Report of Indian Institute of Public Administration ... - Ministry of Power

State Reports (Vol.-III)
Study on `Impact of Restructuring of SEBs’
first year of the tariff period (i.e., 2004-05) and up to 31 March 2009 for generating
companies and transmission licensee vide Regulation 12 and from 2006-07 to 2008-09
vide Regulation 84. Para 5.3(f) of tariff policy requires MYT frame work to be
adopted for any tariff to be determined from April 1,2006 and initial control period
may be for three years duration and that in case of lack of reliable data, the
appropriate Commission may state assumptions in MYT for first control period.
GENCO, TRANSCO and DISCOMs have filed ARR/tariff petition for 2006-07. They
have been directed by the Commission to file tariff petition/ARR for the control
period, the same is awaited.
In respect of generation, station tariff is fixed power station-wise and their capital
cost, all operating parameters including operation and maintenance (O&M) and index
for evaluation of O&M are specified on normative basis. Variation in cost of fuel will
be covered by fuel price adjustment clause. As such for the generating stations, tariff
can be determined for the control period following the MYT.
In case of transmission system, the Central Electricity Regulatory Commission
(CERC) follows determination of tariff transmission project-wise. Tariff for
transmission of power by Power Grid is the summation of tariff determined for
various transmission projects. As capital cost for the lines and sub-stations, covered
under each project, is fixed with its commissioning and O&M charges and its
escalation is determined on normative basis, it is feasible to determine the tariff for
each project valid for the control period. In the States, a number of lines and substations
are added by the transmission system. The lines and sub-stations do not form
part of the project but are decided in the Annual Plan. As such, the States cannot
adopt the policy of CERC as their tariffs will have to be determined for each line and
sub-station and then summed up for hundreds of such lines and sub-stations. The
concerned State Commission determines the transmission tariff, based on assets
created at the end of previous year, likely to be created during the current year and
ensuing year. Long-term projection for capital addition in transmission system is not
precisely feasible and as such any transmission tariff determined for the control period
will have conditionality of investment, their debt equity ratio, interest and financing
charges, etc. On account of this, though tariff will be determined for the control
period, it will undergo review/revision annually, if, investment, interest and finance
charges, etc., are different from that assessed.
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