Finalppclorder24516 1588

TARIFF ORDER
Determination of Tariff for FY 2016-17

And
True-up for FY 2013-14
Petition No. 191/2016

for
Puducherry Power Corporation Limited (PPCL)
Gas Power Station (32.5 MW)
May 23’ 2016
संयक्
ु त विद्यत
ु विनियामक आयोग (गोिा राज्य और संघ शाससत प्रदे शों के सिए)
JOINT ELECTRICITY REGULATORY COMMISSION
For the State of Goa and Union Territories,
2 ति, िाणिज्य निकंु ज, एचएसआईआईडीसी कायाािय पररसर, उद्योग विहार फेज-V,गड़
ु गांि - 122016 हररयािा
2nd Floor, HSIIDC Office Complex, Vanijya Nikunj,
Udyog Vihar, Phase-V, Gurgaon-122 016 (Haryana)
दरू भाष 0124-2875302, फैक्स 0124-2342853
Phone: 0124-2875302 Fax: 0124-2342853
Website: www.jercuts.gov.in
Email: secy-jerc@nic.in
JERC Order on Tariff Petition for PPCL FY 2016-17
Contents
1. INTRODUCTION ............................................................................................................................. 6
1.1 JERC Formation .......................................................................................................................... 6
1.2 Puducherry Power Corporation Limited (PPCL)......................................................................... 7
1.3 Regulations................................................................................................................................. 8
1.4 Filing of Petition ......................................................................................................................... 8
1.5 Admission of Petition ................................................................................................................. 9
1.6 Interaction with the Petitioner .................................................................................................. 9
1.7 Public Hearing Process ............................................................................................................. 10
2. Summary of True-up for FY 2013-14 and Tariff for FY 2016-17 filed by the Petitioner .............. 12
2.1 Introduction ............................................................................................................................. 12
2.2 Summary of the True-up Petition for FY 2013-14 submitted by the Petitioner ...................... 14
2.3 Summary of the Tariff Petition for FY 2016-17 submitted by the Petitioner .......................... 15
2.4 Prayer ....................................................................................................................................... 17
3. Objections raised and the Commission’s Comments .................................................................. 18
3.1 Introduction ............................................................................................................................. 18
3.2 Operation & Maintenance Expenses (O&M) ........................................................................... 18
3.3 Auxiliary Power Consumption (APC)........................................................................................ 19
3.4 Restriction of Plant Loading ..................................................................................................... 20
4. True-up for FY 2013-14 ................................................................................................................ 22
4.1 Background .............................................................................................................................. 22
4.2 Regulations............................................................................................................................... 23
4.3 Operational Parameters .......................................................................................................... 24
4.4 Annual Fixed Charge (AFC) approved for True-up of FY 2013-14............................................ 24
4.5 Differential Annual Fixed Charge (AFC) approved during True-up of FY 2013-14 .................. 32
4.6 Variable Charges approved for True-up of FY 2013-14 ........................................................... 34
5. Tariff Determination for FY 2016-17 ........................................................................................... 35
5.1 PPCL Gas Power Station ........................................................................................................... 35
5.2 Regulations............................................................................................................................... 35
5.3 Operational Parameters .......................................................................................................... 36
5.3.1 Normative Annual Plant Availability Factor (NAPAF) ........................................................... 36
5.3.2 Auxiliary Power Consumption (APC) .................................................................................... 38
5.3.3 Gross Station Heat Rate (GSHR) ........................................................................................... 40
5.3.4 Performance Parameters approved for FY 2016-17 ............................................................ 41
5.4 Variable Cost Parameters ........................................................................................................ 41
5.5 Energy (Variable) Charges for working capital requirement for FY 2016-17 .......................... 44
5.6 Annual Fixed Charges (AFC) for FY 2016-17............................................................................ 45
5.7 Annual Fixed Charge (AFC) approved for FY 2016-17.............................................................. 55
5.8 Energy /Variable Charge (Net) ................................................................................................. 55
5.9 Annual Fixed Charge and other charges approved by the Commission for FY 2016-17 ......... 56
6. Directives ..................................................................................................................................... 57
JOINT ELECTRICITY REGULATORY COMMISSION FOR THE STATE OF GOA and UNION TERRITORIES Page 1
6.1 Outstanding dues from ED-Puducherry to PPCL...................................................................... 57

7. Conclusion ................................................................................................................................... 59
List of Tables
Table 1: List of Correspondence with PPCL ........................................................................................ 10

Table 2: Details of Public Notice published by the Petitioner ............................................................ 10
Table 3: Schedule of Public Hearing at Puducherry ............................................................................ 11
Table 4: Details of Public Notice published by the Commission......................................................... 11
Table 5: Repeat Public Notice published by the Commission ............................................................ 11
Table 6: Annual Fixed Charge (AFC) proposed by the Petitioner for FY 2013-14............................... 15
Table 7: Annual Fixed Charge proposed by PPCL for FY 2016-17 ....................................................... 16
Table 8 : Depreciation approved by the Commission for True-up of FY 2013-14 (Rs. Crores) .......... 27
Table 9: Interest Charges approved by the Commission for True-up of FY 2013-14 (Rs Crores)....... 28
Table 10: Interest on working capital approved by the Commission for True-up of FY 2013-14 (Rs
Crores) ......................................................................................................................................... 29
Table 11: Revised Annual Fixed Charge (AFC) approved for True-up of FY 2013-14 (Rs Crores) ....... 32
Table 12: Annual Fixed Charge (AFC) approved for FY 2013-14 (Rs Crores) ...................................... 33
Table 13: Details of the PPCL Gas Power Station ............................................................................... 35
Table 14: Performance Parameters approved by the Commission for FY 2016-17 ........................... 41
Table 15: GCV gas details submitted by the Petitioner for FY 2016-17 ............................................. 42
Table 16: Weighted average GCV (kcal/scm) considered by Commission for FY 2016-17 ................ 43
Table 17: Weighted Average Cost of Gas (Rs/1000 scm) considered for FY 2016-17 ........................ 44
Table 18: Variable Charges for working capital for FY 2016-17 ......................................................... 44
Table 19 : Depreciation approved by the Commission for FY 2016-17 (Rs Crores) ........................... 48
Table 20: Interest Charges approved by the Commission for FY 2016-17 (Rs Crores)....................... 49
Table 21: Interest on working capital approved by the Commission for FY 2016-17 (Rs Crores) ...... 51
Table 22: O&M expenses approved for FY 2016-17 (Rs Crores) ........................................................ 52
Table 23: Annual Fixed Charge approved for FY 2016-17 (Rs Crores) ................................................ 55
List of Annexures
S. No. Annexure
1 Admittance Notice issued by the Commission on Tariff Petition for FY 2016-17
Public Notices by PPCL on the Tariff Petition for FY 2016-17 inviting
2
suggestions/comments from stakeholders
3 Public Notices issued by the Commission for intimation of Public Hearing
List of Abbreviations
Abbreviation Full Form

Act : Electricity Act, 2003
APC : Auxiliary Power Consumption
CERC : Central Electricity Regulatory Commission
CGS : Central Generating Station
Commission/JERC : Joint Electricity Regulatory Commission for the state of Goa
and union territories
EA 2003 : Electricity Act, 2003
EDP : Electricity Department, Puducherry
FC : Fixed Charges
FY : Financial Year
GFA : Gross Fixed Assets
GCV : Gross Calorific Value
JERC : Joint Electricity Regulatory Commission for the state of Goa

and union territories
MU : Million Unit
MW : Mega Watt
NAPAF : Normative Annual Plant Availability Factor
O&M : Operation and Maintenance Expenses
PAF : Plant Availability Factor
PLF : Plant Load Factor
PPA : Power Purchase Agreement
PPCL : Puducherry Power Corporation Limited
RO : Reverse Osmosis
RoE : Return on Equity
SHR : Station Heat Rate
Before the
Joint Electricity Regulatory Commission

for the State of Goa and Union Territories
Gurgaon
CORAM
S. K. Chaturvedi (Chairperson)
Ms. Neerja Mathur (Member)
Petition No. 191/2016
In the matter of
Determination of Generation Tariff for the Financial Year 2016-17 for Puducherry
Power Corporation Limited (PPCL) Gas Power Station (32.5 MW)
And in the matter of
Puducherry Power Corporation Ltd. (PPCL)………………………………………………Petitioner
Electricity Department, Puducherry ………………………………………………………Respondent
ORDER
Date: May 23’ 2016
1. INTRODUCTION
1.1 JERC Formation
In exercise of the powers conferred by Section 83 of the Electricity Act, 2003 the Central
Government constituted a two member (including Chairperson) Joint Electricity Regulatory
Commission for all Union Territories except Delhi to be known as “Joint Electricity Regulatory
Commission for Union Territories’’ with headquarters at Delhi as notified vide notification no.
23/52/2003 – R&R dated May 2’ 2005. Later on with the joining of the state of Goa, the
Commission came to be known as “Joint Electricity Regulatory Commission for the State of
Goa and Union Territories” as notified on May 30’ 2008. The Joint Electricity Regulatory
Commission for the State of Goa and Union Territories (Andaman & Nicobar Islands,
Chandigarh, Dadra and Nagar Haveli, Daman & Diu, Lakshadweep and Puducherry) started
functioning with effect from September 2008. Office of the Commission is presently located in
Gurgaon, Haryana.
1.2 Puducherry Power Corporation Limited (PPCL)
Puducherry Power Corporation Limited (hereafter referred to as ‘PPCL’ or ‘Petitioner’), an

undertaking of Government of Puducherry, is a Government company within the meaning of
Companies Act, 1956. Further, it is a “Generating Company”, as defined under sub-section 28
of section 2 of Electricity Act, 2003.
PPCL was incorporated on 30th March 1993, with the objective of generating 32.5 MW of
Electricity (22.9 MW from gas turbine and 9.6 MW from Steam turbine) at Karaikal which is
one of the outlying regions of Union Territory of Puducherry. The required gas of 1.91 lakhs
cubic meter of gas per day is obtained from the gas wells at Narimanam in the Cauvary basin
under an agreement with GAIL (India) Ltd.
The Karaikal Gas Power Station was declared commercial operation w.e.f. January 3’ 2000 and
is supplying power to Electricity Department Puducherry (EDP) under a PPA signed with them
on February 25’ 2002. Consequent to setting up of the Joint Electricity Regulatory Commission
(JERC), the Petitioner had filed Petition for determination of tariff for the period FY 2011-12.
The Commission vide Order dated August 6’ 2011 had approved tariff with effect from June
2011 for FY 2011-12. Subsequently, based on Review Petition filed by the Petitioner, the
Commission had revised the tariff vide its Order communicated to PPCL on December 28’
2011 and the Corporation then filed Appeal No. 41 of 2012 to APTEL against the Review Order
pertaining to the Tariff Order FY 2011-12 (Order dated December 28’ 2011) which was
disposed of by APTEL with directions, as per the judgment dated November 21’ 2012.
In the light of observations and findings of Hon’ble APTEL in Appeal No. 41/2012, the Petition
for tariff determination for FY 2011-12 (Petition No. 18/2010) and Review Petition for FY
2011-12 (Petition No. 45/2011) were restored by the Commission vide its Order dated
December 19’ 2012.
The Commission carried out detailed proceedings in this matter and subsequently vide its
Order dated April 29’ 2013 approved capital cost of Rs 146.45 Crores for FY 2011-12 as
against the earlier approved capital cost of Rs 137.77 Crores. The Order observed that the
approved capital cost of Rs 146.45 Crores will be considered along with the audited accounts
at the time of approval of True-up for FY 2011-12, True-up for FY 2012-13 and Review for FY
2013-14. Accordingly, the same had been considered by the Commission while taking up
True-up for FY 2011-12 and FY 2012-13 along with the Review for FY 2013-14.
At present, the tariff of the instant station is at a rate fixed by the Commission to PPCL vide
Commission’s Order dated March 31’ 2015 on the basis of Petition filed for the tariff period
FY 2015-16.
1.3 Regulations
The Commission, in exercise of the powers conferred upon by the Electricity Act, 2003 has
notified JERC (Terms and Conditions for determination of Tariff) Regulations, 2009 for
determination of tariff (hereinafter referred to as the ‘JERC Tariff Regulations 2009’).
As per provisions of Clause 19 of the JERC Tariff Regulations 2009 and amendments thereon,
the Commission, while determining the cost of generation of each thermal/gas/hydro-electric
generating stations located within the State, shall be guided, as far as feasible, by the
principles and methodologies of CERC, as amended from time to time.
1.4 Filing of Petition
The Petitioner was mandated to file the Tariff Petition for the tariff period FY 2016-17 before
November 30’ 2015. The Petitioner submitted before the Commission that the collection of
data/information from various sources is taking more than the estimated time and submitted
before the Commission that it may be allowed to file the Tariff Petition in the second week of
January 2016.
Due to the delay in filing of the Petition as per the regulatory timelines, the Petitioner filed an
application for condonation of delay in filing the Tariff Petition for FY 2016-17 before the
Commission vide its letter dated December 8’ 2015. The Commission acceded to the request
of the Petitioner and granted extension of time up to January 15’ 2016 for filing of the
Petition vide its letter dated December 22’ 2015.
PPCL then filed its Petition before the Commission for approval of tariff for FY 2016-17 for
Puducherry Gas Power Station (32.5 MW) for sale of power to the deemed distribution
licensee of Puducherry which was received at the Commission’s office on January 7’ 2016,
under Section 62 read with Regulation no. 3 to 10 of JERC Tariff Regulations 2009.
The True-up Petition for FY 2013-14 was also received at the Commission’s office on January
7’ 2016.
1.5 Admission of Petition
The Commission admitted the Petition for determination of Generation Tariff for PPCL for FY
2016-17 along with the True-up for FY 2013-14 on January 8’ 2016. The copy of the letter
stating the admittance of the Petition is enclosed as Annexure 1 to this Order.
In compliance of Regulation 29 of JERC (Conduct of Business) Regulations 2009 and

Regulation 12(5) of the JERC Tariff Regulations 2009, the Petitioner was directed to publish
the Public Notice of the Tariff Petition (abridged form) in at least three newspapers widely
circulated in the area of UT of Puducherry, highlighting the Petition and outlining the existing
& proposed tariff. Further, it was indicated that the Public Notice should highlight that the
suggestions/objections from the general public/stakeholders should be received latest by
January 25’ 2016. The Petitioner was directed to submit the copies of the newspapers in
which the Public Notice is published, before the Commission.
1.6 Interaction with the Petitioner
The Commission interacted regularly with the Petitioner to seek clarifications and justification
on various issues essential for the analysis of the Tariff Petition. The Commission and the
Petitioner also discussed key issues related to the Petition, which included norms of operation
of the plant, details of fuel expenses submitted to the Commission, etc.
The Technical Validation Session (TVS) was held at Puducherry on January 27’ 2016, where
the representatives of the Petitioner and the Commission were present. The Commission
carried out prudence check of the bills submitted and sought clarifications in the submissions
of the Petitioner.
The Petitioner submitted its replies, as shown below, in response to the queries raised by the
Commission, which have been considered during approval of the tariff of the Petitioner.
Table 1: List of Correspondence with PPCL

S. No. Date Subject
1. 19.01.2016 Queries and data deficiencies sought by the Commission
2. 22.01.2016 Reply to the deficiency note
3. 22.01.2016 Additional data submitted by PPCL in response to the deficiency note
4. 03.02.2016 Clarifications sought by the Commission post the TVS held on 27.01.16
Response by PPCL on the clarifications sought by the Commission post
5. 05.02.2016
the technical validation session
Additional clarifications by the Commission required for True-up for
6. 22.02.2016
FY 2013-14
Reply by PPCL on the additional clarifications sought for True-up of
7. 24.02.2016
FY 2013-14
1.7 Public Hearing Process
The Commission directed the Petitioner to publish the summary of the Tariff Petition in
abridged form and manner as approved in accordance with the Section 64 of the Electricity
Act 2003 to ensure wide public participation.
The Public Notice was published by the Petitioner in the following newspapers for inviting
objections/ suggestions from the stakeholders on the Tariff Petition:
Table 2: Details of Public Notice published by the Petitioner

S. No. Date Name of newspapers Place of Circulation
1. 13.01.2016 The Hindu (English Edition) Puducherry, Karaikal
2. 14.01.2016 Daily Thanthi (Tamil edition) Puducherry, Karaikal
3. 14.01.2016 Kerala Kumudhi (Malayalam Daily) Mahe
4. 14.01.2016 Janamitra (Telugu Daily) Yanam
The Petitioner also cited the Public Notice and the Petition on its website
(www.ppcl.puducherry.gov.in) for inviting objections and suggestions on the Petition.
Interested parties / stakeholders were requested to file their objections/suggestions on the

Petition on or before January 25’ 2016. The copies of the Public Notice are attached as
Annexure 2 to this Order.
The Commission published the notice for Public Hearing regarding the approval of the tariff
for FY 2016-17 and True-up for FY 2013-14. The schedule of the Public Hearing is given below.
Table 3: Schedule of Public Hearing at Puducherry

S. No. Date & Time Venue of Hearing Subject
Tariff Petition for PPCL for FY
2016-17 and True-up for FY 2013-
January 28’ 2016
Hall at Puducherry 14;
09:30 am hours
Multipurpose Social Service ARR & Tariff Petition of EDP for
onwards for all
1. Society (PMSSS) Complex, FY 2016-17, Review for FY 2015-
category of
#81, Laporte Street, 16, Provisional True-up for FY
consumers
Puducherry - 605001 2014-15 and True-up for FY 2013-
14
Table 4: Details of Public Notice published by the Commission

1. January 16’ 2016 Dina Malar (Tamil) Puducherry
2. January 16’ 2016 Dina Thanthi (Tamil) Puducherry
3. January 16’ 2016 Malai Malar (Tamil) Puducherry
Table 5: Repeat Public Notice published by the Commission

1. January 20’ 2016 The New Indian Express Vishakhapatnam, Chennai
(English)
2. January 20’ 2016 Dina Thanthi (Tamil) Puducherry, Karaikal
3. January 20’ 2016 Dina Malar (Tamil) Puducherry, Karaikal
4. January 20’ 2016 Malai Malar (Tamil) Puducherry, Karaikal
The copies of Public Notice published by the Commission for intimation of Public Hearing are
attached as Annexure 3 to this Order. The Public Notices were also published on the website
of the Commission (www.jercuts.gov.in).
During the Public Hearing, each objector was provided an opportunity to present his views on
the Petition filed by the Petitioner. All those present in the hearing, irrespective of whether
they had given a written objection or not, were given an opportunity to express their views.
Only EDP expressed its view on the Tariff Petition filed by PPCL and the same has been
examined by the Commission. The issues discussed during the Public Hearing and the views of
the Commission thereon, have been summarized in Chapter 3 of this Order.
2. Summary of True-up for FY 2013-14 and Tariff for FY 2016-17 filed

by the Petitioner
2.1 Introduction
The power generating station of PPCL at Karaikal was declared under commercial operation
w.e.f. January 3’ 2000 and is supplying power to EDP under a PPA signed with them on
February 25’ 2002. Consequent to setting up of the Commission, the Petitioner had filed
Petition for determination of tariff for the period FY 2011-12 (Petition No. 18/2010). The
Commission vide its Order dated August 6’ 2011 had approved tariff with effect from June
2011. Subsequently, based on Review Petition (Petition No. 45/2011) filed by the Petitioner
on the Tariff Order dated August 6’ 2011, the Commission partially allowed the Review
Petition vide Order dated November 3’ 2011 and the Corporation then filed Appeal No. 41
of 2012 to APTEL against the Review Order pertaining to the tariff period FY 2011-12. The
Hon’ble Aptel vide its Order dated November 21’ 2012 partially allowed the Appeal and
disposed of the Appeal with directions. The key observations and findings of the Hon’ble
APTEL are as summarized below.
Quote
‘’
1. Tariff Regulation 22(2) provides for determination of the capital cost to be considered on
the basis of the audited accounts or approvals already granted by the Commission. The
Appellant claimed capital cost of Rs.146.45 Crores based on the audited accounts which
were not taken into consideration by the Joint Commission and capital cost of only
Rs.137.77 Crores was allowed on the ground that the approval of competent authority
was not obtained. This is not a proper approach as the approval of the competent
authority was not contemplated under the Regulation. Even though the approval of the
competent authority for Rs.146.45 Crores was placed before the Joint Commission for
reconsideration of the capital cost in the Review, the Joint Commission wrongly rejected
the claim on the ground that nothing new had been pointed out by the Appellant. The
Joint Commission should have scrutinized the audited accounts placed before it by the
Appellant and considered the approval obtained from the Government and passed the
order after prudence check in accordance with law. The Joint Commission is directed to
consider the documents on record and pass order according to law after hearing the
parties once again.
2. The Tariff Regulations provide that the components of generation tariff shall be as laid
by the Central Commission in the 2004 Tariff Regulations as amended from time to time.
The 2009 Tariff Regulations have been made effective by the Central Commission with
effect from 1.4.20009. According to the 2009 Regulations, Normative Plant Availability
Factor (NAPF) is to be taken as 85% for thermal power stations. However, the Joint
Commission in the impugned order adopted NAPF of 87.5% contrary to the Tariff
Regulations. The State Commission is directed to pass the consequential order in
accordance with the Tariff Regulations.
3. The State Commission has determined the auxiliary consumption as per the Tariff
Regulations. No case has been made out by the Appellant for relaxation of the norms for
auxiliary consumption.
4. In view of the above, issue No. 1&2 regarding capital cost and Normative Annual Plant
Availability Factor is answered in favour of the Appellant. Issue No. 3 regarding Auxiliary
Consumption is answered as against the Appellant.
5. Thus, the Appeal is partly allowed. ‘’
Unquote
In the light of observations and findings of the Hon’ble Aptel in Appeal No. 41/2012, the
Petition for tariff determination for FY 2011-12 (Petition No. 18/2010) and Review Petition
(Petition No. 45/2011) were restored by the Commission vide its Order dated December 19’
2012.
Order dated April 29’ 2013 approved capital cost of Rs 146.45 Crores for FY 2011-12 against
the earlier approved capital cost of Rs 137.77 Crores (which is the first year of tariff
determination under the Commission).
The Commission also noted that NAPAF of 85% would be considered at the time of True-up
for FY 2011-12 and FY 2012-13. NAPAF of 85% had already been approved for FY 2013-14 as
per the Tariff Order for FY 2013-14.
Presently, the tariff of the station is at a rate fixed by the Commission vide its Order dated
March 31’ 2015 on the basis of Petition filed for the tariff period FY 2015-16.
The Petitioner, this time, has submitted the True-up petition for FY 2013-14 and the Tariff
Petition for FY 2016-17. The True-up Petition for FY 2013-14 has been submitted along with
the audited accounts of the respective year.
For FY 2016-17, the Petitioner has submitted the operational parameters and cost of the
generating station. The operational parameters pertain to normative plant availability factor
(NAPAF), station heat rate (SHR) and auxiliary power consumption. The costs cover both the
energy (variable) and capacity (fixed) charges.
The summary of the proposal is as outlined in the following sections.
2.2 Summary of the True-up Petition for FY 2013-14 submitted by the Petitioner
The Petitioner has submitted the True-up Petition for FY 2013-14 on the basis of the
approved opening capital cost of Rs 146.45 Crores as per the Commission’s Order dated
April 25’ 2014 by considering Hon’ble APTEL judgment dated November 21’ 2012. The
Commission had carried out the Review for FY 2013-14 vide its Order dated April 25’ 2014.
The Petitioner has considered Rs. 4.47 Crores as additional capital cost and thereby the
closing capital cost of Rs. 150.92 Crores for True-up of FY 2013-14.
The Petitioner has claimed Annual Fixed Charge (AFC) of Rs 23.59 Crores for FY 2013-14 on
the basis of the said capital cost (on the basis of the revised submission dated February 5’
2016). The AFC approved by the Commission during Review for FY 2013-14 was Rs. 22.74
Crores and the AFC now claimed by the Petitioner during True-up is Rs. 23.59 Crores,
accordingly the differential AFC of Rs (23.59 – 22.74) = Rs. 0.85 Crores has been claimed by
the Petitioner as part of the True-up exercise for the year.
The Petitioner has considered Gross Station Heat Rate (GSHR) = 2600 kcal/kWh and
Auxiliary Power Consumption (APC) = 5.50% for FY 2013-14.
Further, in accordance with the provisions of the Regulation 24 of the JERC Tariff
Regulations 2009 and CERC Regulation 15 (3), for the purpose of computation of the Return
on Equity, the grossing up of the base rate has been done with respect to actual tax rate
applicable to the Petitioner for FY 2013-14.
The Petitioner has claimed an additional amount of Rs. 1.13 Crores towards replacement
of damaged/corroded pipe rack structure besides the already allowed amount of Rs. 9.30
Crores for O&M of FY 2013-14. This amount was utilized for replacement of
damaged/corroded structural steel by new pipe rack structure inside the Plant. The plant
is located very near to the sea coast and the steel has been affected by corrosion. The
structure had got rusted due to various environmental factors like cooling tower drift and
nearness to seashore. Immediate replacement was necessary to avoid collapse of
structure leading to safety issues and to maintain plant operation. Therefore, the
Petitioner has submitted that it be allowed to recover this amount additionally as part of
the O&M expenses of the plant. This amount has been claimed over and above the AFC
amount of Rs. 23.59 Crores for FY 2013-14.
The Commission vide its Order dated March 28’ 2013 had notified the formula for recovery
of energy charges for FY 2013-14 which accounts for the actual gas GCV, actual gas cost,
normative gross station heat rate and normative auxiliary consumption. As the recovery of
energy charges for FY 2013-14 is on the basis of this formula, no adjustment is due on
account of the variation from the approved rates in the energy/variable charges.
The break-up of the Annual Fixed Charge (AFC) claimed for FY 2013-14 is as mentioned
below.
Table 6: Annual Fixed Charge (AFC) proposed by the Petitioner for FY 2013-14
S. No. Particulars FY 2013-14
1. Gross Generation (MUs) 242.00
2. Normative Plant Availability Factor (NAPAF) 85%
3. Auxiliary Consumption (%) 5.50%
4. Net Generation (MUs) 228.68
5. Annual Fixed Charges (Rs. Crores) 23.59*
(a) Interest on Loan Capital (Rs. Crores) 0.00
(b) Depreciation (Rs. Crores) 0.33
(c) O&M Expenses (Rs. Crores) 9.30*
(d) Interest on Working Capital (Rs. Crores) 3.49
(e) Return on Equity (Rs. Crores) 10.47
Note: * - The Petitioner has submitted an additional claim of Rs. 1.13 Crores towards replacement of
corroded pipe rack structure as mentioned in the previous paragraph.
2.3 Summary of the Tariff Petition for FY 2016-17 submitted by the Petitioner
The Petitioner has claimed the opening capital cost of Rs 150.37 Crores as approved in the
last year Tariff Order dated March 31’ 2015 plus proposed capitalization amount of Rs 0.51
Crores paid additionally towards the R.O. Plant this year i.e. Rs 150.88 Crores for FY 2016-
17. The Petitioner has submitted that the Commission consider this additional capitalization
for successful & efficient operation of the plant as per CERC Regulation, 9(2) (iv). The
Petitioner has submitted that the R.O. plant has been capitalized for an amount of Rs. 4.47
Crores which includes the consultancy charges paid to the Central Electricity Authority in
connection with the execution of the project, travelling expenses, etc., and advertisement
charges thereon, as the plant was put into operation with effect from 01.10.2014. The
Petitioner has considered the amount of Rs. 3.96 Crores on payment basis up to September
2014 and the difference of Rs. 0.51 Crores (Rs.4.47 Crores - Rs.3.96 Crores) has been added
to the opening capital cost of Rs. 150.37 Crores as the project is completed and handed
over to the Corporation and the same is put into operation with effect from 01.10.2014. As
such, it is submitted that the differential amount of Rs. 0.51 Crores may be allowed as an
additional capital cost to the R.O. plant.
The Petitioner has submitted the Normative Plant Availability Factor (NAPAF) of 85% for FY
2016-17. The Petitioner has submitted that the Commission is to be guided by the principles
and methodologies of CERC Regulations for fixation of generation tariff.
The gross and net generation, the fixed and variable charges projected by the Petitioner for
FY 2016-17 are as given below.
Table 7: Annual Fixed Charge proposed by PPCL for FY 2016-17

S.
Particulars FY 2016-17
No.
1. Gross generation (MUs) 242.66
2. Auxiliary consumption (%) 6.00%
3. Net generation (MUs) 228.10
4. Normative Plant Availability Factor (NAPAF) 85%
4. Annual Fixed Charge (Rs. Crores) 27.38
(a) Interest on loan capital (Rs. Crores) 0.00
(b) Depreciation (Rs. Crores) 0.38
(c) O&M expenses (Rs. Crores) 12.38
(d) Interest on working capital (Rs. Crores) 4.01
(e) Return on equity (Rs. Crores) 10.61
The Petitioner has proposed that the energy charges would be billed as per the below
mentioned formula based on CERC Tariff Regulations 2014.
Energy Charge (ECR) = GHRxLGPx100/ {GCV x (100-APC)}

Where
ECR = Energy charge Rate, in Rs per kWh sent out upto three decimal charges,
GHR= Normative Gross Station Heat Rate in kcal/kWh,
LGP= Weighted average landed price of gas in Rs/scm, during the calendar month,
GCV= Gross calorific value of gas, in kcal per scm during the calendar month,
APC= Normative Auxiliary Power Consumption in percentage
The Petitioner has considered Gross Station Heat Rate = 2646 kcal/kWh and
Auxiliary Power Consumption (APC) = 6% for FY 2016-17.
The Petitioner has submitted that in addition to the fixed and variable charges, the
Petitioner may be allowed to recover statutory taxes, duties etc. on actual basis.
2.4 Prayer
The Petitioner has prayed before the Commission:
Quote
‘’
i) Approve the tariff for FY 2016-17 as brought out in this Petition as detailed below at
85% PLF
Fixed cost - Rs. 27.38 Crores per annum
Variable Energy Charges - As per formula with normative GHR of 2646
kcal/kwh and normative APC of 6%
ii) Allow the “Normative Annual Plant Availability Factor” @ 85% as laid down in the
CERC Regulation 2014-19 vide clause No. 36 A) for Karaikal Power Station for FY 2016-17 for
full fixed cost recovery
iii) Allow capital cost as prayed by the Petitioner
iv.) Allow the recovery of filing fees as and when paid to the Hon’ble Commission and
publication expenses from the beneficiary
v) Allow the recovery of additional Operation and Maintenance expenses due to breakdown
of Gas Turbine Generator as part of AFC, an amount of Rs. 9.33 Crores to be recovered by
way of tariff as a one-time measure
vi) Puducherry Electricity Department may be directed to avail maximum load in the 11 KV
as was being done previously or PPCL may be allowed to set up another transformer of 15
MVA with additional capital cost to dispatch the power through 110/11 KV system
vii) Pass any other order in this regard as the Hon’ble Commission may find appropriate
in the circumstances pleaded above
‘’
Unquote
3. Objections raised and the Commission’s Comments

3.1 Introduction
In response to the Public Notice inviting objections/suggestions from the stakeholders on
the Petition filed by the Petitioner for True-up for FY 2013-14 and Tariff for FY 2016-17,
Electricity Department-Puducherry (EDP) has filed its objections/suggestions in writing.
Public Hearing was held at Puducherry on January 28’ 2016 wherein the respondents were
given an opportunity to put forth their objections and suggestions on the True-up Petition
for FY 2013-14 and Tariff Petition for FY 2016-17 before the Commission.
Only EDP made a written submission of the objections. The objections raised by EDP and
the Commission’s response thereon are as given below.
3.2 Operation & Maintenance Expenses (O&M)

3.2.1 Stakeholder’s Comment
The Petitioner in their Petition has submitted the following, as regards the O&M expenses
‘’It is submitted that the Operation and Maintenance expenses for FY 2014-15 as approved
by the Hon’ble Commission is only Rs.11.60 Crores but the actual cost on the major repair
work during FY 2014-15 was alone Rs. 9.33 Crores. And even this Operation and
Maintenance expenses were not recovered during this break down period on account of
non-recovery of AFC. It is therefore submitted that as a one-time measure, the additional
expenditure being incurred on Generator repairs be allowed additionally as part of
Operation and Maintenance expenses. The Plant was re-started on 02.05.2015 after
completion of major breakdown which covered the period from 01.10.2014 to 01.05.2015.
The Petitioner is not in a position to undertake the major replacement work due to such
type of catastrophic failure without the necessary of the some additional expenses under
AFC and that too when due to shut down of unit for long time, the Petitioner is not in a
position to recover even the normative fixed charges. So, it is humbly requested that
Hon’ble Commission may kindly consider it as a onetime compensation by exercising its
power to remove difficulty provided for in the Tariff Regulations, 2009.’’
The Respondent ED-Puducherry has submitted that the Petitioner is silent about the
settlement or admittance of the insurance claim lodged with the insurance company after
the break-down of the plant on 01.10.2014 under the ‘Machinery Breakdown’ clause and
‘Loss of Profit’ policy. This aspect has also been dealt by the Commission in its Tariff Order
for FY 2015-16 dated 31.03.2015, wherein the Commission had decided to take a view on
the request of the Petitioner based on the actual expenses as per the audited accounts and
settlement or admittance of the insurance claim amount.
Also, since the plant was not under operation for the breakdown period of 7 months, the
O&M cost incurred during the period needs to be lower than the norm approved under the
Regulations which is for the whole operation period.
As per the relevant CERC/JERC Regulations, no compensatory allowances or allowing special

treatment by way of one-time dispensation for the amount of Rs. 9.33 Crores claimed are
allowed for the gas station.
Such the huge cost is capital in nature, as the repairs have contributed to increasing the life
of the plant. Therefore, the expenditure needs to be capitalized and should not be treated
as revenue expenditure, so as to avoid any tariff shock to the consumers. If any such
allowance is to be granted, necessary amendments to the Regulations have to be carried
out by the Commission.
3.2.2 Commission’s View
The Commission has noted the submission of the Petitioner in the Petition and objections
raised by the Respondent. The Commission notes that the said expenditure is for the period
FY 2014-15, for which True-up is pending. Also, the Commission had checked the status of
the insurance claim raised by the company. The Petitioner stated that the insurance claim is
still pending with the insurance company and a formal reply is awaited from their end. The
Commission has noted all the submissions and would take a final decision regarding the said
expenditure while carrying out True-up for FY 2014-15, once audited accounts for the said
period are finalized and submitted before the Commission.
3.3 Auxiliary Power Consumption (APC)

The Petitioner has submitted in their petition that ‘’with regard to the auxiliary power
consumption, the Petitioner is seeking to invoke the power of the Hon’ble Commission to
deviate from the Tariff Regulations, 2009. The Auxiliary Power Consumption (APC) is
considered as per actual based on period from 01.06.2015 to 30.09.2015 because the station
has electric Gas Booster Compressor pumps due to which APC is higher.
..
The Petitioner is praying for the APC of 6%.
The Hon'ble Commission may consider the facts and factors and allow the Petitioner to avail
the actual auxiliary consumption made during the period from 01.04.2015 to 30.09.2015
(coverage of 6 months) of the tariff year 2016-17.’’
The Respondent ED-Puducherry has stated that in view of the CERC Regulations for the
tariff period 2014-19 and CEA guidelines, the norm of 2.5% auxiliary power consumption for
combined cycle generating station and additional APC limited to 2.5% for the electric driven
gas boosters (totaling to 5%), which has already been approved by the Hon’ble Commission
in the Tariff Order dated 31.03.2015 for FY 2015-16 and the same may be adopted for FY
2016-17 also. The higher APC of 6% as submitted by the Petitioner may not be accepted.

The Commission has noted the submission of the Petitioner and the Respondent. The
Commission has determined the auxiliary power consumption in accordance with the CERC
Regulations and CEA guidelines. The detailed treatment of the same is in the analysis of the
auxiliary power consumption for FY 2016-17 in Chapter-5 of this Tariff Order. Accordingly,
the Commission has allowed 5.0% auxiliary power consumption as per the norms for FY
2016-17.
3.4 Restriction of Plant Loading

The Petitioner has submitted in their Petition that ‘’Plant loading is required to be restricted
due to low 11 KV loads from eight 11 KV feeders installed in the substation of PPCL. Since 11
kV loads are restricted, power generated has to be exported to the grid via two transformers
(15 MVA) which have a restriction of 22 MW, so generation of the Plant has to be restricted.
Previously most of the power generated was exported through 11 KV feeders and the
transformer loading was very meager, so Plant could generate the maximum. In view of
above, it is requested that Puducherry Electricity Department may be requested to avail
maximum load in the 11 KV as was being done previously or PPCL may be allowed to set up
another transformer of 15 MVA with additional capital cost to dispatch the power through
110/11 KV system.’’
The Respondent EDP has submitted that most of the steel industry at Karaikal region have
closed the factories due to recession/constraints. Therefore, the demand has been
considerably reduced which is beyond the control of the Department. However, peak
evacuation from 11 kV feeders as of now is to the tune of 8 MW, but PPPCL can export
balance power of 22 MW through 110 kV feeders with 2X15 MVA power transformers.
Therefore, it is submitted to the Commission that the constraint in exporting power through
110 kV feeders may be called from PPCL.

The Commission had asked the Petitioner to submit its response on the clarification as
submitted by the Respondent. The Petitioner in its response submitted the following:
Quote
‘’ It is submitted that in the month of November’15, the average evacuation through the 11
kV system was 7.2 MW and 110 kV evacuation was 19.86 MW. Previously, the evacuation
used to be vice-versa. The 11 kV loads of steel and alloy feeders are not steady and in case of
fault-tripping of the feeders, the total load shifts to 110 kV grid. Due to this condition, to
avoid over-loading of transformers the load in 15 MVA transformers are restricted to 22 MW
so that the transformers load can go upto 27 MW in case of feeder-tripping and avoid plant
tripping. If the 11 kV evacuation is increased to former level, this situation can be avoided.’’
Unquote
The Commission has noted the submissions of both the parties, as stated above. The
Commission directs both the Petitioner and EDP to resolve their differences amicably and
see to it that the Petitioner is able to off-take its full capacity to EDP. As regards the
Petitioner’s request to set up another 15 MVA transformer to dispatch the power through
the 110/11 KV system, the Commission is of the view that the Petitioner may approach the
Commission separately on this and file a separate petition with detailed cost-benefit
analysis duly carried out with respect to the additional capital cost to be incurred.
4. True-up for FY 2013-14

4.1 Background
The True-up of FY 2013-14 is to be carried out as per the provisions of Regulation 8 of JERC
Tariff Regulations 2009. The Regulation 8 of JERC Tariff Regulations 2009 specifies as under:
‘’ (8) Review and True Up
1) The Commission shall undertake a review along with the next Tariff Order of the expenses and
revenues approved by the Commission in the Tariff Order. While doing so, the
Commission shall consider variations between approvals and revised estimates/pre-
actuals of sale of electricity, income and expenditure for the relevant year and permit
necessary adjustments/ changes in case such variations are for adequate and justifiable
reasons. Such an exercise shall be called ‘Review’.
2) (i) After audited accounts of a year are made available, the Commission shall undertake
similar exercise as above with reference to the final actual figures as per the audited
accounts. This exercise with reference to audited accounts shall be called ‘Truing Up’.
(ii) The Truing Up for any year will ordinarily not be considered after more than one year
of ‘Review’.
3) The revenue gap of the ensuing year shall be adjusted as a result of review and truing up
exercises.
4) While approving such expenses/revenues to be adjusted in the future years as arising out
of the Review and / or Truing up exercises, the Commission may allow the carrying costs
as determined by the Commission of such expenses/revenues. Carrying costs shall be
limited to the interest rate approved for working capital borrowings.
5) For any revision in approvals, the licensee would be required to satisfy the Commission
that the revision is necessary due to conditions beyond its control.
6) In case additional supply is required to be made to any particular category, the licensee
may, any time during the year make an application to the Commission for its approval.
The application will demonstrate the need for such change of consumer mix and
additional supply of power and also indicate the manner in which the licensee proposes
to meet the cost for such change of consumer mix and additional supply of power.
7) The Commission may consider granting approval to such proposals provided the cost of
additional supply is ordinarily met by the beneficiary category.’’
The Commission had approved tariff for FY 2013-14 vide its Order dated March 28’ 2013
(Petition No. 98/2013). The Commission in the Order had noted that the determination of
tariff is on the basis of the provisional capital cost of Rs. 137.77 Crores and would be subject
to revision depending on the outcome of Petition No. 18/2010 and Petition No. 45/2011.
The Commission in its Tariff Order dated March 28’ 2013 approved AFC of Rs. 22.26 Crores
for FY 2013-14 on the basis of the provisional capital cost of Rs 137.77 Crores.
In the light of observations and findings of the Hon’ble Aptel in Appeal No. 41/2012, the
Petition for tariff determination for FY 2011-12 (Petition No. 18/2010) and Review Petition
(Petition No. 45/2011) were restored by the Commission vide its Order dated December 19’
2012.
Order dated April 29’ 2013, approved capital cost of Rs 146.45 Crores against the earlier
approved capital cost of Rs 137.77 Crores. Due to the revision in the capital cost of the
plant, the Commission revised the Annual Fixed Charges (AFC) in the review exercise
undertaken for the year as per its Tariff Order dated April 25’ 2014.
The Commission during the Review for FY 2013-14 approved revised AFC of Rs. 22.74 Crores
and accordingly approved the differential AFC i.e. Rs (22.74 - 22.26) = 0.48 Crores as part of
the review exercise for the year.
The audited accounts have been submitted along with the True-up Petition for FY 2013-14
and after due prudence check of the fuel bills and bills raised to the beneficiary (ED-
Puducherry), the Commission has carried out the True-up for the year.
The Commission has reviewed the variations between approvals and actuals of income and
expenditure for FY 2013-14 as per the audited accounts submitted by the Petitioner and has
permitted necessary adjustments after due prudence check in cases where variations are
for reasonable and justifiable reasons during the True-up exercise.
4.2 Regulations
As per provisions of Clause 19 of the JERC Tariff Regulations 2009, the Commission, while
determining the cost of generation of each thermal/gas/hydro-electric generating stations
located within the state, shall be guided, as far as feasible, by the principles and
methodologies of CERC, as amended from time to time.
Accordingly, CERC Regulations for the tariff period 2009-14 have been referred to here for
FY 2013-14.
4.3 Operational Parameters

Petitioner’s Submission
The Petitioner has submitted the following operational parameters for FY 2013-14.
1. Normative Annual Plant Availability Factor (NAPAF)
The Petitioner has considered the NAPAF of 85% as per the Hon’ble APTEL judgment
dated November 21’ 2012. The Commission as per its Orders dated March 28’ 2013 and
April 25’ 2014 had approved the NAPAF of 85% and same has been considered here.
2. Gross Station Heat Rate

The Petitioner has considered the gross station heat rate of 2600 kcal/kWh for FY 2013-
14 as per the Commission’s Orders dated March 28’ 2013 and April 25’ 2014.
3. Auxiliary Consumption
The Petitioner has considered the auxiliary consumption of 5.50% for FY 2013-14 as per
the Commission’s Orders dated March 28’ 2013 and April 25’ 2014.
Commission’s Analysis
The operational parameters – NAPAF, gross SHR and auxiliary consumption are to be
considered as approved earlier by the Commission as per Order dated March 28’ 2013 (ARR
& Tariff for FY 2013-14) and April 25’ 2014 (Review for FY 2013-14).
NAPAF of 85% is in line with the judgment of the Hon’ble APTEL dated November 21’ 2012
in Appeal No. 41/2012 and also observed in the Commission’s Order dated April 29’ 2013.
Therefore, NAPAF of 85% is retained by the Commission for FY 2013-14.
Auxiliary consumption is 5.50% and Gross Station Heat Rate (GSHR) of 2600 kcal/kWh area
retained as approved earlier for FY 2013-14.
4.4 Annual Fixed Charge (AFC) approved for True-up of FY 2013-14

The components of the fixed charges have undergone a change due to change in the
approved capital cost. The following components have been considered as part of the
fixed charges for the year.
1. Depreciation
2. Interest on Loan
3. Interest on working capital
4. O&M expenses
5. Return on equity
The components of the fixed charges mentioned above are discussed in detail in the following
paragraphs. The Commission has arrived at the revised Annual Fixed Charge (AFC) for the year
and accordingly approved the differential AFC charges as part of the True-up exercise for FY
2013-14.
4.4.1 Capital Cost for FY 2013-14
The capital cost considered in the present petition is based on the approved capital cost of
Rs. 146.45 Crores during Review of FY 2013-14 as per the Commission’s Order dated April
25’ 2014 plus Rs. 4.29 crores towards R.O. Plant which includes outstanding
liability/pending payment to the party. Besides Rs. 18.00 lacs incurred initially towards
Preliminary expenses, Consultancy charges to CEA, Advertising charges, etc., which were
directly attributable to the project (i.e.) have also been capitalized, resulting into the total
additional capital cost at Rs. 4.47 Crores for FY 2013-14.
The Petitioner has considered the opening capital cost of Rs 146.45 Crores and additional
capitalization of Rs. 4.47 Crores and thereby the closing capital cost of Rs. 150.92 Crores for
True-up of FY 2013-14.
The Commission has considered the opening capital cost of Rs. 146.45 Crores as approved
earlier as per the Review for the year vide Tariff Order dated April 25’ 2014. The
Commission, has made note of the claim of additional capitalization of Rs. 4.47 Crores for FY
2013-14 and also the submission of the Petitioner to allow capitalization of the RO plant
from FY 2013-14.
The Commission, in this regard, notes that the Petitioner in the Tariff Petition for FY 2016-
17 has stated that the RO plant was put into operation with effect from October 1’ 2014. As
such, the additional capitalization towards the RO plant would be allowed only from FY
2014-15. The Commission, therefore, has not considered any additional capitalization
towards the RO plant in FY 2013-14 as the plant was not operationalized during this period
and would consider the same during the True-up of FY 2014-15 based on supporting
documents submitted.
The Commission, therefore, approves Rs 146.45 Crores as the opening capital cost and no
additional capitalization during the True-up of FY 2013-14.
4.4.2 Depreciation
The Petitioner has submitted that the depreciation has been computed on the approved
average capital cost of Rs 148.69 Crores for True-up of FY 2013-14. The Petitioner has
excluded the cost of freehold land of Rs 7.93 Crores for depreciation purpose. The
depreciable value of the asset has been capped at 90% of the capital cost. The cumulative
depreciation recovered up to FY 2012-13 is Rs 124.64 Crores and accordingly the
depreciation for the year has been considered as Rs 0.33 Crores by the Petitioner (as per
revised submission dated February 5’ 2016).
The Commission has considered the opening capital cost of Rs 146.45 Crores and NIL
additional capitalization for FY 2013-14. The cost of the freehold land of Rs 7.93 Crores has
been excluded for depreciation purpose. The cumulative depreciation recovered up to FY
2012-13 is Rs 124.67 Crores (as per the True-up for FY 2012-13 in Tariff Order dated April
25’ 2014). Since the plant has already completed 12 years from the date of commercial
operation and is in its 13th year of operation, the remaining depreciable value of the asset
has been spread over the balance useful life of the asset (i.e. 12 years) for FY 2013-14 as per
the applicable CERC Regulations.
The depreciable value of the asset has been capped at 90% of the capital cost of the asset
as per the applicable CERC Regulations and accordingly the depreciation for True-up of FY
2013-14 is approved as NIL.
The calculation of the same is as shown in the following Table:
Table 8 : Depreciation approved by the Commission for True-up of FY 2013-14 (Rs. Crores)
Petitioner’s
S. Submission
Details (as per revised Approved
No.
submission dt.
05.02.16)
1 Closing Capital cost 148.69* 146.45
2 Less cost of Freehold Land 7.93 7.93
3 Capital cost excluding FH Land 140.76 138.52
4 Cap on Depreciation 126.68 124.67
Cumulative Depreciation upto the
5 124.64 124.67
previous year
6 Depreciation for the year 0.33 0.00
Note: * The Petitioner has considered the average capital cost instead of closing capital cost in its
submission.
The Commission, therefore, approves NIL depreciation for purposes of the revised fixed
charges during True-up of FY 2013-14.
4.4.3 Interest Charge on Loan
The Petitioner has submitted that the entire capital cost of the project has been funded from
its own resources and capital investment has been considered at 70% normative loan and 30%
normative equity as per the JERC Tariff Regulations 2009. If equity deployed is more than 30%,
the amount of equity is limited to 30% and the balance amount is to be considered as the
normative loan.
The Petitioner has considered the opening capital cost of Rs 146.45 Crores with additional
capitalization of Rs. 4.47 Crores for the year for purposes of tariff determination. The
Petitioner has considered the gross normative average loan of Rs 104.08 Crores on the average
capital cost of Rs. 148.69 Crores. The cumulative repayment has been considered as Rs. 104.08
Crores, resulting in NIL net average loan outstanding.
The Petitioner has claimed NIL interest charges for the True-up of FY 2013-14 on the basis of
this revised capital cost.
On the basis of the approved opening capital cost of Rs 146.45 Crores and NIL additional
capitalization for the year (as discussed in the section on capital cost), the gross normative
loan is Rs 102.52 Crores (70% of the approved average capital cost of Rs. 146.45 Crores).
As per the CERC Regulations for the tariff period 2009-14, the repayment shall be deemed
to be equal to the depreciation amount. It is seen that the cumulative depreciation
recovered so far is higher than the gross normative loan, so the cumulative repayment has
been limited to the gross normative loan. The cumulative depreciation up to the previous
year is Rs 124.67 Crores and accordingly the cumulative repayment has been considered
equal to the gross normative loan amount and thereby the net loan opening is NIL.
The cumulative repayment has been limited to the gross normative loan amount. The
computation of the interest charges is as below.
Table 9: Interest Charges approved by the Commission for True-up of FY 2013-14 (Rs Crores)
Petitioner’s
Submission
S.
Details (as per revised Approved
No.
submission dt.
05.02.16)
1. Average Capital cost for the year 148.69 146.45
2. Loan at 70% of average capital cost 104.08 102.52
3. Cumulative repayment up to previous year 104.08 102.52
4. Average net loan outstanding 0.00 0.00
5. Rate of Interest 13.36% 13.36%
6. Interest on Normative Loan 0.00 0.00
The Commission, therefore, approves the interest charges for the year as NIL for purposes
of the revised fixed charges during True-up of FY 2013-14.
4.4.4 Interest on Working Capital
The Petitioner has claimed the interest on working capital at Rs. 3.49 Crores for FY 2013-14
as per the CERC Regulation 18 (b) and JERC Regulation 29 and interest on working capital is
considered as per the CERC Regulations 18 (3).
The rate of interest of 14.45% has been considered by the Petitioner.
As per CERC Regulation 18 (b) for the tariff period 2009-14, the working capital of the Gas
Turbine Generating Station shall be considered as under:
i. Fuel cost of one month (Gas) at NAPAF
ii. Maintenance spares at 30% of O&M expenses
iii. Receivables equivalent to two months of capacity and energy charges based on the NAPAF
iv. O&M expenses for one month
The interest on working capital has been considered at the rate of interest on normative basis
as prime lending rate (PLR) of State Bank of India (SBI) considering the PLR rate as on April 1’
2013 i.e. 14.45% per annum. The energy charges considered while working out working
capital are based on average fuel consumption and payments made during January’13,
February’13 and March’13 corresponding to generation at NAPAF of 85%. As per the CERC
Regulations, the Commission has to consider the landed cost incurred and GCV of fuel as
per actual for the three months preceding the first month for which tariff is to be
determined, thereby, the fuel consumption values for the months of January’13,
February’13 and March’13 have been considered for arriving at the one month fuel cost for
purposes of computation of the working capital.
The Commission has considered the working capital and the interest thereon as per the
Regulations mentioned above at an interest rate of 14.45% per annum and arrived at the
interest on working capital of Rs 3.26 Crores.
Table 10: Interest on working capital approved by the Commission for True-up of FY 2013-14 (Rs Crores)
Petitioner’s
Submission
S. No. Details (as per revised Approved
submission dt.
05.02.16)
1. Cost of gas (one month) at NAPAF 5.58 5.06
2. Maintenance spares (30% O&M expenses) 2.79 2.79
3. Receivables (two months) at NAPAF 15.00 13.94
4. O&M expenses (one month) 0.77 0.77
5. Total working capital 24.15 22.57
6. Rate of interest on working capital 14.45% 14.45%
7. Interest on working capital 3.49 3.26
Note: The additional one-time O&M expenditure of Rs. 0.87 Crores allowed under the sub-head of
‘O&M expenses’ has not been considered for the computation of the working capital requirement
for the year.
The Commission, therefore, approves the interest on working capital for the year at Rs.
3.26 Crores for purposes of the revised fixed charges during True-up of FY 2013-14.
4.4.5 Operation and Maintenance (O&M) Expenses
The Petitioner has claimed the O&M expenses at Rs. 9.30 Crores for the True-up of FY 2013-
14, which have already been approved by the Commission earlier in the Review for the year.
The O&M expenses include employee cost, R&M expenses and A&G expenses.
The Petitioner in the True-up Petition for FY 2013-14 has submitted that:
‘’ The Operation and Maintenance cost of the Corporation pertaining to the FY 2013-14, was
Rs. 12.97 crores whereas, the Commission allowed Rs. 9.30 crores and out of Rs. 12.97
crores a sum of Rs. 1.13 crores wholly and exclusively in connection with replacement of
corroded structure/pipeline, etc., through PWD, Karaikal due to ageing of the Plant. This
amount was utilized for replacement of damaged/corroded structural steel by new in pipe
rack structure inside the Plant. PPCL Plant is located very near to the sea coast and all
structural steel have been affected by corrosion. The structure had got rusted due to various
environmental factors like cooling tower drift and nearness to seashore. Immediate
replacement was necessary to avoid collapse of structure leading to safety issues and to
maintain plant operation. The copy of the Office Memorandum vide
No.D.21044/10/ID(P)D/2012/P3, dt.10.01.2013 in connection with replacing of
damaged/corroded structural steel with new Pipe Rack structure from Gas Booster
Compressor to Boiler Area inside the Plant area at Karaikal for an estimated cost of
Rs.2,29,69,000/- is enclosed as Annexure-III.
Therefore, it is submitted to the Hon’ble Commission that the Corporation may be allowed to
recover this amount under the head Operation and Maintenance while carrying out the
truing-up exercise for the tariff period 01.04.2013 to 31.03.2014.’’
The Petitioner has claimed an additional O&M expenditure of Rs. 1.13 Crores towards
replacement of damaged/corroded pipe rack structure.
The Commission has examined the O&M expenses claimed by the Petitioner. The expenses
have been determined in line with the sub-regulation (C) of Regulation 19 of CERC
Regulations for the tariff period 2009-14 and Regulation no. 27 of JERC Tariff Regulations 2009
for the 32.5 MW gas turbine plant.
The Commission, in accordance with the Regulations allows normative O&M expenditure of
Rs. 9.30 Crores for the True-up of FY 2013-14.
The Commission has examined the claim of the Petitioner for an additional O&M
expenditure of Rs. 1.13 Crores towards replacement of damaged/corroded pipe rack
structure. The Commission had asked for additional supporting documents from the
Petitioner in respect of this additional expenditure. The Petitioner, subsequently submitted
the order of Inspector of Factories, Karaikal dated 06.11.2012 necessitating the said
expenditure. This order gave immediate instructions to the Petitioner to repair the
structures, ladder and platforms in the deareator, cooling water systems, chimney area as
they were found to be in dilapidated condition and further use of these structures would
endanger human life. The Commission also notes that the said work was awarded to the
Public Works Department, Government of Puducherry on deposit work basis with the
approval of Government of Puducherry vide letter no. dated 10.01.2013 at an estimated
cost of Rs. 2,29,69,000/-.
The Commission on a further clarification asked the Petitioner to submit the actual
expenditure incurred under this head during FY 2013-14. The Petitioner, then, submitted
utilization certificate dated 18.12.2013 stating that a sum of Rs. 87,43,600/- had been fully
utilized upto November 2013 during FY 2013-14 for the said expenditure. The Commission
has gone through the utilization certificate submitted by the Petitioner and found the same
to be in order. Accordingly, the Commission allows Rs. 87,43,600 as a one-time additional
expenditure considering the necessity of the same.
The Commission, therefore, approves the normative O&M expenses for the year at Rs.
9.30 Crores for purposes of the revised fixed charges during True-up of FY 2013-14.
Additionally, one-time O&M expenditure of Rs. 0.87 Crores towards replacement of
damaged/corroded pipe rack structure has been allowed by the Commission.
4.4.6 Return on Equity
The Petitioner has submitted that the entire capital cost of the project has been funded
from its own resources and capital investment has been considered as 70% normative loan
and 30% normative equity as per the JERC Tariff Regulations 2009. The Regulations stipulate
that if the equity employed is more than 30%, the amount of equity for determination of
tariff is limited to 30% and the balance amount is to be considered as normative loan.
The Petitioner has submitted the pre-tax rate of return on equity as 23.481% (base rate of
return of 15.5% grossed up by the corporate tax rate of 33.99%) as per Regulation 24 of the
JERC Tariff Regulations 2009 and CERC Regulations. The Petitioner has submitted that it
does not have any tax holiday from FY 2010-11 and the tax holiday was applicable only up
to FY 2009-10. The Petitioner has claimed return on equity on 30% of the average capital
cost submitted i.e. Rs. 148.69 Crores at the rate of 23.481% which works out to Rs. 10.47
Crores.
The Commission has considered the pre-tax rate of return on equity as 23.481% (base rate
of return of 15.5% grossed up by the corporate tax rate of 33.99%) as per Regulation 24 of
the JERC Tariff Regulations, 2009 and the CERC Regulations. The tax holiday was applicable
only up to FY 2009-10 and accordingly the Petitioner has been subject to the corporate tax
rate.
The opening capital cost as considered by the Commission is Rs 146.45 Crores, with NIL
additional capitalization for purposes of the tariff determination exercise for the True-up of
FY 2013-14. The return on equity on the approved average capital cost of Rs. 146.45 Crores
on the normative equity capital base works out to Rs. 10.32 Crores. (23.481% on equity
portion (30%) of approved average capital cost of Rs. 146.45Crores).
The Commission, therefore, approves the Return on Equity for the year at Rs 10.32 Crores
for purposes of the revised fixed charges during True-up of FY 2013-14.
4.5 Differential Annual Fixed Charge (AFC) approved during True-up of FY 2013-14
The revised Annual Fixed Charge (AFC) approved by the Commission vis-à-vis that submitted
by the Petitioner for FY 2013-14 is as below.
Table 11: Revised Annual Fixed Charge (AFC) approved for True-up of FY 2013-14 (Rs Crores)
Petitioner’s
Submission
S. No. Particulars Approved
(as per revised
submission dt.
05.02.16)
1. Depreciation 0.33 0.00
2. Interest on loan 0.00 0.00
4. Operation and Maintenance Expenses 9.30 9.30*
5. Return on Equity 10.47 10.32
6. Revised Annual Fixed Charge (AFC) 23.59 22.87
Note: * The Commission has also allowed additional one-time O&M expenditure of Rs. 0.87 Crores
towards replacement of damaged/corroded pipe rack structure for FY 2013-14.
The Commission, based on the analysis carried out in the earlier paragraphs, approves the
revised Annual Fixed Charge (AFC) at Rs. 22.87 Crores for the True-up of FY 2013-14.
Additionally, one-time O&M expenditure of Rs. 0.87 Crores towards replacement of
damaged/corroded pipe rack structure has been allowed by the Commission for FY 2013-14.
The Commission in the Review for FY 2013-14 as per the Order dated April 25’ 2014 had
approved AFC of Rs 22.74 Crores. The AFC has now got revised to Rs (22.87 + 0.87) = 23.75
Crores for FY 2013-14, on the basis of the True-up exercise carried out by the Commission
on the approved average capital cost of Rs. 146.45 Crores.
The revised Annual Fixed Charge (AFC) now approved by the Commission vis-à-vis approved
earlier by the Commission for FY 2013-14 is as below.
Table 12: Annual Fixed Charge (AFC) approved for FY 2013-14 (Rs Crores)
Approved
S. Order dated Review Order
Particulars during True-up
No. 28.03.2013 dt. 25.04.14 in this Order
1. Depreciation 0.00 0.00 0.00
2. Interest on Loan 0.00 0.00 0.00
3. Interest on Working Capital 3.26 3.12 3.26
4. Operation and Maintenance Expenses 9.30 9.30 10.17
5. Return on Equity 9.70 10.32 10.32
6. Annual Fixed Charge 22.26 22.74 23.75
The difference in the Annual Fixed Charge i.e. Rs (23.75 – 22.74) = 1.01 Crores is now
approved by the Commission as part of the True-up exercise for FY 2013-14 and the
Petitioner is entitled to bill this amount separately as supplementary bill.
4.6 Variable Charges approved for True-up of FY 2013-14

The Commission as per its Order dated March 28’ 2013 had approved the formula basis
which the variable charges would be recovered for FY 2013-14. The formula for the energy
charge (per unit basis) accounts for the actual gas cost, actual gross calorific value of the
gas, normative auxiliary consumption and normative gross station heat rate (normative
parameters approved by the Commission for FY 2013-14). The Petitioner has been billing
the variable charges for FY 2013-14 on the basis of this formula.
The Commission as part of the prudence check during the Truing-up exercise has verified
the bills that have been raised to the beneficiary i.e. EDP for FY 2013-14. The Commission
has found the bills to be in order and as per the parameters approved by the Commission.
The Commission, therefore, does not find any amount due to the Petitioner on account of
the variable charges during the True-up exercise for the year.
5. Tariff Determination for FY 2016-17

5.1 PPCL Gas Power Station
The Petitioner owns and operates one combined cycle gas power station generating 32.5
MW of Electricity (22.9 MW from gas turbine and 9.6 MW from Steam turbine) at Karaikal.
The details of its capacity, commercial operation data etc. are as given in the below table.
Table 13: Details of the PPCL Gas Power Station

S. No. Subject Particulars
1. Capacity
a) Gas turbine 22.9 MW
b) Steam turbine 9.6 MW
TOTAL 32.5 MW
2. Date of commercial operation 3rd January, 2000
3. Type of fuel Natural Gas
4. Type of cooling system Induced draft cooling tower
5. Gas supplier GAIL
5.2 Regulations
As per provisions of Clause 19 of the JERC Tariff Regulations 2009, the Commission, while
determining the cost of generation of each thermal/gas/hydro-electric generating stations
located within the State, shall be guided, as far as feasible, by the principles and
methodologies of CERC, as amended from time to time.
The Commission for the purpose of analysis of the tariff period FY 2016-17 has considered
the CERC Regulations for the period FY 2014-19 issued by the CERC vide notification No.L-
1/144/2013/CERC dated February 21’ 2014.
5.3 Operational Parameters
5.3.1 Normative Annual Plant Availability Factor (NAPAF)
The Petitioner has submitted that in terms of Regulation 36 of the JERC Tariff Regulations
2009 read with the CERC Regulations, 2014, NAPAF of 85% is being claimed. CERC has
specified Normative Annual Plant Availability Factor (NAPAF) at 85% for recovery of full
fixed charges for the period 2014-19 for thermal generating stations.
Further, the Petitioner has submitted that the Hon’ble Commission may fix the norm-
“Normative Annual Plant Availability Factor” NAPAF for the plant at 85% for recovery of full
fixed charges for FY 2016-17. However, it is reiterated that the Petitioner did not raise Sale
of Power bills against Electricity Department for the month of April, 2015 as the plant was
re-started/restored only on 02.05.2015 due to major breakdown from 01.10.2014 to
01.05.2015 after completion of repairing works with BHEL who is the Original Equipment
Manufacturer (OEM).
The Commission had approved NAPAF of 85% for FY 2013-14 as per the Tariff Order dated
March 28’ 2013. The relevant extract from the Order dated March 28’ 2013 is reproduced
below for reference.
Quote
‘’The Commission in its tariff order for FY 2012-13 dated April 13’ 2012 had approved a
Normative Annual Plant Availability Factor (NAPAF) of 87% considering the actual plant
availability factor (PAF) data submitted by the Petitioner from FY 2000-01 to 2009-10. The
PAF for the years 2000-01 to 2009-10 was observed to vary from 91% to 98.84%. However,
for FY 2010-11 PAF was 78.64% and PLF as 69% due to reduction in gas supply and major
plant breakdown. For fixing the NAPAF, the abnormal value for the year FY 2010-11 i.e. PAF
of 78.64% had not been considered. The data for FY 2010-11 was considered as a stray case
as compared to continuous data from FY 2000-01 to 2009-10 which justified its
performance. The Commission, therefore, had fixed the NAPAF at 87% for FY 2012-13, with
a view to promote and maintain the efficiency level achieved for a continuous period of 10
years.
The Commission in the tariff order for FY 2011-12 dated August 6’ 2011 had also done a
similar analysis and approved the NAPAF at 87%. In the review order for FY 2011-12 dated
November 3’ 2011, the Commission found no merit in the plea of the Petitioner to relax the
NAPAF for the year FY 2011-12.
The Petitioner had gone on appeal on fixing of the NAPAF norm, besides other issues as
decided in the tariff order dated August 6’ 2011 and further in the review order dated
November 3’ 2011. The Petitioner had said that the NAPAF should be fixed as per the CERC
tariff regulations 2009-14 at 85%. The Hon’ble Aptel in appeal no. 41/2012 in its judgment
dated November 21’ 2012 on fixing of the NAPAF norm decided in favour of the Appellant.
The relevant extract of the judgment is as -

‘’ As correctly pointed out by the Appellant, once the norms have been fixed, the same have
to be followed and applied. When the norms and parameters have been prescribed by the
Central Commission Regulations, the same have to be followed unless it is justified that it is
not feasible to follow Regulations of the Central Commission. No such justification was made
by the Joint Commission for rejecting the claim of the Appellant to apply the Central
Commission Regulations.
That apart, the Regulation 19 relied upon by the learned Counsel for the Joint Commission
would not apply to the present case as the said Regulation only deals with the tariff filing
and not with reference to the manner of fixation of the norms. This manner of fixation of
norms has been provided only in Regulation 36 which adopts the Central Commission Tariff
Regulations 2004, as amended from time to time in toto.
Therefore, the finding on this issue fixing 87% is wrong as the Appellant’s prayer that
Normative Plant Availability Factor of 85% in terms of Regulation 36 of Regulations 2009
should be maintained. Hence, the Joint Commission is directed to pass consequential orders
on this issue in favor of the Appellant. Thus, 2nd question also is answered accordingly.’’
The Commission, therefore, in compliance of the Hon’ble Aptel’s judgment approves the
NAPAF at 85% for FY 2013-14.’’
Unquote
The Commission has approved NAPAF at 85% for FY 2013-14, FY 2014-15 and FY 2015-16 as
per the Tariff Orders of the respective years in compliance with the judgement of Hon’ble
APTEL in Appeal No. 41/2012 on November 21’ 2012.
The Commission has also perused the CERC Regulations for the tariff period 2014-19 and
found the NAPAF to be 85% as per Regulation 36 (A) (a) and accordingly approves the same
for FY 2016-17.
The Commission, therefore, approves the Normative Annual Plant Availability Factor
(NAPAF) at 85% for FY 2016-17.
5.3.2 Auxiliary Power Consumption (APC)
The Petitioner has submitted that the APC be considered as per actuals based on the period
from 01.06.2015 to 30.09.2015 because the station has electric gas booster compressor
pumps due to which APC is higher and CEA has also recommended higher APC for plants
having electric gas booster compressor. Since natural gas is supplied at a lower pressure i.e.
3 to 5 kg/sq.cm, electric driven gas booster compressor is required to boost up the gas
pressure to 17 kg/sq.cm resulting in increase of APC. Four electric driven gas booster
compressor of 300 kW each have to run to achieve the full load. Further, the Petitioner has
submitted that the Hon’ble APTEL has held in a number of judgments that the vintage of
power plants is to be kept in mind before determining the various operating parameters for
the power plant and accordingly the Petitioner has prayed for APC at 6%.
The Commission has observed the submissions made by the Petitioner and considered the
auxiliary power consumption as per the norms mentioned in the CERC Regulations and CEA
guidelines. As per the CERC (Terms and Conditions for Determination of Tariff) Regulations
for the tariff period 2014-19, the norm of auxiliary power consumption for gas turbine
generating stations is as below. The Regulation 36 (E) (c) of CERC Regulation 2014-19 has
been referred to here.
1. Combined cycle 2.5%
2. Open cycle 1.0 %
As per the CEA guidelines, in cases where electric driven gas booster compressors are part
of the auxiliary plant, 2.5% extra auxiliary consumption can be allowed.
In view of the above norms mentioned in the CERC Regulations and CEA guidelines, 2.50%
auxiliary consumption for combined cycle plus additional APC limited to 2.5% for the
electric driven gas booster compressor pumps is approved for auxiliary power consumption
for FY 2016-17.
The Hon’ble APTEL in Appeal No. 41/2012 in its judgment dated November 21’ 2012 has
upheld the decision and analysis of the Commission on the auxiliary power consumption
norm of the power plant. The relevant extract of the judgment is as –
Quote
‘’
We have carefully considered these submissions. As a matter of fact, this point has been
taken into consideration by the Joint Commission in the tariff order dated 6.8.2011.
The Joint Commission referred to the said prayer and also considered the Auxiliary
Consumption actuals for the previous year’s 2000-01 to 2009-10 and for the projection for
the year 2010-11 and 2011-12. It is specifically held by the Joint Commission in the said
impugned order dated 6.8.2011 that Central Commission Regulations 2009 provided the
norms of Auxiliary Consumption for gas turbine generating station as
(i) Combined cycle 3.0%
(ii) Open cycle 1%
The Joint Commission also referred to the CEA guidelines which provided that in cases where
electric driven gas booster compressor are part of the Auxiliary Plant, 2.5% extra Auxiliary
Consumption can be allowed. Taking into consideration of all these factors, the Auxiliary
Consumption of 5.5% was approved by the Joint Commission for the financial year 2011-12
since the Appellants gas plant is having electric driven gas booster compressor.
Thus, it is clear that the Joint Commission followed the Central Commission Regulations as
well as the CEA guidelines and correctly approved Auxiliary Power Consumption at 5.5% as
there was no case made out for relaxation. This finding, in our view is perfectly justified.’’
Unquote
Thus, the above judgment has upheld the analysis of the Commission that the auxiliary
power consumption should be approved as per the CERC Regulations and CEA guidelines.
The Commission in its analysis has referred to the CERC Regulations for the tariff period
2014-19 and accordingly approves the auxiliary power consumption at 5.0% for FY 2016-17.
The Commission, therefore, approves Auxiliary Power Consumption (APC) at 2.5% for
combined cycle plus additional power consumption limited to 2.5% for electric driven gas
booster pumps. Thus, 5.0% auxiliary power consumption of gross power generation is
approved for FY 2016-17.
5.3.3 Gross Station Heat Rate (GSHR)
The Petitioner has submitted that the JERC Tariff Regulations 2009 provide that the norms
and parameters of CERC Tariff Regulations shall be applicable. CERC Regulations provide for
determination of Station Heat Rate on the basis of Gross Calorific Value (GCV).
The station design net heat rate is 2291 kcal/kWh. A copy of the heat balance diagram for
design heat rate has also been enclosed along with the petition. The gross heat design heat
for net station design heat rate of 2291 kcal/kWh works out to (2291*1.1) 2520 kcal/kWh
considering a conversion factor of 1.1 i.e. GCV = 110% of NCV. Further, applying the
degradation factor of 5 % as per the CERC Regulations, the normative GSHR comes out to
2520 * 1.05 = 2646 kcal/kWh. The Commission has also approved the GSHR at 2646
kcal/kWh for FY 2015-16 on the basis of the submission of the Performance Guarantee
Report of the Corporation for the guaranteed heat rate of 2291 kcal/kWh (on the basis of
the NCV of the gas). Accordingly, the Petitioner has sought GSHR of 2646 kcal/kWh for FY
2016-17.
The Commission had dealt with the issue of fixing the GSHR in the previous Tariff Order
dated April 25’ 2014 after elaborately analyzing the past actuals of the heat rate for twelve
years and CERC Order dated 07.06.2012 on NEEPCO’s Petition for revising the GHR of Assam
and Agartala Gas Power Projects as analogous to the PPCL Plant. The Commission had also
gone through the Performance Guarantee Report of PPCL gas power station for the
guaranteed heat rate of 2291 kcal/kWh (on the basis of the NCV of the gas) and accordingly
approved GSHR at 2646 kcal/kWh for FY 2014-15. Similar principle had been applied for
approving the GSHR at 2646 kcal/kWh for FY 2015-16.
On similar lines and considering the Performance Guarantee Report of PPCL gas power
station for the guaranteed heat rate of 2291 kcal/kWh (on the basis of the NCV of the gas),
the Commission approves the GSHR at 2646 kcal/kWh for FY 2016-17.
The Commission, therefore, approves the Gross Station Heat Rate (GSHR) for the PPCL gas
station at 2646 kcal/kWh for FY 2016-17.
5.3.4 Performance Parameters approved for FY 2016-17

Based on the above analysis, the performance parameters as approved for PPCL gas power
station for FY 2016-17 are as listed in the Table below.
Table 14: Performance Parameters approved by the Commission for FY 2016-17

Projected by the Approved by the
S. No. Parameter
Petitioner Commission
1. Normative Plant Availability Factor (%) 85% 85%
2. Auxiliary Power Consumption (%) 6.00% 5.00%
3. Gross Station Heat Rate (kcal/kWh) 2646 2646
5.4 Variable Cost Parameters

The Commission has prescribed a formula, in line with the CERC formula, for calculating
Energy (Variable) charges on month to month basis for billing purpose. However, in the
following paragraphs, variable charges have been computed to workout cost of gas (one
month) and receivable for two months (energy charge component) which are used for
calculation of the working capital requirement.
The details of the weighted average gross calorific value (GCV) and price of gas as submitted
by the Petitioner and the Commission’s analysis are discussed below in the following
paragraphs.
5.4.1 Weighted Average Gross Calorific Value (GCV) of Gas
The Petitioner has submitted the weighted average GCV 10140.28 kcal/scm for FY 2016-17
based on the landed cost of gas for the months of July’15, August’15 and September’15.
This has been considered to calculate the fuel cost for working out the interest on working
capital. The Commission is requested to allow weighted average GCV of gas for the months
of July’15, August’15 and September’15.
The CERC Regulations for calculation of the working capital requirement state that the
Quote ‘’landed cost incurred (taking into account normative transit and handling losses) by
the generating company and gross calorific value of the fuel as per actual for the three
months preceding the first month for which tariff is to be determined shall be considered
and no fuel price escalation shall be provided during the tariff period.’’ Unquote
In line with the CERC Regulations, the Commission had asked PPCL to submit the latest data
of the fuel cost and GCV.
Accordingly, PPCL made additional submission on January 22’ 2016 furnishing the following
details:
Table 15: GCV gas details submitted by the Petitioner for FY 2016-17
S. Oct’15 Nov’15 Dec’15
Parameter Unit
TNo. Gas Gas Gas
h 1. Quantity of gas supplied by GAIL Cu.m 5653316 5504574 5724070
e Adjustment(+/-) in quantity supplied
2. Cu.m - - -
made by GAIL
3. Gas supplied by GAIL (1+2) Cu.m 56,53,316 55,04,574 57,24,070
T 4. Normative Transit & Handling Losses Cu.m - - -
h 5. Net Gas Supplied (3-4) Cu.m 56,53,316 55,04,574 57,24,070
e 6. Amount charged by the Gas Company (Rs) 61208172 58742908 61806152
Adjustment(+/-) in amount charged
7. (Rs) - - -
C made by Gas Company
o 8. Total amount charged (6+7) (Rs) 6,12,08,172 5,87,42,908 6,18,06,152
m9. Transportation charges by rail /ship/
(Rs) - - -
m road transport
Adjustment (+/-) in amount charged
i
10. made by Railways/Transport (Rs) - - -
s
Company
s
11. Demurrage Charges, if any (Rs) - - -
i
Cost of diesel in transporting gas
o 12. through other system, if applicable
(Rs) - - -
n Total Transportation Charges (9+/-10-
13. (Rs) - - -
11+12)
h Total amount Charged for fuel
a 14. supplied including Transportation (Rs) 6,12,08,172 5,87,42,908 6,18,06,152
s (8+13)
15. Weighted average GCV of Gas as fired (kCal/Cu.m) 10094.45 10118.81 10081.54
Weighted average rate of Fuel/1000 Rs/1000
T 16. Cu.m Cu.m
10,826.95 10,671.65 10,797.59
The Commission has validated the fuel details submitted by the Petitioner from the fuel bills
submitted alongside and found the above submission as regards the quantity of gas, cost of
fuel and weighted average GCV of gas in order.
The Commission has considered weighted average GCV of gas for the period Oct’15, Nov’15
and Dec’15 in its analysis of the GCV. The Commission has computed the GCV of gas
weighted by the quantity of gas procured for these months to arrive at the weighted
average GCV of gas for the period from Oct’15 to Dec’15.
Table 16: Weighted average GCV (kcal/scm) considered by Commission for FY 2016-17
S. No. Parameter Oct’15 Nov’15 Dec’15
Average GCV of gas for the month
1. 10094.45 10118.81 10081.54
(kcal/scm)
Weighted average GCV of gas considered by
2. 10098.02
the Commission for FY 2016-17 (kcal/scm)
The Commission, therefore, considers it appropriate to take GCV 10098.02 kcal/scm based
on the additional submission of the Petitioner for purposes of computing the working
capital requirement for FY 2016-17.
Accordingly, the Commission considers the Gross Calorific Value of Gas as 10098.02
kcal/scm for purpose of computation of the fuel cost in working capital requirement for
FY 2016-17.
5.4.2 Weighted Average Price of Gas
The Petitioner has considered the weighted average landed cost of gas for the months of
July’15, August’15 and September’15. This has been considered to arrive at the fuel cost for
working out the interest on working capital for FY 2016-17.
The Petitioner has considered the weighted average price of gas Rs. 12770.03 per 1000 scm
for FY 2016-17 based on the months of July’15, August’15 and September’15.
As the CERC Regulations provide for the landed cost of fuel to be considered for the three
months preceding the first month for which tariff is to be determined, the Commission
asked PPCL to furnish the latest bills and corresponding figures. The Petitioner,
subsequently submitted the details as given earlier in Table 15.
The Commission validated the fuel details from the fuel bills submitted by the Petitioner
alongside and found the submission of the Petitioner to be in order.
The Commission in its analysis has considered the weighted average (weighted by the
quantity procured during the period) to arrive at Rs. 10766.36 per 1000 scm rate for the
fuel.
Table 17: Weighted Average Cost of Gas (Rs/1000 scm) considered for FY 2016-17
S.
Parameter Oct’15 Nov’15 Dec’15
No.
Weighted average cost of gas as fired (Rs
1. 10,826.95 10,671.65 10,797.59
/1000 scm) for the month
Weighted average cost of gas (Rs/1000 scm)
2. 10,766.36
considered by the Commission for FY 2016-17
The Commission in its analysis considers it appropriate to allow the weighted average price of
gas as Rs 10766.36 per 1000 scm to arrive at the weighted average cost of gas for the period
from Oct’15 to Dec’15.
Accordingly, the Commission considers the weighted average cost of gas at Rs 10766.36 per
1000 scm for the purpose of computation of the fuel cost in the working capital requirement
for FY 2016-17.
5.5 Energy (Variable) Charges for working capital requirement for FY 2016-17
Based on the performance and cost parameters as approved in the earlier paragraphs, the fuel
cost of PPCL gas station for FY 2016-17 at 85% NAPAF, is worked out as given in the Table
below:
Table 18: Variable Charges for working capital for FY 2016-17

S. No. Items Unit Approved
1. Station Heat Rate kcal/kWh 2646
2. Gross Calorific value of Gas kcal/scm 10098.02
3. Price of Gas Rs/1000 scm 10766.36
4. Fuel Cost /Gross units Rs/kWh 2.821
5. Fuel Cost/Net units Rs/kWh 2.970
5.6 Annual Fixed Charges (AFC) for FY 2016-17
The Petitioner has submitted the projections of the capacity charges/fixed charges comprising
the following components for FY 2016-17.
1. Depreciation
2. Interest on Loan
3. Return on Equity
4. O&M Expenses
5. Interest on Working Capital
The components of the AFC as mentioned above are discussed in detail in the following
paragraphs.
5.6.1 Capital Cost for FY 2016-17
The Petitioner has submitted that the total capital cost has been claimed as stated in
Regulation 22 (2) of the JERC Tariff Regulations, 2009. The Petitioner has prepared the tariff
for FY 2016-17 by considering the capital cost of Rs. 150.37 Crores as opening capital cost as
per Hon’ble Commission order dated 31.03.2015. The RO Plant project has been completed
during FY 2013-14 and till date Rs. 3.96 Crores has been paid.
It is submitted that the capital cost of the RO plant work has already been approved by the
Commission vide its order No.G.O.Ms.No.35, dated 15.12.2006. The work was completed in
January 2014 at an estimated cost of Rs. 4.29 Crores for which the Petitioner has also
obtained approval from the Govt. of Puducherry. Thus, the R.O. Plant has been capitalized
for an amount of Rs. 4.47 Crores which includes the Consultancy charges paid to the Central
Electricity Authority in connection with the execution of the project, travelling expenses,
etc., and advertisement charges thereon, as the Plant as put into operation with effect from
01.10.2014.
Further, the Petitioner has submitted that-
‘’No generating station can operate on a sustainable basis to achieve the level of
performance parameters specified by the Hon’ble Commission without incurring capital
expenditure on various items from time to time. The expenditure on capital assets to be
incurred by the generating stations are, therefore, a necessity for the proper and effective
working of the generating station and, therefore, are beneficial to the respondents. The
incurring of additional capital expenditure from time to time towards replacement /
refurbishment of old assets has been absolutely necessary to maintain the higher level of
performance on a sustainable basis and is in the larger public interest. The significant
improvements in the performance which the generating stations have been able to achieve
were because of the investment made from time to time in the replacement/ refurbishing of
the assets which have served for many years.’’
The Petitioner has considered the amount of Rs. 3.96 Crores on payment basis up to
September, 2014 and the difference of Rs. 0.51 Crores (Rs.4.47 Crores - Rs.3.96 crores) has
been added to the opening capital cost of Rs. 150.37 Crores as the project is completed and
handed over to the Corporation and the same has been put into operation with effect from
01.10.2014. Accordingly, the closing capital cost of Rs. 150.88 Crores has been considered
by the Petitioner for FY 2016-17.
The Commission has noted the submission of the Petitioner for a claim of additional
capitalization of Rs. 0.51 Crores. The Commission in the earlier Tariff Order dated April 25’
2014 had allowed capitalization of Rs. 3.32 Crores towards the RO plant on the basis of
actual payment, on the approved opening capital cost of Rs. 146.45 Crores for FY 2014-15.
Further, the Commission had allowed amount of Rs. 0.60 Crores on actual payment basis as
additional capitalization towards the RO plant during FY 2014-15 as per the last year’s Tariff
Order dated March 31’ 2015, thereby approving the closing capital cost at Rs. 150.37 Crores
as on 31st March 2015.
The Commission, notes, that the Petitioner this time has sought an amount of Rs. 0.51
Crores as additional capitalization towards the RO plant as the project is completed and
handed over to the Corporation and the same is put into operation with effect from
01.10.2014.
The Commission, considering the reasonableness of the expenditure of Rs. 0.51 Crores
allows the same towards the capitalization of the RO plant during FY 2014-15. The
Commission will re-visit the earlier approval of the capital cost for FY 2014-15 during the
True-up of the said year.
For purposes of the capital cost for FY 2016-17, the Commission has considered the
capitalization of Rs. 0.51 Crores towards the RO plant during FY 2014-15 as the plant has
been put into operation with effect from 01.10.2014. The Commission, notes that the
Petitioner has inadvertently added the additional capitalization of Rs. 0.51 Crores towards
the RO plant during FY 2016-17. The Commission, however, considering the said
expenditure during FY 2014-15 considers the closing capital cost of Rs. (150.37 + 0.51) =
150.88 Crores as on 31st March 2015.
The Commission, therefore, considers the opening capital cost of Rs. 150.88 Crores and no
further additional capitalization during FY 2016-17.
The Commission, therefore, approves the opening capital cost at Rs. 150.88 Crores and no
further additional capitalization during FY 2016-17.
5.6.2 Depreciation for FY 2016-17
The Petitioner has projected the depreciation charge for the year at Rs. 0.38 Crores. The
Petitioner has restricted the accumulated depreciation of the asset to 90% of the capitalized
value of the asset. The rate of depreciation has been considered as per Regulation 26 of the
JERC Tariff Regulations 2009 and applicable CERC Regulations.
The Petitioner has claimed depreciation on the closing capital cost of Rs. 150.88 Crores, (cost
of freehold land of Rs 7.93 Crores to be excluded); the cumulative depreciation claimed upto
FY 2015-16 is Rs. 125.27 Crores. The cap on depreciation for the year i.e. 90% of the capitalized
value of the asset has been considered as Rs 128.66 Crores.
Since the plant has already completed 12 years of operation and would be in its 16th year of
operation in FY 2016-17, the Petitioner has considered the remaining depreciable value of the
asset i.e. Rs (128.66-125.27) i.e. Rs. 3.39 Crores to be shared equally over the remaining life of
the asset i.e. 9 years and accordingly claimed depreciation of Rs. 0.38 Crores for FY 2016-17.
The Petitioner has claimed the depreciation amount of Rs. 0.38 Crores for FY 2016-17.
The Commission has considered the opening capital cost of Rs 150.88 Crores and no
additional capitalization during FY 2016-17 for purposes of the tariff determination exercise.
The cost of the freehold land of Rs 7.93 Crores has been excluded for depreciation purpose.
The cumulative depreciation recovered up to FY 2015-16 is Rs. 125.27 Crores (as per the last
year Tariff Order dated March 31’ 2015). It is noted that the plant is in its 16th year of
operation. Since the plant has already completed 12 years from the date of commercial
operation, the remaining depreciable value of the asset has been spread over the balance
useful life of the asset (i.e. 9 years) as per the CERC regulations. Relevant extract of the
Regulation is as reproduced below.
As per the CERC Regulations for the tariff period 2014-19, Regulation 27(5):
Quote
‘’Provided that the remaining depreciable value as on 31st March of the year closing after a
period of 12 years from the effective date of commercial operation of the station shall be
spread over the balance useful life of the assets.’’
Unquote
The depreciable value of the asset has been capped at 90% of the capital cost of the asset
as per the applicable CERC Regulations and accordingly the depreciation for the year is
approved at Rs 0.38 Crores.
Table 19 : Depreciation approved by the Commission for FY 2016-17 (Rs Crores)

S. Petitioner’s
Details Approved
No. Submission
1 Closing Capital cost 150.88 150.88
2 Less cost of Freehold Land 7.93 7.93
3 Capital cost excluding Freehold Land 142.95 142.95
4 Cap on depreciation 128.66 128.66
5 Cumulative depreciation up to previous year 125.27 125.27
6 Depreciation for the year 0.38 0.38
As shown in the above Table, the remaining depreciation of Rs. (128.66 – 125.27) = 3.39 Crores
has been spread over the remaining useful life of the asset i.e. 9 years, resulting into
depreciation for the year at Rs. 0.38 Crores.
The Commission, therefore, approves the depreciation at Rs. 0.38 Crores for FY 2016-17.
5.6.3 Interest Charges on Loan for FY 2016-17
The Petitioner has submitted that the entire capital cost of the project has been funded from
its own resources and capital investment has been considered at 70% normative loan and 30%
normative equity as per the JERC Tariff Regulations 2009 and applicable CERC Regulations.
The Petitioner has considered the opening capital cost of Rs 150.37 Crores, with the addition in
capital cost of Rs 0.51 Crores, resulting in closing capital cost of Rs 150.88 Crores. The
Petitioner has considered the gross loan of Rs 105.44 Crores, with cumulative repayment of Rs
105.44 Crores, resulting in NIL net opening loans.

The rate of interest has been considered at 13.36%. The Petitioner has considered NIL interest
charges for the year.
Regulation 26 of CERC Regulations for the tariff period 2014-19 has been referred to here
for the computation of the interest on normative loan.
On the basis of the approved average capital cost of Rs 150.88 Crores, the gross normative
loan amount is Rs 105.62 Crores. As per the applicable CERC Regulations, the repayment
shall be deemed to be equal to the depreciation amount. On a clarification from the
Commission regarding the cumulative repayment considered for purposes of interest
calculation, the Petitioner has submitted that the cumulative depreciation recovered so far
is higher than the gross normative loan, so the cumulative repayment has been considered
limited to the gross normative loan. The submission of the Petitioner is found to be in order,
as elaborated below.
It is observed that the cumulative depreciation so far recovered (upto FY 2015-16) is Rs

125.27 Crores as also reflected in para 5.6.2 above. The gross normative average loan for FY
2016-17 on the basis of the approved average capital cost of Rs 150.88 Crores is Rs 105.62
Crores. It is seen that the cumulative depreciation so far recovered is higher than the gross
normative loan amount and accordingly there is no loan outstanding for the year. In the
absence of any outstanding loan amount, the interest charges for the year are approved as
NIL.
The computation of the interest charges is as below.
Table 20: Interest Charges approved by the Commission for FY 2016-17 (Rs Crores)
S. Petitioner’s
Details Approved
No. Submission
1. Average Capital cost for the year 150.63 150.88
2. Loan at 70% of average capital cost 105.44 105.62
3. Cumulative repayment upto current year 105.44 105.62
4. Average net loan outstanding 0.00 0.00
5. Rate of Interest 13.36% 13.36%
6. Interest 0.00 0.00
The Commission, therefore, approves the interest charges for the year as NIL for FY 2016-17.
5.6.4 Interest on Working Capital
The Petitioner has claimed the interest on working capital of Rs. 4.01 Crores for FY 2016-17
as per the applicable CERC Regulation 28(3) and Regulations 29 of the JERC Tariff
Regulations 2009. CERC Regulations 2014-19 have been referred to by the Petitioner.
For computing the Interest on Working Capital (IWC), the rate of interest considered is the
SBI Base Rate as on 01.4.2015 as per Regulation 28(3) of CERC Regulation 2014-19 i.e.
13.50%. The energy charges considered while working out IWC are based on average actual
fuel consumption and payments made pertaining to the period commencing from July’15,
August’15 and September’15.
As per CERC Regulations for tariff period 2014-19, Regulation 28 (3): the working capital to
the Gas Turbine Generating Station shall be considered as under:
i. Fuel cost of one month (Gas) at NAPAF
ii. Maintenance spares at 30% of O&M expenses specified in Regulation 19
iii. Receivables equivalent to two months of capacity and energy charges based on the NAPAF
iv. O&M expenses for one month
The applicable rate of interest as per the Regulation 28 (3) is as:

Quote‘’ Rate of interest on working capital shall be on normative basis and shall be considered
as the bank rate as on 1.4.2014 or as on 1st April of the year during the tariff period 2014-15 to
2018-19 in which the generating station or a unit thereof or the transmission system including
communication system or element thereof, as the case may be, is declared under commercial
operation, whichever is later.’’ Unquote
The bank rate has been defined in the regulations as follows:
Quote ‘’Bank Rate means the base rate of interest as specified by the State Bank of India from
time to time or any replacement thereof for the time being in effect plus 350 basis points’’
Unquote
Accordingly, the Commission has considered the base rate of 10.00% (as on 01.04.2014) and
arrived at the bank rate of 13.50% (10.00% + 3.50%) for computation of the interest on
working capital for FY 2016-17.
The energy charges considered while working out WC are based on average actual fuel
consumption and payments made for the months of October’15, November’15 and
December’15, as discussed in Section 5.4 of this Order. The weighted average GCV and
weighted average cost of gas for calculating the fuel requirement/cost is as discussed in
Section 5.4 of this Order. Energy charges for working capital purposes have been worked
out corresponding to generation at NAPAF of 85%.
The Commission has considered the working capital and interest thereon as per the
Regulations mentioned above at an interest rate of 13.50% per annum and arrived at the
interest on working capital of Rs 3.47 Crores.
Table 21: Interest on working capital approved by the Commission for FY 2016-17 (Rs Crores)
S. Petitioner’s
Details Approved
No. Submission
1. Cost of gas (one month) at NAPAF 6.79 5.69
2. Maintenance Spares (30% O&M expenses) 3.71 3.72
3. Receivables (two months) at NAPAF 18.15 15.25
4. O&M expenses (one month) 1.03 1.03
5. Total working capital 29.68 25.69
6. Rate of interest on working capital 13.50% 13.50%
The Commission, therefore, approves Rs. 3.47 Crores as the interest on working capital for
FY 2016-17.
5.6.5 Operation and Maintenance (O&M) Expenses
The Petitioner has claimed the O&M expenses at Rs. 12.38 Crores for FY 2016-17. The O&M
expenses include employee cost, R&M expenses and A&G expenses.
The Petitioner has submitted that the O&M expenses have been taken as @ 35.70 lac/MW
as specified by CERC for small gas turbine for FY 2015-16 and thereafter the O&M expenses
for relevant year of tariff have been worked out considering escalation @ 6.7% p.a. over the
base O&M expenses of FY 2015-16, based on JERC Regulation 27 and applicable CERC
Regulations.
The Petitioner, has also additionally claimed O&M expenses of Rs. 9.33 Crores as a one-time
relief measure for FY 2014-15 due to the major break-down which occurred during the
period 01.10.2014 to 01.05.2015. There was no generation during the period of breakdown
for approximately 7 months and there was no generation for the month of April, 2015 for
which the GAIL (I) Ltd., will claim the Minimum Guaranteed Off-take (MGO). The condition
of claiming the MGO is known accurately only at the end of the year and for FY 2015-16,
due to the major breakdown, the Petitioner will be liable to pay MGO which would be
known only at the end of the financial year. The Petitioner has submitted that as a one-time
measure, the additional expenditure being incurred on Generator repairs be allowed
additionally as part of Operation and Maintenance expenses. The Plant was re-started on
02.05.2015 after completion of major breakdown which covered the period from
01.10.2014 to 01.05.2015. The Petitioner has submitted that due to the machinery
breakdown for no fault on the part of the Petitioner, it has had to incur a one-time extra
expenditure which has not envisaged when the O & M Expenses had been notified by the
Commission and has requested to allow the same to be recovered by way of tariff as a one-
time measure.
The Commission has examined the O&M expenses claimed by the Petitioner. The
Commission has considered the CERC tariff regulations for the tariff period 2014-19. As per
the CERC Regulation 29 (c), the O&M expenses for small gas turbine power generating
plants for the tariff period FY 2016-17 are to be considered as Rs 38.13 lakhs/MW.
Accordingly, the O&M expenses for the 32.5 MW gas plant for FY 2016-17 have been
worked out as (38.13*32.5/100 = 12.39) Rs 12.39 Crores.
Regarding the additional expenditure claimed for the Repairs of Stator and Rotor of the Gas
Turbine generator carried out by BHEL at a cost of Rs. 9.33 Crores for the break-down
period 01.10.2014 to 01.05.2015, the actual amount due would be known only once the
claim from the insurance company is settled and during the final True-up for FY 2014-15
based on finalization of the audited accounts for the year. The Commission would then take
a view regarding this expenditure.
Table 22: O&M expenses approved for FY 2016-17 (Rs Crores)
S. No. Financial Year Approved

1. 2014-15 10.86
2. 2015-16 11.60
3. 2016-17 12.39
The Commission, therefore, approves the Operation & Maintenance charges at Rs 12.39
Crores for FY 2016-17.
5.6.6 Return on Equity
The Petitioner has submitted that the entire capital cost of the project has been funded
from its own resources and capital investment has been considered as 70% normative loan
and 30% normative equity as per JERC Tariff Regulations 2009. Regulations stipulate that if
the equity employed is more than 30%, the amount of equity for determination of tariff is
limited to 30% and the balance amount is to be considered as normative loan.
The Petitioner has submitted the pre-tax rate of return on equity as 23.481% (Base rate of
return of 15.5% grossed up by the corporate tax rate of 33.99%) as per Regulation 24 of the
JERC Tariff Regulations and CERC Regulations. The Petitioner has submitted that it does not
have any tax holiday from FY 2010-11 and the tax holiday was applicable only up to FY
2009-10.
The Petitioner has claimed return on equity on 30% of the average capital cost submitted
i.e. Rs. 150.63 Crores at the rate of 23.481% which works out to Rs. 10.61 Crores (23.481%
of Rs. 45.19 Crores).
The Commission for purposes of the tax on return on equity has kept in mind the CERC
Regulations for 2014-19.
Relevant extract of the CERC Regulation 25(1) is as:

Quote ‘’the base rate of return on equity as allowed by the Commission under Regulation 24
shall be grossed up with the effective tax rate of the respective financial year. For this
purpose, the effective tax rate shall be considered on the basis of actual tax paid in the
respect of the financial year in line with the provisions of the relevant Finance Acts by the
concerned generating company or the transmission licensee, as the case may be. The actual
tax income on other income stream (i.e., income of non-generation or non-transmission
business, as the case may be) shall not be considered for the calculation of “effective tax
rate”.’’ Unquote
Further, Regulation 25 (3) talks about the truing-up of the grossing up of the rate on return
on equity. Relevant extract is as:
Quote ‘’The generating company or the transmission licensee, as the case may be, shall true
up the grossed up rate of return on equity at the end of every financial year based on actual
tax paid together with any additional tax demand including interest thereon, duly adjusted
for any refund of tax including interest received from the income tax authorities pertaining
to the tariff period 2014-15 to 2018-19 on actual gross income of any financial year…’’
Unquote
For the purpose of analysis of the grossing-up tax rate on the base rate of return of 15.5%,
the Commission notes that as per the unaudited accounts for FY 2014-15, the Petitioner
incurred a loss (loss before tax) of Rs. 31.96 Crores due to the plant breakdown from
01.10.2014 to 01.05.2015. The Commission is of the view that it would be difficult for the
Petitioner to absorb such high losses and the carry-forward impact of such loss would
continue during FY 2016-17. In this regard, the Commission notes that Profit after Tax for FY
2013-14 (audited) is Rs. 8.78 Crores and FY 2012-13 (audited) is Rs. 6.92 Crores respectively.
Assuming a similar profitability in the range of Rs. 10 Crores during FY 2015-16 and FY 2016-
17, the carry-forward impact of the loss incurred during FY 2014-15, would lead to no tax
liability during FY 2016-17.
The Commission, in view of the above, has therefore considered that the Petitioner would
not be liable to pay any tax during FY 2016-17. The same would be re-visited at the time of
True-up for FY 2016-17 based on the actual tax paid and duly supported by relevant
documents. Therefore, the Commission has not considered the grossing-up of the base rate
with the tax rate and has considered the return on equity as 15.50%.
Further, the Commission highlights that the other income stream (i.e. income of non-
generation or non-transmission business, as the case may be) shall not be considered for
the calculation of “effective tax rate’’ in terms of the relevant regulations during the True-
up.
The Commission directs the Petitioner to provide actual tax details along with the
supporting documents during the True-up of FY 2016-17.
The return on equity on the approved average capital cost of Rs. 150.88 Crores on the
normative equity capital base works out to Rs. 7.02 Crores. (15.50% on the equity portion
(30%) of approved average capital cost of Rs. 150.88 Crores).
Therefore, the Commission approves the return on equity at Rs. 7.02 Crores for FY 2016-
17.
5.7 Annual Fixed Charge (AFC) approved for FY 2016-17

The Annual Fixed Charge (AFC) vis-à-vis that submitted by the Petitioner is as below for FY
2016-17.
Table 23: Annual Fixed Charge approved for FY 2016-17 (Rs Crores)
Petitioner’s
S. No. Particulars Submission in Approved
the petition
1. Depreciation 0.38 0.38
2. Interest on Loan 0.00 0.00
3. Interest on Working Capital 4.01 3.47
4. Operation and Maintenance Expenses 12.38 12.39
5. Return on Equity 10.61 7.02
6. Annual Fixed Charge (AFC) 27.38 23.25
The Commission, therefore, approves the AFC at Rs. 23.25 Crores for FY 2016-17.
5.8 Energy /Variable Charge (Net)

The Commission approves the computation of energy charges for payment purpose for FY
2016-17 on the basis of the following formula:
ECR= GHR X LGP X 100/{GCV X (100 – APC)}
Where
ECR= Energy Charge Rate, in Rs. per kWh sent out upto three decimal places
GHR= Normative Gross Station Heat Rate in kcal/kWh
LGP= Weighted average landed price of gas in Rs/scm, during the calendar month
GCV= Gross Calorific Value of gas, in kcal per scm during the calendar month
APC= Normative Auxiliary Power Consumption in percentage
As the energy charges shall be computed and billed based on the above formula, there will be
no need for any adjustment in True-up on this account.
An illustrative example is as shown below:

Assuming,
GHR = Normative Gross Station Heat Rate i.e. Rs 2646 kcal/kWh for FY 2016-17
LGP = Rs 10.766/scm
GCV = 10098 kcal/scm
APC= Normative Auxiliary Power Consumption, at 5.00% for FY 2016-17
ECR = 2646 X 10.766 X 100/ ((10098 X (100-5.0)) = Rs 2.970/kWh
So, as can be observed from the above example the energy charges for the month work out to
be Rs. 2.970 /kWh assuming the above mentioned parameters.
5.9 Annual Fixed Charge and other charges approved by the Commission for FY 2016-17
- The Commission approves the Annual Fixed Charge (AFC) at Rs. 23.25 Crores for FY 2016-17
- The capacity charges (fixed cost) per month to be billed shall be calculated as per the
newly notified CERC Regulations for tariff period FY 2014-19. The payment of capacity
charges shall be as per the Regulation 30 of the CERC Regulations for the tariff period FY
2014-19.
- The Incentive shall be governed as per Regulation 30 (4) which is reproduced here below.
‘’Incentive to a generating station or unit thereof shall be payable at a flat rate of 50

paise/kWh for ex-bus scheduled energy corresponding to scheduled generation in excess of
ex-bus energy corresponding to Normative Annual Plant Load Factor (NAPLF) as specified in
regulation 36 (B).’’
Further, the Commission approves the Normative Annual Plant Load Factor (NAPLF) of
85% for purposes of the incentive calculation as per Regulation 36 (B) (a) of the CERC
Regulations for the tariff period from FY 2014-19.
- The Energy Charges (net) to be billed per month shall be based on the unit energy rate
calculated on the basis of the formula provided in Section 5.8 of this Order
- In addition to the charges approved above, the Commission also allows recovery of filing
fees paid to the Commission and publication expenses for FY 2016-17 from the beneficiary
in twelve equal monthly installments
6. Directives
The following are the Commission’s observations on the pending compliance of directives, as
per the earlier Tariff Orders.
6.1 Outstanding dues from ED-Puducherry to PPCL

The directive as given in the Tariff Order for FY 2013-14 dated March 28’ 2013 is as -
Quote
‘’The Commission has noted that there are outstanding dues of Rs 68.27 Crores from the ED,
Puducherry to Puducherry Power Corporation Limited. PPCL is directed to expedite its collection
from the Department and ensure that there are no arrears due. The supporting details as
received from PPCL are attached as Annexure 6.
The status on the same should be reported to the Commission every quarter from the issuance
of this order.’’
Unquote
(a) Compliance/Action taken as per the Tariff Order dated April 25’ 2014
The Petitioner on a query regarding the status of collection of outstanding dues from ED-
Puducherry to PPCL has submitted that Rs 71.50 Crores are outstanding towards sale of power
made to EDP from FY 2008-09 till date including variable charges, revision of tariff as per JERC
Order, True-up for FY 2011-12 and re-imbursement of filing fees for FY 2011-12, FY 2012-13 and
FY 2013-14. The details of the outstanding amount have been submitted by the Petitioner.
Further, EDP is required to pay a surcharge of 1.50% per month as per the PPA on the
outstanding amount.
Commission’s Comments
The Commission has made note of the repeated requests of the Petitioner regarding its pending
claims from ED-Puducherry. The Petitioner has made repeated requests to EDP vide its letters
dated December 23’ 2013 and July 29’ 2013. Further, no payment of these outstanding dues
has so far been received by the Petitioner. The Commission has made note of the submissions
of the Petitioner and the efforts of the Petitioner in this regard. The Petitioner should provide
the status of the same by September 30’ 2014.
(b) Compliance/Action taken as per the Tariff Order dated March 31’ 2015
The Petitioner has submitted that out of Rs. 71.50 Crores, they have received an amount of Rs.
5.85 Crores only. The balance amount of Rs. 65.65 Crores is still outstanding.
The Petitioner is once again directed to collect the outstanding from ED-Puducherry and to
provide the status of the payment of the outstanding dues from EDP by September 30, 2015.
(c) Compliance/Action taken as per this Tariff Order

In spite of repeated requests, no amount was received from the Electricity Department against
the outstanding of Rs. 132.42 Crores (amount outstanding Rs.65.65 crores + surcharge Rs.66.77
Crores). However, in accordance with the decision of the Board of Directors of the Corporation,
the surcharge amount of Rs. 66.77 Crores was waived-off and the present outstanding after
waiver of surcharge is Rs. 65.65 Crores. In this connection, it is also stated that the Corporation
had received a provisional credit note from M/S GAIL (l) Ltd., amounting to Rs. 25.61 Crores
towards refund of transmission charges, sales tax collected from PPCL on supply of gas during
the period from FY 2008-09 to FY 2013-14. Of the said amount, some amount is payable to the
Electricity Department, the details of which are being worked on. The copy of the letter
addressed to Electricity Department, Puducherry requesting to settle the pending dues has also
been enclosed.
The efforts of Petitioner in this regard are appreciated. The Petitioner is once again directed to
collect the outstanding dues from ED-Puducherry and provide the status of the payment of
outstanding dues by EDP by September 30’ 2016. The Petitioner is directed to determine the
amount of credit to be passed on to ED-Puducherry based on the Credit Note received from
GAIL. It is further directed to expedite the collection of dues after adjusting the credit amount
and settle this long pending issue. The Petitioner should provide the status of the payment of
outstanding dues by EDP by September 30’ 2016.
7. Conclusion
The Commission approves the capacity (fixed) charges and energy charges for FY 2016-17 and
other charges for PPCL Gas Power Station at Karaikal as given below:
1. Annual Fixed Charge (AFC) for FY 2016-17 at Rs. 23.25 Crores and an amount of Rs. 1.01
Crores to be recovered as part of the True-up for FY 2013-14 during FY 2016-17.
2. Energy Charges (net) for FY 2016-17– to be calculated in accordance with the formula given
in Section 5.8 of this Order
3. In addition to the charges approved above, the Commission also allows recovery of filing
fees paid to the Commission and publication expenses for FY 2016-17 from the beneficiary
in twelve equal monthly installments
This Order shall come into force from 01.04.2016 and shall remain effective till 31.03.2017.
-हस्ताक्षरित- -हस्ताक्षरित-
नीरजा माथरु सध
ु ीर चतुर्वेदी
सदस्य अध्यक्ष
संयुक्त विद्युत विनियामक आयोग
(गोिा औि केंद्र शाससत प्रदे शों के सिए)
स्थाि : गुडगााँि
ददिांक: 23 मई, 2016
-हस्ताक्षरित-
(प्रमाणित सत्य प्रनतसिवि)
सचचर्व

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TARIFF ORDER

Determination of Tariff for FY 2016-17

Petition No. 191/2016

6.1 Outstanding dues from ED-Puducherry to PPCL...................................................................... 57

Table 1: List of Correspondence with PPCL ........................................................................................ 10

Abbreviation Full Form

GCV : Gross Calorific Value

JERC : Joint Electricity Regulatory Commission for the state of Goa

NAPAF : Normative Annual Plant Availability Factor

O&M : Operation and Maintenance Expenses

PAF : Plant Availability Factor

PLF : Plant Load Factor

PPA : Power Purchase Agreement

PPCL : Puducherry Power Corporation Limited

RoE : Return on Equity

SHR : Station Heat Rate

Joint Electricity Regulatory Commission

And in the matter of

Puducherry Power Corporation Ltd. (PPCL)………………………………………………Petitioner

Electricity Department, Puducherry ………………………………………………………Respondent

1.1 JERC Formation

1.2 Puducherry Power Corporation Limited (PPCL)

Puducherry Power Corporation Limited (hereafter referred to as ‘PPCL’ or ‘Petitioner’), an

1.4 Filing of Petition

1.5 Admission of Petition

In compliance of Regulation 29 of JERC (Conduct of Business) Regulations 2009 and

1.6 Interaction with the Petitioner

Table 1: List of Correspondence with PPCL

1.7 Public Hearing Process

Table 2: Details of Public Notice published by the Petitioner

Interested parties / stakeholders were requested to file their objections/suggestions on the

Table 3: Schedule of Public Hearing at Puducherry

Table 4: Details of Public Notice published by the Commission

Table 5: Repeat Public Notice published by the Commission

2. Summary of True-up for FY 2013-14 and Tariff for FY 2016-17 filed

5. Thus, the Appeal is partly allowed. ‘’

The summary of the proposal is as outlined in the following sections.

Table 7: Annual Fixed Charge proposed by PPCL for FY 2016-17

Energy Charge (ECR) = GHRxLGPx100/ {GCV x (100-APC)}

3. Objections raised and the Commission’s Comments

3.2 Operation & Maintenance Expenses (O&M)

As per the relevant CERC/JERC Regulations, no compensatory allowances or allowing special

3.2.2 Commission’s View

3.3 Auxiliary Power Consumption (APC)

3.3.2 Commission’s View

3.4 Restriction of Plant Loading

3.4.2 Commission’s View

4. True-up for FY 2013-14

‘’ (8) Review and True Up

4.3 Operational Parameters

2. Gross Station Heat Rate

4.4 Annual Fixed Charge (AFC) approved for True-up of FY 2013-14

3. Interest on working capital

4.4.1 Capital Cost for FY 2013-14

The calculation of the same is as shown in the following Table:

4.4.3 Interest Charge on Loan

4.4.4 Interest on Working Capital

The rate of interest of 14.45% has been considered by the Petitioner.