(1) For maintaining tariff stability and passing the benefits achieved to the consumers under the multiyear tariff framework via contingency reserve, the licensee shall create a contingency reserve at the beginning of the control period and the revenue surplus, if any, generated by the licensee in and up to FY 2010-11 shall be transferred to contingency reserves at the beginning of the control period.
(2) The licensee shall maintain separate accounts in their books and reflect the balance in the contingency reserve account in the balance sheet. There shall be yearly additions and drawls to/from these contingency reserve account based on the annual review and performance of the licensee.
(3) Fund under contingency reserve shall be kept in a separate bank account and shall be effectively invested and managed to earn returns based on market conditions ensuring adequate liquidity. This fund shall not be utilized for speculative purposes. The use of these funds in any other manner shall be only with the prior approval of the Commission.
1 Subs. vide Not. HPERC-F(1)-1/2018 dated 22nd November, 2018 published in R.H.P. dated 27th November, 2018 at p. 6265-6277.Before its substitution it stood as under:- “ (2) The distribution licensee, 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 the Base Rate of State Bank of India plus 350 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.” Compendium of HPERC Regulations, March 2021 13 1 12-A Treatment of Regulatory Assets.- (1) While determining ARR of the Licensee, the regulatory assets shall not be created as matter of course except where it is justifiable in accordance with the tariff policy and recovery of the such regulatory assets shall be time bound and within the period not exceeding three years:
Provided that the carrying cost of regulatory asset so created shall be allowed to the Licensee in the ARR.
(2) The amortization schedule corresponding to the regulatory asset, including the carrying cost, shall be prepared and put in effect along with creation of the regulatory asset.
(3) The carrying cost of the regulatory asset shall be in line with the State Bank Advance Rate (SBAR) for the tenure for which regulatory asset has been created.]
PART-III PRINCIPLES FOR DETERMINATION OF AGGREGATE REVENUE REQUIREMENT (ARR)