(1) The capital cost for a project shall include-
(a) the expenditure incurred or projected to be incurred, including interest during construction and financing charges, any gain or loss on account of foreign exchange risk variation during construction on the loan - (i) being equal to 70% of the funds deployed, in the event of the actual equity in excess of 30% of the funds deployed, by treating the excess equity as normative loan, or (ii) being equal to the actual amount of loan in the event of the actual equity less than 30% of the funds deployed, - up to the date of commercial operation of the project, as admitted by the Commission, after prudence check;
(b) capitalised initial spares subject to the ceiling norms as per regulation 0;
(c) additional capital expenditure determined under regulation 0:
Provided that the assets forming part of the project, but not in use, shall be taken out of the capital cost.
(2) The capital cost admitted by the Commission, after prudence check, shall form the basis for determination of tariff:
Compendium of HPERC Regulations, March 2021 15
Provided that the prudence check of capital cost may be carried out based on the benchmark norms to be specified by the Commission from time to time:
Provided further that in cases where benchmark norms have not been specified, prudence check may include scrutiny of the reasonableness of the capital expenditure, financing plan, interest during construction, use of efficient technology, cost over-run and time over-run, and such other matters as may be considered appropriate by the Commission for determination of tariff:
Provided further that where the implementation agreement and the transmission service agreement entered into between the transmission licensee and the long-term transmission customer provides for ceiling of actual expenditure, the capital expenditure admitted by the Commission shall take into consideration such ceiling for determination of tariff:
1 [Provided further that in case of the existing projects, the capital cost admitted by the Commission prior to the start of the control period and the additional capital expenditure projected to be incurred for the respective years of the control period, as may be admitted by the Commission, shall form the basis for determination of tariff:]
2 [15. Initial Spares.—The capital cost may include initial spares capitalised as a percentage of the original project cost, subject to the following ceiling norms:—
(a) Transmission Line 0.75%
(b) Transmission Sub-station (Green Field) 3.0%
(c) Transmission Sub-station (Brown Field) 4.5%
(d) Series Compensation devices and HVDC Station 3.5%
(e) Gas Insulated Sub-station (GIS) 4.0%
(f) Communication System 3%]