jserc tariff regulations 2010 - tarun negi

Presentation Title

Presentation Subtitle

1

JSERC Generation Tariff Regulations 2010

April 16, 2010

Tata Power- Jojobera

Presentation Outline…

•Overview of Draft JSERC Generation Tariff Regulations 2010

•Tariff Determination Framework

•Operational Norms

•Annual Fixed Charges

•Energy Charges


Overview of Draft JSERC Generation Tariff Regulations 2010


• Hon’ble JSERC issued Generation Tariff Regulation on 10th December 2010 for Generating

Companies of Jharkhand.

• These Regulations will be valid during the Control Period FY 12-13 to FY 15-16 with FY 11-12

as the Base Year & FY 10-11 as Previous Year.

• ARR for FY 11-12 would be based on Annual Tariff Structure Framework & ARR for FY 12-13

to FY 15-16 would be based on MYT Framework.

• Business Plan is to be submitted prior to the commencement of the Control Period.

• Annual Performance Review (APR) Petition with Provisional Truing-up is to be submitted

during each year of the Control Period.

• Final Truing-up would be done by Hon’ble JSERC at the end of the Control Period.


Overview of Draft Generation Tariff Regulations 2010 – 1/3

• No sharing of loss or gains on Controllable items. Genco is to retain the financial gains or

bear the financial losses.

• Additional Capitalization after COD to Cut-off Date and that after Cut-off Date is allowed.

• RoE (Post-Tax) at 15.5% is admissible on flat basis. RoE is to be grossed-up by applicable Tax

Rate.

• Favourable norms on Interest on Working Capital.

• O&M Expenses for Transition Year (FY 12) would be as per JSERC Tariff Regulations 2004 &

that for Control Period would be as per Audited Accounts & estimates submitted for the

Control Period.

• New rates for Depreciation of Assets defined.



• LDO is a part of fixed cost and is recoverable only upto Normative Availability.

• Stricter Operational norms imposed on Jojobera Units 2 & 3.

• Recovery of full Capacity Charges is allowed upon achievement on Normative Plant

Availability.

• Incentive would be a circular function of Annual Fixed Charges and would be admissible

upon achievement Plant Availability beyond the Normative Plant Availability.

• Fuel Price Adjustment (FPA) Mechanism firmed up.

• Variation in scheduled Generation would be adjusted through UI Mechanism.



Tariff Determination Framework


Tariff Determination Framework – 1/3

•Annual Tariff Framework: For approval of ARR and Generation Tariff during the Transition Period (FY 12) – Genco to submit the ARR for FY 12 with truing-up of FY 10 & APR for FY 11.•MYT Framework: The Commission shall adopt Multi Year Tariff framework for approval of ARR and Generation Tariff during the Control Period (FY 13-16) – Genco to submit the one ARR for FY 13-16 and APR with provisional truing-up every year. •The MYT framework shall be based on the following:

→Business Plan of the Generating Company (plant wise separately) for the entire Control Period

to be submitted to JSERC for approval, prior to the start of the Control Period;

→Forecast of expected tariff for sale of power for each year of the Control Period, based on

reasonable assumptions of the underlying financial and operational parameters, as submitted in

the Business Plan;

→ Trajectory for specific parameters stipulated by the JSERC, where the performance of the

Genco is sought to be improved through incentives and disincentives;

→Annual Review of performance which shall be conducted vis-à-vis the approved forecast



•Business Plan: Business Plan for the MYT Control Period would consist of Capital

Investment Plan, Capital Structure, O&M Expenses, Depreciation, Performance Targets

etc. •Truing-up: Final Truing-up shall be done by JSERC at the end of the Control Period.

any surplus and deficit on account of O&M expenses shall be to the account of the generating

company and shall not be trued up in ARR; and

at the end of the control period –

−JSERC shall review actual capital investment vis-à-vis approved capital investment.

−Depreciation and financing cost, which includes cost of debt including working capital

(interest), cost of equity (return) shall be trued up on the basis of actual/audited

information and prudence check by JSERC.

•Reconciliation: Reconciliation of amount after Truing-up would be done by Genco with

beneficiaries at prevailing SBI PLR in six equal monthly installments within 3 months of the

Tariff Order for Truing-up. Tata Power- Jojobera


•Capital Cost & Additional Capitalization: Capital Cost of the Project upto COD and Additional Capitalization after COD upto Cut-Off Date and also, after Cut-Off Date would form the basis for Tariff Determination.•Renovation & Modernization: Genco for meeting expenses of R&M for the purpose of extension of asset life beyond useful life (25 Years) has 2 options:

−Submit a DPR consisting of Financing Plans, complete scope, justification, cost-benefit analysis, estimated life extension from a reference date, financial package, phasing of expenditure, schedule of completion, reference price level, estimated completion cost of R&M implementation scheme. −This expenditure (upon approval of JSERC) less the accumulated Depreciation form the basis of Tariff Determination.−Alternatively, the Genco (which has not availed of any R&M allowance earlier) would be allowed a special R&M allowance @Rs 5.59 Lakhs/MW with an escalation of 5.72% YoY.

•Rebate: 1% Rebate to DISCOM for payment within 30 days of bill presentation. 2% rebate

through a LoC on presentation.


Operational Norms


Operational Norms


Particulars UoM Existing PPA (Unit 2 & 3)

JSERC Tariff Regulations 2010

Jojobera (2x120 MW)

Tenughat (2x 210 MW)

Patratu (8x110 MW)

Availability % No norms 85% 75% 82%

Heat Rate Kcal/Kwh 2800 or at actuals 2567/2577 3043-2503 3150/3100

Aux Power % 15% or at actuals 10% 9.5% 12%

Sp. LDO Consumption ml/Kwh At actuals 1 1 3.5

•Stricter Operational Norms imposed on Jojobera w.r.t. other Generating Utilities and existing PPA.•LDO Cost would be recovered only upto Normative Availability – no reimbursement if LDO is used over Normative Availability.•Normative Plant Availability would depend on average ex-bus declared capacity in MW and normative Aux Power consumption which implies that there would be daily scheduling of Capacity with ‘concerned LDC’ and Plant Availability would be computed based on the following formula.

Annual Fixed Charges


Elements of Fixed Charges

The Fixed Charges comprise of the following elements:

• Depreciation• Interest on Long-term Loan• Interest on Working Capital• O & M Expenses• Return on Equity (Post-Tax) to be grossed-up by applicable Tax Rate• Incentive• LDO Cost


•Full Recovery of Fixed Charges are allowed upon achievement of Normative Availability.•If Actual Availability is below Normative Availability, Fixed Charges would be recovered on pro-rata basis.•No recovery of Fixed Charges is allowed if Availability for the year is zero.•LDO Cost is an element of Fixed Charges now.

Elements PPA (Unit 2 & 3) JSERC Tariff Regulations 2010

Remarks

Depreciation 7.84% (On Plant & Machinery)

5.28% (On Plant & Machinery)

Balance depreciable value (after Cumulative Depreciation reaches 70%) after 12 Years from COD shall be spread over the balance Useful life of the assets.

Interest on Loan

Weighted average Rate of Interest on average outstanding loan – Depreciation being the deemed repayment.

Weighted average Rate of Interest on average outstanding loan - Depreciation being the deemed repayment.

2/3rd gain on re-financing the loan to be retained by Genco.

Interest on Working Capital

Coal Stock for 1 month, LDO stock for 2 months, O&M Expenses for 1 month, Receivables for 2 months

Coal Stock for 2 months, LDO stock for 2 months, Receivables for 2 months (upto Normative Availability), O&M Expenses for 1 month, Maintenance Spares @20% of O&M Expenses

Working Capital is to be computed at Normative Availability.

Interest Rate would be SBI PLR prevailing at the start of the Control Period.

Norms of Fixed Charges – 1/2


Elements PPA (Unit 2 & 3) JSERC Tariff Regulations 2010 RemarksO&M Expenses

3% of Capital Cost with 7% escalation YoY

-2.5% of Capital Cost with 6% escalation YoY – for FY 12-Staff expenses, R&M and A&G Expenses based on audited accounts – for MYT

For the Control Period FY 13-16, O&M Expenses would be approved based on submitted audited accounts & Business Plan.

Return on Equity

19.40% (Post-Tax) on Guaranteed (75%) PLF

15.5% (Post-Tax). Post-Tax RoE to be grossed by applicable Taxes to arrive at the Pre-Tax RoE. No separate Income Tax recovery.

Incentive Above 75.5% PLF, 0.7% RoE with every 1% rise in PLF+0.3%

AFC*((Actual Availability/Normative Availability)-1)

Incentive for actual availability >85% and disincentive for actual availability<85%.

LDO Cost At actuals @1 ml/Kwh upto Normative Availability

Sharing of Gain/Loss out of LDO Consumption @50:50.

Norms of Fixed Charges – 2/2


Energy Charges


Elements of Energy Charges

•Energy Charges consist of Coal Cost and would be computed based on:

Normative Heat Rate, Auxiliary Power Consumption, Estimated Gross Calorific

Value and Landed Cost of Fuel.

Recovery of Energy Charges would be based on scheduled ex-bus energy for the

month & approved Energy Charges per unit with Fuel Price Adjustment (FPA).

No recovery of Energy Charges beyond specified Operational Norms.

Similarly, Efficiency (Heat Rate) & Aux Power Gains are to be retained by Genco.

Thus, Fuel Cost is no more pass-through for us. Recovery of Energy Charges would

depend on Operational Efficiency .


jserc tariff regulations 2010 - tarun negi

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