HYDRO TARIFFHYDRO TARIFF Commission Tariff Notification Commission Tariff Notification 26/03/0126/03/01 Applicable Period Applicable Period 01/04/01 to 31/03/0401/04/01 to 31/03/04 Normative Capacity Index- 85 %Normative Capacity Index- 85 % Auxiliary Energy Consumption (% Energy generated)Auxiliary Energy Consumption (% Energy generated)

Transformation Losses- Transformation Losses- 0.5 % of Energy generated0.5 % of Energy generated(From generation voltage to transmission voltage)(From generation voltage to transmission voltage)

Date of Commercial operation: Not exceeding 15 days from the date Date of Commercial operation: Not exceeding 15 days from the date synchronizationsynchronization

O&M Expenses – as per actualO&M Expenses – as per actual

TypeType Rotating Rotating

ExcitersExciters

Static Excitation Static Excitation systemsystem

Surface Hydro Gen. StationSurface Hydro Gen. Station 0.2%0.2% 0.5%0.5%

Underground Gen. StationUnderground Gen. Station 0.4%0.4% 0.7%0.7%

HYDRO TARIFF contd..HYDRO TARIFF contd..

Tariff componentTariff component Capacity chargeCapacity charge Energy chargeEnergy charge Unscheduled Interchange (UI) chargeUnscheduled Interchange (UI) charge IncentiveIncentive

Capacity charge:Capacity charge: (Annual Fixed costs – Primary Energy (Annual Fixed costs – Primary Energy

Charge) When Negative, this amount will be zeroCharge) When Negative, this amount will be zero..AFC = IOL = Interest on Loan CapitalAFC = IOL = Interest on Loan Capital

+DEP = Depreciation/Advance +DEP = Depreciation/Advance

+ROE = Return on Equity+ROE = Return on Equity

+O&M = Operation & Maintenance +O&M = Operation & Maintenance

+TOI = Tax on Income+TOI = Tax on Income

+IWC = Interest on working capital+IWC = Interest on working capital

ENERGY CHARGESENERGY CHARGES

Primary Energy ChargesPrimary Energy Charges = =

Primary Saleable Energy (Ex-Bus) x Primary Energy RatePrimary Saleable Energy (Ex-Bus) x Primary Energy Rate (1 - r)(1 - r)

Primary Energy RatePrimary Energy Rate = = 90% of lowest variable charges of central sector thermal plants of concerned region90% of lowest variable charges of central sector thermal plants of concerned region

r = Free power to home state @ 12 %r = Free power to home state @ 12 %

Secondary Energy ChargesSecondary Energy Charges = =

Secondary Saleable Energy(Ex-Bus) x Secondary energy rateSecondary Saleable Energy(Ex-Bus) x Secondary energy rate(1 – r)(1 – r)

Secondary Energy Rate = Per unit cost of primary energy.Secondary Energy Rate = Per unit cost of primary energy.

CAPACITY INDEXCAPACITY INDEX

Capacity Index = Declared Capacity (MW) x 100%Capacity Index = Declared Capacity (MW) x 100%

Maximum Available Maximum Available Capacity(MW)Capacity(MW)

Annual capacity index is the average of the daily Annual capacity index is the average of the daily capacity indices capacity indices

Introduced to Introduced to To minimize water spillageTo minimize water spillage To ensure availability of peaking capacity of the hydro To ensure availability of peaking capacity of the hydro

station when it is most required by the systemstation when it is most required by the system

‘Declared Capacity or 'DC' means the capacity in MW to be available from the generating station over the peaking hours of next day, as declared by the generator, taking into account the availability of water, optimum use of water and availability of machines and for this purpose, the peaking hours shall not be less than 3 hours within 24 hour period, in case of pondage and storage-type generating stations and in case of purely run-of–river type generating stations the capacity to be available from the generating station during the next day, as declared by the generating station, taking into account the availability of water, optimum use of water and availability of machines.

DECLARED CAPACITYDECLARED CAPACITY

'Maximum Available Capacity' means the following:(a) Pondage and storage type generating stationsThe maximum capacity in MW, the generating station can generate with all units running, under the prevailing conditions of water levels, flows and with 100% gate openings, over the peaking hours of next day. ExplanationThe peaking hours for this purpose shall not be less than 3 hours within a 24 hours period.

(b) Purely run-of-river type generating stationsThe maximum capacity in MW, the generating station can generate with all units running, under the prevailing conditions of water levels, flows and with 100% gate openings over the next day.

MAXIMUM AVAILABLE CAPACITYMAXIMUM AVAILABLE CAPACITY

a) Run-of-River type hydro stations

Since there is no regulation possible in such stations, these shall be treated as must run stations. The maximum declared capacity, duly taking into account the over load capability, must be equal to or greater than that required to make full use of the available water. There shall be no spillage, unless plant is operating at full plant capacity.

b) Diurnal storage & long term Storage hydro stations

These type of hydro stations are designed to operate during peak hours to meet system peak demand. The declared capacity shall be equal the maximum available capacity of the plant including overload capacity, wherever applicable. RLDCs shall ensure that generation schedules of such type of stations shall be prepared and the stations dispatched accordingly except in the event of specific system requirements/constraints.

CERC Notification No. L-7/25(1)/2001-CERC dated: March, 26th ,2001.

IncentiveIncentive = = (Annual Fixed Costs – Primary Energy Charge) * (Annual Fixed Costs – Primary Energy Charge) * (CI-0.85)(CI-0.85)

where where CI = Capacity IndexCI = Capacity Index

Note: Note: 1.1. For Incentive purpose, the Primary energy rate for the first For Incentive purpose, the Primary energy rate for the first

year of tariff period shall remain constant throughout the year of tariff period shall remain constant throughout the entire tariff periodentire tariff period

2.2. Incentive shall accrue upto maximum capacity index of 100 Incentive shall accrue upto maximum capacity index of 100 %%

3.3. When capacity index is less than 85% generator shall get When capacity index is less than 85% generator shall get less payment towards capacity charges.less payment towards capacity charges.

4.4. The total incentive payable shall be shared by the various The total incentive payable shall be shared by the various beneficiaries as per their individual allocated capacity.beneficiaries as per their individual allocated capacity.

INCENTIVEINCENTIVE

Capacity Index achieved by various stations of Capacity Index achieved by various stations of NHPC during 2001-02 to 2003-04 (upto Sept 03)NHPC during 2001-02 to 2003-04 (upto Sept 03)

StationStation Installed Installed CapacityCapacity

CI (%)CI (%)

2001-022001-02

CI (%)CI (%)

2002-032002-03

CI (%)CI (%)

2003-042003-04

Chamera(P)Chamera(P) 540540 94.294.2 96.696.6 96.596.5

Bairasiul(P)Bairasiul(P) 198198 96.396.3 96.396.3 99.399.3

Tanakpur(R)Tanakpur(R) 94.294.2 96.196.1 99.799.7 100100

Uri(R)Uri(R) 480480 9494 99.299.2 100100

Salal(R) Salal(R) 690690 97.097.0 95.295.2 99.899.8

NEW HYDRO TARIFFNEW HYDRO TARIFF

• Period 01/04/2004 to 31/03/2009Period 01/04/2004 to 31/03/2009• Normative value of Capacity Index:Normative value of Capacity Index:

For purely run of the river type generating stations:For purely run of the river type generating stations:

85% during first year and 90% after first year85% during first year and 90% after first year

For Pondage and storage type generating stationsFor Pondage and storage type generating stations

80 % during first year and 85 % after first year80 % during first year and 85 % after first year

Note: Note: The relaxed Normative Value of Capacity Index is The relaxed Normative Value of Capacity Index is applicable only for recovery of capacity chargesapplicable only for recovery of capacity charges

Auxiliary Consumption & Transformation losses- No changeAuxiliary Consumption & Transformation losses- No change Date of Commercial Operation: Has been replaced by a new termDate of Commercial Operation: Has been replaced by a new term

Scheduled Commercial Operation Date: for own managementScheduled Commercial Operation Date: for own management

Actual Commercial Operation Date : means the date declared by the Actual Commercial Operation Date : means the date declared by the generator after demonstration of Maximum continuous rating(MCR) or generator after demonstration of Maximum continuous rating(MCR) or Installed Capacity through a successful trial run.Installed Capacity through a successful trial run.

Rate of primary energy for all hydro electric power generating Rate of primary energy for all hydro electric power generating stations, except for pumped storage generating stations, shall be equal stations, except for pumped storage generating stations, shall be equal to lowest variable charges of the central sector thermal power to lowest variable charges of the central sector thermal power generating stations of the concerned region. generating stations of the concerned region.

Provided that in case the primary energy charge recoverable by Provided that in case the primary energy charge recoverable by applying the above primary energy rate exceeds the Annual Fixed applying the above primary energy rate exceeds the Annual Fixed Charge of a generating station, the primary energy rate of such Charge of a generating station, the primary energy rate of such generating station shall be calculated by the following formula:generating station shall be calculated by the following formula:

Primary energy rate = Primary energy rate = Annual Fixed ChargeAnnual Fixed Charge Saleable Primary EnergySaleable Primary Energy

Primary Energy Charge = Saleable Primary Energy x Primary Energy RatePrimary Energy Charge = Saleable Primary Energy x Primary Energy Rate

Secondary Energy Rate shall be equal to Primary Energy Rate.Secondary Energy Rate shall be equal to Primary Energy Rate.

Secondary Energy Charge = Saleable Secondary Energy x Secondary Energy Rate.Secondary Energy Charge = Saleable Secondary Energy x Secondary Energy Rate.

Primary and Secondary Energy chargesPrimary and Secondary Energy charges

(1)(1) Incentive shall be payable in case of all the generating stations, Incentive shall be payable in case of all the generating stations, including in case of new generating stations in the first year of including in case of new generating stations in the first year of operation, when the capacity index (CI) exceeds 90% for purely operation, when the capacity index (CI) exceeds 90% for purely run-of-river power generating stations and 85 % for run-of-run-of-river power generating stations and 85 % for run-of-river power station with pondage or storage type power river power station with pondage or storage type power generating stations and incentive shall accure up to a max. generating stations and incentive shall accure up to a max. capacity index of 100 %.capacity index of 100 %.

(2) Incentive shall be payable to the generating company in (2) Incentive shall be payable to the generating company in accordance with the following formula:accordance with the following formula:

Incentive = 0.65 x Annual Fixed Charge x (CIIncentive = 0.65 x Annual Fixed Charge x (CIAA-CI-CINN)/100)/100

(If incentive is negative, it shall be set to zero)(If incentive is negative, it shall be set to zero)

Where, CIWhere, CIAA is the capacity index achieved and CI is the capacity index achieved and CIN N is the is the

normative capacity index whose values are 90% for purely run normative capacity index whose values are 90% for purely run of the river hydro stations and 85% for pondage/storage type of the river hydro stations and 85% for pondage/storage type hydro generating stations.hydro generating stations.

IncentiveIncentive

Purely Run-Of-River Power StationsPurely Run-Of-River Power Stations Since variation of generation in such stations may lead to spillage, Since variation of generation in such stations may lead to spillage,

these shall be treated as must run stations. The maximum available these shall be treated as must run stations. The maximum available capacity , duly taking in to account the over load capability, must be capacity , duly taking in to account the over load capability, must be equal to or greater than that required to make full use of the available equal to or greater than that required to make full use of the available water.water.

Run-Of-River Power Stations with poundage and Run-Of-River Power Stations with poundage and storage type power stationsstorage type power stations

These hydro stations are designed to operate during peak hours to These hydro stations are designed to operate during peak hours to meet system peak demand. Maximum available capacity of the station meet system peak demand. Maximum available capacity of the station declared for the day shall be equal to the installed capacity including declared for the day shall be equal to the installed capacity including overload capability, minus auxiliry consumption and transformation overload capability, minus auxiliry consumption and transformation losses, corrected for the reservoir level. The Regional Load Despatch losses, corrected for the reservoir level. The Regional Load Despatch Centres shall ensure that generation schedules of such type of stations Centres shall ensure that generation schedules of such type of stations are prepared and stations dispatched for optimum utilization of are prepared and stations dispatched for optimum utilization of available hydro energy except in the event of specific system available hydro energy except in the event of specific system requirements/constraints.requirements/constraints.

HYDRO TARIFFHYDRO TARIFF Normative O & M expenses rather than actual O & M Normative O & M expenses rather than actual O & M

expensesexpenses

Rs. 10.5 Lakh/MW ( Base Year 2003-04)Rs. 10.5 Lakh/MW ( Base Year 2003-04)

Escalation: 4 % per yearEscalation: 4 % per year

YearYear O& M ExpensesO& M Expenses

2004-052004-05 10.9210.92

2005-062005-06 11.3611.36

2006-072006-07 11.8111.81

2007-082007-08 12.2812.28

2008-092008-09 12.7712.77

TENTATIVE COST FOR NTPC THERMAL STATIONS FOR THE MONTH OF DEC 2003TENTATIVE COST FOR NTPC THERMAL STATIONS FOR THE MONTH OF DEC 2003

StationStation

Fixed Cost Fixed Cost Rs. Cr/yrRs. Cr/yr

(1)(1)

Average Average Fixed Cost Fixed Cost Rs. Cr/dayRs. Cr/day

(2)(2)

Average Average Fixed Cost Fixed Cost P / KWhP / KWh

(3)(3)

Variable Variable Base Cost Base Cost P / KWhP / KWh

(4)(4)

Variable Variable FPA FPA P / KWhP / KWh

(5)(5)

Total Total Variable Variable Base Cost Base Cost P / KWh P / KWh

(6)=(4)+(5)(6)=(4)+(5)

Composite Composite Cost Cost P / KWhP / KWh

(7)=(3)+ (6)(7)=(3)+ (6)

SingrauliSingrauli 364.59364.59 0.9960.996 28.2728.27 67.9867.98 7.867.86 75.8475.84 104.11104.11

RihandRihand 478.74478.74 1.3301.330 65.8365.83 34.2934.29 44.7044.70 78.9978.99 137.41137.41

Unchahar – IUnchahar – I 195.91195.91 0.5350.535 73.3573.35 106.03106.03 6.746.74 112.77112.77 186.12186.12

Anta GPS*Anta GPS* 92.9292.92 0.2580.258 47.1347.13 60.5560.55 84.1184.11 144.66144.66 139.47139.47

Auraiya GPS*Auraiya GPS* 160.20160.20 0.4450.445 42.1742.17 61.9261.92 92.8892.88 154.80154.80 169.73169.73

DadriGPS(G)DadriGPS(G) 210.96210.96 0.5760.576 37.2037.20 95.1495.14 0.240.24 95.3895.38 132.58132.58

Dadri (T)Dadri (T) 416.78416.78 1.1581.158 76.9776.97 90.5690.56 55.5755.57 146.13146.13 229.24229.24

Unchahar – II Unchahar – II ------ ------ ------ 103.28103.28 6.986.98 110.26110.26 ------

DadriGPS(L)DadriGPS(L) 210.96210.96 0.5760.576 37.2037.20 356.34356.34 71.2171.21 437.55437.55 474.75474.75

*Rates for mixed fuel (gas+ liquid fuel, naphtha)

Energy Charges (paise/kwh) for Central Sector Energy Charges (paise/kwh) for Central Sector stations (Dec 2003)stations (Dec 2003)

Sl. No.Sl. No. Power StationPower Station Rate (Paise / Rate (Paise / KWh)KWh)

1.1. Salal Salal 69.4769.47

2.2. Tanakpur Tanakpur 69.4769.47

3.3. SingrauliSingrauli 75.8475.84

4.4. RihandRihand 78.9978.99

5.5. Anta/Auraiya/Dadri GTAnta/Auraiya/Dadri GT 95.0095.00

6.6. UnchaharUnchahar 110.00110.00

7.7. Dadri (Thermal)Dadri (Thermal) 146.00146.00

Clause 44 (xix) of draft tariff regulations dated 1.1.2004(a) Purely run-of-river type hydro stationsSince there is no regulation possible in such stations, these shall be treated as must run stations. The maximum declared capacity, duly taking into account the over load capability, must be equal to or greater than that required to make full use of the available water. There shall be no spillage, unless plant is operating at full plant capacity.  (b) Pondage & Storage type hydro stationsThese hydro stations are designed to operate during peak hours to meet system peak demand. The declared capacity shall be equal the maximum available capacity of the plant including overload capacity, wherever applicable. RLDCs shall ensure that generation schedules of such type of stations shall be prepared and the stations dispatched accordingly except in the event of specific system requirements/constraints.

ORDER dated 10th December 2003 para 2. (Petition No. 7/2003)

Nathpa Jhakri HEP is run of river project, with pondage type hydro-electric project, located in the State of Himachal Pradesh, and is a joint venture between Central Government and Government of Himachal Pradesh. On commissioning of all the units, Nathpa Jhakri HEP will generate power to the extent of 6951 MUs per annum, in 90% dependabe year and 1500 MW valuable peek power, for supply to the constituents of Northern Region.

METHODOLOGY FOR DETERMINING THE UI CHARGES OF HYDRO STATIONS COVERED UNDER ABT

(as used by NREB and circulated in 113th Commercial Committee Meeting)

In case of ROR hydro stations (without pondage) viz Salal, Tanakpur, Uri & NJHEP, the UI charges to the stations for generation beyond Declared Capacity (DC) are allowed subject to the condition that the excess MWh generation over the day is within the tolerance (3%) specified by the CTU. If it is observed that excess MWh generation is beyond the specified tolerance on more than 3 days of the week, then UI payable to the generating station for generation beyond scheduled generation is reduced to zero on 15-minute time-block basis on all days of excess MWh generation, and credit thereof is passed on to the beneficiaries. However, in case of sudden increase / reduction in inflows, the generation schedule of the station is deemed to have been revised as stipulated under para 5.12.5.(i) of CERC’s ABT order dated 4.1.2000, and thus, no UI is payable by/to the station under such conditions. NHPC has to submit a proof from a project upstream (owned by any other utility) regarding sudden release / reduction of inflows, to NREB / NRLDC for post facto modification of generation schedule as per actual generation for such instances.

In case of pondage based hydro stations viz. Bairasiul and Chamera HEPs, the UI charges to the stations for generation beyond schedule but upto DC are allowed subject to the condition that the excess MWh generation over the day is within the tolerance (3%) specified by the CTU on each day of the week. In case of actual generation being in excess of the declared MWh generation over the day, UI payable to the generating station for generation beyond schedule is reduced to zero on 15-minute time-block basis on that day and credit thereof is passed on to the beneficiaries.