1.2.2.3.3 Diesel Engine Generating Station

The annual Operation & Maintenance (O&M) expenses after the Commercial Operation Date of the last Unit shall be determined as per the following formula :

C(O&M)n = OMP*CC (0.7 WPn/WP1 + 0.3 CPn/CP1)

Where, C(O&M)n is the annual Operation & Maintenance expenses in cores of Rupees for the nth year,

OMP is O&M percentage factor being 0.04 for plant based on medium speed 4-stroke D.G. engines and 0.025 for plant based on low speed 2 stroke D.G. engines.

CC is the the actual capital expenditure crores of Rupees as provided in clause 1.2..1

WPn is the wholesale price index during the nth year, and

CPn is the consumer price index during the nth year.

Note : (1) Upto the Commercial Operation Date of the last Unit, the O&M Expenses for Units in commercial operation shall be allowed in proportion to the allocation of the capital cost to the respective Unit as set out in the techno-economic clearance of the CEA or clearance of the competent authority approved by the State Government.

(2) No escalation in O&M Expenses shall be allowed upto one year from the COD of the Generating Station.

1.2.2.4 Tax On Income

Tax on the following income streams, if any, of the Generating Company to be computed as an expense at actuals:-

i) Sixteen per cent return on equity;

ii) The extra rupee liability on account of foreign exchange rate variation in computing the return on equity not exceeding 16 per cent in the currency of the subscribed capital;

iii) The amount of grossed up tax that is payable and actually paid by the generating company under income streams mentioned at items (i) and (ii);

Any under or over recoveries of tax shall be adjusted every year on the basis of a certificate of statutory auditors.

Note: Tax on other income streams, if any, accruing to the Generating Company shall not  constitute a pass through component in the tariff. Tax on such other incomes shall be payable by the Generating Company.

1.2.2.5 Return On Equity

Return on equity shall be computed on the paid up and subscribed capital relatable to the generating unit, and shall be 16 per cent of such capital.

Explanation - I : For the purpose of this paragraph, the Generating Company shall, in regard to subscribed equity brought in foreign exchange, have the option to compute the return on equity not exceeding 16 per cent in the currency of the subscribed capital.

Explanation - II : Premium raised by the Generating Company while issuing share capital and investment or internal resources created out of free reserve of existing company, if any, for the funding of the project, shall also be reckoned as paid up capital for the purpose of computing the return on equity, provided such premium amount and internal resources are actually utilised for meeting the capital expenditure of the power generation project and forms part of the approved financial package as set out in the techno-economic clearance accorded by the Authority.

1.2.2.6 Interest on working capital

1.2.2.6.1 Steam Power Station

For the purpose of calculations of interest on working capital, the working capital shall not exceed the following :

(a) One and half months' expenses of the following items :

i. Primary fuel consumption - coal, lignite or petroleum coke or vacuum residue at 75% PLF.

ii. Secondary fuel oil consumption at 75% PLF.

iii. Annual O&M Expenses.

(b) Expenses of the following items of stock :

i. half a month's consumption of primary fuel in case the source of fuel is within 100 km from the Generating Station or one month's consumption of primary fuel for other Stations at Rated Capacity.

ii. half a month’s consumption of secondary fuel oil at Rated Capacity.

iii. One year maintenance spares at 40 percent of annual O&M Expenses.

Note
(i) Consumption of fuels shall be calculated as per relevant operation norms.

(ii) In case the source of primary fuel-coal or lignite linked mine or oil refinery in case of petroleum coke or vaccum residue is located within 100 km from the Generating Station, it shall be treated as pit-head station.

(iii) In respect of one year maintenance spares, for each of the first 3 years of operation of the station, one third of capitalised spares cost shall be deducted form the cost of one year maintenance spares.

(iv) In case the due date of payment of monthly bill is less than 15 days as per Power Purchase Agreement, the one and a half month’s expenses specified at item (a) above shall be limited to (30+n) days, where n is the number of days for due payment of monthly bill.

1.2.2.6.2 Combined Cycle Combustion Turbine (CCCT) Station

For the purpose of calculation of interest on Working Capital, the Working Capital in respect of operational parameters shall not exceed the following :

(a) One and half months' expenses of the following items :

(i) Fuel consumption at 75% PLF.

(ii) Annual O&M Expenses.

(b) Expenses of the following items of stock :

(i) half a month's consumption of fuel at 75% of Installed Capacity in case of CCCT generating station using Naphtha /NGL.

(ii) One year maintenance spares at 40% of annual O&M

Note:
(1) Consumption of fuel shall be calculated as per relevant operation norms.

(2) In respect of one year maintenance spares, for each of the first 3 years of operation of the station, one third of capitalised spares cost shall be deducted from the cost of one year maintenance spares.

(3) In case the due date of payment of monthly bill is less than 15 days as per Power Purchase Agreement, the one and half months expenses specified at item (a) above shall be limited to (30 +n) days expenses where 'n' is the number of days for due payment of monthly bills.

1.2.2.6.3 Diesel Engine Generating Station

For the purpose of calculation of interest on working capital, the working capital in respect of operational parameters shall not exceed the following :

a) One and half months' expenses of the following items :

(i) Fuel consumption at 75.0% PLF.

(ii) Lubricating oil including cylinder oil consumption at 75.0% PLF.

(iii) Annual O&M Expenses.

b) Expenses of the following items of stock :

i) half a month's consumption of fuel at 75.0% of installed capacity.

ii) Half a month consumption of lubricating oil including cylinder oil at 75.0% of Installed capacity.

iii) One year maintenance spares at 40 percent of annual O&M Expenses.

Note : (i) Consumption of fuel and lubricating oil including cylinder oil shall be calculated as per relevant operation norms.

(ii) In respect of one year maintenance spares, for each of the first 3 years of operation of the station, one third of capitalised spares cost shall be deducted from the cost of one year maintenance spares.

(iii) In case the due date of payment of monthly bill is less than 15 days as per Power Purchase Agreement, the one and a half months expenses specified at item (a) above shall be limited to (30+n) days expenses where 'n' is the number of days for due payment of monthly bills.

1.2.3 Incentive

Full fixed charges shall be recoverable at generation level of 75% Annual P.L.F. Payment of fixed charges below the level of 75% Annual P.L.F. shall be on prorata basis. There shall not be any payment for fixed charges for generation level above 75 % Annual P.L.F. For generation of above 75% Annual P.L.F., the additional

incentive payable shall not exceed 0.7 percent of paid up and subscribed capital, for each percentage point increase of Plant Load Factor above the normative level of 75% PLF. While computing level of generation, the extent of backing down, as ordered by the Regional Electricity Boards or State Load Despatch Center, as the case may be shall be reckoned as generation achieved. The payment of fixed charges shall be on monthly basis, proportionate to the electricity drawn by the respective Boards and other persons. Necessary adjustment based on actual shall be made at the end of each year.

Note: 1. The additional incentive of return on equity of 0.7 percent for each percentage increase above the normative level of 75% Annual PLF mentioned above shall be the maximum ceiling. It shall be open to the Generating Companies and Boards or other Power Purchasers to negotiate and fix a suitable lower additional incentive, within the above ceiling.

Note: 2    For Naphtha/NGL based CCCT plants and Diesel Engine Genrating Units the extent of backing down, as ordered by Regional Electricity Boards or the State Load Despatch Center, as the case may be, beyond Plant Load Factor of 75% Annual P.L.F. shall not be reckoned as generation achieved for purposes of incentive.

1.2.4 Energy (Variable ) Charges

1.2.4.1 Energy (variable) charges shall cover generally fuel costs and its charges per kWh of energy supplies shall be computed based on landed cost of fuel, its calorific value and the following parameters subject to the stipulation of note (3) under Clause 1.1 :

(a) Primary Fuel : Specific fuel comsumption based on the net heat rate formulae at as per clause 1.1.3 and calorific value of fuel.

(b) Secondary Fuel Oil : Specific secondlary oil consumption as per clause 1.1.6 and
(for steam power stations only)      Auxiliary Energy Consumption at clause 1.1.5.

In addition, the energy charges shall take into account following additional component where applicable.

(a) Lubricating Oil:    Specific lubricating oil consumption as per clause 1.1.8 and Auxiliary Energy
(for Diesel Generating    Consumption as per clause 1.1.5.3
Station only)

(b) For Desulphurisation : Specific reagent consumption as per clause 1.1.7 and
system if installed        Auxiliary Energy Consumption as per clause 1.1.5.
and operated.

1.2.4.2 Adjustment on account of variation in price or quality

Initially the relevant Calorific Value of the fuel shall be taken as per actuals in the preceding three months. Any variation shall be adjusted on a month to month basis on the basis of the relevant Calorific Value of the fuel actually received and burnt and actual landed cost incurred by the Generating Company for procurement of the fuel. This method shall be adopted for the determination of the additional charges for the reagents for Desulfurisation and for the lubricating oil for diesel generating stations.

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