Allowed

Appeal no. 46 of 2013 of Power Grid Corporation of India Ltd. v. Central Electricity Regulatory Commission & Ors.

APTEL2 Sept 2013Appeal no. 46 of 2013

Case brief

AI extract

What is this about?

The Appellate Tribunal for Electricity held that time schedules in Tariff Regulations apply irrespective of line length. The Tribunal allowed the appeal, setting aside the order that denied additional Return on Equity based on a shorter internal timeline.

What did the court decide?

The impugned order dated 11.12.2012 is set aside; Central Commission directed to pass consequential order.

Appeal no. 46 of 2013 of Power Grid Corporation of India… — Company and Corporate | APTEL (2013)

¶1

Appeal no. 46 of 2013

¶2

Before the Appellate Tribunal for Electricity (Appellate Jurisdiction) Appeal no. 46 of 2013

¶3

Dated: 2^nd September, 2013

¶4

Present: Hon’ble Mr. Rakesh Nath, Technical Member Hon’ble Mr. Justice Surendra Kumar, Judicial Member

¶5

In the matter of:

¶6

Power Grid Corporation of India Ltd. Saudamini, Plot No. 2 Sector 29, Gurgaon – 122 001 Haryana

¶7

…Appellant(s)

¶8

Versus

¶9

1. Central Electricity Regulatory Commission 3^rd and 4^th Floor, Chanderlok Building, 36, Janpath New Delhi – 110 001

¶10

…Respondent(s)

¶11

2. Karnataka Power Transmission Corporation Ltd. Kaveri Bhavan, Bangalore – 560 009

¶12

3. Transmission Corporation of Andhra Pradesh Limited Vidyut Soudha, Hyderabad – 500 082

¶13

Page 1 of

¶14

Appeal no. 46 of 2013

¶15

4. Kerala State Electricity Board Vaidyuthi Bhavanam Pattom, Thiruvananthapuram – 695 004

¶16

5. Tamil Nadu Electricity Board NPKRR Maaligai, 800, Anna Salai Chennai – 600 002

¶17

6. Electricity Department, Government of Goa Vidyuti Bhawan, Panaji Goa 403 001

¶18

7. Electricity Department, Government of Pondicherry Pondicherry – 605 001

¶19

8. Eastern Power Distribution Company of Andhra Pradesh Ltd.

¶20

APEPDCL, P&T Colony, Seethmmadhara Vishakhapatnam – 530 013

¶21

9. Southern Power Distribution Company of Andhra Pradesh Limited

¶22

Srinivasa Kalyana Mandapam Backside Tiruchanoor Road, Kesavayana Gunta Tirupati – 517 501

¶23

10. Central Power Distribution Company of Andhra Pradesh Limited

¶24

Corporate Office, Mint Compound Hyderabad – 500 063

¶25

11. Northern Power Distribution Company of Andhra Pradesh Limited

¶26

Opp. NIT Petrol Pump, Chaitanyapuri, Kazipet Warangal – 506 004

¶27

Page 2 of

¶28

Appeal no. 46 of 2013

¶29

12. Bangalore Electricity Supply Company Limited Corporate Office, K.R. Circle Bangalore – 560 001

¶30

13. Gulbarga Electricity Supply Company Limited Station Main Road, Gulbarga – 585 102

¶31

14. Hubli Electricity Supply Company Limited Navanagar, PB Road Hubli – 580 025

¶32

15. MESCOM Corporate Office Paradigm Plaza, AB Shetty Circle Mangalore – 575 001

¶33

16. Chamundeswari Electricity Supply Corporation Limited

¶34

# 927, L J Avenue, Ground Floor New Kantharaj Urs Road, Saraswatipuram Mysore – 570 009

¶35

Counsel for the Appellant (s) : Mr. M.G. Ramachandran Ms. Swagatika Sahoo

¶36

Counsel for the Respondent(s): -

¶37

Page 3 of

¶38

Appeal no. 46 of 2013

¶39

JUDGMENT

¶40

RAKESH NATH, TECHNICAL MEMBER

¶41

This Appeal has been filed by Power Grid Corporation of India Ltd. against the order dated 11.12.2012 passed by the Central Electricity Regulatory Commission in Review Petition no. 23 of 2011 in petition no. 58 of 2011 wherein the Central Commission has partly allowed the Review Petition filed by the Appellant and reviewed the Tariff Order dated 27.9.2011 on one issue but rejected the claim of the Appellant for additional Return on Equity for timely completion of the transmission assets.

¶42

The Appellant is a transmission licensee. The Central Commission is the Respondent no. 1. The Respondent no. 2 to 16 are the beneficiaries of the transmission project executed by the Appellant.

¶43

Page 4 of

¶44

Appeal no. 46 of 2013

¶45

The brief facts of the case are as under:-

¶46

a) On 1.4.2009, the Tariff Regulations, 2009 of the Central Commission came into force providing the terms and conditions for determination of tariff of transmission licensee. The Regulation provided for additional Return on Equity at the rate of 0.5% provided the transmission project is completed within timeline stipulated in the Regulations.

¶47

b) On 14.1.2010 the Board of Directors of the Appellant accorded investment approval for implementation of transmission system associated with Simhadri-II generation project in Southern Region consisting of loop in and loop out of both the circuits of GajuwakaVemagiri 400 kV Double Circuit line at Simhadri-II TPS. As per the investment approval, the transmission

¶48

Page 5 of

¶49

Appeal no. 46 of 2013

¶50

project was scheduled to be commissioned within 18 months from the date of investment approval i.e. by 14.07.2011. However, the transmission project of the Appellant was commissioned on 01.08.2011.

¶51

c) On 8.3.2011, the Appellant filed a petition being no. 58 of 2011 before the Central Commission for approval of the transmission tariff for the above transmission project as the transmission project of the Appellant had been commissioned within the time schedule specified in the Tariff Regulations. The Appellant in the petition claimed for additional Return on Equity at the rate of 0.5% in accordance with the Tariff Regulations, 2009.

¶52

d) On 27.9.2011, the Central Commission passed the Tariff Order determining the transmission tariff for the Appellant’s transmission project. However, the Central Commission did not allow the additional Return on

¶53

Page 6 of

¶54

Appeal no. 46 of 2013

¶55

Equity as there was a delay in commissioning of the project with respect to the expected date of commissioning as per the investment approval of the transmission Project by the Board of the Appellant.

¶56

e) On 11.11.2011, the Appellant filed a Review Petition being no. 23 of 2011 before the Central Commission seeking review of the order dated 27.9.2010.

¶57

f) On 11.12.2012, the Central Commission passed the impugned order by partly allowing the Review Petition. However, the additional Return on Equity as sought by the Appellant for completion of transmission project within the time schedule specified in the Regulation was not allowed.

¶58

Aggrieved by the above order, the Appellant has filed this Appeal.

¶59

Page 7 of

¶60

Appeal no. 46 of 2013

¶61

Nobody appeared on behalf of the Respondents on the various dates when this matter came up before this Tribunal despite service of notice. Ultimately, we heard Shri M.G. Ramachandran, Learned Counsel for the Appellant.

¶62

Shri M.G. Ramachandran, Learned Counsel for the Appellant submitted as under:-

¶63

a) Regulation 15 of the Tariff Regulations, 2009 read with Statement of Objects and Reasons dated 3.2.2009 of the Central Commission provides that if a transmission project is completed within the time frame stipulated in the Tariff Regulations, the transmission project will be entitled to additional Return on Equity at the rate of 0.5%.

¶64

Page 8 of

¶65

Appeal no. 46 of 2013

¶66

b) In terms of the Tariff Regulations, the timeline for commissioning of the project was till 13.5.2012 and the project was commissioned within the scheduled time, i.e. on 1.8.2011.

¶67

c) However, the Central Commission wrongly disallowed the claim of the Appellant for additional Return on Equity on the ground that the transmission project was expected to be commissioned by 1.5.2011 but was commissioned only on 1.8.2011 resulting in a delay of 3 months from the expected date of commissioning. The Central Commission without considering the time schedule given in the Tariff Regulation erroneously took into consideration the expected date of commercial operation which was only internal decision of the Appellant for speeding up the commissioning of the transmission project.

¶68

Page 9 of

¶69

Appeal no. 46 of 2013

¶70

d) The Central Commission in a similar matter by order

¶71

dated 18.8.2011 in another petition being no. 232 of 2010 has allowed additional Return on Equity in respect of another transmission which was project commissioned within the time schedule specified in the Regulations.

¶72

The only question that arises for our consideration is whether the Central Commission should have decided the claim of the Appellant for additional Return on Equity for timely commissioning of its transmission project involving Loop-in-Loop-out of the transmission line on the basis of internal schedule of the transmission licensee or as per the schedule specified in the Regulation for a transmission line?

¶73

Let us examine the Tariff Regulations. The relevant Regulation is reproduced as under:-

¶74

Page 10 of

¶75

Appeal no. 46 of 2013

¶76

“15. Return on Equity

¶77

(1) Return on equity shall be computed in rupee terms, on the equity base determined in accordance with regulation 12.

¶78

(2) Return on equity shall be computed on pre-tax basis at the base rate of 15.5% to be grossed up as per clause (3) of this regulation:

¶79

Provided that in case of projects commissioned on or after 1^st April, 2009, an additional return of 0.5% shall be allowed if such projects are completed within the timeline specified in Appendix-II:

¶80

Provided further that the additional return of 0.5% shall not be admissible if the project is

¶81

not completed within the timeline specified above for reasons whatsoever.”

¶82

Thus, the Regulations provided for additional Return on

¶83

Equity of 0.5% if the project is completed within the

¶84

timeline specified in Appendix – II of the Regulations.

¶85

Appendix – II of the Tariff Regulations specify the

¶86

qualifying time schedule of 28 months from the date of

¶87

Page 11 of

¶88

Appeal no. 46 of 2013

¶89

investment approval by the Board of the Licensee for a 400 kV double circuit D/C twin transmission line in plain area which is relevant to the case. The relevant extracts

¶90

of the Appendix –II are as under:-

¶91

“C. Transmission Schemes

¶92

Qualifying time schedules in months

¶93

S.No.	Transmission Work	Plain Area (months)	Hilly Terrain (months)	Snowbound area/@very difficult Terrain (months)
a.	……………………
b.	……………………
c.	……………………
d.	……………………
e.	400 KV D/C Twin Transmission line	28	34	38

¶94

“

¶95

Thus the Appendix-II indicates that if a 400 kV D/C twin transmission line in plain area, irrespective of its length,

¶96

is commissioned within 28 months from the date of

¶97

investment approval by the Board of the Transmission

¶98

Page 12 of

¶99

Appeal no. 46 of 2013

¶100

Licensee, then the transmission project will be entitled to an additional Return on Equity of 0.5%.

¶101

The Statement of Objects and Reasons of the Tariff Regulation 2009 also indicate the intent of the Central Commission to allow additional Return on Equity at the rate of 0.5% to those projects that are completed within time schedule as stipulated in Appendix-II. However, if the project is not completed within the specified timeline

¶102

for any reasons whatsoever, the additional return of

¶103

0.5% would not be admissible.

¶104

Let us now examine the main order dated 27.9.2011 passed by the Central Commission regarding the tariff for the period 2009-14 for Loop-in-Loop-out of Gajuwaka-Vemagiri 400 kV D/C line at Simhadri-II TPS. The relevant extracts of the order are as under:

¶105

Page 13 of

¶106

Appeal no. 46 of 2013

¶107

“ADDITIONAL ROE

¶108

23. Investment approval for the transmission project was granted on 14.1.2010 and the Board of Directors of the petitioners granted timeline of 18 months. The project was scheduled to be commissioned by 14.7.2011. The project was anticipated to be commissioned on 1.5.2011. The petitioner has claimed additional return of equity of 0.5% under Regulation 15 of the 2009 regulations as the project was anticipated to be completed before 18 months.

¶109

24. The actual date of commercial operation of the project was 1.8.2011. There has been a delay of 3 months in commissioning the project. Hence, the petitioner’s claim for additional return of equity of 0.5% is rejected.”

¶110

Thus, the Central Commission rejected the claim of the

¶111

Appellant for additional Return on Equity of 0.5% because there was a delay of 3 months with respect to

¶112

the anticipated date of commissioning of the project i.e.

¶113

1.5.2011.

¶114

Let us now examine the impugned order dated

¶115

11.12.2012 passed in the Review Petition filed by the

¶116

Page 14 of

¶117

Appeal no. 46 of 2013

¶118

Appellant on various issues including disallowance of additional Return on Equity in accordance with the Tariff Regulations. The findings given by the Central Commission in the review order regarding disallowance

¶119

of additional Return on Equity are as under:-

¶120

“6. We have considered the submission of the Review Petitioner and the respondent. As per the “Scope of the project”, the subject asset is a Line In Line Out (LILO) of both circuits of 400 kV D/C Gazuwaka – Vemagiri transmission line at Simhadri-II TPS of length 6.15 km only. No timeline has been specified for a LILO in Appendix-II in the 2009 Tariff Regulations. Since, the Board of Directors of PGCIL in the Investment approval had fixed a time line of 18 months for execution of 400 kV D/C, twin conductor transmission line, the same time line has been considered for the purpose of allowing additional return on equity. As per the investment approval, LILO was to be commissioned within 18 months i.e. by 14.7.2011, but was actually commissioned on 1.8.2011. Accordingly, additional return on equity has been disallowed in the impugned order. The Review Petitioner cannot assume the time limit specified in Appendix-II of the Tariff Regulations for a transmission line for the purpose of claiming the additional RoE for a LILO, which is comparatively a smaller line and requires a much shorter time frame for execution. Since, the LILO was executed after the period of 18 months prescribed in the investment approval, the Commission has denied additional RoE

¶121

Page 15 of

¶122

Appeal no. 46 of 2013

¶123

for said asset. In our view, there is no error in the order and the review on this ground is rejected.”

¶124

The crux of the findings of the Central Commission in the review order is as under:-

¶125

(a) No timeline has been specified for Loop-in-Loop-out of a transmission line in AppendixII of 2009 Tariff Regulations. Time limit specified for a transmission line will not be applicable for a Loop-inLoop-out which is comparatively a smaller line and requires a shorter time frame for execution.

¶126

(b) Since the Board of Directors of the Appellant had fixed timeline of 18 months for execution of the Project,

¶127

the same has been considered for the purpose of allowing additional Return of Equity.

¶128

(c) As per the investment approval by the Board of Directors of the Appellant, the project was to be commissioned within 18 months, i.e. by 14.7.2011 but

¶129

Page 16 of

¶130

Appeal no. 46 of 2013

¶131

was actually commissioned on 1.8.2011. Accordingly

¶132

additional Return on Equity has been disallowed.

¶133

We find that in the main order dated 27.9.2011 the Central Commission had not given any reason for not considering the claim of the Appellant for timely commissioning of the transmission project with respect to the schedule given in Appendix-II of the Tariff Regulations and had reckoned the delay in commissioning with respect to expected date of commissioning i.e. 1.5.2011 and not with respect to the commissioning schedule approved by the Board i.e. 14.7.2011. However, in the Review order it has reckoned the delay in commissioning with respect to commissioning schedule approved by the Board i.e. 14.7.2011 and also explained the reason for inapplicability of the Appendix-II of the Tariff Regulations because no time schedule was specified

¶134

Page 17 of

¶135

Appeal no. 46 of 2013

¶136

for Loop-in-Loop out of a transmission line. Further, according to the Commission, the time schedule as given in the Appendix-II for transmission line could not be applied for Loop-in-Loop-out of a transmission line which is comparatively a smaller transmission line.

¶137

We find from the Tariff Regulations, 2009 that the time schedule specified for a transmission line in Appendix-II is not linked to the length of the transmission line. The transmission project under consideration is Loop-inLoop-out of Gajuwaka-Vemagiri 400 kV Double Circuit line at Simhadri-II involving execution of a twin transmission line of length of about 6 km. When the time schedule specified in the Regulations for 400 kV Double Circuit Twin Transmission line is 28 months

¶138

irrespective of length of the lines, the same has to be considered for the project in question which involves a short transmission line.

¶139

Page 18 of

¶140

Appeal no. 46 of 2013

¶141

Let us consider a transmission line of 6 km. constructed by the transmission licensee between two generating stations located in close proximity. Naturally, for this transmission line even though of short length, the time schedule as specified in Appendix-II of the Regulations would apply as the schedule is not linked to the length of line. Therefore, it is logical that the timeline for Loopin-Loop-out of a transmission line involving a short length of line should also be considered as per the Appendix-II.

¶142

Loop-in-Loop-out of a transmission line at a substation/switchyard of a generating station is also a transmission line project and should be entitled to additional Return on Equity as applicable to a transmission line as per the Regulations as no separate time schedule has been for a specified

¶143

Page 19 of

¶144

Appeal no. 46 of 2013

¶145

short transmission line or a project involving Loop-inLoop-out of a transmission line.

¶146

The Central Commission is bound to follow its Regulations and when the Regulations provide for something to be done in a particular manner, it has to be done in the same manner and in no other manner. When the Regulations have been framed for additional Return on Equity for a transmission line executed within the time schedule specified for a transmission line irrespective of its length, the same have to be applied in

¶147

the manner specified in the Regulation and in no other manner.

¶148

The time of completion of a transmission project could not be compared with the internal schedule set up by the transmission licensee for the purpose of considering additional Return on Equity. The completion time of the transmission line has to be compared with the schedule

¶149

Page 20 of

¶150

Appeal no. 46 of 2013

¶151

specified in the Regulations. Admittedly, the

¶152

transmission project of the Appellant has been commissioned within the time schedule specified in the Regulations. Accordingly, the Appellant is entitled to additional Return on Equity @ 0.5% for the project.

¶153

Summary of our findings:

¶154

The Tariff Regulations specify time schedule for commissioning of transmission line in plain area, hilly terrain and snowbound area/very difficult terrain, irrespective of length of line. Thus, the same time schedule is applicable for a short line and long line of similar configuration in similar terrain. Loop-in-Loop-out of a transmission line at a sub-station/generating station switchyard is also a transmission line project and its time schedule has to be considered as per the time schedule specified in the Regulations for a transmission line. Accordingly, the claim of the Appellant for

¶155

Page 21 of

¶156

Appeal no. 46 of 2013

¶157

additional Return on Equity for timely completion of

¶158

the transmission project involving Loop-in-Loop

¶159

out of a transmission line has to be decided with respect to the time schedule given in the AppendixII of the Regulations and not with respect to the internal schedule of the transmission licensee.

¶160

In view of above, the Appeal is allowed and the impugned order dated 11.12.2012 is set aside. The Central Commission is directed to pass consequential order as per our findings. No order as to costs.

¶161

22. Pronounced in the open court on this

¶162

2^nd day of September , 2013 .

¶163

(Justice Surendra Kumar) (Rakesh Nath) Judicial Member Technical Member

¶164

√ REPORTABLE/ NON-REPORTABLE mk

¶165

Page 22 of

Appeal no. 46 of 2013 of Power Grid Corporation of India Ltd. v. Central Electricity Regulatory Commission & Ors.

Case brief

What is this about?

What did the court decide?

Appeal no. 46 of 2013 of Power Grid Corporation of India Ltd. v. Central Electricity Regulatory Commission & Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Appeal No. 91 of 2013 & IA-144 of 2013 of Himachal Sorang Power Ltd. Versus Central Electricity Regulatory Commission & Anr.

Appeal No.66 of 2013 of Tuppadahalli Energy India Private Limited. Versus 1. Karnataka Electricity Regulatory Commission 2. Mangalore Electricity Supply Company Limited

Appeal no. 128 of 2012 of The Kerala High Tension and Extra High Tension Industrial Electricity Consumers’ Association Productivity House Versus 1. Kerala State Electricity Regulatory Commission, 2. The Kerala State Electricity Board

Appeal no. 250 of 2012 of Neyveli Lignite Corporation Ltd. Versus 1. Kerala State Electricity Board, 2. Central Electricity Regulatory Commission

Appeal No. 199 of 2012 of The South Indian Sugar Mills Association & Ors. Versus Tamil Nadu Electricity Regulatory Commission & Ors.

Appeal no. 2 of 2013 of Haryana Vidyut Prasaran Nigam Limited. Versus Haryana Electricity Regulatory Commission. & Ors.

Appeal No. 214 of 2012 of Torrent Power Ltd. Versus Gujarat Electricity Regulatory Commission

Appeal No.213 of 2012 of NTPC Limited. Versus Central Electricity Regulatory Commission & Ors.

Appeal No.213 of 2012 of NTPC Limited. Versus Central Electricity Regulatory Commission & Ors.

Appeal No. 166 of 2012 of Delhi Transco Limited. Versus Delhi Electricity Regulatory Commission & Ors.

I.A. No. 320 of 2013 in Dfr No. 530 of 2011 of Karnataka Power Transmission Corporation Limited & Ors. Versus M/s. Vijayalakshmi Hydro Power Limited.