chhattisgarh state electricity regulatory · pdf fileelectricity board (cseb) and is the...

Chhattisgarh State Electricity Regulatory Commission Irrigation Colony, Shanti Nagar, Raipur (CG.) Pin-492001

Phone: 91-771-4048788, Fax: 2445857 Website: cserc.gov.in, Email: [email protected]

In the matter of Approval of Capital Investment Plan filed by Chhattisgarh State Power Transmission Company Ltd. for FY2013-

14 to FY2015-16.

Petition No. 51 of 2012(M)

M/s Chhattisgarh State Power Transmission

Company Limited ..... Petitioner

Present: Manoj Dey, Chairman

Vinod Shrivastava, Member

ORDER

(Passed on 09.04.2013)

1. Chhattisgarh State Power Transmission Company Limited (herewith

called ‘CSPTCL’) is a successor company of Chhattisgarh State

Electricity Board (CSEB) and is the designated State Transmission Utility

in the State, providing transmission services to Chhattisgarh State

Power Distribution Company Limited (herewith called ‘CSPDCL’).

2. Based on the principles contained in Sections 61 and 62 of the

Electricity Act 2003, the National Electricity Policy and the Tariff Policy

notified by the Central Government, the Commission notified the

regulations namely Chhattisgarh State Electricity Regulatory

Commission (Terms and Conditions for determination of tariff according

to Multi-Year Tariff principles and Methodology and Procedure for

determination of Expected revenue from Tariff and Charges)

Regulations, 2012 (herewith referred as ‘MYT Regulations 2012’) on 6th

October 2012.

3. As per Regulation 2.1 (a) of these regulations, the scope of regulations

covers the State Transmission Utility. CSPTCL is the STU in the state

and as such is covered under the said regulations.

4. The Regulations 7 of the MYT Regulations, 2012 relate to filing of

Capital Investment Plan by the entities covered by the MYT Regulations

2012. The relevant portion is reproduced for ready reference.

“7. CAPITAL INVESTMENT PLAN

7.1 The Generating Company, Transmission Licensee, and Distribution Licensee shall file for approval of the Commission a capital

investment plan by 31st October 2012. The capital investment plan

Capital Investment Plan Order (for CSPTCL) FY 2013-14 to FY 2015-16

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should cover the entire Control Period, with details for each year of

the Control Period.

7.2 The capital investment plan may be in respect of new generation projects or transmission/distribution schemes (for lines, sub stations, bays, etc.) for capacity addition/ enhancement or

renovation of existing capacities on completion of life or work

required due to change in law, or deferred execution of work included in original scope or efficiency improvement or such works

of value more than Rs. 1Crore which may be expedient for safe

operation of the system.

(a) The capital investment plan shall show separately, on-going

projects that will spill over into the Control Period, and new

projects (along with justification) that will commence in the

Control Period but may be completed within or beyond the Control Period. The capital investment plan shall contain the

scheme details, justification for the work, capitalization

schedule, capital structure and cost benefit analysis (where applicable)....”

5. Accordingly, CSPTCL submitted the instant petition for approval of its

Capital Investment Plan for the control period FY2013-14 to FY 2015-16

on dated 27.11.2012. After due verification, it was registered on

11.12.2012 as petition No 51 of 2012(M). The proposals include such

works which are expected to be completed after the control period but

the investment will be required within the instant control period. Prayer

for approval of spill over works (for Power Evacuation and other

schemes approved vide order dated 01.06.2010 and order dated

28.03.2012), has also been made.

6. A Technical Validation Session (TVS) on the petition was held on

28.12.2012 in the office of Commission. During the validation session,

the utility was asked to submit clarifications / additional information for

prudent analysis of the proposals mentioned in the petition.

7. During scrutiny certain additional information was felt necessary, the

utility was directed to submit such details and the same have been

taken on record. The Capitalization schedules for each of the scheme

has been estimated based on the status report filed by the utility and

additional information received.

8. The utility was directed to publish gist of its proposals in the news

papers in the form of a public notice inviting suggestions and objections

on the same. The petition was uploaded on the website of the

Commission and also on the website of the companies and made it

public. The public notice appeared in newspapers; namely, Hari Bhoomi,

Bilaspur (Hindi), Navbharat Raipur (Hindi) & Hitavada Raipur (English)

on 20.01.2013. 21 days time was granted for submission of e

comments/ suggestions/ objections on the petition.


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9. A notice for hearing scheduled on 26.02.2013, in the office of

Commission, was published separately on 19.02.2012 in Navbharat

Bilaspur, Central Chronicle Raipur and Hari-Bhoomi Raipur.

10. Neither any comment from any stakeholder was received nor any

objection was presented in the hearing too.

11. On 5th March 2013, a meeting of State Advisory Committee was

convened and a presentation on the Capital Investment Plan filed by

CSPTCL was organized for the stakeholder.

12. Based on the available data and information, the Commission is issuing

this order and approving in-principle the Capital Investment Plan

proposed by the STU with respect to capital expenditure plans to the

extent and as per observations/ directives mentioned in attached

documents.

13. The Capital Investment Plan is being approved for the control period

based on the petition filed by the utility. The utility may request for

change / additions as per priority requirement, if any, and may submit

additional / revised plan for approval as per MYT Regulation 2012.

14. Spillover Works: CSPTCL has proposed some spill over works which

were approved vide previous orders but are going to continue in the

instant control period. It also includes provision for 400KV substation

Bilaspur and its associated line for connectivity to PGCIL, Surhela,

Mopka etc, for which a review is already pending. Barring provision for

The provision against such schemes under review was Rs. 325.62 Cr.

out of which CSPTCL has stated to have already incurred expenditure of

Rs. 15 Cr. Accordingly, rest of investment of Rs.310.62 Cr is not being

considered at this juncture. Rest of the spillover work may be continued

by CSPTCL. We approve capital expenditure on spillover works of Rs.

575.24 (885.86 – 310.62) Cr.

The list of approved spill over works for control period FY 2013-14 to

FY 2015-16 is given in annexure A-1.

15. Normal Development Scheme: CSPTCL has proposed various

works under normal development scheme for purpose of system

strengthening, system reliability, voltage improvement and better

quality of supply. It has proposed addition of one 400 KV substation,

five 220 KV substation and twenty one 132 KV substations. Similarly

erection of 460 ckt km 400 KV line, 790 ckt km 220 KV line and 1814

ckt km 132 KV line is proposed in the plan. Addition of one 400/220 KV


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transformer, five 220/132 KV transformers and seventeen 132/33 KV

transformers is also planned. Five number 132/33 KV transformers are

also proposed to be augmented in the control period.

We have gone through the proposals in detail. CSPDCL, the sole long

term beneficiary, was also provided opportunity to offer comments.

After detailed technical deliberation on the load pattern and alternative

means, views have been formed on each of the scheme. While the

capital expenses considered (mostly based on submissions of utility) &

consequential capitalization have been tabulated in the Annexure-II, the

ratio adopted in each of the case is elaborated hereunder:-

15.1 400/220 KV substation :

CSPTCL has proposed 400/220 KV substation at Dhamtari with LILO

arrangement of 400 KV Raita-Jagdalpur line under execution. This

substation is proposed to be connected to 220 KV Gurur substation.

We note that the proposed substation will facilitate load sharing of Gurur

substation and reduce loading of 220 KV Bhilai-Gurur line. Its

connectivity to other nearby substations, either existing or proposed,

may also be possible. Accordingly, we approve the scheme, however

utility is advised that the location of 400KV Dhamtari substation should

be so fixed that line length for connectivity is optimized.

15.2 220 KV substation :

(i) 220 KV substation Jagdalpur

220 KV substation at Jagdalpur is proposed by CSPTCL. During

TVS it was pointed out by the officers of the Commission that

400/220 KV substation at Jagdalpur is already approved, locating

220 KV substation in the same premises will not only save

considerable capital cost but will bring in savings in recurring

O&M cost too. As the utility submitted space constraint, it was

pointed out that Raita 400KV S/s also have approximately

similar space constraints yet 220KV S/s has been accommodated

by way of compact designing. As Raita substation has 10 bays

and Jagadalpur 400 KV s/s has only 4 bays, feasibility of such

accommodation must be explored earnestly.

To our dismay, we note that the advice has not been given any

heed, no study has been undertaken (at-least to the knowledge

of this Commission) as such in the larger public interest, we are

constrained to take a position that Services of reputed and

experienced consultant may be engaged for the purpose of


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accommodating lay out design and drawing of 220 KV substation

Jagdalpur in the 400 KV substation premises. Possibility of

acquisition of adjacent land, if any, may also be explored.

Accordingly we are allowing 220 KV Jagadalpur S/s but do not

intend to allow proposed 220 KV DCDS line between the two

substations. Though we are approving inter-linking line with

existing 132 KV substation Jagdalpur, however we advice that

before taking up the work, possibility of LILO arrangement of

132 KV Kanker-Jagdalpur line at this substation should be

examined. However, leave is granted that if after due exercise

such accommodation is found infeasible, then utility may re-

approach the Commission with detail.

(ii) 220/132 KV substation Borjhara and metal park Raipur.

CSPTCL has given justification for construction of Borjhara

substation with its future connectivity to nearby 132 KV

substations and advantage of load sharing of 132 KV substation

Birgaon. It has also proposed a new 220 KV substation at Metal

Park, Siltara Raipur.

After detail deliberation, we are of the opinion that with

construction of a new 220 KV substation in western part of

Raipur city in place of two 220 KV substation Borjhara and Metal

Park Raipur, desired relief can be achieved. Presently, 220 KV

substation Bhilai is under loaded and spare capacity is available

there. 220 KV Siltara-Bhilai Line and 132 KV Simga-Bhilai line is

lightly loaded. Further, as reported by utility itself, 132 KV

substation Ravanbhata is also expected to be charged in FY 13-

14. Possibility of interconnecting 132 KV substation Birgown and

Siltara should also be explored. In view of these aspects, CSPTCL

should review the proposal and as such the instant proposal of

220 KV substation Borjhara and Metal Park Raipur is deferred.

(iii) 220 KV substation Raita :

The utility has proposed 220 KV substation adjoining to 400 KV

substation with connectivity to proposed 132 KV substations at

Mandhar and Daldalseoni. The 220 KV substation Raita and 132

KV substations at Mandhar and Daldalseoni are proposed to cater

the load of eastern part of the Raipur City.

After due deliberation, we are of the opinion that the proposal

needs a review for change in location near Daldalseoni. It will


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eliminate the requirement of 132 KV substations at Mandhar,

Daldalseoni and Agriculture College Raipur and will result

reduction in expenditure plan of CSPTCL. Utlity may study the

feasibility and revised proposal may be submitted accordingly.

(iv) 220 KV substation Rakhi, Raipur

220 KV substation Rakhi, Raipur is proposed for power supply to

new Raipur. It is stated that establishment of Nai Rajdhani at

Raipur will have vast load in near future and NRDA has made

requirement of two number 220 KV substations in Nai Rajdhani

area.

Looking to the future growth potential and importance of the

substation, the proposal is approved with 220 KV DCDS line from

Raita to Rakhi.

15.3 132 KV substations :

CSPTCL has proposed for construction of 21 nos. 132 substation with

associated lines. CSPDCL, the beneficiary, was served with the list of

proposed 132 substations for offering comments on the proposals but

no response has been received. Based on the available technical

details and keeping in view the past performance, we hold as under :-

(i) 132 KV substation Vadraf Nagar : This substation is fed

through 120 km lengthy 33 KV feeder.

We are of the view that after charging of Pratappur 132 KV

substation, some load sharing of that area will be possible.

Therefore, there is no urgent need of Vadrafnagar substation at

present. However, proposal for land acquisition of Vadrafnagar

substation along with construction of 132 KV Pratappur–

Vadrafnagar line is allowed.

(ii) 132 KV substation Batoli (Ambikapur) : The utility submitted

that this area gets supply through long 33 KV feeder emanating

from 132 KV substation Ambikapur. The area is facing low

voltage problem & having poor voltage regulation. 132 KV

Ambikapur-Pathalgaon line is passing through nearby by Batoli,

which can be utilized to cater LILO arrangement to the proposed

132 kV S/s.

We agree with the proposal.


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(iii) 132 KV substation Bhaiyathan : CSPTCL has proposed 132 KV

substation Bhaiyathan in view of poor voltage regulation and

load growth potential.

We observe that as 132 KV S/s Pratapur and 220/132/33 KV S/s

Vishrampur are already under construction, there is no express

need of the substation at present, therefore, scheme is deferred.

(iv) 132 KV substation Baijalpur (Rajnandgown): The

justification given by CSPTCL for construction of this substation

is vague and not much convincing.

As such, we are not approving this substation at present.

(v) 132 KV substation Lormi : Lormi area is fed from 132 KV

substation Mungeli and construction of 220/132/33 KV substation

Mungeli is under progress. Utility has submitted that this will

improve the voltage profile of the area.

Looking to load of the area and length of 33 KV line, we approve

the construction of 132 KV substation at Lormi.

(vi) 132 KV substation Takhatpur: We have noted that there is

approved plan of construction of 132 substation at Kota, which

will take care of Takhatpur area also. Therefore, we decide to

defer the proposal.

(vii) 132 KV substation Kondatarai (Raigarh): Kondatarai

substation is proposed to be located in out-skirt of Raigarh Town

and will cater the part load of Raigarh Town. 132 KV Raigarh-

Saranggarh line is passing through nearby area, which can be

utilized for the substation.

In view of future load growth of Raigarh and moderate cost

involvement in scheme, we agree with proposal.

(viii) 132 KV substation Kansabel (Raigarh): We have noted that

near Kasabel area new hydel project is coming up therefore,

requirement of this substation is deferred till actual need arises.

(ix) 132 KV substation Dharamjaigarh: Dharamjaigarh area is

supplied through 33 kV lines emanating from 132 substation

Gharghoda, Chaple (Raigarh) and Pathalgaon. CSPCL submitted

that load of this area will increase by virtue of Coal Mines.


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In our opinion, connectivity and load growth need review by

CSPTCL & CSPDCL. Thereafter the proposal may be submitted, if

required. We decide to defer the proposal, at present.

(x) 132 KV substation Charama: This area is fed through Kanker

and Dhamtari 132 KV substation through 33 KV feeder. Load

recorded in these feeders are more than 10 MW. Voltage

regulation is also stated to be beyond limit.

We agree with the proposal, however Voltage Regulation

Calculation Sheet should be submitted to the Commission within

a month.

(xi) 132 KV substation Narayanpur: CSPTCL has submitted

proposal of 132 KV substation Narayanpur which shall be

supplied power through proposed 132 KV line from 132 KV

substation Kondagaon.

The Commission is of the view that 220 KV substation at

Narayanpur will be more appropriate which should be constructed

with LILO arrangement of existing 220 KV Gurur-Barsoor Line

with 132 KV connectivity between Kondagaon and Bhanuprappur

EHV substation. It will reduce the incoming feeder loading of

Kanker substation and will be more useful for connectivity and

load sharing point of view.

Therefore, utility is directed to review the proposal. However, we

approve 132 KV Kondagaon-Narayanpur line with substation land

provision at Narayanpur for 220 kV S/s.

(xii) 132 KV substation Pakhanjur: This area is fed through 33 KV

feeders radiating from Bhanupratappur substation.

We agree with the proposal to the extent of construction of 132

KV Bhanupratappur-Pakhanjur feeder and land provision for

substation at load center in Pakhanjur area.

(xiii) 132 KV substation Bijapur (Bastar) : Bijapur area is fed from

220 KV substation Barsoor via 33 KV Gidam substation through

lengthy 33 KV feeder. Bijapur is district HQ and also nexal

affected area.

We agree with the proposal.

(xiv) 132 KV substation SV Pooling station, Renki Korba: This

pooling station is presently owned by M/s S.V. Power and


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operated by CSPTCL. When it is taken over by CSPTCL then

substation shall be able to feed load of adjoining area inclusive of

SECL.

The proposal is concurred.

(xv) 132 KV substation Vandana Pooling station, Korba: We

note that 220 KV substation at Chhuri is under construction

which is near to Vandana Pooling substation. Chhuri substation

shall also have 33 KV system to feed the load of the area.

Therefore, there is no need of 132 KV substation at Vandana

Pooling station. Accordingly proposal is not accepted.

(xvi) 132 KV substation Sivrinarayan : Sivrinarayan area is fed

from 33 KV feeder radiating from Akaltara substation having

poor Voltage regulation. Looking to upcoming generating stations

in nearby area load growth is expected.

We agree with the scheme. However proposed 132 kV feed from

132 KV substation Kasdol should be reviewed and feed from 220

KV substation Banari (Janjgir) may be examined.

(xvii) 132 KV substation Dabhara: Dabhara is load growth area and

it is having connectivity from Adhabhar and Saranggarh

substation.

We agree with justification provided by CSPTCL, accordingly

scheme is approved. CSPTCL has also proposed its connectivity

from Naharpali (Raighrh) substation, which is to be reviewed.

LILO arrangement of 132 KV Raigarh-Saranggarh line at this

proposed substation is approved.

(xviii) 132 KV substation Nagri: After approving 132 KV substation

Charama, we don’t find merit in the instant proposal rather it is

advised that utility may examine possibility of additional feed

through 33 KV feeder from 132 KV substation Gariyabandh.

(xix) 132 KV substation Mandhar: Following the ratio adopted in

the proposal for 220 KV substation Raita and advise given by us

regarding construction of 220 KV substation at Daldal-Seonin we

are unable to agree with the proposal.

(xx) 132 KV substation Daldalseoni: In view of the ratio already

stated, proposal do not merit consideration.


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(xxi) 132 KV substation Agricultural College, Raipur: After

construction of 220 KV substation at Daldalseoni as advised by

the Commission, the proposal for construction of 132 substation

at Agriculture College, Raipur may be revisited. Presently we are

not inclined to concur the proposal.

15.4 CSPTCL has proposed new transmission lines, second circuiting of 220

KV / 132 KV EHV lines and augmentation / addition of new

transformers at EHV substation. On these proposal, after due scrutiny,

we hold as under:-

(i) Addition of Transmission Lines :

(a) 220 KV Raita-Parswani line: CSPTCL has proposed this

line for 220 KV connectivity between 400 KV substation Raita

and 220 KV substation Parswani (Mahasamund). Proposal is

stated to be for want of better stability of supply to nearby 132

KV substations. After commissioning of 220 KV substation at

Sarayipali, it will feed 132 KV load of some part of Mahasamund

area.

We are of the view that as we are approving proposal for 220 KV

Rakhi substation which includes 220 KV line from Raita

substation to Rakhi, in future Rakhi substation may be connected

to Mahasamund and Doma 220 KV substations. Further

Mahasamund 220 KV substation may also be connected to

Sarayipali 220 KV substation. Thus, there is no express

requirement of direct connectivity between 400 KV substations

Raita and Parsawani. As such we do not agree with the proposal.

(b) 220 KV Bilaspur-Mungeli line: Construction of 400 KV

substation at Bilaspur has already been put under review.

Therefore, the instant proposal is not considered presently.

(ii) Second Circuiting of existing transmission lines :

(a) 220 KV Korba-Vishrampur line: In view of the

increasing load of Vishrampur/ Ambikapur area, we agree with

the proposal.

(b) 132 KV Surhela-Balodabazar line: For better stability in

power supply, we agree with the scheme.

(c) 132 KV Vishrampur-Balrampur line: We agree with the

scheme but second circuiting is to be done up to Pratappur only.


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(d) 132 KV Pathalgown-Ambikapur line: We agree with

this scheme.

(e) 132 KV Kasdol-Balodabazar line: We are of the view

that since 132 KV substation Sivrinarayan is approved to be fed

from Banari 220 KV substation, hence second circuiting of Kasdol

Balodabazar is not essential at present and the same is deferred.

(f) 132 KV Gandai-Saja line: Looking to limited load at

Gandai and double circuit connectivity of Saja to Bemetara, we

do not find force in the proposal for second circuiting of Gandai-

Saja line and as such same is deferred.

(g) 132 KV Bemetara-Saja line: For better voltage at

Gandai and Dhamdha substation, the proposal is concurred.

(h) 132 KV Dhamdha Saja line: We are of the view that

looking to the limited load at Dhamdha and double circuiting of

Bemetara-Saja line, second circuiting of Dhamdha-Saja line is

not required at present. Accordingly proposal is deferred.

(i) 132 KV Magarlod-Gariyabandh line: The load of

Gariabandh substation is limited as such second circuiting of 132

KV Magarlod-Gariyabandh line is not required at present. As

such, scheme is deferred.

(iii) LILO of existing lines: The following proposals for LILO of

existing lines are approved :-

(a) LILO of 220 KV Mopka-Siltara line at 400 KV Substation

Raita.

(b) LILO of 220 KV Bhatapara-Doma line at 400 KV Substation

Raita.

(c) LILO of 132 KV Raigarh-Adhabhar line at 132 KV

Substation Chaple.

15.5 Other capital works :

(i) Addition / augmentation of transformers: CSPTCL has

submitted proposals for additional transformers & augmentation

of transformers at EHV substations. It has also submitted

proposal for installation / replacement of Capacitor Banks, RTUs,

Communication equipments and Construction of administrative

complex for CSPTCL.

It is noted that CSPTCL has taken plea of State Grid Code 2011,

for the works of additional transformers without considering the


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actual loading on substation and substation connectivity to other

near-by substations. In our view the referred provision should

not be inferred in isolation rather spirit of the regulation should

be appreciated in proper context. Accordingly we are unable to

agree with the proposal in full, however at the same time, it is

appreciated that over the passage of time there exist genuine

need of additional transformers and augmentation of

transformers. Accordingly we are approving capital expense

Rs.150 Cr. towards installation of additional transformers and

augmentation of transformers at following locations:-

(a) Additional 160 MVA transformer – 220 KV substation

Doma, Vishrampu, Chhuri, Saraypali (in place of Mungeli).

(b) Additional 40 MVA transformer – 132 KV substation

Bhanupratappur, Navagarh, Balod, Tulsi, Bagbahara, and 220 KV

substation Doma.

(c) Augmentation of transformers at 132 substations Raigarh,

Dongargown, Bilaspur, Dalli-Rajhara and Dongargarh.

The Rs 150 Cr capital expense allowed herewith may be phased by the

utility as per its own priority, for the sake of computation, we are

considering the same @ Rs 50 Cr / year.

(ii) Addition of capacitor bank / RTU etc.: CSPTCL has proposed

capital expense of Rs 180 Cr for procurement of Capacitor

Banks, RTUs, OPG cables, Communication equipments, Battery,

Battery chargers etc. It is a settled principle that for any capital

expense to be considered in a plan, it has to be well identified.

As such, we refrain from any deliberation on the summary

proposal. However, to meet out the express requirement an

amount of Rs. 45 crore capital expenses is allowed which may be

phased by the utility as per its own priority. For the sake of

computation, we are considering the same @ Rs. 15 crore per

year. If required, further expenses, utility may submit detail

plan, at a later date. Leave is granted for the same.

(iii) Construction of administrative block :We don’t find any

express necessity of such building hence construction of

administrative block is not being approved at present.

16. Finally the Commission considers following expenditure during control

period 2013-14 to 2015-16.


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Capital Investment Considered for FY 2013-14 to 2015-16 (Rs. Cr.)

Particulars Scheme

Provision (Rs Cr.)

Expend. upto

31.03.12

Est. Expense

in FY 12-13

Capital Expense considered in the Control period

FY 13-14

FY 14-15

FY 15-16

Total

Spill over Schemes

PE Schemes 729.17 357.02 292.28 79.87 0.00 0.00 79.87

Normal Development Works approved in Business Plan 2010

812.19 99.92 214.28 173.39 13.98 0.00 187.37

From Prior period 215.27 156.22 53.05 6.00 0.00 0.00 6.00

From Addl. Business Plan 2012

478.89 0.00 176.89 244.78 57.22 0.00 302.00

New Schemes 977.23 0.00 0.00 163.55 312.08 300.05 775.68

Total 3212.75 613.16 736.50 667.59 383.28 300.05 1350.92

17. Funding of Capital Investment Plan :

The Capital investment is proposed to be financed at a debt equity ratio

of 80:20. CSPTCL has indicated that for the spillover schemes it has

already tied up loans with PFC and for new schemes it is hopeful to get

loans from the prime lender on viable terms and conditions. No grant

from Government or any other source has been envisaged for the

proposed schemes.

The Commission advises that the debt is to be tied up at optimized

interest rates that are available in market. The high cost debt may be

swapped with low cost debt. Further, to minimize the Interest During

Construction (IDC), all out focused efforts should be made to ensure

that once a project is kicked off, it must be completed in shortest

possible time. The petition by CSPTCL indicate IDC at a very high value,

we are not inclined to accept such high values. During TVS it was

confirmed by CSPTCL representatives that the costs of individual

scheme are hard costs and do not include IDC. We are allowing cost of

schemes as proposed by CSPTCL. Subject to prudence check,

Capitalization of IDC shall be dealt at the time of true up of ARR of

respective year.

18. Capitalization plan :

18.1 We have gone through Capitalization plan submitted by CSPTCL for spill

over work as well as new normal development schemes.

We are of the view that normally, in the ideal condition, capitalization

of a scheme becomes due in the year in which the last trench of capital


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expenses is made. Provisions have been indicated accordingly in the

Annexure I & II. However, looking to the past trend, we are considering

70% of the estimated capitalization for front end consideration in ARR

& tariff. Accordingly, subject to adjustment of capitalization already

considered in previous years, the capitalization to be considered for the

purpose of ARR and tariff is estimated as under:-

Capitalization estimated for ARR during FY 2014-16 (Rs. Cr.)

S. N. Particulars Capitalization during Control period

FY 13-14 FY 14-15 FY 15-16 Total

A Spill over Schemes 1 PE Schemes 729.17 0.00 0.00 729.17

2 Normal Development Works approved in Business Plan 2010

396.51 90.06 0.00 486.57

3 From Prior period 110.85 0.00 0.00 110.85

4 From Addl. Business Plan 2012 107.95 370.94 0.00 478.89

B New Schemes 70.30 198.33 279.05 547.68

Gross Ideal Capitalization 1414.78 659.33 279.05 2353.16

Estimated realistic Capitalization (70%)

990.35 461.53 195.34 1647.21

However, on receipt of any new information the extent of loading of

capitalization on ARR / Tariff may be reviewed appropriately.

It is also made clear that actual Capitalization as per word and spirit of

regulation shall lie on the date on which the asset is ‘put to use’. It is in

utilities own interest to ensure speedy completion of capital works.

18.2 The actual capitalization shall be accounted and adjusted at the time of

true up when realistic values will be available. We are of the view that

except for the schemes allowed by Commission, no expense shall

qualify for additional capitalisation at the time of tariff determination /

true up. For spill over works, it is noted that at the time of ARR / Tariff

estimation, capitalisation of such schemes was considered, now the

same shall be revisited during the true up. For the purpose of ARR,

subject to appropriate check, GFA as in provisional accounts for

FY 2011-12 shall be considered. Such check may include (but not

limited to) scheme-wise comparison of actual capitalisation vis-a-vis

the approved plan. Additional capitalisation for FY 2012-13 shall be also

revisited as per status considered in this order.

We feel it imperative to stress that on completion of the schemes, at

the time of true of ARR of respective years, CSPTCL shall be under


CSERC of 16

obligation to provide, the details of actual expenses incurred and

capitalized on each of scheme. Such details shall include (but not

limited to) –

• The order copy for work (Purchase /Erection/ Testing &

Commissioning etc.) so as to verify the order value.

• The copy of loan agreement.

• The details of IDC calculation.

• In case of time overrun, justification for the same, with

documentary evidence of force majeure conditions, if any.

• The tax paid, if any, over and above the order value.

• The Employee and A&G cost capitalized, if any.

It must be understood, loud and clear, that if the utility fails to provide

such details at the time of true up, the additional GFA to such extent,

may not qualify for consideration in computation of ARR and tariff and

cost & consequences shall rest wholly and squarely on the utility itself.

18.3 Further Capitalisation for FY 13-14 to FY 15-16 shall be considered in

accordance to this order. The year of capitalization for each approved

scheme has been considered based on the projections and status report

submitted by the utility.

19. General observations:

19.1 As stated in the previous orders and provided in the regulations too, it

is reiterated, that in case of emergency situations, causing threat to life

and property, work may be taken up by the utility on its own. However,

in such cases, the petition for expost facto approval should be

submitted at the first available opportunity with justification. The

Commission, subject to its satisfaction with exigency stated and

prudent scrutiny of cost, may accord approval for such additional

capitalization.

19.2 Further, it may be noted that the authorities can not be allowed to take

shelter of regulatory process to run away from their functional

responsibility. It must be understood loud and clear that the

responsibility of detailed budgeting, financial planning and

administrative/technical approval of various proposals rests unfettered

on the management of the utility. The tariff order or approval of capital

investment plan order should not be construed or projected as a

substitute for detail financial budgeting or planning.

19.3 Last but not the least, the approval of the schemes does not imply that

Commission has given any blanket approval for capitalization of such

expenses. It must be borne by all and one, that all the approvals


CSERC of 16

granted by the Commission are only in-principle approvals and such

approval / concurrence by the Commission does not in any way absolve

or dilute the responsibility and liability of the competent authorities to

adhere to prudence check of technical requirement and detailed

specifications. Similarly canons of financial propriety shall have to be

applied with undiminished force and vigor. Regulatory process only

ensures test on some broad parameters. Executive authorities must do

their duty of exercising prudence check, un-trembled by the

consideration that such costs or proposals have passed the test of

regulatory scrutiny. If at any point of time, Commission comes to know

about any irregularity, then such costs shall not be considered for

capitalization ‘ab-initio’.

20. Commission's Directives

20.1 Scheme wise direction includes directions for study / resubmission in

certain cases (such as 220 KV Metal park/ Borjhara, 220 KV Raita, 132

KV Narayanpur etc.) CSPTCL is expected to take up the directions in an

earnest manner.

20.2 Priority of implementation of the schemes and their completion should

be decided by CSPTCL. Effort should be made by CSPTCL for

completion of all the schemes within scheduled period.

20.3 The work of procurement of substation land and forest clearance should

be processed timely and on priority, as this take its own time.

20.4 Proper financial Planning & Due Diligence: We are disappointed to note

that though specific direction was given in previous order, yet

prioritization of schemes is still lacking. Utility is directed to ensure

proper compliance.

21. Other directives such as conduction of load flow study, swapping of high

cost loans, creation and maintenance of asset register etc. contained in

the previous orders, unless superseded, shall remain in force.

SD/-

MEMBER

SD/-

CHAIRMAN

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