Commission in

the MTR Order, i.e., 14.75%.


Table 46: Interest on Working Capital for FY 2015-16, as submitted by RInfra-T




5.7.6 Regulation 35.2 specifies the methodology for assessment of working capital requirement

by a Transmission Licensee, and has been quoted at para. 4.8.6 earlier in this Order.


O&M charges approved in this Order as discussed above. The Commission has also

scrutinized the closing inventory as provided by RInfra-T in its revised submission based

on unaudited actuals and the revenue earned from Transmission Charges as approved in

the respective Orders.

5.7.8 The MYT Regulations, 2011 specify that the rate of IoWC shall be considered on

normative basis and be equal to the SBAR as on the date of application for determination

of Tariff. The Commission has computed interest as per the rate approved in the MYT

Order, which is 14.75%. The summary of IoWC for FY 2015-16 as submitted by RInfra-

T and as approved by the Commission is provided in the Table below.

Table 47: Interest on Working Capital for FY 2015-16, as approved by Commission


Submission

Approved in

this Order

Operations and maintenance expenses

for one month 4.56 4.32

One-twelfth of the sum of book value

of stores, materials and supplies at end

of each month

1.93 1.74

One and a half months of the expected

revenue from Transmission Charges at

the prevailing Tariffs

30.08 30.08




Submission

Approved in

this Order

Less: Amount of security deposit from

Transmission System Users - -

Total working capital requirement 36.57 36.15

Interest Rate (%) - State Bank

Advance Rate 14.75 14.75


5.7.9 The Commission approves Interest on Working Capital of Rs. 5.33 Crore, as against

Rs. 5.39 Crore submitted by RInfra-T, for the provisional Truing-up of FY 2015-16.



5.8.1 Regulation 36.1 of the MYT Regulations, 2011 provides for contributions to Contingency

Reserves of a sum between 0.25 and 0.5 per cent of the original cost of fixed assets.

RInfra-T has considered the contribution to Contingency Reserves at 0.25% of the

original cost of fixed assets as on 1 April, 2015.

Table 48: Contribution to Contingency Reserves for FY 2015-16, as submitted by RInfra-T


Contribution to Contingency Reserves 3.59 3.57 0.02


5.8.2 RInfra-T had provided documentary evidence for investments made in specified

securities for Contingency Reserves, but it was not sufficient to substantiate RInfra-T’s

claim. As sought by the Commission, RInfra-T subsequently provided further

documentary support for the investments made in approved securities. Upon scrutiny, the

Commission has concluded that the investments were made in approved securities as

specified in the MYT Regulations, 2011.

5.8.3 Regulation 36.1 of the MYT Regulations, 2011 governs the appropriation towards

Contingency Reserves, and has been quoted at para. 4.9.4 earlier in this Order.

Considering that provision, the Commission approves the contribution to Contingency

Reserves as 0.25% of the opening GFA considered in this Order for FY 2015-16.



Table 49: Contribution to Contingency Reserves for FY 2015-16, as approved by

Commission

Particulars (Rs. Crore) MTR Order Actual Approved in

this Order


Reserves 16.75 16.75



Reserves as % of opening GFA 1.17% 1.17%

Contribution to Contingency Reserves

during the year 3.57 3.59 3.59


for the provisional Truing-up of FY 2015-16.

5.9 Income Tax


5.9.1 Income Tax for FY 2015-16 is estimated based on the actual Income Tax payable for

RInfra-T for FY 2014-15, as in the Table below.

Table 50: Income Tax for FY 2015-16, as submitted by RInfra-T


Income Tax 29.09 1.01 28.08


5.9.2 Regulation 34 of MYT Regulations, 2011, which specifies the manner of computation of

Income Tax, has been quoted at para. 4.10.4 earlier in this Order.

5.9.3 The Commission is of the view that it is not appropriate to re-assess Income Tax based on

projected expenses since these are provisional. In the past, RInfra-T has actually incurred

much lower expenditure on Income Tax than was approved, on account of lower

capitalisation.

5.9.4 Accordingly, the Commission approves Income Tax for FY 2015-16 as approved in the




Table 51: Income Tax for FY 2015-16, as approved by Commission

Particulars (Rs. Crore) MTR Order Estimates Approved in

this Order

Income Tax 1.01 29.09 27.94

5.9.5 The Commission approves Income Tax of Rs. 27.94 Crore, as against Rs. 29.09

Crore submitted by RInfra-T, for the provisional Truing-up of FY 2015-16.

5.10 Revenue from Transmission Charges


5.10.1 The revenue from Transmission Charges has been considered based on the combination

of charges approved in the InSTS Tariff Order dated 14 August, 2014 in Case No. 123 of

2014 for the first 2 months and the charges approved in the Order dated 26 June, 2015 in

Case No. 57 of 2015 for the remaining months of FY 2015-16.

5.10.2 There is no direct income accruing from Open Access charges.


5.10.3 The Transmission Charges submitted in the Petition are in line with the InSTS Tariff

Orders in Case No. 123 of 2014 and Case No. 57 of 2015 applicable for FY 2015-16.

Accordingly, the Commission approves the revenue from Transmission Charges as

submitted by RInfra-T.

5.10.4 The following Table shows the revenue from Transmission Charges approved by the


Table 52: Revenue from Transmission Charges for FY 2015-16, as approved by

Commission


submission

Approved in

this Order

Revenue from Transmission Charges 208.86 240.68 240.68

5.10.5 The Commission approves revenue from Transmission Charges of Rs. 240.68 Crore

for the provisional Truing-up of FY 2015-16.





5.11.1 Transmission Charge payments to RInfra-T have been regularly delayed. The details of

delay in terms of number of days in each month of FY 2015-16, till December, 2015, and

the DPC claimed by RInfra-T for such delay have been submitted. Further, the DPC

claims have also not been honored by the defaulting TSUs.

5.11.2 The Commission has considered DPC of Rs. 35.02 Crore payable to RInfra-T as on 26

March, 2015 as Non-Tariff Income. By considering DPC as Non-Tariff Income, the cash

neutrality of RInfra at the Company level gets disturbed. The interest earned by RInfra-D

(on excess Transmission Charges) is not retained by the Company, but passed on to the

consumers. As the interest earned is passed on, it cannot now compensate for the funding

cost of delayed under-recovery of Transmission Charges by RInfra-T.

5.11.3 The Commission has also acknowledged that DPC and interest on delayed payment

compensate for funding cost of under-recovery of charges, which is over and above the

normative working capital. Accordingly, DPC was not considered as Non-Tariff Income

while framing the MYT Regulations, 2015.

5.11.4 RInfra-T has also filed an Appeal before the ATE challenging the treatment of DPC as

Non-Tariff Income. The Appeal is pending.

5.11.5 In view of the above, the Commission may not consider the amount of Rs. 35.02 Crore as

Non-Tariff Income in FY 2015-16.

5.11.6 Further, interest on Contingency Reserve investments, income from land usage charges,

interest from staff loans and advances, etc., also form part of Non- Tariff Income for FY

2015-16.


Table 53: Non-Tariff Income for FY 2015-16, as submitted by RInfra-T


Non-Tariff Income 2.96 37.65 (34.69)


5.11.8 In the MTR Order dated 26 June, 2015, the Commission had considered DPC under Non-

Tariff Income:



“4.11.6. In Case No. 151 of 2014, the STU informed the Commission that RInfra-D is

paying net Transmission Charge after deducting the receivables of RInfra-T. Since

RInfra-D has been allowed Transmission Charge in its ARR, the Commission rejects

the contention of RInfra-T that DPC only compensates the business for the interest

cost of funds deployed internally to fund delays.

4.11.7. Hence the Commission has treated income received from DPC for FY 2012-

13 as Other Income. That has been incorporated in the ARR of FY 2015-16.”

5.11.9 Accordingly, the Commission is considering DPC as Non-Tariff Income. The

Commission has taken the actual DPC receivable by RInfra-T as on 31 March, 2016 as

per the STU Pool account, which was Rs. 45.89 Crore. This has been considered in Non-

Tariff Income for FY 2015-16.

5.11.10Although they may be constituents of a single corporate entity, RInfra-T and RInfra-D

are distinct and separate as Licensees under the EA, 2003 and the relevant Regulations.

They are obliged to adhere to their respective obligations as Licensees with respect to the

payment security mechanism, which is also stipulated in the Intra-State Transmission

Tariff Orders, and the modalities prescribed for payment of the Transmission Charges.

The Commission is not concerned with the cash neutrality of RInfra as a whole. It also

expects due diligence on the part of RInfra-T to ensure timely recovery of Transmission

Charges. RInfra-T is directed to provide to the Commission the details of the payment

security mechanism and its implementation in FY 2015-16 and in the current financial

year so far, within a month of this Order.

5.11.11With regard to the other claims, the Commission had sought details of unaudited actual

expenses incurred under various heads of Non-Tariff Income during FY 2015-16 after the

financial year was over. RInfra-T provided the unaudited actual expenses for FY 2015-

16, which the Commission has accepted against Non-Tariff Income provisionally.

5.11.12 The following Table shows the Non-Tariff Income as submitted by RInfra-T and as

approved by the Commission in this Order.

Table 54: Non-Tariff Income for FY 2015-16, as approved by Commission


submission

Approved in

this Order


5.11.13 The Commission approves Non-Tariff Income of Rs. 48.82 Crore, as against Rs.

2.96 Crore submitted by RInfra-T, for the provisional Truing-up of FY 2015-16.





5.12.1 RInfra-T has let out space on its Sub-station rooftops for installation of BTS towers of

Reliance Communication Ltd. RInfra-T has received Rs. 0.11 Crore from this in FY

2014-15. RInfra-T has considered 1/3rd of the amount received after netting of Income

Tax. RInfra-T had considered Rs. 0.02 Crore as Income from Other Business for FY

2014-15, which is considered for FY 2015-16 as well.


5.12.2 The Commission has scrutinized the calculation of Income from Other Business. The

provisions of Regulation 63.1 of the MYT Regulations, 2011 governing the treatment of

Income from Other Business have been quoted at para. 4.13.3 earlier in this Order.

5.12.3 In line with Regulation 63.1, the Commission approves Income from Other Business in

the ARR of FY 2015-16 as shown in the following Table.

Table 55: Income from Other Business for FY 2015-16, as approved by Commission


submission

Approved in

this Order

Income from Other Business 0.04 0.02 0.02

5.12.4 The Commission approves Income from Other Business of Rs. 0.02 Crore for the

provisional Truing-up of FY 2015-16.

5.13 Provisional Revenue Gap/ Surplus for FY 2015-16


5.13.1 The provisional Revenue Gap of FY 2015-16 computed after comparing the revenue

received from InSTS and the ARR (net of Non-Tariff Income and Income from Other

Business) is shown in the Table below.

Table 56: Summary of provisional True-up for FY 2015-16, as submitted by RInfra-T


Operation &maintenance expenses 54.67 54.88 (0.20)

Depreciation expenses 61.79 63.12 (1.33)

Interest on long term loans 70.70 72.83 (2.13)

Interest on working capital and on 5.39 4.96 0.43




consumer security deposits

Income Tax 29.09 1.01 28.08


Total revenue expenditure 225.23 200.37 24.86

Add: Return on equity capital 74.61 75.84 (1.23)

Aggregate Revenue Requirement 299.84 276.21 23.63

Less: Non-Tariff Income 2.96 37.65 (34.69)

Less: Income from Other Business 0.02 0.04 (0.01)

Aggregate Revenue Requirement from

Transmission Tariff 296.85 238.52 58.33

Revenue from intra-State Transmission

Charges 240.68 208.86 31.81

Cumulative Revenue Gap till FY 2013-14

inclusive of carrying cost 12.94 12.94 -

Revenue Gap / (surplus) for FY 2014-15 (51.33) (51.33) -

Impact of ATE Judgment in Appeal No.

139 of 2012 8.72 8.72 -

Revenue Gap / (surplus) 26.52 0.00 26.52


5.13.2 Considering RInfra-T’s submissions and the Commission’s analysis based on the MYT

Regulations, 2011, ATE Judgments and past Orders, the Commission has computed total

ARR and Revenue Gap/surplus for FY 2015-16 as detailed in the Table below.

Table 57: Summary of provisional True-up for FY 2015-16, as approved by Commission


submission

Approved in

this Order

Operation &maintenance expenses 54.88 54.67 51.85

Depreciation expenses 63.12 61.79 61.18

Interest on long term loans 72.83 70.70 70.11

Interest on working capital and on consumer

security deposits 4.96 5.39 5.33

Income Tax 1.01 29.09 27.94


Total revenue expenditure 200.37 225.23 219.99

Add: Return on equity capital 75.84 74.61 74.21

Aggregate Revenue Requirement 276.21 299.84 294.20

Less: Non-Tariff Income 37.65 2.96 48.82




submission

Approved in

this Order

Less: Income from Other Business 0.04 0.02 0.02


Transmission Tariff 238.52 296.85 245.36

Revenue from intra-State Transmission

Charges 208.86 240.68 240.68

Cumulative Revenue Gap till FY 2013-14

inclusive of carrying cost 12.94 12.94 12.94

Revenue Gap / (surplus) for FY 2014-15 (51.33) (51.33) (21.32)

Impact of ATE Judgment in Appeal No. 139 of

2012 8.72 8.72 8.72

Revenue Gap / (surplus) 0.00 26.52 5.04

5.13.3 After provisional Truing-up of the various elements for FY 2015-16 as discussed in

earlier paragraphs, the ARR for FY 2015-16 works out to Rs. 294.20 Crore.

Considering the revenue from Transmission Charges of Rs. 240.68 Crore, Non-

Tariff Income of Rs. 48.82 Crore, Income from Other Business of Rs. 0.02 Crore,

the cumulative Revenue Gap till FY 2013-14 of Rs. 12.94 Crore, the Revenue

Surplus for FY 2014-15 of Rs. 21.32 Crore and the impact of ATE Judgment of Rs.

8.72 Crore, the Commission approves a cumulative Revenue Gap of Rs. 5.04 Crore

which is to be adjusted in the Tariff for subsequent years.



6 MULTI YEAR TARIFF FOR FY 2016-17 TO FY 2019-20

6.1 Background

6.1.1 RInfra-T has submitted details of its projected expenses over the MYT 3rd

Control Period

under various heads, viz., O&M expenses, depreciation, interest on loans, IoWC, etc., as

per the formats prescribed. The Commission has carried out prudence check for approval

of expenditure for each of these items and the ARR of RInfra-T for the MYT 3rd

Control

Period in the following paragraphs.



6.2.1 Certain schemes which were expected to be capitalized by FY 2015-16 were not

capitalized for various uncontrollable reasons. These are now proposed to be completed

in the 3rd

Control Period.

6.2.2 In the MTR Order dated 26 June, 2015, the Commission had directed as follows with

respect to such schemes.

“9.1.3. The Commission directs RInfra-T to take a fresh look at those capex

schemes which have been approved in-principle and were to be capitalized in the

Control Period but have failed to start even at this point, so as to assess whether

they need revision or are at all required from system point of view…”

6.2.3 RInfra-T submitted a review report on 30 September, 2015 and 5 April, 2016 with its

outlook on such schemes. The schemes that were part of this report were 220 kV Golibar

EHV Sub-station, 220 kV Airport EHV Sub-station, 220 kV Dahisar EHV Sub-station,

220 kV Nagari Niwara EHV Sub-station, HVDC scheme and the scheme for acquiring

land for construction of EHV Sub-stations.

6.2.4 The review report included details of the above schemes with the revised year of

commissioning and the works that are to be carried out under such schemes.

6.2.5 The capital investment plan for the 3rd

Control Period has been categorized into the

following groups.

Group A: DPR schemes already approved in-principle by the Commission.

Group B: DPR schemes pertaining to the 3rd

Control Period submitted to the

Commission for in-principle approval.



Group C: DPR schemes previously approved by the Commission, but for which

revised DPRs will be submitted in due course with revision in cost and scope of work.

Group D: New DPR schemes to be submitted to the Commission for in-principle

approval in due course.

Non-DPR Schemes.

6.2.6 RInfra-T has provided details of each of the schemes under these categories and the

works that are expected to be carried out during the 3rd

Control Period.

6.2.7 RInfra-T has also projected the capitalisation under Non-DPR schemes.

6.2.8 The following Table shows the details of group-wise capitalisation projected for the 3rd

Control Period.

Table 58: Capitalisation for FY 2016-17 to FY 2019-20, as projected by RInfra-T

Particulars (Rs. Crore) FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20

Group A

220 kV cable link RInfra

Saki to TPC Saki 41.98

System Improvement scheme 30.45 24.15

Relocation of Transmission

Lines and towers in MBMC

area

2.27

220 kV Nagari Niwara EHV

Sub-station 311.31 39.48

Total 74.70 335.46 39.48

Group B

3rd

Transformer at Goregaon

EHV Sub-station 27.53 1.63

Capex schemes at RInfra 220

kV Versova EHV Sub-

station:

102.09 6.81

Total - 129.62 8.44 -

Group C

220 kV Golibar EHV Sub-

station 697.50 58.07

220 kV Dahisar EHV Sub-

station 384.95

Total 697.50 443.02

Group D

2nd

incoming feeder at

Chembur EHV Sub-station 68.43 7.43




3rd

Transformer at Borivali

EHV Sub-station 31.77

BKC 2nd

feed 250.76

System Improvement scheme

(Phase II) 3.24 13.35 40.04

Total 3.24 81.77 330.00

Non-DPR Schemes 11.27 20.00 20.00 20.00

Grand total 85.97 488.32 847.19 793.02

6.2.9 Although a 4-year capex plan has been prepared as per the MYT Regulations, 2015, there

is always some level of uncertainty with respect to capital expenditure. Capex is assessed

based on land availability, approvals from plot owners for construction of walls, statutory

approvals from authorities such as MCGM, Forest Department, MBMC, MHADA, etc.

However, considerable delays are faced in getting such permissions and approvals. These

lead to deferment of the capex originally planned, which is also evident from the past

experience.

6.2.10 The Commission may approve the proposed capex, and allow RInfra-T to submit the

DPRs only for those schemes for which project activities are required to be initiated in

the next 1-2 years. The DPRs will be submitted for in-principle approval based on actual

status of execution of previously approved schemes and after revisiting the need and

feasibility of execution for the remaining schemes.


6.2.11 The Commission has analysed the schemes proposed to be executed by RInfra-T in the

3rd

Control Period.

6.2.12 In the MYT Order in Case No. 141 of 2012, for the 2nd

Control Period the Commission

had approved capitalisation in line with the submission of RInfra-T, as shown in the

Table below.

Table 59: Capitalisation for FY 2012-13 to FY 2015-16, as approved by Commission in last

MYT Order

Particulars (Rs. Crore) FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Total capitalisation (excluding IDC) 428.86 242.01 228.56 698.73

IDC 20.54 4.29 14.05 42.35

Total capitalisation(including IDC) 449.40 246.29 242.61 741.08



6.2.13 The actual capitalisation approved by the Commission for FY 2012-13 and FY 2013-14

in the subsequent MTR Order dated 26 June, 2015 in Case No. 221 of 2014 and approved

for FY 2014-15 and FY 2015-16 in the present Order is as shown in Table below:

Table 60: Comparison of Capitalisation approved for FY 2012-13 to FY 2015-16 – Original

vis-à-vis revised approval

Particulars (Rs. Crore) FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

Originally approved in MYT Order 449.40 246.29 242.61 741.08

Revised approval in MTR Order 400.77 52.06 26.45 134.28

Approved in this Order - - 34.60 50.09*

*Capitalisation provisionally approved based on provisional unaudited figures provided by

RInfra-T in this Order.

6.2.14 It is evident from the above Tables that RInfra-T has in the past been unable to complete

the capital expenditure proposed during the respective years of the 2nd

Control Period.

This has led to substantial time over-runs in the projects.

6.2.15 Schemes such as 220 kV Nagari Niwara EHV Sub-station, 220 kV Golibar EHV Sub-

station and 220 kV Dahisar EHV Sub-station, which were proposed during the 2nd

Control Period have again been proposed in the 3rd

Control Period, with revised cost

estimates and scope of work. RInfra-T neither initiated these schemes nor incurred any

expenditure during the 2nd

Control Period.

6.2.16 The Commission notes RInfra-T’s submission of some uncertainty regarding timely

approvals from authorities such as MCGM, Forest Department, MBMC, MHADA, etc.,

which may affect the timely completion of works in the manner proposed.

6.2.17 In the light of the above, the various schemes proposed by RInfra-T in the 3rd

Control

Period have been assessed so as to consider only a realistic quantum of capital

expenditure and capitalization for projection in the ARR of the 3rd

Control Period. Each

scheme is evaluated based on the factual situation, the present status, various

uncontrollable delay factors and the past performance of execution of schemes by RInfra-

T. The following methodology has been followed while approving capitalisation for the

3rd

Control Period.

Table 61: Methodology for approving Capitalisation for FY 2016-17 to FY 2019-20

Scheme Categorisation Commission Ruling

Group A

Schemes

Schemes which are already

approved in principle by the

Commission

The Commission has considered such

schemes while approving capitalisation for

the 3rd

Control Period, except the 220 kV

Nagari Niwara EHV Sub-station



Scheme Categorisation Commission Ruling

Group B

Schemes

Schemes which are

submitted to the

Commission for in principle

approval

The Commission has considered all such

schemes out of these which have been

approved before the issue of this Order

Group C

Schemes

Earlier approved Schemes

for which revised DPRs are

yet to be submitted to the

Commission for in principle

approval

The Commission has not considered such

schemes for the 3rd

Control Period. After

review of all such schemes, the

Commission, vide its letter dated 2 May,

2016 has cancelled the earlier in principle

approval of these schemes, and no revised

proposals have been received so far.

Group D

Schemes

New schemes for which

DPR is to be submitted to

the Commission for in

principle approval

The Commission has not considered such

schemes for the 3rd

Control Period. The

Commission may take a view on these

schemes after in principle approval and due

recommendation from STU.

Group A Schemes:

6.2.18 RInfra-T has proposed 4 such schemes, namely 220 kV cable link from RInfra Saki to

TPC Saki, System Improvement scheme, relocation of Transmission Lines and towers in

MBMC area and 220 kV Nagari Niwara EHV Sub-station.

6.2.19 The System Improvement scheme has been approved in principle by the Commission and

work is in progress. The capitalisation claimed by RInfra-T is within the approved DPR

cost.

6.2.20 As regards relocation of Transmission Lines and towers in the MBMC area, there is a

slight cost over-run as compared to the DPR cost. The Commission approves the

capitalisation of this scheme in the 3rd

Control Period subject to prudence check at the

time of MTR.

6.2.21 Vide Order dated 14 March, 2016 in Case No. 24 of 2015, the Commission amended

RInfra-T’s Transmission Licence to include the 220 kV cable link from RInfra 220 kV

Saki Sub-station to TPC-T220 kV Saki Sub-station. Considering this, the Commission

approves the proposed capitalisation of this scheme in the 3rd

Control Period as sought by

RInfra-T.

6.2.22 The Commission has not considered the capitalisation proposed for the 220 kV Nagari

Niwara EHV Sub-station scheme for the following reasons.



220 kV Nagari Niwara EHV Sub-station

6.2.23 The Commission had initially given DPR approval of Rs. 460.59 Crore for this scheme. It

was proposed to be started during FY 2012-13 and be completed by FY 2015-16, as per

the DPR. However, the total capital expenditure incurred till date is Rs. 58.84 Crore

according to RInfra-T. The original scope of work included installation of Transmission

Line and Sub-station, but the Sub-station portion has now been dropped by RInfra-T.

6.2.24 The Commission had sought details of the current status of the scheme. In its response

dated 5 April, 2016, RInfra-T stated that the scheme consists of two parts, i.e., laying of

220 kV cable and erection of 220 kV Sub-station. RInfra-T is executing the cable portion

of the DPR between RInfra-T Aarey Sub-station and MSETCL Borivali Sub-station. The

Sub-station part of the DPR is not being taken up at this stage by RInfra-T, as MSETCL

has proposed 220 kV Film City EHV Sub-station in the same area catering to the RInfra-

D and Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) load around the

Goregaon East/Film City area, as per the STU plan. RInfra-T has proposed for the

withdrawal of the Sub-station component, and the land at Film City has been allocated by

Government of Maharashtra to MSETCL.

6.2.25 Since MSETCL has proposed an EHV Sub-station in the same area catering to the

RInfra-D and MSEDCL load around Goregaon East/Film City as per the STU plan, the

question arises as to whether it is necessary for RInfra-T to construct the Line portion

separately under the Nagari Niwara Scheme.

6.2.26 The 220 kV Borivali-Aarey Tie Line may also get overloaded due to the additional load

envisaged in future in this area. This issue of overloading could be resolved at the time of

construction of the MSETCL Film City Sub-station.

6.2.27 The Commission is of the view that the cost-benefit of construction of only the

Transmission Line needs to be analysed before approving such capital expenditure.

Considering the above facts and analysis, vide letter dated 2 May, 2016 the Commission

has cancelled the scope of Sub-station work and asked RInfra-T to seek revised approval

of the cable portion along with the STU recommendation. Hence, the Commission has

not considered any capitalisation against this scheme in the 3rd

Control Period as there

would be a change in the scope of work and cost in the revised proposal. The

Commission may take a view after the revised DPR is received.

Group B Schemes:

6.2.28 RInfra-T has proposed two schemes, namely installation of 3rd


EHV Sub-station and 220 kV Bays extension at Versova EHV Sub-station. The

Commission has approved both in principle, hence capitalisation against these schemes is



considered as approved by the Commission. The following are the details of the schemes

approved by the Commission.

a) Vide letter dated 17 March, 2016, the Commission has approved the DPR for the 3rd

Transformer at Goregaon EHV Sub-station of RInfra-T at a cost of Rs. 28.72 Crore.

Accordingly, the Commission has considered it for capitalisation.

b) Vide letter dated 10 May, 2016, the Commission has approved DPR of 220 kV Bays

extension at Versova EHV Sub-station. As against the DPR cost of Rs. 108.90 Crore

proposed, the Commission has approved Rs. 80.35 Crore. As the proposed Bays are not

part of the Transmission Licence of RInfra-T, the Commission has approved this DPR

subject to amendment of the Licence, for which RInfra-T is expected to file its Petition.

Accordingly, the Commission has considered revised phasing of capitalisation for the 3rd

Control Period.

Group C Schemes:

6.2.29 RInfra-T has proposed two schemes, namely 220 kV Golibar EHV Sub-station and 220

kV Dahisar EHV Sub-station. The Commission has evaluated their status as below.

220 kV Golibar EHV Sub-station

6.2.30 The Commission had approved a cost of Rs. 215.42 Crore in the original DPR, with the

project starting in FY 2011-12 and ending in FY 2013-14. RInfra-T has stated that it has

not incurred any capital expenditure so far, and a revised DPR was proposed to be

submitted. The Commission had sought the current status of this scheme, to which

RInfra-T responded at the TVS and in its letter dated 5 April, 2016 that the project

activities are yet to be initiated due to non-availability of land. Land allocation at BKC is

being pursued with authorities such as MMRDA, Urban Development Department,

Energy Department, MCGM, STU, etc., but land allocation is awaited from MMRDA. A

revised DPR with time lines and cost is being prepared and would be submitted for in-

principle approval after land is allocated.

6.2.31 As RInfra-T has not initiated any activity and there is no concrete plan as yet as the basic

requirement of land is yet to be met. Consequently, the Commission, vide its letter dated

2 May, 2016, has cancelled the scheme. Hence, the Commission has not considered any

capitalisation against this scheme for the 3rd

Control Period.

220 kV Dahisar EHV Sub-station

6.2.32 The Commission had approved a cost of Rs. 195.94 Crore in the original DPR, with the

project starting in FY 2009-10 and ending in FY 2010-11. The capital expenditure

incurred till date is Rs. 0.95 Crore, as stated by RInfra-T, and a revised DPR is proposed

to be submitted. As regards the current status of the scheme sought by the Commission,



RInfra-T stated that reservation of land by MCGM is awaited; that RInfra-T is exploring

various options for land for erection of the Sub-station; and that a revised DPR with time

lines and cost is being prepared and would be submitted to the Commission for in-

principle approval after land is allocated.

6.2.33 Considering these facts, the Commission vide its letter dated 2 May, 2016 has cancelled

the scheme of 220 kV Dahisar EHV Sub-station, and has hence not considered any

capitalisation against this scheme for the 3rd

Control Period.

Group D Schemes:

6.2.34 RInfra-T has proposed a second incoming feeder for Chembur EHV Sub-station,

installation of 3rd

Transformer at Borivali EHV Sub-station, 2nd

feeder to Golibar (BKC)

EHV Sub-station and the System Improvement Scheme (Phase II).

6.2.35 Recently, vide letter dated 9 May, 2016, RInfra-T has submitted the DPR for installation

of a 3rd

Transformer at Borivali Sub-station at Rs. 36.12 Crore, and proposed

capitalisation against it from FY 2019-20 to FY 2021-22. In the absence of approval and

phasing of expenditure at the end of the 3rd

Control Period, the Commission has not

considered capitalisation against this scheme. This may be looked at again at the time of

the MTR.

6.2.36 Since the DPR for the other schemes are yet to be submitted and they have not so far

been recommended by the STU, the Commission has not considered their capitalisation

for the 3rd

Control Period. The Commission would take a view on these schemes after

submission of the DPRs along with STU recommendations.

6.2.37 Based on RInfra-T’s submission, the Commission has not considered any retirement of

assets in the 3rd

Control Period.

6.2.38 The Commission has considered the Non-DPR capitalisation as that for FY 2016-17 and

FY 2017-18 submitted by RInfra-T, as for both the years it is well within the limits of

20% of the approved DPR capitalisation. However, the Commission has capped the Non-

DPR capitalisation for FY 2018-19 to 20% of the total DPR capitalisation approved.

Since no DPR schemes are approved for FY 2019-20, no Non-DPR schemes are

considered either. The position will be reviewed at the stage of MTR.

6.2.39 The following Table shows the capitalisation approved by the Commission for the MYT

3rd

Control Period as discussed above.



Table 62: Capitalisation for FY 2016-17 to FY 2019-20, approved by Commission


Group A

220 kV cable link RInfra


System Improvement scheme 30.45 24.15

Relocation of Transmission

Lines and towers at MBMC

area

2.27

Total 74.70 24.15

Group B

Installation of 3rd


EHV Sub-station 27.53 1.19

220 kV Bays extension at

Versova EHV Sub-station 71.74 8.61

Non-DPR Schemes 11.27 20.00 1.96

Total Capitalisation 85.97 143.42 11.76

6.2.40 The Commission approves Capitalisation of Rs. 85.97 Crore for FY 2016-17, Rs.

143.42 Crore for FY 2017-18 and Rs. 11.76 Crore for FY 2018-19. The Commission

has not approved any capitalisation for FY 2019-20.

6.2.41 RInfra-T should complete all the schemes approved by the Commission for the 3rd

Control Period within the stipulated time so that the assets are put to use for the

benefit of the consumer. No capitalisation shall be claimed against assets which are

unutilised.



6.3.1 No fresh loans are contracted for any of the schemes proposed to be carried out in the 3rd

Control Period. In case actual borrowings are made during the Period, the details would

be submitted at the time of the subsequent Petition(s).

6.3.2 RInfra-T has considered the opening normative loan balance for FY 2016-17 as equal to

the closing loan balance of FY 2015-16.

6.3.3 For the computation of weighted average interest rate applicable for each year of the 3rd

Control Period, RInfra-T has worked out its likely loan balance as on 1 April of each

respective year. That has been worked out considering the actual cumulative repayments

up to 31 March of each year as per the loan repayment schedules of various Banks.



6.3.4 The weighted average interest rate is then worked out using the interest rates of different

banks and the outstanding actual loan balances as on 1 April of each year of the MYT 3rd

Control Period.

6.3.5 After considering the loan repayments, no actual loan balance is expected in FY 2019-20.

The weighted average interest rate as applicable for FY 2018-19 is considered for FY

2019-20 in view of the 2nd

proviso to Regulation 29.5 of the MYT Regulations, 2015.

The interest rate so determined is then applied to the normative loan balance (after

considering depreciation equivalent repayment) to determine the interest chargeable to

the ARR, in accordance with the Regulations.

6.3.6 No retirement of assets is proposed in the 3rd

Control Period, and details of IDC

computation and project-wise work-in-progress have been provided.

Table 63: Interest on Long Term Loans for FY 2016-17 to FY 2019-20, as submitted by

RInfra-T


Opening balance of loan 584.00 577.88 838.86 1320.75

Loan addition – equivalent

to 70% of proposed

capitalisation

60.18 341.82 593.03 555.11

Loan repayment (equal to

depreciation claimed) 66.30 80.85 111.14 148.70

Closing balance of loan 577.88 838.86 1320.75 1727.16

Average loan balance 580.94 708.37 1079.81 1523.96

Interest rate (%) 11.43% 11.47% 11.50% 11.50%

Interest amount claimed

in ARR 66.38 81.22 124.18 175.26


6.3.7 Regulation 29 of the MYT Regulations, 2015 states that:

“29.1 The loans arrived at in the manner indicated in Regulation 26 on the assets put

to use shall be considered as gross normative loan for calculation of interest on loan:

Provided that in case of retirement or replacement or de-capitalization of assets,

the loan capital approved as mentioned above, shall be reduced to the extent of

outstanding loan component of the original cost of such assets based on documentary

evidence



29.2 The normative loan outstanding as on April 1, 2016, shall be worked out by

deducting the cumulative repayment as admitted by the Commission up to March 31,

2016, from the gross normative loan.

29.3 The repayment during each year of the Control Period from FY 2016-17 to FY

2019-20 shall be deemed to be equal to the depreciation allowed for that year.

29.4 Notwithstanding any moratorium period availed, the repayment of loan shall be

considered from the first year of commercial operation of the Scheme and shall be

equal to the annual depreciation allowed...”

6.3.8 Accordingly, the Commission has considered normative opening loans for FY 2016-17

based on the closing normative loans for FY 2015-16 approved by the Commission in

this Order.

6.3.9 Since FY 2015-16 was over, the Commission had asked for the actual closing balance of

loans and repayments as on 31 March, 2016 along with the unaudited actual interest paid

during the year. RInfra-T replied that it has been able to refinance all its existing loans at

a much lower rate of interest since it had been in talks with the financial institutions for a

long time. The refinanced loans are from State Bank of India, South Indian Bank and

State Bank of Hyderabad. The rest of the loans stand repaid as at the end of FY 2015-16.

This was done to make the repayments of these loans equal to the depreciation allowed as

per the Regulations and reduce the rate of interest.

6.3.10 The following Table shows the closing balance of loans for FY 2015-16 as submitted by

RInfra-T.

Table 64: Opening and closing Loan Balance for FY 2015-16, as submitted by RInfra-T

Name of Bank

Opening

Balance for FY

2015-16

(Rs. Crore)

Addition (70%

of the debt) (Rs.

Crore)

Repayment

equivalent to

depreciation

(Rs. Crore)

Closing Balance

for FY 2015-16

(Rs. Crore)

Bank of

Maharashtra 191.98 19.01 172.97

State Bank of

Hyderabad 70.56 6.99 63.57

Corporation Bank 81.30 8.05 73.25

South India Bank 229.77 22.75 207.02

Normative Loans 26.73 35.06 4.38 57.41

Total 600.34 35.06 61.18 574.22



6.3.11 RInfra-T stated that there is only a marginal difference of Rs. 1.87 Crore between the

total amount of loan swapped and refinanced as at the end of FY 2015-16 and the

outstanding regulatory balance, which may be considered as normative loan.

6.3.12 The Commission has considered the opening balance of loan for FY 2016-17 as equal to

the closing balance approved in the provisional True-up for FY 2015-16 in this Order.

Loan additions are considered as equal to 70% of the capitalisation approved in para 6.2

for each year of the 3rd

Control Period from FY 2016-17 to FY 2019-20. The repayments

have been taken as equal to the depreciation approved in this Order.

6.3.13 The Commission has not considered any retirement of assets during the 3rd

Control

Period, in line with the submissions of RInfra-T.

6.3.14 With regard to computation of interest rate for the 3rd

Control Period, the MYT

Regulations, 2015 provide that:

“29.5 The rate of interest shall be the weighted average rate of interest computed on

the basis of the actual loan portfolio at the beginning of each year:

Provided that at the time of Truing-up, the weighted average rate of interest

computed on the basis of the actual loan portfolio during the concerned year shall be

considered as the rate of interest;…”

6.3.15 The Commission has considered the weighted average interest rate based on the actual

loan portfolio presented by RInfra-T in its revised submission. The following Table

shows the computation of weighted average interest rate for the 3rd

Control Period based

on the actual loan portfolio of RInfra-T after refinancing.

Table 65: Weighted Average Interest Rate for FY 2016-17 to FY 2019-20, as approved by

Commission

Name of Bank

Opening Balance

for FY 2016-17

after refinancing

(Rs. Crore)

Interest rate at the

beginning of FY

2016-17 after

refinancing

State Bank of Hyderabad 87.89 11.00%

South India Bank 131.86 11.00%

State Bank of India 352.60 11.00%

Total 572.35

Weighted Average Interest Rate 11.00%

6.3.16 The Commission has considered the weighted average interest rate of 11.00%, arrived at

for FY 2016-17, for each subsequent year of the 3rd

Control Period.



6.3.17 The Commission has applied the weighted average interest rate on the average of opening

and closing loan balance to arrive at the interest expenses for the 3rd

Control Period.

6.3.18 The following Table shows the interest expenses approved by the Commission for the 3rd

Control Period.

Table 66: Interest on Long Term Loans for FY 2016-17 to FY 2019-20, as approved by

Commission

Particulars (Rs. Crore) FY 2016-

17

FY 2017-

18

FY 2018-

19

FY

2019-20

Opening balance of loan 574.22 568.93 598.03 530.93

Loan addition – equivalent to 70% of approved

capitalisation 60.18 100.39 8.23 -

Loan repayment (equal to depreciation approved) 65.47 71.29 75.32 75.58

Closing balance of loan 568.93 598.03 530.93 455.35

Average loan balance 571.57 583.48 564.48 493.14

Interest rate (%) 11.00% 11.00% 11.00% 11.00%

Interest amount approved in ARR 62.87 64.18 62.09 54.25

6.3.19 The Commission approves Interest on Long Term Loans of Rs 62.87 Crore for FY

2016-17, Rs. 64.18 Crore for FY 2017-18, Rs. 62.09 Crore for FY 2018-19 and Rs.

54.25 Crore for FY 2019-20.

6.4 Depreciation


6.4.1 The opening GFA for FY 2016-17 is taken as equal to the closing GFA of FY 2015-16.

No retirement of assets is proposed in the 3rd

Control Period and no consequential

treatment is provided in the depreciation.

6.4.2 Regulation 27 of the MYT Regulations, 2015 states that the depreciation rates specified

shall apply to assets for depreciation up to 70% of original cost. The remaining

depreciable value of the assets as on 31 March of the relevant year shall be spread over

the balance useful life of the asset.

6.4.3 Asset addition during each financial year of the 3rd

Control Period, after excluding land

cost which is specifically attributable to land assets, is considered in the same proportion

as the opening GFA of each year. The interest chargeable to capital works (IDC) is

charged only to building and plant and machinery in the proportion of their opening

GFA.



6.4.4 Depreciation is worked for each year based on assets, depreciated up to the limit of 70%.

In case the asset reaches 70% of the depreciation, the balance depreciable value is spread

over the balance useful life of such asset.

6.4.5 Assets which are added in H2 of FY 2015-16 and in the 3rd

Control Period will not reach

70% depreciation in the 3rd

Control Period. Accordingly, depreciation is determined by

simply applying the depreciation rates for asset classes as specified in the MYT

Regulations, 2015. On assets added during a year, depreciation for half of the year is

computed, considering mid-year addition.

6.4.6 Depreciation has not been claimed beyond 90% of the asset value.

6.4.7 The following Table shows the depreciation claimed by RInfra-T.

Table 67: Depreciation for FY 2016-17 to FY 2019-20, as submitted by RInfra-T

Particulars

(Rs. Crore) FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20

Opening GFA 1499.41 1585.38 2073.70 2920.89

Closing GFA 1585.38 2073.70 2920.89 3713.91

Depreciation 66.30 80.85 111.14 148.70


6.4.8 Regulation 27 of the MYT Regulations, 2015 provides for determination of depreciation

for the 3rd

Control Period as follows:

“27.1 The Generating Company, Licensee, and MSLDC shall be permitted to recover

depreciation on the value of fixed assets used in their respective Businesses,

computed in the following manner :

(a) The approved original cost of the fixed assets shall be the value base for

calculation of depreciation:

Provided that the depreciation shall be allowed on the entire capitalized amount of

the new assets after reducing the approved original cost of the retired or replaced or

decapitalised assets.

(b) Depreciation shall be computed annually based on the straight line method at the

rates specified in the Annexure I to these Regulations:



Provided that the Generating Company or Licensee or MSLDC shall ensure that

once the individual asset is depreciated to the extent of seventy percent, remaining

depreciable value as on 31st March of the year closing shall be spread over the

balance Useful Life of the asset including the Extended Life, as provided in this

Regulation.”

6.4.9 Thus, depreciation is to be claimed on the original cost of fixed assets on straight line

basis in line with the rates specified in the Regulations.

6.4.10 The Commission has considered the opening GFA of FY 2016-17 as equal to the closing

GFA of FY 2015-16 arrived at in this Order. The addition to GFA for each year of the 3rd

Control Period has been taken as equal to the capitalisation approved by the Commission

in para 6.2 of this Order. The Commission has also not considered any retirements of

assets, in line with the submissions of RInfra-T.

6.4.11 The Commission has worked out depreciation on each of the asset classes in line with the

deprecation rates specified in the Regulations. The following Table shows the

deprecation approved by the Commission for the 3rd

Control Period.

Table 68: Depreciation for FY 2016-17 to FY 2019-20, as approved by Commission


Opening Gross Fixed Assets 1,482.54 1,568.51 1,711.93 1,723.69

Addition of Gross Fixed Assets 85.97 143.42 11.76 -

Asset Retirement - - - -

Closing Gross Fixed Assets 1,568.51 1,711.93 1,723.69 1,723.69

Depreciation 65.47 71.29 75.32 75.58

6.4.12 The Commission approves Depreciation of Rs. 65.47 Crore for FY 2016-17, Rs.

71.29 Crore for FY 2017-18, Rs. 75.32 Crore for FY 2018-19 and Rs. 75.58 Crore for

FY 2019-20.



6.5.1 RInfra-T has considered the opening regulatory equity for FY 2016-17 as equal to the

closing regulatory equity of FY 2015-16. For each financial year of the 3rd

Control

Period, RoE is computed based on Regulation 28 of the MYT Regulations, 2015, i.e.,

15.5% on the equity capital at the beginning of the year plus 50% of the equity portion

for the assets capitalized during the year.



6.5.2 There has been no retirement of assets proposed and no consequential treatment is

provided in the equity balance.

Table 69: Return on Equity for FY 2016-17 to FY 2019-20, as submitted by RInfra-T



beginning of the year 491.09 516.88 663.38 917.54

Equity portion of

expenditure capitalized 25.79 146.50 254.16 237.90

Equity portion of asset

retired during the year - - - -

Regulatory equity at the end

of the year 516.88 663.38 917.54 1,155.44

Return computation

RoE at the beginning of the

year 76.12 80.12 102.82 142.22

RoE on capitalisation during

the year 2.00 11.35 19.70 18.44

Total return on equity 78.12 91.47 122.52 160.66


6.5.3 Regulation 28 of the MYT Regulations, 2015 provides for determination of Return on

Equity for the 3rd

Control Period as follows:

“28.1 Return on equity for a Generating Company shall be allowed on the equity

capital determined in accordance with Regulation 26 for the assets put to use, at the

rate of 15.5 per cent per annum in Indian Rupee terms.

28.2 Return on equity for the Transmission Licensee, Distribution Wires Business and

MSLDC shall be allowed on the equity capital determined in accordance with

Regulation 26 for the assets put to use, at the rate of 15.5 per cent per annum in

Indian Rupee terms, and for the Retail Supply Business, Return on equity capital shall

be allowed on the amount of equity capital determined in accordance with Regulation

26 at the rate of 17.5 per cent per annum in Indian Rupee terms.

28.3 The return on equity shall be computed in the following manner:—

(a) Return at the allowable rate as per this Regulation, applied on the amount of

equity capital at the commencement of the Year; plus

(b) Return at the allowable rate as per this Regulation, applied on 50 per cent of the

equity capital portion of the allowable capital cost, for the investments put to use in



Generation Business or Transmission Business or Distribution Business or MSLDC,

for such Year.

6.5.4 As specified in the above Regulations, RoE has been computed at 15.50 % on the

opening equity of the year and on 30% of the equity portion of the approved

capitalisation.

6.5.5 The Commission has considered the closing equity balance of FY 2015-16 as the opening

equity balance for FY 2016-17. The equity additions are 30% of the approved

capitalisation for each year of the 3rd

Control Period. No retirements are considered, and

consequently no impact of retirements on equity balances.

6.5.6 RInfra-T stated in reply to data gaps raised that retirements have not been projected as no

estimates are available. The effect in terms of writing off depreciation, reduction in

equity and loan balances, etc., will be accounted on an actual basis when it is presented

for Truing-up.

6.5.7 RoE has been computed at 15.50 % of the opening equity, in accordance with MYT

Regulations, 2015.

6.5.8 The following Table shows the RoE for the 3rd

Control Period as approved by the

Commission.

Table 70: Return on Equity for FY 2016-17 to FY 2019-20, as approved by Commission



beginning of the year 485.99 511.79 554.81 558.34


capitalized 25.79 43.03 3.53 -

Equity portion of asset

retired during the year - - - -

Regulatory equity at the end

of the year 511.79 554.81 558.34 558.34

Return computation

RoE at the beginning of the

year 75.33 79.33 86.00 86.54

RoE on capitalisation during

the year 2.00 3.33 0.27 -

Total return on equity 77.33 82.66 86.27 86.54



6.5.9 The Commission approves Return on Equity of Rs. 77.33 Crore for FY 2016-17, Rs.

82.66 Crore for FY 2017-18, Rs. 86.27 Crore for FY 2018-19 and Rs. 86.54 Crore for

FY 2019-20.



6.6.1 In the past, RInfra-T has been claiming additional O&M expenses over and above the

norms specified in the MYT Regulations, 2011 as these expenses were not considered

while devising the norms in those Regulations.

6.6.2 While framing the MYT Regulations, 2015, the Commission had considered the actual

O&M expenses for FY 2011-12 to FY 2013-14, which included such additional O&M

expenses which were separately claimed. However, there were some anomalies, since

some of the expenses had not been included in those years, thus impacting the norms that

were finally specified in the MYT Regulations, 2015.

6.6.3 It is not clear if the current norms of O&M expenses for RInfra-T are fully normalized

with the actual O&M expenses. Any increase in land usage charges may be treated as

uncontrollable and should be allowed if they are beyond the normative O&M expenses.

Similarly, any charges that are to be paid to Public Works Department (PWD) for cable

laying should be allowed in future over and above the normative O&M expenses since

such charges were not faced in previous years.

6.6.4 However, in its Petition, RInfra-T has claimed O&M expenses in line with the MYT

Regulations, 2015 based on the Line ckt. Kms. and number of Bays added during each

year of the 3rd

Control Period.

6.6.5 The following Table shows the O&M expenses claimed by RInfra-T for the 3rd

Control

Period based on the norms.

Table 71: Summary of O&M Expenses for FY 2016-17 to FY 2019-20, as submitted by

RInfra-T


Circuit km. Basis 3.19 3.45 3.84 4.26

Number of Bays basis 53.34 57.60 64.85 75.15

Total O&M expenses 56.52 61.05 68.70 79.41




6.6.6 RInfra-T has questioned whether the O&M expenses used for preparing the revised

norms for the MYT Regulations, 2015, have been fully normalized with respect to

additional expenses over above the base O&M expenses claimed, and sought that any

increase in expenses on this account be treated as uncontrollable and allowed over and

above the normative O&M expenses.

6.6.7 The following Table shows the O&M expense norms for RInfra-T set out in the draft

MYT Regulations, 2015.

Table 72: Summary of O&M Expense norms in Draft MYT Regulations, 2015

Voltage level FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20

Rs. Lakh/ckt. km

>66 kV and <400 kV 0.50 0.52 0.55 0.57

Rs. Lakh/Bay

>66 kV and <400 kV 23.43 24.60 25.83 27.12

66kV and less 4.90 5.14 5.40 5.67

6.6.8 These norms were developed based on the actual O&M expenses of RInfra-T for the

period from FY 2011-12 to FY 2013-14, which also included the additional expenses

over and above the base O&M expenses.

6.6.9 In its comments on the draft Regulations, RInfra-T stated that all its additional expenses

were not covered in FY 2011-12 to FY 2013-14 and that there would be an anomaly in

case the norms are prepared based on the O&M expenses for these years.

6.6.10 The Commission considered RInfra-T’s comments and normalized the expenses for FY

2011-12 to FY 2013-14 accordingly. The Commission prepared the O&M expense norms

for RInfra-T in the final MYT Regulations based on these normalized expenses.

6.6.11 It will be seen that the O&M expense norms specified in the final MYT Regulations,

2015 are higher than in the draft Regulations. This also indicates that the additional O&M

expenses over and above the base O&M expenses have been considered.

6.6.12 The following Table shows the norms specified in the MYT Regulations, 2015 for

arriving at O&M expenses for the 3rd

Control Period for RInfra-T.



Table 73: Summary of O&M Expense norms for FY 2016-17 to FY 2019-20

Voltage level FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20

Rs. Lakh/ckt. Km

>66 kV and <400 kV 0.59 0.62 0.65 0.68

Rs. Lakh/Bay

>66 kV and <400 kV 27.70 29.09 30.54 32.07

66kV and less 5.79 6.08 6.38 6.70

6.6.13 Accordingly, the Commission does not accept the plea of RInfra-T to provide any

escalation over and above the norms specified in the MYT Regulations, 2015.

6.6.14 The Commission has also considered the number of Bays and Transmission Line length

in ckt. Km. in accordance with the capitalisation approved for the 3rd

Control Period in

this Order.

6.6.15 The following Table shows the additions considered in the number of Bays and ckt. Km.

of Lines as submitted by RInfra-T and as approved by the Commission based on the

capitalization of schemes in the respective years.

Table 74: List of Ckt. Km. of Lines and number of Bays to be added in FY 2016-17 to FY

2019-20, as submitted by RInfra-T and as approved by Commission

Particulars FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20

RInfra-T’s Submission

Transmission Lines (ckt.

Km.)

220 kV Cable link RInfra


Capex Schemes at RInfra 220

kV Versova EHV Sub-station 1.00

220 kV Nagari Niwara

(Aarey-Borivali Cable) 30.00

Aarey BKC cable

connectivity 32.00

Chembur 2nd

Feeder 5.00


station 13.00

BKC 2nd

Feeder 20.00

Number of Bays (Nos.)




220 kV




station 12.00


station 12.00

BKC 2nd

Feeder 2.00

33 kV

3rd Transformer at Goregaon



station 28.00


station 28.00

3rd Transformer at Borivali


System Improvement II 16.00

Approved by the Commission

Transmission Lines (ckt.

Km.)

220 kV Cable link RInfra


Number of Bays

220 kV



33 kV

3rd Transformer at Goregaon




6.6.16 The scope of work in the approved DPR of 220 kV Versova EHV Sub-station is for

extension of the existing 220 kV bus for creation of 6 new Bays to connect the link Line

between RInfra-T Versova Sub-station and TPC-T Versova Sub-station. Considering this,

there is no scope for erection of a 1 km. Transmission Line, as claimed by RInfra-T.

Hence, the Commission has not considered the Transmission Line length of 1 km. for

calculation of normative O&M expenses.

6.6.17 In its DPR, RInfra-T has proposed 8 x 220 Bays, of which the Commission has approved

6. The Commission has disapproved 2 x 220 kV spare Bays proposed by RInfra-T but for

which there was no immediate requirement and which would have remained unutilised as

in other Sub-stations of RInfra-T.

6.6.18 The addition in ckt.km. Lines and number of Bays for other schemes as claimed by

RInfra-T are not considered as the Commission has not approved any capitalisation

against these schemes.

6.6.19 Based on the norms and the addition in Bays and ckt.km. Lines in the respective years,

the Commission has arrived at the following normative O&M expenses for the 3rd

Control Period.

Table 75: O&M Expenses for FY 2016-17 to FY 2019-20 approved by Commission


Average Line Length (ckt.km.) 540.16 541.66 541.66 541.66

O&M norms (Rs. Lakhs/ckt.km.) 0.59 0.62 0.65 0.68

O&M expenses on ckt. Km. basis

(Rs. Crore) 3.19 3.36 3.52 3.68

Average Number of 220 kV Bays 104 107 110 110

Average Number of 33kV Bays 366 373 380 380

Norms for 220 kV Bays (Rs.

Lakh/bay) 27.70 29.09 30.54 32.07

Norms for 33kV bays (Rs.

Lakh/bay) 5.79 6.08 6.38 6.70

O&M expenses on number of

Bays (Rs. Crore) 50.00 53.80 57.84 60.74

Total O&M Expenses (Rs.

Crore) 53.19 57.16 61.36 64.42

6.6.20 The Commission approves normative O&M Expenses of Rs. 53.19 Crore for FY

2016-17, Rs. 57.16 Crore for FY 2017-18, Rs. 61.36 Crore for FY 2018-19 and Rs.

64.42 Crore for FY 2019-20.





6.7.1 IoWC is computed for each year as per Regulation 31.2 of the MYT Regulations, 2015.

6.7.2 RInfra-T has considered the expected revenue from Transmission Charges as the same as

the projected ARR for each year of the 3rd

Control Period, inclusive of the resultant Gap /

surplus for FY 2014-15 and FY 2015-16 as considered in its Petition.

6.7.3 The Base Rate of SBI at the time of filing the present Petition was 9.30%, to which 150

basis points (1.50%) is added. The rate of 10.80% is considered for arriving at the IoWC.


Table 76: Interest on Working Capital for FY 2016-17 to FY 2019-20, as submitted by

RInfra-T


Interest on Working Capital 6.95 7.00 9.15 12.08


6.7.5 Regulation 31.2 of the MYT Regulations 2015 specifies the methodology for assessment

of working capital requirement by a Transmission Licensee:

“31.2 Transmission: — (a) The working capital requirement of the Transmission

Licensee shall cover:

(i) Operation and maintenance expenses for one month;

(ii) Maintenance spares at one per cent of the opening Gross Fixed Assets for

the Year; and

(iii) One and a half month equivalent of the expected revenue from

transmission charges at the prevailing Tariff;

minus

(iv) Amount held as security deposits in cash, if any, from Transmission

System Users.”


expenses approved in this Order for the 3rd

Control Period. The Commission has

considered maintenance spares as 1% of the GFA approved in this Order.

6.7.7 The Transmission Charges considered for arriving at the working capital requirement is

the ARR approved by the Commission for each year of the 3rd

Control Period in this



Order after considering the cumulative Revenue Gap of FY 2014-15 and FY 2015-16 as

approved in this Order and carrying cost on the Revenue Surplus of FY 2014-15.

6.7.8 The MYT Regulations, 2015 stipulate that the rate of IoWC shall be considered on

normative basis and shall be equal to the Base Rate plus 150 basis points:

“…(b) Rate of interest on working capital shall be on normative basis and shall

be equal to the Base Rate as on the date on which the Petition for determination

of Tariff is filed, plus 150 basis points…”

6.7.9 The Commission has accordingly considered the Base Rate as 9.30% and addition of 150

basis points, thereby considering the interest rate as 10.80% for each year of the 3rd

Control Period.

6.7.10 The following Table shows the IoWC approved by the Commission for the 3rd

Control

Period.

Table 77: Interest on Working Capital for FY 2016-17 to FY 2019-20, as approved by

Commission


Operations and maintenance

expenses for one month 4.43 4.76 5.11 5.37

Maintenance spares @1% of the

opening GFA 14.83 15.69 17.12 17.24

One and a half month of the expected

revenue from Transmission Charges

at the prevailing Tariffs

36.60 38.77 40.02 39.42

Less: Amount of security deposit

from Transmission System Users - - - -

Total working capital requirement 55.86 59.22 62.25 62.02

Rate of interest (% p.a.) - SBI Base

Rate plus 150 basis points 10.80% 10.80% 10.80% 10.80%

Interest on working capital 6.03 6.40 6.72 6.70

6.7.11 The Commission approves Interest on Working Capital of Rs. 6.03 Crore for FY

2016-17, Rs. 6.40 Crore for FY 2017-18, Rs. 6.72 Crore for FY 2018-19 and Rs. 6.70

Crore for FY 2019-20.





6.8.1 Regulation 36.1 of the MYT Regulations, 2015 provides for contributions to Contingency

Reserves of a sum between 0.25 and 0.50 per cent of the original cost of fixed assets.

6.8.2 RInfra-T has considered the contribution to Contingency Reserves at 0.25% of the

original cost of fixed assets as on 1 April of each year of the 3rd

Control Period.

Table 78: Contribution to Contingency Reserves for FY 2016-17 to FY 2019-20, as




Reserves 3.75 3.96 5.18 7.30

Commission’s Analysis

6.8.3 Regulation 34 of the MYT Regulations, 2015 provides for contribution to Contingency

Reserves as follows.

“34.1 Where the Licensee has made a contribution to the Contingency Reserve, a

sum not less than 0.25 per cent and not more than 0.5 per cent of the original cost

of fixed assets shall be allowed annually towards such contribution in the

calculation of Aggregate Revenue Requirement:

Provided that where the amount of such Contingency Reserves exceeds

five (5) per cent of the original cost of fixed assets, no further contribution shall

be allowed;

Provided further that such contribution shall be invested in securities

authorized under the Indian Trusts Act, 1882 within a period of six months of the

close of the Year.”

6.8.4 Accordingly, the Commission has approved contribution to Contingency Reserves at

0.25% of the opening GFA approved in this Order for each year of the 3rd

Control Period.

6.8.5 The following Table shows the contribution to Contingency Reserves as approved by the

Commission for the 3rd

Control Period.



Table 79: Contribution to Contingency Reserves for FY 2016-17 to FY 2019-20, as

approved by Commission


Opening balance of

Contingency Reserves 20.33 24.04 27.96 32.24

Opening gross fixed assets 1,482.54 1,568.51 1,711.93 1,723.69

Opening balance of

Contingency Reserves as % of

opening GFA

1.37% 1.53% 1.63% 1.87%


Reserves during the year 3.71 3.92 4.28 4.31

Closing balance of

Contingency Reserves 24.04 27.96 32.24 36.55


for FY 2016-17, Rs. 3.92 Crore for FY 2017-18, Rs. 4.28 Crore for FY 2018-19 and

Rs. 4.31 Crore for FY 2019-20.

6.9 Income Tax


6.9.1 Regulation 33 of the MYT Regulations, 2015 provides for computation of Income Tax.

RInfra-T engages in both regulated and un-regulated businesses. In accordance with the

Regulations, the Income Tax has been provisionally considered, for each year of the 3rd

Control Period, at the same level as worked out for FY 2014-15 in its Petition.

6.9.2 The Income Tax projected by RInfra-T is as shown in the Table below.

Table 80: Income Tax for FY 2016-17 to FY 2019-20 3rd

Control Period, as submitted by

RInfra-T


Income Tax 29.09 29.09 29.09 29.09


6.9.3 Regulation 33 of the MYT Regulations, 2015 specifies the computation of Income Tax as

follows.



“33.1 The Commission, in its MYT Order, shall provisionally approve Income Tax

payable for each year of the Control Period based on the actual Income Tax paid by

the Generating Company or Licensee or MSLDC, in case the Generating Company or

Licensee or MSLDC has not engaged in any other regulated or unregulated Business

or Other Business, as allowed by the Commission relating to the electricity Business

regulated by the Commission, as per latest available Audited Accounts, subject to

prudence check:

Provided that in case the Generating Company or Licensee or MSLDC has

engaged in any other regulated or unregulated Business or Other Business, and the

actual Income Tax paid by the Generating Company or Licensee or MSLDC has to be

allocated to the different Businesses, then the Income Tax shall be provisionally

allowed based on the Income Tax on the regulatory Profit Before Tax, as allowed by

the Commission relating to the electricity Business regulated by the Commission,

subject to prudence check…”

6.9.4 The Commission is of the view that it is not appropriate to re-assess Income Tax based on

projected expenses since these are normative. Hence, the Commission maintains the

Income Tax quantum as approved in the Truing-up of FY 2014-15 in this Order for the

3rd

Control Period.

Table 81: Income Tax for FY 2016-17 to FY 2019-20, as approved by Commission

Particulars

(Rs. Crore) FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20

Income Tax 27.94 27.94 27.94 27.94

6.9.5 The Commission approves Income Tax of Rs. 27.94 Crore for the 3rd

Control

Period.



6.10.1 RInfra-T has submitted the major heads of Non-Tariff Income claimed for the 3rd

Control

Period.

6.10.2 RInfra-T has been getting income as interest on investment made for Contingency

Reserves. It has considered the average interest rate of the investments made in securities

approved by the Commission. Interest on such securities has been computed accordingly.

6.10.3 Income from RInfra-D on account of land usage charges will be revised in the next MYT

Control Period. The existing MoM is applicable till 31 March, 2016, and RInfra-T will

shortly enter into a similar arrangement with RInfra-D for land usage charges considering



revised Ready Reckoner rates. Such charges have accordingly been considered with an

escalation of 5% over the FY 2015-16 charges for the 3rd

Control Period.

6.10.4 Interest on staff loans and advances has been considered at the actuals for FY 2014-15.

6.10.5 Non-Tariff Income also includes realization of exchange loss, sale of scrap, rental

income, etc. No income has been projected against these for the 3rd

Control Period.


Table 82: Non-Tariff Income for FY 2016-17 to FY 2019-20, as submitted by RInfra-T


Non-Tariff Income 2.96 3.34 3.77 4.34


6.10.7 The Commission has considered Non-Tariff Income as submitted by RInfra-T. Any

change with respect to Non-Tariff Income can be considered in the Truing-up of the

respective years.

6.10.8 The following Table shows the Non-Tariff Income approved by the Commission for the

MYT 3rd

Control Period.

Table 83: Non-Tariff Income for FY 2016-17 to FY 2019-20, as approved by Commission


Non-Tariff Income 2.96 3.34 3.77 4.34

6.10.9 The Commission approves Non-Tariff Income of Rs. 2.96 Crore for FY 2016-17, Rs.

3.34 Crore for FY 2017-18, Rs. 3.77 Crore for FY 2018-19 and Rs. 4.34 Crore for FY

2019-20.



6.11.1 Income from Other Business amounts to Rs. 0.11 Crore annually.

6.11.2 In accordance with Regulation 60 of the MYT Regulations, 2015, 2/3rd

of the amount

received after netting of Income Tax, i.e., Rs. 0.05 Crore is considered as Income from

Other Business for FY 2016-17. An enhancement of 25% is considered from FY 2017-18

onwards as per the rent agreement.




6.11.3 Regulation 60 of MYT Regulations, 2015 provides for treatment of Income from Other

Business as follows:

“60. Income from Other Business –

Where the Transmission Licensee has engaged in any Other Business under Section

41 of the Act for optimum utilization of its assets, an amount equal to two-3rds of the

revenues from such Other Business after deduction of all direct and indirect costs

attributed to such Other Business shall be deducted from the Aggregate Revenue

Requirement in calculating the Annual Transmission Charges of the Transmission

Licensee:

Provided that the Transmission Licensee shall follow a reasonable basis for

allocation of all joint and common costs between the Transmission Business and the

Other Business and shall submit the Allocation Statement, duly certified by the

Statutory Auditor, to the Commission along with its Petition for determination of

Aggregate Revenue Requirement;

Provided further that where the sum total of the direct and indirect costs of such

Other Business exceeds the revenues from such Other Business, no amount shall be

allowed to be added to the Aggregate Revenue Requirement of the Transmission

Licensee on account of such Other Business….”

6.11.4 In line with the above Regulation, the Commission approves Income from Other

Business for the 3rd

Control Period as shown in the following Table.

Table 84: Income from Other Business for FY 2016-17 to FY 2019-20, as approved by

Commission


Income from Other Business 0.05 0.06 0.06 0.06

6.11.5 The Commission approves Income from Other Business of Rs. 0.05 Crore for FY

2016-17, and Rs. 0.06 Crore for each subsequent year of the 3rd

Control Period.

6.12 Carrying/ Holding Cost on Revenue Gap / Surplus for FY 2014-15


6.12.1 Carrying cost is claimed on the incremental Revenue Gap of FY 2014-15 on account of

the difference between the Gap approved by the Commission in the MTR Order and the

Truing-up Gap for FY 2014-15 as submitted by RInfra-T in this Petition.



6.12.2 RInfra-T has considered the interest rate as approved in the MTR Order for FY 2014-15

and FY 2015-16. For FY 2016-17, the interest rate has been considered as per the MYT

Regulations, 2015.

6.12.3 The carrying cost has been claimed on simple interest basis as per the methodology

adopted by the Commission in the MTR Order. However, it has filed an Appeal before

the ATE for computation of carrying cost on compound interest basis.

6.12.4 The following Table shows the computation of carrying cost as submitted by RInfra-T.

Table 85: Carrying Cost on Gap of FY 2014-15, as submitted by RInfra-T

Particulars (Rs. Crore) FY 2014-15 FY 2015-16 FY 2016-17

Revenue Gap as per MTR Order -51.33 -23.22

Incremental Revenue Gap (after

excluding Availability incentive) 28.10

Total Revenue Gap -23.22

Carrying cost interest rate 14.50% 14.75% 10.80%

Revenue Gap as per MTR Order

-51.33

Carrying cost on above for half year -3.79

Opening balance - 28.10 -23.22

Addition during the year -23.22 -51.33 -

Closing balance -23.22 -23.22 -23.22

Carrying cost on opening 4.15 -1.25

Carrying cost on addition -1.68 -7.57 -

Carrying cost -1.68 -3.43 -1.25

Total carrying cost -6.36


6.12.5 The Commission has worked out the holding cost on the Revenue Surplus of FY 2014-15

in line with the methodology adopted in the MTR Order while Truing-up for FY 2012-13

and FY 2013-14.

6.12.6 The Commission has considered the interest rate as the weighted average SBAR of the

respective years FY 2014-15 and FY 2015-16.

6.12.7 The Commission has considered the interest rate on the holding cost of FY 2014-15

during FY 2016-17 as specified in the MYT Regulations, 2015:



“The Commission shall allow Carrying Cost or Holding Cost, as the case may be,

on the admissible amounts, with simple interest, at the weighted average Base

Rate prevailing during the concerned Year, plus 150 basis points.”

6.12.8 In line with the Regulations, the Commission has considered the interest rate for FY

2016-17 as the Base Rate plus 150 basis points.

6.12.9 The Commission has not considered any carrying/holding cost on the Gap/(surplus) of

FY 2015-16 as it would be worked out at the time of Truing-up.

6.12.10 The Commission approves the holding cost on the Revenue Surplus of FY 2014-15 as

shown in the Table below.

Table 86: Holding Cost on Revenue Surplus of FY 2014-15, as approved by Commission

Particulars (Rs. Crore) FY 2014-15 FY 2015-16 FY 2016-17

Holding cost interest rate 14.75% 14.29% 10.80%

Opening balance - 21.32 21.32

Addition during the year 21.32 - -

Closing balance 21.32 21.32 21.32

Holding cost on Opening 3.05 1.15

Holding cost on addition 1.57 - -

Holding cost 1.57 3.05 1.15

Total Holding Cost 5.77

6.12.11The Commission approves Holding Cost of Rs. 5.77 Crore for FY 2014-15, to be

adjusted in the ARR for FY 2016-17.

6.13 ARR for FY 2016-17 to FY 2019-20


6.13.1 RInfra-T has submitted the ARR for the 3rd Control Period based on the individual

elements described in the Petition.



Table 87: ARR for FY 2016-17 to FY 2019-20, as submitted by RInfra-T

Sr.

No. Particulars (Rs. Crore) FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20

1 Operation & maintenance

expenses 56.52 61.05 68.70 79.41

2 Depreciation expenses 66.30 80.85 111.14 148.70

3 Interest on long term loans 66.38 81.22 124.18 175.26

4 Interest on working capital and

on consumer security deposits 6.95 7.00 9.15 12.08

5 Income Tax 29.09 29.09 29.09 29.09

6 Contribution to Contingency

Reserves 3.75 3.96 5.18 7.30

7 Total revenue expenditure 228.98 263.17 347.43 451.84

8 Add: Return on equity capital 78.12 91.47 122.52 160.66

9 Aggregate Revenue

Requirement 307.10 354.64 469.96 612.49

10 Less: Non-Tariff Income 2.96 3.34 3.77 4.34

11 Less: Income from Other

Business 0.05 0.06 0.06 0.06

12

Aggregate Revenue

Requirement from

Transmission

304.08 351.24 466.12 608.09

13 Revenue Gap / (surplus) for FY

2014-15 32.84 - - -

14 Carrying cost on FY 14-15 gap /

(surplus) -6.36 - - -

15 Provisional Revenue Gap /

(surplus) for FY 2015-16 26.52 - - -

16 Net ARR to be recovered from

Transmission Tariff 357.07 351.24 466.12 608.09




6.13.2 The Commission approves the ARR for the 3rd Control Period as shown in the following

Table considering its rulings in earlier paragraphs of this Section.

Table 88: ARR for FY 2016-17 to FY 2019-20, as approved by Commission

Sr.

No. Particulars (Rs. Crore) FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20

1 Operation & maintenance

expenses 53.19 57.16 61.36 64.42

2 Depreciation expenses 65.47 71.29 75.32 75.58

3 Interest on long term loans 62.87 64.18 62.09 54.25

4 Interest on working capital and

on consumer security deposits 6.03 6.40 6.72 6.70

5 Income Tax 27.94 27.94 27.94 27.94

6 Contribution to Contingency

Reserves 3.71 3.92 4.28 4.31

7 Total revenue expenditure 219.21 230.89 237.72 233.19

8 Add: Return on equity capital 77.33 82.66 86.27 86.54

9 Aggregate Revenue

Requirement 296.53 313.55 323.98 319.73

10 Less: Non-Tariff Income 2.96 3.34 3.77 4.34

11 Less: Income from Other

Business 0.05 0.06 0.06 0.06

12 Aggregate Revenue

Requirement from

Transmission Tariff

293.52 310.15 320.15 315.33

13 Carrying cost on FY 14-15 gap

/ (surplus) (5.77) - - -

14 Cumulative Revenue Gap /

(surplus) up to FY 2015-16 5.04 - - -

15 Net ARR to be recovered

from Transmission Tariff 292.79 310.15 320.15 315.33

6.13.3 The Commission approves total recovery of Rs. 292.79 Crore for FY 2016-17, Rs.

310.15 Crore for FY 2017-18, Rs. 320.15 Crore for FY 2018-19 and Rs. 315.33 Crore

for FY 2019-20 through Transmission Charges.



7 DIRECTIVES IN MTR ORDER, AND COMPLIANCE STATUS

7.1 Background

7.1.1 In its MTR Order in Case No. 221 of 2014, the Commission had given certain directions,

the status of compliance of which was to be indicated in the present Petition. The

directives and their compliance by RInfra-T are set out below.

7.2 Timely Completion of Project

Directive

7.2.1 The Commission noted the poor performance of RInfra-T in commissioning capital

expenditure projects. RInfra-T does not seem to have taken a holistic approach towards

system augmentation, and there appears to be much scope for improvement in the manner

in which it plans and executes such projects. The Commission needs to be convinced that

the time over-run is on account of factors which are not within RInfra-T’s reasonable

control in order to consider the capitalisation as submitted by it. For this purpose, RInfra-

T should submit documentary evidence to conclusively show that the time and cost over-

runs were not controllable. The supporting documents should be submitted for each

scheme in respect of which significant time over-run has been reported on an aggregate

basis over the MYT period, before the end of the current Control Period. RInfra-T should

also submit the scheme-wise IDC at the time of True-up of FY 2014-15 and FY 2015-16.

7.2.2 RInfra-T should explain why the Commission should admit any capitalisation after the

cut-off date.

7.2.3 RInfra-T should take a fresh look at those capex schemes which have been approved in-

principle and were to be capitalized in the Control Period but have failed to start, so as to

assess whether they need revision or are at all required from the system point of view.

RInfra-T should submit its review report before commencement of any activity in these

schemes within three months and obtain its approval.

RInfra-T’s Response

7.2.4 Vide letter dated 18 January, 2016, RInfra-T submitted a report elaborating the reasons

for time over-run, including incurrence of expenditure beyond the cut-off date, with

supporting documents. It is a combined report for FY 2014-15 and FY 2015-16.

7.2.5 RInfra-T also submitted a review report vide letters dated 30 September, 2015 and 5

April, 2016 considering the outlook of schemes such as 220 kV Golibar EHV Sub-

station, 220 kV Airport EHV Sub-station and 220 kV Dahisar EHV Sub-station. The



review report also covered the 220 kV Nagari Niwara EHV Sub-station, HVDC scheme

and the scheme for acquiring land for construction of EHV Sub-stations, which have been

approved in principle by the Commission but could not be capitalised in the 2nd

Control

Period.

Commission’s Ruling

7.2.6 In this Order, the Commission has reviewed the schemes considering the report and other

submissions of RInfra-T.

7.2.7 RInfra-T should complete all the schemes approved by the Commission for the 3rd

Control Period within the stipulated time and ensure that the assets are put to use.

7.2.8 Capitalisation against assets which are unutilised will not be allowed.

7.2.9 Under Section 39 of the EA, 2003, the STU is to carry out the following among other

functions:

“ (2) The functions of the State Transmission Utility shall be –

…(b) to discharge all functions of planning and co-ordination relating to intra-

State transmission system with –

(i) Central Transmission Utility;…

(c) to ensure development of an efficient, co-ordinated and economical system

of intra State transmission lines for smooth flow of electricity from a generating

station to the load centres;…”

7.2.10 However, there are several instances of assets being created but remaining unutilised for

a long time, casting doubts on their credibility and prudency. Hence, the Commission

expects the STU to carry out detailed need-based analysis to ascertain the technical and

financial feasibility of the assets prior to its recommendation. The STU must also

regularly monitor the progress of execution by the Transmission Licensees of the

schemes it has recommended. Based on such monitoring, the Transmission Plan may be

require to be modified from time to time. Accordingly, the STU shall also revise its

recommendations to the Commission based on the contemporary requirements of the

Transmission System and endeavor to ensure that such instances of non-utilisation are

assets are minimized. The Commission’s Secretariat shall convey this to the STU.



8 SUMMARY OF COMMISSION RULING

8.1 Impact of ATE Judgment

8.1.1 The Commission has not considered the potential impact of ATE Appeal No. 223 of 2015

at this stage as submitted by RInfra-T since the Appeal has yet to be decided.

8.2 True-up for FY 2014-15

8.2.1 The Commission approves actual Capitalisation of Rs. 34.60 Crore for FY 2014-15.

8.2.2 The Commission approves Interest on Long Term Loans of Rs. 73.74 Crore for the


8.2.3 The Commission approves Depreciation of Rs. 59.57 Crore for the Truing-up of FY

2014-15.

8.2.4 The Commission approves Return on Equity of Rs. 72.29 Crore upon Truing-up for FY

2014-15.

8.2.5 The Commission approves actual base O&M Expenses of Rs. 40.81 Crore pertaining to

Employee, R&M and A&G expenses. The Commission also approves Corporate expense

allocation of Rs. 2.25 Crore, Energy Charges of Rs. 3.99 Crore, SCADA charges of Rs.

1.01 Crore and land usage charges of Rs. 3.68 Crore, in addition to the base O&M

Expenses, for the Truing-up of FY 2014-15.

8.2.6 The Commission approves Interest on Working Capital of Rs. 6.74 Crore for Truing-up

of FY 2014-15.

8.2.7 The Commission approves Contribution to Contingency Reserves of Rs. 3.50 Crore for

the Truing-up of FY 2014-15.

8.2.8 The Commission approves Income Tax of Rs. 27.94 Crore in the Truing-up for FY 2014-

15.

8.2.9 The Commission approves revenue from Transmission Charges of Rs. 317.42 Crore in

the Truing-up for FY 2014-15.

8.2.10 The Commission approves Non-Tariff Income of Rs. 2.55 Crore for the Truing-up of FY

2014-15.



8.2.11 The Commission approves Income from Other Business of Rs. 0.02 Crore in the Truing-

up for FY 2014-15.

8.2.12 The Commission approves Incentive on Availability of Rs. 4.70 Crore in the Truing-up

for FY 2014-15.

8.2.13 The Commission approves O&M Expenses of Rs. 50.19 Crore for FY 2014-15, after

sharing of efficiency losses, for the Truing-up of FY 2014-15.

8.2.14 After Truing-up of various elements for FY 2014-15, the ARR for FY 2014-15 works out

to Rs 293.97 Crore. Considering revenue of Rs 317.42 Crore from Transmission Charges,

Availability incentive of Rs 4.70 Crore, Non-Tariff Income of Rs. 2.55 Crore and Income

from Other Business of Rs. 0.02 Crore, the Commission approves a revenue surplus of

Rs. 21.32 Crore for FY 2014-15 for adjustment in the Tariff of subsequent years.

8.3 Provisional True-up for FY 2015-16

8.3.1 The Commission provisionally approves Capitalisation of Rs. 50.09 Crore, as presented

by RInfra-T in its revised submission, on which it will take a final view in the Truing-up

for FY 2015-16.

8.3.2 The Commission approves Interest on Long Term Loans of Rs. 70.11 Crore, as against

Rs. 70.70 Crore submitted by RInfra-T, for the provisional Truing-up of FY 2015-16.

8.3.3 The Commission approves Depreciation of Rs. 61.18 Crore, as against Rs. 61.79 Crore

proposed by RInfra-T, for the provisional Truing-up of FY 2015-16.

8.3.4 The Commission approves Return on Equity of Rs. 74.21 Crore, as against Rs. 74.61

Crore claimed by RInfra-T, for the provisional Truing-up of FY 2015-16.

8.3.5 The Commission approves the base normative O&M Expenses of Rs. 40.66 Crore

considering the norms specified in the MYT Regulations, 2011. The Commission also

approves Corporate expense allocation of Rs. 2.34 Crore, Energy Charges of Rs. 3.81

Crore, SCADA charges of Rs. 1.17 Crore and land usage charges of Rs. 3.86 Crore in

addition to the base normative O&M Expenses for the provisional Truing-up of FY 2015-

16.

8.3.6 The Commission approves Interest on Working Capital of Rs. 5.33 Crore, as against Rs.

5.39 Crore submitted by RInfra-T, for the provisional Truing-up of FY 2015-16.


the provisional Truing-up of FY 2015-16.



8.3.8 The Commission approves Income Tax of Rs. 27.94 Crore, as against Rs. 29.09 Crore

submitted by RInfra-T, for the provisional Truing-up of FY 2015-16.

8.3.9 The Commission approves revenue from Transmission Charges of Rs. 240.68 Crore for

the provisional Truing-up of FY 2015-16.

8.3.10 The Commission approves Non-Tariff Income of Rs. 48.82 Crore, as against Rs. 2.96

Crore submitted by RInfra-T, for the provisional Truing-up of FY 2015-16.

8.3.11 The Commission approves Income from Other Business of Rs. 0.02 Crore for the

provisional Truing-up of FY 2015-16.

8.3.12 After provisional Truing-up of the various elements for FY 2015-16 as discussed in

earlier paragraphs, the ARR for FY 2015-16 works out to Rs. 294.20 Crore. Considering

the revenue from Transmission Charges of Rs. 240.68 Crore, Non-Tariff Income of Rs.

48.82 Crore, Income from Other Business of Rs. 0.02 Crore, the cumulative Revenue

Gap till FY 2013-14 of Rs. 12.94 Crore, the Revenue Surplus for FY 2014-15 of Rs.

21.32 Crore and the impact of ATE Judgment of Rs. 8.72 Crore, the Commission

approves a cumulative Revenue Gap of Rs. 5.04 Crore which is to be adjusted in the

Tariff for subsequent years.

8.4 Multi Year Tariff for FY 2016-17 to FY 2019-20

8.4.1 The Commission approves Capitalisation of Rs. 85.97 Crore for FY 2016-17, Rs. 143.42

Crore for FY 2017-18 and Rs. 11.76 Crore for FY 2018-19. The Commission has not

approved any capitalisation for FY 2019-20.

8.4.2 The Commission Interest on Long Term Loans of Rs 62.87 Crore for FY 2016-17, Rs.


2019-20.

8.4.3 The Commission approves Depreciation of Rs. 65.47 Crore for FY 2016-17, Rs. 71.29

Crore for FY 2017-18, Rs. 75.32 Crore for FY 2018-19 and Rs. 75.58 Crore for FY 2019-

20.

8.4.4 The Commission approves Return on Equity of Rs. 77.33 Crore for FY 2016-17, Rs.


2019-20.

8.4.5 The Commission approves normative O&M Expenses of Rs. 53.19 Crore for FY 2016-17,

Rs. 57.16 Crore for FY 2017-18, Rs. 61.36 Crore for FY 2018-19 and Rs. 64.42 Crore for

FY 2019-20.



8.4.6 The Commission approves Interest on Working Capital of Rs. 6.03 Crore for FY 2016-

17, Rs. 6.40 Crore for FY 2017-18, Rs. 6.72 Crore for FY 2018-19 and Rs. 6.70 Crore for

FY 2019-20.


FY 2016-17, Rs. 3.92 Crore for FY 2017-18, Rs. 4.28 Crore for FY 2018-19 and Rs. 4.31

Crore for FY 2019-20.

8.4.8 The Commission approves Income Tax of Rs. 27.94 Crore for the 3rd

Control Period.

8.4.9 The Commission approves Non-Tariff Income of Rs. 2.96 Crore for FY 2016-17, Rs.


2019-20.

8.4.10 The Commission approves Income from Other Business of Rs. 0.05 Crore for FY 2016-

17, and Rs. 0.06 Crore for each subsequent year of the 3rd

Control Period.

8.4.11 The Commission approves Holding Cost of Rs. 5.77 Crore for FY 2014-15, to be

adjusted in the ARR for FY 2016-17.

8.4.12 Considering the above, the total recovery of ARR inclusive of all past recoveries and

associated holding costs as approved by the Commission through the Transmission

Charges for the MYT 3rd Control Period is as given in the Table below:

Table 89: Total recovery approved by Commission for MYT 3rd Control Period through

Transmission Charges (Rs Crore)



Transmission Tariff 293.52 310.15 320.15 315.33

Holding cost on FY 14-15 gap / (surplus) (5.77) - - -

Cumulative Revenue Gap / (surplus) up to

FY 2015-16 5.04 - - -

Total Recovery from Transmission Tariff 292.79 310.15 320.15 315.33

8.4.13 The Commission approves total recovery of Rs. 292.79 Crore for FY 2016-17, Rs.

310.15 Crore for FY 2017-18, Rs. 320.15 Crore for FY 2018-19 and Rs. 315.33 Crore

for FY 2019-20 through Transmission Charges.



9 RECOVERY OF TRANSMISSION CHARGES

9.1.1 Under the Transmission Pricing Framework specified in the MYT Regulations, 2015, the

approved ARR of a Transmission Licensee for a particular year is to be considered for

recovery through the TTSC of that year.

9.1.2 As RInfra-T forms a part of the InSTS, its approved ARR for each year of the 3rd

Control

Period shall be allowed to be recovered through the InSTS Transmission Tariff Orders of

the Commission for the respective years.



10 APPLICABILITY OF THE ORDER

10.1.1 This Order shall come into effect from 1 June, 2016.

The Petition of M/s Reliance Infrastructure Ltd. in Case No. 13 of 2016 stands disposed

of accordingly.

Sd/- Sd/-

(Deepak Lad) (Azeez M. Khan)

Member Member



11 APPENDIX-1: LIST OF PERSONS AT THE TVS HELD ON 24

FEBRUARY, 2016

Sr. No. Name Organisation

1. Shri Kapil Sharma RInfra-T

2. Shri Pravin Pokhmare RInfra-T

3. Shri Sumegh Mangle RInfra-T

4. Shri Radhaprasad Muni RInfra-T

5. Shri Vivek Mishra RInfra-T

6. Shri Kishor Patil RInfra-T

7. Shri Rakesh Raj RInfra-T

8. Shri Arvind Sharma RInfra-T

9. Shri Vikas Soner RInfra-T

10. Shri Pratik Shah RInfra-T

11. Shri Amirkumar Samant RInfra-T

12. Shri R.N. Farkade S.E. STU

13. Dr. Ashok Pendse Thane-Belapur Industries Association

(Consumer Representative)

14. Smt. Ashwini Chitinis Prayas Energy Group (Consumer

Representative)

15. Shri. Bhuvanesh Mehta RInfra-T



12 APPENDIX-2: LIST OF PERSONS AT THE PUBLIC HEARING

HELD ON 13 APRIL, 2016

Sr. No. Name Organisation

1. Shri. Ganesh Balasubramaniam RInfra-T

2. Shri. Radhaprasad Muni RInfra-T

3. Shri Pravin Phokmare RInfra-T

4. Shri. Sumegh Mangle RInfra-T

5. Shri. R.R. Mehta RInfra-T

6. Shri. Kapil Sharma RInfra-T

7. Shri. Rakesh Raj RInfra-T

8. Shri. Arwind Kumar Sharma RInfra-T

9. Shri. Vikas Soner RInfra-T

10. Shri. C.R. Patkar RInfra-T

11. Shri. Bhuvanesh Mehta RInfra-T

12. Shri. Amir Kumar Samant RInfra-T

13. Shri Manoj Kapse -

14. Shri R.N. Farkade S.E. STU

before the maharashtra electricity ... - reliance energy · shri deepak lad, member order ... 1.6...

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