BEFORE THE GUJARAT ELECTRICITY REGULATORY...

BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION

GANDHINAGAR

Suo-Motu Proceedings in

Order No. 1 of 2012

In the Matter of:

Determination of tariff for procurement of power by distribution licensees and

others from Solar Energy Projects for the State of Gujarat – Rehearing in order

No.1 of 2012 as per the directions of the Hon’ble APTEL vide Judgment dated

17.04.2013 in Appeal No. 75 of 2012.

Respondent No.1: Gujarat Urja Vikas Nigam Limited,

Sardar Patel Vidyut Bhavan,

Race Course Circle, Vadodara – 390007.

Represented By: Learned Advocate Shri Anand Ganeshan with Shri

V.T.Patel.

Respondent No.2: Gujarat Energy Transmission Corporation Limited,

Sardar Patel Vidyut Bhavan,

Race Course Circle, Vadodara – 390007.

Represented By: Smt. Venu Birappa.

Represented No.3: Dakshin Gujarat Vij Company Limited,

Nana Varachha Road,

Kapodara Char Rasta, Surat – 395006.

Represented By: Nobody was present.

Respondent No.4: State Load Despatch Centre (Gujarat),

132 KV Gotri Sub Station Compound,

Near T.B. Hospital, Gotri Road,

Vadodara- 390021, Gujarat.

Ph. No. (0265) 2352103.

Represented by: Shri D.N.Shah.

Respondent No.5 Torrent Power Limited,

Electricity House, Lal Darwaja,

Ahmedabad-380001.

Represented by: Shri Chetan Bundela.

Respondent No.6: The Under Secretary,

Energy and Petrochemicals Department,

Block No. 5, 5th Floor, New Sachivalaya,

Gandhinagar, Gujarat.

Represented by: Nobody was present.

Respondent No.7: Rudraksh Energy,

R-15A, Yudhisthir Marg,

C-Scheme, Jaipur, Rajasthan.


Respondent No.8: The Director,

Gujarat Energy Development Agency,

4th

Floor, Block No. 11 & 12,

Udyog Bhavan, Sector-11,

Gandhinagar, Gujarat.


Respondent No. 9: Essar Power Gujarat Limited,

Essar house, 11- Keshavrao Khadye Marg,

Mahalaxmi, Mumbai - 400 034.


Respondent No.10: Jaihind Projects Limited,

3rd

floor, Venus Atlantis Corporate Park,

Nr. Prahlad Nagar AUDA, Garden Satellite,

Ahmedabad – 380015.


Respondent No.11: Acme Tele Power Limited,

A-509, Smita Tower, opposite Vishramnagar,

Gurukul Road, Ahmedabad.


Respondent No.12: Moserbaer Clean Energy Limited,

43B, Okhla Industrial Estate,

New Delhi - 110020, India.

Represented by: Learned Advocate Shri Hemant Sahai with Advocate

Ms. Mazag Andrabi.

Respondent No.13: Abellon CleanEnergy Limited,

10th floor, Sangeeta Complex, Nr. Parimal Railway

Crossing, Ellisbrige, Ahmedabad – 380006.

Represented by: Shri Kaushik Patel.

Respondent No.14: Welspun Renewables Energy Limited,

Welspun House, 7th Floor,

Kamala City, Senapati Bapat Marg, Lower Parel,

Mumbai – 400013.


Respondent No.15: Kiran Energy Solar Power Private Limited,

3, Advani Chambers, August Kranti Road,

Mumbai – 400036.


Respondent No.16: Solarfield Energy Private Limited,

3, Advani Chambers, August Kranti road,

Mumbai – 400036.

Represented by: Nobody was present

.

Respondent No.17: EMCO Limited,

Corporate Division

Plot No.F-5, Road No. 28,

Wagle Industries Estate,

Thane – 400604.


Respondent No.18: Joseph Mathews,

ENAM Holdings Private Limited,

11th floor, Express Towers,

Nariman Point, Mumbai – 400021.


Respondent No. 19: Yantra eSolar India Pvt. Limited,

D # 8-2-596/C/1, Ascent Towers,

First Floor, Road # 10, Banjara Hills,

Hyderabad – 500034.


Respondent No.20: Atulkumar and Kalidas Patel,

27-B, Mayurvila Residency,

Berna Road, Himatnagar

Dist: Sabarkantha.


Respondent No.21: Rajkot Municipal Corporation,

Commissioner office, Dr. Ambedkar Bhavan,

Dhebarbhal Road, Rajkot – 360001.


Respondent No.22: Lanco Solar Energy Private Limited,

Office Plot - 229, Udyog Vihar,

Phase – 1, Gurgaon – 122016,

Haryana, India.


Represented No.23: Adani Power Limited,

Achalraj, Opp. Mayor Bunglow,

Law Garden, Ahmedabad – 380009.


Represented No.24: Cargo Solar Power (Gujarat) Private Limited,

Cargo House, Opp. Gandhi Ashram,

Ashram Road, Ahmedabad.


Respondent No.25: Surat Municipal Corporation,

Main office building,

Muglisara, Surat – 395003.


Respondent No.26: Applied Materials India Private Limited,

9th Floor, Tradex Tower II

B-4, Commercial Strip

(Facing Jaypee Green Golf Course)

Sector Alpha - I

Greater NOIDA – 201306,

Uttar Pradesh, India

Tel: (91) 120-2320082 / (9) 120-3921400.


Respondent No.27: Senior Research Associate,

Prayas Energy Group,

Athawle Corner, Karve Road,

Pune – 411004.


Respondent No.28: SunEdison Energy India Private Limited,

Menon Eternity, 10th Floor New # 165,

Old No # 110, St. Marys Road,

Alwarpet Chennai – 18.

Phone No. : 91-(44)42923800.


Respondent No.29: Solar Energy Society of India

A-14, Mohan Operative Industrial Estate,

Mathura Road, New Delhi – 110044.

Represented by: Learned Advocate Shri Hemant Sahai with Advocate

Ms. Mazag Andrabi.

CORAM:

Shri Pravinbhai Patel, Chairman

Dr. M. K. Iyer, Member (Finance)

Date: 07/07/2014.

ORDER

[1] The Commission passed Order No. 1 of 2012 and decided the tariff for

procurement of power by Distribution Licensees and others from Solar Energy

Projects.

[2] Being aggrieved of the said order, the Solar Energy Society of India filed an

Appeal No. 75 of 2012 before the Hon’ble Appellate Tribunal for Electricity.

[3] The Hon’ble Appellate Tribunal for Electricity passed the judgment date

17.04.2013 in said appeal and remanded back the matter to the Commission

and directed the Commission to pass appropriate order in terms of the

observations and directions of the Hon’ble APTEL as recorded in the

Judgment dated 17.04.2013. The summary of findings recorded by the Hon’ble

Tribunal stated below:

“…18. Summary of our findings

i) Operation & Maintenance Expenses: The State Commission should

have maintained O&M expenses in absolute value at least at the same

level as approved for FY 2010-1 i.e. Rs. 8.25 Lakhs/MW. Accordingly,

we direct the State Commission to redetermine the O&M cost and allow

at *least 0.825% of the capital cost.

ii) Inverter replacement cost: We do not want to interfere with the

assessment of cost reduction for inverter @ 10% p.a. made by the State

Commission for the reason indicated in paragraph 9.4 of the judgment.

However, the State Commission has incorrectly computed the inverter

replacement cost at 3.81% of the capital cost in the 13th year. With

annual reduction of 10% in inverter cost the cost in the 13th year would

work out to 4.24% of the capital cost and not 3.81%. Accordingly, the

State Commission shall correct the inverter replacement cost.

iii) Working Capital: We do not find any infirmity in the State

Commission’s order in determining the working capital.

iv) Return on Equity: The State Commission is not bound to adopt the

RoE as provided in the Central Commission’s Regulations. If the State

Commission has decided to allow post tax RoE of 14% to renewable

energy projects as applicable to power projects of conventional energy

sources, we cannot find fault with the same. However, the State

Commission should have followed the principle of grossing up of the

income tax as decided by this Tribunal in Appeal no. 174 of 2009, 68 of

2009 and Review Petition no. 9 of 2010 in Appeal no. 68 of 2009.

Accordingly, directed.

v) Discount factor: We do not find any infirmity in the State Commission

adopting a discount factor of 10.74% as per the Central Commission’s

notification dated 7.10.2011.

vi) Annual degradation of Solar Plant: We feel that the issue raised by

the Appellant needs to be considered to examine if the levelising tariff

allowed by the State Commission ensures recovery of the revenue

permissible to the Developers in the life cycle of the solar plant at the

energy sent out with degradation. Accordingly, the matter is remanded

to the State Commission.

vii) Tariff for first 12 years: We find that the State Commission has

balanced the interests of the project developer and the consumer by

allowing a tariff of only about 8.5% higher than the levellised tariff

during the first 12 years. We do not find any reason to interfere with the

findings of the State Commission in this regard.

viii) Successive revision in tariff: This issue does not survive as the

learned counsel for the Appellant during the rejoinder submission

decided not to press the issue.

ix) Clean Development Mechanism: In view of the clarification given by

the State Commission that the CDM benefit has to be shared by the

Project Developer with GUVNL on cash basis, the issue would not

survive.

x) Project specific tariff: We do not find force in the argument of the

Appellant regarding option for project specific tariff. The findings of the

Tribunal in Techman case (Appeal nos. 50 & 65 of 2008) for hydro

projects will not be applicable to the present case.

19. In view of above, the Appeal is partly allowed to the extent as

indicated above. The State Commission shall pass the consequential

order in terms of the observations and directions referred to above. No

order as to costs….”

[4] In the aforesaid judgement, the Hon’ble APTEL directed the Commission to

pass consequential order with respect to finding stated in para 18 (i), (ii), (iv)

and (vi) of the judgement dated 17.04.2013 in Appeal No. 75 of 2013. The

Commission decided to kept the hearing and pass a consequential order after

hearing of the concerned parties.

[5] Thereafter, the matter was kept for hearing on 10.01.2014, 01.02.2014,

04.03.2014 and finally on 05.04.2014.

[6] The Hon’ble APTEL in the aforesaid order remanded matter back for

reconsideration of the following parameters considered by the Commission in

its Order No. 1 of 2012 dated 27.01.2012.

(i) Operation and Maintenance Charges,

(ii) Inverter Replacement Cost;

(iii) Returns on Equity;

(iv) Annual Degradation of Solar Power Plant and recovery of revenue

permissible to the developers in the life cycle of Solar PV Power

Plant at the energy sent out with degradation.

As the Hon’ble APTEL has directed to revisit on above parameters and pass

the consequential order based on the decision and directives given in its

judgement dated 17.04.2013 in Appeal No. 75 of 2013, we decide the above

parameters one by one.

[7] Now, we deal with Issue No. 1 which pertains to Operation and maintenance

charge. The Hon’ble APTEL in its order dated 17.04.2013, in para 8.7, 8.8,

8.9, and 8.10 decided about the O&M Charges as under:

“……8.7 We find that at the reduced the capital cost of Rs. 10

crores/MW, the O&M expenses at 0.75% of the capital cost

work out to Rs. 7.5 Lakhs/MW. As against this, in the order

dated 29.1.2010, the State Commission allowed O&M expenses

at 0.5% of the capital cost of Rs. 16.5 crores/MW which works

out to Rs. 8.25 Lakhs/MW for FY 2010-11. In the discussion

paper the State Commission had proposed O&M expenses at

0.75% of the capital cost of Rs. 11 crores/MW i.e. Rs. 8.25

Lakhs/MW, which is the same level as decided for 2010-11 by

order dated 29.1.2010.

8.8 As rightly pointed out by the Appellant and also indicated by the

State Commission in the discussion paper, the employees’

expense is a major component of O&M expenses of solar power

project. The reduction in cost of Solar Power Projects is

basically for the solar power module only. Therefore, the

reduction of the capital cost should not impact the O&M cost

appreciably. The intention of the State Commission in the

discussion paper was also by providing O&M at 0.75% of the

proposed capital cost of Rs. 11 crores/MW i.e. at Rs. 8.25

lakhs/MW. However, the State Commission decided to reduce

the capital cost to Rs. 10 crores/MW in the impugned order but

maintained the O&M cost at Rs. 0.75% only. No explanation

was given in the impugned order for effectively reducing the

O&M expenses. We feel that the State Commission should have

maintained O&M expenses in absolute value atleast at the same

level as approved for the FY 2010-11 i.e. at Rs. 8.25

Lakhs/MW. Accordingly, we direct the State Commission to

reconsider the O&M cost and allow atleast 8.25% of the capital

cost.

8.9 Learned counsel for GUVNL has argued that the State

Commission has also allowed insurance cost in addition to

O&M cost in the impugned order. We find that in the earlier

order dated 29.1.2010 also the State Commission had allowed

0.35% of the net assets of the project as insurance charges in

addition to O&M charges. Therefore, there is no force in the

arguments of the Respondent no. 2 regarding insurance

charges.

8.10 Accordingly, the State Commission is directed to re-determine

the O&M charges…..”

Thus, in the aforesaid findings, the Hon’ble APTEL directed the Commission

to re-determine the O& M Charges as directed by the Hon’ble APTEL.

[7.1] Learned Advocate Shri Hemant Sahai, on behalf of the Solar Energy Society

submitted that the Commission had considered the O & M charges as Rs. 8.25

Lakhs /MW per year for FY 2010–2011 and the same be escalated at the rate

of 5% as decided by the Commission in its Order No. 02 of 2010 dated

29.01.2010. Based on the above calculation, the O & M charges works out to

Rs. 9.10 Lakhs/MW per Year. The O & M charges stated atleast Rs. 8.25

Lakhs/MW in the Order of the Hon’ble APTEL relates to the project which

were commissioned during FY 2010-2011. Therefore, the projects which were

commissioned during FY 2010-2011 should receive the O & M Charge of Rs.

9.10 Lakhs/MW for FY 2012 – 2013, while as per Order No. 1 of 2012 dated

29.01.2012 of the Commission, it works out Rs. 7.50 lakhs/MW only. The

Hon’ble APTEL decided and directed the Commission to consider the O&M

charges at Rs. 8.25 Lakhs/MW and re-determine the O & M Charges. If, the O

& M expenses are allowed at the rate of Rs. 8.25 Lakhs/MW, it would amounts

to different O & M expenses allowed for FY 2012-2013 for the project which

were commissioned under previous control period i.e. Order No. 2 of 2010

dated 29.01.2010 i.e. 9.10 Lakhs/ MW and those under the impugned order

No. 01 of 2012 dated 27.1.2012 would be paid O & M charges at the rate of

Rs. 8.25 Lakhs/MW, which is a discrimination amongst the two project

developers. Based on the above submissions, he submitted that the

Commission may allow O & M expenses for FY 2012-2013 at Rs. 9.10

Lakhs/MW and the same may be escalated at 5.72% as per GERC order.

[7.2] Learned advocate Shri M.G. Ramchandran, on behalf of the GUVNL,

submitted that the O & M expenses proposed in the draft discussion paper was

o.75% of the capital cost of Rs. 11 cores/MW which works out to Rs. 8.25

Lakhs/MW. The Commission in earlier order dated 29.01.2010 approved the

O& M expenses as Rs. 8.25 Lakhs/MW which is 0.5% of the capital cost of

Rs. 16.5 crores/MW. The submissions of Solar Energy Society and other

respondents that the O & M expenses should be allowed at the rate of Rs. 9.10

Lakhs/MW by accelerating the previously allowed the expenditure of Rs.8.25

Lakhs/MW at the rate of escalated 5 % p.a. However, the above claims of the

appellant (Solar Energy Society) before the Hon’ble Tribunal was rejected by

the Tribunal and held that the O& M expenses should not have been reduced in

absolute terms. In the discussion papers also, the Commission had propose O

& M expenses as Rs. 8.25 Lakhs/MW. Therefore, the Commission should

maintain the O&M expenses of Rs. 8.25 Lakhs/MW and need not reduced it

further. The Hon’ble Tribunal has directed the Commission to re-determine the

O & M expenses and allowed at least 8.25 Lakhs/MW of capital cost. The

claims of the Solar Energy Society and Other respondents that the Commission

allows escalation on O & M expenses of Rs. 8.25 Lakhs/MW have not been

allowed by the Hon’ble Tribunal. Therefore, the Solar Energy Society and

other respondents cannot reagitate the same again before the Commission. The

contentions of the Solar Energy Society & others to provide higher O & M

Expenses over and above RS. 8.25 Lakhs/MW is misconceived. The O & M

amount of Rs. 8.25 Lakhs per MW is adequate considering that the O & M

expense (spares etc.) is directly related to capital cost. Therefore, the claims of

the Solar Society and Others are liable to be rejected.

[8] We have carefully considered the submissions made by the parties. The issue

emerged for the decision of the Commission is as to whether the project which

are commissioned during the control period of the Order No. 1 of 2012 dated

27.01.2012 are entitled for O & M expenses as Rs. 8.25 Lakhs/MW or Rs. 9.10

lakhs/MW. It is therefore necessary to refer the para 8.7 to 8.10 of the Hon’ble

APTEL order as stated above.

[8.1] According to the aforesaid decision, the O&M cost is required to re-

determined atleast at 0.825% of the Capital Cost which works out to Rs. 8.25

Lakhs/MW. The Commission has in Order No. 1 of 2010 considered the

Capital Cost as Rs. 10 crores/MW. Therefore, the 0.825% of the said capital

cost works out to Rs. 8.25 Lakhs/MW. The aforesaid amount is an absolute

value of Rs. 8.25 Lakhs/MW as considered by the Commission in earlier Order

No. 2 of 2010 dated 29.01.2010.

[8.2] The contentions of the Solar Energy Society and Others that O & M expenses

be allowed Rs. 9.10 Lakhs/MW for FY 2012-13 by escalating Rs. 8.25

Lakhs/MW for FY 2010-11 for two years at the rate of 5 % per annum as

decided by the Commission in its earlier Order No. 2 of 2010 dated 29.01.2010

is concerned, the same issue was raised by the above parties before the

Hon’ble APTEL and it was recorded by the Hon’ble Tribunal in Para 8.1 of its

order dated 17.04.2013 in Appeal No. 75 of 2012 which reads as under:

“…..8.1 According to the learned Senior counsel for the Appellant, the

State Commission has reduced O&M cost from Rs. 8.25 Lakh/MW in

2010-11 to Rs. 7.5 Lakh/MW in 2012-13 whereas O&M cost ought to

have been increased to Rs. 9.09 Lakh/MW for 2012-13 by escalating Rs.

8.25 Lakh/MW for 2010-11 for two years @ 5% per annum as approved

by the State Commission in its earlier tariff order dated 29.01.2010…..”

The above submission of the Solar Energy Society of India was already raised

before the Hon’ble APTEL and Hon’ble APTEL has after considering the

submissions of the Solar energy Society has decided in para 8.7, 8.8 as stated

above that the Commission may re-consider the O & M expenses atleast to the

extent of 0.825% of the capital cost which works out to Rs. 8.25 lakhs/MW

with consideration of Rs. 10 Crores/MW capital cost.

[8.3] The principle of associating O &M expenses to the capital cost has not been

disturbed by the Hon’ble APTEL but decided that the O & M expenses should

be at least the same amount as was existing before the impugned order.

Moreover, the cost of spares which is a part of the O & M expenses has also

reduced significantly. Hence, the O& M expenses can be kept at the rate of Rs.

8.25 Lakhs/MW. The contentions raised by the GUVNL are not acceptable.

The O & M expenses consists of administrative expenses, maintenance spares,

etc. which remain same for the project commissioned/operating during the

same period. The project which were commissioned during the control period

of Order No. 2 of 2010 dated 29.01.2010 were receiving O & M expenses

during the FY2012-2013 @ Rs. 9.10 Lakhs/MW with consideration of the O &

M expenses of Rs. 8.25 Lakhs/MW for FY 2010-2011 and escale it by 5% per

annum. While the project which was commissioned during the FY 2012-2013

onward i.e. control period of Order No. 1 of 2012 dated 27.01.2012 receive the

O & M expenses @ Rs. 8.25 Lakhs/MW which is lower than Rs. 9.10

Lakhs/MW received by the project developers who commissioned the plant

during the control period of Order No. 2 of 2010 dated 29.01.2010. Thus, O &

M expenses which consist of the same components of Administrative

expenses, repair and maintenance expenses, spares etc allowed different by the

Commission for some project commissioned during different control period is

a discriminatory amongst different Solar PV Power Project Developers which

is not permissible. We therefore, decide that the O & M expenses for tariff

determination of Order No. 1 of 2012 dated 27.01.2012 at Rs. 9.10 lakhs/MW

for tariff determination purpose and the same may be escalated at the rate of

Rs. 5.72 per annum thereafter.

[9] Now we deal with the issue of the inverter replacement cost. The Commission

has considered the inverter replacement cost in the 13th year, which work out to

Rs. 3.81 % while the Solar Society has disputed that the same stating that it

works out to 4.24% of the capital cost. The Hon’ble APTEL has in its order

dated 17.04.2013 in para 9.4 to 9.6 recorded as under:

“……9.4 We notice that the State Commission for the first time has proposed to

include inverter replacement cost in the 13th

year of operation while

working out the levellised tariff for the solar power projects. However,

considering the reduction in cost of electronics and current cost trend

of photovoltaic modules, the State Commission decided to consider an

annual reduction in cost of inverters at 10% and replacement cost of

3.8% of the capital cost in the 13th

year. The impugned order indicates

that some developers had pleaded that the projected cost of inverter

replacement is too low and it should be considered atleast 5 to 6% of

the capital cost.

9.5 The State Commission has allowed an additional cost of inverter

replacement over and above the O&M cost and inverter replacement

cost was not allowed in the earlier tariff order dated 29.1.2010. At the

moment, it is not possible to predict what would be the actual cost of

inverter replacement in the 13th

year of operation of solar power plants.

However, the State Commission has made an estimation based on the

rate of reduction in cost of electronics and current cost trend of

photovoltaic inverters at 10% per annum. The State Commission has

tried to provide an additional expenditure with a view to compensate

the project developers for the replacement of the inverter which

according to the State Commission could be required in the 13th

year.

The Appellant has also not suggested on alternate methodology for

estimation of the inverter replacement cost with relevant supporting

material. In any case inverter replacement cost is an additional cost

which has been allowed and which was not provided in the previous

tariff order dated 29.1.2010. We, therefore, do not want to interfere

with the assessment of cost reduction made by the State Commission at

10% per annum.

9.6 However, we find that the State Commission has incorrectly computed

the inverter replacement cost at 3.81% of the capital cost in the 13 th

year. We also find that at annual reduction in the inverter cost at 10%,

the cost in the 13th

year would work out to 4.24% of the capital cost and

not 3.81% of the capital cost. So the argument of GUVNL that the

inverter has to be replaced from 12 to 14th

year and replacement cost in

the 13th

year will be accounted for tariff in the 14th

year is not valid. The

State Commission has allowed inverter replacement in the 13th

year

and, therefore, the cost of inverter as assessed for the 13th

year alone

has to be considered for determination of tariff. Accordingly,

directed…..”

As far as the above issue is concerned, the order of the Hon’ble APTEL has

directed the Commission to pass the consequential order and correct the

inverter replacement cost which is not disputed by GUVNL & Others. As the

above findings of the Hon’ble APTEL clearly decided that the inverter cost on

13th year works out to Rs. 4.24% of the capital cost and not 3.81% of the

capital cost, we decide to consider inverter cost as Rs. 4.24% capital cost as a

part of tariff determination in the 13th year and be given effect in the tariff

determination, in compliance to order passed by the Hon’ble APTEL.

[10] Now we deal with the issue with regard to Return on Equity and Income Tax

payable to the Solar Power project Developers. The Hon’ble APTEL has in its

Order para 11 to 11.9 decided as under:

“…….11. The fourth issue is regarding Return on Equity.

11.1 According to the Appellant, the State Commission should have

allowed the Return on Equity as per the Central Commission’s

Regulations and should have grossed up the post tax return to arrive at

pre-tax return and then compute the Income Tax.

11.2 The Respondent no. 2 has contended that the same rate of return as

allowed to Solar Projects in the impugned order has been allowed in the

earlier Solar Tariff Order dated 29.1.2010 as well as for all renewable

energy projects. Regarding grossing up of income-tax, the State

Commission has correctly allowed income tax at 20.008% for 10 years

and corporate tax at 32.445% for 11th

year onwards.

11.3 According to the learned counsel for the State Commission, the

State Commission has allowed income tax at 20.008% (18.5% MAT +

5% surcharge +3% Education cess) per annum for 10 years and

corporate tax at 32.445% per annum from 11th

year onwards, over and

above 14% ROE to solar power developers which is adequate. Let us

examine the findings of the State Commission regarding ROE.

“24.8 Return on Equity: The Commission has provided in the Multi

Year Tariff Regulation, 2011 Notification No. 1 of 2011 as well as

indicated in the Discussion Paper the return on equity as 14% per

annum. The Commission has also allowed Income Tax at 20.008%

(18.5% MAT + 5% Surcharge +3% Education Cess) per annum for

10 years, and Corporate Tax at 32.445% per annum from 11th

year

onwards. Any further enhancement in the return on equity will

burden the Consumers.

……………………

“Commission’s Ruling:

The Commission has provided in the Multi Year Tariff Regulation,

2011 Notification No. 1 of 2011, indicated in the Discussion Paper,

as well as considers the return on equity for all projects, renewable

and non-renewable, at 14% per annum. Hence, the Commission shall

retain the return on equity at 14% per annum.”

11.4 We notice that the State Commission has allowed post tax RoE of

14% for solar as well as other renewable and non-renewable power

projects. The MYT Regulations, 2011 of the State Commission also

provide for 14% RoE. Even though the Central Commission’s

Regulations for renewable energy projects provide for post tax RoE of

16%, the State Commission is not bound to adopt the same RoE. If the

State Commission has decided to allow post tax RoE of 14% to

renewable energy projects as applicable to power projects of

conventional energy sources, we cannot find fault with the same.

11.5 As regards grossing up of income-tax, this Tribunal in a number of

judgments has decided that the income tax has to be grossed up to

permit the required post tax Return on Equity. This Tribunal in the

judgment in Appeal no. 174 of 2009 dated 14.02.2011 in the matter of

Tata Power Company Limited vs. Maharashtra Electricity Regulatory

Commission has decided as under:

“18. While the State Commission has computed the tax by

considering the Return on Equity equal to profit before tax, it has

ignored the fact that such allowed income tax would also be

considered as revenue gains and the Appellant would have to pay

tax on the same. In order to rectify the same, the State

Commission ought to have grossed up the tax computed by it and

pass the same to the Appellant. Thus the claim of the State

Commission that it has reimbursed the actual tax and hence there

is no case for allowing post tax Return on Equity is not correct.

Therefore, it would be appropriate to direct the State Commission

to compute income tax entitlement of the Appellant by replacing

Return on Equity by regulatory profit before tax on the basis of

income less permissible expenses. Accordingly ordered.”

11.6 This Tribunal in the judgment in Appeal no. 68 of 2009 dated

23.03.2010 in the matter of Torrent Power Limited vs. Gujarat

Electricity Regulatory Commission has decided as under: “55. In view

of the foregoing discussion and analysis, we set aside order of the State

Commission in this view of the matter and direct that it allows the

income tax by grossing up to ensure the stipulated post tax return by the

State Commission to the Appellant.”

11.7 Learned counsel for Respondent no. 2 has referred to the order

dated 05.01.2011 in Review Petition no. 9 of 2010 in Appeal no. 68 of

2009. The extracts of order dated 5.1.2011 is reproduced as under:

“10. Regulation 7 clearly stipulated that the tax on income stream

of the generating company from its core business shall be

computed as expense and shall be recovered from the

beneficiaries. The adjustment for under or over recovery of any

amount from beneficiary has to be made by the generating

company directly on the basis of income tax assessment under the

Income Tax Act as certified by the statutory auditors. Regulation

66(20) only restricts the income tax to be allowed on the

permissible return subject to actual payment.

11. This is the only difference in the State Commission’s

Regulations with reference to the Regulations of 2004 of the

Central Commission in respect of Income Tax. The Central

Commission’s Regulations of 2004 allow income tax as pass

through even on income over and above the permissible return on

equity due to better performance over the generation norms.

However, the State Commission’s Regulations allow the income

tax on the permissible return. The principle of grossed up tax is

applicable to both as decided by this Tribunal in the impugned

judgment and in various other cases referred to by the

Respondent.

12. Conjoint reading of the Regulations of the State Commission

will imply that income tax has to be taken as expense subject to

adjustment as per actual as per audited accounts by the statutory

auditors and to the extent of permissible return. However, tax on

income on permissible return has to be ‘pass through’. Thus the

intent of the Regulations is that income on permissible return on

core business in the hands of the generating company has to be

net of tax. Thus the entire tax inclusive of grossed up tax is

relatable to the core activity of the generating company. However,

if there is any over-recovery of tax, the generating company has to

reimburse the same as the same is adjustable as per actual as per

audited accounts by the statutory auditors.

13. The Tribunal’s judgment dated 23.03.2010 in para 52 clearly

shows that the Tribunal has considered Regulation 7 and

Regulation 66 and Section 195 (A) of the Income Tax Act to arrive

at the decision that grossing up of the tax has to be carried out to

ensure that after paying the tax, the admissible post tax return is

assured to the Appellant (Respondent in Review Petition), Torrent

Power Limited. The Tribunal has also held in the judgment that

the Appellant, Torrent Power Limited should neither benefit nor

loose on account of tax payable which is a pass through in the

tariff. Thus, there is no question of the generating company

making profit on account of income tax. The excess recovery of

income tax if any has to be reimbursed by the generating company

to the distribution company as per the Regulations of the State

Commission. In this case the excess recovery of income tax if any

has to be adjusted in the true up of the financials. Thus the

judgment dated 23.3.2010 needs no review”. According to the

aforesaid para, the return on equity receivable by the project

developer is 14 % and the income tax is required to apply the

principles of grossing up as per the decision of the Hon’ble

Tribunal in Appeal Nos. 174 of 2009, 68 of 2009 and Review

Petition No. 09 of 2010 in Appeal No. 68 of 2009.

11.8 In Review order also, the Tribunal has decided that the principle of

grossed up tax is applicable to the Central Commission’s

Regulations as well as the State Commission’s Regulations.

11.9 The findings of the Tribunal in the above cases will also be

applicable to the present case. Therefore, the issue regarding

grossing up of income-tax is decided in favour of the

Appellant…..”

[10.1] Learned advocate Shri Hemant Sahai, on behalf of the Solar Energy Society of

India, submitted that the appellant had submitted before the Hon’ble Tribunal

that post-tax Return on Equity (RoE) at 14% per annum be allowed by the

Commission. The Commission while passing the impugned order has

computed Income- Tax without grossing up. However, the Commission has

computed tax on 14% Return on Equity which for first 10 years when MAT is

@ 20% and Corporate Tax is 32.455 for next 15 years as applicable would

yield lower post-tax return as Income Tax is computed by the Tax Authorities

on pre-tax returns. Accordingly, the post tax return available to the Solar

Generator for initial 10 years post tax return @ of 13.44% for first 10 years and

for next 15 years it works out to 12.53 %, while the Commission has

considered to allow return on equity 14% per annum for entire 25 years of the

projects. Thus, the Commission has not allowed post tax return @ of 14%. The

Hon’ble Tribunal has in its judgement relied on its earlier judgements in (i)

Appeal Nos. 174 of 2009 dated 14.02.2011, (ii) 68 of 2009 dated 23.03.2010

and (iii) Review Petition No. 09 of 2010 in Appeal No. 68 of 2009. Thus, the

issue of the grossing up is decided in favor of the appellant.

[10.2] Moserbaer Clean Energy Limited had reiterated the submissions of the Solar

Energy Society of India.

[11] Advocate Shri M.G. Ramchandran, on behalf of the GUVNL, submitted that

the Hon’ble APTEL had rejected the claim of the appellant to grant higher RoE

than 14% by rejecting the same. The Hon’ble Tribunal while dealing with the

issue of grossing of the tax for post-tax return held that taxes should be

accounted in the tariff and solar generator should be entitled to 14% RoE

exclusive of tax liability. The above is based on the principle that 14% post-tax

return assured to the project developer in case of the conventional energy

project where the actual tax paid by the project developer is to be reimbursed

to ensure that the RoE at the rate of 14 %, if fully paid. The project developer

cannot be allowed to take profit on account of income tax. The Tribunal had

relied on the judgement in Appeal No. 68 of 2010 and Review Petition No. 09

of 2010 in which the Hon’ble APTEL decided that actual income tax is to be

reimbursing to ensure that the project developer shall get 14 % RoE, invested

with ceiling of 30% of equity cost.

[11.1] In Review Petition No. 09 of 2010 in Appeal no. 68 of 2009, the Hon’ble

Tribunal held that the only actual tax payable by the project developers can be

allowed in the tariff and that the project developer can neither be benefited nor

lose on account of payment of Income Tax. The Hon’ble Tribunal also held

that the Commission is required to consider the issue in light of the above

decision.

[11.2] The contentions of the Solar Energy Society and Others, the principles decided

by the Hon’ble APTEL cannot be applied as tariff has to be generic and the

same for all irrespective of tax paid and that individual tax payment cannot be

looked is misconceived and also not maintainable in the present proceedings

because the present proceedings are only for carrying out for directions of

Hon’ble Tribunal in remand matter. These proceedings may not be used for the

purpose of reagitating the issue or otherwise contending that the decision of the

tribunal is incorrect, or that it was not the intention of the Hon’ble APTEL in

passing the said judgement or otherwise that the decision ought not to be

followed.

[11.3] It is incorrect on part of the Solar Energy Society and Others that irrespective

as to whether it paid tax or not, it should be entitled for higher tariff on account

of Income Tax adjustment. The decision of the Hon’ble Tribunal is clear that

the project developer pays tax under Income Tax Act, 1961 and can get entitled

to reimbursement of such income tax so as to ensure that the RoE @ 14% is

not affected.

[11.4] The GUVNL had called details from the solar developers to provide the details

of actual tax paid to ensure that they are not profiting out of the claim of the

Income Tax without paying the actual income tax. The Solar Energy Society

has refused to provide any such details of Tax paid. Thus, there can be no

claim by the petitioner for reimbursement of income tax. Therefore, the

contentions sought to be raised by the petitioner is misconceived and contrary

to the decision of the Hon’ble Tribunal and the same is liable to be rejected.

[12] We have carefully considered the submissions made by the parties. The

aforesaid issue was decided by the Hon’ble Tribunal in para 11 to 11.9 as

stated above, and summaries the same in para 18 (iv) of the Judgement dated

17.04.2013 in Appeal No. 75 of 2012.

[12.1] According to the above decision, the Hon’ble APTEL has considered the 14%

RoE considered by the Commission seems as per the GERC (MYT)

Regulations, 2011 and allowed the same to all renewable energy projects also.

Now, the issue emerges for decision of the Commission is as to whether

Income Tax paid to the Solar Project developers be allowed post-tax RoE at

the rate of 14% by grossing up or by allowing the actual Income Tax paid by

the Solar Power Developers in addition to 14% RoE and the Hon’ble APTEL

has relied on its judgment dated 14.02.2010 in Appeal No. 174 of 2009 in

which the Tribunal has decided that the State Commission ought to have

grossed up Income Tax computed by it and pass the same to the appellant. The

same decision was also reiterated by the Hon’ble APTEL in Appeal No. 68 of

2009 dated 23.03.2010 in the matter of TPL V/s. GERC and Others. The

Hon’ble Tribunal had also considered its decision in Review Petition No. 09 of

2010 in Appeal No. 68 of 2009, order dated 05.01.2011 in which the Hon’ble

Tribunal decided that the Grossing up of tax has to be carried out to ensure that

after paying the tax, the admissible post tax return is assured to TPL. The

Hon’ble Tribunal had also held in its judgments that TPL should neither be

benefited nor lose on account of tax payable which is to pass through in the

tariff. Thus, there is no question of generating company making profit on

account of income tax. The excess recovery of income tax, if any, has to be

reimbursed by the generating company to the distribution company as per the

regulations of the Commission. Thus, the Hon’ble Tribunal decided in the

aforesaid judgement to allow the principle of gross up while deciding the tariff

subject to final adjustment as per the actual payment of income tax by the

generating company.

[12.2] The Solar Energy Society & Other project developers have submitted that the

actual return on equity available to the project developer for initial 12 years is

13.44% and 12.53 % for the remaining 13 years. Therefore, RoE available to

the Solar Generator will be less than 14 % granted by the Commission in its

tariff order. We note that the RoE available to the Solar Power Developers if

grossing up of tax not allowed, it works out as under:

“…..a) Allowed by the Commission for first 10 years: Post-tax return = 14.00%

Tax on Post tax return = 14.00% x 20.00%= 2.80%

Pre tax Return = 14.00% +2.80%=16.80%

b) Tax computed by Tax Authorities:

Taxable Income = Pre-tax return = 16.80%

Tax on Taxable Income = 16.80% x 20% = 3.36%

Post- tax return available to Generator = Pre-tax Return – Tax.

= 16.80% - 3.36% = 13.44%

c) Allowed by the Commission for next 15 years:

Post-tax return = 14.00%

Tax on Post tax return = 14.00% x 32.45%= 4.54%

Pre tax Return = 14.00% +4.54% =18.54%

d) Tax computed by Tax Authorities for next 15 years:

Taxable Income = Pre-tax return = 18.54%

Tax on Taxable Income = 18.54% x 32.45% = 6.01%

Post- tax return available to Generator = Pre-tax Return – Tax

= 18.54% - 6.01% = 12.53.

From the above calculations, it seems that the plea of the Solar Energy Society

of India and Others seems to be valid that they are not getting the RoE @ 14%

as granted by the Commission if the post-tax RoE @ 14% is not allowed to be

grossed up for Income Tax. The respondent GUVNL raised the issue that the

Solar Project Developers are entitled for the actual tax paid by them and not

eligible for grossing up is not valid because the Hon’ble Tribunal has in para

11.8 of its order dated 17.04.2013 in Appeal No. 75 of 2012 decided that the

principles of Gross Up tax is applicable to the CERC as well as State

Commission regulation also.

[12.3] Considering the above, we decide that the Solar Power Project Developers are

eligible for RoE available 14% post-tax with grossing up of Income Tax and

accordingly the effect of the same be given in the tariff determination.

[13] Now we deal with the issue raised by the Solar Energy Society with regard to

annual degradation of Solar Plant and the formula for levelised tariff is

concerned and the finding of Hon’ble Tribunal on the above issue is as under:

“…..13. The sixth issue is regarding the consideration of 1%

annual degradation of plant and formula used for levellised tariff.

13.1 According to the Appellant, the State Commission has not

considered degradation of plant as approved by the State

Commission in the impugned order in computing the levelised

tariff.

13.2 According to learned counsel for the Respondent no. 2, the

State Commission has already considered the generation that will

be available from the Solar Power Developers after applying

degradation factor.

13.3 Learned Sr. counsel for the State Commission has informed

that performance degradation has been taken into account by the

State Commission while determining the year to year tariff and

the same has also been given effect while determining the

levellised tariff. The State Commission has also furnished

calculation sheet indicating the gross generation after taking into

account the performance degradation.

13.4 We find from these calculations that the State Commission

has taken into account the annual degradation of 1% while

working out the gross in the tariff stream of 25 years. The State

Commission has computed year-wise tariff from year wise

expenses and net generation which has been discounted by taking

annual discount rate. Levellised tariff has been determined by

dividing the arithmetic summation of year wise tariff divided by

the arithmetic summation of discount factor. Learned Senior

counsel for the Appellant argued that with equated levellised

tariff, the cash stream for 25 years is constant only if generation

is assumed to be constant. But since the State Commission has

allowed annual degradation @ 1%, the annual cash flows will

also reduce each year by 1% as tariff is constant. The reduction in

cash flows is solely due to reduction in generation. Hence the

levellised tariff has to be computed with cash flows reducing in

the same proportion as generation. The Appellant in the written

submission gave illustration to explain their point.

13.5 We feel that the issue raised by the Appellant needs to be

considered by the State Commission to examine if the levellising

tariff allowed by the State Commission ensures recovery of the

revenues permissible to the Developers during the life cycle of the

plant at the energy sent out with degradation. Accordingly, the

State Commission shall consider the submissions of the Appellant

and decide the matter…..”

In the aforesaid decision, the Hon’ble Tribunal directed the Commission to

examine if levelised tariff allowed by the Commission ensures recovery of

revenue permissible to the developers. Therefore, it is necessary to verify the

degradation considered by the Commission at rate of 1% p.a. and its impact on

levelised tariff.

[13.1] The petitioner contended that the calculation done by the Commission with

regard to levelised tariff with a formula based on absolute value of tariff stream

for 25 years does not correctly captured the impact of degradation of plant

approved by the Commission in the impugned Order. The derivation of formula

to be used for calculating a levellised tariff with generation does not remain

constant for 25 years with an assumption that the Present Value (PV) of

revenues after levelisation is same as that without levelisation. The correct

formula is as under:

(AFCi x Di)

T = ______________

Si x Di (Revenue Stream Formula)

Whereas,

AFCi = Annual Fixed Charges;

Si =Unit Generated respectively for year;

(i) = For 25 Years.

[13.2] The Petitioner further contended that the formula considered by the Commission

is applicable only when the generation is constant for 25 years. In that case only,

the levelisation of tariff would yield the same tariff as that of revenue stream.

[13.3] The levellised tariff arrived by using the Commission’s methodology of using

tariff stream levelisation is Rs. 10.37/Unit and that by using revenue stream

proposed by the petitioner works out to Rs. 10.49/Unit. The levellised tariff

formula adopted by the Commission works out with consideration of

degradation is not correct. As a result, the levellised tariff works out by the

formula considered by the Commission and revenue stream formula proposed by

the Solar Energy Society of India are different. The levelised tariff with tariff

stream would not yield the realistic present value equivalent to that without

levelisation unless the levelisation- is done with revenue stream. CERC is

considering the revenue stream for computation of levelisation tariff and

accelerated depreciation benefit as the plant is considered operational for the

second half of the first year and not full year. It is necessary to determine the

revenue for 25 years which has been given by the Commission in yearly

Average Fixed Cost (AFC) is the same as the PV of revenue with levelised

tariff.

[14] Learned Advocate Shri M.G. Ramchandran, on behalf of the GUVNL, submitted

that the Commission has considered the lowering the PV Module capacity of

Solar Power Plant or by progressively reducing the capacity utilization factor

taking into account that the Solar PV System will be degraded and the generation

will be reduced. The Commission has considered the CUF @ of 18% and the

energy generation with consideration of degradation of Solar PV Module. Thus,

the Commission had considered the effect of annual degradation of Solar PV

Power Projects. The decision of the Hon’ble APTEL cannot be considered as

directions to the Commission to give double benefit i.e. both the reduction in

CUF and also reduction in capacity of Solar Power Plant for the purpose of

deciding the annual fixed charges to be apportioned amongst the unit generated

for recovery of the Tariff.

[15] We have carefully considered the submissions made by the parties. The issue

emerged for the decision of the Commission is as to whether the Commission has

considered the degradation of the Solar Plant and the effect of the degradation on

gross energy generation, net energy available to the distribution licensees and

effect of the above degradation on levelised tariff while determining the revenue

permissible to the developer in the life cycle of the Solar Power Plant.

[15.1] We note that the Commission has determined the tariff under Order No. 1 of 2012

dated 27.01.2012, with consideration of the degradation of the Solar Power Plant

at the rate of 1 % per annum as per para 2.3.3 of the Order which read as under:

“……2.3.3. Annual Degradation in Performance:

A performance warranty for 25 years on photovoltaic modules is an

industry standard today. Typical warranties guarantee a performance of

more than 90% for the first 10 years, and a performance of more than

80% for the next 15 years, adding to a total of 25 years. This implies an

annual degradation rate of 0.9% for the photovoltaic modules. No

substantial degradation is expected in the performance of the balance of

system.

Hence, the Commission decides to consider the annual degradation in

the performance of photovoltaic systems at 1%.......”

Accordingly, the Commission has given effect of the degradation in the tariff

determination by the Commission and considered that the gross generation

reduced on year to year basis after first year up to 25th

year of the Solar Power

Plant. The effect of the same also reflected in the net energy generation available

from the Solar PV Power Plant. The Commission has also determined year to

year tariff component i.e. (i) RoE, (ii) depreciation, (iii) auxiliary consumption,

(iv) interest on working capital, (v) interest on loan, (vi) Income Tax payable and

also considered the discount rate for levelisation of the tariff. Thus, the

Commission has determined year to year tariff which gives Annual fixed charges

available to the project developers. While deciding the levelised tariff, the

Commission has considered the ‘Tariff Stream’ formula for determination of

tariff.

[15.2] According to this formula, the annual tariff and discount rate works out based on

the annual fixed charges. The above formula state that the tariff of every year and

the discount factor is considered for determination of the tariff. While deciding

the revenue, it is necessary to consider the annual fixed charge and generation

approved by the Commission and discount rate considered by the Commission

while determining the levellised tariff from the formula proposed by the Solar

Energy Society which is revenue based. It is found that the tariff determined by

the Commission with the formula of levelisation is different from the formula

proposed by the petitioner and levelisation of tariff on revenue stream basis

seems to be higher than the tariff determined by the Commission. Moreover, the

revenue stream based levelised tariff seems to be valid as proposed by the

petitioner in which the annual fixed charge with consideration of degradation of

the Solar Power Project be given effect. We also note that while determining the

present value in case of levellised tariff determined by the Commission, the

present value worked out is different from the tariff determined with the formula

suggested by the Solar Energy Society of India and Others. It works out which is

equal to Present Value without levelisation. We therefore, decide that the

levelised tariff be determined with consideration of revenue based formula

proposed by the Solar Energy Society and Others.

Based on the above, we decide to determine the levelised tariff by considering

levelised fixed charges and levelised net generation separately.

[16] In view of the above, we decide that the O& M Charges for Solar Power Project

commissioned during the control period of the Order No. 1 of 2012 dated

27.01.2012 as 9.10 Lakhs/MW with escalation of Rs. 5.72% p.a. We also decide

that the inverter cost be considered as 4.24% of capital cost in the 13th years

instead of 3.81% of capital cost. We also decide the post-tax RoE of 14% be

entitled by the Solar Power Developers with grossing up of Income tax. We also

decide that the degradation of the Solar Power Plant be considered as @1% and

the revenue steam of the annual revenue determine be levelised as per the

formula stated in para 15.2 above. The other parameters of the tariff which are

normative parameters decided by the Commission in Order No. 1 of 2012 dated

27.01.2012 shall remain unchanged and the same are considered for re-

determination of tariff for the projects which are commissioned during the

control period of Order No. 1 of 2012 dated 27.01.2012 as under:

COMMISSION’S ORDER

The Commission approves the tariff for Procurement by the Distribution

Licensees and others from Solar Energy Projects for the Control Period from 29

January, 2012 to 31 March, 2015 as outlined in the table below:

Period 29 Jan. ’12 to

31 Mar. ’13

1 Apr. ’13 to

31 Mar. ’14

1 Apr. ’14 to

31 Mar. ’15

For megawatt-scale photovoltaic projects availing accelerated depreciation

Levellised Tariff for 25

years

Rs. 9.70 per kWh Rs. 9.02 per kWh Rs. 8.39 per kWh

For first 12 years Rs. 10.52 per kWh Rs. 9.64 per kWh Rs. 8.82 per kWh

For subsequent 13 years Rs. 7.00 per kWh Rs. 7.00 per kWh Rs. 7.00 per kWh

For kilowatt-scale photovoltaic projects availing accelerated depreciation

Levellised Tariff for 25

years

Rs. 11.64 per kWh Rs. 10.82 per kWh Rs. 10.07 per

kWh

Levellised Tariff for Solar Thermal

Projects

With accelerated depreciation benefit: Rs. 11.83 per kWh for 25 years

[17] We order accordingly.

[18] With this order, the present petition is disposed of.

Sd/ Sd/-

[DR. M. K. IYER] [PRAVINBHAI PATEL]

MEMBER (F) CHAIRMAN

Place: Gandhinagar.

Date: 07/07/2014.

TARIFF CALCULATIONS:

Year Unit 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

(Technical)

Gross Generation: MU 1.58 1.56 1.55 1.53 1.51 1.50 1.48 1.47 1.45 1.44 1.43 1.41 1.40 1.38 1.37 1.36 1.34 1.33 1.32 1.30 1.29 1.28 1.26 1.25 1.24

Auxiliary Consumption: MU 0.0039 0.0039 0.0039 0.0038 0.0038 0.0037 0.0037 0.0037 0.0036 0.0036 0.0036 0.0035 0.0035 0.0035 0.0034 0.0034 0.0034 0.0033 0.0033 0.0033 0.0032 0.0032 0.0032 0.0031 0.0031

Net Generation: MU 1.57 1.56 1.54 1.53 1.51 1.50 1.48 1.47 1.45 1.44 1.42 1.41 1.39 1.38 1.37 1.35 1.34 1.33 1.31 1.30 1.29 1.27 1.26 1.25 1.24

(Financial)

Fixed Cost Unit

O&M Expenses Rs. Lakh 9.10 9.62 10.17 10.75 11.37 12.02 12.71 13.43 14.20 15.01 15.87 16.78 17.74 18.75 19.83 20.96 22.16 23.43 24.77 26.18 27.68 29.26 30.94 32.71 34.58

Other Expenses Rs. Lakh - - - - - - - - - - - - 42.40 - - - - - - - - - - - -

Depreciation Rs. Lakh 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00

Interest on Loan Rs. Lakh 86.83 77.73 68.63 59.53 50.43 41.33 32.23 23.13 14.03 4.93 - - - - - - - - - - - - - - -

Interest on Working Capital Rs. Lakh 1.81 1.80 1.78 1.77 1.76 1.75 1.74 1.73 1.73 1.72 1.71 1.70 1.70 1.69 1.69 1.69 1.68 1.68 1.68 1.68 1.68 1.68 1.69 1.69 1.69

Insurance Cost Rs. Lakh 3.50 3.29 3.08 2.87 2.66 2.45 2.24 2.03 1.82 1.61 1.40 1.33 1.26 1.19 1.12 1.05 0.98 0.91 0.84 0.77 0.70 0.63 0.56 0.49 0.42

Return on Equity Rs. Lakh 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00

Tax Rs. Lakh 10.51 10.51 10.51 10.51 10.51 10.51 10.51 10.51 10.51 10.51 20.17 20.17 20.17 20.17 20.17 20.17 20.17 20.17 20.17 20.17 20.17 20.17 20.17 20.17 20.17

Gross Cost Rs. Lakh 213.74 204.94 196.17 187.43 178.72 170.06 161.42 152.83 144.28 135.78 101.15 101.99 145.27 103.81 104.81 105.87 106.99 108.19 109.46 110.81 112.23 113.75 115.36 117.06 118.87

A.D. Tax Benefit Rs. Lakh 240.09 32.45 (9.08) (17.39) (19.05) (19.38) (19.45) (19.46) (19.47) (19.47) (6.49) (6.49) (6.49) (6.49) (6.49) (6.49) (6.49) (6.49) (6.49) (6.49) (6.49) (6.49) (6.49) (6.49) (6.49)

Net Cost Rs. Lakh (26.35) 172.50 205.25 204.82 197.78 189.44 180.87 172.29 163.75 155.24 107.64 108.47 151.76 110.30 111.30 112.36 113.48 114.68 115.95 117.29 118.72 120.24 121.84 123.55 125.35

Discount Factor 10.74% 1.00 0.903 0.815 0.736 0.665 0.600 0.542 0.490 0.442 0.399 0.361 0.326 0.294 0.265 0.240 0.216 0.195 0.177 0.159 0.144 0.130 0.117 0.106 0.096 0.086 9.51

Discounted Net Generation MU 1.57 1.41 1.26 1.12 1.00 0.90 0.80 0.72 0.64 0.57 0.51 0.46 0.41 0.37 0.33 0.29 0.26 0.23 0.21 0.19 0.17 0.15 0.13 0.12 0.11

Discounted Gross Cost Rs. Lakh 213.74 185.06 159.96 138.02 118.84 102.11 87.53 74.83 63.79 54.21 36.47 33.20 42.71 27.56 25.13 22.92 20.92 19.10 17.45 15.95 14.59 13.35 12.23 11.20 10.27

Discounted Net Cost Rs. Lakh (26.35) 155.77 167.37 150.82 131.51 113.75 98.07 84.36 72.40 61.98 38.81 35.32 44.62 29.28 26.68 24.32 22.19 20.24 18.48 16.88 15.43 14.11 12.92 11.83 10.84

Levelised Net Generation MU 1.47

Levelised Gross Cost Rs. Lakh 160.02

Levelised Net Cost Rs. Lakh 142.18

Levelised Gross Tariff Rs./kWh 10.92

Levelised Net Tariff Rs./kWh 9.70

Solar PV Tariff as per APTEL Order- Annexure I

TARIFF CALCULATIONS:

Solar Tariff for kW Scale as per APTEL Order - Annexure II

Year Unit 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

(Technical) Gross

Generation: MU 1.58 1.56 1.55 1.53 1.51 1.50 1.48 1.47 1.45 1.44 1.43 1.41 1.40 1.38 1.37 1.36 1.34 1.33 1.32 1.30 1.29 1.28 1.26 1.25 1.24 Auxiliary

Consumption: MU 0.0039 0.0039 0.0039 0.0038 0.0038 0.0037 0.0037 0.0037 0.0036 0.0036 0.0036 0.0035 0.0035 0.0035 0.0034 0.0034 0.0034 0.0033 0.0033 0.0033 0.0032 0.0032 0.0032 0.0031 0.0031 Net

Generation: MU 1.57 1.56 1.54 1.53 1.51 1.50 1.48 1.47 1.45 1.44 1.42 1.41 1.39 1.38 1.37 1.35 1.34 1.33 1.31 1.30 1.29 1.27 1.26 1.25 1.24

(Financial)

Fixed Cost Unit

O&M Expenses Rs. Lakh 10.92

11.54

12.20

12.90

13.64

14.42

15.25

16.12

17.04

18.02

19.05

20.13

21.29

22.50

23.79

25.15

26.59

28.11

29.72

31.42

33.22

35.12

37.13

39.25

41.49

Other Expenses Rs. Lakh

-

-

-

-

-

-

-

-

-

-

-

-

50.88

-

-

-

-

-

-

-

-

-

-

-

-

Depreciation Rs. Lakh 72.00

72.00

72.00

72.00

72.00

72.00

72.00

72.00

72.00

72.00

24.00

24.00

24.00

24.00

24.00

24.00

24.00

24.00

24.00

24.00

24.00

24.00

24.00

24.00

24.00

Interest on Loan Rs. Lakh

104.20

93.28

82.36

71.44

60.52

49.60

38.68

27.76

16.84

5.92

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Interest on Working Capital Rs. Lakh

2.17

2.16

2.14

2.13

2.12

2.10

2.09

2.08

2.07

2.06

2.05

2.05

2.04

2.03

2.03

2.02

2.02

2.02

2.02

2.02

2.02

2.02

2.02

2.03

2.03

Insurance Cost Rs. Lakh 4.20

3.95

3.70

3.44

3.19

2.94

2.69

2.44

2.18

1.93

1.68

1.60

1.51

1.43

1.34

1.26

1.18

1.09

1.01

0.92

0.84

0.76

0.67

0.59

0.50

Return on Equity Rs. Lakh

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

50.40

Tax Rs. Lakh 12.61

12.61

12.61

12.61

12.61

12.61

12.61

12.61

12.61

12.61

24.21

24.21

24.21

24.21

24.21

24.21

24.21

24.21

24.21

24.21

24.21

24.21

24.21

24.21

24.21

Gross Cost Rs. Lakh 256.49

245.93

235.40

224.92

214.47 204.07

193.71

183.40

173.14 162.93

121.39

122.38

174.32

124.57

125.77

127.04

128.39

129.83

131.35

132.97

134.68

136.50

138.43

140.47

142.64

A.D. Tax Benefit Rs. Lakh

288.11

38.93

(10.90)

(20.87)

(22.86)

(23.26)

(23.34)

(23.36)

(23.36)

(23.36)

(7.79)

(7.79)

(7.79)

(7.79)

(7.79)

(7.79)

(7.79)

(7.79)

(7.79)

(7.79)

(7.79)

(7.79)

(7.79)

(7.79)

(7.79)

Net Cost Rs. Lakh (31.62)

207.00

246.31

245.79

237.33 227.33

217.05

206.75

196.50 186.29

129.17

130.17

182.11

132.36

133.56

134.83

136.18

137.61

139.14

140.75

142.47

144.29

146.21

148.26

150.43

Discount Factor 10.74%

1.00

0.903

0.815

0.736

0.665

0.600

0.542

0.490

0.442

0.399

0.361

0.326

0.294

0.265

0.240

0.216

0.195

0.177

0.159

0.144

0.130

0.117

0.106

0.096

0.086 9.51

Discounted Net Generation MU

1.57

1.41

1.26

1.12

1.00

0.90

0.80

0.72

0.64

0.57

0.51

0.46

0.41

0.37

0.33

0.29

0.26

0.23

0.21

0.19

0.17

0.15

0.13

0.12

0.11

Discounted Gross Cost Rs. Lakh

256.49

222.08

191.96

165.62

142.61

122.53

105.03

89.80

76.55

65.05

43.76

39.84

51.25

33.07

30.15

27.50

25.10

22.92

20.94

19.14

17.51

16.02

14.67

13.45

12.33

Discounted Net Cost Rs. Lakh

(31.62)

186.92

200.85

180.98

157.81

136.50

117.69

101.23

86.88

74.38

46.57

42.38

53.54

35.14

32.02

29.19

26.62

24.29

22.18

20.26

18.52

16.94

15.50

14.19

13.00

Levelised Net Generation MU

1.47

Levelised Gross Cost Rs. Lakh

192.02

Levelised Net Cost Rs. Lakh

170.62

Levelised

Gross Tariff Rs./kWh 13.10

Levelised Net Tariff Rs./kWh

11.64

TARIFF CALCULATIONS: Solar Thermal Tariff as per APTEL Order - Annexure III

Year Unit 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

(Technical) Gross

Generation: MU 2.01 2.01 2.00 2.00 1.99 1.99 1.98 1.98 1.97 1.97 1.96 1.96 1.96 1.95 1.95 1.94 1.94 1.93 1.93 1.92 1.92 1.91 1.91 1.90 1.90

Auxiliary Consumption: MU 0.201 0.201 0.200 0.200 0.199 0.199 0.198 0.198 0.197 0.197 0.196 0.196 0.196 0.195 0.195 0.194 0.194 0.193 0.193 0.192 0.192 0.191 0.191 0.190 0.190

Net Generation: MU 1.81 1.81 1.80 1.80 1.80 1.79 1.79 1.78 1.78 1.77 1.77 1.76 1.76 1.76 1.75 1.75 1.74 1.74 1.73 1.73 1.72 1.72 1.72 1.71 1.71

(Financial)

Fixed Cost Unit O&M

Expenses Rs. Lakh

21.00

22.20

23.47

24.81

26.23

27.73

29.32

31.00

32.77

34.64

36.63

38.72

40.94

43.28

45.75

48.37

51.14

54.06

57.15

60.42

63.88

67.53

71.40

75.48

79.80

Other Expenses

Rs. Lakh

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Depreciation Rs. Lakh

84.00

84.00

84.00

84.00

84.00

84.00

84.00

84.00

84.00

84.00

28.00

28.00

28.00

28.00

28.00

28.00

28.00

28.00

28.00

28.00

28.00

28.00

28.00

28.00

28.00

Interest on Loan

Rs. Lakh

121.56

108.82

96.08

83.34

70.60

57.86

45.12

32.38

19.64

6.90

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Interest on Working Capital

Rs. Lakh

2.61

2.61

2.62

2.63

2.64

2.65

2.66

2.67

2.68

2.69

2.71

2.72

2.74

2.75

2.77

2.79

2.82

2.84

2.86

2.89

2.92

2.95

2.98

3.02

3.06

Insurance Cost

Rs. Lakh

4.90

4.61

4.31

4.02

3.72

3.43

3.14

2.84

2.55

2.25

1.96

1.86

1.76

1.67

1.57

1.47

1.37

1.27

1.18

1.08

0.98

0.88

0.78

0.69

0.59

Return on Equity

Rs. Lakh

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

58.80

Tax Rs. Lakh

14.71

14.71

14.71

14.71

14.71

14.71

14.71

14.71

14.71

14.71

28.24

28.24

28.24

28.24

28.24

28.24

28.24

28.24

28.24

28.24

28.24

28.24

28.24

28.24

28.24

Gross Cost Rs. Lakh

307.58

295.75

283.99

272.31

260.70

249.18

237.74

226.39

215.14

204.00

156.33

158.34

160.48

162.74

165.13

167.67

170.36

173.22

176.23

179.43

182.82

186.41

190.20

194.23

198.48

A.D. Tax Benefit

Rs. Lakh

336.13

45.42

(12.72)

(24.35)

(26.67)

(27.14)

(27.23)

(27.25)

(27.25)

(27.25)

(9.08)

(9.08)

(9.08)

(9.08)

(9.08)

(9.08)

(9.08)

(9.08)

(9.08)

(9.08)

(9.08)

(9.08)

(9.08)

(9.08)

(9.08)

Net Cost Rs. Lakh

(28.55)

250.33

296.71

296.66

287.37

276.32

264.97

253.64

242.40

231.25

165.42

167.43

169.56

171.82

174.22

176.76

179.45

182.30

185.32

188.52

191.90

195.49

199.29

203.31

207.57

BEFORE THE GUJARAT ELECTRICITY REGULATORY...

Documents

Transcript of BEFORE THE GUJARAT ELECTRICITY REGULATORY...