Tariff Regulations, 2019-2024

BY:- SAIBAL CHOWDHURY

 Revised tariff norms are-

1. linking Fixed cost recovery with the normative quarterly plant availability factor
(NQPAF) instead of the normative annual PAF(NAPAF).
2. Tightening of working capital norms with receivables reduced to 45 days to 60 days
earlier.
3. Inclusion of a provision for generators to recover fuel costs through billing on actual
gross calorific value (GCV) of coal received.
4. Increase in efficiency gains sharing and change in the definition of bank rate.
KEY POINTS 5. The CERC’s multi -year tariff regulation for fifth tariff period would be applicable to
interstate generation and transmission.
 Tariff Structure
• The supplement fixed cost for additional capitalisation on account of revised emission
standards will be determined by the CERC separately.
• The variables or energy charges of thermal power station comprise the landed fuel cost
(primary and secondary fuel cost) plus the cost of reagent like limestones, sodium
bicarbonate and urea used in the implementation of the revised emission control
standards.
• The determination of the input price is dealt with in a separate section of the draft
regulation. The GCV of coal received is proposed to be reduced by 85 kCal per kg to
account for the loss of calorific value in storage.
KEY POINTS Capital structure
• The useful life ,40 years for storage-type hydropower plants (earlier 35 years) and 15
years for communication systems.
• For thermal station that have completed 25 years of operation, the beneficiary and
generator may agree to settle the total cost (fixed and variable( based on schedule
generation rather than the current arrangement of separate recovery of fixed cost
based on schedule .In addition of a special allowance of Rs 950,000 per MW (earlier Rs
750,000 per MW for the first year with 6.35 percent annual escalation
 RoE

• The salvage value of the assets is proposed to be reduced to 5 % from 10 %, excluding IT

equipment and software that have zero salvage value.
• This will increase the allowed depreciation to up to 95% of the capital cost of the assets.
• Further, the norms have been tightened for the normative inventory of coal or lignite
and limestone for non-pithead station from 20 days (from 30 days) as well as for
receivables of all station to 45 days (from 60 days).

O&M expenses

• For coal/ lignite based station, the year wise allowed O&M expenses have been specified
KEY POINTS for different units (The expenses for 800 MW units have been mentioned separately
earlier these were covered under 600 MW and above units )
• For new hydropower stations, which will start commercial operation after April 2019,O&M
for the first year has been revised to 2.5 percent of the original project cost from 2%
original earlier.
• The O&M expenses for hydro projects that have not completed three year on April 1,2019
will be calculated by applying an escalation of 4.7 % as compared to 6.4% in the existing
order. The same escalation will be applicable during the subsequent years of the tariff
period as against 6.64%.
 Computation of capacity and energy charges-

• The fixed cost of thermal generation has been proposed to be recovered in two parts-
capacity charges for the peak and off-peak periods of the month, with former being 25%
more than the latter. These charges are recoverable if the actual PAF during peak and
off-peak periods for the month is equal to the NQPAF for the cumulative peak and off-
peak period respectively during the month (instead of the NAPAF).
• Differential incentive has been proposed for peak and off-peak periods at 65 paisa per
Kwh and 50 paisa per Kwh.

Operation norms-

• For pondage/storage-based hydropower stations, the NAPAF varies from 85% to

KEY POINTS 90%depending on how significantly the silt affects the plant. The CERC may extent
allowance under special circumstances like the abnormal silt problem. Another 5%
allowance allowance will be provided for plants in the northeast.

Rebate and late payment surcharge

• The payment of bills of generators or transmitter within two days of issuance should
lead to rebate of 2%. The rebate will be reduced to 1% if payment is made after two
days but within 30 days of bills presentation.
  Tariff in respect of a generating station may be determined for the whole of the generating
station or unit thereof, and tariff in respect of a transmission system may be determined
for the whole of the transmission system or element thereof or associated communication
system.
a) In case of commercial operation of all the units of a generating station or all
elements of a transmission system prior to 1.4.2019, the generating company or the
transmission licensee, as the case may be, shall file consolidated petition in respect
of the entire generating station or transmissions system for the purpose of
determination of tariff for the period 1.4.2019 to 31.3.2024
TARIFF b) In case of commercial operation of units of generating station or elements of the
DETERMINATION transmission system on or after 1.4.2019, the generating company or the
transmission licensee shall file a consolidated petition, in accordance with the
provisions of Procedure Regulations, combining all the units of the generating
station or all elements of the transmission system which are anticipated to achieve
the date of commercial operation during the next two months from the date of
application
c) Tariff of the associated communication system forming part of transmission system
which have achieved commercial operation prior to 1.4.2014 shall be as per the
methodology approved by the Commission prior to 1.4.2014.
  Where only a part of the generation capacity of a generating station is tied up for
supplying power to the beneficiaries through long term power purchase agreement,
1. The units for such part capacity shall be clearly identified and in such cases, the
tariff shall be determined for such identified capacity.
2. Where the unit(s) corresponding to such part capacity cannot be identified, the
tariff of the generating station may be determined with reference to the capital
cost of the entire project,
3. but tariff so determined shall be applicable corresponding to the part capacity
contracted for supply to the beneficiaries
 In case of expansion of existing generating station, the tariff shall be determined for
TARIFF the expanded capacity in accordance with these regulations:
DETERMINATION 1. Provided that the common infrastructure of existing generating station, shall
be utilized for the expanded capacity.
2. The benefit of new technology in the expanded capacity shall be extended to
the existing capacity.
 Assets installed for implementation of the revised emission standards shall form part
of the existing generation project and tariff thereof shall be determined separately
on submission of the completion certificate by the Board of the generating company.
  Variable charge component of Tariff of the generating station sourcing coal or lignite
from the integrated mine shall be determined based on the input price of coal or
lignite, as the case may be, from such integrated mines:
1. Provided that the generating company shall maintain the account of the
integrated mine separately and submit the cost of integrated mine, in
accordance with these regulations, duly certified by the Auditor.
 Tariff of generating station using coal washery rejects developed by Central or State
PSUs or Joint Venture between a Government Company and Company other than the
Government Company shall be determined in accordance with these regulations:
1. The shareholding of the company other than Government Company either
directly or through any of its subsidiary company or associate company shall
TARIFF not exceed 26% of the paid up share capital;
DETERMINATION 2. Provided further that the variable component of the tariff of such generating
station or unit thereof shall be determined based on the fixed cost and the
variable cost of the coal washery project;
3. Provided also that the Gross Calorific Value of coal rejects shall be as
measured jointly by the generating company and the beneficiaries in a
mutually agreed manner
 In case of multi-purpose hydro schemes, with irrigation, flood control and power
components, the capital cost chargeable to the power component of the scheme only
shall be considered for determination of tariff.
  The generating company or the transmission licensee, as the case may be, shall
file petition before the Commission as per Annexure-I of these regulations
containing the details
1. underlying assumptions for the capital expenditure and additional
capital expenditure incurred
2. projected to be incurred, wherever applicable.
 Where the capital cost considered in tariff by the Commission on the basis of
TARIFF projected additional capital expenditure exceeds/ falls short the actual
additional capital expenditure incurred on year to year basis by more than 10%,
DETERMINATION 1. The generating company or the transmission licensee shall refund to
/recover from the beneficiaries or the long term transmission customers
as the case may be, the tariff recovered/shortfall corresponding to the
additional capital expenditure , as approved by the Commission,
2. Along with interest at 1.20 times of the bank rate as prevalent on 1st
April of the respective year.
 Tariff determination structure is divided in two components:-
1. Capacity charges /AFC
2. Energy/Variable charges
Components of Annual Fixed charges:-
a) Depreciation;
b) Return on Equity
TARIFF c) Interest on loan capital;
d) Interest on Working Capital;
STRUCTURE e) Operation & maintenance expenses;
Variable Charges components :-
a) Landed Fuel Cost of primary fuel; and
b) Cost of secondary fuel oil consumption
 Special Provisions for Tariff for Thermal Generating Station

which have Completed 25 Years of Operation from Date of Commercial Operation:

1. In respect of a thermal generating station that has completed 25 years of operation

from the date of commercial operation, the generating company and the
beneficiary may agree on an arrangement, including provisions for target
availability and incentive, where in addition to the energy charge, capacity charges
determined under these regulations shall also be recovered based on scheduled
TARIFF generation.

STRUCTURE 2. The beneficiary shall have the first right of refusal and upon its refusal to enter into
an arrangement as above, the generating company shall be free to sell the
electricity generated from such station in a manner as it deems fit.
 Debt-Equity ratio is 70:30 ratio
1. 30% of capital cost and equity in excess of 30% shall be treated as normative
loan
2. equity less than 30% of the capital cost, actual equity shall be considered for
determination of tariff
3. equity invested in foreign currency shall be designated in Indian rupees on the
date of each investment
CAPITAL 4. Any grant obtained for the execution of the project shall not be considered as a
STRUCTURE part of capital structure for the purpose of debt : equity ratio
5. In case of generating station or a transmission system including communication
system which has completed its useful life accumulated depreciation as on the
completion of the useful life less cumulative repayment of loan shall be utilized
for reduction of the equity and depreciation admissible after the completion of
useful life
6. The balance depreciation, if any, shall be first adjusted against the repayment
of balance outstanding loan and thereafter shall be utilized for reduction of
equity till the generating station continues to generate and supply electricity to
the beneficiaries (New Addition)
 The Capital Cost of a new project shall include the following:
1. The expenditure incurred up to the date of commercial operation of the project
2. Interest during construction and financing charges as per debt equity conditions
3. Any gain or loss on account of foreign exchange risk variation pertaining to the
loan amount can be availed during the construction period
4. Interest during construction and incidental expenditure during construction can
be computed
5. Capitalised initial spares subject to the ceiling rates (full ceiling rate given in
COMPUTATION regulation)
6. Expenditure on account of additional capitalization and de-capitalisation
OF determined.
CAPITAL COST 7. Adjustment of revenue due to sale of infirm power in excess of fuel cost prior to
the date of commercial operation
8. Adjustment of any revenue earned by the transmission licensee by using the
assets before the date of commercial operation.
Note:- Cost determination of following should be accordance with the regulations
 9. Capital expenditure incurred on the ash utilisation, handling including
transportation facility as a part of ash disposal of thermal generating station
10. Capital expenditure incurred towards railway infrastructure and its
augmentation for transportation of coal upto the receiving end of the
generating station.
11. Expenditure on account of biomass handling equipment, if co-firing
12. Expenditure on account of emission control system necessary to meet the
applicable emission standards of notified by Government
13. Expenditure on account of fulfilment of any conditions for obtaining
environment clearance for the project
Conti…… 14. Expenditure on account of change in law and force majeure events.
COMPUTATION OF 15. Capital cost incurred or projected to be incurred by a thermal generating
station, on account of implementation of the norms under Perform, Achieve
CAPITAL COST and Trade (PAT) scheme of Government of India shall be considered by the
Commission subject to sharing of benefits accrued under the PAT scheme with
the beneficiaries.
Note:- Cost determination of following should be accordance with the regulations
 The following shall be excluded from the capital cost of the existing and new projects:
1. The assets forming part of the project, but not in use (to be declared at the time of
filing tariff petition)
2. De-capitalisation of Assets after the date of commercial operation on account of
replacement or removal on account of obsolescence or shifting from one project to
another project
Conti…… 3. In case of hydro generating station any expenditure incurred or committed to be
incurred by a project developer for getting the project site allotted by the State
COMPUTATION Government by following a transparent process;
OF 4. Proportionate cost of land of the existing project which is being used for generating
power from generating station based on renewable energy
CAPITAL COST 5. Any grant received from the Central or State Government or any statutory body or
authority for the execution of the project which does not carry any liability of
repayment
Note :- All Capital Expenditure are subjected to Prudence Check by the Commission
 Initial spares shall be capitalised as a percentage of the Plant and Machinery cost upto
cut-off date as per ceiling norms:
 The following shall be considered as controllable and uncontrollable factors leading
to cost escalation, Interest during construction (IDC) and Incidental expenditure
during construction (IEDC) of the project :-
The “controllable factors” shall include but shall not be limited to the following:-
1. Efficiency in the implementation of the project not involving approved change
in scope of such project, change in statutory levies or change in law or force
majeure events
2. Delay in execution of the project on account of contractor, supplier or agency
CONTROLLABLE of the generating company or transmission licensee.
AND The “uncontrollable factors” shall include but shall not be limited to the following:-
UNCONTROLLABLE 1. Force Majeure events
2. Change in law
FACTOR
3. Time and cost over-runs on account of land acquisition except where the
delay is attributable to the generating company or the transmission licensee
 1. Additional Capitalisation within the original scope and upto the cut-off date

2. Additional Capitalisation within the original scope and after the cut-off date

COMPUTATION 3. Additional Capitalisation beyond the original scope

OF
4. Additional Capitalisation on account of Renovation and Modernisation
ADDITIONAL
CAPITAL 5. Special Allowance for Coal-based/Lignite fired Thermal Generating station
EXPENDITURE
6. Special Provision for thermal generating station which have completed 25
years of operation from commercial operation date

7. Additional Capitalization on account of Revised Emission Standards

 Return on Equity
1. Return on equity shall be computed in rupee terms (Accordance with
regulation 18 of the these regulation)
2. equity base determined in accordance with regulation
3. ROE of thermal gen. station, Transmission system including communication
system and run of river hydro genset would be calculated at 15.5%
4. In case of storage type including pumped storage hydro genset and run of
COMPUTATION OF river with pondage can be calculated at 16.5%
ANNUAL FIXED Tax on Return on Equity.
1. The base rate of return on equity as allowed by the Commission under
COST Regulation 30 of these regulations shall be grossed up with the effective tax
rate of the respective financial year.
2. Rate of pre-tax return of equity =Base rate/(1-t)
ROE where ‘t’ is effective tax rate. In case minimum alternate tax or MAT is applicable, t
should be considered as MAT.
 Provided that return on equity in respect of additional capitalization after cut-off date
beyond the original scope excluding additional capitalization due to Change in Law, shall be
computed at the weighted average rate of interest on actual loan portfolio of the
generating station or the transmission system. Provided further that:
1. In case of a new project, the rate of return on equity shall be reduced by 1.00% for such
period as may be decided by the Commission, if the generating station or transmission
system is found to be declared under commercial operation without commissioning of
any of the Restricted Governor Mode Operation (RGMO) or Free Governor Mode
COMPUTATION Operation (FGMO), data telemetry, communication system up to load dispatch centre or
OF protection system based on the report submitted by the respective RLDC
2. In case of existing generating station, as and when any of the requirements under above
ANNUAL FIXED of this Regulation are found lacking based on the report submitted by the concerned
RLDC, rate of return on equity shall be reduced by 1.00% for the period for which the
COST deficiency continues;
3. In case of a thermal generating station, with effect from 1.4.2020:
a) rate of return on equity shall be reduced by 0.25% in case of failure to achieve the
ramp rate of 1% per minute;
b) an additional rate of return on equity of 0.25% shall be allowed for every incremental
ramp rate of 1% per minute achieved over and above the ramp rate of 1% per minute,
subject to ceiling of additional rate of return on equity of 1.00%: Provided that the
detailed guidelines in this regard shall be issued by National Load Dispatch Centre by
30.6.2019.
 Interest on loan capital (70% of capital cost)
1) The loans arrived as per the regulations shall be considered as gross normative
loan for calculation of interest on loan.

2) The repayment of loan shall be considered from the first year of commercial
operation of the project and shall be equal to the depreciation allowed for the
year or part of the year.

3) The rate of interest shall be the weighted average rate of interest calculated on
INTEREST the basis of the actual loan portfolio after providing appropriate accounting
adjustment for interest capitalized.
ON
4) The interest on loan shall be calculated on the normative average loan of the
LOAN CAPITAL year by applying the weighted average rate of interest.

5) The changes to the terms and conditions of the loans shall be reflected from the
date of such re-financing.
 1. Depreciation shall be computed from the date of commercial operation

2. The value base for the purpose of depreciation shall be the capital cost of the
asset admitted by the Commission. Weighted average life for the generating
station of the transmission system shall be applied.

3. The salvage value of the asset shall be considered as 5% and depreciation shall
be allowed up to maximum of 95% of the capital cost of the asset.
DEPRECIATION
4. Land other than the land held under lease and the land for reservoir in case of
hydro generating station shall not be a depreciable asset and its cost shall be
excluded from the capital cost while computing depreciable value of the asset.

5. Provided that the remaining depreciable value as on 31st March of the year
closing after a period of 12 years from the effective date of commercial
operation of the station shall be spread over the balance useful life of the assets
 6. Depreciation shall be calculated annually based on Straight Line Method

7. In case of the existing projects, the balance depreciable value shall be worked
out by deducting the cumulative depreciation.

8. The generating company or the transmission license shall submit the details of
proposed capital expenditure five years before the completion of useful life of
the project along with justification and proposed life extension.

9. In case of de-capitalization of assets in respect of generating station or unit

thereof or transmission system or element thereof, the cumulative
DEPRECIATION depreciation shall be adjusted by taking into account the depreciation
recovered in tariff by the decapitalized asset during its useful services.
 Coal-based/lignite-fired thermal generating stations :-
Cost of coal or lignite and limestone towards stock applicable
1. 15 days for pit-head generating stations
2. 20 days (from 30 days) for non-pit-head generating stations for
generation corresponding to the normative annual plant availability
factor or the maximum coal/lignite stock storage capacity whichever is
lower
3. Advance payment for 30 days towards Cost of coal or lignite and
INTEREST limestone for generation corresponding to the normative annual plant
availability factor
ON 4. Cost of secondary fuel oil for two months for generation corresponding
WORKING CAPITAL to the normative annual plant availability factor, and in case of use of
more than one secondary fuel oil, cost of fuel oil stock for the main
secondary fuel oil;
5. Maintenance spares @ 20% of operation and maintenance expenses
6. Receivables equivalent to 45 days ( from 60 days) of capacity charges
and energy charges for sale of electricity calculated on the normative
annual plant availability factor; and
7. Operation and maintenance expenses for one month
 Open-cycle Gas Turbine/Combined Cycle thermal generating stations
1. Fuel cost for 30 days corresponding to the normative annual plant availability
factor
2. Liquid fuel stock for 15 days corresponding to the normative annual plant
availability factor
3. Maintenance spares @ 30% of operation and maintenance expenses specified in
Regulation 35 of these regulations
4. Receivables equivalent to 45 days of capacity charge and energy charge for sale
of electricity calculated on normative plant availability factor
INTEREST 5. Operation and maintenance expenses for one month.
ON Hydro generating station (including pumped storage hydro electric generating station) and
transmission system:
WORKING CAPITAL a) Receivables equivalent to 45 days of annual fixed charges
b) Maintenance spares @ 15% of operation and maintenance expenses specified in
Regulation 35 of these regulations
c) Operation and maintenance expenses for one month.
 1. The cost of fuel in cases covered under sub-clauses (a), (b) and (c) of clause (1) of this
Regulation shall be based on the landed cost incurred (taking into account normative
transit and handling losses) by the generating station and gross calorific value of the fuel
as per actual weighted average for the third quarter of preceding financial year in case of
each financial year for which tariff is to be determined.
2. Provided that in case of new generating station, the cost of fuel for the first financial year
shall be considered based on landed cost incurred (taking into account normative transit
and handling losses) and gross calorific value of the fuel as per actual weighted average
for three months, as used for infirm generation, preceding date of commercial operation
INTEREST for which tariff is to be determined.
3. Rate of interest on working capital shall be on normative basis and shall be considered as
ON the bank rate as on 1st April of the year during the tariff period 2019-24 in which the
WORKING CAPITAL generating station or a unit thereof or the transmission system including communication
system or element thereof, as the case may be, is declared under commercial operation,
whichever is later
4. i.e one Year MCLR (Marginal cost of fund based lending Rate)+350 Basis points (Early
SBI + 350 Basis)
5. Provided that in case of truing-up, the rate of interest on working capital shall be
considered at bank rate as on 1st April of each of the financial year during the tariff
period 2019-24
6. Interest on working capital shall be payable on normative basis notwithstanding that the
generating company or the transmission licensee has not taken loan for working capital
from any outside agency.
 O&M Expenses have been specified for different units year wise based on type of
generating stations and transmission systems:-

1. Coal-based/lignite-fired thermal generating stations

2. Open-cycle Gas Turbine/Combined Cycle thermal generating stations
3. Hydro Generating Station
4. Transmission system
5. Communication system
O&M
Expenses
 1. Input Price for variable charges
2. Date of Commercial Operation
3. Additional Capitalisation after commercial operation upto date of target capacity
4. Capital Cost
5. Depreciation
COMPUTATION OF 6. Interest on loan capital
CAPITAL COST OF 7. Return on equity
INTEGRATED 8. Interest on working capital
9. Operation and maintenance expenses
MINE AND INPUT
PRICE
 The variable cost in respect of the thermal generating Stations consist of
1. landed fuel cost of primary fuel
2. Cost of secondary fuel oil consumption
3. cost of reagents on account of implementation of the revised emission
control standards
Components of Landed cost of Primary Fuel
COMPUTATION 1. Price or input price of fuel corresponding to the grade
2. Quality of fuel (GCV) and inclusive of statutory charges as applicable
OF 3. Transportation cost by rail or road or any other means
VARIABLE COST 4. Loading, unloading, handling charges
5. Transit and Handling Losses
6. Landed Price of Reagent (Limestone, Sodium Bi-Carbonate, Urea and
Anhydrous Ammonia etc. )
 Computation and Payment of Capacity Charge for Thermal Generating Stations:
1. The fixed cost of a thermal generating station shall be computed on annual
basis, based on norms specified under these regulations, and recovered on
monthly basis under capacity charge.
2. The total capacity charge payable for a generating station shall be shared by
its beneficiaries as per their respective percentage share or allocation in the
COMPUTATION capacity of the generating station.
OF 3. Capacity Charge for the month shall be recovered in two parts
a) Capacity Charge for Peak period of the month
CAPACITYCHARGES b) Capacity Charge for Off-Peak period of the month.
AND 4. The Capacity Charge rate for Peak hours shall be 25% more than that of Off-
Peak hours.
ENERGY CHARGES
5. The Capacity Charge payable to a thermal generating station for a calendar
month shall be calculated in accordance with formulae given in regulation
 6. In addition to the capacity charge the incentive shall be payable to a generating
station or unit
1. @ 65 paise / kWh for ex-bus scheduled energy during Peak period
2. @ 50 paise / kWh for ex-bus scheduled energy during Off-Peak period
7. Corresponding to scheduled generation in excess of ex-bus energy
corresponding to Normative Quarterly Plant Load Factor (NQPLF) as specified in
Regulation 59 (B) of these regulation
COMPUTATION Computation and Payment of Energy Charge for Thermal Generating Stations:
OF 1. The energy charge shall cover the primary and secondary fuel cost and limestone
consumption cost (where applicable), and shall be payable by every beneficiary
CAPACITYCHARGES for the total energy scheduled to be supplied to such beneficiary during the
AND calendar month on ex-power plant basis, at the energy charge rate of the month
(with fuel and limestone price adjustment).
ENERGY CHARGES 2. Total Energy charge payable to the generating company for a month shall be:
Energy Charges = (Energy charge rate in Rs./kWh) x {Scheduled energy (ex-bus)
for the month in kWh}
 • Tariff structure:
– Continues with existing two part tariff for thermal and hydro
– And one part tariff for interstate transmission
• Capital structure
– Same as before 70:30
– For hydro of storage type
Before it was 35 years Now it is 40 years

– Special allowance
CHANGES Earlier it was 750,000 per MW Now it is 950,000 per MW
With 6.35 percent annual
escalation

• ROE:
- Current post tax of 15.5 percent for generation / transmission project is retained
along with 16.5 percent of storage based hydropower stations
- But the 0.5 percent of incentives is removed for completing projects on time
 • Depreciation:
– The salvage value assets is proposed

Before it is 10 percent now it is 5 percent

• Working capital:
– Norms have been tightened
– For normative inventory of coal or lignite and limestone for non-pithead
stations
CONTNUED Before it was 30 days Now it is 20 days
CHANGES
– For receivables
Before it was 60 days Now it is for 45 days

• O&M expenses:
Before it was under 600 MW and Now it is heightened to 800
above
 These relate to the recovery of tariff and incentives
Thermal plants
1. The NQPAF has been lowered to 83 per cent from the earlier annual PAF of 85
per cent.
2. The NQPLF has not been revised and remains at 85 per cent.
3. The gross station heat rate for the existing units of 200 MW, 210 MW and 250
be MW has been tightened to 2,410 kCal per kWh from 2,450 kCal per kWh
4. While that of 500 MW subcritical units, and units of 500 MW and above with
electrically operated boiler feed pumps (BFPs) has been retained at 2,375 kCal
per kWh and2,335 kCal per kWh, respectively
OPERATION For coal/lignite-based plants (with COD after April 2009),
NORMS 1. The factor with which the design heat rate is multiplied to derive the gross
heat rate has been increased to 1.05 (from 1.045).
2. The secondary fuel day oil consumption norms have been tighten by 50 per
cent.
3. The auxiliary energy consumption of coal/lignite plants has been increased by
0.5 percentage points for higher capacity units (300 MW and above) with
steam-driven BFPs to 5.75 per cent and that for combined cycle units by 0.25
percentage points to sav2.75 per cent.
 For pondage/storage-based hydropower stations
1. The NAPAF varies from 85 percent to 90 per cent (unchanged from last time)
depending on how significantly the silt affects the plant.
2. The CERC may extend allowance under special circumstances like the abnormal
silt problem.
3. Another 5 per cent allowance will be provided for plants in the Northeast.
For transmission systems
1. The normative annual transmission system availability factor (NATAF) for the
OPERATION recovery of annual fixed charges of AC systems is 98 percent, and of high voltage
direct current (HVDC) bipole links and HVDC back-to-back stations is 95 per cent.
NORMS 2. AC transmission systems and HVDC systems will be eligible for incentives for
NATAF exceeding 98.5 per cent (unchanged) and97.5 per cent (previously 96 per
cent),respectively. In both cases, incentives will not be provided for availability
beyond 99.75 per cent.
 1. 2% rebate will be given if payment of bills of generation and transmission with 2
days of issuance
2. The rebate will be reduced to 1% if payment is made between after 2 days to 30
days of bill issuance
3. The late payment surcharge 1.25% per month will be applicable in case of
payment after 45 days of billing
REBATE 4. The generator or transmission must equally share (50:50) with beneficiaries due to
AND financial gains due to ( variation in norms, saving in interest owing to refinancing
or non tariff income)
LATE PAYMENT
SURCHARGE
 Truing up for the tariff period 2019-24 is considered for the following:

1. The capital expenditure including additional capital expenditure incurred

up to 31.3.2024, as admitted by the Commission after prudence check at
the time of truing up
2. The capital expenditure including additional capital expenditure incurred
up to 31.3.2024, on account of Force Majeure and Change in Law
3. Subjected to prudence check

TRUING UP
 Notes :-
1. Similarly there is formula for calculation of energy charge for Gas turbine/
combied cycle, Hydro generation station, transmission and communication system
2. Hydro energy charge is 50% of AFC spread over design energy adjusted for aux., as
per CERC rules
3. Any revenue earned by the generating company from supply of infirm power after
accounting for the fuel expenses shall be applied in adjusting the capital cost
accordingly.
4. Any refund of taxes and duties along with any amount received on account of
Notes penalties from fuel supplier shall have to be adjusted in fuel cost.
5. Implementation of revised emission standards in case of a thermal generating
station shall be determined separately by the Commission
6. Variation in heat rate or price of fuel will be allowed through fuel price adjustment
7. GCV of coal received is proposed to be reduced by 85 kCal per kg to account for
the loss of calorific value in storage
Thank You !!