Central Electricity Regulatory Commission

06.02.2012, Amendments dated 18-03-2014, 05-01-2015, 10-07-2015, 7-10-2015, 30-03-2016

These regulations shall come into force on 1.4.2012, and unless reviewed earlier or extended by the Commission, shall remain in force for a period of 5 years from the date of commencement

• Wind Power Projects
• Small Hydro Project (lower than or equal to 25 MW at single location)
• Biomass Power Plant Based on Rankine Cycle Technology (use of Fossil fuel is restricted up to 15% in terms of calorific value on annual basis till 31-03-2017).
• Non Fossil fuel based Co-generation
• Solar PV and Solar Thermal Power Project
• Biomass Gasifier based Power Project (uses 100% producer gas engine, coupled with gasifier technologies)
• Biogas Based Power Project (uses 100% Biogas fired engine coupled with Biogas technology for Co-digesting agriculture residues, manure and other bio waste)
• Municipal Solid Waste based Power Projects
• Refuse derived Fuel based Power Projects using new plant & machinery

To be determined by the commission on case to case basis for the following type of projects.

• Municipal Solid waste and Refuse derived fuel based projects
• Any other new renewable energy technologies approved by MNRE
• Other hybrid projects include renewable – renewable–renewable or renewable– conventional sources
• Solar PV and Solar Thermal projects, if project developer opts for project specific tariff
• Hybrid Solar Thermal Power Plants
• Biomass project other than that based on Rankine Cycle technology application with water cooled condenser.

Single part tariff consisting of the following fixed cost components:

(a) Return on equity

(b) Interest on loan capital

(c) Depreciation

(d) Interest on Working capital

(e) Operation and maintenance expenses

(f)  Fuel cost component to be added to the above for Biomass and Non-Fossil Cogeneration.(Single part tariff with two components, fixed cost component and fuel cost.)

(i) The generic tariff shall be determined on levelised basis for the Tariff Period.

For single part tariff with two components, tariff shall be determined on levelised basis considering the year of commissioning of the project for fixed cost component and on year of operation basis for fuel cost component.

(ii) For levelised tariff computation, the discount factor equivalent to weighted average cost of capital shall be considered.

(iii) Levelisation shall be carried out for the useful life while tariff shall be specified for the period equivalent to Tariff Period.

For project specific tariff the generating company shall submit the break-up of capital cost items along with its petition

For project specific tariff:

• If equity is more than 30% of the capital cost, equity in excess of 30% shall be treated as normative loan.
• If equity is less than 30%, actual equity to be considered for determination of tariff.
• Equity invested in foreign currency be designated in Indian rupees on the date of each investment.

12 years

Calculation for interest to be worked out on gross normative loan.

• Normative loan outstanding as on 1st April of every year shall be worked out by deducting the cumulative repayment up to March 31st of previous year from the gross normative loan.
• For the computation of tariff, the normative interest rate shall be considered as average of State Bank of India (SBI) Base rate prevalent during the first six months of previous year plus 300 basis points.
• The payment of loan to commence from 1st year of commercial operation of the project and shall be equal to the annual depreciation allowed.

Depreciation per annum to be on “Differential Depreciation Approach” over loan period beyond loan tenure over useful life computed on “Straight Line Method”.

Depreciation to be charged from the first year. In case commercial operation is for part of the year, depreciation to be charged on pro-rata basis.

The normative Return on Equity shall be:

• 20% per annum for the first 10 years
• 24% per annum 11th year onwards

Interest on working capital shall be interest rate equivalent to average State Bank of India base rate prevalent during first six months of the previous year plus 350 basis points.

determined based on normative O&M expenses for the first Year of Control Period.

Payment other than through Letter of Credit but within 1 month of presentation of bills by generating companies – 1%

Payment of bills beyond 60 days from the date of billing – 1. 25% p.m.

Shared between generating company and concerned beneficiaries as follows:

• 1st Year - 100% by project developer after the date of commercial operation
• 2nd  year – share of beneficiaries @ 10% to progressively increase by 10% every year up to 50% and then to be shared in equal proportion, by the generating company and the beneficiaries.

To be taken into consideration including accelerated depreciation benefit, if availed, while tariff is determined

For income tax benefit on account of accelerated depreciation, if availed, the following principles to be considered.

(i) Assessment of benefit shall be based on normative cost, accelerated depreciation rate as per relevant provision under income tax Act and corporate income tax rate.

(ii) Capitalization of RE projects during second half of the fiscal year. Per unit

benefit shall be derived on levellised basis at discount factor equivalent to Post Tax weighted average cost of capital.

Tariff determined under these regulations shall be exclusive of taxes and duties as may be levied by the appropriate Government and shall be allowed as pass through on actual incurred basis.

Biomass Power Plants of 1O MW installed capacity and above, non-Fossil Fuel based Co-generation projects, Municipal Solid Waste and Refuse Derived Fuel to be subjected to scheduling and dispatch code and specified under CERC (Indian Electricity Grid Code) Regulations,2010 and CERC (Unscheduled Interchange and related matters) Regulations, 2009 including amendments thereto.

As detailed in the regulations

http://www.cercind.gov.in/Current_reg.html

http://www.cercind.gov.in/2012/regulation/CERC_RE-Tariff-Regualtions_6_2_2012.pdf

http://www.cercind.gov.in/2014/regulation/noti94.pdf

http://www.cercind.gov.in/2015/regulation/Noti5.pdf

http://www.cercind.gov.in/2015/regulation/NotiRE.pdf

http://www.cercind.gov.in/2015/regulation/NotiRE.pdf