(1) The Commission shall approve the capital expenditure plan including scheme for augmentation submitted by the Power System Operation Company, based on the load growth forecast during the control period.
The same would be considered for computation of ARR, wherein the amount of electricity handled by the State Load Despatch Centre shall be projected considering the estimated growth plan of its users and any plans of new transmission system, based on network expansion plans within the State.
(2) Capital expenditure plan submitted by the Power System Operation Company shall also provide details of ongoing projects that will spill into the control period and new projects that will commence during the control period but may extend beyond the control period.
(3) The capital expenditure plan shall be in conformity with the plans made by the transmission licensee and with the capital investment plans of the distribution licensee and the generating company(ies). The capital expenditure plan shall inter-alia include-
(a) purpose of investment (i.e. replacement of existing assets, meeting load growth, technical loss reduction, meeting reactive energy requirements, improvement in quality and reliability of supply, etc) ;
(b) Capital structure;
(c) Capitalisation schedule;
(d) Financing plan;
(e) Cost-benefit analysis;
(f) improvement in operational efficiency envisaged in the control period;
1 [(4) For each year of the control period, the Commission shall watch over the actual capital expenditure and capitalization vis-à-vis the approved capital expenditure and capitalization schedule. In the normal course, the Commission shall not revisit the approved capital investment plan (capital expenditure and the capitalization schedule) during the control period and adjustments to depreciation, interest on capital loan and return on equity on account of variations for the actual capital expenditure incurred and capitalization done vis-à-vis approved capital investment plan (capital expenditure and capitalization), shall be 1 Subs. vide Not. no. HPERC/F(5)(3)(1)(SLDC) dated 1 st November,2013 published in the R H.P.
dated 4 th November, 2013 at p. 4619- 4626. Before its substitution is read as under:
“(4) The Commission shall review the actual capital expenditure incurred and capitalisation at the end of each year of the control period vis-à-vis the approved capital expenditure and capitalisation schedule. In the normal course, the Commission shall not revisit the approved capital investment plan (capital expenditure and capitalisation schedule) during the control period and adjustment to depreciation, interest on capital loan and return on equity for the actual capital expenditure incurred and capitalisation vis-à-vis approved capital investment plan (capital expenditure and capitalisation) shall be done at the end of control period.” 10 Compendium of HPERC Regulations, March 2021 done during the mid-term performance review and at the time of true up at the end of control period.]
(5) In case the capital expenditure is required for emergency work which has not been approved in the Capital Investment Plan, the Power System Operation Company shall submit an application (containing all relevant information along with reasons justifying emergency nature of the proposed work seeking approval by the Commission. The Power System Operation Company shall take up the work prior to the approval of the Commission provided that the emergency nature of the scheme has been certified by its Management.
Provided that, for the purpose of this sub-regulation, such approved capital expenditure shall be treated as a part of actual capital expenditure incurred to the Power System Operation Company/State Load Despatch Centre as well as the approved capital expenditure by the Commission.
1[13-A. Consumer Contribution, Deposit Work, Grant and Capital Subsidy.—(1) The works carried out by the Power System Operation Company/State Load Despatch Centre after obtaining the estimated cost from the users shall be classified as Deposit Works.
(2) Capital works undertaken by the Power System Operation Company/State Load Despatch Centre utilising grants received from the State and Central Governments, including funds under various schemes shall be classified under the category of Grants.
(3) The works carried out with any other grant of similar nature or such amount received without any obligation to return the same and with no interest costs attached to such subvention shall also be classified as works performed through consumer contribution, deposit work, capital subsidy or grant.
(4) The expenses on such capital expenditure shall be treated as follows:—
(a) normative O&M expenses as specified in these regulations shall be allowed.
However, any departmental charges taken by the Power System Operation Company/State Load Desptach Centre against deposit works and which are executed departmentally shall be adjusted in the employee cost;
(b) the debt to equity ratio shall be considered in accordance with Regulation 17, after deducting the amount of financial support provided through consumer contribution, deposit work, capital subsidy or grant;
(c) depreciation to the extent of works performed through consumer contribution, deposit work, capital subsidy or grant shall not be allowed as specified in Regulation 22;
(d) provisions related to return on equity, as specified in Regulation 20, shall not be applicable to the extent of financial support provided through consumer contribution, deposit work, capital subsidy or grant;
(e) provisions related to interest and finance charges, as specified in Regulation 21, shall not be applicable to the extent of financial support provided through consumer contribution, deposit work, capital subsidy or grant.” 1 Ins. regulation 13-A vide Not No. HPERC-F(1)-3/2018 dated 22 nd November, 2018 published in the R H.P. dated 27 th November, 2018 at p. 6277-6283 Compendium of HPERC Regulations, March 2021 11 1 [14. Mid-term review and True Up at the end of control period.- (1) The power system operation company shall file the mid-term review petition and true-up petition in ccordance with the timelines specified in Appendix-I to these regulations along with the details of apital expenditure including additional capital expenditure, sources of financing, operation and aintenance expenditure, etc incurred for the period, duly audited and certified by the auditors. The true up across various controllable parameters shall be done by the Commission for the previous years of the control period or for the previous control period on the basis of audited accounts made available by the power system operation company during the mid-term review or during control period true up in accordance with following principles:
(a) any surplus or deficit on account of O&M expenses shall be to the account of the power system operation company and shall not be trued up in ARR;
2 [(b) the Commission shall review actual capital investment vis-a-vis approved capital investment. Variations in Capitalisation on account of time and/or cost overruns/ efficiencies in the implementation of a capital expenditure project not attributable to an approved change in scope of such project, change in statutory levies or force majeure events; and]
(c) depreciation and financing cost, which includes cost of debt including working capital (interest), cost of equity (return) shall be trued up on the basis of actual/audited information and prudence check by the Commission;
(d) After true up the variations as approved by the Commission shall be adjusted in the ARR of the next control period or as may be deemed fit by the Commission.
(2) Notwithstanding anything contained in these regulations, the gains or losses in the controllable items of ARR on account of force majeure, change in law and change in taxes and duties shall be passed on as an additional charge or rebate in ARR over such period as may be laid down in the order of the Commission.
1 Subs. vide Not. No. HPERC/F(5)(3)(1)(SLDC) dated 1 st November,2013 published in the R H.P.
dated 5 th November, 2013 at page no 4620- 4626. Before its substitution reg. 14 read as under:
“14. True Up and review at the end of control period.
(1) The Commission shall carry out truing up exercise along with the application for determination of fees and charges filed for the period after the expiry of the control period, for the fees and charges recovered up to end of control period and admitted by the Commission after prudence check at the time of truing up.
(2) The Power System Operation Company shall submit along with the application for truing up, details of capital expenditure including additional capital expenditure, sources of financing, operation and maintenance expenditure, etc incurred for the control period, duly audited and certified by the auditors for true up at the end of the control period. After true up the variations as approved by the Commission shall be adjusted in the ARR of the next control period or as may be deemed fit by the Commission.
(3) Towards the end of the control period, the Commission shall review if the implementation of the principles laid down in these regulations has achieved their intended objectives. While doing this, the Commission shall take into account, among other things, the industry structure, sector requirements, consumer and other stakeholder expectations and the licensee’s requirements at that point in time. Depending on the requirements of the sector to meet the objects of the Act, the Commission may revise the principles for the second control period.
(4) The end of the first control period shall be the beginning of the second control period and the licensee shall follow the same procedure, unless required otherwise by the Commission. The Commission shall analyse the performance of the licensee with respect to the targets set out at the beginning of the first control period and based on the actual performance, expected efficiency improvements and other factors prevalent, determine the initial values for the next control period.” 2 Subs. vide Not No. HPERC-F(1)-3/2018 dated 22nd November, 2018 published in the R H.P. dated 27th November, 2018 at p. 6277-6283 and before its substitution clause (b) read as under:
“ (b) the Commission shall review actual capital investment vis-à-vis approved capital investment;” 12 Compendium of HPERC Regulations, March 2021
(3) Towards the end of the control period, the Commission shall review if the implementation of the principles laid down in these regulations has achieved their intended objectives. While doing this, the Commission shall take into account, among other things, the industry structure, sector requirements, consumer and other stakeholder expectations and the licensee’s requirements at that point in time. Depending on the requirements of the sector to meet the objects of the Act, the Commission may revise the principles for the next control period.
(4) The end of the one control period shall be the beginning of the next control period and the licensee shall follow the same procedure, unless required otherwise by the Commission. The Commission shall analyse the performance of the licensee with respect to the targets set out at the beginning of one control period and based on the actual performance, expected efficiency improvements and other factors prevalent, determine the initial values for the next control period.]
1 [(5) The Power System Operation company/State Load Despatch Centre, for the approved true-up of any year over and above that approved in the Tariff Order for that year, shall be entitled to a carrying cost at one (1) Year weighted average State Bank of India (SBI) MCLR / any replacement thereof as notified by RBI for the time being in effect applicable for one (1) Year period of the relevant Year plus 300 basis points and for any true-up resulting in less than that approved in the Tariff Order for that year, the carrying cost shall be recovered at the same rate.]
PART- IV DETERMINATION OF ANNUAL REVENUE REQUIREMENT AND COMPUTATION OF ANNUAL CHARGES