RAJASTHAN ELECTRICITY REGULATORY COMMISSION, JAIPUR

Suo-Motu
In the matter of determination of generic tariff for sale of electricity from wind
power plants in the state to Distribution Licensee for FY 2012-13.
Coram:
1. Shri D.C. Samant, Chairman
2. Shri S.K.Mittal, Member
3. Shri S.Dhawan, Member
Date of hearing

12.07.2012

Date of order

07.09.2012
Order

1.

As per RERC (Terms and Conditions for Determination of Tariff)

Regulations, 2009 (hereinafter referred as RERC Tariff Regulations, 2009),
Commission may initiate process for determination of generic tariff for
Renewable Energy (RE) generating stations on Suo-Motu basis or on the
basis of Petition filed by the Nodal Agency.

2.

The RERC Tariff Regulations, 2009 provide for terms and conditions for
determination of generic tariff for wind power projects to be
commissioned during the Control Period of FY 2009-10 to FY 2013-14,
based on the parameters outlined in Part VII of these Regulations.
Commission had recently issued Fourth Amendment in RERC Tariff
Regulations, 2009 vide Notification dated.18.05.2012.

3.

Commission, based on the performance parameters contained in the

RERC Tariff Regulations 2009 read with the said Fourth Amendment,
had worked out the draft order of generic tariff for the wind power
projects getting commissioned during FY 2012-13 and the same was
issued for comments/suggestions from the stakeholders

4.

Public notices were published in the following newspapers on the dates

mentioned against each inviting comments/suggestions from the
stakeholders on the Draft Order:
Rajasthan Patrika :

09.06.2012

Rashtradoot

09.06.2012

The Times of India :

09.06.2012
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Public notices along with the draft order were also placed on
Commissions website.
5.

The last date for submission of comments/suggestions by the

stakeholders/public was 02.07.2012. Comments/suggestions from the
stakeholders mentioned in Annexure-III were received.

6.

Hearing on the Draft Order was held on 12.07.2012. The Stakeholders,

who participated in the hearing, are mentioned in Annexure-IV.

7.

The present regulatory exercise is limited to determination of generic

tariff based on the parameters contained in RERC Tariff Regulations,
2009 read with Fourth Amendment. The comments of the stakeholders
on parameters such as Capital Cost, Depreciation, Interest Charges,
Auxiliary Consumption, De-ration etc. fall outside the scope of this
order, as they stand specified under the said Regulations and
therefore, they have not been considered. Similarly, other suggestions
of general nature such as providing expert help and arrangements for
recording of proceedings of hearing were also received. These
suggestions, though taken note of, have also not been discussed in this
Order on account of being outside the scope of this order.

8.

The comments/suggestions received from various stakeholders on

broad issues through written submissions and arguments during hearing
on the proposed Draft Order have been grouped and summarized as
under:

9.

(1)

Consideration of Surcharge, Changes in MAT,CDM Benefit,

Additional Depreciation and O&M Expenses;

(2)

Subsidy or incentive by the Central Government;

(3)

Procurement of Power at lower of the two tariff streams;

(4)

Procurement of wind power beyond RPO;

(5)

Metering and CUF; and

(6)

Some other comments.

The above issues and Commissions analysis/decision thereon have

been dealt in the following paras.

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Consideration of Surcharge, Changes in MAT, CDM Benefit, additional

depreciation and O&M Expenses:
Stakeholders suggestions/comments:
10.
Main points raised by CLP Wind Power (India) Pvt. Ltd. (CLP India),
Indian Wind Power Association (IWPA), Enercon (India) Limited (EIL),
Greenergy Renewables Pvt. Ltd. (GRPL), Torrent Power, Indian Wind
Turbine Manufacturers Association (IWTMA), Rajasthan Vidyut Vikas
Sansthan (RVVS), Ajmer Vidyut Vitran Nigam Ltd. (AVVNL) and others
on the above issue are briefly as under:
(1)

Commission has not considered surcharge on income tax/MAT for

second and subsequent years, probably on the anticipation of
abolition of surcharge with the introduction of Direct Tax Code.
MAT/Income Tax (including surcharge, cess etc) is the Govt. tax
and does not constitute revenue to the generating company and
unless, Govt. of India through Finance Act alter/delete the
provisions of surcharge, not considering the same indirectly
reduces the admissible return on equity. Therefore, Commission
needs to consider surcharge on MAT as well as Income Tax for
entire project life. The illustration given at regulation 21(5) of the
RERC Tariff Regulations, 2009 considers MAT and income tax with
surcharge & cess.

(2)

There can be drastic changes in taxation rates (including

surcharge, cess etc.) or methodology of levy of taxes, it will be
appropriate to specify that the tariff for wind power projects
getting commissioned during FY 12-13 at whatever MAT/Income
Tax rate it is determined, shall be subject to annual revision
reflecting the difference in applicable MAT and income tax
(including surcharge and cess).

(3)

The Clean Development Mechanism (CDM) benefit has not been

taken into account in the tariff calculations, a suitable provision
needs to be made so that developers may pursue CDM benefit
seriously, which can generate about 20 paise/kWh.

(4)

The adoption of CERC methodology in determining the benefit of

higher depreciation is right step .However, depreciation benefit is
to be considered vis-a-vis depreciation considered by the
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Commission, as such depreciation beyond 12 years must be as per

RERC Regulations, i.e. 2.024%.

11.

(5)

The capital cost of wind power plant includes Rs. 15 lacs/MW

towards the cost of wind energy evacuation upto and including
pooling station and Rs. 2 lacs/MW payable to RVPN as the
connectivity charges. Further, as per sub-regulation 6(iv) of
regulation 83, O&M expenses are to be levied at the rate of 1.25%
of capital cost for plants and 3% for transmission line. There are no
O&M expenses on the connectivity charges of Rs. 2 lacs/MW.
Therefore, connectivity charges should not be included in the
capital cost for working out the O&M Expenses.

(6)

The GERC model for solar tariff may be adopted and for initial
period, a low tariff may be given, which may be gradually
increased.

Commissions Analysis and Decision:

(1) As regards the levy of surcharge, it is stated that the Commission
had determined levelised tariff based on the same methodology
for wind power plants commissioned during the FY 2009-10 i.e. first
year of the present control period. In order to maintain continuity
and consistency during the on going MYT control period, the
identical methodology has been followed in this order in
determination of generic tariff for FY 12-13. Further, this issue also
came up before Appellate Tribunal for Electricity (APTEL) in M/s
Enercon (India) Limited and Indian Wind Power Association
(Rajasthan State Council) v. Rajasthan Electricity Regulatory
Commission, Jaipur and Ors. reported in 2011 ELR (APTEL) 0987,
where it was decided by Honble APTEL that the Commission
applied the correct rate of MAT including surcharge for the
purpose of grossing up the rate of return on equity. In view of the
said position no change is required as far as levy of surcharge is
concerned.
(2) As regards the suggestion of year-on-year adjustment of MAT
based on rate prescribed by GoI, it is stated that the tax rate
movements over the tariff period of 25 years could eventually
even out, as it may go up or down. Even otherwise, such year-onyear changes cannot be captured, when levelised tariff for 25
years is being determined. Commission, therefore, would like to
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continue with the past practice on account of the said reasons

and also for the sake of consistency.
(3) Regarding the issue of considering CDM benefit in the tariff
calculation methodology raised by one of the Discoms, it is
clarified that RERC Tariff Regulations 2009 at regulation 42 provide
for sharing of CDM credit during the current control period wherein
project developer has been allowed 75% share of CDM benefits, if
this benefit is availed. Therefore, it would not be appropriate to
factor CDM benefit in the determination of tariff for wind projects.
The projects, which would avail CDM benefit, should share that as
envisaged in Regulations. Further, CERC is also not considering the
same in tariff computation, though CERC RE Tariff Regulations also
have such an enabling provision for sharing of CDM benefits.
(4) As regards the methodology of calculation of Higher Depreciation
benefit, it may be mentioned that IWPA and EIL, while welcoming
the adoption of CERC methodology suggested that depreciation
beyond 12 years be taken as 2.04%. On this issue, it may be
mentioned that the exercise is to arrive at the tax benefit of higher
depreciation a developer could avail. Therefore, the benefits of
option of higher depreciation available under Income Tax Act, i.e.
35% (=20%+15%) for the first year and 15% afterwards under written
down value method have to be compared with book
depreciation (i.e. 5.28% as per Straight Line Method) available
under Companies Act, 1956. CERC is also following the similar
methodology of arriving at the additional benefit with reference to
book depreciation available under Companies Act.
It would,
therefore, be appropriate to retain the methodology for working
HD benefit as per the Draft Order. As all reasonable costs and
return on equity of 16% grossed up with normal tax rate is being
allowed, the additional tax benefit of higher depreciation needs
to be passed on to the consumers.
(5) As regards the suggestion of RVVS of not to consider Rs. 2 lacs/MW
for the purpose of working out O&M expenses, Commission would
like to clarify that RERC Tariff Regulations 2009 provide for O&M
expenses in terms of percentage of lump sum capital cost of a
power plant. The capital cost of a power plant comprises of hard
costs i.e. equipment costs, cabling etc as well as soft cost such as
Interest During Construction (IDC), Erection & Commissioning, and
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Consulting Fee etc. As per prevailing practice of the power sector,

when Commercial operation Date (CoD) of a project is achieved,
these costs, hard as well as soft, are capitalised and become part
of a lump sum cost.
(6) As regards the suggestion of AVVNL for specifying different slabs
for preferential tariff with lower tariff for initial years, it is stated that
the RERC Tariff Regulations 2009 at note (ii) appearing below sub
regulation 6(b)(viii) of regulation 83 provides for determination of
levelised tariff for useful life of the wind projects i.e. 25 years.
Therefore, suggestion of Discoms for specifying different slabs of
the levelised tariff cannot be accepted and thus, levelised tariff for
25 years has been determined in accordance with the above
provision of RERC Tariff Regulations, 2009. It may be mentioned
that CERC also follows similar methodology.
Subsidy or incentive by the Central Government
Stakeholders suggestions/comments:
12.
Main points raised by CLP India, IWPA, EIL, REGEN, InWEA, EOXIS, INOX,
Green Infra, Torrent Power, GRPL, IWTMA, PEC and others are briefly as
under:
(1)

The main objectives of GBI Scheme are:

(a) To broaden Investor Base by:
(i) Facilitating

the entry of large Independent Power

Producers (IPPs)

(ii) Attracting FDI in the Wind Power Sector

(b) To provide level playing field between various classes of

investors.
(c) To incentivize higher efficiencies.
(d) To provide a framework for transition from an investment
based incentive to outcome based incentive.
(2)

The Generation Based Incentive (GBI) was available for the wind
turbines commissioned after the issue of the scheme for
implementation of GBI for Grid interactive wind power projects
issued by Ministry of New & Renewable Energy (MNRE), GoI, vide
letter dated 17.12.2009 and before 31.03.2012.The duration of
scheme has not been extended so far. As per clause 4.6 of the
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scheme, this incentive is over and above the tariff that may be
approved by the State Electricity Regulatory Commission. In other
words, this incentive is sanctioned by the Union Government to
enhance the availability of power to the Grid and is not be taken
into account while fixing tariff by the State Regulators.
(3)

Reducing GBI from the tariff would render the GBI scheme itself
meaningless. Further, if GBI is reduced from the tariff, none of the
investors would want to get into the effort and expenses towards
availing this incentive.

(4)

As regards the treatment of GBI, Commission in its wind tariff order

for the FY 2009-10 has stipulated as under:
Commissions Ruling:
42. It may be mentioned that most of the investment in wind
energy in the state is taking place outside the incentive available
under GBI. However, the current tariff order is no way impinges on
the GBI scheme, which would be governed by the terms and
conditions of the scheme.

(5)

The new stand taken by the Commission that GBI should be

passed on to the distribution licensee is a radical change from the
earlier decision, this change in approach has never been
discussed through any consultation/public hearing.

(6)

Similarly, other policy supports like tariff subsidy or CFA is provided

to the developers for attracting investment in the sector and the
same cannot be passed on to the Discoms where spirit and terms
& conditions of such policy support do not provide for the same.
In case such benefits are to be passed on to the Discoms, no
Generator would make efforts and incur expenditure towards
availing such benefits. Even in other cases, Commission may
specify that benefit shall be shared between Discom & Generator.
RERC Tariff Regulations, 2009 do not provide for reduction in the
tariff to the extent of GBI/Tariff subsidy/CFA/AD so availed by the
project developer. CERC and MERC are not adjusting GBI in tariff
calculation.

(7)

If GBI is to be allowed as a pass through, then it should be on

sharing basis, as provided for CDM benefit, as expenses are
involved in availing this benefit was other view point on the issue of
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GBI sharing. Yet another suggestion for GBI was that it should be
adjusted in tariff only in project specific tariff.
(8)

13.

GBI is not a capital subsidy and should not be treated similar to

Accelerated Depreciation.

Commissions Analysis and Decision:

(1) Most of the comments/suggestions as regards GBI are that it
should be over and above the preferential tariff determined by
this Commission. Commission has examined the issue. The GBI
Policy declared by Ministry of New and Renewable Energy (MNRE)
provided that GBI sanctioned by Union Government was to
enhance the availability of power to the grid. It has been
specifically mentioned in the Policy note that it shall be over and
above the tariff determined by the Commission. The scheme was
available to the wind turbines commissioned on or before
31.03.2012. Since then, neither the Policy has been extended nor
has any new Policy been issued by GoI.
(2) Considering the above position, the Commission is of the view that
GBI/Tariff Subsidy may not be factored if a notification (from
Central Government or State Government) specifically provides
for such GBI/ Tariff Subsidy to be over and above the preferential
tariff determined by the Commission. Even CERC methodology
doesnt adjust GBI benefit in tariff calculation. It would, therefore,
be appropriate that at present, factoring of GBI/Tariff Subsidy
should continue to be governed by terms and conditions of such
scheme(s), as and when declared by the Central Government
and this view is in consonance with the decision taken by the
Commission in tariff order of FY 9-10, as quoted by one
stakeholder.
(3) The position as regards CDM and Higher Depreciation has been
dealt with in earlier part of this order and benefit of Accelerated
Depreciation stands withdrawn by the Govt. of India from the
current financial year as far as wind energy projects are
concerned.

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Procurement of Power at lower of the two tariff streams

Stakeholders suggestions/comments:
14.
Main points raised by IWPA,EIL, InWEA, ReNeW, REGEN, Green Infra,
INOX, EOXIS, Acciona Energy, TANOT POWER, Torrent Power, CLP India,
IWTMA,JVVNL , AVVNL and others on the above issue are briefly as
under:
(1)

Unlike the present process where an investor is assured of a PPA

after the RREC grants approval, this process is likely to introduce
significant uncertainty from the investors perspective on matters
such as project certainty, applicable tariff, viability etc.

(2)

Commission has virtually directed Discoms to procure wind energy

at a generic tariff which is lower between the two tariff options
available to the investors i.e. with higher depreciation (HD) and
without HD. A generator not in a position to avail higher
depreciation benefit may agree to lower tariff stream in the
anticipation of GBI/Tariff subsidy. But having contracted for lower
stream, he will have to pass on GBI/Tariff subsidy to Discoms. This is
grossly unjust to the investors who are willing to invest without
availing HD benefit. This is going to adversely affect the investment
in the state of Rajasthan, as investor profile has changed over the
years. At present, large international investors, who prefer
generation linked incentive over the tax incentives are investing in
the wind based generation in India.

(3)

After withdrawal of Accelerated Depreciation, more IPPs would

be investing in wind generation and they would not be able to
avail benefit of higher depreciation.

(4)

This, in a way, is removal of level playing field between the two

categories of the investors i.e. those who can avail the benefit of
higher depreciation and those who cannot.

(5)

Creating classifications within the preferential tariff and preferring

one over other may create uncertainty for a large number of
projects already under various stages of construction in the state

(6)

JVVNL and AVVNL stated that clarification for providing basis for
applying preference is required specifically through an example, if
there are two generators providing wind power, one based on
higher depreciation and another one without higher depreciation,
and if the RPO has not been met then in that case how should
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Discoms proceed. Any preference without a set of evaluation

matrix may get highlighted during audit.
Commissions Analysis and Decision:
15.
In the light of the submissions made by the stakeholders as well as
Discoms, the Commission is of the view that the matter needs to be
re-considered. Commission has also taken note of the submission of
the stakeholder that after withdrawal of AD benefit, IPPs are expected
to invest more in wind generation, who would not be able to avail
benefit of higher depreciation. In order to address the concerns of
developers as well as Discoms, the Commission has reviewed the
matter and decided that both the tariff i.e. with or without availing
higher depreciation would be valid tariff for the purpose of signing of
Power Purchase Agreements (PPAs) by the Discoms.
Procurement of wind power beyond RPO
Stakeholders suggestions/comments:
16.
Main points raised by CLP India, IWPA,EIL, InWEA, Green Infra, PEC,
RVVS,REGEN, ReNeW, EOXIS, INOX, CVK Solar, JVVNL , AVVNL and
others on the above issue are briefly as under:
(1)

It is to mention that, an investor/ generator needs to commit fund

deployment and even incur significant capex before reaching a
stage wherein PPA could be signed by the utilities. Thus, this clause
of restricting signing PPA would act as a major risk to developer
wherein there could be a situation where after putting in the initial
investment the developer gets to know that PPA cannot be signed
as RPO has been fulfilled. Therefore, the restriction may be
removed from the order at least for the FY13 and the situation may
be reviewed at the time of finalizing tariff for FY14.

(2)

RERC in its Renewable Energy Obligation Regulations, 2007 has

mentioned that RPO is minimum. Thus, there should not be any
requirement of taking prior approval of the Commission.

(3)

RPO was reduced in 2007 Regulations in view of actual energy

purchase of RE sources being far below than specified target. The
wind RPO target would be achieved based on the wind
capacities already commissioned or in the pipe line. Prescribing
the requirement of approval of the Commission for procurement
beyond RPO would, thus, seriously jeopardise the development of
new wind projects in the State.
Page 10

(4)

Even the RERC (Renewable Energy Certificate and Renewable

Purchase Obligation Compliance Framework) Regulations, 2010,
acknowledge that excess power (RE based) over RPO can be
purchased by utilities.
Clause 7(1) of RERC (Renewable Energy Certificate and
Renewable Purchase Obligation Compliance Framework)
Regulations, 2010 mention that:
..Credit for excess renewable power purchase/REC would be
adjusted in the ensuing year....
Similarly, the National Action Plan on Climate Change (NAPCC)
mentions about supporting RE based power in the national power
system through specifying Dynamic Minimum Renewables
Purchase Standard (DMRPS).

(5)

This will create uncertainty in procurement of power as the

achievement of RPO is only available on annual basis.

(6)

There will be practical difficulties in implementing this. Wind power

generation is nature dependent and wind generation per MW of
capacity may vary annually. Next year generation cannot be
predicted with certainty. Prediction based on the next year may
result in shortfall in meeting RPO and based on average may lead
to overshooting of RPO.

(7)

From wind plants installed during this financial year, energy

contribution will be very low as the high wind season i.e. April to
September is over and therefore, the capacity added during this
year will be useful for meeting RPO requirement for next FY. The
Commission should assess the energy purchase from wind
resources by various Discoms as per RPO for the FY 2011-12 and
thereafter the quantum of capacity to be added for the FY 201213 be determined based on the RPO requirement for the year FY
13-14.

(8)

While entering PPA with wind generator for RPO, Discoms may
consider normative generation by considering CUF 20% or 21% as
the case may be. It should also be clarified that distribution
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licensee shall not be held responsible for non compliance of

meeting RPO obligation, in case actual generation is lower or
higher than normative. Alternatively, the RPO of the Wind power
should be specified in terms of MW contracted and not the kWh.
(9)

The calculation for capacity to be contracted for RPO fulfilment

may be specified, in absence of which, there could be a
possibility of usage of different calculation methodologies i.e. RPO
capacity based on energy consumption as per Multi Year Tariff
(MYT) Order or projected annual energy consumption based on
actuals by year end.

(10) Representative of CVK Solar Enterprises stated in the hearing that

energy available from wind plants getting commissioned during
the course of a year is around 30% of the annual CUF, as most of
the plants get commissioned in the later part of financial year and
monthly generation from April to July is much higher than average
monthly generation of later part of the financial year. It was
further argued that approval of capacity beyond RPO need not
be insisted upon.
17.

Commissions Analysis and Decision:

(1) It may be observed that under S. 86(1)(b), electricity purchases
are required to be regulated by the Commission. This relates to
regulating both quantum as well as price of electricity purchases.
As far as purchases of renewable energy upto RPO limit are
concerned, Commissions approval is implied as in such cases the
tariff as well as the quantum of power purchase are as determined
or specified by the Commission.
(2) However, once purchases in excess of RPO are to be made even
at the tariff determined by the Commission, the capacity to be
contracted over and above RPO level would require Commissions
approval. As regards suggestion of a stakeholder that RPO be
specified in capacity terms on account of the uncertainty in
working out energy availability from wind plants and total annual
energy requirement, it may be mentioned that S. 86(1)(e) of the
Electricity Act envisages RPO in relation to consumption of
electricity in the area of distribution licensee, and, therefore, has to
be in energy terms.
Page 12

(3) However, Commission realises that exact assessment of capacity

in relation to RPO target, which is in energy terms, may not be
possible in very precise terms on account of the fact that wind
generation from plants may vary from year to year depending
upon wind intensity and other factors. Similarly, the energy
consumption in particular year may vary from the assessed
requirement. On account of the said uncertainty the capacity
required for meeting RPO in the particular year cannot be
correctly assessed during the course of the year in which PPA
would need to be finalised. However, a broad assessment for a
capacity to be contracted can be made based on past trend of
energy availability from wind power plants.
(4) The past trend of energy availability could be worked out based
on the actual availability of energy from plants in past 3 years as
most of the capacity addition in the State has been during this
period. The total energy availability in a financial year from the
accumulated capacity of plants injecting power to grid as on 1st
April of the Financial Year could be considered for working out the
average CUF for that Financial Year. The annual average CUF thus
worked out of the past 3 years i.e. FY 9-10, FY 10-11 and FY 11-12
could then give average CUF of past three years by taking simple
average of CUF of these three years. This average CUF then could
be used for assessing the energy availability from the plants which
were supplying power to Discoms as on 1st April, 2012. Considering
uncertainty in the availability of energy from wind plants due to
year to year variation in energy output on account of changes in
wind intensity and other factors, the Discoms may take CUF lower
by 7% than the average CUF of past 3 years. This is so because
even the CUF on year to year basis may vary significantly.
(5) As regards availability of energy from plants to be commissioned in
the current year, it can be assumed that energy availability would
be on the average for six month. Further since energy availability
in the second half of the financial year is much lower than first half
i.e. April to September, the energy availability in first half of the
year and second half of the year could be assumed to be in the
ratio of 70:30 i.e. 70% in first half year and 30% in the second half
year.

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(6) As regards total energy requirement of Discoms, the energy as

approved in the ARR and the tariff order could be taken into
consideration and margin of 5% may be added on this to account
for variation, if any, in energy requirement from what has been
approved.
(7) This is to further clarify that by taking recourse to above
methodology, in case RPO target gets exceeded, that could be
adjusted in RPO of ensuing year and shortfall, if any, could be met
by additional purchases in coming years.
(8) However, this is not to say that wind energy beyond RPO target
cannot or need not be purchased even if purchase beyond RPO
level is justified. However, if capacity in excess of assessment
based on methodology discussed above is to be purchased, the
approval of Commission along with justification be obtained.
Metering and CUF
Stakeholders suggestions/comments:
18.
Main comments given by RVVS in respect of metering and CUF are as
under:
(1)

The Commission in their order dated 16.7.2009, in the matter of

determination of tariff for Wind power plants, had clarified at para
29 that the tariff is determined on the ex-bus basis at Generator
premises which is the interface metering point as defined in the
CEA Metering Regulations. It was further clarified in the same para,
that interface metering point could be at the licensee premises
subject to mutual agreement, and, in that case 1% loss for 33 kV
systems and 3% loss (sic.) for 132 kV systems shall be applicable.
The provision of mutual agreement for deciding the location is not
in confirmation with Central Electricity Authority Regulation which
have been made by the CEA in exercise of the powers conferred
by sub section-1 of section-55 and clause (e) of section-73 read
with sub section(2) of section-177 of Electricity Act. Therefore, the
Commission may take a view and direct, that metering shall be
done strictly as per CEA Metering Regulations which are binding
as per Electricity Act.
Page 14

19.

(2)

Provisions for proper checking, maintaining & testing of the

interface meters as per CEA Regulations should be necessarily
complied. This will facilitate avoidance of dispute in bills. It is,
therefore, suggested that Commission may reiterate that the
payment of bills raised to the Distribution licensee should be
released only after receipt of these meter testing reports
periodically.

(3)

The Wind Power plants in Rajasthan are operating at around 10 to

12% CUF as against 20-21% CUF which is minimum in the entire
country. This CUF has been considered by the Commission for the
purpose of estimating the generated units. The reasons for
significantly low generation from Wind power plants need to be
investigated. The possible reasons could be either installation of
poor/ de-rated plants by the Developers in the beginning itself, or
a very poor site selection where Wind velocity is too low to qualify
for site approval.

(4)

To oversee the issues relating to lower generation and metering, a

committee be constituted, whose report in respect of site
clearance & commissioning and compliance of CEA Metering
Regulations, may be made essential prerequisite before signing of
the PPA by a Distribution licensee.

Commissions Analysis and Decision:

(1) As regards the metering issue raised by the stakeholder, it would
be pertinent to have a look at the evacuation needs of wind
energy projects. Wind turbines with capacities ranging from 225
kW to 2.1 MW are distributed in a geographical area. A low
capacity wind turbine usually generates energy at a low three
phase voltage output rated at 440-690V. A pad mounted
transformer at the turbine steps up the voltage to a medium
voltage, usually 33 kV. Several such turbines are connected to
form cluster/group, which in turn are connected to the large
substation termed as a pooling station where the substation
transformer steps up the voltage to the desired transmission level
(e.g. 132 kV 220 kV). This pooling station is further connected to
nearest Utility Substation.

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(2) In view of the requirement of pooling station to facilitate

evacuation of wind energy, particularly for a group of low
capacity turbine; special provision has been incorporated in
Regulations for metering as given in regulation 83 of Tariff
Regulations 2009. Even CERC and some other Regulatory
Commissions have made special provisions in respect of wind
energy. It may be mentioned that CERCs RE Regulations define
interconnection point in relation to wind energy projects as line
isolator on outgoing feeder on HV side of the pooling sub-station.
MERC RE Regulations also define the interconnection point in the
similar way. GERCs recent Order defines interconnection at the
nearest GETCO substation and stipulates metering point as 66 kV
pooling substation located at the wind farm site.
(3) However, since the issue raised by the stakeholder relates to the
provisions specified in Regulations, the same would be examined
separately for taking an appropriate view.
(4) As regards the suggestion relating to checking, maintaining &
testing of interface meters, the STU or Discoms, as the case may
be, would need to see that applicable regulations in this regard
are complied with.
(5) As regards low CUF, it may be mentioned that it may vary based
on quality of plants and machinery, its efficiency and also on
location and wind regime. The Commission has adopted capital
cost of Rs. 530 lac/MW considering CUF of 20% or 21%, as the case
may be, as the norm for tariff determination. Low efficient, derated plants may have lower cost and lower CUF.
(6) However, Commission agrees with stakeholder that there is need
to encourage efficient plants for optimal utilization of wind
potential in the State. The Nodal Agency (RREC) should take
suitable steps to discourage low efficiency/de-rated plants while
giving clearance to a project.
20.

Other Suggestions:
(1) RVVS suggested that it may be advisable to prescribe a standard
Format which should be annually furnished by the Developers to
the Distribution licensee ensuring the disclosure of any policy/
capital finance assistance or higher depreciation benefit etc. The
Page 16

submission of Format should be made essential pre-requisite for

payment of bills of the Developers by the Distribution licensees.
(2) Shri P.N. Mandola during hearing said that Commission should not
fix any tariff for supply of power by wind power plants to
distribution licensee and Companies should be asked to reveal
their cost structure. It is further suggested that long term
agreements may not be executed and tariff should be
determined on yearly basis for a plant.
(3) M/s Torrent Power suggested that in case a project developer,
who intends to opt for REC Mechanism, approaches the Discoms
for entering into a PPA for sale of electricity component at an
Average Power Purchase Cost (APPC) determined by the
Commission under REC mechanism, then in such a case, the
Discoms should be obliged to procure the power from such
developer at APPC.
(4) Samata Power observed that reason of increasing tariff period of
wind power plants from 20 years to 25 years need to be
elaborated.
21.

Commissions Analysis and Decision:

(1) As regards the suggestion of prescribing standard formats for
disclosure of information annually, Distribution licensees need to
obtain annual certificate, as mentioned later in this order.
(2) On the comment that annual tariff be determined based on cost
of projects, Commission would like to mention that since project
specific tariff is not being determined and instead a generic tariff
valid for 25 years as per applicable Regulations is being
determined through this order, the said suggestion cannot be
agreed to.
(3) As regards suggestion to make it obligatory for Discoms to
purchase electricity component at APPC under REC mechanism,
the Commission would like to clarify that as per existing
Regulations, such purchases are not obligatory and this matter is
outside the scope of this order.
(4) In respect of the point raised by the stakeholder for increasing
tariff period of wind power plants from 20 to 25 years, it may be
mentioned that the same is being done in pursuance of recent
amendment in Regulations.
Page 17

The levelised generic tariff for wind power projects for FY 2012-13.
22.
The levelised generic tariff for wind power plants, getting commissioned
during FY 2012-13, has been worked out based on operational and
performance parameters as specified under Regulation 83(6) of RERC
Tariff Regulations, 2009 and the Financial Principles as stipulated under
Part III of RERC Tariff Regulations, 2009, read with Fourth Amendment
finalised vide Notification dated 18.05.2012. The parameters adopted
in this order have been discussed in the following sub-paras.
Debt-Equity Ratio
(1) The Debt-Equity ratio of 70:30 as envisaged at regulation 17 of RERC
Tariff Regulations 2009 has been taken for working out the debt and
equity components of normative capital cost for determination of
levelised generic tariff.
Capital Cost
(2) Capital cost of Rs 530 Lacs/MW, including connectivity charges (of Rs.
2 Lacs/MW) and cost of evacuation network (Rs 15 Lacs/MW) as per
sub-regulation 6(b)(i) of RERC Tariff Regulations 2009, has been taken
for FY 2012-13.
Capacity Utilisation Factor (CUF) & de-ration in CUF
(3) Regulation 83(6)(b)(ii) of RERC Tariff Regulations 2009 provides for CUF
of 21% for Jaisalmer, Jodhpur and Barmer districts and 20% for other
districts. Further, regulation 83(6)(b)(iii) also stipulates a de-ration of
1.25% from 6th ,10th, 14th & 18th year in the above CUFs. Accordingly,
CUFs along with de-ration have been taken.
Operation & Maintenance Expenses
(4) O&M expenses have been taken as 1.25% of capital cost for power
plant and 3% of cost of transmission line in accordance with
Regulation 83 (6)(b)(iv) of RERC Tariff Regulations,2009.
Depreciation
(5) In accordance with regulation 83(6)(b)(vi) of RERC Tariff Regulations
2009, the rate of the depreciation has been considered as 5.28% of
the total project cost for the first 12 years and remaining depreciable
value has been spread over the balance useful life of the power
project and transmission system.

Page 18

Interest rate on long term and Interest on working capital requirement

(6) In line with Regulations 83(6)(b)(viii) of RERC Tariff Regulations 2009,
the interest rate on long term loans has been taken as 300 basis points
higher than the average SBI base rate prevalent during first six months
of FY 11-12 . The average SBI base rate for first six months during FY
2011-12 works out to be 9.30%. Accordingly, the interest rate of 12.30%
(= 9.30% + 3.00%) has been taken for long term loans.
(7) The repayment of loan has been taken equal to the depreciation
allowed for that year as stipulated at regulation 22(3) of RERC Tariff
Regulations, 2009.
(8) For the purpose of working capital requirement, the composition of
working capital has been taken as per regulation 83(6)(b)(vii).
(9) The interest on working capital for wind power plants has been taken
as 250 basis points higher than the average SBI base rate prevalent
during first six months of FY 11-12, which works out to be 11.80%
(=9.30%+2.50%). Accordingly, interest rate of 11.80% has been taken
for working capital requirements.
Return on Equity
(10) Regulation 21 of RERC Tariff Regulations 2009 provides for 16% Return
on Equity base of 30% determined in accordance with regulation 17.
As per regulation 21, return on equity has been computed by grossing
up the base rate of 16% with tax rate equivalent to Minimum
alternate Tax (MAT) for first 10 years from COD and normal tax rate for
remaining years of the project life. The MAT rate of 20.01% (= 18.50%
MAT rate+5% surcharge + 3% education cess) has been considered
for first year and a MAT rate of 19.06% (= 18.5% MAT rate + 3%
education cess) has been considered for remaining 9 years of the first
10 years. For remaining 15 years of project life (also equal to useful
life), the normal tax rate of 30.90% (= 30% tax rate + 3% education
cess) has been applied for grossing up of Return on Equity.
Subsidy or incentive by the Central Government
23.
As discussed earlier, the Generation Based Incentive/Tariff Subsidy, if
allowed by the Central Govt. would be governed by the terms and
conditions of such scheme.

Page 19

24.

Earlier, the benefit of accelerated depreciation of 80% was being

extended to wind power plants under Income Tax Act. However,
recently, vide GoI Notification No. 15/2012 (F. No. 149/21/2010-SO (TPL)]
S.O.694 (E), dated 30.03.2012, this depreciation has been restricted to
15% for wind power plants installed after 31.03.2012. However, In
addition to this, an additional depreciation of 20% has been allowed to
the wind power projects during the first year in a recent amendment in
the Finance Act, 2012. Both these rates have been considered in
computing income tax benefit as given at Annexures-1and 2. In this
computation, the methodology of taking capitalisation during the
second half of the year, as has been followed by CERC for working out
the benefit of accelerated depreciation, has been applied. The
energy available in the second half of the year has been taken as 30%
of annual generation. The levelised generic tariff has been worked out
considering both the situations viz. if higher depreciation benefit is
availed and if not availed.

Tariff period and Levelised Tariff

25.
The levelised tariff has been determined for the useful life of the wind
power projects i.e. for 25 years as per note (ii) of regulation 83(6)(b)(viii)
of RERC Tariff Regulations 2009. Earlier levelised tariff of 20 years was
being determined and PPAs were to be entered into for the same
period. However, since levelised tariff of 25 years has now been
determined, PPA should also be for 25 years.
26.

In light of the above position, the levelised generic tariff applicable for
wind power plant for FY 2012-13 has been determined as under:

S.
No.

Particulars

Tariff (Rs/kWh)
if higher
depreciation
benefit is not
availed
3

Tariff (Rs/kWh) if
higher
depreciation
benefit is
availed
4

Wind Power Plants located

in Jaisalmer, Jodhpur &
Barmer districts

5.18

4.89

Wind Power Plants located

in districts other than
Jaisalmer, Jodhpur &
Barmer districts.

5.44

5.13

Page 20

27.

Distribution licensees may procure wind energy at the applicable tariff.

However, if capacity in excess of RPO after assessment as discussed in
para 17 of this order, is to be contracted, approval of the Commission
alongwith justification be obtained.

28.

A generator claiming the higher tariff worked out as above for projects
not availing higher depreciation benefit would have to furnish an
undertaking in advance to the buyer regarding higher depreciation
benefit not being availed and this would have to be followed for each
financial year.
Similarly, annual undertaking would need to be
furnished if CDM benefit is not availed. However, if CDM benefit is
availed, it would have to be shared with distribution licensee as
envisaged in applicable Regulations.

29.

A project developer, to the extent of capacity contracted with

distribution licensee by signing PPA for supply of power as per
applicable tariff determined under this order, would not be availing
benefit of REC in respect of such contracted capacity and such an
undertaking would also be incorporated in the PPA.

30.

The detailed calculations for determination of tariff are annexed as

under:
(1) Tariff determination of Wind Energy Power Plants Annexure-I
located in Jaisalmer, Jodhpur & Barmer districts.
(2) Tariff determination of Wind Energy Power Plants Annexure-II
located in districts other than Jaisalmer,
Jodhpur & Barmer districts.

(S. Dhawan)
Member

(S.K. Mittal)
Member

(D.C. Samant)
Chairman

Page 21

Annexure-III
List of Stakeholders who submitted their comments

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22

M/s CLP Wind Farms (India) Private Limited (CLP India), Mumbai
M/s Indian Wind Power Association(IWPA), Jaipur
M/s ReGen Powertech Pvt. Ltd.(REGEN), Chennai
Shri Bal Mukund Sandhya, Director, Samta Power, Jaipur
M/s Acciona Energy India Pvt. Ltd.(Acciona Energy), Bangalore
M/s Enercon (India) Limited(EIL), Jaipur
Shri P. N. Mandola, Committee for Protection of Public Properties,
Jaipur
M/s Indian Wind Energy Association(InWEA), New Delhi
M/s Eoxis Renewable Energy India Private Limited(EOXIS),
Mumbai
M/s South Asia Energy Policy, Bangalore
M/s Power & Energy Consultants(PEC), Delhi
M/s INOX Renewables Limited, Noida
M/s ReNew Power Ventures Pvt. Ltd.(ReNeW), Gurgaon
M/s Green Infra Limited(Green Infra), New Delhi
M/s Tanot Wind Power Ventures private Limited(TANOT POWER),
Hyderabad
M/s Greenergy Renewables Pvt. Ltd., Mumbai
M/s Torrent Power Limited(Torrent Power), Ahmedabad
Superintending Engineer (RDPPC), Ajmer Discom
M/s Rajasthan Vidhyut Vikas Sansthan(RVVS), Jaipur
M/s Indian Wind Turbine Manufacturers Association(IWTMA),
Chennai
M/s CVK Solar Enterprises(CVK Solar), Jaipur
Jaipur Vidyut Vitran Nigam Limited, Jaipur

Page 22

Annexure-IV
List of Stakeholders present during the hearing

1. Sh. B. K. Makhija, Director(T), RREC

2. Sh. B. M. Bhamu, SE (RDPPC), AVVNL
3. Sh. S. C. Sharma, SE(C), JVVNL
4. Sh.Ajeet Saxena, XEn(RA&R),JVVNL
5. Sh. L. N. Soni, XEN(RA), Jd VVNL
6. Sh. Anand K. Ganeshan, Advocate, IWPA & EIL
7. Sh. Vikalp Vats, Assistant Manager, InWEA
8. Sh. Santosh Singh, Senior Manager, Greenergy Renewables Pvt. Ltd.
9. Sh. Brajesh Kumar, Manager, CLP India
10. Sh. B. M. Sanadhya, Director, Samta Power
11. Sh. Sunil Kumar, Coordinator, IWPA-RSC
12. Sh. R. Vyas, Corporate Advisor, EIL
13. Sh. Vinod, State Head, Suzlon
14. Ms. Shruti Bhatia, GM-Pol. & Govt. PoliciRelations, Vestas India
15. Sh. Vikas Kumar, Head-Regulatory Affairs, ReNew Power
16. Sh. Prabhat K. Mishra, GM-Power Sales & Regulatory, Green Infra Ltd.
17. Sh. Vikram Paliwal, GM-PD, ReGen Powertech
18. Sh. Amit Jangid, Sr. Executive, Suzlon
19. Sh. Inder Bhambra, Executive Director, EOXIS
20. Sh. R. G. Gupta, CEO, RVVS
21. Sh. M. M. Vijayvergia, CMD, CVK Solar Enterprises
22. Sh.P.N.Mandola, Secretary, Committee for Protection of Public
Properties
23. Sh. Sandeep Sharma

Page 23