(1) The value base for the purpose of depreciation shall be the capital cost of the asset admitted by the Commission.
(2) Depreciation shall be calculated for each year of the control period, on the amount of original cost of the fixed assets of the corresponding year.
1 Subs. 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 and before its substitution read as under:
“21 The rate of interest shall be the weighted average rate of interest calculated on the basis of the actual loan portfolio at the beginning of each year applicable to the project for the State Load Despatch Centre:
Provided that if there is no actual loan for a particular year but normative loan is still outstanding, the last available weighted average rate of interest shall be considered:
Provided further that if the State Load Despatch Centre does not have actual loan, then the weighted average rate of interest of the Power System Operation Company as a whole shall be considered.” Compendium of HPERC Regulations, March 2021 19
(3) The salvage value of the asset (excluding IT equipments and Software’s) shall be considered as 10% and depreciation shall be allowed up to maximum of 90% of the capital cost of the asset. The salvage value for IT equipments and Software’s shall be considered as NIL and 100% value of the assets shall be considered depreciable.
(4) Depreciation shall be calculated annually, based on the Straight Line Method and at the rates specified in Appendix-II to these regulations. The value base for the purpose of depreciation shall be original cost of the asset. Land is not a depreciable asset and its cost shall be excluded while computing 90% of the original cost of the asset.
(5) Assets fully depreciated shall be shown separately.
(6) Value of the assets not in use or declared obsolete shall be taken out from the capital cost for the purpose of calculation of depreciation.
(7) Depreciation shall be charged from the first year of operation of the asset. In case, the operation of the asset is for the part of the year, the depreciation shall be charged on a pro rata basis.
(8) In addition to allowable depreciation, the applicant shall be entitled to advance against depreciation (AAD), computed in the manner given hereunder: - AAD = Loan (raised for capital expenditure) repayment amount based on loan repayment tenure, subject to a ceiling of 1/10th of loan amount minus depreciation as calculated on the basis of these regulations:
Provided that advance against depreciation shall be permitted only if the cumulative repayment upto a particular year exceeds the cumulative depreciation upto that year:
Provided further that advance against depreciation in a year shall be restricted to the extent of difference between cumulative repayment and cumulative depreciation upto that year.
(9) On repayment of entire loan, the remaining depreciable value shall be spread over the balance useful life of the asset.
1 [23. Interest on Working Capital.—(1) The working Capital shall cover:—
(a) O&M expenses for one month;
(b) receivables for two months State Load Despatch Centre charges as approved by the Commission;
(c) maintenance spares @ 15% of O&M Expenses for one month.
1 Subs. 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 and before its substitution read as under:
“ 23. Interest on working capital.- (1) The working capital shall cover-
(a) Operation and maintenance expenses for one month;
(b) Maintenance spares @ 40% of R&M expenses for 1 month; and
(c) Receivables equivalent to two months of the State Load Despatch Centre charges as approved by the Commission.
(2) Rate of interest on working capital to be computed as provided hereinafter in these regulations shall be on normative basis and shall be equal to the1[average Base Rate of State Bank of India for the last six months prior to the filing of the MYT petition plus 350 basis points.
(3) The interest on working capital shall be payable on normative basis notwithstanding that the Power System Operation Company has not taken working capital loan from any outside agency or has exceeded the working capital loan based on the normative figures.” 20 Compendium of HPERC Regulations, March 2021
(2) Rate of interest on working capital to be computed as provided hereinafter in these regulations shall be on normative basis and shall be equal one (1) Year 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, as may be applicable as on 1st April of the Financial Year in which the Petition is filed plus 300 basis points.
(3) The interest on working capital shall be payable on normative basis notwithstanding that the Power system Operation Company/ State Load Despatch Centre has not taken working capital loan from any outside agency or has exceeded the working capital loan based on the normative figures.]