ORGANIZATIONAL STUDY OF NTPC LIMITED AND STUDY ON DETERMINATION OF TARIFF OF COAL BASED CENTRAL GENERATING UTILITIES

Submitted in partial fulfillment of the requirements of the M.B.A Degree Course of Bangalore University

Submitted By YASHWANT SINGH (06XQCM6089)

Under the Guidance and Supervision of

Prof. Sumithra Sreenath Faculty MPBIM Sh. Abhay K. Srivastava Sr. Manager (comml) NTPC Ltd. Patna

M.P BIRLA INSTITUTE OF MANAGEMENT Associate Bharatiya Vidya Bhavan 43, Race Course Road, Bangalore-560001.

EXECUTIVE SUMMARY
This report has two parts. The first part consists about NTPC LIMITED and Second part consist the DETERMINATION OF TARIFF SETTING OF NEYVELI THERMAL POWER STATION(2*210MW). This internship report is an effort of mine for the fulfillment of the same. I have opted NTPC LIMITED, PATNA for my Internship Training. Reason for selecting this organization is to know more about the Strategy, structure and Function of the Company. NTPC is a reputed electric power generation Company in India. It has a leading presence in India. It has, over the years, acquired a strong reputation in the field of electric power generation. First part of this report includes company Profile & Organizational structure of NTPC & its various departments. Company profile includes its History of NTPC. Rank among all electric generating company in the world in different years, Market Capitalization, Net Profit earned in different years. Organizational structure includes organization chart, vision, mission, and NTPC group & shareholding pattern of NTPC. Various functional department like, Commercial, Finance, Human Resource, etc & there operation, Microscopic study of Commercial department, Norms and terms for determination of tariff setting of coal based central generating utilities. Second part of this report contains determination of tariff setting of Neyveli Thermal Power Station(2*210MW).

Need for the Study

The need to undergo this training for a MBA student of Bangalore University is to fulfill the requirement of MBA Degree Course of Bangalore University. This training is undertaken during August-September 2007 and the main purpose of the training is to know the practical implication and policies of the company.

Objectives of the Study

The objective of undergoing this training is to get the practical exposure of the functional departments of the organization. During training, we study how the theoretical knowledge is practically applied in different departments in the organization. During my training I was also offered a study titled, Determination of tariff setting of coal based central generating utilities.

STUDENT DECLARATION
I, YASHWANT SINGH hereby declare that this internship training report entitled ORGANIZATIONAL STUDY OF NTPC LIMITED & STUDY ON

DETERMINATION OF TARIFF OF COAL BASED CENTRAL GENERATING UTILITIES has been undertaken and completed by me under the valuable guidance of Sh. A.K. SRIVASTAVA Sr. Manager,(comml)), NTPC/ ERHQ, Patna and Prof. SUMITHRA SREENATH, faculty member, M.P BIRLA INSTITUTE OF MANAGEMENT in partial fulfillment of Master of Business Administration (MBA) program and it is my original work and not submitted for the award of any other degree, diploma, fellowship or other similar title or prizes.

PLACE: BANGALORE DATE:

YASHWANT SINGH (06XQCM6089)

ii

PRINCIPALS CERTIFICATE
This is to certify that this dissertation entitled ORGANIZATIONAL STUDY OF NTPC LIMITED AND DETERMINATION OF TARIFF SETTING OF COAL BASED CENTRAL GENERATING UTILITIES at NTPC LIMITED is the result of the work carried out by Mr. YASHWANT SINGH under the guidance and supervision of Prof. SUMITHRA SREENATH, of M. P. Birla Institute of Management, Bangalore as per the requirements of the Bangalore University, MBA syllabus. This report has not formed the basis for the award of any other degree.

Place :Bangalore Date:

(Dr.Nagesh.S.Malavalli) Principal

iii

GUIDES CERTIFICATE
I hereby certify that this dissertation entitled ORGANIZATIONAL STUDY OF NTPC LIMITED AND DETERMINATION OF TARIFF SETTING OF COAL BASED CENTRAL GENERATING UTILITIES at NTPC LIMITED, is done by Mr.

YASHWANT SINGH bearing registration number 06XQCM6089, under my guidance and supervision as per the requirements of the Bangalore University, MBA syllabus. This report has not formed the basis for the award of any other degree.

Place: Bangalore Date:

(Prof. Sumithra Sreenath) Faculty (MPBIM)

iv

ACKNOWLEDGEMENT
Preparing a project report of this nature is an arduous task and I am fortunate enough to get support form a large number of persons to whom I shall always remain grateful. Firstly, I would like to thank Dr. N.S. MALAVALLI, Principal, M.P Birla Institute of Management for his kind support and giving me the opportunity to present this project. I also wish to express my sincere thanks to Sh. A.K. SRIVASTAVA, Sr. Manager (Comml), NTPC/ Patna, my project guide, who provided his valuable guidance and selfless involvement in preparing and simplifying this task for me. I am very thankful to my guide Prof SUMITHRA SREENATH, faculty member, M.P BIRLA INSTITUTE OF MANAGEMENT for the valuable advice, guidance, precious time and support who motivated and supported me a lot in carrying out this project. Last but not the least; I would like to thank all the respondents for giving me their precious time and relevant information and experience I required without which this project would have been a different story.

Place: Bangalore Date:

YASHWANT SINGH (06XQCM6089)

CONTENTS
Particulars Page No.

Part A: Organizational Study

1. Introduction 1.1. Industry Profile 1.2. Growth in the early Years 1.3. Challenges of nineties 1.4. Installed capacity 2 2 4 5 5

2. Organization structure 2.1. Organization chart 2.2. Company Vision and Mission 2.3. Shareholding pattern of Ntpc and sources of finance

7 7 8 9

3. NTPC performance 3.1. Operational excellence 3.2. Robust financials

11 11 11

4. Operation aspects of functional department 4.1. Finance department 4.2. IT department 4.3. Human resources department 4.4. New project department

14 14 19 20 24

5. Swot analysis

26

6. Microscopic Study of commercial Department 6.1 What is Availability Tariff? 6.2 How do the beneficiaries share the payments? 6.3 How does the mechanism work?

28 30 31 32

6.4 Why was Availability Tariff Necessary? 6.5 How does it benefit everyone? 6.6. The Daily Scheduling Process 6.7 Deviation from Schedule 6.8 Terms and condition of tariff determination

32 33 35 37 40

Part-B: Determination of tariff order of NEYVELI THERMAL POWER STATION

1. Introduction Calculation of fixed cost, variable cost and total cost. 2. Findings 3. Suggestions 4. Conclusion 5. BIBLIOGRAPHY

54

70 71 73 74

List of Tables/Chart

Particulars

Page No.

1. Installed Capacity 2. Organization Chart of NTPC LIMITED 3. Shareholding pattern of NTPC 4. NTPCS Sources of Finance 5. Profit after Tax 6. Organization Chart of Commercial Department 7. Scheduling Process 8. Deviation from Schedule

5 7 9 10 13 28 36 37

PART- A ORGANIZATIONAL STUDY

1. INTRODUCTION
1.1 Industry Profile:
Although electric power generation in India on a commercial basis is almost a century old, substantial power development efforts began only after independence. At the launch of the First Five-Year plan in 1951, power generation was recognized as a major input for the country's economic development and was accorded high priority. Power sector outlays have been among the highest in successive five-Year Plans ever since. The first two Plans focused on hydro power (as component of multi-purpose projects). Subsequent plans emphasized on rapid installations of thermal power stations. As a result of Plan efforts, India's installed power generation capacity grew to 16,664 MW in 1974. However, assessment of the planned growth since 1951 indicated that with the uneven distribution of resources, power development with only States as spatial units, would result in large inter-state imbalances. This, and the need for quicker and greater capacity addition, led the Government of India to assume a leading role in large scale power generation as a matter of policy and, through an amendment of the Electricity (Supply) Act, National Thermal Power Corporation Ltd. (NTPC) and National Hydroelectric Power Corporation Ltd. (NHPC) were set up in the central sector to supplement the efforts of the States. The year 1975 witnessed the birth of an organizational that went on to achieve great feats in performance in a sector that was, until then, characterized largely by lack of investment, severe supply shortage and operational practices that made the commercial viability of the sector unsustainable. On November 7, 1975, NTPC came into being and with it came a bold way of looking at the power infrastructure that could support the economy, then reeling under the oil crisis. Since then, NTPC has led the power sector with creation of an immensely efficient and reliable power generation infrastructure which was till then largely in the hands of State Electricity Boards. NTPC was set up in the central sector to build, own and operate large thermal power stations with unit sizes of 200 MW and 500MW. Capacity addition by NTPC was meant to supplement the efforts of State Electricity Boards (SEBs). The first four projects, namely, Singrauli, korba, Ramagundam and Farakka, in four different regions of the country were already on the drawing board and were to be set up as pit-head stations.

There were challenges aplenty. The expectations were high and so were the risks. NTPC symbolized hope of the country suffering from crippling power black-outs, the Government of India, which was trying to put an ailing, economy back on track and the World Bank, which was supporting the country in many development initiatives. Thus, NTPC was created not only to redraw the power map of India but also to excel in its performance and set benchmarks for others to follow. It succeeded on both counts. On 7th November, 1975 the company came into existence. Shri D.V. Kapoor was the first Director of NTPC. On 8th December Government of India, had shown green signal to first Pit Head Super Thermal Power Project at Singrauli in Uttar Pradesh and work on the said project started in February, 1978. In 1976, company capital was 125 corers. In March, 1979 Government of India, had accepted the project FARAKKA. In 1979, share capital of company increased to 300 corers from 125 corers. In 1982, company acquired capacity of producing 200MW. In 1985, Director of The World Bank Shri A.W. Kalwasen visited the Singrauli project. In 1986, the company earned net profit of 182.95 corers. NTPC issued its first Public Issue Bond and earned 163.95 corers. This issue was over subscribed by 63%. In 1994, company gave a profit of 65 corers to the government and the success story continued and still going on till today. Pursuant to special resolution passed by the Shareholders at the Companys Annual General Meeting held on September 23, 2005 and the approval of the Central Government under section 21 of the Companies Act, 1956, the name of the Company "National Thermal Power Corporation Limited" has been changed to "NTPC Limited" with effect from October 28, 2005. The primary reason being the company's foray into hydro and nuclear based power generation along with backward integration by coal mining. NTPC Ltd is the largest thermal power generating company of India. Within a span of 27 years since inception, NTPC has emerged as a truly national power company, with power generating facilities in all the major regions of the country. Based on 1998 data, carried out by Data monitor UK, NTPC is the 6th largest in terms of 3

thermal power generation and the second most efficient in terms of capacity utilization amongst the thermal utilities in the world. The Forbes Global 2000 ranking for 2005 ranks it as the 5th leading company in India and the 486th leading company in the world. NTPCs share on 31 Mar 2007 in the total installed capacity of the country was 20.18% and it contributed 28.5% of the total power generation of the country during 2006- 07. Thus, every fourth home in India is lighted by NTPC. NTPC was among the first Public Sector Enterprises to enter into a Memorandum of Understanding (MOU) with the Government in 1987-88. NTPC has been Placed under the 'Excellent category' (the best category) every year since the MOU system became operative. Recognizing its excellent performance and vast potential, Government of the India has identified NTPC as one of the jewels of Public Sector 'Navratnas'- a potential global giant. Inspired by its glorious past and vibrant present, NTPC is well on its way to realize its vision of being "one of the world's largest and best power utilities, powering India's growth".

1.2

Growth In The Early Years

The first few years were marked by the ambitious task of setting up several generation and transmission projects. Work began at a fast pace on constructing 3X200 MW units at Singrauli, which were eventually commissioned in 1982-83. Till today, the project continues to occupy the pride of place not only amongst NTPC projects but also amongst the consistently top performing stations in the country. The proliferation of several 200 MW units continued with the rapid commissioning of Korba, Ramagundam and Farakka projects in the early/ mid eighties. In addition, NTPC also built transmission lines associated with its generating projects. NTPC quickly upgraded the power system to 500 MW units by synchronizing its first 500 MW unit at Singrauli in 1986. Through the eighties, NTPC continued to add capacity at a frenetic pace. Rihand (2X 500 MW) and Vindhyachal (6X 210 MW), which were both collaborative efforts with the governments of UK and the erstwhile USSR, were added to the expanding list of projects. The company grew in stature, both literally and figuratively. In sixth five year plan period (1980-85), it added 2200 MW of generation capacity, which was 15.6% of the countrys addition of 14226 MW. In seventh five year plan period (1985-90), it added 7613 MW. 4

5 Until today, this remains the best plan performance in the current tenth plan (2002-07) by adding over 9000 MW.

1.3 Challenges of the Nineties.

The late eighties and nineties found NTPC grappling with some difficult environmental conditions. One of the challenges, which NTPC had to negotiate, was the mounting out standings on the payments by state electricity boards. As more and more stations went on stream, NTPC found that state electricity board were unable to pay for the electricity purchased by them because of their poor financial health. The funding of project by the WORLD BANK too came under a cloud when the latter signaled that unless the receivables were brought down to a maximum level of two months of billing, it would have to reconsider continuing its assistance to NTPCs projects. The year 1991 saw a major shift on the policy front as well. For the first time, Government of India invited private participation in power generation sector to increase investments in the sector in order to present a conductive environment to the private developers or Independent Power Producers (IPPs).

1.4 Installed Capacity

As on 31.03.2007, NTPCs total installed capacity is 27904 MW, which includes gas power stations & JV with SAIL & MSEB. The details of the station are as under: Coal Based Power Station: Coal based 1. 2. 3. 4. 5. 6. 7. 8. 9. Singrauli Korba Ramagundam Farakka Vindhyachal Rihand Kahalgaon NTCPP Talcher Kaniha State Uttar Pradesh Chattisgarh Andhra Pradesh West Bengal Madhya Pradesh Uttar Pradesh Bihar Uttar Pradesh Orissa Uttar Pradesh Orissa Commissioned Capacity (MW) 2,000 2,100 2,600 1,600 3,260 2,000 1,340 840 3,000 1,050 460

10. Unchahar 11. Talcher Thermal

12. Simhadri 13. Tanda 14. Badarpur 15. Sipat

Andhra Pradesh Uttar Pradesh Delhi Chattisgarh Total (Coal)

1,000 440 705 500 22,895

Gas/ Liquid Fuel Based Power Station

Gas based 1. Anta 2. Auraiya 3. Kawas 4. Dadri 5. Jhanor-Gandhar 6. Rajiv Gandhi CCPP Kayamkulam Total (Gas) Rajasthan Uttar Pradesh Gujarat Uttar Pradesh Gujarat Kerala Haryana State Commissioned Capacity (MW) 413 652 645 817 648 350 430 3,955

7. Faridabad

Owned under Joint Venture

Coal Gas/LIQ. FUEL * Captive Power Plant under JVs with SAIL ** Power Plant under JV with GAIL, FIs & MSEB 3 1 314* 740**

2. ORGANIZATION STRUCTURE
2.1 ORGANISATION CHART

2.2 COMPANY VISION & MISSION NTPC's vision:

"A WORLD CLASS INTEGRATED POWER MAJOR, POWERING INDIAS GROWTH, WITH INCREASING GLOBAL PRESENCE. To realize this vision, NTPC has drawn up a detailed Corporate Plan for the period 19972012 which represents the company's collective optimism and enthusiasm, inspired by a glorious past, a vibrant present and a brilliant future. The Plan has been prepared in-house in consultation with the committed, competent and confident members of the NTPC family. The road map that has been charted out was after a thorough scan of the strengths and weaknesses within the organization as well as opportunities and threats in the environment. NTPCs Mission: DEVLOP AND PROVIDE RELIABLE POWER, RELATED PRODUCTS AND SERVICES ENERGY AT COMPETITIVE WITH PRICES, INTERGRATING AND MULTIPLE

SOURCES

INNOVATIVE

ECO-FRIENDLY

TECHNOLOGIES AND CONTRIBUTE TO SOCIETY. To create a role model in the electricity distribution business by setting new benchmarks. To provide transparent, ethical and prompt services for enhancing customer delight. To adopt creative and innovative techniques for demand-side management and financial viability of the distribution businesses. To speedily plan and implement distribution networks using state-of-the-art technologies. To provide reliable, uninterrupted and quality power at appropriate tariffs. To achieve effective energy accounting by ensuring accurate metering, timely billing and collection of revenues. To create competent and committed human resource by nurturing technological & commercial competence for organisational growth and excellence.

2.3 Shareholding Pattern of NTPC

It is a public listed (Bombay Stock Exchange) Indian public sector company, with majority shares owned by the Government of India. At present, Government of India.

11%

Government of India

FIIs, Domestic Bank, Public and Others 89%

As on 31st March, 07 the authorised share capital of NTPC is Rs.100,000 million and the paid up share capital Rs. 82,455 million

NTPC's Source of Finance As on 31/3/2007

IR
23% 29%

Bonds Domestic Borrowings Paid up capital GOI Loans

6%

14% 19%

9%

Total investment Rs. 592.4 Billion

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3. NTPC PERFORMANCE
3.1 OPERATIONAL EXCELLENCE

NTPC recorded a Generation of 188.74 Billion Units (BU) during FY 2006-07- an increase of 10.41 per cent over the previous year (FY 2005-06). Seven coal based stations (Dadri, Unchahar, Vindhyachal, Simhadri, Rihand, Tanda and Talcher-Kaniha) have achieved more than 90 per cent PLF. Coal based Stations performed at the highest ever Plan Load Factor (PLF) of 89.43 per cent compared to 87.67 per cent last year. Contributed 28.50 per cent of the total electricity generated in the country during 2006-07 with 20.18 per cent share of the total installed capacity of the nation. All the taken over stations (Badarpur, Talcher, Tanda & Unchahar) operating at more than 85 per cent PLF. Commendable turnaround at Unchahar project. From PLF of 18 per cent at the time of takeover to present PLF of 95.59 per cent. Feroze Gandhi Unchahar Thermal Power Station won Asian Power Plant of the Year Award 2006 instituted by Asian Power Magazine, Hong Kong for overall plant performance.

Singrauli, the flagship station of NTPC completes 25 years of generation. Unit I of Singrauli, a unit of 1982 vintage, registered more than 91 per cent average PLF during the last decade.

3.2 ROBUST FINANCIALS Provisional and unaudited profit after tax for the year 2006-07 is Rs 67,264 Million as compared to Rs. 58,202 million during the year 2005-06, an increase of 15.57 per cent. Provisional and unaudited Net sales of Rs. 306,387 million during 2006-07 as against Rs. 261,429 million registering an increase of 17.20 per cent. The provisional unaudited gross revenue is Rs. 332,997 million, during 2006-07 as against Russ. 287,530 million for the year 2005-06, an increase of 15.81 per cent. Highest interim dividend @24 per cent amounting to Rs. 19789 million during the year.
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Highest ever capital expenditure of Rs. 78206 million during 2006-07. High investor confidence: Standard and Poors Ratings Services raised the corporate credit rating of NTPC to Investment Grade on the basis of its stand alone credit profile and dominant market share.

Latest market capitalization of the company is Rs. 1327 billion (US$30.75 billion) making it the fourth largest company. 100 per cent realization of the billing over the fourth year in succession. Loan agreement of US$300 million (approximately Rs. 13.15 billion) with ADBfirst loan syndication deal for an Indian Corporate under the Asian Development Banks Complementary Finance Scheme for Sipat and Kahalgaon Stage II.

Loan agreement of US$ 100 million (Approximately Rs. 4.4 billion) signed with KfW to part finance the expenditure on Renovation and Modernization of NTPC Power Plants.

Term-loan of Rs. 20 billion disbursed by LIC in addition to Bonds of Rs. 15 billion placed with them to finance the capital expenditure of on-going projects. Term loan of Rs. 15 billion signed with SBI in addition to term loan of Rs. 13 billion signed with various other banks to part finance on-going capacity addition programmes.

In the process of concluding financial tie-ups for about US $ 1.5 billion with international banks and multilateral institutions.

12

Profit after Tax (Rs. Crore)

8000 7000 6000 5000 4000 3000 2000 1000 0 3607.5 5807 5820.2

6864.7

2002-03 2004-05 2005-06 2006-07

13

4. OPERATIONAL ASPECTS OF DIFFERENT FUNCTIONAL DEPARTMENTS

4.1 FINANCE DEPARTMENT
Finance department is very essential for any organization to be set up. It is the backbone of any organization. Similarly the finance department plays a vital role in the set up and running of NTPC. Chief accountant manager and chief finance manager work under the direct control of finance Director at NTPC. Other top executives in the finance department are senior executive (finance), divisional officer (finance), accounts officers; assistant accounts officers, senior assistants (Accounts) and assistant (accounts). The chief finance manager and accounts manager handle various activities in the finance department. Each of them has their tasks cut out systematically in these areas. In NTPC, finance and accounting department is subdivided into 12 sub departments. They are_ Salary department _ Bills department _ Budget & costing department _ Provident fund department _ Quarterly and annual accounts department _ Debt servicing department _ On going project department Its brief explanation as follows: SALARY DEPARTMENT In NTPC salary deportment looks after the advances to employees salary payable to the employees. Salary department calculates the salary of employees, on the basis of information given by the human resource department regarding the employees attendance, leave, leave not sanctioned, under salary amount deduction made in respect of provident fund, tax, and remittance charges, recoveries for advance. Salary department credit net salary amount and reimbursement of Medical and electricity charges amount to employees bank account by issuing cheques.

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CASH DEPARTMENT The cash section is responsible for all receipts and payments of cash, cheques, etc., and accounting the same in the books of accounts. The functions of cash section are1. Operation of bank accounts. 2. Withdrawal of cash from bank, to cater for daily needs. 3. Payment of vouchers by cheques/cash. 4. Cash disbursement to salary department for payment of salaries and wages & Payments. 5. Computerized of cash entry books. 6. Preparation of bank reconciliation statement 7. Safe custody of cash, cheque book, revenue stamps & other documents like Bank guarantees, fixed deposit receipts and other investment etc. 8. Reconciliation of inter transfer of funds transaction. PROVIDENT FUND DEPARTMENT NTPC LIMITED contributory provident rules: These rules shall come in to force W.E from 20th July 1970. The fund shall be deemed to have been established on and from 20th July 1970. The regional provident fund commissioner decision is final regarding interpretation of any rules and it must be carried out by both the trustees and the member of the fund. MEMBERSHIP OF THE FUND Every employee employed in the company, shall become member of the fund, by subscribing from the beginning of the month following that in which he completes 60 days continuous service or has actually worked for not less than 60 days during a period of 3 months or less in the company. The trainees and apprentices after completion of training period shall become members of the fund (even though they are not worked for 60 days). The company contribution shall commence from the day on which, employees subscribing the funds. Every employee, on becoming a member, shall remain a member until he withdraws his provident fund accumulation. Member must abide by all rules and regulations of the fund from time to time in force. CONTRIBUTION: The compulsory contribution of a member shall be 12% of the qualifying emoluments. Qualifying emoluments includes basic pay plus dearness 15 other

allowance. The companys contribution for a member shall be equal to same 12% of the qualifying emoluments. The members contribution shall be deducted from the salary bill or from wage bill, as the case may be, and made available to the trustees along with the companys contributions for credit to the individual account of the member before the 15th of the following month. QUARTERLY / ANNUAL A/Cs DEPARTMENT Under this department all accounts of the corporation and various project units are compiled, that is accounts in the form of trading accounts, P & L A/C, B/S are collected from all the project trough V-sat on computer and later are processed. The usual steps followed are trial balance grouping-schedules-P&L A/c, B/S. An accounts officer is in charge of this section that is under the control of divisional officer. A consolidated trading, P&L A/C and B/s is drawn for NTPC of whole monthly and annually. All these accounts are subject to audit by all auditors, i.e. internal auditor, statutory auditors, and accounting general. INDEPENDENT INTERNAL AUDIT DEPARTMENT Independent Internal audit cell in NTPC is based on regional headquarter. Auditors at the headquarter move to all units of region and submit their report to corporate centre for compliances. This department is not controlled by respective regional headquarter but by corporate centre. BUDGET AND COSTING DEPARTMENT Budgeting is a planning and forecasting exercise that matches resources available and resources to be raised by business, for planned expenditure requirements for a give year. Budgetary control is a process of management and cost control that functions by comparing actual results with budgeted results and reviews feedback obtained for input purposes for preparing new or revised estimates, and take steps for controlling and correcting deviations if any. The budget and budgetary control exercise at NTPC is comprised of the following steps. 1. Obtaining budget proposal from constituent departments/divisions/units. 2. Reviewing and analyzing budget proposal with historical situations and ground situations at the time of preparing the budget. 3. Preliminary screening and discussion.

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4. Drafting proposal to be put up before audit committee. 5. Approval by board of directors. 6. Publication of approved proposals in budget book form. 7. Periodical correction by comparing actual and budgeted results and initiating suitable correction. 8. Preparing revised estimates on a quarterly basis and comparing the same with actual. 9. Generation of monthly capital and revenue expenditure statements. 10. Historical data of current year used as the comparison base for the next year budget exercise. BUDGET & BUDGETARY CONTROL Budget is prepared under 2 heads at NTPC: Revenue Budget Capital Budget Effectiveness of Budgetary Controls depends on:a) Support from the Divisions cover under the Budgetary Plan. b) Implementation in letter and Spirit of the Budget Plan c) Thoroughness of review and feedback to the Budget Department. d) Presence of a Good Management Information System for obtaining prompt information to monitor the Budgetary Plan in Operation. e) Quick follow through on feedback Obtained. INSURANCE DEPARTMENT Insurance is a service of an undertaking taken in order to over come or setoff the losses or damages while operating the business. In order to cover the risk and maintenance NTPC has taken out insurance policy with many companies. The risky projects among all power generating projects are Raichur Thermal Power Plants in order to cover all those risks while operating all those insurance policies covered under Raichur Thermal Power Plants can be classified as: The policy covered under maintenance involves the following aspects: 1. Standard fire and special perils 2. Boiler explosion Policy 3. Terrorism

17

The policy covered under construction involves the following aspects: 1. Marin Policy 2. Storage and Erection 3. Contractors all risk policy Any fire break outs and any hazardous moments causing damage to the infrastructure of the plant and damages to the people working over there are covered in this category. Technical failures, Machine mal functioning, primary power breakups will be covered under same category. The chances for the explosion of the boiler are expected eve though it is very rare and unfortunate, this certainty of happening also stipulated in the policy. The terrorism activity of any land of damaging the plant, explosions, and hijack also stated under the policy. At the time of constructing the plant the transported hazards while getting goods from one place to the procurement place for ex: risk of transportation, accidents, delay on transportation, sticks, everything will be covered under the Marine Policy. At the time of starting and erecting the goods for construction, all risks of warehousing, godowns, and fire emergences are included in the storage and erection clause. All the risks faced by the contractor at the time of building the plant will be covered under contractors all Risk policy. Ex: Theft of material, Destruction of work progress etc.

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IT DEPARTMENT
In NTPC, whole organization is computerized. LAN is established at offices in and at all project sites. LAN is used for e-mail, file sharing, and printing of document, internet, and application software. The computerization includes latest software like auto cad, oracle, developed 2000, windows NT, server etc. The software developed with in NTPC deals withfinance, administration, design, MIS, public deposit, provident fund. During the year following additional expanses take place for the computerization. Management information systems (MIS) play a vital role in NTPC, as information is required for any company to set up and also to work. In 1996, NTPC started a full-fledged computer services so, in order to cater to all of them systems department was organized. There are 13 systems engineers. There are 8 computer engineers catering according to NTPC. Wide Area Network (WAN) is been installed connecting 9 projects with the use of V-SAT at. Local Area Network (LAN) is also been installed at all project locations at Bangalore. The whole organization is computerized. All the projects are automated and they go online to rectify the problems in the project. They train the staff whenever required, i.e., when the technology is being updated.

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Human Resource Department

Human resource department concerned with managing /developing people. As the organization is made up of people, they should be managed /developed to attain higher level of performance this can be done by developing their skills and motivating them. This helps the organization to achieve its objective. The HRD department took several initiatives for updating technical /professional skills of employees and improving work culture. For this company organized several training programmes. Functions of the human resource department: Recruitment It is the process of finding and attracting capable applicants for employment. It is the process of searching for and obtaining applicants for jobs, from among whom the right people can be selected. Training and development Training is one of the most important interventions for developing human resource. Hence, identification of training competency profile in terms of vision, mission of the company would be the strategic point of the training and development strategy of the company. The following objective has been set in this regard: To provide training to all employees at regular interval. Training to become an integral component of individual Professional evolution by: Updating knowledge to avoid obsolescence. Enhancing professional creativity. Enabling employees to shoulder higher responsibility. To create a business bias and strategic thinking to take up. IN-HOUSE TRAINING PROGRAMMES Corporate excellence through co-operation and collaboration. Company a/cs and accounting standard Performance management. Managing conflict for organizational excellence. Total quality management 20

 Motivation and goal setting. BPR and bench marking Attitudinal shift through self development EXTERNAL TRAINING PROGRAMMES National seminar on utilization of fly ash. Earthquake resistance designs of plants. Renewable energy sources and energy audit. National seminar views of the future civil engineering in 21st century. Role of energy efficiency in the Indian energy sector. Seminar on instrumentation engineering practice, team and research Conference on the condition monitoring of plant and equipment. International conference on civil engineering. Performance Appraisal To ensure greater objectivity in appraising the performance of employees and also taking in to account the present day practices in professionally managed organizations, NTPC decided to introduce a new system called Performance Appraisal and Development System (PADS) in the corporation. The PADS will apply to all the employees in the Corporation cadre. In NTPC once in year the performance appraisal will be sent to all the departments in order to know the appraisal of employees. It will be measured by immediate supervision, reveal authority and accepting authority. Retirement The corporation has multiple schemes of retirement benefits of its employees, majority of employees retiring under the pension and allied schemes, few employees retiring under contributory provident fund schemes, a scheme exempted. Transfer Transfer of an employee from one place of work to another place of work or one job to another job is ordered primarily in the interest of the service of the corporation. Request of an employee for transfer is given consideration and acted upon if it is in consonance with the interest of the service of the corporation. Transfer also aims at rotation of employees among related jobs of the discipline to which the employee belongs, thereby enabling the employee to acquire wider knowledge and experience in the discipline. Transfer and non-transfer; however is not a matter of right for any employee.
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Welfare Activities: The HR dept. is in charge of all the welfare activities in the organization. The welfare activities undertaken by NTPC are: 1) School, recreation club. 2) House journal 3) Libra 4) Sports and games 5) Consumer cooperative society 6) Literacy programmes 7) Canteen 8) Medical facilities 9) Salary and allowance 10) General administration 11) Time office 12) Security 13) Leave 14) Election 15) Cultural activity 16) Uniform 17) Festival allowance Reward system Focus of the reward system in the company would be to promote team work and culture of achievement and excellence in the organization. In addition to the mechanism of individual reward for making exemplary contribution in the key thrust area of the company for overall excellence and for desirable attributes like creativity and innovation. Coupled with above, schemes like .Inter division competition. and proposed .Profit sharing schemes. etc has been institutionalized in the company for the team reward. Safety Measures Providing conveyance and other facilities to the employees involved in the accident while on duty/service: 1) Accidents resulting in minor injuries/services injuries 2) Fatal accidents while on duty 22

3) Death of employee while on service. 4) Last homage 5) Free conveyance 6) Retention of corporation accommodation 7) Special leave for attending court in accident cases.

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NEW PROJECT MANAGEMENT

The prime objective of project management is to execute the project within the scheduled period and budgeted cost. Hence, the project has to be planned meticulously, implemented effectively and managed professionally to achieve those objectives by maintaining high quality standards. Scientific methods of effective project management and construction/erection techniques are adopted by NTPC to achieve the desired results. Because of high stakes involved, following innovative and effective project management practices were evolved to essentially succeed in the venture. It mainly works for the eastern zone, i.e. Bihar, Orissa, West Bengal, etc.. The selected goes to the spot where the project is to be set up for checking various availability. Team checks for various factors are: 1. Nature of land: They check for the land which is barren, where farming can not be done. They check the quality of soil. This is done in order to prevent for using fertile land where there can be possibility of doing farming. So, it looks for the unfertile land. They use to study the land in order to check whether it can bear the weight of plant. 2. Availability of factor of production: Coal: How this factor of production can be made available for the plant. Are there any possibilities of coal mine there or they have to import from somewhere else? Transportation can be possible there or not. Water: It is a very useful factor of production, which is needed in plenty. It is checked whether there is a river or lake nearby or not. 3. Other than this they also check how many people and in what way they are affected. It is very important to check whether the people present there is co-operative or not. The project team after this has to interact with state government and get the approval from them also. They have to take various clearance certificates for the project from Pollution control board, Ministry of environment and forest, defense etc. After all things are fulfilled a feasibility report are prepared and put to the board. The expenses occurred on this is given by board. The estimate cost of the project is calculated and it is then sent to the government of India where it gets the final approval. There is one more department working under this, which is known as PROJECT MONITORING. Its main work is to monitor the ongoing project whether it is working 24

as per schedule or not, checks for the any demerits or any shortage. If there is any problem it is rectified. Mainly the work is given on the contract for the completion of the project. It always monitors the work of the contractor in order to check the regularity of contractor towards the work and give notice to them in case of any failure in schedule. If there is any lack of doing project on time, an exception report is submitted to the REGIONAL EXECUTIVE DIRECTOR, which takes necessary steps to rectify it.

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5. SWOT ANALYSIS
STRENGTHS:
NTPC is an existing profit making corporation with considerable reputation for their technical competence. Premier Power Company owned by government. Maximum holding of market share(28%). Experience man power and managerial ability to implement the project. It has international competitiveness.

WEAKNESS:
No advertisement strategy has adopted. Decision-making power doesnt vests completely in NTPC management people but Government interference is to a great extent. NTPC is a public sector organization and hence profit making is not the motive. In such a condition, private sectors make benefit. As NTPC is a public company, formation of new policies is a complicated procedure.

OPPORTUNITIES:
As per the plan of central government, electricity is to be provided to all by 2012. Therefore, NTPC have a great opportunity to invest in new power plant project.

A positive growth in the profits made by NTPC indicates a bright future.

THREATS:

An imbalance created because of increasing raw materials costs and of low quality. Coming of independent power producers, ex: Tata power, Reliance, Lanco,etc.

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MICROSCOPIC STUDY OF COMMERCIAL DEPARTMENT AND NORMS &TERMS OF DETERMINATION OF TARIFF OF COAL BASED CENTRAL GENERATING UTILITIES

27

28

6. COMMERCIAL DEPARTMENT
Organization Chart of ERHQ Commercial, Patna

S.K. Sinha DGM (Commercial)

N.Debnath Sr.Manager (finance) Disha Inititative

Alok Mahendra Sr.Manager (comml.) Bihar,PGCIL

A.K. Srivastava Sr.Manager Regulatory Initative

A.K. Paswan Manager (CRM)

Debasis Pal Sr.Engr.(comml.) ASEB, SIKKIM

Faisal Ahmad Sr.Engr. (comml.) MIS, Billing

T.K.Bangal Engr.(comml.) MIS, Billing, UI with ERLDC

It is a part of financial department. Its main work is to determine the tariff of electricity generated and getting clearance of the bill. Determination of tariff is the main work of this department. Other than this it is engaged in various other work also. Followings are the work done by the commercial department. A). Bill realization: This is another very important department which runs under finance department but it has got its own important. It uses to collect revenue for electric sold to their customer. It is engaged in preparing the bills and collecting the payment. In eastern region the main customer is state electricity board. It makes the bill by itself. The bill includes fixed charges, fuel charges, etc. Billing is done in two steps: 1. Provisional billing: It is done on every 25th of the month. 2. Final billing: It is done in 1st week of month. B). Customer relationship management: Maintain the data about its customer say SEB. This data contains the past record of the customer about their payment duration, financial

health in order to know the capability of making payment. It keeps records of the annual consumption, annual revenue requirement, etc. This has gained NTPC, as there is past record of 3 year of 95% realization of the bill. In spite of this they give their valuable suggestion to their customer to excel in every filed, which give return to them only. They have introduced the benefits of MANAGEMENT INFORMATION SYSTEM to their customers. All of this type of guidance given is free of cost. C). Arrangement for power purchase agreement with customer: Commercial department is only engaged in selling of electricity produced. It determines how much electricity is to be distributed among their customers. For this the customers have to give prior notice the amount of electricity they need for next 24 hours. D). Assurance of payment of security mechanism: On the sale of electricity, a letter of credit is taken from the customer. On the default of payment of any customer it cash the letter of credit from the bank. E). Facilities and rebate given to the customer: As commercial department is engaged with the preparation or billing of the electricity sold, it also determines about the various facilities and rebate to be given to the customers who pays their on the time. Presently 2% rebate is given if the payment is made on the time. F). Monitoring of share allocation to different customers: This situation arises when the electricity produced is less than demand by the customers. It is the responsibility of commercial department to allocate the share of electricity produced to the customer according to the need. G). Settlement of various issues with other electricity producers: There are various issues which is to be solved with the help of other electricity producers. Commercial department`s representative solves any issue with other states, agencies, etc at regional level through regional committee meetings. The main rule of commercial department is to sale of each and every unit generated and getting billed as per norms, and money is collected.

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I). Determination of generating utilities:There are various fixed costs and variable costs in generating electricity. Commercial department determine the tariff of it. There are various norms given by central government on which tariff is to be determined. Below each points are explained and there is also step by step calculation of tariff. First of all see what this determination of tariff is and various related topic to it: The determination of tariff of central generating station is always remain a prime concern for the generator, the customer & regulatory authority since beginning as this affects the financial position of SEBs & finally the consumer. A system of single-part tariff was in vogue in India for pricing of thermal power prior to 1992. The single-part tariff for a station was calculated so as to cover both the fixed cost as well as the variable (energy) cost. The system of single-part tariff, particularly for Central generating stations, was conducive neither to economic generation of power as per merit-order, nor to satisfactory operation of the regional grids, the Government of India adopted a two-part tariff formula in 1992 for Central generating stations based on the recommendations of the KP Rao Committee. The serious problems of regional grid operation however continued even after 1992. This was because the K.P. Rao Committee had been able to tackle only one end, the Central generation side. Over drawls by some SEBs during peak-load hours and under-drawls during off-peak hours continued unabated, causing serious frequency excursions and perpetual operational/ commercial disputes. These forced the Government of India to consider further structural reforms in the bulk power and transmission tariff to induce better system operation and grid discipline through a mechanism of commercial incentives and disincentives. Based on deliberations between 1995 and 1998, Ministry of Power had crystallized the formulation for the so-called Availability Based Tariff (ABT).

6.1 What is Availability Tariff?

The term Availability Tariff, particularly in the Indian context, stands for a rational tariff structure for power supply from generating stations, on a contracted basis. The power plants have fixed and variable costs. The fixed cost elements are interest on loan, return on equity, depreciation, O&M expenses, insurance, taxes and interest on working capital. The variable cost comprises of the fuel cost, i.e., coal and oil in case of thermal plants and nuclear fuel in case of nuclear plants. In the Availability Tariff mechanism, the fixed and variable cost components are treated separately. The payment of fixed cost to the generating company is linked to availability of the plant, that is, its capability to deliver MWs on a day-by-day basis. The total amount payable to the generating company over a
30

year towards the fixed cost depends on the average availability (MW delivering capability) of the plant over the year. In case the average actually achieved over the year is higher than the specified norm for plant availability, the generating company gets a higher payment. In case the average availability achieved is lower, the payment is also lower. The first component of Availability Tariff, is termed as capacity charge & the second component of Availability Tariff is the energy charge, which comprises of the variable cost (i.e., fuel cost) of the power plant for generating energy as per the given schedule for the day. It may specifically be noted that energy charge (at the specified plant-specific rate) is not based on actual generation and plant output, but on scheduled generation. In case there are deviations from the schedule (e.g., if a power plant delivers 600 MW while it was scheduled to supply only 500 MW), the energy charge payment would still be for the scheduled generation (500 MW), and the excess generation (100 MW) would get paid for at a rate dependent on the system conditions prevailing at the time. If the grid has surplus power at the time and frequency is above 50.0 cycles, the rate would be lower. If the excess generation takes place at the time of generation shortage in the system (in which condition the frequency would be below 50.0 cycles), the payment for extra generation would be at a higher rate.

6.2 How do the beneficiaries share the payments?

The Central generating stations in different regions of the country have various States of the Region as their specified beneficiaries or bulk consumers. The latter have shares in these plants calculated according to Gadgil formula, and duly notified by the Ministry of Power. The beneficiaries have to pay the capacity charge for these plants in proportion to their share in the respective plants. This payment is dependent on the declared output capability of the plant for the day and the beneficiary's percentage share in that plant and not on power / energy intended to be drawn or actually drawn by the beneficiary from the Central station.The energy charge to be paid by a beneficiary to a Central station for a particular day would be the fuel cost for the energy scheduled to be supplied from the power plant to the beneficiary during the day. In addition, if a beneficiary draws more power from the regional grid than what is totally scheduled to be supplied to him from the various Central generating stations at a particular time, he has to pay for the excess drawal at a rate dependent on the system conditions, the rate being lower if the frequency is high, and being higher if the frequency is low. 31

6.3 How does the mechanism work?

The process starts with the Central generating stations in the region declaring their expected output capability for the next day to the Regional Load Dispatch Centre (RLDC). The RLDC breaks up and tabulates these output capability declarations as per the beneficiaries' plant-wise shares and conveys their entitlements to State Load Dispatch Centres (SLDCs). The latter then carry out an exercise to see how best they can meet the load of their consumers over the day, from their own generating stations, along with their entitlement in the Central stations. They also take into account the irrigation release requirements and load curtailment etc. that they propose in their respective areas. The SLDCs then convey to the RLDC their schedule of power drawal from the Central stations (limited to their entitlement for the day). The RLDC aggregates these requisitions and determines the dispatch schedules for the Central generating stations and the drawal schedules for the beneficiaries duly incorporating any bilateral agreements and adjusting for transmission losses. These schedules are then issued by the RLDC to all concerned and become the operational as well as commercial datum. However, in case of contingencies, Central stations can prospectively revise the output capability declaration, beneficiaries can prospectively revise requisitions, and the schedules are correspondingly revised by RLDC. While the schedules so finalized become the operational datum, and the regional constituents are expected to regulate their generation and consumer load in a way that the actual generation and drawls generally follow these schedules, deviations are allowed as long as they do not endanger the system security. The schedules are also used for determination of the amounts payable as energy charges, as described earlier. Deviations from schedules are determined in 15-minute time blocks through special metering, and these deviations are priced depending on frequency. As long as the actual generation/drawal is equal to the given schedule, payment on account of the third component of Availability Tariff is zero. In case of under-drawal, a beneficiary is paid back to that extent according to the frequency dependent rate specified for deviations from schedule.

6.4 Why was Availability Tariff Necessary?

Prior to the introduction of Availability Tariff, the regional grids had been operating in a very undisciplined and haphazard manner. There were large deviations in frequency from
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the rated frequency of 50.0 cycles per second (Hz). Low frequency situations result when the total generation available in the grid is less than the total consumer load. These can be curtailed by enhancing generation and/or curtailing consumer load. High frequency is a result of insufficient backing down of generation when the total consumer load has fallen during off-peak hours. The earlier tariff mechanisms did not provide any incentive for either backing down generation during off-peak hours or for reducing consumer load / enhancing generation during peak-load hours. In fact, it was profitable to go on generating at a high level even when the consumer demand had come down. In other words, The Availability Tariff directly addresses these issues. Firstly, by giving incentives for enhancing output capability of power plants, it enables more consumer load to be met during peak load hours. Secondly, backing down during off-peak hours no longer results in financial loss to generating stations, and the earlier incentive for not backing down is neutralized. Thirdly, the shares of beneficiaries in the Central generating stations acquire a meaning, which was previously missing. The beneficiaries now have well-defined entitlements, and are able to draw power up to the specified limits at normal rates of the respective power plants. In case of over-drawal, they have to pay at a higher rate during peak load hours, which discourages them from over-drawing further. This payment then goes to beneficiaries who received less energy than was scheduled, and acts as an incentive/compensation for them.

6.5 How does it benefit everyone?

The mechanism has dramatically streamlined the operation of regional grids in India. Firstly, through the system and procedure in place, constituents schedules get determined as per their shares in Central stations, and they clearly know the implications of deviating from these schedules. Any constituent which helps others by under-drawal from the regional grid in a deficit situation, gets compensated at a good price for the quantum of energy under-drawn. Secondly, the grid parameters, i.e. frequency and voltage, have improved, and equipment damage correspondingly reduced. During peak load hours, the frequency can be improved only by reducing drawls, and necessary incentives are provided in the mechanism for the same. High frequency situation on the other hand, is being checked by encouraging reduction in generation during off-peak hours. Thirdly, because of clear separation between fixed and variable charges, generation according to merit-order is encouraged and pithead stations do not have to back down normally. The 33

overall generation cost accordingly comes down. Fourthly, a mechanism is established for harnessing captive and co-generation and for bilateral trading between the constituents.

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SCHEDULING
Now lets see how the scheduling is done to the various customers. How each one is allocated their share. 6.6 THE DAILY SCHEDULING PROCESS Suppose a 1000 MW Central coal-fired power station has three beneficiaries (States A, B and C) with allocated shares of 30, 30 and 40% respectively. Suppose the station foresees a capability to deliver 900 MW (ex-bus) on the next day, and advises the same to the RLDC by 9 AM. The RLDC would break it up, and advise the three SLDCs by 10 AM that their entitlements in the Central station are 270, 270 and 360 MW respectively, for the next day. Entitlements in the other Central stations would also be advised by RLDC to the SLDCs similarly. Simultaneously, the SLDCs would receive availability status from their intra - State stations as well. They would then carry out a detailed exercise as to how best to meet the expected consumer demand in their respective States over the 24 hours. For this, they would compare the variable costs of various intra - State power stations inter-se, and with energy charge rates of the Central stations, and also consider the irrigation release requirements vs. energy availability of the hydro-electric stations. After this exercise, the SLDCs will issue the dispatch schedules for the intra - State stations, and their requisition from the Central stations (restricted to the States respective entitlements). Suppose States A and B fully requisition their shares from the Central station under consideration (270 MW each, throughout the 24-hour period), while State C requisitions 360 MW during the day time, but only 200 MW during the night hours. Summation of the three requisitions would thus produce, for the Central generating station, the total dispatch schedule of 900 MW during the day time and 740 MW during the night hours, as illustrated in figure - 1. This would be issued by the RLDC by 5 PM, and would be effective from the following midnight (unless modified in the intervening hours). States A, B and C shall pay capacity charge for the whole day corresponding to plant availability of 270, 270 and 360 MW, and the generating station would get capacity charge corresponding to 900 MW. Energy charge payments by the three States would be for 270 x 24 MWh, 270 x 24 MWh, and (200 x 24 + 160 x 16) MWh of energy respectively, at the specified energy charge rate of the generating station.

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36

37 6.7 DEVIATIONS FROM SCHEDULE

As mentioned earlier, the energy charge, at the specified energy charge rate of a generating station, is payable for the scheduled energy quantum. The energy actually supplied by the generating station may differ from what was scheduled. If actual energy supplied were higher than scheduled, the generating station would be entitled to receive a payment for the excess energy (the deviation from schedule, technically termed as Unscheduled Interchange (UI) in Availability Tariff terminology) at a rate dependent on frequency at that time. If the energy actually supplied is less than what is scheduled, the generating station shall have to pay back for the energy shortfall, at the same frequency linked rate. The relationship between the above UI rate and grid frequency, for the inter-State system, is specified by CERC. The present relationship, applicable from 1.10.2004, is shown in figure - 2. When the frequency is 50.5 Hz or higher, the UI rate is zero, which means that the generating station would not get any payment for the extra energy supplied. It would burn fuel for producing this extra energy, but would not get reimbursed for it at all. Conversely, if the actual energy supplied were less than scheduled energy, the generating station would still be paid for the scheduled energy (at its energy charge rate) without having to pay back anything for the energy shortfall. It would thus be able to save on fuel cost (for the energy not generated) and retain the energy charge as net saving. There is thus a strong commercial incentive to back down generation during high frequency situations, and help in containing the frequency rise.

On the other hand, when frequency goes down, the UI rate (for both over-supply and under-supply) ramps up, reaching a ceiling level of Rs. 5.70 per kWh at a frequency of 49.0 Hz. At a frequency of 49.5 Hz, the UI rate is Rs. 3.45 per kWh presently. Under this condition, any extra energy sent into the grid would get the generating station a UI payment at the rate of Rs. 3.45 per kWh. For any shortfall, the generating station shall have to pay back at the same rate. It would thus have a strong commercial incentive to maximize its generation during periods of such low frequency. A similar scheme operates for the States (beneficiaries) as well. Any State drawing power in excess of its schedule has to pay for the excess energy at the same frequency dependant rate. The high UI rate during low-frequency conditions would induce all States to reduce their drawal from the grid, by maximizing their own generation and/or by curtailing their consumer load. If a State draws less power than scheduled, it pays for scheduled energy quantum at the normal rate and gets paid back for energy not drawn at a much higher UI rate. On the other hand, during high-frequency conditions, a State can draw extra power at a low rate, and is thus encouraged to back down its own costlier generating stations. An under-drawal during high-frequency conditions means that the State pays for the scheduled power quantum unnecessarily. It should either reduce its schedule, or increase its drawal. For the above purpose, the energy is metered in 15-minute time blocks, since frequency keeps changing (and the UI rate with it). The metered energy is then compared with the scheduled energy for that 15-minute time block, and the difference (+ or -) becomes the UI energy, as illustrated in figure - 3. The corresponding UI rate is determined by taking the average frequency for the same 15-minute time block into account.

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Also, for each Central generating station and State, the actual energy has to be metered on a net basis, i.e., algebraic sum of energy metered on all its peripheral interconnection points, for every 15-minute time block. All UI payments are made into and from a regional UI pool account, operated by the concerned RLDC.

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6.8 TERMS & CONDITION OF TARIFF DETERMINATION

On 26th March2004 Central Electricity Regulatory Commission issued a regulation on terms & condition of tariff setting for central generating station which deals with the norms & various conditions for tariff determination. The salient points of the said regulation are as under: Components of Tariff: Tariff for sale of electricity from a thermal power generating station shall comprise of two parts, namely, the recovery of annual capacity (fixed) charges and energy (variable) charges. (1) The annual capacity (fixed) charges shall consist of (a) Interest on loan capital; (b) Depreciation, including Advance against Depreciation; (c) Return on equity; (d) Operation and maintenance expenses; and (e) Interest on working capital. (2) The energy (variable) charges shall cover fuel cost. Norms of Operation: The norms of operation as given hereunder shall apply: (i) Target Availability for recovery of full Capacity (Fixed) charges: (a) All thermal power generating stations, except those covered under clauses (b) and (c) below --- 80% (b) Thermal power generating stations of Neyveli Lignite Corporation Ltd (TPS-I, TPSII, Stage I&II and TPS-I Expansion) and Talcher Thermal Power Station of National Thermal Power Corporation Ltd. --- 75% (c) Tanda Thermal Power Station of National Thermal Power Corporation Ltd. - 60% Note Recovery of capacity (fixed) charges below the level of target availability shall be on pro rata basis. At zero availability, no capacity charges shall be payable. (ii) Target Plant Load Factor for Incentive (a) All thermal power generating stations, except those covered under clauses (b) and (c) below - 80%
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(b) Thermal power generating stations of Neyveli Lignite Corporation Ltd (TPS-I, TPSII, Stage I&II and TPS I Expansion) and Talcher Thermal Power Station of National Thermal Power Corporation Ltd. - 75% (c) Tanda Thermal Power Station of National Thermal Power Corporation Ltd. - 60 (iii) Gross Station Heat Rate (a) Coal-based thermal power generating stations, other than those covered under clauses (b) and (c) below: 200/210/250 MW sets During stabilization period Subsequent period 2600 KCal/kWh 2500 KCal/kWh 500 MW and above sets 2550 KCal/kWh 2450 KCal/kWh

Note 1 In respect of 500 MW and above units where the boiler feed pumps are electrically operated, the gross station heat rate shall be 40 kCal/kWh lower than the station heat rate indicated above. Note 2 For generating stations having combination of 200/210/250 MW sets and 500 MW and above sets, the normative gross station heat rate shall be the weighted average station heat rate. (b) Talcher Thermal Power Station (c) Tanda Thermal Power Station (d) Lignite-fired thermal power generating stations (1) For lignite-fired generating stations except for TPS-I and TPS-II (Stage I & II) of Neyveli Lignite Corporation Ltd, the gross station heat rates specified under clause (a) above for coal-based thermal power generating stations shall be corrected, using multiplying factors as given below: (i) For lignite having 50% moisture: Multiplying factor of 1.10 (ii) For lignite having 40% moisture: Multiplying factor of 1.07 (iii) For lignite having 30% moisture: Multiplying factor of 1.04 (iv) For other values of moisture content, multiplying factor shall be pro-rated for moisture content between 30-40 and 40-50 depending upon the rated values of 41 3100 kCal/kWh 3000 kCal/kWh

multiplying factor for the respective range given under sub-clauses (i) to (iii) above. (2) TPS-I and TPS-II (Stage I & II) of Neveli Lignite Corporation Ltd: TPS-I TPS-II (iv) Secondary fuel oil consumption (a) Coal-based generating stations: (i) All coal-based thermal power generating stations except those covered under subclauses (ii) and (iii) below: During Stabilization period 4.5 ml/kWh Talcher Thermal Power Station Tanda Thermal Power Station (b) Lignite-fired generating stations: During Stabilization period 5.0 ml/kWh (v) Auxiliary Energy Consumption: (a) Coal-based generating stations: Subsequent period 3.0 ml/kWh Subsequent period 2.0 ml/kWh 3.5 ml/kWh 3.5 ml/kWh 3900 kCal/kWh 2850 kCal/kWh

With cooling Tower

Without cooling Tower

(i) 200 MW series (ii) 500 MW series Steam driven boiler feed pumps Electrically driven boiler feed pumps

9.0% 7.5% 9.0%

8.5% 7.0% 8.5%

iii) Talcher Thermal PowerStation 11.0%

(c) Lignite-fired thermal power generating stations: (i) All generating stations, except TPS-I and TPS-II (Stage I & II) of Neyveli Lignite Corporation Ltd: 42

The auxiliary energy consumption norms shall be 0.5 percentage point more than the above auxiliary energy consumption norms of coal-based generating stations at (v) (a) (i) & (ii) above. (ii) TPS-I & TPS-II Stage-I&II of Neyveli Lignite Corporation Ltd.: TPS-I TPS-II Note During stabilization period, normative auxiliary consumption shall be reckoned at 0.5 percentage points more than the norms indicated at (a), (b) and (c) above. Capital Cost: Subject to prudence check by the Commission, the actual expenditure incurred on completion of the project shall form the basis for determination of final tariff. The final tariff shall be determined based on the admitted capital expenditure actually incurred up to the date of commercial operation of the generating station and shall include capitalized initial spares subject to following ceiling norms as a percentage of the original project cost as on the cut off date: (i) Coal-based/lignite-fired generating stations -- 2.5% Provided that where the power purchase agreement entered into between the generating company and the beneficiaries provides a ceiling of actual expenditure, the capital expenditure shall not exceed such ceiling for determination of tariff; Provided further that in case of the existing generating stations, the capital cost admitted by the Commission prior to 1.4.2004 shall form the basis for determination of tariff. Note Scrutiny of the project cost estimates by the Commission shall be limited to the reasonableness of the capital cost, financing plan, interest during construction, use of efficient technology, and such other matters for determination of tariff. Additional capitalizations: (1) The following capital expenditure within the original scope of work actually incurred after the date of commercial operation and up to the cut off date may be admitted by the Commission, subject to prudence check: (i) Deferred liabilities; (ii) Works deferred for execution (iii) Procurement of initial capital spares in the original scope of work, subject to ceiling specified in regulation 17; 43 12.0% 10.0%

(iv) Liabilities to meet award of arbitration or for compliance of the order or decree of a court; and (v) On account of change in law. Provided that original scope of work along with estimates of expenditure shall be submitted along with the application for provisional tariff. (2) Subject to the provisions of clause (3) of this regulation, the capital expenditure of the following nature actually incurred after the cut off date may be admitted by the Commission, subject to prudence check: (i) Deferred liabilities relating to works/services within the original scope of work; (ii) Liabilities to meet award of arbitration or for compliance of the order or decree of a court (iii) On account of change in law; (iv) Any additional works/services which have become necessary for efficient and successful operation of the generating station, but not included in the original project cost; and (v) Deferred works relating to ash pond or ash handling system in the original scope of work. (3) Any expenditure on minor items/assets like normal tools and tackles, personal computers, furniture, air-conditioners, voltage stabilizers, refrigerators, fans, coolers, TV, washing machines, heat-convectors, carpets, mattresses etc. brought after the cut off date shall not be considered for additional capitalisation for determination of tariff with effect from 1.4.2004. Note The list of items is illustrative and not exhaustive (4) Impact of additional capitalisation in tariff revision may be considered by the Commission twice in a tariff period, including revision of tariff after the cut off date.

Note 1 Any expenditure admitted on account of committed liabilities within the original scope of work and the expenditure deferred on techno-economic grounds but falling within the original scope of work shall be serviced in the normative debt-equity ratio specified in regulation 20. Note 2 44

Any expenditure on replacement of old assets shall be considered after writing off the gross value of the original assets from the original project cost, except such items as are listed in clause (3) of this regulation.

Note 3 Any expenditure admitted by the Commission for determination of tariff on account of new works not in the original scope of work shall be serviced in the normative debtequity ratio specified in regulation 20. Note 4 Any expenditure admitted by the Commission for determination of tariff on renovation and modernization and life extension shall be serviced on normative debt equity ratio specified in regulation 20 after writing off the original amount of the replaced assets from the original project cost. Sale of Infirm Power: Any revenue (other than the recovery of fuel cost) earned by the generating company from sale of infirm power, shall be taken as reduction in capital cost and shall not be treated as revenue. Debt-Equity Ratio: (1) In case of all generating stations, debtequity ratio as on the date of commercial operation shall be 70:30 for determination of tariff. Where equity employed is more than 30%, the amount of equity for determination of tariff shall be limited to 30% and the balance amount shall be considered as the normative loan. Provided that in case of a generating station where actual equity employed is less than 30%, the actual debt and equity shall be considered for determination of tariff. (2) The debt and equity amount arrived at in accordance with clause (1) shall be used for calculating interest on loan, return on equity, Advance Against Depreciation and Foreign Exchange Rate Variation. Computation of Capacity (Fixed) Charges: (1) The capacity charges shall be computed on the following basis and their recovery shall be related to target availability. (i) Interest on loan capital (a) Interest on loan capital shall be computed loan wise on the loans arrived at in manner indicated in regulation 20. 45 the

(b) The loan outstanding as on 1.4.2004 shall be worked out as the gross loan as per regulation 20 minus cumulative repayment as admitted by the Commission up to 31.3.2004. The repayment for the period 2004-09 shall be worked out on a normative basis. (c) The generating company shall make every effort to swap the loan as long as it results in net benefit to the beneficiaries. The costs associated with such swapping shall be borne by the beneficiaries.

(d) The changes to the loan terms and conditions shall be reflected from the date of such swapping and benefit passed on to the beneficiaries. (e) The generating company shall not make any profit on account of swapping of loan and interest on loan. (ii) Depreciation, including Advance against Depreciation (a) Depreciation For the purpose of tariff, depreciation shall be computed in the following manner, namely: (i) The value base for the purpose of depreciation shall be the historical cost of the asset; (ii) Depreciation shall be calculated annually, based on straight line method over the useful life of the asset and at the rates prescribed in Appendix II to these regulations. The residual life of the asset shall be considered as 10% and depreciation shall be allowed up to maximum of 90% of the historical capital cost of the asset. Land is not a depreciable asset and its cost shall be excluded from the capital cost while computing 90% of the historical cost of the asset. The historical capital cost of the asset shall include additional capitalization on account of Foreign Exchange Rate Variation up to 31.3.2004 already allowed by the Central Government /Commission. (iii) On repayment of entire loan, the remaining depreciable value shall be spread over the balance useful life of the asset. (iv) Depreciation shall be chargeable from the first year of operation. In case of operation of the asset for part of the year, depreciation shall be charged on pro rata basis. (b) Advance Against Depreciation In addition to allowable depreciation, the generating company shall be entitled to Advance against Depreciation, computed in the manner given hereunder: 46

AAD = Loan repayment amount as per regulation 21 (i) subject to a ceiling of 1/10th of loan amount as per regulation 20 minus depreciation as per schedule Provided that Advance against Depreciation shall be permitted only if the cumulative repayment up to a particular year exceeds the cumulative depreciation up to that year; Provided further that Advance against Depreciation in a year shall be restricted to the extent of difference between cumulative repayment and cumulative depreciation up to that year. (iii) Return on Equity: Return on equity shall be computed on the equity base determined in accordance with regulation 20 @ 14% per annum. Provided that equity invested in foreign currency shall be allowed a return up to the prescribed limit in the same currency and the payment on this account shall be made in Indian Rupees based on the exchange rate prevailing on the due date of billing. Explanation The premium raised by the generating company while issuing share capital and investment of internal resources created out of free reserve of the generating company, if any, for the funding of the project, shall also be reckoned as paid up capital for the purpose of computing return on equity, provided such premium amount and internal resources are actually utilized for meeting the capital expenditure of the generating station and forms part of the approved financial package. (iv) Operation and Maintenance expenses Normative operation and maintenance expenses shall be as follows, namely: (a) Coal-based generating stations except Talcher Thermal Power Station and Tanda Thermal Power Station of National Thermal Power Corporation Ltd (Rs in Lakh per MW) Year 2004-05 2005-06 2006-07 2007-08 2008-09 200/210/250 MW Sets 10.40 10.82 11.25 11.70 12.70 500 MW & above sets 9.36 9.73 10.12 10.52 10.95

47

Note For the generating stations having combination of 200/210/250 MW sets and 500 MW and above set, the weighted average value for operation and maintenance expenses shall be adopted. (b) (i) Talcher Thermal Power Station The base operation and maintenance expenses including insurance, for the year 2000-01 shall be derived by averaging the actual operation and maintenance expenses for the years 1998-99 to 2002-03 based on the audited balance sheets and by excluding abnormal operation and maintenance expenses, if any, after a prudence check by the Commission. The average of such normalized operation and maintenance expenses, after prudence check, for the years 1998-99 to 2002-03 considered as operation and maintenance expenses for the year 2000-01 shall be escalated at the rate of 4% per annum to arrive at operation and maintenance expenses for the base year 2003-04. The operation and maintenance expenses for the base year 2003-04 shall be escalated further at the rate of 4% per annum to arrive at permissible operation and maintenance expenses for the relevant year of tariff period. (ii) Tanda Thermal Power Station The base operation and maintenance expenses including insurance, for the year 2001-02 shall be derived by averaging the actual operation and maintenance expenses for the years 2000-01 to 2002-03 based on the audited balance sheets and by excluding abnormal operation and maintenance expenses, if any, after a prudence check by the Commission. The average of such normalized operation and maintenance expenses, after prudence check, for the years 2000-01 to 2002-03 considered as operation and maintenance expenses for the year 2001-02 shall be escalated at the rate of 4% per annum to arrive at operation and maintenance expenses for the base year 2003-04. The operation and maintenance expenses for the base year 2003-04 shall be escalated further at the rate of 4% per annum to arrive at permissible operation and maintenance expenses for the relevant year of tariff period. (v) Interest on Working Capital (a) Working capital shall cover: Coal based/Lignite-fired generating stations (i) Cost of coal or lignite for 1 months for pit-head generating stations and two months 48

for non-pit-head generating stations, corresponding to the target availability; (ii) Cost of secondary fuel oil for two months corresponding to the target availability; (iii) Operation and Maintenance expenses for one month; (iv) Maintenance spares @ 1% of the historical cost escalated @ 6% per annum from the date of commercial operation; and (v) Receivables equivalent to two months of fixed and variable charges for sale of electricity calculated on the target availability. (b)(1) Rate of interest on working capital shall be on normative basis and shall be equal to the short-term Prime Lending Rate of State Bank of India as on 1.4.2004 or on 1st April of the year in which the generating station or a unit thereof is declared under commercial operation, whichever is later. Interest on working capital shall be payable on normative basis Not withstanding that the generating company has not taken working capital loan from any outside agency. (2) Full capacity charges shall be recoverable at target availability specified in regulation 16. Recovery of capacity (fixed) charges below the level of target availability shall be on pro rata basis. At zero availability, no capacity charges shall be payable. (3) The payment of capacity charges shall be on monthly basis in proportion to the allocated capacity. Energy Charges: (i) Generating stations covered under ABT Energy (variable) Charges shall cover fuel costs and shall be worked out on the basis of ex-bus energy scheduled to be sent out from the generating station as per the following formula: Energy Charges (Rs) = Rate of Energy Charges in Rs/kWh X Scheduled Energy (ex-bus) for the month in kWh corresponding to scheduled generation. (ii) Generating stations other than those covered under ABT Energy (variable) charges shall cover fuel costs and shall be worked out on the basis of ex-bus energy delivered / sent out from the generating station as per the following formula: Energy Charges (Rs) = Rate of Energy Charges in Rs/kWh X Energy delivered (ex-bus) for the month in kWh Where, Rate of Energy Charges (REC) shall be the sum of the cost of normative quantities of 49

primary and secondary fuel for delivering ex-bus one kWh of electricity in Rs/kWh and shall be computed as under:

Pp = Price of primary fuel namely coal or lignite or gas or liquid fuel in Rs/Kg or Rs/cum or Rs./litre, as the case may be. (Qp)n = Quantity of primary fuel required for generation of one kWh of electricity at generator terminals in Kg or litre or cum, as the case may be, and shall be computed fuel oil for coal/lignite based generating stations) and gross calorific value of coal/lignite or gas or liquid fuel as fired. Ps = Price of Secondary fuel oil in Rs./ml (Qs)n = Normative Quantity of Secondary fuel oil in ml/kWh as per clause 16 (iv), as the case may be, and AUXn= Normative Auxiliary Energy Consumption as % of gross generation as per clause 16 (v), as the case may be. (iii) Adjustment of rate of energy charge (REC) on account of variation in price or heat value of fuels: Initially, Gross Calorific Value of coal/lignite or gas or liquid fuel shall be taken as per actuals of the preceding three months. Any variation shall be adjusted on month to month basis on the basis of Gross Calorific Value of coal/lignite or gas or liquid fuel received and burnt and landed cost incurred by the generating company for procurement of coal/lignite, oil, or gas or liquid fuel, as the case may be. No separate petition need to be filed with the Commission for fuel price adjustment. In case of any dispute, an appropriate application in accordance with Central Electricity Regulatory Commission (Conduct of Business Regulations), 1999, as amended from time to time or any statutory re-enactment thereof, shall be made before the Commission. (iv) Landed Cost of Coal: The landed cost of coal shall include price of coal corresponding to the grade/quality of coal inclusive of royalty, taxes and duties as applicable, transportation cost by rail/road or any other means, and, for the purpose of computation of energy charges, shall be arrived at after considering normative transit and handling losses as percentage of the quantity of coal dispatched by the coal supply company during the month as given below:

50

Pit head generating stations

0.3% 0.8%

Non-Pit head generating stations:

Incentive: Incentive shall be payable at a flat rate of 25.0 paisa/kWh for ex-bus scheduled energy corresponding to scheduled generation in excess of ex-bus energy corresponding to target Plant Load Factor. Unscheduled Interchange (UI) Charges: (1) Variation between actual generation or actual drawl and scheduled generation or scheduled drawl shall be accounted for through Unscheduled Interchange (UI) Charges. UI for a generating station shall be equal to its actual generation minus its scheduled generation. UI for a beneficiary shall be equal to its total actual drawal minus its total scheduled drawal. UI shall be worked out for each 15 minute time block. Charges for all UI transactions shall be based on average frequency of the time block and the following rates shall apply with effect from 1.4.2004: Average Frequency of time block UI Rate (Paisa per kWh) 50.5 Hz and above 0.0 Below 50.5 Hz and up to 50.48 Hz 8.0 Below 49.04 Hz and up to 49.02 Hz 592.0 Below 49.02 Hz 600.0 Between 50.5 Hz and 49.02 Hz linear in 0.02 Hz step (Each 0.02 Hz step is equivalent to 8.0 paise /kWh within the above range.) Note The above average frequency range and UI rates are subject to change through a separate notification by the Commission. Rebate: For payment of bills of capacity charges and energy charges through a letter of credit on presentation, a rebate of 2% shall be allowed. If the payments are made by a mode other than through a letter of credit but within a period of one month of presentation of bills by the generating company, a rebate of 1% shall be allowed. Late Payment Surcharge: In case the payment of bills of capacity charges and energy charges by the beneficiary (ies) is delayed beyond a period of 1 month from the date of billing, a late payment surcharge at the rate of 1.25% per month shall be levied by the generating company. Metering and Accounting: Metering arrangements, including installation, testing and operation and maintenance of meters and collection, transportation and processing of data 51

required for accounting of energy exchanges and average frequency on 15 minute time block basis shall be organized by the Central Transmission Utility/Regional Load Despatch Centers. The Regional Electricity Board and the Regional Power Committee or the Regional Electricity Board shall issue the Regional Accounts for energy on monthly basis as well as UI charges on weekly basis. UI accounting procedures shall be governed by the orders of the Commission.

52

PART-B Determination of tariff order of Neyveli Thermal Power Station-I (Expansion) (2x210 MW)

53

1. Introduction
The Neyveli Thermal Power Station is South Asia's first and only lignite fired Thermal Power Station and also the first pit-head power station in India. Neyveli Thermal Power Station is a generating company owned and controlled by the Government of India. The first station of Neyveli Thermal Power Station-I was commissioned with one unit of 50 MW in May 1962. Presently this power station consists of six units of 50 MW each and three units of 100 MW each. The last unit of this power station was synchronized in February 1970. This Thermal Power Station-I continuously achieved over 70% load factor from 1982-83 to 1991-92 against the National Average of around 50% and won continuously the Meritorious Productivity Award instituted by Department of Power. The power generated from this Thermal Power Station is fed to the grid of Tamilnadu Electricity Board, the sole beneficiary. Neyveli Thermal Power Station- I is also having one expansion station consisting of 2X210 MW unit which caters the electricity needs of southern states. Neyveli Thermal power station - II has been a major source of power to all southern states of India. The 1470Mw capacity power station consists of 7 units of 210MW each. The power station was constructed in two stages in 630MW and 840MW.The first 210MW unit was synchronized in March 1986 and the last unit in June 1993. Neyveli Thermal Power Corporation Ltd. has filled a petition before CERC for approval of tariff for Neyveli Thermal Power Station-I (Expansion) (2x210MW) for the period from 1.4.2004 to 31.3.2009 & accordingly after hearing all the stakeholders, the CERC has issued the tariff order. As earlier stated that the generating station is having a total capacity of 420 MW & comprises 2 units of 210 MW each. The dates of commercial operation of these units of the generating station are as follows: Unit Unit-I Unit-II Date of commercial operation 9.5.2003 5.9.2003

The completion cost of the generating station is stated to be Rs. 139033 lakh, which includes foreign exchange component of Rs. 54774 lakh, at December 2000 price level. 54

55 The tariff for the generating station for the period ending 31.3.2004 was approved by the Commission vide its order dated 7.4.2005 in Petition No. 105/2002 based on the capital cost of Rs. 129914 lakh as on 5.9.2003 after deducting an amount of Rs. 9119 lakh withheld by the petitioner as the liquidated damages, from the gross block of Rs. 139033 lakh on that date. Subsequently, the petitioner filed Petition No. 8/2006 seeking increase in capital cost by an amount of Rs. 7265 lakh on account of FERV for the period December 2000 to the date of commercial operation of the station for approval of tariff for the period 1.4.2004 to 31.3.2009. It was submitted that loan component of capital cost worked out to Rs. 50060 lakh @ Rs. 50.59/Euro, against an amount of Rs. 42796 lakh considered in the order dated 7.4.2005 The Commission vide its order dated 26.4.2006 accepted the claim of the petitioner and directed that the capital cost of Rs. 137179 lakh would be taken as the opening cost as on 1.4.2004 for the purpose of determination of tariff for the period ending 31.3.2009 as per the following details: (Rs. in lakh) Equity Component Loan component Total Less liquidated damages Net Capital cost sent out, based on the pooled lignite price of Rs 1124/MT. ADDITIONAL CAPITALIZATION 2003-04: The petitioner has claimed additional capitalization of Rs. 5586.64 lakh from date of commercial operation to 31.3.2004 with following details: (Rs. in lakh) 1. 2. 3. 4. (a) 1. 2. (b) Off-shore spares cost Spares Bank Charges Retention charges Custom duty Total off shore On-shore spares cost Spares Others Total-on-shore 3524.63 4.69 374.60 824.48 4728.40 264.24 120.00 384.24 96238 50060 146298 9119 137179

In addition, the petitioner has claimed energy charge at 130.5 paisa/kWh of the electricity

(a)+(b) Grand total Common service assets for the period up to 31.3.2004 Total

5112.64 474.00 5586.64

As the claim of additional capitalization did not exceed 20% of the approved capital cost, this was not considered for the purpose of tariff for the period ending 31.3.2004 in the order dated 7.4.2005 in Petition No. 105/2002. However, this additional capitalization is being considered in the gross block as on 1.4.2004 for the purpose of tariff for the period 2004-09. The 2004 regulations which stipulate capitalization of initial spares for lignite-fired generating stations to the extent of 2.5% of original project cost as on the cut-off date were notified on 26.3.2004. The petitioner placed the orders for these spares before the norms fixing maximum ceiling of initial spares came into effect. The petitioner could not capitalize the expenditure on these spares before date of commercial operation because these were not supplied by that time. Therefore, the reasonable expenditure incurred by the petitioner for procurement of initial spares is being considered without applying the ceiling norm of the 2.5% for arriving at capital base as on 1.4.2004. As per sanction of the Central Government issued in December 2001, the revised cost estimate for the generating station is for an amount of Rs. 142027 lakh and completion cost of Rs.142347 lakh at December, 2000 price level, inclusive of capital spares. The revised cost estimate includes FERV up to December 2000 and does not include FERV from December 2000 to the date of commercial operation of the generating station. The capital cost admitted by the Commission as on 1.4.2004 of Rs. 137179 lakh includes FERV of Rs.7265 lakh from December 2000 to the date of commercial operation. The capital cost admitted by the Commission as on 1.4.2004 after excluding FERV of Rs. 7265 lakh is thus Rs. 129914 lakh as on the date of commercial operation. After including additional capital expenditure of Rs.5586.64 lakh from the date of commercial operation to 31.3.2004 over the admitted cost of Rs.129914 lakh by the Commission excluding FERV, the cost works out as Rs. 135501 lakh as on 31.3.2004 excluding FERV. Since this is less than the approved completion cost of Rs.142347 lakh, we allow the additional capitalization of Rs. 5586.64 lakh claimed by the petitioner for the period 5.9.2003 to 31.3.2004. The total initial spares in the capital cost of Rs.135501 lakh excluding FERV works out as Rs.5962 lakh (Rs.5113 lakh + Rs.849 lakh). 56

It would be pertinent to point out that it was stated in Petition No. 105/2002 that the petitioner had withheld an amount of Rs. 9119 lakh as LD for the time overrun by the contractor and the matter had gone for arbitration. Irrespective of the outcome of the arbitration proceedings presently pending, the capital base for tariff purpose shall not exceed Rs. 142347 lakh excluding FERV from December 2000. CAPITAL COST As per the second provision to regulations 17 of the 2004 regulations, in case of the existing generating station, the capital cost admitted by the Commission for determination of tariff prior to 1.4.2004 shall from the basis for determination of tariff. The petitioner has claimed tariff based on the opening gross block of Rs. 144749 lakh which included admitted capital cost of Rs. 137179 lakh as on 1.4.2004. FERV/EXTRA RUPEE LIABILITY DURING THE YEARS 2001-04 Regulation 1.13 (a) of the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2001 provided as under: Extra rupee liability towards interest payment and loan repayment actually incurred, in the relevant year shall be admissible; provided it directly arises out of foreign exchange rate variation and is not attributable to Utility or its suppliers or contractors. Every utility shall follow the method as per the Accounting Standard-11 (Eleven) as issued by the Institute of Chartered Accountants of India to calculate the impact of exchange rate variation on loan repayment. Any foreign exchange rate variation to the extent of the dividend paid out on the permissible equity contributed in foreign currency, subject to the ceiling of permissible return shall be admissible. This as and when paid, may be spread over the twelve-month period in arrears. Based on the above, the gross block as on 1.4.2004 comes to Rs. 144748.40 lakh as per details given below: (Rs. in lakh) Capital cost admitted as on 1.4.2004 as per order dated 26.04.06 Additional capitalization for the period 2003-04 FERV capitalized Opening Gross Block as on 1.4.2004 137179.00 5586.64 1982.76 144748.40

57

DEBT-EQUITY RATIO
Clause (1) and (2) of Regulations 20 of the 2004 regulations inter alia provides that,Debt-Equity Ratio. (1) In case of the existing generating stations, debt equity ratio considered by the Commission for the period ending 31.3.2004 shall be considered for determination of tariff with effect from 1.4.2004: TARGET AVAILABILITY The petitioner has considered target availability of 75%, as notified by the Commission in the 2004 regulations. Accordingly, target availability of 75% has been considered for recovery of full fixed charges and computation of fuel element in the working capital for the period from 1.4.2004 to 31.3.2009. RETURN ON EQUITY As per clause (iii) of regulation 21 of the 2004 regulations, return on equity shall be computed on the equity base determined in accordance with regulation 20 @ 14% per annum. Equity invested in foreign currency is to be allowed a return in the same currency and the payment on this account is made in Indian Rupees based on the exchange rate prevailing on the due date. The petitioner has claimed return on equity @14%. Accordingly, the charges on account of return on equity during the period 2004-09 work out as follows: (Rs. in lakh) 2004-05 Average equity Return on equity 99161 13883 2005-06 99107 13875 2006-07 99034 13865 2007-08 98040 13726 2008-09 94831 13276

INTEREST ON LOAN (a) Interest on loan capital shall be computed loan-wise on the loans arrived at in the manner indicated in regulation 20. (b) The loan outstanding as on 1.4.2004 shall be worked out as the gross loan as per regulation 20 minus cumulative repayment as admitted by the Commission for the period up to 31.3.2004. The repayment for the period 2004-09 shall be worked out accordingly on normative basis. (c) The generating company shall make every effort to swap the loan as long as it results in net benefit to the beneficiaries. The costs associated with such swapping shall be borne 58

by the beneficiaries. The changes to the loan terms and conditions shall be reflected from the date of such swapping and benefits passed on to the beneficiaries. (e) In case any moratorium period is availed of by the generating company, depreciation provided for in the tariff during the years of moratorium shall be treated as repayment during those years and interest on loan capital shall be calculated accordingly. (f) The generating company shall not make any profit on account of loan and interest on loan. The interest on loan has been worked out as under in accordance with the methodology specified by the Commission: (a) The average loan amount for the relevant tariff period has been worked out based on actual loan details furnished by the petitioner. (b) The loan drawls up to 5.9.2003, that is, the date of commercial operation of the generating station have been considered. (c) The cumulative repayment of loan has been worked out based on the details given in the petition. (d) The exchange rate (Rupee/Euro) @ Rs.53.10/ Euro, applicable on 31.3.2004, has been considered. (e) The Government Guarantee fees @ 1.20% per annum have been allowed for working out the interest rate in case of foreign loan. (f) On the basis of actual rate of interest on actual average loans, the weighted rate of interest on loan has been worked out and the same has been applied on the average loan for working out the interest on loan in relevant periods of tariff. The necessary calculations in support of interest on loan are appended below:

Calculations of interest on loan

2004-05 2005-06 2006-07 2007-08 2008-09

Euro 191.837 M Loan (Portion-I) Gross Loan-Opening Cum. Repayments up to Previous Period Net Loan-Opening Addition due to Drawl 23560 0 23560 0 23560 0 23560 0 23560 0 23560 0 23560 0 23560 0 23560 772 22787 0

59

Cum .Repayments up to Previous Period Net Loan-Opening Addition due to Drawl Addition due to FERV Repayment Net Loan-Closing Average Loan Rate of Interest Interest

10039 18220 0 0 5206 13014 15617 8.71% 1360

15244 13014 0 0 5206 7809 10411 8.71% 907

20450 7809 0 0 5206 2603 5206 8.71% 453

25656 2603 0 0 2603 0 1301 8.71% 113

28259 0 0 0 0 0 0 8.71% 0

Euro 33.234 M Loan (Portion-I) Gross Loan-Opening Cum. Repayments up to Previous Period Net Loan-Opening Addition due to Drawl Addition due to FERV Repayment Net Loan-Closing Average Loan Rate of Interest Interest 113 0 113 0 0 0 113 113 1.95% 2 113 0 113 0 0 0 113 113 1.95% 2 113 0 113 0 0 2 111 112 1.95% 2 113 2 111 0 0 4 108 110 1.95% 2 113 6 108 0 0 4 104 106 1.95% 2

Euro 33.234 M Loan (Portion-II) Gross Loan-Opening Cum Repayments up to Previous Period Net Loan-Opening Addition due to Drawl Addition due to FERV Repayment Net Loan-Closing Average Loan 111 58 53 0 0 39 14 34 111 97 14 0 0 14 0 7 111 111 0 0 0 0 0 0 111 111 0 0 0 0 0 0 111 111 0 0 0 0 0 0

Rate of Interest Interest Total loan Gross Loan-Opening Addition due to FERV Repayment Net Loan-Closing Average Loan Rate of Interest Interest Gross Loan-Opening Cum. Repayments up to Previous Period Net Loan-Opening Addition due to Drawl Addition due to FERV Repayment Net Loan-Closing Average Loan Weighted Average Rate of Interest Interest

9.31% 3

9.31% 1

9.31% 0

9.31% 0

9.31% 0

52043 0 0 23560 23560 1.95% 459 28259 10097 41946 0 0 5244 36701 39324 4.64% 1825

52043 0 0 23560 23560 1.95% 459 28259 15341 36701 0 0 5220 31481 34091 4.02% 1369

52043 0 0 23560 23560 1.95% 459 28259 20561 31481 0 0 5208 26274 28878 3.17% 915

52043 0 772 22787 23173 1.95% 452 28259 25769 26274 0 0 3379 22895 24584 2.31% 567

52043 0 772 22015 22401 1.95% 437 28259 29148 22895 0 0 776 22119 22507 1.95% 439

DEPRECIATION
Sub-clause (a) of clause (ii) of regulation 21 of the 2004 regulations provides for computation of depreciation in the following manner, namely: (i) The value base for the purpose of depreciation shall be the historical cost of the asset. (ii) Depreciation shall be calculated annually based on straight line method over the useful life of the asset and at the rates prescribed in Appendix II to these regulations. The

61

residual life of the asset shall be considered as 10% and depreciation shall be allowed up to maximum of 90% of the historical capital cost of the asset. (iii) On repayment of entire loan, the remaining depreciable value shall be spread over the balance useful life of the asset. (iv) D (iv) Depreciation shall be chargeable from the first year of operation. In case of operation of the asset for part of the year, depreciation shall be charged on pro rata basis. (b) Advance Against Depreciation In addition to allowable depreciation, the generating company shall be entitled to Advance against Depreciation, computed in the manner given hereunder: AAD = Loan repayment amount as per regulation 21 (i) subject to a ceiling of 1/10th of loan amount as per regulation 20 minus depreciation as per schedule.

Provided that Advance against Depreciation shall be permitted only if the cumulative repayment up to a particular year exceeds the cumulative depreciation up to that year; Provided further that Advance against Depreciation in a year shall be restricted to the extent of difference between cumulative repayment and cumulative depreciation up to that year. (iii) Return on Equity: Return on equity shall be computed on the equity base determined in accordance with regulation 20 @ 14% per annum. (iv) Operation and Maintenance expenses Normative operation and maintenance expenses shall be as follows, namely: (a) Coal-based generating stations except Talcher Thermal Power Station and Tanda Thermal Power Station of National Thermal Power Corporation Ltd depreciation shall be chargeable from the first year of operation. In case of operation of the asset for part of the year, depreciation shall be charged on pro rata basis. The petitioner has calculated the weighted average depreciation rate of 3.69% (excluding land). It has been noted that the normative loan is still outstanding. Therefore depreciation has been calculated as per weighted average rate of depreciation. Weighted average rate of depreciation calculated is 3.65% as against 3.69% claimed by the petitioner. The rate has been calculated based on gross value of assets. Depreciation has been allowed at opening gross block of Rs.144748.40 lakh. The depreciable value of the generatin statio is 62

0.9 x (Rs.144748.40 lakh) = Rs 130273.56 lakh. Cumulative deprecation recovered in tariff up to 31.3.2004 is 3620 lakh. Accordingly, for the period 1.4.2004 to 31.3.2009 the depreciation works out to Rs. 5287 lakh each year by applying rate of depreciation 3.65%. The necessary computations in support of depreciation allowed are given hereunder: (Rs. In lakh) Details of depreciation As per last order Add additional capitalization Add FERV on 31.3.2004 Rate Of Dep. Depreciation during 1982.76 14474 8.40 3.65% 5287 144748. 40 3.65% 5287 144748. 40 3.65% 5287 144748. 40 3.65% 5287 144748. 40 3.65% 5287 0 2001-04 due to Gross Block as 144748.4 during
Up to 31.3.2004 2004-05 2005-06 2006-07 2007-08 2008-09

137179.0 0

2001-04 due to 5586.64

ADVANCE AGAINST DEPRECIATION As per sub-clause (b) of clause (ii) of regulation 21 of the 2004 regulations, in addition to allowable depreciation, the generating company is entitled to Advance Against Depreciation, computed in the manner given hereunder: AAD = Loan repayment amount as per regulation 21 (i) subject to a ceiling of 1/10th of loan amount as per regulation 20 minus depreciation as per schedule O&M EXPENSES The 2004 regulations have prescribed the following Operation and Maintenance expense norms for the generating station: Year O & M expenses 2004-05 10.40 2005-06 10.82 2006-07 11.25 (Rs. in lakh/mw) 2007-08 11.70 2008-09 12.17
63

64 Based on the above norms, the petitioner has claimed O&M expenses for the generating station with 420 MW capacity as detailed below: (Rs. in lakh) Years O&M expenses 2004-05 4368 2005-06 4544 2006-07 4725 2007-08 4914 2008-09 5111

O&M expenses claimed by the petitioner are in order and are allowed. INTEREST ON WORKING CAPITAL In accordance with clause (v) of regulation 21 of the 2004 regulations, working capital in case of Coal based/Lignite-fired generating stations shall cover: (i) Cost of lignite for 1 months, corresponding to the target availability; (ii) Cost of secondary fuel oil for two months corresponding to the target availability; (iii) Operation and maintenance expenses for one month; (iv) Maintenance spares @ 1% of the historical cost escalated @ 6% per annum from the date of commercial operation; and (v) Receivables equivalent to two months of fixed and variable charges for sale of electricity calculated on the target availability. Under the 2004 regulations, the rate of interest on working capital shall be on a normative basis and shall be equal to the short-term Prime Lending Rate of State bank of India as on 1.4.2004 or on 1st April of the year in which the generating station or a unit thereof is declared under commercial operation, whichever is later. Working capital has been calculated considering the following elements: (a) Lignite Cost: The lignite stock has been worked out for 1.5 months on the basis of operational parameters given in the 2004 regulations and weighted average price and GCV of lignite. The details in regard to cost of lignite considered as a component of working capital are given below: Particulars Weighted Avg. GCV of Lignite (kCal/kg) Heat Contribution by Lignite (kCal/kwh)
2004-05 2005-06 2006-07 2007-08 2008-09

2678 2720

2678 2720

2678 2720

2678 2720

2678 2720

Specific Lignite Consumption(kg/kwh) Requirementof Lignite for the period (MT) Lignite Stock (1 & 1/2 months) (MT) Wt. Av. Price of Lignite (Rs./ MT) Lignite Stock- (1 & 1/2 months)- (Rs. in Lakh)

1.016

1.016

1.016

1.016

1.016 280267 7 350334 .58 977

2802677

2802677

2802677

2810355

350334.58 350334.58 350334.58 351294.40 977 977 977 977

3422.77

3422.77

3422.77

3432.15

3422.7

(b) Secondary Fuel Oil: The petitioner has considered price and GCV of secondary fuel oil as under: Price of Secondary fuel oil (Rs./KL) GCV of Secondary fuel oil (Kcal./KL) 13151 10000

The petitioner has stated that the furnace oil and LDO prices prevailing during 2004 to March 2004, were considered for arriving at the weighted average secondary fuel oil price at Rs 13151/KL, to arrive at the rate of energy charges with the secondary fuel. It has been observed from the details of Oil Price Working furnished by the petitioner that the weighted average secondary fuel oil price is a Rs. 13151 KL is a mix of 95% cost of furnace oil ands 5% cost of LDO consumption during January 2004 to March 2004. Further, the price of secondary fuel has been considered which works out to Rs13150.89/MT. This has been considered and allowed. GCV of secondary fuel oil of 10000 Kcal/KL as claimed has been allowed. Accordingly, the fuel component in working capital for the purpose of the tariff for the period 2004-09, works out as follows:

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(Rs. in lakh) Particulars Weighted Avg. GCV of Oil (kCal/Lit.) Heat Contribution by Oil (kCal/kwh) Requirement of Oil for the period (ltrs) Oil Stock(2 months) (KL) Weighted Avg. Price of Oil (Rs./KL) Oil Stock- 2 months(Rs. in Lakh) 2004-05 10000 30.00 8278200 2005-06 10000 30.00 8278200 2006-07 10000 30.00 8278200 2007-08 10000 30.00 8300880 2008-09 10000 30.00 8278200

1379.70 13151

1379.70 13151

1379.70 13151

1383.48 13151

1379.70 13151

181.44

181.44

181.44

181.94

181.44

(c ) O & M expenses : O& M expenses for working capital has been worked out for one month of O & M expenses approved above and are considered in tariff of the respective year. (d) Maintenance spares: The petitioner has calculated the value of maintenance spares for the purpose of working capital considering gross block of Rs. 144748.40 lakh which includes additional capital expenditure of Rs. 5586.64 lakh claimed for the period from 5.9.2003 to 31.3.2004) claimed for the purpose of tariff as historical cost as on 1.4.2004. Starting with the 1% of Rs. 144748.40 lakh the cost of maintenance spares for a particular year has been calculated by the petitioner, by escalating the previous years cost by 6%. The claims of the petitioner for maintenance spares for working capital are as follows: Year Amount claimed for maintenance spares 2004-05 1534.33 2005-06 1626.40 2006-07 1723.98 (Rs in lakh) 2007-08 1827.42 2008-09 1937.06

The 2004 regulations do not provide for taking into account additional capital expenditure for working out the cost of maintenance spares for the working capital. Hence, the cost of 66

maintenance spares for the working capital is computed on historical cost of Rs137179 lakh as on date of commercial operation. The value of the spares works out is as follows: (Rs in lakh) Year Amount allowed for maintenance spares (e) Receivables: As per the 2004 regulations, receivables equivalent to two months of fixed and variable charges, for sale of electricity calculated on target availability are the part of the working capital. The supporting calculations in respect of receivables considered are tabulated hereunder: Variable Charges Variable Charges / year Variable Charges -2 m Fixed Charges - 2 months Receivables 2004-05 28471 4745 4477 9222 2005-06 28471 4745 4430 9175 2006-07 2007-08 2008-09 28471 4745 4383 9129 28549 4758 4335 9093 28471 4745 4272 9017 1419 1504 1594 1690 1791 2004-05 2005-06 2006-07 2007-08 2008-09

The average SBI PLR of 10.25% as on 1.4.2004 has been considered as the rate of interest on working capital during the tariff period 2004-05 to 2008-09. The necessary details in support of calculation of interest on working capital are appended below: (Rs in lakh) 2004-05 Fuel Cost LigniteStock-1.1/2 months Oil stock -2 months O & M expenses Spares Receivables Total Working Capital Rate of Interest Int. on Working Capital 0 3423 181 364 1419 9222 14609 10.25% 1497 2005-06 0 3423 181 379 1504 9175 14662 10.25% 1503 2006-07 0 3423 181 394 1594 9129 14721 10.25% 1509 2007-08 0 3423 182 410 1690 9093 14807 10.25% 1518 2008-09 0 3423 181 426 1791 9017 14839 10.25% 1521 67

68 ANNUAL FIXED CHARGES A statement showing summary of the capital cost and other related matters is annexed To this order. The annual fixed charges for the period 1.4.2004 to 31.3.2009, allowed in this order are summed up as below: Particulars 1 Interest on Loan 2 Int. on Working Capital 3 Depreciation 4 Adv.AgainstDepreciation 5 Return on Equity 6 O & M Expenses TOTAL
2004-05 2005-06 2006-07

(Rs in lakh)
2007-08 2008-09

1825 1497 5287 0 13883 4368 26860

1369 1503 5287 0 13875 4544 26578

915 1509 5287 0 13865 4725 26300

567 1518 5287 0 13726 4914 26011

439 1521 5287 0 13276 5111 25634

ENERGY /VARIABLE CHARGE Lignite Transfer price The petitioner has claimed energy charge of 130.50 paisa/kWh based on the pooled lignite transfer price of Rs. 1124/MT as approved by the Board of Directors of the petitioner company for the year 2004-05 and is subject to change in subsequent years based on the lignite transfer price to be decided by the petitioner every year. Accordingly, the base rate of energy charge works out to 114 paisa/kWh as per the following computations based on fuel prices and GCVs. Description Capacity operating hours corresponding to PLF 75% Gross Station Heat Rate Specific Fuel Oil Consumption Aux. Energy Consumption Weighted Average GCV of Oil Weighted Average GCV of Lignite Weighted Average Price of Oil Weighted Average Price of Lignite Unit MW hrs kCal/kWh ml/kWh % kCal/l kCal/Kg Rs./KL Rs./MT As considered 420.00 6570.00 2750.00 3.00 9.50 10000.00 2678 13150.89 977.00

Rate of Energy charges from Sec. fuel oil Heat Contributed from SFO Heat Contributed from Lignite Specific Lignite consumption Rate of Energy Charges from Lignite Rate of Energy Paisa/ KWh x-bus sent

Paisa/kWh kCal/kWh kCal/kWh Kg/kWh Paisa/kWh Paisa/KWh

3.95 30.00 2720.00 1.02 99.23 114.01

Calculation of total cost per MU:

Generation @100% (a). Generation @ 75% (b)Auxiliary energy consumption@ 9.5% of (a) Net sent out energy (a-b) Total fixed cost (c) Fixed cost per kwh (d) Variable cost per kwh Total cost per kwh 3679.2 MU 2759.4 MU 262.14 MU 2497.26 MU Rs. 26860 (lac) Rs. 1.08 Rs. 1.14. Rs. 2.33

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2. FINDINGS
NTPC among the public sector claims to be the best and which is true NTPC has derived its hard way and has been continuously striving to compete with the competitors and has been successful. NTPC has integrated Information Technology as a strategic tool in its management systems. Because of computerization there is cost reduction in the form of reduction in paper work and also quickness of action. NTPC is being showing consistent growth prospective There has been constant rise in NTPC profit year after year. NTPC is managing its Human Resources very effectively by conducting various types of training and other sessions. It has centralized many functions which help of better control and coordination. There exists a good relationship between the employees and management. The organization is having qualified people and devoted employees. The organization is equipped with Environmental Management System (EMS) ISO14001 and the Occupational Health and Safety Assessment System OHSAS 18001 at its different establishments. NTPC power stations have been certified for ISO14001 & OHSAS 18001 by reputed national and international Certifying Agencies.

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3. SUGGESTIONS
I find that there is a slight dissatisfaction among employees. In order to satisfy them, certain changes have to be made which are as follows: Recognizing the good work done by the employees by giving them certain performance based rewards. Managers should be more clear in communicating with their subordinates & should try to set performance oriented goals. The innovative ideas of the employees have to be encouraged. There should be a streamlined job rotation policy for the employees.

Some amount of decision making power should be given to the non supervisors. This will motivate them even more. If these suggestions are implemented, then the employee motivation will increase, resulting in a bigger output and increase in the profits of the organization.

Planning for better and more efficient training programs in order to create interest among employees towards Training. Most successful training Programme is those that have strong support from top management, managers make a commitment to invest the necessary resources to provide sufficient money and time for training. Job rotation, job enlargement, job enrichment needs to be done frequently which would motivate the employees to do better Young upgraded work force need to be recruited in order to meet imbalance of age. As NTPC is facing a tough competition from the Private firms it must formulate better policies to attract customers. An organization become more competitive in todays Global marketplace, so organization has to recognize the need for employees to become more innovative and try to instill a spirit of risk taking and innovative among employees by providing them with effective training. 71

In the customer relationship program there is customer meet organized by Commercial Department, in which the main member is State Electricity Board. There are various other generators, who should also be invited and given valuable suggestion. In spite of computerization, the organization still do lot of paper work, which should be replaced by soft copy and proper back up should be there for these soft copy. The customer feed back received should be structured in proper manner. Inter department coordination should maintain by using proper management network. Social welfare activities which are being carried out by NTPC are suggested to be continued.

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4. CONCLUSION
This Internship has given me an opportunity to correlate the theoretical knowledge and the classroom learning to the actual corporate world. It was a great opportunity to work in such a premier enterprise and the lessons learnt were very valuable. I got a chance to interact with the managers of the different organizations and got their insights on the topic. It taught me to incorporate the various functional and cultural aspects in a good planning package. I am happy to work with NTPC, which gave me an opportunity to apply the learnings that I gained from my college and it also gave me practical knowledge of an organization structure, hierarchy and it functioning. . The interaction with employees and executives proved to be highly interesting. It gave me the opportunity to know about different departments especially the finance department. I have worked on DETERMINATION OF TARIFF OF COAL BASED CENTRAL GENERATING UTILITIES, where I came to the derivation of cost of kilo watt per hour. In this we have to classify various factors of production in fixed charge and variable charge. There are certain norms fixed by central government on which calculation are to be done( mentioned above). There was excitement in me while starting with this project report and obviously with new environment also. I really enjoyed doing this study and gained lot of knowledge, which will be very much helpful to me in future.

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5. SELECT BIBLIOGRAPHY
WEBSITES USED: www.ntpc.co.in www.wikipedia.com/ntpc www.google.com/ntpc www.cerc.org

DOCUMENTS USED: CENTRAL ELECTRICITY REGULATORY COMMISSION ABC OF ABT: A Primer On Availability Tariff by APPROVAL OF TARIFF FOR NEYVELI THERMAL POWER STATION-1 (EXPANSION) (2*210 MW) issued by CERC.

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