Petition No.03/2000


1. Shri S.L. Rao, Chairman
2. Shri D.P. Sinha, Member
3. Shri G.S. Rajamani, Member
4. Shri A.R. Ramanathan, Member

In the matter of

Petition for Provisional Approval of Generation Tariff of Rangit Hydroelectric Project


In the matter of

National Hydroelectric Power Corporation Limited                              …Petition


Chairman, West Bengal State Electricity Board and Others  ……             Respondents

(Dates of Hearing 27th April, 2000 and 10th May, 2000)

National Hydroelectric Power Corporation Limited (NHPC) has filed this petition seeking provisional approval of the Commission for generation tariff in respect of Rangit Hydroelectric Power Project.  West Bengal State Electricity Board (WBSEB), Bihar State Electricity Board (BSEB), Damodar Valley Corporation (DVC), Grid Corporation of Orissa Limited (GRIDCO) and Government of Sikkim who are the beneficiaries of the power project have been impleaded.  NHPC has prayed that it may be allowed to bill the beneficiaries of the project at a provisional tariff of Rs.4.51 per unit for the period from 1.2.2000 to 31.3.2000 and  at a provisional tariff of Rs.2.11 per unit for the period from 1.4.2000 to 31.3.2001, subject to necessary adjustment with retrospective effect that may become necessary  after final approval of the tariff for this project.

2.    Government of India, Ministry of Power, vide its letter No.8/1/98-DO (NHPC) dated 7th April, 1999 (Annexure –I  to the petition) accorded its approval to the revised cost estimates of the project.  As per the revised  estimates, the project was to be executed at a cost of Rs.361.86 crores (net) and Rs.367.48 crores (gross) including IDC of Rs.87.89 crores at May, 1997 price level.  It has been stated that against the above sanction, an actual expenditure of Rs.419.66 crores had been incurred till October, 1999 and the anticipated completion cost of the project is Rs.457.80 crores at April 1999 price level.  The exact cost of the project would be known after the accounts of the project are closed and the sanction of the competent authority for revised capital cost of the project would be obtained thereafter.  NHPC has prayed for provisional approval of tariff  since the terms and conditions for determination of tariff are not yet notified by the Commission.  The tariff would be revised retrospectively in the light of terms and conditions to be notified by the Commission.

3.    The tariff prayed for has been worked out on the basis of sanctioned capital cost of Rs.361.86 crores since, according to the petitioner, the sanction of the competent authority for the further revision of the capital cost  is yet to be obtained by NHPC.  Based on the above capital cost, the tariff for supply of energy generated from Rangit project for the period from February 2000 to March 2000 has been worked out to Rs.4.51 per unit and for the financial year 2000-2001  Rs.2.11 per unit.  The tariff calculations are based on the guidelines notified by the Government of India on 30th March, 1992 as amended from time to time in the absence of terms and conditions for determination of tariff by the Commission.

4.    The petition came up for hearing on 27th April, 2000 after notice and  service of copies of the petition.  However, no one was present on behalf of the respondents at the hearing.  Except DVC, none of the other respondents had filed replies by that date.  In the interest of justice and fair play, we considered it appropriate to afford an opportunity to the respondents to interact with NHPC on the tariff proposals contained in the proposal.  Accordingly, we adjourned the hearing of petition to 10th May, 2000 and directed Member-Secretary, EREB to convene a meeting of the petitioner with the respondents latest by 8th May, 2000 and apprise the Commission of the decisions arrived at such a meeting.  Though the directions of the Commission as contained in its order dated 27th April, 2000 were conveyed to the Member-Secretary, EREB as also the beneficiaries/ respondents on 28th April, 2000, yet the meeting had not been convened till 10th May, 2000 on the ground that copies of the petition had not been received by any of the beneficiaries / respondents.   Meanwhile, counter reply has been filed on behalf of WBSEB also.

5.    On 10th May, 2000 when the matter was taken up for hearing, Shir R.K. Mehta, Advocate, appearing on behalf of GRIDCO and Shri Brijender Chahar, Advocate, appearing for State of Sikkim prayed for an adjournment on the ground that the said respondents had not received copy of the petition.  Shri R.K. Sharma, ED, NHPC, present at the hearing on 10th May, 2000 placed on record photocopies of the receipts duly signed on behalf of the respondents that the copies of the petition was received by  GRIDCO on 4th February, 2000 and by the Government of Sikkim on 9th February, 2000.   He pointed out that the copies of the petition were also received by the other respondents; by WBSEB and DVC on 3rd February, 2000 and by BSEB on 4th February, 2000.  We have taken a very serious view of the misrepresentation of the facts before the Commission through the counsel and also by the Member-Secretary, EREB.  We decided to proceed with the hearing since sufficient opportunities had been provided to the respondents to respond to the provisional tariff proposals contained in the petition filed by NHPC though they had failed to avail of these opportunities.  However, at the request of Shri R.K. Mehta, the learned counsel appearing for GRIDCO, we  allowed him two days time to enable him to file the written submissions,  they have since been filed on 12th May 2000.

6.   We have heard Shri R.K. Sharma, ED, NHPC.  He has stated that the project was synchronised on 1st Feb 2000, has been put into commercial operation w.e.f. 15th February, 2000 in accordance with the Govt. of India notification of January, 1995 and, therefore,  as per the tariff proposal the tariff is to be charged w.e.f. that date The date of commissioning of the project had been notified to Member-Secretary, EREB through NHPC’s letter dated 2nd March, 2000.  As per Government of India’s notification, the revenue earned from sale of infirm power before the declared date of commissioning shall be taken as reduction in capital expenditure.  He informed that the allocation of power among the beneficiary States had not been notified by the Government of India and he requested the Commission to give appropriate direction to the Government of India for expeditious decision on the allocation of power, though it is to be allocated as per the standard formula of the Government of India according to which 12% free power is to be supplied to the home State, 15% unallocated share of the Government of India and the remaining 73% among the States of the region as per the Gadgil formula.  Pending allocation of power by the Government of India, the beneficiaries will be charged based on actuals as per the energy accounts prepared by the EREB.  He pointed out that billing for Loktak project is also being done on the same basis i.e. on the basis of actual drawl  of energy by the beneficiary States.  

7.    We have perused the replies filed on behalf of WBSEB and DVC as also the written submissions filed on behalf of GRIDCO.  DVC has primarily objected to 12% free power to home state and ROE at the rate of 16%.  The objections raised by WBSEB also basically relate to guidelines prescribed by the Government of India for tariff calculation in its notification  dated 30th March, 1992, as amended from time to time.  Respondents have also contended that since the matter was not discussed in the REB Forum and since power allocation by Central Government has not been done, which should also be considered.  GRIDCO in its written submissions has stated that the cost of free power allowed to the home state should be subsidised by the Government of India or NHPC.  On the question of equity, it has been contended by GRIDCO that the maximum equity for tariff purposes is Rs.180.93 crores instead of Rs. 181.94 crores adopted by NHPC and ROE of 12% should be allowed as against 16% claimed by NHPC.  It has been contended  that after repayment of loan the equity components will be reduced.  On the loan amount, it has been pointed out that opening loan for 2000-2001 should be reduced to Rs.176.27 crores.  It has been prayed on behalf of GRIDCO that NHPC may be directed to recalculate tariff taking into account the various discrepancies pointed out.

8.    We have carefully considered the matter in the light of submissions made by the parties in their pleadings and  at the time of hearing.  The objections of the respondents generally relate to the tariff norms notified by the Government of India.  At this stage, we are concerned with the provisional tariff only and, therefore, we do not propose to go into the questions raised on behalf of the respondents, calling  into  question the guidelines prescribed by the Government of India for tariff calculation in its notification dated 30th March, 1992 as amended from time to time, particularly so when the terms and conditions for determination of tariff have not yet been notified by the Commission.   We are further convinced that provisional tariff on actual drawl basis should still be allowed as the power is being drawn by the beneficiaries. We reserve the issues to be raised at the time of final hearing of the petition.

9.    We, therefore, direct that as an interim measure, the petitioner shall be entitled to the provisional tariff as claimed in the present petition.  The respondents shall be liable to make payments of tariff as claimed on the basis of actual energy drawn by them subject to adjustment after power allocation is notified by the Central Government.

10.    The present petition shall be kept pending and the parties shall be at liberty to pursue it after notification  of terms and conditions for  tariff determination by the Commission.  Once again, we make it clear that the directions contained hereinabove are without prejudice to the rights of the parties and the issues  raised by them in their pleadings.

11.    A copy of this order shall be sent to the Ministry of Power, Govt. of India for expeditious announcement of shares of the beneficiary States.  A copy shall also be  sent to all concerned for necessary compliance.


(A.R. Ramanathan)




(D.P. Sinha)



New Delhi,
Dated 12.05.2000

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