CERC Tariff Regulations : 2019-24

Key Provisions:
Ø Return on Equity Ø Depreciation
Ø Stations Older than 25 years Ø Single-part Tariff
Ø O&M Expenses Ø Special Allowance / R&M
Ø Target Availability Ø New Projects
Ø Incentive Ø Tariff Application, True-up
Ø GCV as received Ø Additional Capitalisation
Ø Station heat rate Ø Transfer pricing of coal from
Ø APC Integrated Mines
Ø Sharing of Operational Gains Ø Other Provisions
Ø Working Capital

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Return on Equity - Reg.- 30 & 31
Ø Rate of return on equity (Base rate - Post-tax) retained at 15.5% (thermal),
16.5% (hydro- storage & pumped storage).
§ Pre-tax ROE = Base rate / (1 – Effective tax rate)
Ø Additional ROE of 0.5% for timely completion of projects deleted.
Ø Ramp rate requirements for thermal (w.e.f 01.01.2020)
§ Reduction in rate of ROE by 0.25% for not achieving ramp rate of 1% per
min.
§ Additional ROE @ 0.25% for every incremental ramp rate of 1% per min
achieved subject to ceiling of 1%.
§ Detailed guidelines to be issued by NLDC by 30.06.2019.
Ø RGMO/FGMO, data telemetry, communication system up to LDC, protection
system mandatory for existing/new projects – Otherwise, Rate of RoE may
be reduced by 1% for the period of deficiency as decided by CERC based on
report by RLDC.
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Old Stations beyond Useful Life - Reg.- 18(3)
Ø In case of generating station or transmission system which has
completed its useful life on or after 01.04.2019, if actual equity
deployed on 01.04.2019 is more than 30% of capital cost, equity in
excess of 30% shall not be considered for tariff computation.
§ Definition of “useful life” provides that extension of life of projects beyond
their useful life may be decided by CERC on case to case basis.

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Old Stations beyond Useful Life – Impact on ROE
(in Rs. Crores)
Tariff Regulations 2014 Tariff Regulations 2019
Stations that have
completed useful life / are Revised Equity
S. No. MW Normative ROE Allowed @ Reduction in
completing useful life in Capital Cost (@30% of capital Revised RoE
Equity 15.5% ROE
2019-24 cost)

1 Dadri-1 840 1690 847 131 507 79 53

2 Farakka-1&2 1600 3197 1567 243 959 149 94
3 Kahalgaon-1 840 2206 1067 165 662 103 63
4 Korba-1&2 2100 1780 871 135 534 83 52
5 Ramagundam-1&2 2100 2306 1146 178 692 107 70
6 Rihand-1 1000 2423 1202 186 727 113 74
7 Singrauli 2000 1247 602 93 374 58 35
8 Talcher Super-1 1000 2867 1362 211 860 133 78
9 Unchahar-1 420 968 480 74 291 45 29
10 Vindhyachal-1 1260 1482 736 114 444 69 45
11 Dadri Gas 830 902 446 69 271 42 27
12 Anta 419 836 343 53 251 39 14
Total 14409 21905 10669 1654 6572 1019 635

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O&M Expenses - Reg.- 35
Unit size / Station (MW) 2019-20 (Lakhs/MW) 2018-19 (Lakhs/MW)
200 MW 32.96 + actual security expenses 30.59
500 MW 22.51 + actual security expenses 20.43
600 MW & Above 20.26 + actual security expenses 18.38
800 MW & Above 18.23 + actual security expenses 18.38
TTPS 56.34 + actual security expenses 55.09
TANDA 46.16 + actual security expenses 45.80
GAS STATIONS 17.58 + actual security expenses 18.72
Koldam Hydro 15.82 + actual security expenses + impact of GST, min wages 25.24
& pay revision
Ø Security expenses to be allowed separately after prudence (Similar to water charges & capital spares).
Generator to submit assessment of security requirement & estimated expenses.
Ø Additional units after first 4 units declared COD after 01.04.2019 – 90% of O&M expenses norms
Ø Annual escalation: Thermal - 3.5% (6.35% p.a. in Reg. 2014); Hydro – 4.77%
Ø O&M expenses for ECS to be notified separately. Till such time, to be decided on case to case basis.
Security Exp.- Separate account to be kept. All CISF & other security Exp. (including housing, medical,
etc.©related
Copyright to security)
2016 Your Company to be booked separately / apportioned.
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Incentive Reg.- 42 (6)
Ø Applicable on achieving Normative Annual Plant Loading Factor (NAPLF) of 85% on a
cumulative basis within each Season (High Demand or Low Demand Season) (wef
01.04.2020)

Ø Differential incentive rate for peak / off-peak hours (wef 01.04.2020)

§ Incentive @65 paisa/kwh during Peak hours

§ Incentive @50 paisa/kwh during off-peak hours

Ø Present dispensation of incentive @50 paisa/kwh to continue till 31.03.2020.

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GCV - Reg.- 43
Ø GCV for ECR computation retained on “as received basis”
Ø GCV margin of 85 kcal/kg is provided for variation on account of storage at generating station.
Ø Measurement of GCV as received:
§ At the unloading point of generating station through collection, preparation and testing of
samples from the loaded wagons, trucks, ropeways, Merry-Go-Round (MGR), belt conveyors
and ships in accordance with the IS 436 (Part-1/ Section 1)- 1964.
§ Through Third party sampling to be appointed by the by the generating companies in
accordance with the guidelines, if any, issued by Central Government:
§ Collection of coal samples – Either manually or through hydraulic Auger or any other
method keeping in view safety of personnel & equipment
§ May adopt any advanced technology in a fair and transparent manner for collection,
preparation and testing.
§ Expenses towards 3rd party sampling shall be reimbursed as part of landed cost of fuel by
the beneficiaries (Reg. – 38)
Ø Procurement of fuel other than notified prices may be considered if it is based on competitive
bidding through transparent process (Reg. – 38)
Ø Transit & Handling Loss : No change
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Co-firing Biomass with Coal
Various provisions of the Regulations provides for co-firing of biomass with coal.

Ø Definition of “Project” includes Biomass pellet handling system.

Ø Definition of “thermal generating station” provides for co-firing biomass with
coal.
Ø Capital cost of new project includes capital cost on account of biomass
handling equipment and facilities for co-firing;
Ø Landed cost of fuel includes landed cost of biomass.
Ø Landed cost of biomass fuel shall be worked out based on its delivered cost at
unloading point of the generating station, inclusive of taxes and duties as
applicable.
Ø ECR of the blended fuel shall be worked out considering consumption of
biomass based on blending ratio as specified by CEA or actual consumption of
biomass, whichever is lower.
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Station Heat Rate - Reg.- 49(C)
Unit / Station Gross Station Heat Rate Comparison with Tariff Regulations
2014
200 / 210 / 250 MW 2430 kcal/kwh Reduced by 20 kcal/kwh
500 MW (sub-critical) 2390 kcal/kwh Increased by 15 kcal/kwh
Stations achieving COD on or 1. Margin over Design Heat Rate – Margin increased by 0.5%
after 01.04.2009 5%.
2. Minimum Boiler Efficiency: Min. Boiler Efficiency for stations
• Supercritical – 86% commissioned in 2009-14: 85%
• Ultra-supercritical - 86.5%.
Tanda 2750 kcal/kwh No change
TTPS 2830 kcal/kwh Reduced by 20 kcal/kwh
Gas stations (except No change.
Ratnagiri)
Ratnagiri CCPP 1820 kcal/kwh Reduced by 30 kcal/kwh

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APC - Reg.- 49(E)
Unit / Station APC Comparison with Tariff Regulations 2014

200 MW 8.5% No change

500 MW & above - With TDBFP 5.75% increase by 0.50%
- With MDBFP 8% increase by 0.25%
Additional APC:
1. Tube type coal mill (Talcher-I, VSTPS-2 & Unchahar-2) 0.8 % Provided in Tariff Regulations 2019
2. IDCT 0.5% No change
3. Air Cooled Condenser – Direct / Indirect cooling 1% / 0.5% No change
Gas stations (CC) – 2.75% Increase by 0.25%
§ With electric motor driven Gas Booster Compressor 2.95%
§ Additional APC for ACC (direct cooling with mechanical 0.35%
draft fans)
TTPS 10.5% No change
Tanda 11.5% Reduced by 0.5%
Ø APC for ECS, Sewage Treatment Plant and External CHP (Jetty & associated infrastructure) to be
considered separately.
Ø APC shall not include colony consumption, construction power and consumption by integrated coal mine.
However, CERC in the SOR has clarified that generating stations shall continue to draw power from the
station for colony consumption.
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Sharing of Net Gain –Thermal Stations
Ø Sharing of Net Gain on account of operational parameters (Station
heat rate, Secondary fuel oil consumption & APC) shall be on annual
basis between Generator and Beneficiaries in 50:50 ratio.
(Regulations 2014 provides sharing in 60:40 ratio).

Ø Net Gain = (ECRn - ECRa) x Scheduled Generation.

ECRn = Normative Energy Charge Rate computed on the basis of normative
operational parameters.
ECRa = Actual Energy Charge Rate computed on the basis of actual operational
parameters.

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Working Capital - Reg.- 34
Ø Coal based stations:
Ø Coal stock:
§ Pithead stations : 10 days (Existing – 15 days)
§ Non-pit head stations: 20 days (Existing – 30 days)
Ø Receivables: 45 days (Existing – 2 months)
Ø Cost of coal used for WC computation to be based on actual (wt. avg. cost) of
third quarter of the preceding FY for each year of tariff period.
Ø Rate of Interest on WC:
§ Bank rate as on 01.04.2019 or on 1st April of FY when COD is declared.
§ While truing up bank rate as on 1st April of each FY shall be considered.
§ Bank rate defined as 1 year SBI MCLR plus 350 basis points. (Presently, it is
SBI Base Rate plus 350 basis points)

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Depreciation - Reg.- 33
§ Depreciation allowed up to 90% of capital cost (retained as Existing)

§ Salvage value to be 10% retained

§ Useful life of hydro stations (including pumped storage) increased to 40 years

from existing 35 years.

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R&M / Special Allowance - Reg.- 27 & 28
R&M
Ø Generating company intending to undertake R&M shall obtain
consent of the beneficiaries and submit the same along with the
petition to the Commission.
Special Allowance (SA)
Ø Special allowance @9.5 Lakh/MW without escalation for the tariff
period 2019-24.
Ø SA to be transferred to a separate fund for utilization towards R&M
activities, for which a detailed methodology shall be issued
separately.

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Special Provision for Stations > 25 years - Reg.- 17
“In respect of a thermal generating station that has completed 25 years of operation
from the date of commercial operation, the generating company and the beneficiary
may agree on an arrangement, including provisions for target availability and incentive,
wherein addition to the energy charge, capacity charges determined under these
regulations, shall also be recovered based on scheduled generation.”

Ø The beneficiary will have the first right of refusal to enter into agreement

Ø On refusal, the generating shall be free to sell the electricity generated from such
station in a manner as it deems fit

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 New Projects - - Reg.- 22
Ø For stations where PPAs have been signed before 5.1.2011 but financial closure
has not taken place by 31.03.2019, fresh consent of beneficiaries is required for
eligibility for determination of tariff.

Ø Time and cost overrun on account of land acquisition included in “uncontrollable

factors”.

Ø Delay in obtaining statutory approval for new projects to be treated as Force

Majeure. (Except cases where delay is attributable to project developer).

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Capital Cost of New Projects - Reg.- 19
Ø Capital cost of new / existing projects shall include: (new provisions)
§ Capital expenditure on railway infrastructure & its augmentation for
transportation of coal up to receiving end of station. (excluding
transportation cost and any other appurtenant cost paid to railways).
§ Capital expenditure on Biomass handling equipment, sewage treatment
plant, Emission Control System, fulfilment of condition for obtaining EC, ash
disposal / handling / utilization & transportation.

Ø IDC and IEDC

§ Pro-rata reduction of IDC & IEDC in case delay in project execution is not
condoned.
§ In case of non-condonation of delay (either partly or fully), any LD
recovered from contractor to be retained by generator.

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Tariff Approval and True-up – Chapter -3
Ø In-principle approval for incurring expenditure on account of change in law or force majeure with
proper justification if it exceeds 10% of admitted capital cost of project or Rs. 100 Cr, whichever is
lower.
Ø Interim True-up of tariff
§ Interim true-up allowed in 2021-22, if AFC increases by more than 20% over the AFC
determined for respective years.
§ In case actual add-cap falls short of projected add-cap allowed, true-up petition filing is not
required and Generator shall refund excess tariff recovered along with interest at Bank rate as
on 1st April of respective years to the customers under intimation to CERC.
Ø Final True-up of tariff
§ Final true-up of tariff to be filed by 30.11.2024.
§ After true-up, if tariff recovered exceeds or falls short of tariff approved, generator shall
refund or recover the excess or shortfall along with simple interest at rate equal to bank rate
as on 1st April of respective years in six equal monthly instalments.

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Additional Capitalization – Chapter 7
Ø Within original scope of work and after cut-off date
§ Force majeure events
§ Raising of ash dyke as part of ash disposal system
Ø Replacement of assets under the original scope after cut-off date to be allowed
§ Replacement of asset allowed on account of change in law, force-majeure, obsolescence of
technology or if the same has otherwise been allowed by Commission.
§ Replacement of asset allowed if useful life is less than useful life of plant and is fully
depreciated
Ø Beyond original scope of work
§ Usage of water from sewage treatment plant.
Ø Provision for capitalization of assets for improvement in fuel receipt system removed.
Ø Provision of Compensation Allowance removed

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Additional Capitalization - ECS – Reg. 29
Ø Supplementary capacity charges for additional capitalization and supplementary
energy charge on account of implementation of ECS shall be determined
separately.
Ø Equity infused to be serviced at ROE Rate
Ø Application with Proposal for ECS to be submitted to CERC.
§ Proposal to contain details of proposed technology as specified by CEA, Scope
of work, phasing of expenditure, schedule of completion, estimated
completed cost and detailed computation of impact on tariff.
§ Proposal to be shared with beneficiaries.
§ Commission may grant approval for incurring add-cap on account of ECS
Ø Petition for determination of tariff to be filed after completion of implementation
of Emission Control System (ECS)

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Other Provisions
Ø Late Payment Surcharge :
§ Applicable beyond a period of 45 days
§ 1.50 % per month
Ø Rebate:
§ 1.5% within a period of 5 days of presentation of bills;
§ 1% after 5 days within 30 days.
Ø Sharing of Non-Tariff Income:
§ Non Tariff income to be shared with customers in the ratio of 50:50
§ Includes rent, sale of scrap, income from advertisements etc.
§ Shall not include interest/ dividend earned corresponding to regulated business
Ø Landed Price of Reagents for ECS
§ Consumption on normative basis – To be notified separately.
§ Purchase price of reagent through competitive bidding plus applicable
statutory charges and transportation charges

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