Chibro Petition - UJVN Limited Dehradun...

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True-up of FY09, FY10, FY11 & MYT Petition for FY14, FY15, FY16Chapter 2. Tariff Determination for FY 2013-14, FY 2014-15 and FY 2015-162.1 Additional Capitalisation2.1.1 It is respectfully submitted that Hon’ble Commission has accepted only theactual capital cost incurred / accrued in its earlier tariff orders. Hence noestimation for additional capitalisation has been claimed for the period fromFY 2013-14 to FY 205-16.2.2 Return on Equity2.2.1 For proposed tariff from FY 2013-14 to FY 2015-16, Section 27(2) of TariffRegulations 2011 have been considered for calculating RoE. Section 27(2) isreproduced as under:“Return on equity shall be computed on at the rate of 15.5% for GeneratingStations, Transmission Licensee and SLDC and at the rate of 16% for DistributionLicensee on a post-tax basis.”2.2.2 Also, in accordance with Regulation 35 of Tariff Regulations 2011-“Income Tax, if any, on the income stream of the regulated business ofGenerating Companies, Transmission Licensees, Distribution Licensees andSLDC shall be reimbursed to the Generating Companies, TransmissionLicensees, Distribution Licensees and SLDC as per actual income tax paid, basedon the documentary evidence submitted at the time of truing up of each yearof the Control Period, subject to the prudence check.”2.2.3 It is respectfully submitted that UJVNL pays income tax at corporate level andnot project level. Bifurcation of tax which is paid at company level intoprojects level may be a complicated process and cause dissatisfaction amongbeneficiaries.2.2.4 In this regard Regulation 15 of CERC (Terms and Conditions of TariffRegulations) Regulations 2009 may be considered. The relevant extracts ofCERC Tariff Regulation 2009 are reproduced as under:Chibro HEP November 2012 Page 17
True-up of FY09, FY10, FY11 & MYT Petition for FY14, FY15, FY16Regulation 15(2) – Return on equity shall be computed on pre-tax basis at thebase rate of 15.5% to be grossed up as per clause (3) of this regulation:Regulation 15(3) - “The rate of return on equity shall be computed by grossingup the base rate with the normal tax rate for the year 2008-09 applicable to theconcerned generating company or the transmission licensee, as the case maybe:”“Provided that return on equity with respect to the actual tax rate applicable tothe generating company or the transmission licensee, as the case may be, inline with the provisions of the relevant Finance Acts of the respective yearduring the tariff period shall be trued up separately for each year of the tariffperiod along with the tariff petition filed for the next tariff period.”Regulation 15(4) – “Rate of return on equity shall be rounded off to threedecimal points and be computed as per the formula given below:Rate of pre-tax return on equity = Base rate / (1-t)Where t is the applicable tax rate in accordance with clause (3) of thisregulation.Illustration.-(i) In case of the generating company or the transmission licensee payingMinimum Alternate Tax (MAT) @ 11.33% including surcharge and cess:Rate of return on equity = 15.50/ (1-0.1133) = 17.481%(ii) In case of generating company or the transmission licensee paying normalcorporate tax @ 33.99% including surcharge and cess:Rate of return on equity = 15.50/ (1-0.3399) = 23.481%"2.2.5 Hence, it is requested to the Hon’ble Commission that for the purpose ofproposed tariff, total tax liability may be computed and provisionally approvedupfront, in the Tariff Order to be given against this Tariff Petition, based onpresent income tax rates. In case of variation of present tax rates with actualChibro HEP November 2012 Page 18
Page 3 and 4: A. Specific Legal Provisions under
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