Comments on Draft Central Electricity Regulatory Commission (Terms and Conditions of Tariff) (First Amendment) Regulations, 2020 (Draft amendment No. L-1/236/2018/CERC dated 01/04/2020) 13 th July 2020 …Message Box ( Arial, Font size 18 Bold)
Comments on Draft CERC Tariff Regulations (First Amendment) Pg1 Tata Power’s Comments Proposed in Draft 1. 2.4 Clause (48) of Regulation 3 of the Principal 1. AUXen should be replaced with AUXe in line with definition of Auxiliary energy Regulations shall be substituted as under: consumption for ECS • “( 48) ‘Plant Load Factor’ or ‘(PLF)’ in relation to There may be requirement of one ECS for meeting each revised parameter of athermal generating station or unit thereoffor a given emission norm (e.g. FGD for SOx, De-NOx for NOx, ESP for Particulate matter period means the total sent out energy corresponding and ZLD for water norm) and they may not only have different auxiliary to scheduled generation during the period, expressed consumptions but may also be installed at different times as a percentage of sent out energy corresponding to • Hence, it is proposed to define an additional term “ AUXen ” which would be the installed capacity in that period and shall be computed normative auxiliary consumption of nth ECS required for meeting each norm. in accordance with the following formula: Definitions • Following formula may be inserted in the definition to bring further clarity. 𝑜 AUXe = σ 𝑜=1 𝐵𝑉𝑌𝑓𝑜 Where AUXen is Normative Auxiliary Energy Consumption in the nth ECS as a percentage of gross energy generation; Where, AUXn= Normative Auxiliary Energy Consumption as a percentage of gross energy generation; and AUXen= Normative Auxiliary Energy Consumption for emission control system as a percentage of gross energy generation, wherever applicable. ” …Message Box ( Arial, Font size 18 Bold) 2 Comments on Draft CERC Tariff Regulations (First Amendment)
Comments on Draft CERC Tariff Regulations (First Amendment) Pg1 Tata Power’s Comments Proposed in Draft Payment of Capacity • AUXen is for individual component of ECS such as AUXe1 for FGD, AUXe2 for NOx 21. Amendment of Regulation 42 of the Principal Computation and etc. where as per our understanding AUXe is the sum of all such AUXen. Regulations • This clarity needs to be brought out in definition of AUXe provided at Sl. No 2.1 of 21.2. Clause (5) of Regulation 42 of the Principal Charges draft amendment. Hence, in the above, the AUXen should be replaced by AUXe. Regulations along with the proviso of the said clause shall be substituted as under:- ∞ • Where = σ 𝑜=1 𝐵𝑉𝑌𝑓𝑜 , AUXe AUXen is Normative Auxiliary Energy … .. Consumption for ‘nth’ component of the emission control system as a percentage of gross energy generation Where AUXen = Normative auxiliary energy consumption for pollution control system as a percentage of gross energy generation, wherever applicable. 4. Amendment of Regulation 9 of the Principal Further clarity is required on following aspects as proposed amendment would not Regulations: Tariff Determination only require multiple petitions to be filed for each station but also there would not 4.1. A new proviso, namely, Fourth Proviso shall be be any tariff available on the date of operation for billing to beneficiaries : added to Clause (1) of Regulation 9 of the Principal • Initial teething problems with each ECS during first 6-12 months of its Regulations as under: operation and it may not be possible for the station to adhere to declared “Provided also that the generating company shall file an availability during peak/off peak hours for reasons beyond its control. application for determination of supplementary tariff for • It is suggested to determine provisional tariff for each ECS based on the emission control system installed in the coal or provisional Capital Cost as per in-principle approval by Hon’ble Commission lignite based thermal generating station in accordance subject to final true-up with these regulations not later than 60 days from the date of operation of such emission control system. ” …Message Box ( Arial, Font size 18 Bold) Comments on Draft CERC Tariff Regulations (First Amendment) 3
Comments on Draft CERC Tariff Regulations (First Amendment) Pg1 Tata Power’s Comments Proposed in Draft • Dispensation in deviation to principle of Regulatory Certainty 12. Amendment of Regulation 30 of the Principal Regulation • Detrimental to investor sentiments , jeopardize Capital Investment Plan for revised emission norms per-se and likely to increase the Tariff 12.1. In the first proviso under Clause (2) of Regulation 30 of the • Compliance of emission norms would require huge investment and in order to tie-up for financial Principal Regulations, the words arrangements amid huge NPAs in the power sector, it is crucial to have in place suitable norms which “excluding additional facilitate the funding . capitalization due to Change in Return on Equity • Companies might prefer to increase debt component - it will increase the overall WACC increasing the Law,” shall be deleted and at the Tariff and defeating the sole intent of reduction in Tariff . It will also have compounding impact on Capital end of the said proviso, the words Cost with increase in IDC and expressions “or in the • Discrimination among generators who have finalised an agreement with lenders. It will be like going back absence of actual loan portfolio of the generating station or the on promise made under the principal regulations attracting the doctrine of promissory estoppel . transmission system, the • Equitable treatment of cost of debt and cost of Equity which is in deviation to financial principles - weighted average rate of interest Existing generating stations having 10-12 years remaining useful life, with gestation period of 28-30 of the generating company or the months for implementation of capital intensive ECS, is required to be given higher RoE to have suitable IRR transmission licensee, as the case • Disparity between Existing and New Stations - ROE at 15.5% for new stations whereas for similar may be, as a whole, shall be investment, existing stations would be eligible for ROE at cost of debt which is unjust and bad in law considered; ” shall be added. • Impact of unforeseen challenges associated with implementation and O&M of ECS In light of above submissions, it is requested that Hon’ble Commission may kindly retain the existing norms of allowing a ret urn on equity of 15.5% (Post tax) on equity infused for the additional capitalisation incurred on account of any ‘Change in Law’ event for any project. …Message Box ( Arial, Font size 18 Bold) Comments on Draft CERC Tariff Regulations (First Amendment) 4
Comments on Draft CERC Tariff Regulations (First Amendment) Pg1 Tata Power’s Comments Proposed in Draft Further clarity is required on following aspects to ensure that (i) 90% depreciation is 14. Amendment of Regulation 33 of the recovered in balance useful life and (ii) depreciation rates during loan tenure are enough to Principal Regulations cover loan repayments. 14.1. A new clause, namely, Clause (9) shall be • That Proposed Amendment is to be read with regulations stipulated under clause 1 to 8 of added after Clause (8) of Regulation 33 of the Depreciation the principal Regulation 33. Principal Regulations as under: • Depreciation on additional capital cost on account of revised emission standards shall be “( 9) The depreciation of the emission control calculated annually as higher of the following rates (i) based on SLM and at rates specified system shall be computed from its date of in Appendix-I to these regulations, and (ii) based on SLM over balance useful life of the operation for the balance useful life or extended station. life of the generating station, as the case may be. ” • Depreciation for generating station having multiple units with different useful life and the ECS achieving COD on different dates . • Ensure recovery of 90% of the GFA within the balance useful life of the station and to ensure loan repayment within the first 12 years or balance life, whichever is lower …Message Box ( Arial, Font size 18 Bold) Comments on Draft CERC Tariff Regulations (First Amendment) 5
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