(1) The capital expenditure incurred or projected to be incurred, on the following counts within the original scope of work, after the date of commercial operation and up to the cut-off date may be admitted by the Commission, subject to prudence check-
(a) undischarged liabilities;
(b) works deferred for execution;
(c) procurement of initial capital spares within the original scope of work, subject to the provisions of regulation 0;
1 Subs. vide Not. no. HPERC/F(5)(3)(1)(Trans) dated 1st November,2013 published in the R H.P. dated 4th November, 2013 at p. 4608 to 4618. Before its substitution fourth proviso read as under:
“Provided further that in case of the existing projects, the capital cost admitted by the Commission prior to
01.04.2011 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 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. 6256-6264. Before its substitution fourth proviso read as under:
“15. Initial Spares.- Initial spares shall be capitalised as a percentage of the original project cost, subject to following ceiling norms:-
(a) transmission line - 0.75%
(b) transmission Sub-station - 2.5%
(c) Series Compensation devices and HVDC Station - 3.5%” 16 Compendium of HPERC Regulations, March 2021
(d) liabilities to meet award of arbitration or for compliance of the order or decree of a court; and
(e) change in law:
Provided that the details of works included in the original scope of work, along with estimates of expenditure, undischarged liabilities and the works deferred for execution, shall be submitted along with the application for determination of tariff.
1 [(2) The capital expenditure incurred on the following counts after the cut off date may, in its discretion, be admitted by the Commission, subject to prudence check:—
(a) Liabilities to meet award of arbitration or for compliance of the order or decree of a court;
(b) Change in law or compliance of any existing law;
(c) Any expenses to be incurred on account of need for higher security and safety of the capital asset as advised or directed by appropriate Government agencies or statutory authorities responsible for national security/internal security;
(d) Any liability for works executed prior to the Cut-off Date, after prudence check of the details of such un-discharged liability, total estimated cost of package, reasons for such withholding of payment and release of such payments etc.;
(e) Any liability for works admitted by the Commission after the Cut-off Date to the extent of discharge of such liabilities by actual payments;
(f) Any additional capital expenditure, which has become necessary for efficient operation of the transmission system. The claim shall be substantiated with the technical justification duly supported by the documentary evidence like test results carried out by an independent agency in case of deterioration of assets, report of an independent agency in case of damage caused by natural calamities, obsolescence of technology, upgradation of capacity for the technical reason such as increase in fault level; and
(g) Any additional expenditure on items such as relays, control and instrumentation, computer system, power line carrier communication, DC batteries, replacement due to obsolesce of technology, replacement of switchyard equipment due to increase of fault level, tower strengthening, communication equipment, emergency restoration system, insulators cleaning infrastructure, replacement of porcelain insulator with polymer insulators, replacement of damaged equipment not covered by insurance 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. 6256-6264. Before its substitution fourth proviso read as under:
“(2) The capital expenditure incurred on the following counts after the cut off date may, in its discretion, be admitted by the Commission, subject to prudence check:-
(a) liabilities to meet award of arbitration or for compliance of the order or decree of a court;
(b) change in law;
(c) in case of transmission system any additional expenditure on items such as relays, control and instrumentation, computer system, power line carrier communication, DC batteries, replacement of switchyard equipment due to increase of fault level, emergency restoration system, insulators cleaning infrastructure, replacement of damaged equipment not covered by insurance and any other expenditure which has become necessary for successful and efficient operation of transmission system:
1 [Provided that any expenditure on acquiring the minor items or the assets like tools and tackles, furniture, air-conditioners, voltage stabilizers, refrigerators, coolers, fans, washing machines, heat convectors, mattresses, carpets etc. brought after the cut-off date, shall not be considered for additional capitalization for the purpose of determination of tariff during the control period” Compendium of HPERC Regulations, March 2021 17 and any other expenditure which has become necessary for successful and efficient operation of transmission system:
Provided that any expenditure on acquiring the minor items or the assets including tools and tackles, furniture, air-conditioners, voltage stabilizers, refrigerators, coolers, computers, fans, washing machines, heat convectors, mattresses, carpets, etc., bought after the Cut-off Date shall not be considered for additional capitalization for determination of tariff:
Provided further that if any expenditure has been claimed under Renovation and Modernisation (R&M) or repairs and maintenance under O&M Expenses, the same expenditure cannot be claimed under this Regulation.]
1 [17. Asset Base.—The Commission shall determine the asset base for each year of the control period at the beginning of the control period, which shall be.— Sum of —
(a) The asset base of the base year as determined by the Commission, considering the most recent audited accounts, estimates of actuals during the base year after doing prudence check and any other factors considered appropriate by the Commission, and
(b) Proposed capitalisation during the year after exercising prudence check shall be—
(i) schemes for which Commission’s approval has been granted,
(ii) schemes which have been submitted for Commission’s approval, and
(iii) schemes not requiring Commission’s approval;
Less— Assets proposed to be retired during the year.
The net value of such retired assets shall be calculated as follows:
Net Value of retired Assets = OCFA – AD – CC Where;
OCFA: Original capital cost of Replaced Assets AD: Accumulated depreciation pertaining to the Replaced Assets CC: Total Consumer Contribution pertaining to the Replaced Assets:
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. 6256-6264. Before its substitution fourth proviso read as under:
“17. Asset Base.- The Commission shall determine the asset base for each year of the control period at the beginning of the control period, which shall be – Sum of-
(a) The asset base of the base year as determined by the Commission considering the most recent audited accounts, estimates of actuals during the base year checked for prudence and any other factors considered appropriate by the Commission, and
(b) Proposed capitalisation during the year, checked for prudence covering-
(i) schemes for which Commission’s approval has been granted,
(ii) schemes which have been submitted for Commission’s approval, and
(iii) schemes not requiring Commission’s approval.
Less- Assets proposed to be retired during the year.
(2) The interest on loan capital and return on equity shall be computed on the financing of the cost of the schemes included in the asset base.” 18 Compendium of HPERC Regulations, March 2021
Provided further that the amount of insurance proceeds received, if any, towards damage to any asset requiring its replacement shall be first adjusted towards outstanding actual or normative loan and the balance amount, if any, shall be utilised to reduce the capital cost of such replaced asset, and any further balance amount shall be considered as Non-Tariff Income.
(2) The interest on loan capital and return on equity shall be computed on the financing of the cost of the schemes included in the asset base.]
1 [17-A. Consumer Contribution, Deposit Work, Grant and Capital Subsidy.—(1) The works carried out by the Transmission Licensee after obtaining the estimated cost from the users shall be classified as Deposit Works.
(2) Capital works undertaken by the Transmission Licensee 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 licensee against deposit works executed departmentally shall be adjusted in the employee cost;
(b) the debt to equity ratio shall be considered in accordance with regulation 18, 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 23;
(d) provisions related to return on equity, as specified in regulation 19, 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 20, shall not be applicable to the extent of financial support provided through consumer contribution, deposit work, capital subsidy or grant.]