HARYANA ELECTRICITY REGULATORY COMMISSION

BAYS 33-36, SECTOR - 4, PANCHKULA - 134112, HARYANA

Notification

The 31st October, 2019

Regulation No. HERC/46/2019: - The Haryana Electricity Regulatory Commission, in

exercise of the powers conferred on it by section 181 of the Electricity Act 2003
(Act 36 of 2003) and all other powers enabling it in this behalf, after previous
publication, hereby frames the following Regulations: -

PART - I PRELIMINARY

1. SHORT TITLE, COMMENCEMENT, EXTENT, AND INTERPRETATION

1.1 These Regulations shall be called the Haryana Electricity Regulatory

Commission (Terms and Conditions for Determination of Tariff for Generation,
Transmission, Wheeling and Distribution & Retail Supply under Multi Year
Tariff Framework) Regulations, 2019.

1.2 These Regulations shall come into force with effect from 1st April, 2020 and
shall, unless otherwise directed by the Commission, remain in force up to
31st March, 2025 for the duration of second control period.

1.3 These Regulations shall extend to the whole of the State of Haryana.

2. SCOPE OF APPLICATION

2.1 These Regulations shall be applicable to all existing and future Generating
Companies, Transmission Licensees / SLDC and Distribution Licensees and
their successors/assignees, if any, and shall apply where the Commission
determines: -

i) tariff for supply of electricity by a generating company to a

distribution licensee under section 62 and 64 of the Act;

ii) tariff for intrastate transmission of electricity by a transmission

licensee to a distribution licensee or to open access consumers under
section 62 and 64 of the Act;

iii) State Load Dispatch Centre (SLDC) fees and charges under section
32(3) of the Act;

iv) tariff for wheeling, distribution & retail supply of electricity by a

distribution licensee under Section 62 and 64 of the Act;

v) tariff in all other cases where the Commission has the jurisdiction for
tariff determination; and

vi) Cross-subsidy Surcharge in addition to the charges for wheeling

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 under the first proviso to sub-section (2) of section 42 of the Act, in
accordance with the Open Access Regulations.

vii) Additional Surcharge in addition to the charges for wheeling under

sub-section (4) of section 42 of the Act, read with the HERC Open
Access Regulations, to meet the stranded fixed cost of such
distribution licensee arising out of its universal obligation to supply.

2.2 In case the tariff has been determined through transparent process of tariff
based competitive bidding in accordance with the guidelines issued by the
Central Government as per Section 63 of the Electricity Act, 2003, the
Commission shall adopt such tariff in accordance with the provisions of the
Act;

2.3 These Regulations shall not apply for tariff determination of renewable energy
generation projects. The tariff for such generation projects shall be
determined as per Haryana Electricity Regulatory Commission (Terms &
Conditions for determination of Tariff from Renewable Energy Sources,
Renewable Purchase Obligation and Renewable Energy Certificate)
Regulations, 2017 as amended from time to time.

3. DEFINITIONS AND INTERPRETATION

3.1 “Act” means the Electricity Act, 2003 (36 of 2003) as amended from time to
time;

3.2 “Accounting Statement” for the purpose of these Regulations, shall include: -

i) Balance sheet / profit and loss statement prepared in accordance with

the relevant schedule of the Companies Act in vogue including as may
be required under any other Regulations notified by the Commission;

ii) Cash flow / fund flow statement in line with the relevant Accounting
Standards of the Institute of Chartered Accountants of India;

iii) Report of the Statutory Auditors,

iv) Cost Accounting Records, wherever applicable, as prescribed under

Section 209(1)(d) of the Companies Act in vogue.

3.3 “additional capitalization means the capital expenditure actually incurred or

projected to be incurred after the date of commercial operation of the project,
up to the cut-off date, and admitted by the Commission after prudence check.

3.4 “applicant” means a generating company or a transmission licensee or a

distribution licensee or SLDC who has made an application for determination
of tariff / charges or an application for annual performance review / true-up in
accordance with these Regulations and the Act and includes a generating

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 company or a transmission licensee or a distribution licensee or SLDC whose
tariff / charges the subject of review by the Commission;3.4 “ARR” means
Aggregate Revenue Requirement comprising of allowable Operating Expenses
(OPEX), Capital Expenditure (CAPEX) and Return on Equity (RoE) for
generation, transmission & SLDC and Wheeling& Retail supply of electricity by
a distribution licensee;

3.5 “Allocation Statement” means annual financial statement in respect of each of

the separate businesses of the Licensees, showing the amount of revenue,
costs / expenses, assets, liability, reserves and basis of provisions, if any
which has been either:

i) charged from or to each such separate business together with a

description of the basis of that charge; or

ii) determined by apportionment or allocation between the

Licensed/Regulated Business and every other separate business of the
Licensee/Generation Company, together with a description of the basis
of the apportionment or allocation:

Provided that ‘Allocation’ Statement’ shall not be construed as a

substitute for maintaining separate accounting statement for the licensed
business and other businesses of the Licensees.

Provided that the licensed business of a distribution and retail supply

licensee(s) shall be segregated as Wheeling Business (wires) and Retail
Supply Business.

Provided that the licensed business of a transmission licensee(s) shall

be segregated as ‘transmission businesses and ‘State Load Despatch
businesses.

Provided that the generation company shall segregate its accounting

data Unit Wise and that such allocation statement in respect of a
generating station shall be maintained in a manner so as to enable
tariff determination, stage-wise, Unit-wise and/or for the whole generating
station.

3.6 “auditor” means an auditor appointed in accordance with the provisions of

section 139 of Companies Act, 2013 or any other law for the time being in
the force;

3.7 “auxiliary energy consumption” or 'AUX' in relation to a period means the

quantum of energy consumed by auxiliary equipment of the generating unit /
plant such as the equipment being used for the purpose of operating plant
and machinery including switchyard of the generating station and transformer

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 losses within the generating unit / plant, expressed as a percentage of the
sum of gross energy generated at the generator terminals of the generating
unit / all the units of the generating plant;

Provided that AUX shall not include energy consumed for supply of power to
housing colony and other facilities at the generating station and the power
consumed for construction works at the generating station;

3.8 “availability”

i) in relation to transmission system for a given period means the time in

hours during that period the transmission system is capable to transmit
electricity at its rated voltage and shall be expressed in percentage of
total hours in the given period and calculated as per the formula specified
in Appendix - I to these Regulations;

ii) in relation to a generating station, for a given period, it shall mean the
average of the daily declared capacities as certified by the State Load
Despatch Centre (SLDC) for all the days during the period expressed as
a percentage of the installed capacity minus normative AUXc as provided
in these Regulations. The formula specified for the purpose shall be as
under: -

10000  DC i
Availability (%) =
N  IC  (100 − AUX n )

Where:

IC = Installed Capacity of the generating plant in MW,

DCi = Average Declared ex-bus Capacity for all days

during the period in MW,

N = Number of days in the given period,

AUXn = Normative Auxiliary Energy Consumption as a percentage

of gross generation,

∑ = Summation from i = 1 to N;

3.9 “bank rate” shall mean the State Bank of India Marginal Cost of Funds based
Lending Rate (MCLR) of one-year tenor, prevalent at the beginning of the
relevant financial year.

3.10 “base year “means the financial year immediately preceding the first year of
the Control Period and used for the purposes of these Regulations;

3.11 “beneficiary” in relation to a

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 i) “generating plant” means the person buying power generated at such a
generating plant whose tariff is determined under these Regulations.

ii) “transmission system” means the person who has availed of the
transmission system on payment of transmission charges determined
under these Regulations. This includes a distribution licensee, a
transmission licensee, a person who has setup a captive power plant or a
generating company including merchant power plant or a consumer
availing long-term or medium-term open access utilizing such transmission
system. Short-term open access consumers will not be treated as
beneficiaries;

iii) “SLDC” means the person who uses the services of SLDC and shall
include distribution licensee, transmission licensee, a person who has set
up captive power plant or a generating company including merchant
power plant or a consumer availing long-term or medium-term open
access.

3.12 “block” in relation to a combined cycle thermal generating plant includes

combustion turbine generator(s), associated waste heat recovery boiler(s),
connected steam turbine generator and auxiliaries;

3.13 “CERC” means the Central Electricity Regulatory Commission;

3.14 “collection efficiency” means the ratio of total revenue realised to the total
revenue billed during the same financial year. The revenue realisation from
arrears pertaining to the same financial year shall be included but revenue
realisation from late payment surcharge and arrears pertaining to the previous
years shall not be included for computation of collection efficiency;

3.15 “Commission” means the Haryana Electricity Regulatory Commission;

3.16 “conduct of business Regulation” means Haryana Electricity Regulatory

Commission (Conduct of Business) Regulations, 2004 as amended / re-
enacted from time to time;

3.17 “control Period” means a multi-year tariff period fixed by the Commission from
time to time. The control period, under these Regulations, shall be of five
years i.e. from 1st April 2020 to 31st March 2025.

3.18 “core business” for the purpose of these Regulations, means the regulated
activities of the generating company or the transmission licensee or the
distribution licensee, as the case may be, and does not include any other
business;

3.19 “cut-off date” means 31st March of the year closing after two years of the
year of commercial operation of the project, and in case the project is

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 declared under commercial operation in the last quarter of a year, the cut-off
date shall be 31st March of the year closing after three years of the year of
commercial operation;

3.20 “Change in Law” shall mean occurrence of the following events: -

(a) enactment, bringing into effect or promulgation of any new Indian law; or

(b) adoption, amendment, modification, repeal or re-enactment of any existing

Indian law; or

(c) change in interpretation or application of any Indian law by a competent

court, Tribunal or Indian Governmental Instrumentality which is the final
authority under law for such interpretation or application; or

(d) change by any competent statutory authority in any condition or covenant

of any consent or clearances or approval or licence available or obtained
for the project; or

(e) coming into force or change in any bilateral or multilateral agreement

or treaty between the Government of India and any other Sovereign
Government having implication for the generating station or the
transmission system regulated under these regulations.

“Provided that financial implication of change in law in relation to a PPA

or TSA shall be as may provide in the PPA or TSA”.

3.21 “date of commercial operation (COD)” means

(a) In relation to a generating unit, the ‘date of Commercial Operation

declared by the generating company after demonstrating the maximum
continuous rating (MCR) or Installed Capacity (IC) through a successful
trial run after seven days’ notice to the beneficiaries and scheduling shall
commence from 00.00 Hrs of the day following the day of successful
completion of trial run. Additionally, the Generator shall certify that the
said generation unit fully comply with the applicable provisions and
technical standards of the Central Electricity Authority (Technical
Standards for Construction of Electrical Plants an Electric Lines)
Regulations, 2010 and Haryana Electricity Regulatory Commission (Grid
Code) Regulations, as amended and in vogue and / or re-enacted.

(a) In relation to the generating plant, the date of commercial operation of

the last unit or block of the generating plant;

(b) In relation to Hydro Power Plants including PSP, CoD shall be the date
declared by the Generating Company after demonstrating peaking
capacity corresponding to the installed capacity of the generating station
through successful trail run after seven days’ notice to the beneficiaries
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 and scheduling shall commence from 00.00 Hrs of the day following the
day of successful completion of trial run. Additionally, the Generator shall
certify that the said generation unit fully comply with the applicable
provisions and technical standards of the Central Electricity Authority
(Technical Standards for Construction of Electrical Plants an Electric
Lines) Regulations, 2010 and Haryana Electricity Regulatory Commission
(Grid Code) Regulations, as amended and / or re-enacted.

Provided further, that in case a hydro generating station, with pondage, is

unable to demonstrate peaking capacity corresponding to the installed
capacity due to insufficient reservoir / pond level, the CoD shall be
consider as the date of commercial operation of the last unit of the
generating unit. However, it shall be mandatory for such hydro generator
to demonstrate peaking capacity corresponding to the installed capacity
as and when such reservoir / pond level is achieved. The same in the
case of run-of-river shall be as soon as sufficient water flow is available
subsequent to the lean inflow season.

(c) in relation of transmission system, the date from 00.00 Hrs of charging
the transmission system or part thereof to its rated voltage level or
seven days after the date on which it is declared ready for charging by
the transmission licensee, but is not able to charge for reasons not
attributable to the transmission licensee, its suppliers or contractors.

Provided in the case of dedicated transmission line / sub-station, the

Generating Company and the Transmission Licensee shall ensure that
the transmission system is commissioned well within the time frame
agreed upon by them. However, in case the delay in commissioning is
on account of the generating station concerned, the transmission licensee
shall approach the Commission with an appropriate petition for approval
of the CoD of such transmission system or transmission element as
such. However, any charges for the transmission line/ sub-station not put
in use due to reasons attributable to generating station shall be borne by
the generation company until such transmission line/ sub-station is put to
use for evacuation of power of the said generating station.

3.22 “declared capacity” or ‘DC’ means the capability of generating plant to deliver
ex-bus electricity in MW declared by such generating plant in relation to any
time-block of the day or whole of the day, duly considering the availability of
fuel or water;

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3.23 “De-capitalization” means reduction in Gross Fixed Assets (GFA) and reflected
in the Fixed Assets Register subsequent to removal of the assets as admitted
by the Commission;

3.24 “Design Energy” in relation to hydro power plant means the quantum of
energy that could be generated in a 90 percent dependable year with 95
percent installed capacity of the generating station;

3.25 “Distribution Business” means the business of operating and maintaining a

distribution system for supplying electricity in the area of supply of the
distribution licensee;

3.26 “Distribution wires Business” means the business of operating and

maintaining the system for wheeling of electricity in the area of supply of the
distribution licensee;

3.27 “existing generating plant” means generating plants declared under commercial
operation on or a date prior to 31st March 2020;

3.28 “existing transmission system” means the transmission system declared under
commercial operation on or a date prior to 31st March 2020;

3.29 “Force Majeure’ for the purpose of these regulations shall mean the events or
circumstances or combination of events and circumstances including those
stated below which partly or fully prevents the generating company or
transmission licensee or distribution licensee to complete the project within the
specified timeline in the investment approval, and only if such events or
circumstances are not within the control of the generating company or
transmission licensee or distribution licensee and could not have been
avoided, had they taken reasonable care or complied with the prudent
practices :

a) Act of God including lightening, drought, fire and explosion, earthquake,

volcanic eruption, landslide, flood, cyclone, typhoon, tornado, geological
surprises, or exceptionally adverse weather conditions which exceeds the
statistical measures for the last hundred years; or

b) Any act of war, invasion, armed conflict or act of foreign enemy, blockade,
embargo, revolts, riot, insurgency, terrorist or military action; or

c) Industrial Strikes and labor disturbances having nationwide impact in India;

or

d) Delay in obtaining statutory approval for the project except where the delay
is attributable to the project developer(s);

3.30 “gross calorific value” or ‘GCV’ in relation to a thermal power generating

plant means the heat produced in kCal by complete combustion of one
kilogram of solid fuel or one litre of liquid fuel or one standard cubic meter of
gaseous fuel, as the case may be;

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3.31 “station heat rate” or ‘SHR’ means the heat energy input in kCal required to
generate one kWh of electrical energy at generator terminals;

3.32 “infirm power” means electricity injected into the grid prior to the Scheduled
COD or the date of commercial operation of a unit or block of a generating
plant whichever is earlier;

3.33 “installed capacity” or 'IC’ means the summation of the name plate capacities
of all the units of the generating plant or the capacity of the generating plant
(reckoned at the generator terminals) approved by the Commission from time
to time;

3.34 “licensee” means any person or persons granted license under Section 14 or
exempted under Section 13 of the Act including deemed licensee

3.35 “licensed business” means the functions and activities, which the licensee(s)
is required to undertake in terms of the licence granted by the Commission or
as a deemed Licensee(s) under the Act;

3.36 “long-term transmission consumer” means a distribution licensee or a person

having a long-term lien for a period as defined in the open access
Regulations notified by the Commission from time to time, over an intra-State
transmission system by paying all applicable charges for which appropriate
agreement has been entered into with the transmission licensee;

3.37 a) “market operation function” means functions of scheduling, dispatch,

metering data collection, energy accounting & settlement, transmission loss
calculation & apportionment, operation of pool account & congestion charge
account, administering ancillary services & information dissemination and any
other function assigned to the SLDC by the Electricity Act, 2003 or by HERC
Regulations and Orders;

b) “market operation charges” means the charges, as approved by the

Commission, to be recovered by the SLDC from the users for performing
market operation functions.

3.38 “maximum continuous rating” or ‘MCR’ in relation to a unit of the thermal

power generating plant means the maximum continuous output at the
generator terminals, guaranteed by the manufacturer at rated parameters, and
in relation to a block of a combined cycle gas based thermal power
generating plant means the maximum continuous output at the generator
terminals, guaranteed by the manufacturer with water or steam injection, if
applicable, and corrected to 50 Hz grid frequency and specified site
conditions;

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3.39 “medium term transmission consumer” means a person having a medium-
term lien for a period as defined in the open access Regulations notified by
the Commission from time to time over an intra-State transmission system by
paying all applicable charges;

3.40 (a) “new generating plants” means generating plants declared under
commercial operation on a date after 31st March 2020;

(b) “new transmission system” means the transmission system declared

under commercial operation on a date after 31st March 2020;

3.41 “operation and maintenance expenses” or “O&M expenses” mean the

expenditure incurred on operation and maintenance of the generating plant or
transmission system or distribution system, as the case may be, including part
thereof, and includes the following expenditure:

a. Employee cost (EC)

b. Repair and Maintenance (R & M) expenses;
c. Administration and General (A &G) expenses;
3.42 “plant load factor” or 'PLF’ for a given period, means the total sent out
energy corresponding to actual generation during the period, expressed as a
percentage of sent out energy corresponding to installed capacity in that
period and shall be computed in accordance with the following formula:

10000  G i
PLF (%) =
N  IC  (100 − AUX n )

Where:

IC = Installed Capacity of the generating Plant/Unit

in MW,
Gi = Actual ex-bus Generation in MW for the ith
time block of the period,
N = Number of Time Blocks during the period,
AUXn = Normative Auxiliary Energy Consumption as a
percentage of gross generation,
∑ = Summation from i = 1 to N;

3.43 “project”

(a)In case of generation business comprising thermal generating station,

all components of the thermal generating station and shall include coal
handling plant, pollution control system, effluent treatment plan, as may be
required;

(b)In case of generation business comprising hydro generating station, all

components of the hydro generating station and shall include dam, intake

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 water conductor system, power generating station, as apportioned to power
generation;

(c)In relation to the transmission business means a transmission system

comprising specified transmission lines, sub-stations and associated
equipment including communication system;

(d)In relation to State Load Despatch Centre means any project associated
with integrated operation of power system in the State; and

(e) In relation to distribution business means a distribution system

comprising specified distribution lines, sub-stations and associated
equipment;

3.44 “Prudence Check” means scrutiny of reasonableness of expenditure incurred

or proposed to be incurred, financing plan, use of efficient technology, cost
and time over-run and such other factors as may be considered appropriate
by the Commission for determination of tariff;

3.45 “rated voltage” means the manufacturer’s design voltage at which the
transmission/distribution system is designed to operate or such lower voltage
at which the line is charged, for the time being, in consultation with supplier
and receiver of electricity

3.46 “retail supply business” means the business of sale of electricity by a

Distribution Licensee(s) to the various categories of consumers within the area
of supply in accordance with the terms of the License for distribution and
retail supply of electricity;

3.47 “revenue” means the amount billed or assessed to be billed at the applicable
tariff including any fuel price adjustments in the case of a Generating
Company and in the case of distribution licensees shall be inclusive of MMC,
FSA or any other charges i.e. power factor surcharge, load / demand
surcharge etc. for sale of power.

3.48 ‘Scheduled Energy’ means the quantum of energy scheduled by the State
Load Dispatch Centre to be injected into the grid by a generating station for a
given time period;

3.49 “Scheduled generation” for any given time or time block means the quantum
of ex-bus energy scheduled by the State Load Dispatch Centre to be injected
into the grid by a generating plant.

3.50 “short-term transmission consumer” in the context of usage of Transmission

System means a person having short-term lien for a period as defined in the
open access Regulations notified by the Commission from time to time over
an intra-State Transmission System by paying all applicable charges;

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3.51 “State” means State of Haryana;

3.52 “State Load Dispatch Centre” or ‘SLDC’ means the centre established by the
State Government under section 31 of the Act for purposes of exercising the
powers and discharging the functions under Section 32 of the Act;

3.53 a) “System Operation Functions” includes monitoring of grid operations,

supervision and control over the intra – state Transmission System, real – time
operations for grid control, system restoration following grid disturbances,
compiling and furnishing data pertaining to system operation, congestion
management/co-ordination with RLDC, black start co-ordination and any other
functions assigned to the SLDC by the Electricity Act, 2003 or by HERC
Regulations and Orders.

b) “System Operation Charges” means the charges, as approved by the

Commission, to be recovered by the SLDC from the users for performing
system operation functions.

3.54 “tariff” means the schedule of charges for generation, transmission and
distribution & retail supply of electricity with terms and conditions applicable
thereto;

3.55 “transmission service agreement” or ‘TSA’ means an agreement, contract,

memorandum of understanding, or any such covenant, entered into between
the transmission licensee and the long-term transmission consumer(s), as
approved by the commission, for the use of transmission system

3.56 “transmission system” means a transmission line or a group of transmission

lines inter-connected together with or without associated sub-stations including
equipment associated with transmission lines and sub-stations;

3.57 Trial Run or Trial Operation: Trial Run or Trial Operation in relation to a
thermal Generating Station or a unit thereof shall mean successful running of
the generating station or unit thereof on designated fuel at Maximum
Continuous Rating or Installed Capacity for a continuous period of 72 hours
and in case of a hydro Generating Station or a unit thereof for a continuous
period of 12 hours:

Provided that:

(i) The short interruptions, for a cumulative duration of 4 hours, shall be

permissible, with corresponding increase in the duration of the test. Cumulative
Interruptions of more than 4 hours shall call for repeat of trial operation or
trial run.

(ii) The partial loading may be allowed with the condition that average load
during the duration of the trial run shall not be less than Maximum

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 Continuous Rating, or the Installed Capacity excluding period of interruption
and partial loading but including the corresponding extended period.

(iii) Units of thermal and hydro Generating Stations shall also demonstrate
capability to raise load upto 105% or 110% of this Maximum Continues Rating
or Installed Capacity, as the case may be.

3.58 “unit” unit’ in relation to a thermal power generating plant means steam
generator, turbine-generator and auxiliaries, or in relation to a combined cycle
gas based thermal power generating plant, means turbine-generator, waste
heat recovery plant and auxiliaries‘and in relation to a hydro generating station
means turbine-generator and its auxiliaries’;

3.59 “unscheduled interchanges” or ‘UI’ means the unscheduled interchange of

energy as mentioned in the Indian Electricity Grid Code or as defined in the
Intra State ABT Regulations of HERC as may be notified from time to time;

3.60 “wheeling” means the operation whereby the distribution system and
associated facilities of a transmission licensee or distribution licensee, as the
case may be, are used by another person for the conveyance of electricity on
payment of charges to be determined under section 62 of the Act;

3.61 “wheeling business” means the business of operating and maintaining a

distribution system for conveyance of electricity in the area of supply of the
distribution licensee;

3.62 “Year” means the financial year i.e. a period commencing on 1st April of a
calendar year and ending on 31st March of the subsequent calendar year;

(a) “Current Year” means a year in which the petition for aggregate
revenue requirement or determination of tariff is to be filed;
(b) “Ensuing Year” means the year immediately following the current year;
and
(c) “Previous Year” means the year immediately preceding the current year
3.63 “Technical Minimum Schedule” in respect of State Generating Stations shall
have the same meaning as provided in Regulation 34 of these Regulations.

Words appearing in these Regulations and not defined shall bear the same
meaning as in the Act. All other expressions used herein but not specifically
defined herein but defined in the Act shall have the meaning assigned to
them in the Act. The expressions used herein but not specifically defined in
the Regulations or in the Act but defined under Haryana Electricity Reform
Act, 1997 (Act 10 of 1998) shall have the meaning assigned to them under
the said Act, provided that such definitions in the Haryana Electricity Reform
Act, 1997 are not inconsistent with the provisions of the Electricity Act, 2003.

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 PART II - MULTI YEAR TARIFF FINANCIAL PRINCIPLES

4. GENERAL

4.1 The Commission, in specifying these Regulations, is guided by the provisions

of Sections 61 and 62 of the Electricity Act, 2003, the National Electricity
Policy and the National Tariff Policy notified by the Central Government under
Section 3 of the Act as amended from time to time as well as the relevant
Regulations notified by the Central Commission.

4.2 The Commission shall adopt Multi Year Tariff (MYT) framework for
determination of ARR/tariff for each year of the Control Period from the
FY 2020-21 i.e. 1.04.2020.

4.3 Basis of implementation of Multi Year Tariff framework: -

The implementation of MYT framework shall be based on the following: -

(a)The capital investment plan and the business plan for a period not less than
the control period to be submitted by the utilities for their respective
businesses along with the MYT Petition;

Provided that to begin with, the generating companies and the licensees
may file their business plan by the end of January 2020 and the first-year
investment plan with the respective MYT Petition for the second control
period under these Regulations.

(b) The forecast for each year of the control period of the various financial and
operational parameters of ARR, based on reasonable assumptions, to be
filed by the utilities for their respective businesses;

(c) The trajectory for specific variables as may be stipulated by the

Commission, where the performance of the utilities for their respective
businesses is sought to be improved under incentive and penalty
framework;

(d) The mid-year performance review vis-a-vis the approved forecast and
variations in performance of controllable and uncontrollable items;

Provided that the Generating Company and the Licensees shall submit their
Accounting Statements / Segmented Accounts / Allocation Statement to
support their claims / assessment including reasons of variations in various
expenses, at the time of performance review / Truing-up.

(e) The mechanism for sharing approved gains or losses on account of

controllable items;

(f) The mechanism for pass through of approved gains or losses on account
of uncontrollable items.

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 Provided that the Commission shall apply prudence check with regard to
the following: -

i) Revenue from Sale of Power- whether consumer category wise sales

projections are backed up by consumer category wise time series data on
connected load / contract demand, sales trend, number of consumers and
any abnormal increase / decrease has been adequately explained.

ii) Billing Efficiency - measured as a percentage of Units billed by the

distribution licensee to the total units injected into the distribution system.

Provided that in the case of a transmission licensee, the same shall be

expressed as a percentage of units injected into the transmission system’

iii) Revenue Collection Efficiency- shall be measured as a percentage of

revenue realised by a generating company / Licensee against the total
amount billed excluding arrears.

iv) Reduction in outstanding receivables from consumers including un-paid RE

Subsidy, if any and beneficiaries in the case of transmission licensees and
Generating Company.

v) Percentage of consumers billed on the basis of meter reading to the

number of consumers billed on average / assessed basis.

vi) Revenue Expenditure including interest payments on term loan / working

capital loans vis-a-vis revenue earned. Any revenue expenditure in excess
of revenue earned shall be supported by a detailed justification including
source of funding at the time of Truing-up;

vii) Merit Order scheduling of power in line with requirement and additional
revenue earned over and above the average power purchase cost on
trading of surplus power;

viii) Assessment of financial and physical progress of Capital Expenditure

under each head vis-a-vis the schedule submitted and approved by the
Commission. In case of any deviation in Capital Expenditure including
Capitalisation, the generating company / Licensee shall submit a detailed
justification at the time of truing-up. The loan drawl should be matched with
physical progress of Capital Works undertaken under each head.

4.4 Tariff during the control period: The Commission shall determine the ARR for
each year of the control period and tariff for the first year of the control period
separately for Generation Company (ies), transmission licensee(s) / SLDC and
distribution licensee(s).

Page 15 of 128
4.5 The tariff applicable to each business in each of the remaining years of the
control period shall be notified by the Commission through a separate order
after taking into consideration the following: -

a) Mid-year performance review;

b) Specified performance targets;
c) True-up of uncontrollable items as defined in Regulation 8.3 and
of controllable items as provided in regulation.
4.6 There will be no true-up of the controllable items except on account of Force
Majeure events or on account of variations attributable to uncontrollable items.
The variations in the controllable items, as defined in Regulation 8.3, over and
above the norms specified will be governed by incentive and penalty framework
specified in these Regulations.

4.7 The tariff determined by the Commission and the directions given in the MYT
order shall be quid pro quo and mutually inclusive. The tariff determined shall,
within the time period specified in the order, be subject to the compliance of
the directions by the generating company and the licensees to the satisfaction
of the Commission. Non-compliance of the directions shall lead to such
amendment, revocation, variations and alterations in the tariff, as may be
ordered by the Commission. Further non-compliance of directions given in the
tariff order may also lead to invocation of the provisions of section 142 and
146 of the Electricity Act, 2003.

Provided the Generation Company and / or the Licensee may seek extension
in time for compliance of the directives with appropriate justification to the
satisfaction of the Commission.

4.8 The tariff determined by the Commission shall continue to be applicable till it is
modified / amended or revised by the Commission.

4.9 The norms specified under these Regulations are the ceiling norms and this
shall not preclude the generating company and/or licensee or any other person,
as the case may be, from agreeing to improved norms of operation. In case
the improved norms are agreed to, such norms shall be applicable for
determination of tariff.

5. PLANT WISE COMPUTATION OF TARIFF FOR GENERATING COMPANY

5.1 The tariff for the generating company shall be determined plant-wise. Following
shall be the categorization for the existing thermal plants of State Generator
i.e. HPGCL: -

S.No Plant Capacity (MW)

1 Panipat TPS Unit 5 & 6

Page 16 of 128
 Unit-5: 210
Unit-6: 210
2 Panipat TPS Unit 7 and 8
Unit-7: 250
Unit-8: 250
3 DCR TPS Yamunanagar
Unit-1: 300
Unit-2: 300
4 Rajiv Gandhi TPS Khedar (Hisar)
Unit-1:
600
Unit-2:
600

5.2 The generating company shall prepare its annual accounts in a manner such
that all individual plants / units are treated as separate business entity
including any new plant that may be commissioned during the control period.

5.3 The operational norms for each generating plant shall be specified unit-wise.
Therefore, the statement of account should also include the unit-wise
performance parameters for each plant.

5.4 The generating company shall file the tariff petition as per the above
categorization. All plants indicated above and the plants which may be
commissioned during the control period shall have separate interface metering
with the transmission licensee(s) as per CEA (Installation and Operation of
Meters) Regulations, 2006 as amended from time to time and, as and when
intra state ABT is implemented, different power plant, as categorised above,
shall be scheduled separately as per the intra State ABT Regulations as may
be notified by the Commission from time to time.

Provided that a Generation entity may file an application for determination of

provisional tariff for a new generating station or Unit(s) six months prior to the
scheduled date of commissioning.

5.5 For the plants, if any, not covered under ABT the Commission may determine,
single part tariff based on a normative PLF.

Provided the Commission may determine tariff for hydro power projects up to
25 MW separately as per the norms specified in the HERC RE Tariff
Regulations in vogue.

5.6 ‘target / normative availability’ and ‘target / normative PLF’ shall be construed as
normative availability and normative PLF till such the time power plants are
brought under intra-State ABT framework.

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 6. ARR / Tariff OF TRANSMISSION BUSINESS AND SLDC

6.1 The transmission licensee i.e. Haryana Vidyut Prasaran Nigam (HVPN) has
been notified as the State Transmission Utility by the Haryana Government as
per Section 39(1) of the Act and has also been entrusted with the operation of
SLDC. Accordingly, HVPN shall submit separate ARR for its transmission
business and SLDC business, as long as it remains under its control, as per
provisions of these Regulations.

6.2 The HVPN shall maintain separate accounts for SLDC and transmission
business. Till accounts are segregated, STU shall prepare an Allocation
Statement to apportion costs and revenues to respective businesses. The
Allocation Statement shall be considered by the Commission only if it is
certified by the Statutory Auditor/Cost Auditor and approved by the Board of
Directors of the STU, and it shall be accompanied with an explanation of the
methodology which shall be consistent over the Control Period.

6.3 After a Government company or an authority or a corporation is established or

constituted for operation of SLDC by or under any State Act, as may be
notified by the State Govt. as per provisions of Section 31 of the Act, the ARR
for SLDC business shall be submitted by such Government company, authority
or corporation, as the case may be, as per provisions of these Regulations.’

6.4 The Commission may require the STU or the Government

company/Authority/Corporation established for operation of SLDC or the SLDC
itself to submit such details/information as may be required for determination of
SLDC charges. Further, the Commission may give directions to SLDC in
relation to the role and functioning of SLDC.

6.5 The transmission tariff determined by the Commission shall comprise all or any
of the following: -

i) Transmission System Access Charges (TSAC);

ii) Annual Transmission Charges (ATC);
iii) Per Unit charges for energy transmitted (Rs/kWh or kVAh);
iv) Reactive Energy Charges (Rs / kVARh);
ATC, for each financial year of the control period shall be designed to recover
the ARR of the Transmission Licensee for the respective financial year as
approved by the Commission.

The ARR shall comprise of the following: -

ii) Operation & Maintenance Expenses (O&M)
Administrative & General Expenses (A&G);
Employees Expenses (working & retired);
Repair & Maintenance (R&M);
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 iii) Depreciation;
iv) Interest Expenses
on term loan (IoTL);
on working capital loan (IoWC);
v) Return on Equity (RoE)
vi) Income Tax / MAT
vii) Foreign Exchange Rate Variation (FERV)applicable on foreign currency
loans.
Provided that Non-Tariff Income, Income from Open Access Consumers and
income from intrastate transmission lines designated as interstate transmission
lines wherein Yearly Transmission Charges are recovered through Point of
Connection (PoC) charges as per CERC Regulations / Order(s), shall be
deducted while determining ATC recoverable by the transmission licensee(s)
from its long-term beneficiaries.

Provided that Non-Tariff Income shall include, but not limited, to Income from
rent of land/building, sale of scrap, investments/advances, rentals, supervision
charges for capital works, sale of tender/documents/advertisements etc.

6.6 The Commission may implement a transmission pricing mechanism for

transmission licensee in such a way so as to align intra-State transmission
pricing mechanism with the inter-State transmission pricing mechanism as
adopted by the Central Electricity Regulatory Commission in line with the
National Tariff Policy of the Government of India.

Provided the existing transmission licensee / STU are able to collect and
collate sufficient data / underlying assumptions including voltage wise
transmission loss allocation factor w.r.t. distance sensitive cost of transmission
after undertaking a detailed study relating the hybrid method (PoC methodology
of CERC bringing together the marginal and average participation approach)
and load flow study including its likely impact on the beneficiaries of
transmission services along with the timelines for implementing the same.

6.7 The aggregate revenue requirement, net of deductions and other income, for
transmission business as approved by the Commission for the control period
shall be the total cost of the transmission system (ATC). The ATC shall be
recovered from all the users of the Transmission System for the respective
year(s) of the control period as per the formula specified herein.

ATC = ∑n i=1 ARRi – NTIi – OIi )

The notations are as explained below:-

ATC = Total Transmission System Cost of the relevant year of the

Control Period.
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n = Number of Transmission Licensee (in case more than one except
those selected through competitive bidding mode u/s 63 of the Electricity
Act, 2003).

NTI = Non-Tariff Income as approved by the Commission for the ith

year of the Control Period.

OI = Other Income i.e. income from any business of the transmission

licensee other than the regulated business income / revenue from which
is required to be shared for the ith year of the Control Period.

Provided that the ATC, as determined by applying the ibid formula shall
be either:-

i) Shared by the long-term beneficiaries of the Transmission System in

proportion to the respective transmission system of each user of the
transmission system allotted in the intra-state transmission system.

Or

Depending on the availability and reliability of the recorded data_.

ii) Average of the respective projected simultaneous maximum peak (co-

incidental system peak) and non-coincidental peak for each long-term
transmission system users.

Provided that the above shall be subject to truing – up on availability of

actual data of co-incidental and non-coincidental system peak as per the
dispensation of truing-up provided in these Regulations.

Provided also that the base transmission tariff for short term users
including Open Access Consumers shall be determined in accordance
with the following formula:-

TT = ATC / ∑n i=1 (Energy Transmitted by Transmission Licensee)

Where:

TT = Transmission Tariff (Rs/kWh)

ATC = Total Transmission System Cost of the relevant year of the

Control Period.

Provided that the energy (kWh) transmitted by the transmission

licensee(s) shall be as projected by the transmission licensees in
their MYT petition and approved by the Commission after following
the due process. Any variation in projected / approved and actual
shall be trued up at the time of mid-term on availability of audited
data / information.

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6.8 Provisional Transmission Tariff

6.9 The Commission, on a petition filed by the existing Transmission Licensee or a

new Transmission Licensee in Haryana, shall determine and approve
transmission tariff under these Regulations on a provisional basis.

Provided a petition for determination of provisional transmission tariff is filed

before the Commission at least six months prior to the anticipated / scheduled
date of commercial operation of the transmission system.

6.10 The petition for determination of provisional transmission tariff shall inter alia
include the following: -

i) Capital Expenditure incurred and projected to be incurred up to the date

of scheduled commercial operation including additional capital expenditure
incurred duly certified by the statutory auditor.

ii) Details of all the underlying assumptions

iii) Based on the above, provisional transmission tariff shall be determined

and allowed from the scheduled date of commercial operation.

Provided in the case the CoD is delayed beyond six months from the
date of Commission’s Order determining / approving provisional
transmission tariff, the said Order shall cease to be applicable and the
Petitioner shall be required to file a tariff petition afresh after the date of
CoD.

iv) The transmission licensee shall file a petition for determination of final
tariff transmission tariff within six months from the date of CoD based on
the audited capital expenditure and capitalisation as o the date of CoD of
the transmission project.

v) The Commission shall determine final tariff based on prudence check of

the audited capital expenditure and capitalisation thereto as on date of
CoD including but not limited to benchmarking capital expenditure and
capitalisation against similar transmission projects commissioned elsewhere
in the country.

Provided where the final transmission tariff determined / approved by the

Commission is +/- 5% of the provisional tariff, the differential amount shall
be restored / recovered from the beneficiaries along with interest rate as
may be considered reasonable by the Commission subject to the ceiling
of the interest rate allowed to the transmission licensee on its working
capital loans.

Page 21 of 128
7. WHEELING (PURE WIRES) AND RETAIL SUPPLY BUSINESS

7.1 The distribution licensee shall segregate the accounts of the licensed business
into Wheeling Business and Retail Supply Business and submit separate ARRs
for the respective businesses. The ARR, approved by the Commission, for
Wheeling Business, shall be an input to determine wheeling charges
recoverable from Open Access consumers and the ARR for Retail Supply
Business, as approved by the Commission, shall be considered to determine
Retail Supply tariff for sale of electricity to different categories of consumers of
the distribution licensee which will be inclusive of wheeling charges.

Provided that till such time the accounts are segregated, as per provisions of
these Regulations, the distribution licensee shall prepare an allocation
statement to apportion costs and revenues to respective business. The
allocation statement shall be approved by the Board of Directors of the
distribution licensee and accompanied with an explanation of the methodology
which should be consistent over the control period under these Regulations.

8. MYT APPROACH

8.1 Base Line values- The Commission shall determine baseline values for
various financial and operational parameters of ARR for the control period
taking into consideration such parameters approved by the Commission in the
past, actual average figures of last three years, audited accounts, estimate of
the figures for the relevant year, Industry benchmarks/norms and other factors
as may be considered appropriate by the Commission;

8.2 Control Period – The second control period under Multi-Year Tariff framework
shall be a period of five (5) years commencing from 1st April 2020.

8.3 The Aggregate Revenue Requirement (ARR) of the Distribution Business

(wires) to be recovered through wheeling charges of the distribution
licensee(s) shall comprise the following: -

i) Interest on Term Loan

ii) Interest on normative Working Capital

iii) Interest on deposits from distribution system users

iv) Depreciation

v) Operation & Maintenance Expenses

vi) Return on average (opening + closing) Equity for the relevant year

vii) Provision for bad and doubtful debts as may be admitted by the
Commissions subject to the ceiling of 0.5% of the account receivable as per
the audited accounts of the relevant year.

Page 22 of 128
 Provided that the wheeling charges shall be net of i) Non-Tariff Income, ii)
Income from Other Business (ARR – (Non-Tariff Income + Income from Other
Business).Non-Tariff Income shall include rent from land / building, sale of
scrap, investment income, interest earned on advances to suppliers /
contractors, rental income from staff quarter / guest houses, income from
schedule of charges, income from supervision charges for capital works,
income from sale of tender documents, income from advertisements etc.

Provided also, prior period income / expenses shall be allowed by the

Commission at the time of truing-up based on the audited accounts on a
case to case basis subject to prudence check. However, all penalties payable
by the distribution licensee arising from Commission’s order, courts / tribunal,
CGRF / Ombudsman shall not be allowed to be recovered through ARR.

8.3.1 The method of recovery of the Distribution charges (wires business) shall
either be on the basis of energy wheeled basis (Rs. kWh / kVAh) or on the
basis of contracted capacity (Rs/kW/kVA/month) as considered appropriate by
the Commission.

8.3.2 Distribution Loss (%) / Aggregate Technical & Commercial loss (%) shall be
as determined by the Commission in the Order in the MYT petition filed by
the power utilities.

Provided that for wheeling transactions, the voltage wise wheeling loss shall
be determined by the Commission in the MYT petition filed by the power
utilities.

Provided for the above, the voltage wise technical losses shall be projected
by the power utilities based on system configuration and capital investment
plan.

8.3.3 O&M Expenses (Wires Business) shall comprise of Employees Cost, Repair
& Maintenance Expenses (R&M), Administrative & General Expenses (A&G).

Provided that between Distribution (Wires) and Retail Supply Business, the
individual components of O&M Expenses shall be allocated, based on the
segregated accounts/ allocation statement submitted by the Licensee

8.3.4 The Aggregate Revenue Requirement of the Retail Supply Business to be

recovered through retail supply tariff of the distribution licensee(s) shall
comprise the following: -

i) Power Purchase Cost

ii) Transmission Charges (Inter State & Intra State)
iii) Interest (Term Loan and normative Working Capital Loan, Consumer
Security Deposit)
iv) Depreciation
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 v) Operation & Maintenance Expenses
vi) Provision for bad and doubtful debt subject to a ceiling of 0.5% of the
account receivable as per the latest available audited accounts.
vi) Return on Equity Capital

Provided that the ARR computed as per above shall be net of Non-Tariff
Income, income from Other Business, receipts from cross – subsidy
surcharge and additional surcharge etc.

Provided further that the prior period expenses shall be considered at the
time of truing – up on a case to case basis subject to prudence check.
However, all penalties payable by the distribution licensee arising from
Commission’s order, courts / tribunal, CGRF / Ombudsman shall not be
allowed to be recovered through ARR.

Provided that the Commission shall determine the distribution / AT&C loss
trajectory in the annual tariff Order after reviewing the actual losses
including feeder wise loss levels in the FY 2019-20 and beyond.

8.3.5 Power Procurement: The distribution licensee shall procure power from the
sources for which Power Purchase Agreement has been approved by the
Commission. The power procurement plan shall be prepared incorporating
aspects of peak support / peak shifting, ramping requirements, ancillary
services, grid security and deviation management. This shall be done by way
of including provision for Energy Storage Systems in the power procurement
plan

Provided that for any procurement from medium to short term contracts that
may be required, the distribution licensee(s) shall obtain prior approval of the
Commission with supporting data / details along with proper justification.

Provided that the power procurement plan submitted for the control period
shall comprise of quantitative forecast of quantum and cost of the unrestricted
base load and peak load demand in its licensed area. An estimate of month
wise availability of power to meet base load and peak load demand both in
terms of megawatt (MW) and Million Units (kWh). The procurement plan shall
inter-alia include action plan regarding energy conservation, energy efficiency
and demand side management.

Provided further that the power procurement plan shall also include
procurement of renewable energy or renewable energy certificate in case the
available RE Sources are not sufficient to meet with the RPO trajectory as
specified by the Commission including backlog, if any, allowed by the
Commission during the previous year(s).

Page 24 of 128
 Provided that the Distribution licensee(s) shall share its power procurement
plan with the State Transmission Utility in order to maintain consistency in
the intra-state transmission system planning.

8.3.6 Power Purchase Agreement (PPA) – The Commission shall consider approval
of PPA in the light of the approved power procurement plan either u/s
section 86(1)(b) or 63 of the Act.

Provided that all such PPAs shall be submitted in the Commission with
complete documentations and adherence to the relevant guidelines and
policy. Further, no PPA / Supplementary Agreement shall be executed without
the prior approval of the Commission.

Provided that the Commission shall approve the PPA as such or with
appropriate modifications or reject the same after holding public /
Stakeholders consultation on the same and if the same is not in conformity
to the level of transparency required including competitiveness of the project
or is found to be in violation of relevant statute / guidelines, the same shall
not be admitted and rejected outrightly.

8.3.7 The O&M norms for the retail supply business shall be same as in the case
of Distribution (Wires) business.

8.3.8 Controllable and Uncontrollable items of ARR

(a) For the purpose of this Regulation, the items of ARR shall be identified
as 'controllable' or 'uncontrollable'. The variation on account of
uncontrollable items shall be treated as a pass-through subject to
prudence check/validation and approval of the Commission;

Provided that the Commission may allow variations in controllable items

on account of Force Majeure events, as defined under these Regulations
and also those attributable to uncontrollable factors as pass-through in
the ARR for the ensuing year based on actual values submitted by the
generating company and licensees and subsequent validation and
approval by the Commission during true-up.

(b) The items in the ARR shall be treated as ‘controllable’ or ‘uncontrollable’

as follows: -

ARR Element Controllable/ Uncontrollable

Interest and Finance Charges Controllable

Return on Equity Controllable

Availability Controllable

Plant availability factor Controllable

Page 25 of 128
ARR Element Controllable/ Uncontrollable

Heat Rate Controllable

Auxiliary Energy Consumption Controllable

Secondary Fuel Oil Consumption Controllable

(SFC)

O&M Expenses (excluding terminal Controllable

liabilities with regard to employees
on account of changes in pay
scales or dearness allowance due
to inflation)

Terminal liabilities with regard to Uncontrollable

employees on account of changes
in pay scales or dearness allowance
due to inflation

Depreciation Controllable

Transit loss of coal Controllable

Capital Expenditure Controllable

All statutory levies and taxes, if any Uncontrollable

excluding tax on Income

Fuel Price (excluding that pertaining Uncontrollable

to domestic coal procured through
e-auction/open market and imported
coal)

Fuel Price pertaining to domestic Controllable

coal procured through e-auction
/open market and imported coal

GCV of Fuel (excluding domestic Uncontrollable

coal procured through e-
auction/open market and imported
coal)

GCV of domestic coal procured controllable

through e-auction/open market and
imported coal

Distribution Losses (technical and Controllable

commercial including bad debts)

Page 26 of 128
 ARR Element Controllable/ Uncontrollable

Collection Efficiency Controllable

Energy Sales (excluding interstate Uncontrollable

and inter Discom energy sales)

Interstate and inter Discom energy Controllable

sales

Power Purchase Price (other than Uncontrollable

for short-term power purchase and
UI)

Power Purchase Price for short-term Controllable

power and UI

Power Purchase Quantum (MU) Controllable

Intra State Transmission losses Controllable

Quality of Supply as per Standard Controllable

of Performance unless exempted

Non-Tariff income Uncontrollable

8.4 Norms: Commission shall determine norms for ‘controllable’ items and where the
performance of the utilities for their respective businesses is sought to be
improved upon through incentive and penalty framework, trajectory for specific
variables may be stipulated. The variations in the controllable items over and
above the specified norms will be governed by incentive and penalty framework
specified in these Regulations.

8.5 Forecast of expected revenue from tariff: The applicant shall develop
forecasting mechanism of expected revenue from tariff and charges and submit
the same along with complete supporting details, including but not limited to the
details of past performance, proposed initiatives for achieving efficiency or
productivity gains, technical studies or secondary research and contractual
arrangements, to enable the Commission to assess the reasonableness of the
forecast.

9. CAPITAL INVESTMENT PLAN

9.1 The generating company and the licensees, in respect of their

respective businesses, shall file, for approval of the Commission, a
capital investment plan along with the MYT petition for a period covering
at least the entire control period. The capital investment plan shall be
project/scheme wise and for each scheme/project shall include:
Page 27 of 128
 (a) Purpose of investment
(b) Capital Structure;
(c) Capitalization Schedule;
(d) Financing Plan including identified sources of investment;
(e) Details of physical parameters / targets;
(f) Cost-benefit analysis and payback period;
(g) Envisaged reduction in O&M cost/losses;
(h) Ongoing projects that will spill into the year under review and new
projects (along with justification) that will commence but may be
completed within or beyond the control period.
9.2 Purpose of investment shall include:

(i) for a generation company- generation capacity growth, replacement

of assets, renovation and modernization,
reduction in average per unit cost of
generation etc;

(ii) for a transmission licensee- power evacuation, system augmentation,

network expansion, replacement of
assets, reduction in transmission losses,
improvement in transmission service and
reliability of supply, reduction in per MW
transmission cost, integration of
renewable energy sources, congestion
management, frequency and voltage
regulation, IT related projects etc.

(iii) for a distribution licensee- meeting load growth/ sales forecast

(MUs), distribution loss reduction, non-
technical loss reduction, replacement of
assets, meeting reactive energy
requirements, managing peak shifting
requirements, congestion management,
frequency and voltage regulation,
improvement in metering, consumer
services, collection efficiency, quality and
reliability of supply etc.

Note: The Capital Investment by transmission licensee(s) in network expansion

shall be based on load flow studies and in accordance with the requirements
of Haryana Grid Code.

Page 28 of 128
9.3 The capital investment plan, in case of a generation company, will be
commensurate with generation capacity growth, renovation &
modernization requirements etc.

In case of a transmission licensee, the capital investment plan will be

commensurate with load/generation capacity growth and will be linked to
improvement in quality of transmission service, reliability, metering and
reduction in transmission losses.

The capital investment plan in case of a distribution licensee shall be

commensurate with sales forecast (MUs) / load growth of the state,
distribution/non-technical loss reduction targets, improvements envisaged
in metering, collection efficiency, reliability and quality of supply etc.

9.4 Capital Investment for renovation and modernization in case of a

transmission licensee and a generation company shall be made through
an application with a detailed project report (DPR) elaborating the
following elements: (i) Complete scope and justification; (ii) Estimated life
extension of the generation/transmission asset; (iii) Improvement in
performance parameters; (iv) Cost-benefit analysis; (v) Phasing of
expenditure; (vi) Milestones/Time lines (vii) Schedule of completion; (viii)
Estimated completion cost; (ix) Other aspects.

9.5 Capital investment plan shall incorporate list of schemes in order of

priority so as to enable the Commission to approve the schemes in that
order and in case lesser amount of capital expenditure is to be
approved then the schemes of lower priority could be disapproved

9.6 The generation company and licensee shall submit all information / data
required by the Commission for approval of the capital investment plan.

9.7 In the normal course, the Commission shall not revisit the approved
capital investment plan during the control period. However, during the
mid-year performance review and true-up, the Commission shall monitor
the year wise progress of the actual capital expenditure incurred by the
generating company or the licensee vis-à-vis the approved capital
expenditure and in case of significant difference between the actual
expenditure viz-a-viz the approved expenditure, the Commission may
true up the capital expenditure, subject to prudence check, as a part of
annual true up exercise on or without an application to this effect by the
generation company/licensee. The generating company and the licensee
shall submit the scheme-wise actual capital expenditure incurred along
with the mid-year performance review and true-up filing.

Page 29 of 128
9.8 In case during the mid-year performance review, the actual cumulative
capital expenditure incurred up to the current year starting from first
year of the control period, is less by more than 10% of the approved
cumulative capital expenditure, the Commission shall true-up the costs
incidental to the actual capital expenditure in the current year and
remaining years of the control period.

Provided that the actual capital expenditure incurred shall be only for
the schemes as per the approved capital investment plan.

Provided that if the actual capital expenditure incurred is more than the
approved capital expenditure, the Commission shall not allow any true-
up of the cost incidental to such variations.

9.9 In case the capital expenditure is required due to Force Majeure events
for works which have not been approved in the capital investment plan
or for works that may have to be taken up to implement new schemes
approved by the State/Central Govt., the generating company or the
licensee shall submit an application containing all relevant information
along with reasons justifying emergency nature of the proposed work
seeking approval by the Commission. In the case of works or schemes,
other than those required on account of Force Majeure events, the
Commission shall consider to give approval only in those cases where
the works / schemes are wholly / substantially financed by the State /
Central Government or, in view of the Commission, shall benefit a large
mass of consumers of the State. The generating company or the
licensee may take up the work prior to the approval of the Commission
only in case the delay in approval will cause undue loss and such
emergency nature of the scheme has been certified by the Board of the
Directors and intimated to the Commission:

Provided that the generating company or the licensee shall submit the
requisite details, as required as per Regulation 9.1 above, within 10
days of the submission of the application for approval of emergency
work;

Provided further that for the purpose of Regulation 9.7 and 9.8, such
approved capital expenditure shall be treated as a part of actual capital
expenditure incurred by the licensee as well as the capital expenditure
approved by the Commission.

9.10 In case the capital expenditure incurred for approved schemes exceeds
the amount as approved in the capital expenditure plan, the generating
company or the transmission or the distribution licensee, as the case

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 may be, shall file an application with the Commission at the end of
control period for truing up the expenditure incurred over and above the
approved amount. After prudence check, the Commission shall pass an
appropriate order on case to case basis. The true-up application shall
contain all the requisite information and supporting documents.

Provided that any additional capital expenditure incurred on account of

time over run and / or on unapproved schemes not covered under
Regulation 9.9 or unapproved changes in scope of approved schemes
shall not be allowed by the Commission unless the generating company
or the licensee, as the case may be, is able to give adequate
justification for the same.

9.11 The generating company, transmission and the distribution licensees

shall also provide a copy of their respective capital investment plans to
each other at the time of filing of the same with the Commission so as
to enable them to carry out planning and network augmentation /
strengthening activities in a co-ordinated manner. The generating
company, transmission and the distribution licensees shall, immediately
after approval of their respective capital investment plans by the
Commission, send copies of the same to each other. In addition to
above the distribution licensee shall also provide a copy of its approved
power procurement plan to the transmission licensee.

9.12 The generating company and transmission and distribution licensees

shall, in general, extend all co-operation to each other by providing data
/information required for carrying out planning and network augmentation
/ strengthening activities in a co-ordinated manner.

9.13 The Commission shall approve the capital investment plan within a
period of 45 days from the date of its filing or submission of complete
information, whichever is later.

9.14 For the purpose of second control period, the timeline for submission of
business plan by the generating company and the licensees shall be as
specified in Regulation 75 of these Regulations.

Provided that any capitalisation done by mere book entries /

presentation in the financial statements in order to comply with any
statute / rules etc. and not in accordance with the Capital Expenditure
approved under these Regulations, shall not be allowed by the
Commission. In such cases, the licensees / generating company shall be
required to prepare memorandum account of any such capitalisation

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 done and submit the same along with ARR / Tariff petition. No RoE,
depreciation interest cost etc. shall be allowable on the same.

9.15 To enable faster adoption of Electric vehicles in the State, the Utilities
i.e., HPGCL, HVPNL, DHBVN and UHBVNL shall endeavour to set up
Public Charging Station (PCS) for charging Electric Vehicles near to
their Sub-Stations or any other appropriate place.

10. BUSINESS PLAN

10.1 The generating company and the licensee, in respect of their respective
businesses, shall file for approval of the Commission a business plan for a
period covering the entire control period along with the MYT petition. The
business plan shall provide the details for each year of the control period.

10.2 The business plan for a generating company shall be based on planned
generation capacity growth and shall contain among other things the following
(i) generation forecasts; (ii) future performance targets; (iii) proposed efficiency
improvement measures; (iv) saving in operating costs; (v) Plan for reduction
in per unit/per MW cost of generation (vi) financial statements (which include
balance sheet, profit and loss statement and cash flow statement) - current
and projected (at least for the control period duration) along with basis of
projections; (vii) any other new measure to be initiated by the Generating
Company e.g. IT initiatives, third party energy audit etc.

10.3 The business plan for transmission licensee shall be based on proposed
generation capacity addition and future load forecasts of the state and should
contain among other things the following: (i) future plans/ performance targets
of the company including efficiency improvement measures proposed to be
introduced (ii) plans for meeting reactive power requirements; (iii) plan for
reduction in transmission losses; (iv) plan for improvement in quality of
transmission service and reliability; (v) metering arrangements; (vi) Plan for
reduction in per MW transmission cost, (vii) financial statements (which
include balance sheet, profit and loss statement and cash flow statement)-
current and projected (at least for the period of control period duration) along
with basis of projections; (viii) any other new measure to be initiated by the
Licensee e.g. IT initiatives etc.

10.4 The business plan for distribution licensee shall be based on sales forecast
(MUs)/load growth and should contain among other things the following: (i)
future plans/ performance targets of the company including efficiency
improvement measures proposed to be introduced (ii) plan for reduction in
distribution and non-technical losses;(iii) plan for improvement in quality of
supply and reliability; (iv) metering arrangements; (v) plan for improvement in

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 collection efficiency (vi) plan for improvement in consumer services/new
consumer services (vii) Plan for reduction in O & M cost per MU of energy
sales (viii) MIS; (ix) scheme for third party energy audit (x) plan for
improvement in metering and billing; (xi) financial statements (which include
balance sheet, profit and loss statement and cash flow statement)- current
and projected (at least for the period of control period duration) along with
basis of projections; (xii) any other new measure to be initiated by the
Licensee(s) e.g. IT initiatives, development of distribution franchisee, periodical
business satisfaction surveys etc.

10.5 In case the accumulated commercial losses of a generating company or the

licensees have substantially eroded their respective paid up equity, the
business plan shall also contain the proposal to progressively reduce the
accumulated commercial losses indicating various measures, including re-
capitalisation, proposed to be undertaken by the generation company/licensee
to achieve turnaround of the company within a specified period.

10.6 The generation company and the licensee shall submit all information / data
as required by the Commission for necessary approval of the business plan.
The Commission shall scrutinize the business plan taking into consideration
the additional information provided by the applicant, if any.

10.7 The Commission shall approve the business plan within a period of 45 days
from the date of its filing or submission of complete information, whichever is
later.

10.8 For the purpose of second control period, the timeline for submission of
business plan by the generating company and the licensees shall be as
specified in Regulation 75 of these Regulations.

11. MID-YEAR PERFORMANCE REVIEW AND TARIFF SETTING

11.1 The generating company and the licensee shall file an application for mid-
year performance review, true-up of previous year and tariff for the ensuing
year not less than 120 days before the close of each year of the control
period, complete in all respects including the information in the existing
formats as per present practice, till such time new formats are finalised by
the Commission.

11.2 The generating company and the licensees, within 7 (seven) days of filing of
the application for mid-year performance review and true-up, shall publish for
information of the public, the contents of the application filed with the
Commission for mid-year performance review, true up of previous year and
approval of tariff for the ensuing year in an abridged form in such manner as
the Commission may direct and shall provide copies of the application and
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 other documents filed with the Commission at a price not exceeding normal
photocopying charges. The generating company and the licensees shall also
host the application and other documents at their official websites.

11.3 The generating company and the licensee shall provide with the application
for mid-year performance review the details of actual capital expenditure and
details of any statutory levies and actual operational and cost data to enable
the Commission to monitor the implementation of its order including
comparison of actual performance with the approved forecasts (and reasons
for deviations). In addition the generating company and the licensees shall
also submit Annual Statement of Performance and Accounts of their
respective businesses (indicating the plant-wise cost data, and unit-wise
performance parameters in case of a generation company), a copy of latest
audited accounts, analysis of detailed reasons for losses, if any, and any
other information which the Commission may require to assess the reasons
and extent of any variation in the performance from the approved forecast
and the need for tariff resetting.

11.4 In their application for performance review, true-up and tariff for ensuing year,
the generating company and the licensee shall submit information for the
purpose of calculating expected expenditure and tariff along with information
on financial and operational performance for the previous year(s). The
information for the previous year should be based on audited accounts copies
of which shall be supplied along with the application. In case audited
accounts for the previous year are not available, audited accounts for the
latest previous year should be filed along with unaudited accounts or
provisional accounts for all the succeeding years. The application should also
include the proposal for tariff revision, if any.

11.5 The scope of the mid-year performance review shall be a comparison of the
performance of the generation company and the licensees for the relevant
financial year with the approved forecast of ARR for their respective
businesses and the performance targets specified by the Commission. Upon
completion of the mid-year performance review and truing up as per
Regulation 13, the Commission shall pass an order recording:

(a) The revised approved ARR for such financial year including approved
modifications, if any;

(b) The approved aggregate gain or loss on account of controllable items and
sharing of such gains or losses;

(c) Truing-up or pass through of uncontrollable items of ARR of previous year(s);

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(d) Pass through of variations in controllable items due to force majeure events,
if any.

(e) Pass through of variations in controllable items attributable to uncontrollable

factors.

(f) Tariff applicable for the ensuing year.

11.6 “The Commission shall review/consider, during the control period, the
application made under this Regulation as also the application for truing up
of the ARR of the previous year, as per provision of the Regulation 13, on
the same principles as approved in the MYT order on the original application
for determination of ARR and tariff. The review / true–up for FY 2018-19 and
FY 2019-20 shall, however, be done on the same principles as approved in
the tariff order for FY 2018-19 and for FY 2019-20. Upon completion of such
review/truing up, either approve the proposed modification with such changes
as it deems appropriate, or reject the application for the reasons to be
recorded in writing. The Commission shall afford opportunity of being heard
to the affected party in case it considers rejecting the application.”

12. INCENTIVE AND PENALTY FRAMEWORK (Sharing of gains & losses)

12.1 Various elements of the ARR of the generating company and the licensee
will be subject to incentive and penalty framework as per the terms
specified in this Regulation. The overall aim is to incentivize better
performance and penalize poor performance, with the base level as per
the norms / benchmarks specified by the Commission.

12.2 The elements of ARR of generating company and licensees to which

incentive and penalty framework shall apply are as follows:

(a) Common for generating company and licensees

(i) Operation & maintenance expenses-Applicable when the actual expenses

fall below or exceed the level specified by the Commission.

(ii) Interest on new long-term loans- Applicable when interest rate falls below
or exceeds the level specified by the Commission.

(iii) Restructuring of capital cost - Applicable when there is a benefit from

restructuring of capital cost.

(iv) Interest on working capital- Applicable when interest rate falls below or
exceeds the level specified by the Commission

(vi) Restructuring of loan portfolio- Applicable when there is a net benefit

from restructuring of loan portfolio

(b) Only for generation Company

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(i) Plant Availability Factor (PAF)- Applicable when actual PAF falls below
or exceeds the level specified by the Commission

(ii) Station heat rate (SHR)- Applicable when actual SHR falls below or
exceeds the level specified by the Commission

(iii) Auxiliary Energy Consumption (AUX)- Applicable when actual AUX falls
below or exceeds the level specified by the Commission

(iv) Specific Fuel Oil Consumption (SFC)- Applicable when actual SFC falls
below or exceeds the level specified by the Commission

(v) Transit loss of coal- Applicable when actual transit loss falls below or
exceeds the level specified by the Commission

Note: Until the Intra-State ABT Regulations are notified by the

Commission, plant availability factor for the generating company shall mean
plant load factor

(c) Only for Transmission Licensee

(i) Availability- Applicable when actual availability falls below or exceeds the
level specified by the Commission. The incentive for actual availability
above target availability shall be worked out as per the following formula:

I = ATC X (AA – TA) / TA

Where

I = Incentive

ATC = Annual transmission charges

AA = Annual availability achieved (actual)

TA = Normative target availability.

Note 1: The incentive mechanism for availability shall be applicable only

when the transmission licensee submits detailed computation of the
availability figures to the Commission and the Commission approves the
same. The detailed computation will include all details of the input data,
methods of recording the data (manual or through electronic modes), formula
used for computation and all other details required to establish the current
level of availability.

While reporting the level of availability to the Commission, the transmission

licensee shall enclose a certificate from the SLDC validating the indicated
level of availability.

Note 2: For all purposes the ‘normative target availability factor’ shall be
considered for recovery of fixed charges. Any fall in the actual availability from

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 the normative target availability shall result in pro-rata reduction of fixed
charges.

(d) Only for Distribution Licensee

(i) Distribution losses - Applicable when actual distribution losses fall

below or exceed the level specified by the Commission

(ii) Collection efficiency- Applicable when actual collection efficiency falls

below or exceeds the level specified by the Commission

(iii) Recovery of arrears - Applicable when actual recovery of arrears of

previous years falls below or exceeds the targets specified by the
Commission

12.3 The gains / losses shall be computed item wise separately for each
business. The computations shall be based on the data submitted by
the generating company and the licensees in the application for mid-
year performance review / true – up and audited annual accounts
corresponding to the financial year.

12.4 In case of gain

The item wise gain shall be shared between the generating company
or the licensee, as the case may be, and their respective beneficiaries
in the ratio of 50:50. However, the sharing ratio of 50:50 may be
revised to a maximum of 60:40 at the time of true-up during mid-year
performance review / true-up. The manner of utilization of the additional
10% gain shall be specified by the Commission from time to time.

12.5 In case of loss

12.5.1 The item wise losses on account of controllable factors in case of a

distribution licensee shall be dealt with in the following manner:

(a) The loss to the Distribution Licensee on account of Distribution

losses, as may be admitted by the Commission after prudence
check, shall be dealt with as under:

(i) One-third of the amount of such loss may be passed on as

an additional charge in tariff over such period as may be
specified in the Order of the Commission; and

(ii) The balance amount of loss shall be absorbed by the

Distribution Licensee.

(b) The item wise losses on account of other controllable factors, unless
otherwise specifically provided by the Commission, shall be borne
by the distribution licensee.

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 12.5.2 The item wise losses on account of controllable factors in case of a
generation company/transmission licensee, unless otherwise specifically
provided by the Commission, shall be borne by the generation
company/ transmission licensee.

13. TRUING-UP

13.1 Truing-up of the ARR of the previous year shall be carried out along
with mid-year performance review of each year of the control period
only when the audited accounts in respect of the year(s) under
consideration is submitted along with the application. In case audited
accounts pertaining to the year, of which truing-up is to be undertaken,
are not available, the generating company or the licensee as the case
may be, shall submit the provisional account duly approved by the
Board of Directors of the company/licensee.

13.2 Truing-up of uncontrollable items shall be carried out at the end of each
year of the control period through tariff resetting for the ensuing year
and for controllable items shall be done only on account of force
majeure conditions and for variations attributable to uncontrollable
factors.

13.3 The Commission shall allow carrying costs for the trued–up amount
(positive or negative) at the interest rates specified in these Regulations by
adjusting the interest allowed on the working capital requirement for the
relevant year of the control period.

Upon completion of the mid-year performance review and truing up in

accordance with these regulations, the Commission shall pass an order
recording:

(a)The revised ARR for such financial year including approved

modifications, if any;

(b)Holding cost for under/over recovered amount from the close of the
relevant year and upto the middle of the ensuing year of the control
period whereupon the trued-up amount has been adjusted by appropriate
resetting of tariff in accordance with regulation 13.4, calculated as
additional borrowing for working capital for that period.

Provided that no carrying cost shall be allowed on account of delay in

filing for true-up due to unavailability of the audited accounts.

13.4 Over or under recoveries of trued-up amount in previous year(s) of the

control period shall be allowed to be adjusted in the ensuing year of the
control period by appropriate resetting of tariff. The unrecovered amount

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 in the one control period shall be adjusted in the subsequent control
period.

14. REVIEW AT THE END OF THE CONTROL PERIOD

14.1 At the end of the second control period, the Commission shall review
the achievement of objectives and implementation of the principles of
MYT laid down in these Regulations.

14.2 To meet the objectives of the Act, the National Electricity Policy and
National Tariff Policy, the Commission may revise the principles of MYT
for the third and subsequent control periods.

14.3 The end of the second control period shall be the beginning of the third
control period. The generating company and the licensee shall follow the
same procedure unless specified otherwise by the Commission. The
Commission shall analyse the performance with respect to the targets
set out at the beginning of the control period and shall determine the
base values for the next control period on the basis of actual
performance achieved, expected improvement and other relevant factors.

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 PART III - COMPONENTS OF ARR AND TARIFF FOR GENERATION,
TRANSMISSION AND DISTRIBUTION BUSINESS

15. COMPONENTS OF TARIFF FOR GENERATION BUSINESS

15.1 The tariff for sale of electricity from a thermal generating plant shall
comprise of two parts, namely,

a. Annual fixed charges (Capacity charges)

b. Variable charges (Energy Charges)

15.2 Both the components will be worked out in the manner provided in these

Regulations.

15.3 The fixed cost of generating plant (thermal or hydro) shall include the
following elements:

a) Return on equity
b) Interest and financing charges on loan capital
c) Interest on working capital
d) Depreciation
e) Operation and maintenance expenses
f) Foreign exchange rate variation, if any
g) All statutory levies and taxes, if any, excluding taxes on income,

15.4 The Energy Charges (or variable charges) for a generating plant
(thermal) shall comprise of primary and secondary fuel cost.

15.5 For the hydro plants i.e. Western Yamuna Canal Hydro project,
Bhudkalan and Kakroi Hydro Plants, however, a single part tariff, based
on a normative PLF and fixed cost worked out as per Regulation 34
hereinafter, may be determined by the Commission. Unless otherwise the
Commission considers it appropriate to determine the same under HERC
RE Regulations in vogue.

16. COMPONENTS OF TARIFF FOR TRANSMISSION AND SLDC BUSINESS

16.1 The following charges shall be recovered for the use of intra-state
transmission system:

a) Transmission tariff or network usage charges, to reflect the cost of owning

(Capital Investment), servicing and maintaining the transmission assets in
order to transfer bulk power to and from different locations. The network
usage charges or transmission tariff, payable by the beneficiaries of the
transmission system shall be designed to recover the Aggregate Revenue

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 Requirement of the transmission licensee approved by the Commission for
each year of the control period;

b) Reactive energy charges, to reflect the voltage related drawl of reactive

energy as provided in the Regulations hereinafter.

(c) Short-term open access consumers shall pay the charges for usage of
Transmission system in terms Rs per kWh as specified in third proviso of
regulation 50 (b).

16.2 SLDC charges, to reflect the cost of operating the State Load Dispatch
Centre (SLDC) including the cost of owning & maintaining it. These shall
be levied as SLDC charges to the beneficiariesof the services of SLDC
in accordance with the provisions of theseRegulations

16.3 The ARR’s for the transmission business and SLDC business comprise
of only fixed costs which shall have the following components:

a) Return on equity (only for transmission business)

b) Interest and financing charges on Debt
c) Interest on working capital
d) Depreciation
e) Operation and maintenance expenses
f) Foreign exchange rate variation, if any
g) All statutory levies and taxes, if any, excluding taxes on income,
16.4 The transmission licensee, including the STU, shall submit ARRs
separately for transmission business and SLDC business and shall
provide all the above information based on the segregated accounts for
its transmission business and for State Load Dispatch Centre (SLDC), a
copy of which shall be submitted to the Commission along with the
application for tariff determination/review. .

16.5Connection charge- A consumer or a person seeking connectivity to the

transmission system for Open Access shall pay ‘connection charge’ to the
transmission licensee as provided in HERC (Terms and condition for
grant of connectivity and open access for intra-State transmission and
distribution system) Regulations, 2012 as amended from time to time.
Connection charges relate to cost of assets installed solely for the use
by an individual user and cost of such assets shall not be considered for
determination of transmission tariff.

17. COMPONENTS OF TARIFF FOR DISTRIBUTION AND RETAIL SUPPLY

BUSINESS

17.1 For distribution licensees, the commission shall determine (i) retail supply
tariff for their retail supply business i.e. sale of electricity to the

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 consumers in their respective licensed areas which will be inclusive of
wheeling charges and (ii) wheeling tariff for their wheeling business which
shall be for the purpose of recovering wheeling charges from open
access consumers falling in their respective licensed areas.

17.2 The ARRs of the distribution licensee for retail supply business and
wheeling business will comprise the following elements:

ARR for Retail supply business ARR for Wheeling business

A - Expenses A - Expenses

a) Return on equity a) Return on equity

b) Interest and financing charges on loan b)Interest and financing charges on

capital loan capital

c) Interest on working capital c) Interest on working capital

d) Depreciation d) Depreciation

e) Operation and maintenance expenses e) Operation and maintenance

expenses
f) Foreign exchange rate variation, if any
f) Foreign exchange rate variation, if
g) All statutory levies, and taxes including
any
taxes on income, if any
g) All statutory levies and taxes,if
h) Bad and doubtful book debt allowed to
any , excluding taxes on income,
be written off
h) any other expenses not mentioned
i) Cost of power purchase
above
j) Transmission charges

k) any other expenses not mentioned above.

Total expenses – A
Total expenses – A
B - Income / receipts:
B - Income / receipts:
a) Non – tariff income including revenue from
a) Non – tariff income
various surcharges
b) Income from other business, to
b) Income from other business in
the extent specified for wheeling tariff
accordance with HERC Regulations, 2007 as
amended from time to time. Total Income / receipts – B

c) Income from cross subsidy surcharge

from open access consumers

d) Income from additional surcharge from

open access consumers

e) Any grant, subvention, subsidy etc

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provided by the State Government

Total Income / receipts – B

ARR for Retail supply business =

(A – B)

ARR for Wheeling business =

(A – B)

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PART IV- GENERAL PRINCIPLES FOR DETERMINATION OF COMMON
COMPONENTS OF ARR AND TARIFF FOR GENERATION,

TRANSMISSION & DISTRIBUTION BUSINESS

18. CAPITAL COST

(1) The Capital cost as admitted by the Commission after prudence check and
subject to debt-equity ratio as per provisions of these Regulations, shall
form the basis of determination of tariff for new power projects.

Provided that where the power purchase agreement entered into between
the generating Company and the beneficiaries or transmission service
agreement entered into between transmission licensee and the long-term
transmission consumer, as the case may be, provides for a ceiling of
actual expenditure, the capital expenditure shall not exceed such ceiling
for determination of tariff;

Provided further that any person intending to establish, operate and

maintain a generating plant may make an application before the
Commission for ‘in principle’ acceptance of the project capital cost and
financing plan before taking up a project. The petition shall contain
information regarding salient features of the project including the capacity,
location, site specific features, fuel, beneficiaries, break-up of the capital
cost estimates, financial package, schedule of commissioning, reference
price level, estimated completion cost including foreign exchange
components, if any, consent of beneficiary licensees to whom the
electricity is proposed to be sold etc;

Provided also that where the Commission has given ‘in principle’
acceptance to the estimates of project capital cost and financing plan,
the same shall be the guiding factor for applying prudence check on the
actual capital expenditure;

(2) The Capital Cost of a new project shall include the following:

(a) the expenditure incurred or projected to be incurred up to the date of

Commercial operation of the project;

(b) Interest during construction and financing charges, on the loans (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;

(c) Increase in cost in contract packages as approved by the

Commission;

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 (d) Interest during construction and incidental expenditure during
construction as computed in accordance with these Regulation.

(e) capitalised Initial spares subject to the ceiling rates, as a percentage

of the original Plant and Machinery cost as on the cut-off date, as
specified below: -

Generating 1. Coal-based generating plants: 2.50%

Company
2. Gas Turbine / Combined Cycle generating plants 4.00%

3. Hydro Generation Plants 1.50%

Transmission 1. Transmission lines 0.75%

licensee
2. Transmission substations 2.50%

3. Series compensation devices and HVDC stations 3.50%

Distribution Distribution Business Projects 1.50%

licensee

Provided that:

(i) where the generating station has any transmission equipment forming part
of the generation project, the ceiling norms for initial spares for such
equipment shall be as per the ceiling norms specified for transmission system
under these Regulations:

(ii) once the transmission project is commissioned, the cost of initial spares
shall be restricted on the basis of plant and machinery cost corresponding to
the transmission project at the time of truing up:

(iii) for the purpose of computing the cost of initial spares, plant and
machinery cost shall be considered as on cut-off date excluding IDC, IEDC,
Land Cost and cost of civil works. The generator/licensee shall submit the
breakup of head wise IDC & IEDC in its tariff application.

(f) expenditure on account of additional capitalization and de-capitalisation

determined in accordance with these Regulation;

(g) any gain or loss on account of foreign exchange risk variation

pertaining to the loan amount availed during the construction period as
approved by the Commission.

(h) adjustment of revenue due to sale of infirm power in excess of fuel cost
prior to the COD as specified under these Regulations; and

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 (i) adjustment of any revenue earned by using the assets before COD.

(3) The capital cost in case of a new hydro generating station shall also include:

(a) cost of approved rehabilitation and resettlement (R&R) plan of the project
in conformity with National R&R Policy and R&R package as approved; and

(b) cost of the developer’s 10% contribution towards Rajiv Gandhi Grameen
Vidyutikaran Yojana (RGGVY) project in the affected area.

(4) The capital cost with respect to thermal generating station, incurred or
projected to be incurred on account of the Perform, Achieve and Trade (PAT)
scheme or to achieve Environmental Norms / Statutory Norms of Government
of India will be considered by the Commission on case to case basis and
shall include:

(a) cost of plan proposed by developer in conformity with norms of PAT

Scheme; and

(b) sharing of the benefits accrued on account of PAT Scheme.

(5) The following shall be excluded or removed from the capital cost of the
existing and new project:

(a) The assets forming part of the project, but not in use;

(b) Decapitalisation of Asset;

(c) In case of hydro generating station any expenditure incurred or committed

to be incurred by a project developer for getting the project site allotted by
the State government by following a two-stage transparent process of bidding;
and

(d) the proportionate cost of land which is being used for generating power
from generating station based on renewable energy:

Provided that any grant received from the Central or State Government or any
statutory body or authority for the execution of the project which does not
carry any liability of repayment shall be excluded from the Capital Cost for the
purpose of computation of interest on loan, return on equity and depreciation;

(6) Capital cost to be allowed by the Commission for the purpose of determination
of tariff for respective businesses will be based on the capital investment plan
prepared by the generating company or the licensee, as the case may be, and
approved by the Commission prior to the filing of application for multiyear tariff
by the generating company/licensees.

(7) Restructuring of capital cost in terms of relative share of equity and loan
component, subject to provisions of Regulation 19, shall be permitted during the
tariff period provided it does not affect tariff adversely. Any benefit from such
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 restructuring shall be subjected to incentive / penalty framework as per
Regulation 12.

(8) The amount of any contribution made by the consumers, open access
consumers and Government subsidy towards works for connection to the
distribution system or transmission system of the distribution /transmission
licensee, shall be deducted from the original cost of the project for the purpose
of calculating the amount under debt and equity under these Regulations.

18.1 Prudence Check of Capital Expenditure:

A. Generating Company or the Transmission Licensee

Where the capital cost considered in tariff by the Commission on the basis of
projected additional capital expenditure exceeds the actual additional capital
expenditure incurred on year to year basis by more than 10%, the generating
company or the transmission licensee shall refund to the beneficiaries or the
long term transmission customers as the case may be, the tariff recovered
corresponding to the additional capital expenditure not incurred, as approved
by the Commission, along with interest at 1.20 times of the bank rate as
prevalent on 1st April of the respective year.

Where the capital cost considered in tariff by the Commission on the basis of
projected additional capital expenditure falls short of the actual additional
capital expenditure incurred by more than 10% on year to year basis, the
generating company or the transmission licensee shall recover from the
beneficiaries or the long term customers as the case may be, the shortfall in
tariff corresponding to difference in additional capital expenditure, as approved
by the Commission, along with interest at the bank rate as prevalent on 1 st
April of the respective year.

B. Distribution Licensee

Any excess tariff recovered on account of variation in projected capitalization in

the tariff order vis-a-vis trued up capitalization by more than 10% during the
year, shall be adjusted in the Revenue Gap/Surplus of the relevant year along
with interest rate at 1.20 times of the bank rate prevalent on 1st April of
respective year:

Provided that any excess tariff recovered on account of variation in projected

capitalization in the tariff order vis-a-vis trued up capitalization due to reasons
beyond the control of the Distribution Licensee i.e., delay in ‘In-principle’
approval of the schemes, road cutting permission from the concerned agencies
etc., shall be adjusted in the Revenue Gap/Surplus of the relevant year along
with interest rate equal to bank rate prevalent on 1st April of respective year.

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 Any shortfall in tariff recovered on account of variation in projected
capitalization in the tariff order vis-a-vis trued up capitalization by more than
10% during the year, shall be adjusted in the Revenue Gap/Surplus of the
relevant year along with interest rate at 0.80 times of the bank rate prevalent
on 1st April of respective year.

The following principles shall be adopted for prudence check of capital cost of the
existing or new projects:

(1) In case of the thermal generating station and the transmission system,
prudence check of capital cost may be carried out taking into consideration
the benchmark norms specified/to be specified by the Commission from time
to time:

Provided that in cases where benchmark norms have not been specified,
prudence check may include scrutiny of the capital expenditure, financing plan,
interest during construction, incidental expenditure during construction for its
reasonableness, use of efficient technology, cost over-run and time over-run,
competitive bidding for procurement and such other matters as may be
considered appropriate by the Commission for determination of tariff:

Provided further that in cases where benchmark norms have been specified,
the generating company shall submit the reasons for exceeding the capital
cost from benchmark norms to the satisfaction of the Commission for allowing
cost above benchmark norms.

(2) The Commission may issue new guidelines or at its discretion, get the
capital cost of any project, vetted by an independent agency or an external
expert. However, the same shall be considered as guiding factor only and not
binding on the Commission as such.

(3) The Commission may issue new guidelines or revise the existing
guidelines for scrutiny and approval of commissioning schedule of the hydro-
electric projects in accordance with the tariff policy issued by the Central
Government under section 3 of the Act from time to time which shall be
considered for prudence check.

(4) Where the power purchase agreement entered into between the generating
company and the beneficiaries provides for ceiling of actual capital
expenditure, the Commission shall take into consideration such ceiling for
determination of tariff for prudence check of capital cost.

Page 48 of 128
C. Interest during construction (IDC), Incidental Expenditure during Construction
(IEDC)

(A) Interest during Construction (IDC)

(1) Interest during construction shall be computed corresponding to the loan

from the date of infusion of debt fund, and after considering the prudent
phasing of funds up to SCOD.

(2) In case of additional costs on account of IDC due to delay in achieving

the SCOD, the generating company or the licensee as the case may be, shall
be required to furnish detailed justifications with supporting documents for
such delay including prudent phasing of funds:

Provided that if the delay is not attributable to the generating company or the
licensee as the case may be, and is due to uncontrollable factors as specified
in these Regulations, IDC may be allowed after due prudence check:

Provided further that only IDC on actual loan may be allowed beyond the
SCOD to the extent, the delay is found beyond the control of generating
company , after due prudence and considering prudent phasing of funds.

(B) Incidental Expenditure during Construction (IEDC):

(1) Incidental expenditure during construction shall be computed from the zero
date and after considering pre-operative expenses upto SCOD:

Provided that any revenue earned during construction period up to SCOD on

account of interest on deposits or advances, or any other receipts may be
considered for reduction in incidental expenditure during construction.

(2) In case of additional costs on account of IEDC due to delay in achieving

the SCOD, the generating company or the transmission licensee as the case
may be, shall be required to furnish detailed justification with supporting
documents for such delay including the details of incidental expenditure during
the period of delay and liquidated damages recovered or recoverable
corresponding to the delay:

Provided that if the delay is not attributable to the generating company or the
transmission licensee, as the case may be, and is due to uncontrollable
factors, IEDC may be allowed after due prudence check:

Provided further that where the delay is attributable to an agency or contractor

or supplier engaged by the generating company or the transmission licensee,
the liquidated damages recovered from such agency or contractor or supplier
shall be considered for computation of capital cost.

Page 49 of 128
(3) In case the time over-run beyond SCOD is not admissible after due
prudence, the increase of capital cost on account of cost variation
corresponding to the period of time over run may be excluded from
capitalization irrespective of price variation provisions in the contracts with
supplier or contractor of the generating company.

Provided that following shall be considered as controllable and uncontrollable

factors leading to cost escalation impacting Contract Prices, IDC and IEDC of
the project:

(1) The “controllable factors” shall include but shall not be limited to the
following:

(a) Variations in capital expenditure on account of time and/or cost over-runs

on account of land acquisition issues;

(b) Efficiency in the implementation of the project not involving approved

change in scope of such project, change in statutory levies or force majeure
events; and

(c) Delay in execution of the project on account of contractor, supplier or

agency of the generating company or transmission licensee.

(2) The “uncontrollable factors” shall include but shall not be limited to the
following:

(i) Force Majeure events; and

(ii) Change in law.

Provided that no additional impact of time overrun or cost over-run shall

be allowed on account of non-commissioning of the generating station or
associated transmission system by SCOD, as the same should be recovered
through Implementation Agreement between the generating company and the
transmission licensee:

Provided further that if the generating station is not commissioned on the

SCOD of the associated transmission system, the generating company shall
bear the IDC [and IEDC] or transmission charges if the transmission system is
declared under commercial operation.

Provided also that if the transmission system is not commissioned on

SCOD of the generating station, the transmission licensee shall arrange the
evacuation from the generating station at its own arrangement and cost till the
associated transmission system is commissioned.

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18.2 Additional capitalization

18.2.1 The Commission may consider allowing, subject to prudence check, any
additional capital expenditure incurred or projected to be incurred, after the
commercial operation date of a project and up to the cut-off date, on the
following provided the same was part of the original scope of work of the
project:

(a) Deferred liabilities without any carrying cost;

(b) Works deferred for execution without any escalation;

(c) Procurement of initial capital spares in the original scope of work

without any escalation, subject to ceiling specified above;

(d) Foreign exchange rate variation

(e) Liabilities to meet award of arbitration provided that it is not on

account of any fault of the generation company or the licensee, as
the case may be;

(f) Liabilities on account of compliance of the order or decree of a court;

(g Liabilities on account of change in law:

Provided that details of the works included in the original scope of

work along with estimates of expenditure, un-discharged liabilities and works
deferred for execution shall be submitted along with the application for
determination of tariff after the date of commercial operation of the project;

18.2.2 The Commission may consider admitting, after prudence check, the capital
expenditure of the following nature actually incurred after the cut-off
date:

(a) Deferred liabilities relating to works / services within the original

scope of work without any escalation;

(b) Liabilities to meet award of arbitration provided that it is not on

account of any fault of the generation company or the licensee, as
the case may be;

(c) Liabilities on account of compliance of the order or decree of a

court;

(d) Liabilities on account of change in law;

(e) Any additional works / services which have become necessary for
efficient and successful operation of the project, but not included in
the original project cost;

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18.2.3 Impact of additional capitalization in tariff revision within the approved
project cost shall be considered by the Commission once during a
particular financial year of the control period.

18.2.4 In case of a transmission licensee, any additional expenditure on items

such as relays, control & 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
may be admitted by the commission subject to prudence check
provided that such replacement has not been necessitated due to any
fault attributable to the transmission licensee :

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. bought after the cut-off date shall
not be considered for additional capitalization for determination of tariff.

Note1: Any expenditure admitted on account of committed liabilities

within the original scope of work and the expenditure deferred on
techno-economic grounds but falling within the original scope of work
shall be serviced in the normative debt-equity specified in these
Regulations;

Note2: Any expenditure on replacement of old assets or renovation and

modernization or life extension shall be considered after excluding the
entire depreciated value or value of the scrap, whichever is higher, of
the original assets from the original capital cost of the assets replaced;

Note3: Any expenditure admitted by the Commission for determination

of tariff on account of new works not in the original scope of work
shall be serviced in the normative debt-equity specified in these
Regulations.

18.2.5 Provided also that if any expenditure has been claimed under Renovation
and Modernization (R&M), repairs and maintenance under O&M
expenses and Compensation Allowance, same expenditure cannot be
claimed under this Regulation.

18.2.6 In case of de-capitalization of assets of a generating company or the

transmission licensee, as the case may be, the original cost of such
asset as on the date of decapitalization shall be deducted from the
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 value of gross fixed asset and corresponding loan as well as equity
shall be deducted from outstanding loan and the equity respectively in
the year such de-capitalization takes place, duly taking into consideration
the year in which it was capitalized.

18.2.7 The scrutiny of the project cost estimates by the Commission shall
include the reasonableness of the capital cost, financing plan, interest
during construction, use of efficient technology and such other matters
for the purposes of determination of tariff.

18.3 Renovation and Modernization:

(1) The generating company or the transmission licensee, as the case may be, for
meeting the expenditure on renovation and modernization (R&M) for the purpose of
extension of life beyond the originally recognized useful life for the purpose of tariff
of the generating station or a unit thereof or the transmission system or an element
thereof, shall make an application before the Commission for approval of the
proposal with a Detailed Project Report giving complete scope, justification, cost-
benefit analysis, estimated life extension from a reference date, financial package,
phasing of expenditure, schedule of completion, reference price level, estimated
completion cost including foreign exchange component, if any, and any other
information considered to be relevant by the generating company or the
transmission licensee.

(2) Where the generating company or the transmission licensee, as the case may
be, makes an application for approval of its proposal for renovation and
modernization, the approval shall be granted after due consideration of
reasonableness of the cost estimates, financing plan, schedule of completion,
interest during construction, use of efficient technology, cost-benefit analysis, and
such other factors as may be considered relevant by the Commission.

(3) In case of gas/ liquid fuel based open/ combined cycle thermal generating
station, any expenditure which has become necessary for renovation of gas
turbines/steam turbine after 25 years of operation from its COD and an expenditure
necessary due to obsolescence or non-availability of spares for efficient operation of
the stations shall be allowed:

Provided that any expenditure included in the R&M on consumables and cost of
components and spares which is generally covered in the O&M expenses during the
major overhaul of gas turbine shall be suitably deducted after due prudence from
the R&M expenditure to be allowed.

(4) Any expenditure incurred or projected to be incurred and admitted by the

Commission after prudence check based on the estimates of renovation and
modernization expenditure and life extension, and after deducting the accumulated
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depreciation already recovered from the original project cost, shall form the basis for
determination of tariff.

19. DEBT EQUITY RATIO

19.1 Existing projects - In case of the existing projects declared under

commercial operation prior to 1st April 2020, debt-equity ratio as allowed
by the Commission for determination of tariff for the period ending 31st
March 2020 shall be considered.

19.2 New projects - For new projects commissioned or whose capacity is

expanded onor after 1st April 2020:

(a) A Normative debt-equity ratio of 70:30 shall be considered for the

purpose of determination of Tariff;

(b) In case the actual equity employed is in excess of 30%, the amount of
equity for the purpose of tariff determination shall be limited to 30%, and
the balance amount shall be considered as normative loan;

(c) In case the actual equity employed is less than 30%, then the actual
debt-equity ratioshall be considered;

(d) The premium, if any, raised by the generating company or the licensee
while issuing share capital and investment of internal accruals created
out of free reserve, shall also be reckoned as paid up capital for the
purpose of computing return on equity subject to the normative debt
equity ratio of 70:30, provided such premium amount and internal
accruals are actually utilized for meeting capital expenditure and form
part of the approved financial package. For the purposes of computation
of return, the portion of free reserves utilized for meeting the capital
expenditure shall be considered from the date the asset created is
productively deployed in the business.

19.3 Renovation and modernization

Any approved capital expenditure incurred by the generating company or

the licensee on renovation and modernization of project (to be submitted
as part of the capital investment plan) shall be considered to be financed
at normative debt-equity ratio of 70:30. If the actual equity employed is
less than 30%, then the actual debt equity ratio, subject to lower limit as
per company law, shall be considered.

Provided that:

In case of de-capitalisation or retirement or replacement of assets, the equity

capital approved as mentioned above, shall be reduced to the extent of 30% (or
actual equity component based on documentary evidence, if it is lower than
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 30%) of the original cost of the de-capitalised or retired or replaced asset, and
the debt capital approved as mentioned above, shall be reduced to the extent of
actual debt component, based on documentary evidence, of the original cost of
the decapitalised or retired or replaced asset:

In case of Generating Station or a transmission system or distribution system,

which has completed its useful life as on or after 1.4.2020, the accumulated
depreciation as on the completion of the useful life less cumulative repayment of
loan shall be utilized for reduction of the equity and depreciation admissible after
the completion of useful life and the balance depreciation, if any, shall be first
adjusted against the repayment of balance outstanding loan and thereafter shall
be utilized for reduction of equity.

20. RETURN ON EQUITY

20.1 The rate of return on equity shall be decided by the Commission keeping
in view the incentives and penalties and on the basis of overall
performance subject to a ceiling of 14% provided that the ROE shall not
be less than the net amount of incentive and penalty.

20.2 Return on equity shall be allowed on equity employed in assets in use

considering the following and subject to Regulation 20.1 above:

i. Equity employed in accordance with Regulation 19.1 and 19.2 on assets

(in use) commissioned prior to the beginning of the year; plus

II. 50% of equity capital portion of the allowable capital cost for the assets
put to use during the year.

Provided that for the purpose of truing up, return on equity shall be
allowed from the COD on pro-rata basis based on documentary evidence
provided for the assets put to commercial operation during the year.

Provided further that assets funded by consumer contributions, capital

subsidies/Govt. grants shall not form part of the capital base for the
purpose of calculation of Return on Equity

20.3 Return on equity invested in work in progress shall be allowed from the
actual date of commercial operation of the assets.

20.4 There shall be no Return on Equity for the equity component above
30%.

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21. INTEREST ON LOAN CAPITAL

21.1 Existing loans

(i) Interest on loan capital shall be computed loan-wise for existing loans
arrived in a manner specified in Regulation 19 and shall be as per the
rates approved by the Commission.

(ii) The loan outstanding as on 1st April of each financial year shall be
worked out as the gross loan in accordance with Regulation 19 by
deducting the cumulative repayment as admitted by the Commission up
to 31st March of previous financial year from the gross normative loan;

(iii) The rate of interest shall be the weighted average rate of interest on
institutional loans calculated on the basis of the actual loan portfolio at
the beginning of each year applicable to the project. In case the
weighted average rate is not available, the interest rate approved by the
Commission in its earlier tariff order shall be allowed.

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 generating plant/project does not have actual
loan, then the weighted average rate of interest of the generating
company/licensee as a whole shall be considered.

(iv) The interest on loan shall be calculated on the normative average loan
of the year by applying the weighted average rate of interest;

(v) The generating company and the licensee shall from time to time review
their capital structure i.e. debt and equity and make every effort to
restructure the loan portfolio as long as it results in net savings on
interest. The costs associated with such re-financing shall be borne by
the beneficiaries and the net savings (after deducting the cost of re-
financing) shall be subjected to incentive / penalty framework as
mentioned in the Regulation 12 which shall be dealt with at the time of
mid-year performance review/true-up.

(vi) The changes to the loan terms and conditions shall be reflected from
the date of such re-financing and benefit passed on to the beneficiaries;

(vii) In case of any dispute relating to re-financing of loan, any of the parties
may approach the Commission with proper application along with all the
relevant details. During the pendency of any dispute, the beneficiaries
shall not withhold any payment on account of orders issued by the
Commission.

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 (viii) In case any moratorium period on repayment of loan is availed of by the
generating company or the licensee, depreciation provided for in the tariff
during the years of moratorium shall be treated as repayment during
those years and interest on loan capital shall be calculated accordingly.

Provided that the repayment for each year of the control period shall be
deemed to be equal to the depreciation allowed for the corresponding
year.

21.2 New loans (on or after 1st April 2020)

(i) Rate of interest on new loans i.e. on or after 01.04.2020 shall be equal
to the marginal cost of funds-based lending rate (MCLR) of the SBI plus
a maximum of 150 basis points w.r.t.1st April of the relevant financial
year. They shall however, be required to submit due justification to the
Commission for the terms and conditions of the loans raised by them
including the loan sanction letter from the banks/ lending institutions,
indicating the applicable rate of interest.

Provided that interest and finance charges on works in progress shall be

excluded and shall be considered as part of the capital cost;

Provided further that neither penal interest nor overdue interest shall be
allowed for computation of Tariff

(ii) Any variation above or below the allowed interest rate shall be subject to
the incentive and penalty framework specified in Regulation 12. The
incentives on refinancing should be net of costs.

(iii) The amount of loan shall be arrived in the manner as specified in

Regulation 19 and shall be based on the approved capital investment
plan.

(iv) In case any moratorium period on repayment of loan is availed of by the

generating company or the licensee, depreciation provided for in the tariff
during the years of moratorium shall be treated as repayment during
those years and interest on loan capital shall be calculated accordingly.

21.3 The interest computation shall exclude interest on loan amount, normative
or otherwise, to the extent of capital cost funded by Consumer
Contributions, Grants or Deposit Works carried out by Transmission
Licensee or Distribution Licensee or Generating Company, as the case
may be.

21.4 Interest shall be allowed on the amount held as security deposit held in
cash from Transmission System Users, Distribution System Users and
Retail consumers, at the Bank Rate as on 1st April of the financial year

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 in which the petition is filed provided it is payable by the
transmission/distribution licensee.

22. INTEREST ON WORKING CAPITAL

22.1 Components of working capital:

For the purpose of computing working capital the components mentioned

in the table below shall be considered:

Generating company

I. Coal-based Thermal Generating Plants:

a) Cost of coal for 1 month corresponding to the normative availability

(same for pit head);

b) Cost of secondary fuel oil for 1 month corresponding to the normative

availability;

c) Normative O&M expenses for 1 (one) month;

d) Maintenance spares @ 10% of the O&M expenses;

e) Receivables equivalent to fixed and variables charges for 1(one)

month for sale of electricity calculated corresponding to normative
availability.

II. Open-cycle / Combined Cycle Gas Turbine Thermal Generating Plants:

a) Fuel cost for 1 (one) month corresponding to the normative annual

plant availability factor, duly considering mode of operation of the
generating plant on gas fuel and liquid fuel;

b) Liquid fuel stock for ½ month corresponding to the normative annual

plant availability factor, and in case of use of more than one liquid
fuel, cost of main liquid fuel;

c) Maintenance spares @ 15% of normative operation and maintenance

expenses;

d) Normative operation and maintenance expenses for one month.

e) Receivables equivalent to capacity charges and energy charges for 1

(one) months for sale of electricity calculated on normative plant
availability factor, duly considering mode of operation of the generating
plant on gas fuel and liquid fuel; and

III. Hydro power plants:

a) Normative operation and maintenance expenses for 1 (one) month

b) Maintenance spares @ 7.5% of normative operation and maintenance

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 expenses;

c) Receivables equivalent to fixed cost for 2 (two) months

Transmission licensee

a) Normative O&M expenses for 1 (one) month;

b) Maintenance spares @ 15% of the O&M expenses;

c) Receivables equivalent to 1 (one) month of fixed cost calculated on

normative / target availability Less amount held as security deposits
from Users except security deposits held in the form of Bank
Guarantees

Provided that at the time of truing up for any year, the working capital
requirement shall be re-calculated on the basis of the values of
components of working capital approved by the Commission in the truing
up

Distribution licensee

I. Wheeling of electricity:

a) Normative O&M expenses for wheeling business for 1 (one) month;

b) Maintenance spares for 1 (one) month based on annual requirement

considered at 1% of GFA (wire business) at the end of the previous
year;

c) Receivables equivalent to 1(one) month of wheeling charges.

less

Amount held as security deposits in cash from Distribution System Users

:

Provided further that for the purpose of Truing-up for any year, the
working capital requirement shall be re-computed on the basis of the
values of components of working capital approved by the Commission
in the Truing-up before sharing of gains and losses

II. Retail supply of electricity:

a) Normative O&M expenses for retail supply business for 1 (one) month;

b) Maintenance spares for 1 (one) month based on annual requirement

considered at 1% of the GFA at the end of the previous year;

c) Uncollected revenue to be calculated as: Revenue billed for the

relevant year * (1 – Normative Collection efficiency)

d) Receivables equivalent to 1 (one) month of billing less consumers’

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 security / advance consumption deposit.

Provided that for the purpose of Truing-up for any year, the working
capital requirement shall be re-computed on the basis of the values of
components of working capital approved by the Commission in the
Truing-up before sharing of gains and losses;

22.2 Rate of Interest

Rate of interest on working capital shall be equal to the MCLR of the relevant
financial year plus a maximum of 150 basis points. However, while claiming
any spread, the generator and the licensees shall submit loan sanction letter
from the banks/ lending institutions, indicating the applicable rate of interest.

For the purpose of truing up, the actual weighted average Rate of Interest will
be considered on the normative working capital by the Commission, subject to
the ceiling margin as indicated above.

23. DEPRECIATION

For the purpose of tariff determination, the depreciation shall be calculated in

the following manner: -

(a) The value base of asset shall be the historical capital cost of the asset
as admitted by the Commission. The historical capital cost shall include
additional capitalization including foreign exchange rate variation, if any
already allowed by the Commission up to 31st March of the relevant
year.

(b) The residual value of the asset shall be considered as 10% and
depreciation shall be allowed up to maximum of 90% of historical capital
cost of the asset;

Provided that the salvage value for IT equipment and software shall be
considered as NIL and 100% value of the assets shall be considered
depreciable.

(c) Depreciation shall be calculated annually over the useful life of the asset
at the rates specified in Appendix II up to 31st March of the 12th year
from the date of commercial operation of the asset. From 1st April of
13th year from the commercial date of operation of the asset, the
remaining depreciable value if any out of the 90% of the capital cost of
the asset shall be equally spread over the balance useful life of the
asset.

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 The deprecation rates given in Appendix-II will be applicable w.e.f.
1.04.2020 only. The depreciation, in case of existing assets, up to
31.03.2020 shall be considered as already allowed and shall not be re–
visited. The deprecation rates as per Appendix-II for such assets shall be
applicable w.e.f 1.04.2020 up to 12th year from the date of COD.

Provided that the rate provided in Appendix II, are the upper ceiling of
the rate of depreciation to be provided up to 12th year from the date of
COD and the developer shall have the option of indicating, while seeking
approval for tariff, lower rate of depreciation, subject to the aforesaid
ceiling.

(d) Land shall not be considered as a depreciable asset and cost shall be
excluded from the capital cost while computing depreciable value of
asset.

(e) Depreciation shall be chargeable from the first year of commercial

operation. In case of commercial operation of the asset for part of the
financial year, then the depreciation shall be charged on pro rata basis;

(f) Depreciation shall not be allowed on assets (or part of assets) funded by
consumer contribution (i.e., any receipts from consumers that are not
treated as revenue) and capital subsidies / grants. Provision for
replacement of such assets shall be made in the capital investment plan.

24. FOREIGN EXCHANGE RATE VARIATION

24.1 The generating company or the licensee, as the case may be, may
hedge foreign exchange exposure in respect of the interest on foreign
currency loan and repayment of foreign loan acquired for the project in
part or full at their discretion to safeguard their interest against
extraordinary variations in the foreign exchange rates.

24.2 The generating company or the licensee shall recover the cost of
hedging of foreign exchange rate variation corresponding to the normative
foreign debt, in the relevant year on year-to-year basis as expense in the
period in which it arises and no extra rupee liability corresponding to
such foreign exchange rate variation shall be allowed against the hedged
foreign currency debt;

24.3 To the extent the generating company or the licensee is not able to
hedge the foreign exchange exposure, then to that extent, the extra
rupee liability towards interest payment and loan repayment
corresponding to the normative foreign currency loan in the relevant year

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 shall be permissible provided it is not attributable to the generating
company/licensees or their contractors.

24.4 The generating company/the licensee shall recover the cost of hedging
and foreign exchange rate variations on year to year basis as income or
expense in the period in which it arises

24.5 Any gain or loss on account of foreign exchange rate variation pertaining
to the loan amount availed during the construction period shall form part
of the capital cost.

25. INCOME TAX

Income tax, if any, on the income stream of the generating company or the
licensee shall not be treated as an expense or a pass-through component in the
tariff and shall be payable by the generating company or the licensees on their
own.

26. INCOME FROM OTHER BUSINESS

The generation company and the licensees may engage in any other business for
optimum utilization of their assets with prior intimation to the Commission. Such
instances and transactions shall be governed in accordance with the Treatment of
Income of Other Businesses of Transmission Licensee(s) and Distribution
Licensee(s), Regulations, 2007 notified by the Commission, as amended from time
to time.

Provided that the licensee shall follow a reasonable basis for allocation of all joint
and common costs between the core/licensed business and the other business and
shall submit the allocation statement as approved by the Board of Directors to the
Commission along with his application for determination of tariff;

Provided further that where the sum total of the direct and indirect costs of such
other business exceed the revenues from such other business or for any other
reason, no amount shall be allowed to be added to the aggregate revenue
requirement of the generation company or the licensees, as the case may be, on
account of such other business.

27 A. PRIOR PERIOD EXPENSES

27.1 The utility may submit to the Commission the prior period expenses as a
part of the filing for truing up;

27.2 The Commission may allow prior period expenses for uncontrollable cost
items only as per the audited accounts during truing up.

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 PART V- PRINCIPLES FOR DETERMINATION OF TARIFF AND NORMS OF
OPERATION FOR GENERATION BUSINESS

28. NORMS OF OPERATION FOR THERMAL POWER STATIONS

(1) Normative Annual Plant Availability Factor (NAPAF)

(a) Existing Plants

MYT Period
Plant Name (Units) 2020-21 2021-22 2022-23 2023-24 2024-25
(%) (%) (%) (%) (%)
Panipat TPS (Unit 5) 85
Panipat TPS (Unit 6) 85 85 85 85 85
Panipat TPS (Unit 7) 85 85 85 85 85
Panipat TPS(Unit 8) 85 85 85 85 85
DCR TPS, Yamuna Nagar (Unit 85 85 85 85 85
1)
DCR TPS, Yamuna Nagar (Unit 85 85 85 85 85
2)
Rajiv Gandhi TPS, Khedar (Hisar) 85 85 85 85 85
(Unit 1)
Rajiv Gandhi TPS, Khedar (Hisar) 85 85 85 85 85
(Unit 2)

(b) New Plants Commissioned on or after 1st April 2020

Description

Normative Annual Plant Availability Factor (NAPAF) in % 85

(2) Auxiliary Energy Consumption

(a)Existing Plants

MYT Period

Plant Name (Units) 2020-21 2021-22 2022-23 2023-24 2024-25

(%) (%) (%) (%) (%)
Panipat TPS (Units 5& 6) 9 9 9 9 9

Panipat TPS(Units 7 & 8) 8.50 8.50 8.50 8.50 8.50

DCR TPS, Yamuna Nagar 8.50 8.50 8.50 8.50 8.50

(Units 1&2)

Rajiv Gandhi TPS, Khedar 6 6 6 6 6

(Hisar) (Unit 1&2)

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(b) New Plants Commissioned on or after 1st April 2020

Description Auxiliary Energy

Consumption (%)

(i) Coal-based Generating Plants(with

natural draft cooling tower or without
cooling tower)*

With Steam driven boiler feed pumps 6.00

With Electrically driven boiler feed pumps 8.50

(ii) Gas Turbine Generating Plants

Combined Cycle 2.75

Open Cycle 1.00

For Coal-based generating stations with induced draft cooling towers, the
norms shall be further increased by 0.5%.

(3) Station Heat Rate

(a) Existing Plants

MYT Period
Plant Name 2020-21 2021-22 2022-23 2023-24 2024-25
(Units) (kCal/kWh) (kCal/kWh (kCal/kWh (kCal/kWh) (kCal/kWh)
Panipat TPS 2550 2550 2550 2550 2550
(Units 5&6)
Panipat 2500 2500 2500 2500 2500
TPS(Units 7 &
8)
DCR TPS, 2344 2344 2344 2344 2344
Yamuna Nagar
(Units 1&2)
Rajiv Gandhi 2387 2387 2387 2387 2387
TPS, Khedar
(Hisar) (Unit
1&2)

Note: Station heat rate norms for DeenBandhuChhottu Ram TPS (Unit 1 and
2) and Rajiv Gandhi TPS (Unit 1 and 2) have been determined considering
their design heat rate as 2201 kCal/kWh and 2241 kCal/kWh respectively and
multiplying the same with a factor of 1.065.

Page 64 of 128
 (b) New Plants Commissioned on or after 1st April 2020

(i) Coal-based Thermal =1.065 X Design Heat Rate (kCal/kWh)

Generating Plants

Where the Design Heat Rate of a unit means the unit heat rate guaranteed by the
supplier at conditions of 100% MCR, zero percent make up, design coal and design
cooling water temperature/back pressure:

Provided that the design heat rate shall not exceed the following maximum design
unit heat rates depending upon the pressure and temperature ratings of the units:

Steam Pressure Rating 150 170 170 247 247

(kg/ cm2)

SHT/RHT (degree 535/535 537/537 537/565 537/565 565/593

Celsius)

Type of Boiler Feed Electrical Turbine Turbine Turbine Turbine

Pump Driven Driven Driven Driven Driven

Maximum Turbine Cycle 1955 1950 1935 1900 1850

Heat Rate (kCal/kWh)

Minimum Boiler
Efficiency

Sub-Bituminous Indian 0.85 0.85 0.85 0.85 0.85

Coal

Bituminous Imported 0.89 0.89 0.89 0.89 0.89

Coal

Maximum Design Unit

Heat Rate (kCal/kWh)

Sub-Bituminous Indian 2300 2294 2276 2235 2176

Coal

Bituminous Imported 2197 2191 2174 2135 2079

Coal

Provided further that in case pressure and temperature parameters of a unit are
different from above ratings, the maximum design unit heat rate of the nearest class
shall be taken;

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Provided also that where unit heat rate has not been guaranteed but turbine cycle
heat rate and boiler efficiency are guaranteed separately by the same supplier or
different suppliers, the unit design heat rate shall be arrived at by using guaranteed
turbine cycle heat rate and boiler efficiency.

Note: In respect of units where the boiler feed pumps are electrically operated, the
maximum design unit heat rate shall be 40 kCal/kWh lower than the maximum
design unit heat rate specified above with turbine driven Boiler Feed Pump.

(ii) Gas-based / Liquid fuel based thermal generating unit(s)/ block(s)

= 1.05 X Design Heat Rate of the unit/block for natural gas and

RLNG as fuel (kCal/kWh)

= 1.071 X Design Heat Rate of the unit/block for liquid fuel (kCal/kWh)

Where the Design Heat Rate of a unit/block shall mean the guaranteed heat
rate for a unit/block at 100% MCR and at site ambient conditions, zero
percent make up, design fuel and design cooling water temperature/back
pressure.

(4) Secondary Fuel Oil Consumption (SFC)

(a) Existing Plants

MYT Period

Plant Name (Units) 2020-21 2021-22 2022-23 2023-24 2024-25

(ml/kWh) (ml/kWh) (ml/kWh) (ml/kWh) (ml/kWh)

Panipat TPS (Unit 1.0 1.0 1.0 1.0 1.0

5&6)

Panipat TPS(Units 0.5 0.5 0.5 0.5 0.5

7 & 8)

DCR TPS, Yamuna 0.5 0.5 0.5 0.5 0.5

Nagar (Units 1&2)

Rajiv Gandhi TPS, 0.5 0.5 0.5 0.5 0.5

Khedar (Hisar)
(Unit 1&2)

(b) New Plants Commissioned on or after 1st April 2020

Type Norms

Coal-based Thermal Generating Plants 0.5ml/kWh

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(5) Operation and maintenance expenses:

The norms for O & M expenses (in Rs. Lac per MW) for the existing plants and
the plants Commissioned on orafter 1st April 2020 shall accordingly be as under:-

Plant (Unit) MYT Period

2020-21 2021-22 2022-23 2023-24 2024-25
Panipat TPS (Unit 5)
25.64 26.66 27.73 28.84 29.99
Panipat TPS (Unit 6)
25.64 26.66 27.73 28.84 29.99
Panipat TPS (Unit 7)
23.76 24.71 25.70 26.73 27.80
Panipat TPS (Unit 8)
23.76 24.71 25.70 26.73 27.80
DCR TPS, Yamuna Nagar (Unit
1) 21.24 22.09 22.97 23.89 24.85
DCR TPS, Yamuna Nagar (Unit
2) 21.24 22.09 22.97 23.89 24.85
Rajiv Gandhi TPS (Unit 1)
12.87 13.38 13.92 14.47 15.05
Rajiv Gandhi TPS (Unit 2)
12.87 13.38 13.92 14.47 15.05

Provided that the above norms shall be multiplied by the following factors for
additional units in respective unit sizes for the units whose COD occurs on or after
1st April 2020 in the same plant:

MW Class Additional Unit No. Multiplication

factor

200/210/250 MW Class Additional 6th units 0.90

Additional 7th or more units 0.85

300/330/350 MW Class Additional 4th and 5th Unit 0.90

Additional 6th or more units 0.85

500 MW and above Class Additional 3rd or 4th unit 0.90

Additional 5th and above units 0.85

(i) Open Cycle /Combined Cycle Gas Turbine Generating Plants

(Rs. Lakhs / MW)

Year Gas Turbine/Combined Cycle Small Gas Turbine

Generating Plants other than small
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 gas turbine power generating plants Power Generating Plants

2020-21 16.24 34.38

2021-22 16.76 35.48

2022-23 17.30 36.62

2023-24 17.85 37.79

2024-25 18.42 39.00

(6) The norms for thermal power plants other than the existing plants listed
above, whose tariff determination falls under the jurisdiction of the Commission, shall
be same as for the new plants given in the sub clause (1) to (5) above
corresponding to the capacity/type of the plant.

(7) For the generating unitsthat undergo renovation and modernization: the
Commission shall specify a separate set of norms of operation to be adopted
during the renovation and modernization period and for the subsequent
period. These norms shall be specified by the Commission on case to case
basis as part of the renovation and modernization capital investment approval
and shall prevail over the norms specified in these Regulations. The
generation tariff shall be determined accordingly by the Commission for such
generating units.

29. EXPENSES ON SECONDARY FUEL OIL FOR THERMAL POWER

PROJECTS

(a) Expenses on secondary fuel oil (in Rs.) shall be computed corresponding to
normative secondary fuel oil consumption (SFC) specified in this Regulation,
in accordance with the following formula:

Expenses on secondary fuel oil (in Rs.) = SFC x LPSFi x NAPAF x 24

xNDY x IC x 10

Where,

SFC = Normative specific fuel oil consumption in ml/kWh;

LPSFi = Weighted average landed price of secondary fuel in Rs.

/ ml considered initially;

NAPAF = Normative annual plant availability factor in percentage;

NDY = Number of days in a Year;

IC = Installed capacity in MW.

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 (b) Initially, the landed cost of secondary fuel oil shall be considered based on
the weighted average price of secondary fuel oil during the three preceding
months and in the absence of landed costs for the three preceding months,
latest procurement price for the generating plant, before the start of the
year shall be considered

(c) The secondary fuel oil expenses shall be subject to fuel price adjustment at
the end of each year of tariff period as per following formula:

= SFC x NAPAF x 24 x NDY x IC x 10 x (LPSFy – LPSFi)

Where,

LPSFy = Weighted average landed price of secondary fuel oil for the
Year in Rs./ml.

30 RECOVERY OF ANNUAL FIXED CHARGES (CAPACITY) CHARGES

FOR THERMAL POWER PROJECTS

(a) The fixed cost of a thermal generating station shall be computed on

annual basis, based on norms specified under these Regulations.
Payment of capacity charge by the beneficiaries shall be on monthly basis
in proportion to allocated / contracted capacity. The total capacity charges
payable for a generating plant shall be shared by its beneficiaries as per
their respective percentage share / allocation in the capacity of the
generating plant;

(b) A generating plant shall recover full capacity charge at the normative
annual plant availability factor specified by the Commission. Recovery of
capacity charge below the level of target availability shall be on pro-rata
basis. No capacity charge shall be payable at zero availability. Total
recovered fixed charges for a Unit up to the end of a month shall not be
more than the admissible approved fixed charges for that Unit as worked
out corresponding to the cumulative PLF (after including deemed
generation) up to the end of that month. For example, at the end of 3rd
month, if the deemed PLF is 80% and the normative PLF is 85%, the
admissible approved fixed charges would be AFC/4 (0.80/ 0.85) where
AFC are the approved annual fixed charges. In case cumulative PLF at
the end of 3rd month is more than the normative PLF, the admissible
approved fixed charges will be AFC/4;

(c) The capacity charge payable to a thermal generating plant (in Rs.) for a
calendar month shall be calculated in accordance with the following
formula: -
CC1= (AFC/12)( PAF1 / NAPAF ) subject to ceiling of (AFC/12)
CC2 =((AFC/6)( PAF2 / NAPAF ) subject to ceiling of (AFC/6)) – CC1

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CC3 =((AFC/4) ( PAF3 / NAPAF ) subject to ceiling of (AFC/4)) – (CC1+CC2)
CC4 =((AFC/3) ( PAF4 / NAPAF ) subject to ceiling of (AFC/3)) – (CC1+CC2+CC3)
CC5 = ((AFC x 5/12) ( PAF5 / NAPAF ) subject to ceiling of (AFC x 5/12)) – (CC1+CC2 +CC3+CC4)
CC6 = ((AFC/2) ( PAF6 / NAPAF ) subject to ceiling of (AFC/2)) – (CC1+CC2+CC3+CC4 + CC5)
CC7= ((AFC x 7/12) ( PAF7 / NAPAF ) subject to ceiling of (AFC x 7/12)) – (CC1+CC2 +CC3 +CC4 + CC5 + CC6)
CC8 = ((AFC x 2/3) ( PAF8 / NAPAF ) subject to ceiling of (AFC x 2/3)) – (CC1+CC2 +CC3 +CC4 + CC5 + CC6 + CC7)
CC9 = ((AFC x 3/4) ( PAF9 / NAPAF ) subject to ceiling of (AFC x 3/4)) – (CC1+CC2 +CC3 +CC4 + CC5 + CC6 + CC7+
CC8)
CC10=((AFC x 5/6) ( PAF10 / NAPAF ) subject to ceiling of (AFC x 5/6)) – (CC1+CC2 +CC3 +CC4 + CC5 + CC6 + CC7
+ CC8 + CC9)
CC11 = ((AFC x 11/12) ( PAF11 / NAPAF ) subject to ceiling of (AFC x 11/12)) – (CC1+CC2+CC3 +CC4 + CC5 + CC6 +
CC7 + CC8 + CC9 + CC10)
CC12 = ((AFC) ( PAFY / NAPAF ) subject to ceiling of (AFC)) – (CC1+CC2+CC3+CC4 + CC5 + CC6 + CC7 + CC8 +
CC9 + CC10 + CC11)

Provided that in case of generating station or unit thereof is under shutdown due to
Renovation and Modernization, the generating company shall be allowed to recover O&M
expenses and interest on loan only.
Where,
AFC = Annual fixed cost specified for the year, in Rupees.
NAPAF = Normative annual plant availability factor in percentage.
PAFn = Percent Plant availability factor achieved upto the end of the nth month.

PAFY = Percent Plant availability factor achieved during the Year

CC1, CC2, CC3, CC4, CC5, CC6, CC7, CC8, CC9, CC10, CC11 and CC12 are the

Capacity Charges of 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th, 10th, 11th and 12th months
respectively.”

Note: Till Intra – State ABT is implemented, Plant Availability Factor (PAF),
wherever mentioned, shall mean Plant Load Factor (PLF). For working out
annual PLF for the purpose of recovery of annual fixed charges, deemed
generation on account of backing down on the instructions of SLDC or on
the request of Discoms shall be included.

Provided that the Commission may, as an option, calculate the recovery

of annual fixed charges (Capacity) charges for thermal power points as
provided below: -

The fixed cost of a thermal generating station shall be computed on annual basis
based on the norms specified under these regulations and recovered on monthly
basis under capacity charge. The total capacity charge payable for a generating
station shall be shared by its beneficiaries as per their respective percentage share
or allocation in the capacity of the generating station. The capacity charge shall be
recovered under two segments of the year, i.e. High Demand Season (period of
three months) and Low Demand Season (period of remaining nine months), and
within each season in two parts viz., Capacity Charge for Peak Hours of the month
and Capacity Charge for Off-Peak Hours of the month as follows:

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Capacity Charge for the Year (CCy) =Sum of Capacity Charge for three
months of High Demand Season +Sum of Capacity Charge for nine
months of Low Demand Season

(2) The Capacity Charge payable to a thermal generating station for a

calendar month shall be calculated in accordance with the following
formulae:

Capacity Charge for the Month (CCm) =Capacity Charge for Peak Hours
of the Month (CCp) +Capacity Charge for Off-Peak Hours of the Month
(CCop)

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Provided that in case of generating station or unit thereof under shutdown
due to Renovation and Modernisation, the generating company shall be
allowed to recover O&M expenses and interest on loan only.

Where,

CCm= Capacity Charge for the Month;

CCp= Capacity Charge for the Peak Hours of the Month;

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CCop= Capacity Charge for the Off-Peak Hours of the Month;

CCpn= Capacity Charge for the Peak Hours of nth Month in a

specificSeason;

CCopn= Capacity Charge for the Off-Peak of nth Month in a specific

Season;

AFC = Annual Fixed Cost;

PAFMpn = Plant Availability Factor achieved during Peak Hours upto the
end of nth Month in a Season;

PAFMopn = Plant Availability Factor achieved during Off-Peak Hours upto

the end of nth Month in a Season;

NAPAF= Normative Annual Plant Availability Factor.

(3) Normative Plant Availability Factor for “Peak” and “Off-Peak” Hours in
a month shall be equivalent to the NAPAF specified in these Regulations.
The number of hours of “Peak” and “Off-Peak” periods during aday shall
be four and twenty respectively. The hours of Peak and Off-Peak periods
during a day shall be declared by the SLDC at least a week in advance.
The High Demand Season (period of three months, consecutive or
otherwise) and Low Demand Season (period of remaining nine months,
consecutive or otherwise) in a region shall be declared by the SLDC, at
least six months in advance:

Provided that SLDC, after duly considering the comments of the

concerned stakeholders, shall declare Peak Hours and High Demand
Season in such a way as to coincide with the majority of the Peak Hours
and High Demand Season of the State to the maximum extent possible:

(4) Any under-recovery or over-recovery of Capacity Charge as a result

of under achievement or over-achievement, vis-à-vis the NAPAF in Peak
and Off-Peak Hours of a Season (High Demand Season or Low Demand
Season, as the case may be) shall not be adjusted with under-
achievement or over-achievement, vis-à-vis the NAPAF in Peak and Off-
Peak Hours of the other Season:

Provided that within a Season, the shortfall in recovery of Capacity

Charge for cumulative Off-Peak Hours derived based on NAPAF, shall be
allowed to be off-set by over-achievement of PAF, if any, and consequent
notional over-recovery of Capacity Charge for cumulative Peak Hours in
that Season:

Provided further that within a Season, the shortfall in recovery of Capacity

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Charge for cumulative Peak Hours derived based on NAPAF, shall not be
allowed to be off-set by over-achievement of PAF, if any, and consequent
notional over-recovery of Capacity Charge for cumulative Off-Peak Hours
in that Season.

(5) The Plant Availability Factor achieved for a Month (PAFM) shall be
computed in accordance with the following formula:

Where,

AUX = Normative auxiliary energy consumption in percentage.

DCi = Average declared capacity (in ex-bus MW), for the ith day of the
period i.e. the month or the year as the case may be, as certified by the
State load dispatch centre after the day is over.

IC = Installed Capacity (in MW) of the generating station

N = Number of days during the period

Note: DCi and IC shall exclude the capacity of generating units not
declared under commercial operation. In case of a change in IC during
the concerned period, its average value shall be taken.

(6) In addition to the capacity charge, an incentive shall be payable to a

generating station or unit thereof @ 65 paise/ kWh for ex-bus scheduled
energy during Peak Hours and @ 50 paise/ kWh for ex-bus scheduled
energy during Off-Peak Hours corresponding to scheduled generation in
excess of ex-bus energy corresponding to Normative Annual Plant Load
Factor (NAPLF) achieved on a cumulative basis within each Season (High
Demand Season or Low Demand Season, as the case may be), as
specified in these Regulations.

Provided that the generating company shall be required to file its

calculations for recovery of capacity charges as per the above two options
separately for each year of the second control period.

Provided further that in case HPGCL’s power stations are backed down
on the instructions of the DISCOMs and at the same time the Discoms
are drawing power at a lower rate from some other sources i.e.
generators, traders etc. or resorting to drawls under UI mechanism, the
Discoms shall compensate HPGCL to the extent of fixed cost
corresponding to loss of generation due to backing down. In such cases
HPGCL shall have the right to sell power not scheduled by the Discoms

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 to a third party provided any revenue earned on this account shall first be
adjusted against the fixed cost to be recovered from the Discoms.

31 ENERGY CHARGES OR VARIABLE CHARGES FOR THERMAL POWER

PROJECTS

(a) The Energy charges or variable charges shall cover the main fuel cost &
secondary fuel oil and shall be payable for the total energy scheduled to
be supplied to a beneficiary during the calendar month on ex-power plant
basis, at the specified variable charge rate, with fuel price adjustment.

(b) The Energy charge for the month shall be worked out on the basis of ex-
bus energy scheduled to be sent out from the generating plant in
accordance with the following formula:

Energy charge or variable charge (Rs)

= Energy Charge Rate (Rs. / kWh) x Scheduled Energy (ex-bus) for the
month (kWh)

Note: Till the time intra state ABT is implemented, ‘scheduled energy’ may
be read as ‘actual energy sent’.

(c) Energy charge rate (ECR) in Rs. per kWh on ex-power plant basis shall
be determined to three decimal places in accordance with the following
formula:

(i) In case secondary fuel Oil cost is the part of ECR:

[[{SHR-(SFCXCVSF) X LPPF}/CVPF]+(SFCXLPSF)]x{100/(100-Aux)}

(ii) In case secondary fuel Oil cost is not the part of ECR

[{SHR-(SFCXCVSF) X LPPF}/CVPF]x{100/(100-Aux)}

Where

Normative auxiliary energy consumption in

AUX = percentage;

Gross calorific value of primary fuel as fired, in kCal

CVPF = per kg

or per litre as applicable;

Gross calorific value of secondary fuel in kCal per

CVSF = ml;

ECR = Energy charge rate in Rs. per kWh sent out;

SHR = Normative Station Heat rate in kCal per kWh;

SFC = Normative Specific fuel oil consumption in ml/kWh

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 LPPF =Weighted average landed price of primary fuel in Rs./kg.

LPSF = Weighted average landed fuel cost of Secondary Fuel in

Rs./ml during the month.

32 LANDED COST OF FUEL FOR THERMAL POWER PROJECTS

The landed cost of fuel for the month shall include price of fuel
corresponding to the grade and quality of fuel inclusive of royalty, taxes and
duties as applicable, transportation cost by rail/road or any other means, for
the purpose of computation of energy charge and in case of coal, shall be
arrived at after considering normative transit/moisture and handling losses as
percentage of the quantity of coal dispatched by the coal supply company
during the month as follows:

Non-pithead generating plants (up to 1000 : Upto 0.8%

KMs

Non-pithead generating plants (above 1000 : Upto 1.2%

KMs

Pit head generating plants : Upto 0.2%

33 PRIMARY FUEL PRICE ADJUSTMENT (FPA) FOR THERMAL POWER

STATIONS

HPGCL shall claim FPA as per the details provided here under: -

Initially gross calorific value of coal shall be taken as per actual in the
preceding financial year for which data is available. Any deviation shall be
adjusted based on the gross calorific value of coal received and burnt and
landed cost incurred by the generating company for procurement of coal on
month to month basis. No separate petition shall be required to be filed with
the Commission for fuel price adjustment. In case of any dispute related to
primary fuel price adjustment, an appropriate application in accordance with
Haryana Electricity Regulatory Commission (Conduct of Business) Regulations,
2004, as amended from time to time or any statutory re-enactment thereof,
shall be made by the affected party before the Commission. For determining
fuel price adjustment (FPA) amount the following formula shall be adopted:-

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 Where,

FPA = Primary Fuel Price Adjustment in Paise/kWh;

SFCn = Normative Specific Fuel Oil consumption in ml /

kWh;

SHRn = Normative Gross Station Heat Rate in kCal / kWh;

ACn = Normative Auxiliary Energy Consumption in

percentage;

Kos = Base value of GCV of fuel oil as taken for

determination of base energy charge in tariff order
in kCal/ml;

Pcm = Weighted average price of coal as per the invoices

submitted for the month at the power station in
Rs/MT;

Kcm = Weighted average GCV of coal fired at boiler front

for the month in KCal/Kg;

Pcs = Base value of price of coal as taken for

determination of base energy charge in tariff order
in Rs/MT;

Kcs = Base value of GCV of coal as taken for

determination of base energy charge in tariff order
in KCal/Kg.

34 Technical Minimum Schedule

Technical Minimum Schedule for operation of Intra-State Coal based Generating

Stations

1. The technical minimum for operation in respect of a unit or units of an intra-State

Generating Station, except HPGCL’s power plants at Panipat, shall be 55% of MCR
loading or installed capacity of the unit of at generating station.

Provided that the above provision in the Regulation shall continue as an option
available to the Commission and shall be implemented as and when considered
feasible by the Commission except for the HPGCL’s power plants of old vintage at
Panipat.

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2. The intra-State Generator may be directed by SLDC concerned to operate its
unit(s) at or above the technical minimum but below the normative plant availability
factor on account of grid security or due to the fewer schedules given by the
beneficiaries.

3. Where the Generator, whose tariff is either determined or adopted by the

Commission, is directed by the SLDC concerned to operate below normative plant
availability factor but at or above technical minimum, the said Generator may be
compensated depending on the average unit loading duly considering theforced
outages, planned outages, PLF, generation at generator terminal, energy sent out
ex-bus, number of start-stop, secondary fuel oil consumption and auxiliary energy
consumption, in due consideration of actual and normative operating parameters of
station heat rate, auxiliary energy consumption and secondary fuel oil consumption
etc. on monthly basis duly supported by relevant data verified by SLDC.

Provided that:

(i) In case of coal / lignite based generating stations, following station heat rate
degradation or actual heat rate, whichever is lower, shall be considered for the
purpose of compensation: -

Unit loading as a % of Increase in SHR Increase in SHR

Sr.No
Installed Capacity of (for supercritical (for sub-critical
the Unit
units) (%) units) (%)

1 85-100 Nil Nil

2 75 - 84.99 1.25 2.25

3 65 - 74.99 2 4

4 55 - 64.99 3 6

(ii) In case of coal / lignite based generating stations, the following Auxiliary Energy
Consumption degradation or actual, whichever is lower, shall be considered for the
purpose of compensation:

Sr Unit Loading (% of MCR) % Degradation in AEC

No. admissible

1 85 – 100 NIL

2 75 – 84.99 0.35

3 65 – 74.99 0.65

4 55 - 64.99 1.0

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(iii) Where the scheduled generation falls below the technical minimum schedule, the
SLDC concerned shall have the option to go for reserve shut down and in such
cases, start-up fuel cost over and above seven (7) start / stop in a year shall be
considered as additional compensation based on following norms or actual,
whichever is lower:

Unit Size (MW) Oil Consumption per start up (Kl)

Hot Warm Cold

200/210/250 MW 20 30 50

500 MW 30 50 90

660 MW 40 60 110

(iv) In case of gas based intra-State Generating Station, compensation shall be

decided based on the characteristic curve provided by the manufacturer and after
prudence check of the actual operating parameters of Station Heat Rate, Auxiliary
Energy Consumption, etc.

(v) Compensation for the Station Heat Rate and Auxiliary Energy Consumption shall
be worked out in terms of energy charges.

(vi) The compensation so computed shall be borne by the entity who has caused
the plant to be operated at schedule lower than corresponding to Normative Plant
Availability Factor up to technical minimum based on the compensation mechanism
finalized by the SLDC.

(vii) No compensation for Heat Rate degradation and Auxiliary Energy Consumption
shall be admissible if the actual Heat Rate and / or actual Auxiliary Energy
Consumption are lower than the normative Station Heat Rate and / or normative
Auxiliary Energy Consumption applicable to the unit or the generating station.

(viii) There shall be reconciliation of the compensation at the end of the financial
year in due consideration of actual weighted average operational parameters of
station heat rate, auxiliary energy consumption and secondary oil consumption.

(ix) No compensation for Heat Rate degradation and Auxiliary Energy Consumption
shall be admissible if the actual Heat Rate and / or actual Auxiliary Energy
Consumption are lower than the normative station Heat Rate and/or normative
Auxiliary Energy Consumption applicable to the unit or the generating station in a
month or after annual reconciliation at the end of the year.

4. In case of a generating station whose tariff is neither determined nor adopted

by the Commission, the concerned generating company shall have to factor the

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above provisions in the PPAs entered into by it for sale of power in order to claim
compensations for operating at the technical minimum schedule.

5. The generating company shall keep the record of the emission levels from the
plant due to part load operation and submit a report for each year to the
Commission by 31st May of the year.

6. SLDC shall prepare a Detailed Operating Procedure in consultation with the

generators and beneficiaries within 2 months’ time and submit to the Commission
for approval. The Detailed Operating Procedure shall contain the role of different
agencies, data requirements, procedure for taking the units under reserve shut down
and the methodology for identifying the generating stations or units thereof to be
backed down upto the technical minimum in specific Grid conditions such as low
system demand, Regulation of Power Supply and incidence of high renewables etc.,
based on merit order stacking.

7. The SLDC shall work out a mechanism for compensation for station heat rate
and auxiliary energy consumption for low unit loading on monthly basis in terms of
energy charges and compensation for secondary fuel oil consumption over and
above the norm of 0.5 ml/kWh for additional start-ups in excess of 7 start-ups, in
consultation with generators and beneficiaries including its sharing by the
beneficiaries.

35 NORMS OF OPERATION AND DETERMINATION OF TARIFF FOR HYDRO

POWER PLANTS

Norms of operation and determination of tariff for hydro power plants other than
those covered under renewable energy sources, shall be as under:-

34.1 The tariff for sale of electricity from a Hydro Generating Station shall comprise
of two parts, namely, the Capacity Charge and Energy Charge.

34.2 Annual Fixed Charges:

The Annual Fixed Charges shall comprise of the following elements:

(a) Depreciation;

(b) Interest and Finance Charges on Loan Capital;

(c) interest on Working Capital;

(d) Operation & Maintenance Expenses;

(e) Return on Equity;

(0 Special allowance in lieu of Renovation &Modernization, wherever applicable;

(g) SLDC Fees and Charges minus:

(h) Non-Tariff lncome:

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Provided that Depreciation, interest and finance charges on Loan Capital, Interest on
Working Capital and Return on Equity for Hydro Generating Stations shall be
allowed in accordance with the provisions specified in these Regulations:

Provided further that prior period income/expenses shall be allowed by the

Commission at the time of truing up based on audited accounts, on a case to case
basis,subject to prudence check.

34.3 The norms of operation for existing hydro generating stations for recovery of
Annual Fixed Charges shall be as under:-

Normative Annual Plant Availability Auxiliary Consumption including

Factor (%) Transformer Losses (%)

80% 1

80% 1

The following Normative Annual Plant Availability Factor CNAPAF) shall apply to
other hydro generating stations for recovery of Annual Fixed Charges:

a) Storage and Pondage type plants with head variation between Full Reservoir
Level (FRL) and Minimum Draw Down Level (MDDL) of up to 80%, and where
plant availability is not affected by silt: 90%

b) In case of storage and pondage type plants with head variation between full
reservoir level and minimum draw down level is more than 8% and when plant
availability is not affected by silt, the month wise peaking capability as provided by
the project authorities in the DPR (approved by CEA or the State Government) shall
form basis of fixation of NAPAF.

c) Pondage type plants where plant availability is significantly affected by silt: 85%.

d) Run-of-river type plants: NAPAF to be determined plant-wise, based on l0-day

design energy data, moderated by past experience where available/relevant.

e) A further allowance may be made by the Commission in NAPAF determination

under special circumstances, e.g., abnormal silt problem or other operating
conditions, and known plant Imitations.

The following Auxiliary Energy Consumption shall apply to other Hydro Stations

(a) Surface hydro generating stations:

i. With rotating exciters mounted on the generator shaft: 0.70%;

ii. With static excitation system: 1.00%;

(b) Underground hydro generating station:

i. With rotating exciters mounted on the generator shaft: 0.90%;

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ii. With static excitation system: 1.20%.

34.4 Operation and Maintenance Expenses for Hydro Power Plant

a) The Operation and Maintenance expenses including insurance shall be derived

on the basis of the average of the actual Operation and Maintenance expenses for
the three (3) years ending March 31,2018, subject to prudence check by the
Commission.

b) The average of such operation and maintenance expenses shall be considered

as operation and maintenance expenses for the financial year ended March 31,2020
and shall be escalated at the escalation factor of 4% to arrive at operation and
maintenance expenses for subsequent years of the control period. Alternatively, the
Commission may peg O&M expenses for the first year of operation at2% of the
projectcost admitted by the Commission (excluding cost of rehabilitation and
resettlement works and any other cost that may be disallowed by the Commission
including on account of delay in CoD).

(2) The O&M expenses for each subsequent year will be determined by
escalating the base expenses determined above, at the escalation factor of 4%.

Capacity Charge and Energy Charge for Hydro Power Plants:

The Annual Fixed Charges of a Hydro Generating Station shall be computed on

annual basis, based on the norms specified under these Regulations, and
recovered on monthly basis under capacity charge (inclusive of incentive) and
Energy Charge, which shall be payable by the beneficiaries in proportion to their
respective share in the capacity of the generating station'

1. The capacity charge (inclusive of incentive) payable to a hydro generating

station for a calendar month shall be as under:-

AFC x 0.5 x NDM /NDY x (PAFM/NAPAF) (in INR);

Where;

AFC = Annual fixed cost specified for the year, in Rupees;

NAPAF = Normative plant availability factor in percentage;

NDM = Number of days in the month;

NDY= Number of days in the year;

PAFM = Plant availability factor achieved during the month, in Percentage.

The PAFM shall be computed in accordance with the following formula:

PAFM = 10000x X ∑DCi / { N x IC x ( 100 - AUX ) } %

i= 1

AUX = Normative auxiliary energy consumption in percentage;

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DCi= Declared capacity (in ex-bus MW) for the is day of the month which the
stationcan deliver for at least three (3) hours; as certified by the State Load
Despatch Centre after the day is over.

IC = Installed capacity (in MW) of the complete generating station;

N = Number of days in the month.

2. The Energy Charge shall be payable by every beneficiary for the total energy
supplied to the beneficiary, excluding free energy for home state (FEHS), if
any, during the calendar month on ex-power plant basis, at the computed
Energy Charge rate.

Total Energy Charge payable to the Generating Company for a month shall
be:

(Energy Charge Rate in Rs./kwh) x {Energy (ex-bus)} for the month in kWh x
(100-FEHS)/100 .

3. Energy Charge Rate (ECR) in Rupees per kWh on ex-power plant basis, for
a Hydro Generating Station, shall be determined up to three decimal places
based on the following formula:

ECR =AFCx 0.5 x 10/ {DE x(100-AUX)x(100-FEHS)};

Where;

FEHS: Free energy for Home State.

DE = Annual Design Energy specified for the hydro generating station, in

MWh, subject to the provision in Regulation below.

4. In case actual total energy generated by a Hydro Generating Station during a

year is less than the Design Energy for reasons beyond the control of the
Generating Company, the following treatment shall be applied on a rolling
basis:

(i) in case the energy shortfall occurs within ten years from the date of
commercial operation of a generating station, the ECR for the year following
the year of energy shortfall shall be computed based on the formula specified
in these Regulations with the modification that the DE for the year shall be
considered as equal to the actual energy generated during the year of the
shortfall, till the Energy Charge shortfall of the previous year has been made
up, after which normal ECR shall be applicable;

(ii) in case the energy shortfall occurs after ten years from the date of
commercial operation of a generating station, the following shall apply:-

Suppose the specified annual Design Energy (DE) for the station is DE
MWh, and the actual energy generated during the relevant (first) and the
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 following (second) financial years are Al and A2MWh, respectively, Al being
less than DE, then the Design Energy to be considered in the formula in
these Regulations for calculating the ECR for the third financial year shall be
moderated as (A1 + A2 - DE) MWh, subject to a maximum of DE MWh and
a minimum of Al MWh;

(iii)Actual energy generated (e.g., Al, A2) shall be arrived at by multiplying

the net metered energy sent out from the station by 100 / (100 - AUX).

ln case the Energy Charge Rate (ECR) for a hydro generating station, as
computed in Regulation above exceeds ninety paise per kWh, and the actual
saleable energy] in a year exceeds {DE x (100 - AUX) x (100-FEHS)/
10000) MWh, the Energy Charge for the energy in excess of the above
shall be billed at ninety paise per kWh only:

Provided that in a year following a year in which the total energy generated
was less than the design energy for reasons beyond the control of the
Generating Company, the Energy- Charge Rate shall be reduced to ninety
paise per kWh after the energy charge shortfall of the previous year has
been made up.

The State Load Dispatch Centre shall finalize the schedules for the hydro
generating stations, in consultation with the beneficiaries, for optimal
utilization of all the energy declared to be available, which shall be
scheduled for all beneficiaries in proportion to their respective allocations in
the generating station.

Capital Cost and Additional Capitalization

For the purpose of determination of tariff, the capital cost and additional
capitalisation for Hydro Power Plants shall be allowed/approved in accordance
with the provisions outlined under Regulation 18.

35 UNSCHEDULED INTERCHANGE CHARGES

(a) As and when intra state ABT is implemented, all variations between actual
net injection and scheduled net injection for generating plant, and all
variations between actual net drawl and schedule net drawl for beneficiaries
shall be treated as their respective unscheduled interchanges (UI) and will
be dealt with as per the intra-State ABT Regulations to be notified by the
Commission.

(b) The profit and loss on account of unscheduled interchange shall be to the
account of the generating company.

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36 SCHEDULING

The methodology for scheduling and dispatch for the generating plant shall
be as specified in the Haryana Grid Code/IEGC and the intra state ABT
Regulations to be notified by the Commission as amended from time to time.
Until the intra-State ABT Regulations are notified by the Commission CERC
ABT Regulations would be applicable.

37 SLDC AND TRANSMISSION CHARGES

(a) SLDC and Transmission charges as determined by the Commission shall be

considered as a part of expenditure, as pass through, if payable by the
generating company;

(b) SLDC and transmission charges paid for energy sold outside the state, if
any, shall not be considered as expenses for determining generation tariff.

38 REACTIVE ENERGY

A generating station shall inject/absorb the reactive energy into the grid as
per the directions of State Load Despatch Centre. Such injection/absorption
may be undertaken on the basis of machine capability and in accordance
with the directions issued by SLDC as per the provisions of Haryana Grid
Code as amended from time to time.

39 DEMONSTRATION OF DECLARED CAPACITY

(i) The generating company may be required to demonstrate the declared

capacity of its generating plant as and when asked by the State Load
Dispatch Centre or as requested by DISCOMs to SLDC. In the event of
the generating company failing to demonstrate the declared capacity, the
capacity charges due to the generating plant shall be reduced as a
measure of penalty as provided below;

The quantum of penalty for the first mis-declaration in a financial year

for any duration or block in a day shall be charged corresponding to
two days of fixed charges. For the second mis-declaration the penalty
shall be equivalent to fixed charges for four days and for subsequent
mis-declarations in the financial year, the penalty shall be multiplied in
the geometrical progression. Same process to be followed in the
subsequent financial years;

(ii) The operating log books of the generating plant shall be available for
review by the State Load Dispatch Centre. These books shall contain
record of machine operation and maintenance.

(iii) The SLDC shall provide to the Commission any data/information in the
context of demonstration of declared capacity by a generating company
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 or in the context of any other issue concerning system operation/security
as may be asked for by the Commission.

40 METERING AND ACCOUNTING

(i) Metering arrangement, including installation, testing and operation and

maintenance of meters and collection, transportation and processing of
data required for accounting of energy exchanges and average
frequency on 15 minutes time block basis shall be provided by the
State Load Dispatch Centre to the State Transmission Utility;

(ii) Processed data of the meters along with data relating to declared
capacities and schedules etc shall be supplied by State Load Dispatch
Centre to the State Transmission Utility;

(iii) For all purpose, the Standards for Metering and Accounting specified in
the Haryana Grid Code Regulations 2009, intra-State ABT Regulations
to be notified by the Commission and the Central Electricity Authority
(Installation and Operation of Meters) Regulations 2006 notified by the
CEA, shall be adopted and followed. Until the intra-State ABT
Regulations are notified by the Commission, CERC ABT Regulations
would be applicable.

41 BILLING AND PAYMENT

(i) Bills shall be raised for capacity charges, and energy charges on
monthly basis by the generating company in accordance with these
Regulations, and applicable payments shall be made by the beneficiaries
directly to the generating company.

(ii) Payment of the capacity charges for a thermal generating plant shall be
shared by the beneficiaries of the generating plant as per their
percentage allocated share for the month (inclusive of any allocation out
of the unallocated capacity) in the installed capacity of the generating
plant.

42 REBATE FOR EARLY PAYMENT

In case of early payment of bills of capacity and energy charges the

following schedule of rebate shall be followed:

Days from the date of receipt of bills of capacity charges, Rebate %

energy charges etc.

0-7 2.0

8-14 1.0

15-21 0.5

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 22-30 0.25

43 LATE PAYMENT SURCHARGE

In case the payment of any bill for charges payable under these Regulations
is delayed by the beneficiary beyond a period of 30 days from the date of
receipt of bill, a late payment surcharge at the rate of 0.04% per day shall
be levied by the generating company and shall be payable by the
beneficiaries.

44 SALE OF INFIRM POWER

(a) Supply of infirm power shall be accounted as Unscheduled Interchange

(UI) and paid for from the regional or State UI pool account at the applicable
frequency-linked UI rate.

(b) Any revenue earned by the generating company from sale of infirm
power after accounting for the fuel expenses shall be applied for reduction in
capital cost. Any loss on this account shall not be taken into consideration.

45 NON-TARIFF INCOME

(a) All incomes being incidental to electricity business and derived by the
generating company from sources, including but not limited to profit derived
from disposal of assets, rents, miscellaneous receipts from the beneficiaries,
etc. shall constitute non-tariff Income of the generating company;

(b) The amount received by the generating companyon account of non-

tariff income shall be deducted from the aggregate revenue requirement for
calculating the net revenue requirement of such licensee:

Provided that the generating companyshall submit full details of his forecast
of non-tariff income to the Commission in such form as may be stipulated by
the Commission from time to time;

Provided that Late Payment Surcharge and Interest on Late Payment earned
by the Generating Company shall not be considered under Non-tariff Income;

(c) The “non-tariff income” shall include but shall not be limited to the
following:

i. Income from rent on land or buildings or other assets;

ii. Income from sale of land or other assets;

iii. Income from sale of scrap;

iv. Income from statutory investments;

v. Income from sale of Ash/rejected coal;

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 vi. Interest on advances to suppliers/contractors;

vii. Rental from staff quarters;

viii. Rental from contractors;

ix. Income from hire charges from contactors and others;

x. Deferred Income from grant, subsidy, etc., as per Annual Accounts;

xi. Income from advertisements;

xii. Excess found on physical verification;

xiii. Interest on investments, fixed and call deposits and bank balances;

xiv. Prior period income, etc.:

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PART VI - PRINCIPLES FOR DETERMINATION OF TARIFF AND NORMS OF
OPERATION FOR TRANSMISSION BUSINESS

45. NORMS OF OPERATION FOR TRANSMISSION LICENSEE

The norms of operation for transmission licensee shall be as under:

45.1 Normative annual transmission system availability Factor (NATAF)

Norm MYT Period

AC System 99.2 (%)

The above-mentioned target availability will be subject to an incentive and

penalty mechanism once the conditions specified in Regulation 12 are satisfied.

Provided also that for AC system, two trippings per year shall be allowed, and
after two trippings in a year, additional 12 hours outage shall be considered in
addition to the actual outage:

Provided also that in case of outage of a transmission element affecting

evacuation of power from a generating station, outage hour shall be multiplied
by a factor of 2.

45.2 Auxiliary energy consumption in the substations

The charges for auxiliary energy consumption in the AC sub-station for

the purpose of air-conditioning, lighting and consumption in other
equipment shall be borne by the transmission licensee and will be
included as part of the administrative and general expenses.

45.3 Operation and maintenance expenses

The actual audited Employee cost (excluding terminal liabilities) and A&G
expenses for the financial year preceding the base year, subject to
prudence check, shall be escalated at the escalation factor of 4% to
arrive at the Employee cost (excluding terminal liabilities) and A&G
expenses for the base year of the control period. The O&M expenses for
the nth year of the control period shall be approved based on the formula
given below:

O&Mn = (R&Mn + EMPn + A&Gn)* (1-Xn) + Terminal Liabilities

Where,

▪ R&Mn – Repair and maintenance costs of the transmission licensee for

the nth year;

▪ EMPn – Employee costs of the transmission licensee for the nth year
excluding terminal liabilities;

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 ▪ A&Gn – Administrative and general costs of the transmission licensee
for the nth year;

The above components shall be computed in the manner specified below:

(a) R&Mn= K*GFA*(INDXn/ INDXn-1)

Where,

▪ ‘K’ is a constant (expressed in %) governing the relationship between

R&M costs and Gross Fixed Assets (GFA) for the nth year. The value
of K will be 0.50% for the entire control period;

▪ GFA is the average value of gross fixed assets for the nth year;

▪ INDXnmeans the inflation factor for the nth year as defined herein
after:

(b) EMPn (excluding terminal liabilities) +A&Gn= (EMPn-1+A&Gn-1) *(INDXn/

INDXn-1)

Where,

▪ INDXn – Inflation Factor to be used for indexing the employee cost

and A&G cost. This will be a combination of the consumer price index
(CPI) and the wholesale price index (WPI) for immediately preceding
year and shall be calculated as under:

▪ INDXn= 0.55*CPIn +0.45*WPIn

Note: As and when any material price index specific to power sector or a
more relevant Index becomes available, the same shall replace the Index
used for working out R&M cost.

Note: Source for CPI and WPI calculation as under:

Wholesale Price Index numbers as per Office of Economic Advisor of

Government of India in the previous year;

Consumer Price Index for Industrial Workers (all India) as per Labour
Bureau, Government of India in the previous year

(c) Xn is an efficiency factor for nth year

Xn will be calculated by the Commission by analysing the change in the

total operating expenditure i.e. expenditure before depreciation, interest
and taxes (i) Per unit of circuit km over last three years; and (ii) Per unit
of transformation capacity over last three years.

The Value of Xn will be determined by the Commission in the MYT order

for the control period. The transmission licensee will be required to submit
the above data based on the actual for the last three years.

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 Note 1: For the purpose of estimation, the same INDXn value shall be
used for all years of the control period. However, the Commission will
consider the actual values in the INDX n at the end of each year during
the mid-year performance review and true-up exercise and true-up the
employee cost and A&G expenses on account of this variation.

Note 2: Any variation in employee cost and A&G cost on account of

reasons beyond variation in INDXn will be subject to the incentive and
penalty framework specified in these Regulations.

Note 3: Terminal liabilities will be approved as per actual expenditure

incurred by the transmission licensee or as established through actuarial
valuation

Note 4:O&M expenses made on account of extraordinary situations, if

any, shall be submitted to Commission for its approval. Such expenses
shall be filed separately and will not be subjected to incentive and penalty
framework. The approved amount by the Commission shall be trued up in
the mid-year performance review and true-up.

Note 5: Changes in the pay scales of employees necessitated on account

of pay revision by Pay Commission or by the State Government orders
shall be considered by the Commission for true-up during the mid-year
performance review and true-up.

45.4 Transmission losses (%)

(a) The trajectory for, intra-state transmission loss, during the control period
shall be as under:

FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25

2.15 2.10 2.05 2.02 2.0

(b) The losses shall be borne by the beneficiaries in kind. The SLDC shall
reduce the demand scheduled by the beneficiaries during each time
block by the 12 months rolling transmission losses (the said period will
be the 12 months period proceeding the relevant month by 3 months).
The SLDC shall post the rolling 12 months losses regularly on its
website. The SLDC, however, shall develop necessary software for
working out rolling 52-week losses and reduce the scheduled demand
accordingly thereafter.

(c) If the actual annual transmission losses (%) exceed the benchmark
value (%) approved by the Commission, the licensee(s) shall be
penalized in the following manner:

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 Percentage increase Penalty
above the Loss level
specified by the
Commission

Upto 5% No Penalty

More than 5% and upto Reduction in return on equity in Rs crore by

10% 0.5 %

More than 10% and upto Reduction in return on equity in Rs crore by 1

15% %

More than 15% Reduction in return on equity in Rs Crore by

1% + 0.5% for every increase of 5% or part
thereof above 15%

Example: In case the specified transmission loss level is 3%, then an

increase of 0.15 in the loss level will amount to 5% increase. Similarly, an
increase of 0.30 and 0.45 in the loss level will amount to 10% and 15%
increase in the loss level respectively.

Provided, further that the intra-State transmission loss, in excess of the

benchmark specified in these Regulations shall not be passed on to the
beneficiaries / electricity consumers.

46 NON-TARIFF INCOME

(a) All incomes being incidental to electricity business and derived by the
licensee from sources, including but not limited to profit derived from disposal
of assets, rents, miscellaneous receipts from the beneficiaries, etc. shall
constitute non-tariff Income of the licensee;

(b) The amount received by the licensee on account of non-tariff income

shall be deducted from the aggregate revenue requirement for calculating the
net revenue requirement of such licensee:

Provided that the transmission licensee shall submit full details of his forecast
of non-tariff income to the Commission in such form as may be stipulated by
the Commission from time to time;

Provided that Late Payment Surcharge and Interest on Late Payment earned
by the the Licensee shall not be considered under Non-tariff Income;

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 (c) The “non-tariff income” shall include but shall not be limited to the
following:

i. Income from rent on land or buildings or other assets;

ii. Income from sale of land or other assets;

iii. Income from sale of scrap;

iv. Income from statutory investments;

v. Income from interest on contingency reserve investment;

vi. Interest on advances to suppliers/contractors;

vii. Rental from staff quarters;

viii. Rental from contractors;

ix. Income from hire charges from contactors and others;

x. Income from advertisements, etc.;

xi. Miscellaneous receipts like parallel operation charges;

xii. Deferred Income from grant, subsidy, etc., as per Annual Accounts;

xiii. Excess found on physical verification;

xiv. Interest on investments, fixed and call deposits and bank balances;

xv. Prior period income, etc

47 INCOME FROM SHORT TERM OPEN ACCESS CONSUMERS

(a) The charges payable by the short-term open access consumers shall
be as specified in the intra-State open access Regulations notified by the
Commission and as amended from time to time;

‘(b) Intra State Transmission Charges and SLDC charges applicable to short
term open access consumers shall not be applicable on short term power
purchase/sale by the long-term and medium-term beneficiaries of the
transmission licensee

(c) 25% of the charges collected from the short-term open access consumers
on account of application money and transmission charges shall be retained
by the transmission licensee and the balance 75% shall be considered as
non-tariff income and adjusted towards reduction in the transmission charges
payable by the long term and medium-term users.

48 REACTIVE ENERGY CHARGES

(a) The reactive energy charges shall be as provided in the Haryana Grid
Code as amended from time to time.

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 (b) Reactive energy charge shall be payable and shared as per Regulation
5.5.1 of Haryana Grid Code (HGC) Regulation, 2009 as amended from
time to time;

(c) Reactive energy account shall be maintained and operated as per the
intra-State ABT Regulations to be notified by the Commission and as
amended from time to time. Until the intra-State ABT Regulations are
notified by the Commission, CERC ABT Regulations shall be applicable;

(d) The reactive energy charges from embedded open access consumers
shall be recovered by the distribution licensee by apportioning the total
reactive energy drawn during the month in the ratio of energy drawn
through open access and the energy drawn from the distribution
licensee. The reactive energy charges shall be recovered for the
apportioned reactive energy corresponding to energy drawn through
open access at the applicable rate.

49 ANNUAL TRANSMISSION CHARGES

(a) The total annual transmission charges of a transmission licensee shall

be equal to total annual expenses and return on equity as allowed as
per these Regulations less non-tariff income and 50% of the revenue
generated from other business in line with HERC Regulations, 2007 for
other income as amended from time to time;

(b) The transmission licensee shall be entitled to recover its annual

transmission charges (ATC) from the beneficiaries.

50 RECOVERY OF ANNUAL TRANSMISSION CHARGES

(a) Transmission licensee shall recover the transmission charges at the

normative annual transmission system availability factor specified for it by
the Commission.

(b) Payment of transmission charges

Annual transmission charges shall be fully recoverable at the specified

level of target availability. Payment of transmission charges below the
specified target availability shall be on pro-rata basis. The transmission
licensee may recover its annual transmission charges by way of a fixed
charge based on transformation capacity. The transmission charges shall
be calculated on a monthly basis. In case of more than one
beneficiaries of the transmission system, including the distribution
licensees and long term and medium term open access consumers (but
subject to any exclusion of any other open access consumers as per
the open access Regulation notified by the Commission), the monthly

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 transmission charges leviable on each beneficiary shall be
computed as per the following formula.

ATC CA

Monthly Transmission Charges = --------- x --------

12 CS

Where,

ATC = Annual Transmission Charges payable by all the beneficiaries

after deducting any benefits to be considered as decided by the
Commission;

CA = Transformation Capacity (MVA) allocated to each beneficiary.

CS = Sum of Transformation Capacity (MVA)allocated to all beneficiaries.

Note: Where allocated Transformation Capacity (MVA) of a beneficiary is

not available, the contracted capacity in MW shall be converted in MVA
at a power factor of 0.90 andthe same shall be considered for
computation of monthly transmission charges payable by the beneficiaries.

Provided that monthly Transmission tariff shall also be shared by a

Generation Company (including Renewable Energy Generators which opt
for third party sale) if power from such Generating Company is sold to a
consumer outside the State of Haryana to the extent of capacity
contracted outside the state.

Provided further that the Long Term and Medium-Term beneficiaries of the
Transmission System shall pay no other charges for the use of
Transmission Network of STU.

Provided also that the transmission charges shall be payable by the short-
term open access consumers for the scheduled energy drawl at per kWh
rate as worked out by dividing the annual transmission charges by the
total volume of energy transmitted by the transmission licensee during the
previous year. Provided further that Intra-State charges payable by the
Open Access Consumers shall not be applicable on short term Open
Access power purchase / sales by the Distribution Licensee.

51. SHARING OF CHARGES FOR INTRA-STATE TRANSMISSION NETWORK IN

CASE OF MULTIPLE TRANSMISSION LICENSEES

51.1 Determination of Monthly Transmission Tariff (MTT)

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51.1.1The aggregate of the yearly revenue requirement for all Transmission
Licensees, less the deductions, as approved by the Commission for
a financial year, shall form the “Total Transmission Cost” (TTC) of
the Intra State transmission system, to be recovered from the
Long-term and Medium term Transmission System Users (TSUs) for
that financial year, in accordance with the following formula:

n
TTC= ∑ (ARRi- NTi- Oi) – STR
i=1
Where,

TTC = Total Transmission Cost for the financial year

n = Number of Transmission Licensee(s)

ARRi= Aggregate Revenue Requirement approved by the Commission for

ith Transmission Licensee for the financial year

NTi= Approved level of non-tariff income for ith Transmission Licensee

for the financial year

Oi = Approved level of income from other business of the i th Transmission

Licensee for the financial year

STR = Revenue from short-term open access charges recovered and not
allowed to be retained during previous financial year.

Provided that the revenue from short-term open access charges

for each year of Control Period shall be taken to be same as
that prevalent during the base year. However, the adjustments
due to variation in actual revenue from short-term open access
charges shall be undertaken during annual truing up:

Provided further that ARR of the Transmission Licensee, in case

of transmission projects selected through competitive bidding,
shall be the Transmission Service Charge (TSC) for relevant year
as per the Transmission Service Agreement (TSA) approved and
adopted by the Commission in accordance with Section 63 of the
Act.

51.1.2 The Total Transmission Cost (TTC) as determined by the

Commission as per Regulation 51.1.1 above, shall be shared by
all long-term and medium-term open access consumers on
monthly basis (including existing Distribution Licensees) in the

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 same manner as provided for in Regulation 50 for sharing of
annual transmission charges.

52 RECOVERY OF CHARGES BY SLDC FROM BENEFICIARIES

“The annual charges of SLDC determined as per Regulations 6 and 16, shall be
recovered as a single composite charge from the beneficiaries as under:

(1) Intra-State transmission licensee 8% of Annual SLDC Charges

(2) Generating stations and sellers 46% of Annual SLDC Charges

(3) Distribution licensee and buyers 46% of Annual SLDC Charges

(i) The SLDC charges shall be levied by the Transmission licensees / STU, also
designated as the SLDC, on the basis of weighted average of the lines (Ckt. km)
owned by the Intra State Transmission Licensee(s) as on the last day of the month
prior to billing of the month.

Ckt. Km 400 kV MF 4 product

Ckt. Km 220 kV MF 2.2 product

Ckt. Km 132kV MF 1.32 product

Ckt. Km 66 kV MF 0.66 product

_________

Total __XXX___

Therefore, the SLDC charges for transmission licensee

= 8% x (annual SLDC charges X weighted Ckt Km of concerned transmission

licensee) / total weightedCkt. Km of all transmission licensees

(ii) The SLDC charges from the generating companies and sellers (which Exclude
short term open access consumers) shall be collected in proportion to their installed
capacity /contracted capacity as on the last day of the month prior to billing of the
month.

(iii) The SLDC charges from distribution licensees and buyers (which exclude short
term open access consumers) shall be collected in proportion to the sum of their
allocated transmission capacity in MVA as on the last day of the month prior to
billing of the month.

(iv) SLDC charges shall be collected on monthly basis.

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(v)Any deviation in the value of annual SLDC charges determined and collected
from the beneficiaries shall be trued up during the mid-year performance review and
true-up.

(vi) For the purpose of recovery of SLDC charges from the entity which has entered
into a long term open access / Medium Term open access agreement with STU,
shall be considered under the category in wunhich it has applied/signed the Long
Term/Medium Term Open Access agreement i.e. generator/supplier or distribution
licensee/buyer”.

53 RECOVERY OF SLDC CHARGES FROM SHORT TERM OPEN ACCESS

CONSUMERS

The short-term open access consumers shall pay composite SLDC charges as
provided in HERC (Terms and conditions for grant of connectivity and open access
for intra–State transmission and distribution system), Regulations, 2012 as amended
from time to time. The total receipt of SLDC charges from short term open access
consumers shall be utilised to reduce the SLDC charges payable by the
beneficiaries.

54. BILLING AND PAYMENT OF CHARGES

54.1 The State Transmission Utility shall raise bills for SLDC and
transmission charges payable by the beneficiaries on a monthly basis.
The STU shall raise bills for UI charges on weekly basis as and when
intra state ABT is implemented. UI accounting procedures shall be
governed by intra-state ABT Regulations to be notified by the
Commission as amended from time to time.

54.2 Rebate for early payment

In case of early payment of bills of transmission and other charges the

rebate as under shall be admissible:

Days from the date of receipt of bills of Rebate (%)

transmission charges

0-7 2

8-14 1

15-21 0.5

22-30 0.25

54.3 Late payment surcharge

In case the payment of bills of transmission and other charges by the

beneficiary is delayed beyond a period of 30 days from the date of

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 receipt of bill, a late payment surcharge of 0.04% per day shall be
payable by the beneficiary.

55. Quality of Supply

The Commission shall monitor the following Quality of Transmission

parameters during the Control Period.

a) Transmission System Availability

b) Transformer Failure across various capacities which represents the

number of transformer failures as a percentage of the total number of
transformers in that specified capacity within the Transmission System over a
specified period of time.

c) System Reliability

The Transmission Licensee in its Business Plan filings shall submit and
propose the trajectory for the achievement of quality targets including
reduction in the frequency of interruptions. The Commission shall specify the
targets for each parameter. The Transmission Licensee shall submit its
performance on each parameter in the form and manner specified by the
Commission. In the case of frequency of interruptions being high the same
will have bearing on the level of incentive allowed for availability.

The Transmission Licensee shall achieve redundancy in their system and

move towards N-1 criteria for their system planning. Also, Transmission
Licensee shall focus in setting up 220/33 kV S/s for ultimate usage of the end
consumer and shall avoid setting up new 132kV S/s or such voltage levels
S/s whose consumers are not in place.

56. Safety Standards

The Transmission Licensee shall develop a Safety Manual and follow

procedure to maintain the safety standards during construction, operation, etc.
in line with the provisions of CEA (Measures relating to Safety and Electric
Supply) Regulations, 2010 as amended from time to time.

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 PART VII - PRINCIPLES FOR DETERMINATION OF TARIFF AND NORMS OF
OPERATION FOR DISTRIBUTION BUSINESS

57. NORMS OF OPERATION FOR DISTRIBUTION LICENSEE

The norms of operation for distribution licensee shall be as under:

57.1 Distribution loss

(a) The distribution loss shall be equal to the difference between the energy
injected into the distribution system (X) and the sum of energy sold to all
its consumers (Y);

(b) Energy sold shall be the sum of metered sales and assessed unmetered
sales, if any, based on approved methodology/ norms. The percentage
distribution loss shall be as follows:

Percentage distribution loss = ((X- Y)/X) x100

(c) The distribution licensee shall file the loss trajectory in the business plan
commensurate with the capital investment plan. The Commission after
verification and evaluation of the same shall approve the loss trajectory
for each year of the control period;

(d) The distribution loss level will be linked to a normative load factor for
unmetered agriculture consumers. The distribution licensee shall establish
consumption of unmetered agriculture consumers through a representative
and reliable energy audit/sample tube well metering/sample DT metering/
meter readings of the 11 kV segregated AP feeders and submit requisite
data for consideration of the Commission.

Provided that the Distribution loss trajectory for the control period shall be
decided by the Commission in the MYT Order, considering the past
performance data, estimate of distribution losses for each year of the
control period submitted by the Distribution Licensees in their MYT Petition,
industry bench marks/norms and after consideration of other relevant
factors considered appropriate by the Commission. The distribution licensee
shall submit appropriate feeder wise losses data along with its plans to
bring the same within the industry benchmark and accordingly calculate
and submit the loss reduction trajectory along with the MYT petition for the
first year of the second control period.

(e) In the absence of requisite data in respect of such energy audit / sample
surveys / sample DT metering/ meter readings of segregated 11kV AP
feeders, the Commission shall not accept the claim of the distribution

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 licensee and may proceed to fix the loss levels and the load factor for
unmetered agriculture consumption on the basis of the information
available with it; The distribution licensee shall furnish within a period of
six months from the date of notification of these Regulations, computation
of supply voltage - wise and consumer category wise distribution and
AT&C losses;

(f) Any overachievement and underachievement of the loss trajectory shall be

subject to incentive and penalty framework specified in Regulation 12. The
distribution licensee(s) shall provide a statement to this effect in the mid-
year performance review and true-up.

Provided that the financial impact on account of over or under

achievement of Distribution Loss target shall be computed as under:

where,

Q1 = Actual quantum of Energy purchased at Distribution periphery

in MU;

L1 = Distribution Loss Target in %;

P = Trued up Average Power Purchase Cost (APPC) per unit at

Distribution periphery in Rs./kWh;

Q2 = Actual quantum of Energy Billed in MU.

57.2 Collection Efficiency

The norms for Collection Efficiency for the distribution licensee(s) shall be
99.50% for every year of this Control Period.

Besides the Collection Efficiency, the Commission shall also monitor the
recovery of arrears of previous years for which the Commission shall
prescribe the targets and shall accordingly assess the performance of the
licensee with regard to recovery of arrears.

Any over achievement or under achievement in respect of Collection

Efficiency and recovery of arrears shall be subject to incentive and
penalty framework as specified in Regulation 12.

57.3 AT&C Losses

The Distribution Licensee shall file AT&C Loss trajectory for monitoring
AT&C Losses.

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 The percentage AT&C losses shall be calculated as per the following
formula:

% AT&C losses=100-CEx(1-DL/100)

Where: CE is the % Collection Efficiency and

DL is the % Distribution Loss

57.4Operation and Maintenance Expenses

The actual audited expenses for the financial year preceding the base year,
subject to prudence check, shall be escalated at the escalation factor of 4%
to arrive at the Employee Costs and Administrative and General Costs for
the base year of the control period. The O&M expenses for the nth year of
the control period shall be approved based on the formula given below.

O&Mn = (R&Mn + EMPn + A&Gn)* (1-Xn) + Terminal Liabilities

Where,

▪ R&Mn – Repair and Maintenance Costs of the Distribution

Licensee(s) for the nth year;

▪ EMPn – Employee Costs of the Distribution Licensee(s) for the

nth year excluding terminal liabilities;

▪ A&Gn – Administrative and General Costs of the Distribution

Licensee(s) for the nth year;

The above components shall be computed in the following manner.

(a) R&Mn= K * GFA *INDXn/ INDXn-1

Where,

▪ ‘K’ is a constant (expressed in %) governing the relationship

between O&M costs and Gross Fixed Assets (GFA) for the nth year.
The value of K will be 1.65% for DHBVN and UHBVN respectively
for the entire control period;

▪ ‘GFA’is the average value of the gross fixed asset of the nth year.

▪ ‘INDXn’means the inflation factor for the nth year as defined herein
after.

(b) EMPn(excluding terminal liabilities) + A&Gn= (EMPn-1 +

A&Gn1)*(INDXn/ INDXn-1)

Where,

▪ INDXn – Inflation Factor to be used for indexing the Employee Cost

and A&G cost. This will be a combination of the Consumer Price

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 Index (CPI) and the Wholesale Price Index (WPI) for immediately
preceding year and shall be calculated as under:

▪ INDXn= 0.55*CPIn +0.45*WPIn.

Note 1: For the purpose of estimation, the same INDXn value shall be
used for all years of the control period. However, the Commission
shall consider the actual values of the INDXn at the end of each year
during the annual performance review exercise and true-up the
employee cost and A&G expenses on account of this variation.

Note 2: Any variation in employee cost and A&G cost on account of

reasons beyond variation in INDXn shall be subject to the incentive
and penalty framework specified in Regulation 12.

Note 3: As and when any material price index specific to power sector
or a more relevant Index becomes available, the same shall replace
the Index used for working out R&M cost.

Note 4: Terminal liabilities shall be approved as per actual expenditure

incurred by the distribution licensee or established through actuarial
valuation for the ensuing year.

Note 5:O&M expenses made on account of extraordinary situations (if

any) shall be submitted to Commission for its approval. Such
expenses shall be filed separately and will not be subjected to
incentive and penalty framework. The approved amount by the
Commission shall be trued up in the annual performance review.

Note 6: Changes in the pay scales of employees necessitated on

account of pay revision by Pay Commission or by the State
Government orders shall be considered by the Commission for true-up
during the annual performance review.

Note 7: Source for CPI and WPI calculation as under:

Wholesale Price Index numbers as per Office of Economic Advisor of

Government of India in the previous year;

Consumer Price Index for Industrial Workers (all India) as per Labour
Bureau, Government of India in the previous year

(c) Xn is an efficiency factor for nth year

The Value of Xn will be determined by the Commission in the MYT

order for the control period.

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58 SALES AND POWER PURCHASE VOLUME

58.1 The distribution licensee shall forecast monthly sales for each
customer category and sub-categories for all years of the control
period in their business plan and ARR filings, for review and approval
by the Commission.

58.2 So long as there are any un-metered agriculture consumers, the sales
forecast for unmetered agriculture consumer shall be validated with
norms approved by the Commission on the basis of a proper study
carried out by the distribution licensee.

Note: These norms can be revised by the Commission based on

actual data or better estimates made available by the distribution
licensee.

58.3 The Commission shall examine the forecasts for their reasonableness
based on growth in the number of consumers, pattern of consumption,
losses and demand of electricity in previous years and anticipated
growth in the subsequent years and any other factor, which the
Commission may consider relevant and approve the sales forecast with
such modifications as deemed fit;

58.4 Sale of electricity, if any, to electricity traders or other distribution

licensee or outside state sales through banking etc. shall be separately
indicated;

58.5 The distribution licensee shall also indicate consumer category-wise

open access consumers. The demand and energy wheeled for them
shall be shown separately for:

(i) Supply within its area of supply; and

(ii) Supply outside its area of supply;

58.6 Based on the above, the distribution licensee shall project month- wise
and source-wise power purchase requirement for each year of the
control period.

58.7 The Commission shall scrutinize and approve the requirement for
purchase of power with such modifications as deemed fit, for each
year of the control period;

58.8 Any power purchased by the distribution licensee over and above the
requirement of power approved by the Commission or variation in the
mix of power purchased in any year shall be considered by the
Commission if it is for reasons beyond the control of the distribution
licensee(s). The Commission shall, however, estimate the revenue from
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 such sales and allowable quantum of power purchase based on target
losses as per the FSA mechanism approved by the Commission. The
resultant cost and revenue shall be adjusted during true-up exercise
for the said financial year in the next year’s tariff;

58.9 Any financial gain or loss on account of power purchased by the

licensee in any year over and above the approved level and not
covered in the above sub Regulations shall be borne by the licensee.

59. COST OF POWER PURCHASE

59.1 The distribution licensee shall be allowed to recover the cost of power
it procures from all approved sources including the power procured
from the State-owned generating stations, independent power
producers, Central generating stations, renewable energy sources and
others, for supply of power to consumers, based on the sales forecast
and losses for the distribution licensee approved by the Commission
for each year of the control period;

59.2 Approved retail sales level shall be grossed up by normative level of

T&D losses as specified by the Commission in the approved loss
trajectory for the purpose of arriving at the quantity of power to be
purchased;

59.3 While approving the cost of power purchase, the Commission shall
determine the quantum of power to be purchased from various sources
in accordance with the principles of merit order schedule and despatch
based on a ranking of all approved sources of supply in the order of
their variable cost of power. All power purchase costs will be
considered legitimate unless the Commission concludes that the merit
order principle has been violated or power has been purchased at
unreasonable rates except for marginal purchases of transient nature
beyond the control of the licensee subject, however, to Regulation
59.2;

59.4 The cost of power purchased by the distribution licensees from

generating stations of HPGCL shall be worked out based on the tariff
determined by the Commission. The cost of power purchase from
central generating stations shall be worked out based on the tariff
determined by the CERC. Similarly, the cost of power purchased from
nuclear power stations of Nuclear Power Corporation of India Ltd.
(NPCIL) shall be worked out on the basis of tariff notified by the
Departmental of Atomic Energy under the Atomic Energy Act, 1961. In
case of bilateral transactions, the rates as per PPAs approved by the

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 Commission shall be considered. The cost of power purchase from
other generating companies / sources shall be worked out based on
invoices raised by the generators during the previous year. In absence
of above, rates based on bills of energy purchased during the previous
3 months shall be considered by the Commission.

59.5 The cost of power purchase from non-conventional energy sources

shall be based on the tariff determined by the Commission as per
renewable energy Regulations notified by the Commission and as
amended from time to time or as per the PPAs approved by the
Commission.

59.6 Subject to provisions of clause 59.3, any variation in cost of power

purchase at the allowed transmission loss level, for reasons beyond the
control of the distribution licensee, shall be allowed to be recovered by
the distribution licensee by way of FSA, as per the formula approved
by the Commission and as amended from time to time. The
procurement price to be adopted for working out variation in the cost of
power beyond approved power purchase volume shall be the
generation tariff approved by the Commission, the rate discovered
through competitive bidding and adopted by the Commission or the
short-term rates approved by the Commission.

59.7 Any loss on account of increase in power purchase cost, not covered
above, shall be borne by the distribution licensee subject to regulations
12 regarding sharing of gains and losses.

59.8 The Renewable Purchase Obligation (RPO) of the distribution licensee

shall be as per the renewable energy Regulations notified by the
Commission as amended from time to time.

60. SHORT-TERM POWER PROCUREMENT

60.1 The distribution licensee shall submit a rolling quarterly forecast of the
quantum of short-term power to be purchased for the year for the
Commission’s approval. The forecast shall be based on monthly sales
forecast, the power available from approved long-term sources of
power, merit order dispatch of available sources, banking with other
distribution utilities, load curtailment, time of its requirement, availability
of short-term power and the expected price. The distribution licensee
shall provide the basis for forecast of short-term power procurement
price including the criteria for evaluation of alternative options;

60.2 The Commission shall indicate the ceiling of short-term power

purchase price and volume for the ensuing quarter based on the
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 availability of power, past requirement, approved quantum of short-term
power in ARR, approval granted for past quarter and past market
performance. The Commission may ask for additional information and
data as it may deem necessary for reviewing the forecast for the
ensuing quarter and the distribution licensee shall furnish such
information within 2 weeks from being asked to do so;

60.3 If there is a short term requirement of power by the distribution

licensee over and above the quantum as approved by the Commission
and such requirement is on account of any factor beyond the control
of the distribution licensee (shortage/non-availability of fuel, snow
capping of hydro resources inhibiting power generation in sources
stipulated in the plan, unplanned/forced outages of power generating
units or acts of God), then the cost shall be directly passed on to the
consumers through FSA mechanism.

Provided that the cost of the additional power shall be allowed at the
ceiling price for short term power determined by the Commission in
accordance with Regulation60.2.

Provided further that in such a case, the distribution licensee shall

inform the Commission about the purchase of power over and above
approved quantum with all of the supporting documents. Unless the
Commission is satisfied that the additional power is within the ceiling
price of short-term power determined by the Commission, it may
disallow the quantum and cost of this short-term power procurement in
the True-Up order.

60.4 The variation in actual quantum and price of short-term power vis-a-vis
the quantum and price of short-term power approved by the
Commission shall be subjected to prudence check by the Commission
and shall be adjusted on yearly basis along with the annual
performance review based on the price and quantum cap determined
by the Commission for each quarter as mentioned in the above
Regulation.

61. TRANSMISSION AND SLDC CHARGES

61.1 The Inter-State transmission charges shall be estimated as per the

order of the Central Electricity Regulatory Commission

61.2 The transmission charges, wheeling charges and other charges

payable by the distribution licensee for intra State transmission or
wheeling of power purchased by it shall be considered as per tariff
determined by the Commission;
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 61.3 The reactive energy charges payable by the distribution licensee to
the transmission licensee shall be payable as per Regulation 5.5.1 of
the Haryana Grid Code (HGC) as amended from time to time.

The reactive energy charges paid by the distribution licensee however

shall not be recovered through ARR. The capital investment plan to be
prepared by the distribution licensee shall include capital investment
towards meeting the reactive energy requirement.

61.4 SLDC charges if paid separately in addition to charges for usage of

transmission network shall be considered as allowable expenses for
the purpose of determination of tariff.

62. WHEELING CHARGES

62.1 The consumers availing wheeling services for ‘open access’, will be
charged a wheeling tariff as determined under these Regulations;

The wheeling charge payable to the distribution licensee by long-term

&medium-term open access consumers shall be in Rs. / MW and shall
be computed by dividing the approved ARR of the licensee for
wheeling business by peak load demand in MW served by the
licensee in the preceding year.

Provided that wheeling charges shall be payable by the long-term and

medium-term open access consumers on the basis of contracted
capacity in MW and by short-term open access consumers on the
basis of scheduled energy transactions cleared by the relevant Load
Despatch Centre.

Provided further that wheeling charges (Rs. /kWh) payable by the

short-term open access consumers during a financial year shall be
worked out by dividing the approved ARR (in Rs.) for wheeling
business for that year by the gross volume of energy wheeled (kWh)
during the relevant year as approved by the Commission.

Provided further that the Distribution Licensee shall be allowed to

recover the approved level of wheeling losses arising from the
operation of the distribution system, as stipulated in the respective
Tariff Order from the short term open access consumers in addition to
the wheeling charges as determined above.

62.2 Income from wheeling from open access consumers:

25% of the wheeling charges collected from open access

consumers shall be retained by the distribution licensees and the

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 balance 75% shall be adjusted towards reduction of ARR for the retail
supply business.

Provided that Wheeling Losses: The Distribution Licensee shall be

allowed to recoverthe approved level of wheeling losses arising from
the operation of the distribution system, as stipulated in the respective
Tariff Order.

63. CROSS-SUBSIDY SURCHARGE / ADDITIONAL SURCHARGE

63.1 The cross-subsidy surcharge and additional surcharge under sections

39, 40 and 42 of the Act shall be determined as per the Open Access
Regulations notified by the Commission as amended from time to time;

Cross-subsidy surcharge shall also be payable by such open access

consumer who receives supply of electricity from a person other than
the distribution licensee in whose area of supply he is located,
irrespective of whether he avails such supply through
transmission/distribution network of the licensee or not.

The consumers located in the area of supply of a distribution licensee

but availing open access exclusively on inter-State transmission system
shall also pay the cross subsidy/additional surcharge.

63.2 The cross-subsidy surcharge and additional surcharge shall be

considered as non-tariff income for retail supply. The licensee shall
provide the consumer category-wise details of the cross – subsidy and
additional surcharge received during the year along with the tariff
filings.

63.3 The distribution licensee shall also submit along with ARR, requisite
calculation for determination of cross subsidy surcharge and additional
surcharge for consideration of the Commission. The cross-subsidy
surcharge and additional surcharge shall be payable as determined by
the commission from time to time.

64 BAD AND DOUBTFUL DEBTS

Bad and doubtful debts shall be allowed to the extent the distribution
licensee has actually written off bad debts subject to a maximum of
0.5% of sales revenue. However, this shall be allowed only if the
distribution licensee submits all relevant data and information to the
satisfaction of the Commission. In case there is any recovery of bad
debts already written off, the recovered bad debts will be treated as
other income.

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 Treatment of Demand Side Management Initiatives

The Commission shall introduce various policies like Time of Day (ToD)
Tariff pertaining to Demand Side Management in order to flatten the Load
Curve of the State and optimise the Power Purchase Cost.

Provided also that Distribution Licensee shall submit the utilization of

funds allocated for DSM schemes and shall maintain separate records
of Revenue/Expenditure related to individual DSM schemes approved by
the Commission.

65 QUALITY AND RELIABILITY OF SUPPLY

65.1 Distribution Transformers failure rate

(i) The commission shall specify the norms for maximum permissible
distribution transformers’ failure rate separately for urban and rural
areas in the MYT order;

(ii) In case the maximum permissible failure rate of distribution

transformers exceeds the limits specified above, the return on equity in
Rs. crores shall be reduced as mentioned below

For Rural Areas

Absolute increase (%) in distribution Percentage reduction in ROE

transformers failure rate from the norm
(Rs. Crores).

0 0

>0≤5 % 1%

>5≤10 % 2%

>10≤15% 3%

>15≤20% 5%

>20 5%+ Absolute increase (%) /

20%

For Urban Areas

Absolute increase (%) in distribution Percentage reduction in ROE

transformers failure rate from the norm
(Rs. Crores)

0 0

>0≤2.5% 1%

>2.5≤5% 2%

>5≤7.5% 3%

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>7.5≤10% 5%

>10 % 5%+ Absolute increase (%) /

10%

Example: In case actual damage rate is 7% against normative damage

rate of 5%, then absolute increase is 2 %.

(iii) The distribution licensee shall maintain a proper record of failure of

the distribution transformers and submit the same in the quarterly
report to the Commission.

65.2 Monitoring progress on Standards of Performance

(i) The distribution licensee shall provide requisite report on the progress
of compliance of the performance parameters as specified in the
HERC (Standards of Performance for the Distribution licensee)
Regulations, 2004 as amended from time to time;

(ii) The transmission licensee shall also provide requisite report on the
progress of compliance of the performance parameters as may be
specified by the Commission in the “Standards of Performance for the
Transmission Licensee Regulations” to be notified by the Commission
and as amended from time to time.

(iii) In case the distribution/transmission licensee fails to submit the report

to Commission or delays the submission by more than 2 months, the
commission may reduce the return on equity by 0.50% if the licensee
is not able to provide adequate justification for the delay.

(iv) The distribution licensee shall submit and upload on their website
circle-wise quarterly report containing the following for their respective
circle: -

(a) Details of expenditure along with cost benefits analysis of each

expenditure costing above Rs. 2.50 lakh

(b) Distribution loss along with the reason for loss above 15%

(c) Status of pending connections (numbers & load)

(d) Sale of power and billing done in the previous quarter along with
the status of recovery.

(e) Failure rate of transformers under warranty/out of warranty

separately for rural & urban area

(f) Three phase and single-phase defective meters pending for

replacement

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 (v) The distribution licensee shall not distribute power to any category of
consumers free of cost. No approval from the Commission shall be
sought in this regard.

(vi) The distribution licenseeshall submit Voltage wise loss dataalong-with

their True-up Petitions.

65.3 Audited Information

The Distribution Licensees shall submit the following Audited Information for the
relevant Financial Year along-with their True-up Petitions:

a) Category wise Sales

b) Category-Wise Break up of Revenue Billed

o Fixed Charges,

o Energy Charges,

o Fuel Adjustment Surcharge etc.

c) Category-wise Revenue Collected

66 FUEL AND POWER PURCHASE COST SURCHARGE ADJUSTMENT

(FSA)

66.1 The distribution licensees shall recover FSA amount on account of

increase in fuel and power purchase costs from the consumers on a
quarterly basis so as to ensure that FSA accrued in a quarter is
recovered in the following quarter without going through the regulatory
process i.e. FSA for the quarter “July to September” is recovered in the
following quarter “October to December”.

66.2 FSA shall be calculated only in respect of approved power purchase

volume including short term power purchase cost, if any, for the relevant
year from all approved sources. Drawl of power under UI mechanism, if
any, shall be allowed only when it is not in violation of grid discipline
and shall be subject to a price cap of average revenue realisation from
all consumer categories for that year.

Average revenue realisation = (Total revenue assessed for electricity

supply in Rs + Government Subsidy in Rs) / Total sales in Units.

66.3 For the purpose of recovery of FSA, power purchase cost shall include
all invoices raised by the approved suppliers of power and credits
received by the distribution licensees during the quarter irrespective of
the period to which these pertain for any change in cost in accordance

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 with tariff approved by any regulator/ government agency mentioned in
Regulation 59.4. This shall include arrears/refunds, if any, not settled
earlier. In case data of the last month in a quarter is not available for
calculating FSA to be levied in the following quarter, the licensee shall
use an estimate based on available data of the first two months of the
quarter. On availability of the actual figures, the difference on this
account shall form part of FSA of the subsequent quarter. If the actual
data for any quarter is not made available by the licensee before the
end of the following quarter for this adjustment, the FSA finally allowed
for that quarter based on actual figures supplied after the prescribed
date shall be limited to the earlier estimated amount or the amount
based on the actual figures, whichever is lower.

66.4 In case of negative FSA, the credit shall be given to the consumers by
setting off the minus figure against the positive figure of FSA being
charged from the consumers. In other words, credit of FSA shall be
given only against FSA being charged so that the base tariff determined
by the Commission remains unchanged.

66.5 Only the allowed percentage of transmission and distribution losses for
the relevant year as per the approved ARR shall be considered for
working out FSA.

66.6 The amount of FSA shall be recovered by each distribution licensee by

charging a uniform FSA (per kWh) across all consumer categories in his
area of license.

66.7 For moderation purposes, the recovery of per unit FSA shall be limited
to 15% of the approved per unit ‘average power purchase cost’ or such
other ceiling as may be stipulated by the Commission from time to time.
For calculating FSA, variations in quarterly purchase volume from an
approved source are allowed subject to an overall ceiling of annual
approved volume from that source. In case a portion of the FSA for any
quarter is not recovered due to the ceiling of 15%, the under recovered
amount shall be added to the FSA for the next quarter.

66.8 Per unit rate of FSA (paisa/kWh) shall be worked out after rounding off
to the nearest paisa;

66.9 The distribution licensee shall submit details relating to FSA recovery to
the Commission for each quarter in the following format by the end of
the following quarter.

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 (i) Approved power purchase volume from approved sources (MU)

(ii) Approved power purchase cost (Rs. million)

(iii) Actual power purchase volume (MU)

(iv) Power purchased (MU) from sources not covered under

Regulation 66.2 giving source wise details and in case of UI the
frequency at which UI drawls were made. (disallowed power
purchase)

(v) Actual cost of power purchase from all sources except (iv) (Rs.
million)

(vi) Actual cost of disallowed power purchase relating to (iv) (Rs.

million)

(vii) Total FSA estimated to be recovered for the quarter (Rs. million)

(viii) FSA per unit (Rs/kWh) being recovered during the following
quarter

(ix) Actual FSA recovered/estimated to be recovered out of estimated

FSA till the end of the following quarter (Rs. million)

(x) Under/ over recovered FSA (vii-ix) (Rs. million)

(xi) Approved sales (Consumer category wise / month wise) for the
quarter (MU)

(xii) Actual sales (Consumer category wise / month wise) for the
quarter (MU)

(xiii) Estimated sales, consumer category wise, for the following quarter
(MU)

Note:

1. All the source-wise details should be supported with requisite documentary

evidence / invoices raised by the generators / suppliers of the power.

2. Actual sales to AP consumers are to be calculated in accordance with the

methodology approved by the Commission in the ARR for the relevant
year.

66.10 FSA (Rs/kWh) shall be worked out as per the following formula:

Total FSA (Rs million) = PC + Int + AdJstQ + (AdJstA/4)

FSA (Rs / kWh) = {PC + Int + AdJstQ + (AdJstA/4)} ÷ PS

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Where

• PC = {(Actual average power purchase cost (Rs/kWh) for the quarter) -

(Average power purchase cost (Rs/KWh) approved by the Commission
for the relevant year)} X PP

• PP = Total volume of power purchase during the quarter worked out

based on total volume of powers sold to all the consumer categories
grossed up by approved T&D loss. Sales to AP consumers are to be
worked out in accordance with the methodology approved by the
Commission in the ARR for the relevant year (MU).

• PS = Estimated sales volume for the following quarter with AP sales as

approved by the Commission in the ARR for the relevant year (MU).

• Actual average power purchase cost (Rs. /KWh) = (total cost of power
purchased during the quarter from approved sources and UI as per
Regulation 66.2in Rs million) / (total volume of power purchased in the
quarter from approved sources and UI in MU) as per Regulation 66.2)

• Int = Additional working capital cost allowed on account of FSA amount

to be worked out as under:

Int = {(total FSA/12) X (interest rate allowed for calculation of working

capital in the ARR of the current financial year)} in Rs million.

• AdJstQ = Under/over recovered FSA of the previous quarter in

accordance with Regulation 66.3 and 66.7 in Rs million.

• AdJstA = Annual adjustment amount based on truing up of the FSA of

the previous year by the Commission in Rs million.

66.11 The licensee shall ensure that the Actual/ estimated FSA arising in a
quarter is recovered in the following quarter. In case the licensee does
not ensure levy of FSA based on the methodology given herein, the
licensee shall have no claim to recover the FSA from the consumers in
any manner in any subsequent period except in accordance with
Regulation 66(3) and 66(7). The unrecovered FSA for the previous
financial year, details of which are supplied to the Commission by the
distribution licensee, may either form part of power purchase cost for
the next financial year or may be allowed to be recovered as annual
adjustment amount in the quarterly recovery of FSA in the next financial
year as the Commission may decide.

66.12 In case Government of Haryana decides to provide subsidy on account

of FSA to a particular consumer category, the amount of subsidy
equivalent to the FSA recoverable from the concerned consumer

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 category, shall be deposited in advance by the Govt. Otherwise the
recovery shall be affected from the consumer through electricity bills. It
shall be the responsibility of the distribution licensees to seek prior
approval of the State Government in this regard and maintain
appropriate record of the same.

67. NON-TARIFF INCOME

67.1 All incomes being incidental to electricity business and derived by the
licensee from sources, including but not limited to profit derived from
disposal of assets, rents, meter rent, income from investments other
than contingency reserves, miscellaneous receipts from the consumers,
etc shall constitute non-tariff income of the licensee;

67.2 The amount received by the distribution licensee on account of non-tariff

income shall be deducted from the aggregate revenue requirement in
calculating the net revenue requirement.

Provided that the distribution licensee shall submit full details of his
forecast of non-tariff income to the Commission in such form as may be
stipulated by the Commission from time to time.

Provided that Late Payment Surcharge and Interest on Late Payment

earned by the Distribution company shall not be considered under Non-
tariff Income.

67.3 The “non-tariff income” shall include but shall not be limited to the
following:

a. Income from rent of land or buildings or other assets;

b. Income from sale of land and other assets;

c. Income from sale of scrap;

d. Income from statutory investments;

e. Income from interest on contingency reserve investment;

f. Interest on advances to suppliers/contractors;

g. Rental from staff quarters;

h. Rental from contractors;

i. Income from hire charges from contactors and others;

j. Income from advertisements, etc.;

k. Miscellaneous receipts;

l. Interest on advances to suppliers;

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 m. Excess found on physical verification;

n. Deferred Income from grant, subsidy, etc., as per Annual Accounts;

o. Prior period income, etc.

68. SUBSIDY

68.1 Pursuant to Section 65 of the Electricity Act, 2003 in case the State
Government requires grant of any subsidy to any consumer or class of
consumers in the tariff determined under Section 62, the distribution
licensee should ensure that the State Government shall, notwithstanding
any direction which may be given under Section 108, pay in advance
the requisite amount as determined by the Commission to compensate
the distribution licensee affected by the grant of subsidy.

68.2 A tariff reflecting subsidy shall not be implemented except to the

extent that the State Government has paid the subsidy to the
distribution licensee in advance of supply to the consumers of the
distribution licensee entitled to benefit from it. In publishing its tariff, the
distribution licensee shall inform its consumers that the approved tariff
calculated without subsidy shall apply if the State Government subsidy is
not so paid as determined by the Commission. The, ‘bill’ issued by the
distribution licensee shall clearly indicate:

a) the tariff determined by the Commission;

b) the amount of State Government subsidy, the rate and period;

c) the net amount payable by the consumer;

68.3 The amount of subsidy agreed to by the State Government may be

provided in the form of payment in cash in advance as per section 65
of Electricity Act or by book adjustment of net dues payable by the
distribution licensee to the State Government. The book adjustment shall
be done on the basis of cash in hand with the distribution licensee and
not on an accrual basis in respect of dues to be collected by the
distribution licensee from consumers on behalf of the State Government.

69An INTER CATEGORY CROSS–SUBSIDY

69.1 The distribution licensee’s tariff proposal should reflect the reasonable
cost of providing service to each consumer class. In case where tariffs
are historically distorted with significant level of cross-subsidy, the aim
should be to gradually move to non-cross subsidized tariffs.

69.2 In the annual performance review and tariff application, the distribution
licensee shall include a report on how far they have implemented the

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cross-subsidy reduction trajectory approved by the Commission for
reduction of cross-subsidy and the measures being proposed in the
current application to implement the plan.

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 PART VIII - FILING OF AGGREGATE REVENUE REQUIREMENT

70. Capital Investment Plan and Business Plan Filings

The distribution licensee shall file by 1st June and the generating company and the
transmission licensee by 1st August of the first year of the control period or any
other date as may be directed by the Commission, an application containing the
following elements for the approval of the Commission, along with requisite fee in
accordance with the provision of HERC (Fee) Regulation, 2005:

(a) Capital Investment Plan as per details specified in Regulation 9.

(b) Business Plan as per details specified in Regulation 10.

71. Tariff Filings

71.2 Tariff filing for the control period under MYT framework

71.2.1 The generating company and the licensees shall file an application for
approval of ARR for their respective businesses for each year of the
control period and tariff for the first year of the control period consistent
with the business plan and the capital investment plan approved by the
Commission. The ARR and tariff filing shall be filed by 30 th November
of the year preceding the 1st year of the control period along with
requisite fee in accordance with the provisions of Haryana Electricity
Regulatory Commission (Fee) Regulations amended from time to time.
The application shall contain all the components of the ARR and tariff
as provided in these Regulations;

The MYT filing shall also contain an application for mid-year

performance review of and true – up petition.

71.2.2 The generation company and the licensees shall provide in the
application forecast for each year of the control period of the various
financial and operational parameters of ARR & various other
components of the ARR and tariff relating to their respective businesses
as mentioned in these Regulations. The application, in case of a
distribution licensee and a transmission licensee shall also include:

(i) For distribution licensee

(a) Sales / demand forecast for each consumer category and sub-
categories for each year of the control period and the methodology and
rationale used;

(b) Power procurement plan based on the sales forecast and distribution
loss trajectory for each year of the control period. The power

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procurement plan should also keep in view energy efficiency and
demand side management measures;

(c) A set of targets proposed for other controllable items such as

collection efficiency, recovery of bad debts, working capital, quality of
supply targets, etc. The targets shall be consistent with the capital
investment plan and business plan approved by the Commission;

(d) Expected revenue from the licensed business, non-tariff income and
income from other business for the base year and first year of the
control period and other matters considered appropriate by the
distribution licensee(s);

(e) Number of consumers in each category, connected load in kW /

kVA.

Voltage wise estimates losses and cost of supply for various consumer
categories per kW and per kWh / kVh

(f) The ARR for different years of the control period, the revenue gap
and tariff proposal for meeting the revenue gap for first year of the
control period. The tariff proposal should be based on the cost of supply
for various consumer categories and the cross-subsidy reduction road
map.

(g) Proposal for meeting the projected cumulative revenue gap for
first year of the control period which shall include mechanism for
meeting the proposed revenue gap, tariff revision for various consumer
categories etc. In the absence of tariff proposal, the application/petition
shall be considered as incomplete and shall be liable for rejection.

(h) A statement of the effect of the proposed tariff changes on a

typical small, average and large consumer in each tariff class. For this
purpose, a typical small consumer is defined such that within the tariff
class, 90% of the consumers supplied under that tariff within a 12-month
period would have greater total expenditure on tariff charges than the
small consumer. Similarly, a typical large consumer is defined such that
90% of the consumers supplied under the tariff would have lesser
expenditure over a 12-month period than the typical large consumer.
The average consumer shall be defined as a consumer having
expenditure on tariff charges equal to the average expenditure in that
tariff class.

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 (ii) For transmission licensee

(a) The Transmission system or network usage forecast for each year of
the Control Period, consistent with the Business Plan;

(b) Proposal for transmission tariff design for each year of the
Control Period, including the losses to be charged and the procedure
thereof;

(c) Proposal for transmission tariff for each year of the Control Period
supported by the adequate justification;

(d) Estimates of Transmission Capacity allocated to each of the

Transmission system user for each year of the control period

(e) Proposal for reactive energy charges;

(f) Proposal for SLDC charges (in case SLDC is controlled by the
transmission licensee);

(g) Expected Revenue from the licensed Business, Non-Tariff Income

and income from Other Business and other matters considered
appropriate by the Transmission Licensee.

71.3 The generating company and the licensee shall also provide a copy of
their respective ARR/tariff filing to each other and also host the same on
their respective websites;

71.4 The generating company and the licensees, within 7 (seven) days of
filing of the application for approval of ARR/Tariff, shall publish in Hindi
and English in daily newspapers having circulation in the area of licensees
/generation company, the contents of the application filed for approval of
ARR/Tariff in an abridged form in such manner as the Commission may
direct for information of the public and shall provide copies of the
application and other documents filed with the Commission at a price not
exceeding normal photocopying charges. The generating company and the
licensees shall also host the application and other documents on their
official websites.

71.5 The distribution licensee shall undertake a separate study to estimate the
cost of supply for various consumer categories and submit the same to the
Commission for its approval along with the MYT filing;

71.6 The distribution licensee shall also undertake a study for preparation of
road map for reduction of cross-subsidy and submit the same to the
Commission for its approval along with the MYT filing;

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 71.7 Notwithstanding anything contained in these Regulations, the Commission
may at all times, either Suo motu or on a petition filed by any interested
or affected party, determine the tariff, including terms and conditions
thereof, of any generating company or the licensee;

71.8 Approval of provisional tariff for a generating station

A Generating Company may also file a petition, not more than six
months prior to the anticipated Date of Commercial Operation (COD), for
determination of provisional tariff of the Unit or Stage or Generating
Station as a whole, as the case may be, based on the capital
expenditure actually incurred up to the date of making the petition or a
date prior to making of the petition, duly audited and certified by the
statutory auditors and the provisional tariff shall be charged from the date
of commercial operation of such Unit or Stage or Generating Station, as
the case may be.

Provided that the Generating Company shall file a fresh petition in

accordance with these Regulations, for determination of final tariff based
on actual capital expenditure incurred up to the date of commercial
operation of the Generating Station duly certified by the statutory auditors
based on Annual Audited Accounts.

Provided further that any difference in provisional tariff and the final tariff
determined by the Commission and not attributable to the Generating
Company may be adjusted at the time of determination of final tariff for
the following year as directed by the Commission.

71.9 Filing for Mid-year performance review, True-up and determination of

tariff for ensuing year

The generating company and the licensees shall file their application for
mid-year performance review of the current year, true-up of the previous
year and tariff for the ensuing year along with requisite fee by 30 th
November of each year of the control period as per the details
mentioned in the Regulation 11 & 13 for the Commission’s review, true-
up of uncontrollable/controllable items in accordance with Regulation 8.3
and approval of tariff for the ensuing year.

72. TARIFF ORDER

72.1 The Commission shall, within one hundred and twenty (120) days from
the receipt of complete application and after considering all suggestions
and objections received from the public/other stakeholders:

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 (i) Issue a tariff order accepting the application with such modifications
or such conditions as may be contained in such order; or

(ii) Reject the application for reasons to be recorded in writing if such

application is not in accordance with the provisions of the Act and the
rules and Regulations made thereunder or the provisions of any other
law for the time being in force and direct the licensee to resubmit the
application after such modifications/amendments as may be directed
by the Commission.

Provided that the applicant shall be given a reasonable opportunity of

being heard before rejecting the application.

72.2 The tariff so determined by the Commission shall be in force from the
date specified in the said order and shall, unless amended or
revoked, continue to be in force for such period as may be stipulated
therein.

73. PUBLICATION OF APPROVED TARIFF

The generating company and the licensees, as the case may be, shall publish
the tariff approved by the Commission in Hindi and English in daily newspapers
having wide circulation in Haryana and shall put up the complete tariff petition,
including annexure, and approved tariff / tariff schedule on its website and make
available for sale, a booklet containing such tariff or tariffs, as the case may be,
to any person upon payment of reasonable reproduction charges.

74. PERIODIC REVIEWS

74.1 To ensure smooth implementation of the Multi Year Tariff (MYT)

framework, the Commission may undertake periodic reviews of
performance during the control period, to address any practical issues,
concerns or unexpected outcomes that may arise.

74.2 The generating company and the licensee shall submit information as part
of annual review on actual performance to assess the performance vis-à-
vis the targets approved by the Commission at the beginning of the
control period. This shall include annual statements of its performance
and accounts including latest available audited / actual accounts and the
tariff worked out in accordance with these Regulations.

74.3 The Commission may approve any modifications to the forecast of the
generating company or the licensee for the remainder of the control
period, with detailed reasons for the same.

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75. SUMMARY OF TIMELINES

Generating company and the licensee shall adhere to the following schedule
for various activities for the first control period:

Time Schedule for various activities for the 2nd Control Period

S Description Filing of document Obtaining Approval of the

No additional document by
information the
and Commission
acceptance by
the
Commission
1 Capital By 1st June by distribution Within 30 days Within 45 days
Investment Plan licensee and by 1st of filing of of acceptance of
August by the generation document the filing
company/ transmission
licensee for each year of
the control period
2 Business Plan By 1st June by distribution Within 30 days Within 45 days
(to be filed only licensee and by 1st of filing of of acceptance of
at the beginning August by the generation document the filing or from
of Control company/ transmission the date of
Period) licensee (only once during receipt of
the control period) additional
information
whichever is
later.
3 Filing of MYT By 30th November of the Within 30 days Within 120 days
Petition (ARR year preceding the first of filing of of acceptance of
and Tariff year of the relevant year document the filing but by
Proposal for the of the control period. 1st of april of the
control period 1st year of the
control period in
any case
4 Mid-Year By 30th November of each Within 30 days Within 120 days
Performance year of the relevant year of filing of of acceptance of
Review/True-up of the control period document the filing

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 PART IX - MISCELLANEOUS

76. HEARING

76.1 The Commission may hold hearing(s) on the ARR/tariff filing and hear such
persons as the Commission may consider appropriate to decide on such
ARR/tariff filing.

76.2 The procedure of hearing on the ARR/Tariff filing shall be as per the
provisions of the HERC (Conduct of Business) Regulations, in vogue or in
the manner as the Commission may decide from time to time.

76.3 Where the Commission considers appropriate it may appoint a consultancy

firm / external expert in order to arrive at a just and fair conclusion in any
matter before it and so appoints some consultancy company, it may require
the generating company and the licensee to bear for the costs of such
consultancy, which shall be allowed as a pass through in the ARR.

77. ISSUE OF ORDERS AND DIRECTIONS

Subject to the provision of the Act and these Regulations, the Commission may,
from time to time, issue orders and directions in regard to the implementation of
these Regulations and procedure to be followed on various matters.

78. POWERS TO REMOVE DIFFICULTIES.

If any difficulty arises in giving effect to any of the provisions of these Regulations,
the Commission may, by a general or special order, not being inconsistent with the
provisions of these Regulations or the Act, do or undertake to do things or direct
the generating company or the licensee to do or undertake such things which
appear to be necessary or expedient for the purpose of removing the difficulties.

79. POWER TO RELAX

The Commission may in public interest and for reasons to be recorded in writing,
relax any of the provision of these Regulations.

80. INTERPRETATION

If a question arises relating to the interpretation of any provision of these

Regulations, the decision of the Commission shall be final.

81. SAVING OF INHERENT POWERS OF THE COMMISSION

81.1 Nothing in these Regulations shall be deemed to limit or otherwise affect the
inherent power of the Commission to make such orders as may be necessary for
ends of justice or to protect consumers’ interest or to prevent the abuse of the
process of the Commission.

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81.2 Nothing contained in these Regulations shall limit or otherwise affect the
inherent powers of the Commission from adopting a procedure, which is at variance
with any of the provisions of these Regulations, if the Commission, in view of the
special circumstances of the matter or class of matters and for reasons to be
recorded in writing, deems it necessary or expedient to depart from the procedure
specified in these Regulations.

81.3 Nothing in these Regulations shall, expressly or by implication, bar the

Commission to deal with any matter or exercise any power under the Act for which
no Regulations have been framed, and the Commission may deal with such
matters, powers and functions in a manner it thinks fit.

82. ENQUIRY AND INVESTIGATION

All enquiries, investigations and adjudications under these Regulations shall be done
by the Commission through the proceedings in accordance with the provisions of
the Conduct of Business Regulations, 2004 as amended from time to time.

83. POWER TO AMEND

The Commission, for reasons to be recorded in writing, may at any time vary, alter
or modify any of the provision of these Regulations after following the due process.

84. REPEAL

The Haryana Electricity Regulatory Commission (Terms and Conditions for

Determination of Tariff for Generation, Transmission, Wheeling and Distribution &
Retail Supply under Multi Year Tariff Framework) Regulations, 2012 including its
subsequent amendments shall stand repealed.

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 Appendix I

Procedure for Calculation of Transmission System Availability Factor

The procedure for calculation of Transmission System Availability Factor shall be

governed as per CERC regulations, issued from time to time.

Appendix II

Depreciation Schedule

S. No Asset Particulars Useful life (Years) Depreciation Rate

for first 12 years of the useful life w.e.f

COD (Salvage Value = 10%)

A Land under full ownership Infinite 0

B Land under lease

(a) for investment in the land The period of lease or the 0

period remaining unexpired
on the Assignment of the
lease

(b) for cost of clearing the site The period of lease 0

remaining unexpired at the
date of clearing the date

C Assets purchased new

(a) Plant and Machinery in generating

plants

(i) Hydro electric 35 5.28%

(ii) Coal based and WHRB based thermal 25 5.28%

plants

(iii) Diesel electric and gas plant 15 5.28%

(b) Cooling towers &Circulating Water 25 5.28%

Systems

(c) Hydraulic works forming part of the

Hydro-electric project

(i) Dams, Spillways, Weirs, Canals, 50 5.28%

Reinforced

concrete flumes and siphons

(ii) Reinforced concrete pipelines and 35 5.28%

surge tanks, steel pipelines, sluice
gates, steel surge tanks, hydraulic
control valves and hydraulic works

D Building & Civil Engineering works

of a permanent character, not
mentioned above

(i) Offices and showrooms 50 3.34%

(ii) Containing thermo-electric generating 25 3.34%

plant

(iii) Containing hydro-electric generating 35 3.34%

plant

(iv) Temporary erections such as wooden - 100%

structures

(v) Roads other than Kutcha roads 50 3.34%

(vi) Others 50 3.34%

E Transformers, Transformer Kiosk,

Sub-Station equipment & other
fixed apparatus (including plant
foundations)

(i) Transformers including foundations 25 5.28%

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S. No Asset Particulars Useful life (Years) Depreciation Rate

for first 12 years of the useful life w.e.f

COD (Salvage Value = 10%)

having rating of 100 KVA and over

(ii) Others 25 5.28%

F Switchgear including cable 25 5.28%

connections

G Lightning arrestors:

(i) Station type 25 5.28%

(ii) Pole type 15 6.33%

(iii) Synchronous condenser 35 5.28%

H Batteries 5 5.28%

I Underground cable including joint 35 5.28%

boxes and disconnected boxes

J Cable duct system 50 5.28%

K Overhead lines including supports

(i) Lines on fabricated steel towers 35 5.28%

operating at nominal voltages higher
than 66 KV

(ii) Lines on steel supports operating at 25 5.28%

nominal voltages higher than 13.2 KV
but not exceeding 66 KV

(iii) Lines on steel or reinforced concrete 25 5.28%

supports

(iv) Lines on treated wood supports 25 5.28%

L Meters 15 5.28%

M Self-propelled vehicles 5 9.50%

N Air Conditioning Plants

(i) Static 15 5.28%

(ii) Portable 5 9.50%

O Office equipments

(i) Office furniture and furnishing 15 6.33%

(ii) Office equipment 15 6.33%

(iii) Internal wiring including fittings and 15 6.33%

apparatus

(iv) Street Light fittings 15 5.28%

P Apparatus let on hire

(i) Other than motors 5 9.50%

(ii) Motors 15 6.33%

Q Communication equipment

(i) Radio and high frequency carrier 15 6.33%

system

(ii) Telephone lines and telephones 15 6.33%

R IT equipment 6 15.00%

S Fibre optic 15 6.33%

T Any other assets not covered 15 5.28%

above

By Order of the Commission

(Sd.) …,
Director / Tariff
HERC

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