1

TABLE OF CONTENTS

S. No Particulars Pages

1 Form 1 2

2 Form 2 3

3 Affidavit 4

4 Petition 5-24

5 Annexure-I Tariff norms 25

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BEFORE THE HONOURABLE JOINT ELECTRICITY REGULATORY

COMMISSION FOR THE STATES OF MANIPUR AND MIZORAM, AIZAWL

FILE NO.

CASE NO.

(To be filled by the Office)

IN THE MATTER OF:

Petition for determination of generic levellised tariff for solar rooftop projects

under section 61 (h) and section 86 (1) (e) of the Electricity Act 2003 and Para 6.4

(7) of the National Tariff Policy

AND

IN THE MATTER OF:

MANIPUR RENEWABLE ENERGY DEVELOPMENT AGENCY, having its

registered office at SAI Complex Takyel, Imphal-795001 …....…Petitioner

Vs

Manipur State Power Distribution Company Limited (MSPDCL), having its

registered office at, Electricity Complex, Patta No. 1293 under 87 (2), Khwai Bazar,

Keishampat, Manipur-795001 ……Respondent

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BEFORE THE HONOURABLE JOINT ELECTRICITY REGULATORY

COMMISSION FOR THE STATES OF MANIPUR AND MIZORAM, AIZAWL

FILE NO.

CASE NO.

IN THE MATTER OF:

Petition for determination of generic levellised tariff for solar rooftop projects

under section 61 (h) and section 86 (1) (e) of the Electricity Act 2003 and Para 6.4

(7) of the National Tariff Policy

AND

IN THE MATTER OF:

MANIPUR RENEWABLE ENERGY DEVELOPMENT AGENCY, having its

registered office at SAI Complex Takyel, Imphal-795001 …....…Petitioner

Vs

Manipur State Power Distribution Company Limited (MSPDCL), having its

registered office at, Electricity Complex, Patta No. 1293 under 87 (2), Khwai Bazar,

Keishampat, Manipur-795001 ……Respondent

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AFFIDAVIT VERIFYING THE PETITION

I, son of ………………………… aged ………………………residing at

………………………… do hereby solemnly affirm and state as follows:

1. I am a Director / Secretary / …………………………………………… of

…………………………… Ltd., the petitioner in the above matter and am duly

authorized by the said petitioner to make this affidavit on its behalf.

2. The statements made in paragraphs 1-2, 5 of the petition herein now shown to

me and marked with the letter ‘A’ are true to my knowledge and the statements made in

paragraphs 3,4,6-57 are based on information received from various public sources and

I believe them to be true.

Deponent

Verification:

I, the deponent above named do hereby verify that the contents of my above affidavit

are true to my knowledge; no part of it is false and nothing material has been concealed

therefrom

Verified at ……….. on the day of …………….

Place: Aizawl

Deponent

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THE PETITIONER MOST RESPECTFULLY SUBMIT AS UNDER:-

FACTS OF THE PETITION:

1) A. Manipur Renewable Energy Development Agency (MANIREDA) is an

autonomous government agency under the Department of Power, setup for

promoting renewable energy sources in the state. MANIREDA is filing this petition

with regards to determining tariff for solar rooftop projects in the state. Hereinafter,

MANIREDA is referred as Petitioner.

2) A. The Government of Manipur has notified for “Manipur Grid Interactive Rooftop

solar PV power policy” 2014, by issuing Gazette notification on 7th January 2015.

As per the policy all individuals,

residents/commercials/institutional/government/semi government building owners

are eligible to set up projects under this policy for a capacity of 1 kW to 500 kW.

3) It may be noted that this Hon’ble Commission issued Order “Determination of

generic levellised generation tariff for the FY2014-15 under Regulation 8 of

the Joint Electricity Regulatory Commission for Manipur & Mizoram (Terms and

Conditions for Tariff determination from Renewable Energy Sources) Regulations,

2010”, dated 5th January, 2015.

4) We would also like to submit that even though the Hon’ble Commission has

determined tariff for solar PV projects, the norms for determination of tariff for MW

size solar PV projects are different from norms for smaller size (kW scale) solar

rooftops projects. One of the major differences affecting the normalized cost of

kilowatt-scale photovoltaic power plants compared to megawatt-scale plants is the

cost of inverters and other equipment and accessories which are higher than

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comparable cost for MW size solar projects. Therefore, it is suggested to kindly

determine separate tariff for solar rooftop (kW scale) projects based on the norms

proposed in this petition.

5) A. After announcement of the policy, many individuals and parties enquired the

Petitioner about the feed-in-tariff rate for injecting power from solar rooftop

projects feeding the solar power to the state power grid.

6) MANIREDA being the nodal agency for promotion of renewable energy in the state

is filing this Petition before the Hon’ble Commission for determination for generic

tariff for solar rooftop projects with capacity size from 1 kW to 500 kW. The

existing tariff approved by the Commission under its Order dated January 5, 2015

can be made applicable to MW size solar PV projects for capacity above 500 kW.

7) The Petitioner would like to humbly submit that other Regulatory Commissions

including Maharashtra Electricity Regulatory Commission (MERC), Gujarat

Electricity Regulatory Commission (GERC), Madhya Pradesh Electricity

Regulatory Commission (MPERC) and Karnataka Electricity Regulatory

Commission (KERC) have also determined separate tariffs for solar rooftop (kW

scale) and large MW size solar projects. The table below provides tariff approved

by various Regulatory Commissions for solar rooftops (kW) and MW size solar PV

projects

Regulatory

Commission

Financial Year Tariff for solar

rooftops

Tariff for solar

PV projects

MERC FY 2015-16 Rs 7.58/kWh Rs 7.08/kWh

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Regulatory

Commission

Financial Year Tariff for solar

rooftops

Tariff for solar

PV projects

GERC FY 2015-16 Rs 8.42/kWh Rs 6.77/kWh

MPERC FY 2015-16 Rs 10.70/kWh Rs 10.44/kWh

KERC FY 2013-141 Rs 9.56/kWh Rs 8.40/kWh

JERC (Goa

and UT)

FY 2014-15 to FY

2016-17

Rs 9.43/kWh2 Rs 8.73/kWh3

8) The Petitioner would like to humbly submit that as per Section 61(h) and

Section 86(1)(e) of Electricity Act 2003 (hereinafter referred as EA 2003) the

State Electricity Regulatory Commissions are empowered to take necessary

measures for promotion of renewable energy based generation in the State. The

relevant text of Section 61 (h) and Section 86(1)(e) is reproduced below:

“61. Tariff regulations.- The Appropriate Commission shall, subject to the

provisions of this Act, specify the terms and conditions for the determination of

tariff, and in doing so, shall be guided by the following, namely: -

…

(h) the promotion of co-generation and generation of electricity from renewable

source of energy;

“86. (1) The State Commission shall discharge the following functions, namely:

-

1 The tariff for FY 2015-16 for MW size solar rooftops has been approved at Rs 6.51/kWh. However, tariff determination for kW scale projects is under draft stage. 2 Upto 500 kW 3 For projects more than 500 kW

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(e) Promote cogeneration and generation of electricity from renewable sources

of energy by providing suitable measures for connectivity with the grid and sale

of electricity to any person, and also specify, for purchase of electricity from

such sources, a percentage of the total consumption of electricity in the area of

a distribution licence.”

9) The Para 6.4 (7) of the National Tariff Policy provides that the Electricity

Regulatory Commission endeavor to promote generation from renewable energy

projects and most specifically generation from solar rooftop projects. The relevant

text of the Para 6.4 (7) is cited below:

Appropriate Commission may provide regulatory framework to facilitate generation

and sale of electricity from renewable energy sources particularly from roof-top

solar system by any entity including local authority, Panchayat Institution, user

institution, cooperative society, Non-Governmental Organization, franchisee or by

Renewable Energy Service Company. The Appropriate Government may also

provide complementary policy support for this purpose.

Explanation: “Renewable Energy Service Company” means an energy service

company which provides renewable energy to the consumers in the form of

electricity.

10) Considering immense potential for development of solar power including solar

rooftops, the government of India revised the solar capacity addition target under

National Solar Mission from 20 GW to 100 GW by FY 2021-22. Out of the 100

GW solar target, 40 GW capacity addition is targeted from solar rooftop projects.

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11) The Petitioner humbly submits that the Ministry of New and Renewable Energy has

also allocated a target of 105 MW to be developed in the state of Manipur under the

Jawaharlal Nehru National Solar Mission (JNNSM) program. With constraints on

availability of land and difficult terrain, significant portion (50 MW) of this target

will have to be met through development of solar rooftop. Hence, it is essential to

ensure a conducive tariff framework for solar rooftop exists in the state of Manipur,

to ensure that solar rooftop capacity addition takes place. Any delay in announcing

tariff for solar rooftops will hamper investments planned in the state. The year wise

solar rooftop capacity addition targets (in MW) for the state of Manipur is tabulated

below:

Category 2015-

16

2016-

17

2017-

18

2018-

19

2019-

20

2020-

21

2021-

22

Total

Roof-top

solar

4 3 6 8 9 10 10 50

12) Petitioner humbly submits that Manipur has a good potential of Solar Energy.

About 280-300 sunny days are available in the State which provides an excellent

potential for installation of Rooftop and other Small Solar Power Plants in the State.

The sunshine period per day on an average comes to about 8-10 hours, of which

effective solar energy would be for about 4.5 - 6 hours per day.

13) Renewable Energy in general and solar energy in particular is not only cheaper and

faster to implement but also offers solutions to various social and economic

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difficulties facing Manipur, including energy access to remote areas, employment

generation etc.

14) The grid connected rooftop solar photovoltaic power generation plants, generates

electricity at the consumption center and hence contributes to reducing the network

losses of the distribution licensee. The electricity generation shall also contribute to

meeting the demand and supply gap and shall also enable the obligated entities for

complying with their solar purchase obligation targets as specified by appropriate

Electricity Regulatory Commissions’. India has a huge potential for deployment of

grid connected rooftop solar photovoltaic power generation plants and the MNRE

envisages harnessing this potential.

GROUNDS OF THE PETITION:

15) The Electricity Act vide Section 61(h) and Section 86(1)(e) of EA 2003empowers

the State Electricity Regulatory Commissions to take necessary measures for

promotion of renewable energy based generation in the State.”

16) National Electricity Policy issued by Government of India dated February 12, 2005

has been a guiding benchmark for various Orders issued by the Hon’ble

Commission for the promotion of Renewable energy sources. National Electricity

Policy provides that the renewable energy potential should be exploited fully to

create additional power capacity and private participation should be encouraged by

providing necessary promotional measures.

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5.2.20 Feasible potential of non-conventional energy resources, mainly small

hydro, wind and bio-mass would also need to be exploited fully to create

additional power generation capacity. With a view to increase the overall share

of non-conventional energy sources in the electricity mix, efforts will be made to

encourage private sector participation through suitable promotional

measures”..(Emphasis Added)

17) Further, the Tariff Policy (TP) notified by the Central Government in pursuance of

the Section 3 of the EA 2003 has stipulated that Appropriate Commission to

determine ‘preferential tariffs’ for procurement of power by distribution licensees

from non-conventional energy sources. The Tariff Policy also mandates

development of suitable regulatory framework to facilitate generation and sale of

electricity from rooftop solar projects.

The relevant extract of clause 6.4 of the NTP is as under -

Pursuant to provisions of section 86(1)(e) of the Act, the Appropriate

Commission shall fix a minimum percentage of the total consumption of

electricity in the area of a distribution licensee for purchase of energy from

renewable energy sources, taking into account availability of such resources

and its impact on retail tariffs. Cost of purchase of renewable energy shall be

taken into account while determining tariff by SERCs. Long term growth

trajectory of Renewable Purchase Obligations (RPOs) will be prescribed by the

Ministry of Power in consultation with MNRE.

…………………………………..

Within the percentage so made applicable, to start with, the SERCs shall also

reserve a minimum percentage for purchase of solar energy from the date of

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notification of this policy which shall be such that it reaches 8% of total

consumption of energy, excluding Hydro Power, by March 2022 or as notified

by the Central Government from time to time.

6.4.7 Appropriate Commission may provide regulatory framework to facilitate

generation and sale of electricity from renewable energy sources particularly

from roof-top solar system by any entity including local authority, Panchayat

Institution, user institution, cooperative society, Non-Governmental

Organization, franchisee or by Renewable Energy Service Company. The

Appropriate Government may also provide complementary policy support for

this purpose. (Emphasis Added)

Principles for determination of Preferential tariff on Cost-Plus basis

18) It is evident from provisions of NTP that preferential tariff for renewable energy is

to be determined by the Appropriate Commission, in accordance with Section 61 of

the Electricity Act 2003. While determining tariff it is necessary to ascertain

benchmark costs and underlying assumptions thereof.

19) In this section, the Petitioner has given its views on key assumptions that may be

considered keeping in mind ground realities and need to encourage development of

solar rooftop projects in the state.

A. Capital Cost

20) In its Tariff Order dated January 5, 2015, the Hon’ble Joint Electricity Regulatory

Commission (Manipur and Mizoram) had approved a capital cost of Rs 691

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lakhs/MW for solar PV projects in the state to be commissioned in FY 2014-15.

This capital cost was fixed in line with capital cost approved for solar PV projects,

by CERC in generic tariff Order for FY 2014-15.

21) However, the approved capital cost is not apropos to the kilowatt-scale rooftop

projects in the state. One of the major differences affecting the normalized cost of

kilowatt-scale photovoltaic power plants compared to megawatt-scale plants is the

cost of inverters and other equipment and accessories which are higher than

comparable cost for MW size solar projects. Therefore, the capital cost approved by

the Hon’ble JERC does not represent the capital cost for kW size solar rooftop

projects. Besides, with regard to the approachability the Manipur is situated at a

difficult terrain and bringing plant and machinery for smaller project would be even

costlier, the fact which need to be taken into account while considering capital cost

of the solar projects in the Manipur.

22) The capital cost for solar rooftop projects (kW scale projects) as compared to MW

size projects, as approved by various Regulatory Commissions (for FY 2015-16) is

tabulated below.

Regulatory

Commission

Financial

Year

Capital cost for kW

scale solar rooftops

(Rs/Wp)

Capital cost for

MW size solar

projects (Rs/Wp)

GERC FY 2015-16 Rs 80/Wp Rs 61.50/Wp

KERC FY 2015-16 Rs 75/Wp4 Rs 57.50/Wp

4 As per discussion paper dated 16 November 2015

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Regulatory

Commission

Financial

Year

Capital cost for kW

scale solar rooftops

(Rs/Wp)

Capital cost for

MW size solar

projects (Rs/Wp)

JERC (Goa and

UT)

FY 2014-15 to

FY 2016-17

Rs 82/Wp5 Rs 75/Wp6

23) Apart from the capital cost approved by Regulatory Commissions, the weighted

average capital cost discovered through bidding undertaken by Solar Energy

Corporation of India for implementation of 24 MW grid connected rooftop solar PV

projects (Phase IV-Part 2-Part A, dated 16 July 2015) for various states in the

eastern region is tabulated below:

State Capacity in kW Weighted average Unit rate

(Rs/Wp)

West Bengal 375 kW Rs 75/Wp

Jharkhand 187.50 kW Rs 79.80/Wp

Odisha 375 kW Rs 74.60/Wp

24) The Petitioner would also like to humbly submit that the benchmark capital cost for

solar rooftop projects as fixed by MNRE is Rs 75/Wp. Considering that cost of

transporting solar rooftop plant and machinery in Manipur is significantly higher

than the national average and almost account for 10-15% of the total hardware cost,

the actual capital cost for setting solar rooftop project in Manipur is comparatively

higher than the national benchmark cost of Rs 75/Wp.

5 For projects up to 500 kW (in all territories of JERC except Lakshadweep and Andaman and Nicobar) 6 For projects more than 500 kW (in all territories of JERC except Lakshadweep and Andaman and Nicobar)

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25) The capital cost for solar rooftop projects in Manipur is estimated at Rs

82/kW. The various cost heads are tabulated below:

Cost Head Cost (Rs’000/kW)

Solar module cost 36

Invertor cost 10

Mounting structure 7

Balance of systems (transformers, wiring,

meters etc.)

6

Transportation and insurance cost 9

Installation cost including civil and electrical

works

6

Contingency at 3% 3

Taxes 6

Total cost 82

26) Apart from the capital cost discussed above, there is separate cost component of

agency charges which account for 11.75% of the total cost estimate. The same was

levied by the Govt. of Manipur under Office Memorandum dated October 26, 2013.

The agency charges is levied on the works undertaken through government

agencies. Therefore any solar rooftop installation work undertaken by government

agencies will have to pay 11.75% on the total estimated cost of Rs 82000/kW.

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27) Accordingly, the Petitioner hereby humbly requests to approve the benchmark

capital cost for solar rooftop projects as Rs 82000/kW. Any agency charges

should be pass through at actuals.

B. Capacity Utilization Factor and annual degradation

28) Capacity utilization factor (CUF) represents important parameter that influences the

economics of a solar rooftop project. The Hon’ble Commission in its generic tariff

Order dated 5th January 2015 has considered normative CUF of 19% solar PV

projects, in line with CERC RE Tariff Regulations

29) Apart from CERC various other State Electricity Regulatory Commissions

including MERC, GERC, MPERC, KERC have notified normative CUF of 19% for

solar PV projects including rooftops.

30) Accordingly, the Petitioner hereby humbly requests that the normative CUF of

19% be considered for solar rooftop projects.

C. Depreciation

31) The Para 5.8.2 of the National Electricity Policy provides that appropriate

depreciation reserves should be created so as to fully meet the debt service

obligations. The said clause is reproduced below for reference:

“5.8.2. The public sector should be able to raise internal resources so as to at

least meet the equity requirement of investments even after suitable gross

budgetary support from the Government at the Centre and in the states in order

to complete their on-going projects in a time-bound manner. Expansion of

public sector investments would be dependent on the financial viability of the

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proposed projects. It would, therefore, be imperative that an appropriate

surplus is generated through return on investments and, at the same time,

depreciation reserve created so as to fully meet the debt service obligation.

This will not only enable financial closure but also bankability of the project

would be improved for expansion programmes, with the Central and State level

public sector organizations, as also private sector projects, being in a position

to fulfil their obligations toward equity funding and debt

repayments.”(Emphasis Added)

32) Considering debt service obligation of 70% of the capital cost and repayment period

of 12 years, the annual debt service obligation works out to 5.83%.

33) Based on the same principle, Hon’ble CERC has allowed a depreciation rate of

5.83% for first 12 years and balance depreciation spread over useful life and thereby

allowing solar project developers to recover debt amount. The relevant Regulation

is cited below for reference

"(1) The value base for the purpose of depreciation shall be the Capital Cost of

the asset admitted by the Commission. The Salvage value of the asset shall be

considered as 10% and depreciation shall be allowed up to maximum of 90% of

the Capital Cost of the asset. (2) Depreciation per annum shall be based on

‘Differential Depreciation Approach' over loan period beyond loan tenure

over useful life computed on ‘Straight Line Method’. The depreciation rate for

the first 12 years of the Tariff Period shall be 5.83% per annum and the

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remaining depreciation shall be spread over the remaining useful life of the

project from 13th year onwards. (3) Depreciation shall be chargeable from the

first year of commercial operation. Provided that in case of commercial

operation of the asset for part of the year, depreciation shall be charged on pro

rata basis"(Emphasis Added)

34) In the light of above facts, the Hon’ble Commission is requested to consider the

depreciation rate in line with CERC Regulation at the rate of 5.83% for first

12 year and the remaining depreciation amount be spread over the remaining

tenure of the useful life

D. Operation & Maintenance Expense

35) O&M expense primarily includes three major components viz., the employee

expenses, administrative and general expenses and the expenses towards repair and

maintenance.

36) The major O&M cost incurred for a solar PV plant is towards the activities such as

scheduled maintenance including cleaning of PV panels, unscheduled maintenance

at the solar PV plant and the associated labour & material cost.

37) The normative O&M cost approved by various State Electricity Regulatory

Commissions is tabulated below.

SERC Financial Year Normative O&M

MERC FY 2015-16 Rs 1300 /kW with 5.72% annual escalation

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RERC FY 2015-16 Rs 1300 /kW with 5.85% annual escalation

KERC FY 2015-16 Rs 1800/kW7 with 5.72% escalation

38) In the light of above facts, this Hon’ble Commission is requested to consider

the normative O&M of 2% of base capital cost (Rs 82000/kW) or Rs 1640/kW

with 5.72% annual escalation.

E. DEBT-EQUITY RATIO

39) Sub-Regulation (1) of Regulation 13 of the JERC RE Tariff Regulations provides

that the debt- equity ratio of 70:30 is to be considered for determination of generic

tariff based

40) Based on the debt equity ratio of 70:30, the debt and equity components of

the normative capital cost for determination of tariff for the solar rooftop RE

projects have been worked out under the petition.

F. Interest on Debt

41) CERC under its RE Tariff Regulations has specified norm for interest on debt as

average SBI Base rate for first six months of the previous year plus 300 basis points.

The relevant clause is cited below for reference:

“(a) The loans arrived at in the manner indicated in the Regulation 13 shall be

considered as gross normative loan for calculation for interest on loan. The

normative loan outstanding as on April 1st of every year shall be worked out by

7 Considered as 2% of capital cost

20

deducting the cumulative repayment up to March 31st of previous year from the

gross normative loan.

(b) For the purpose of computation of tariff, the normative interest rate shall be

considered as average State Bank of India (SBI) Base rate prevalent during the

first six months of the previous year plus 300 basis points.

(c) Notwithstanding any moratorium period availed by the generating company, the

repayment of loan shall be considered from the first year of commercial operation

of the project and shall be equal to the annual depreciation allowed"

42) Accordingly, the average SBI base rate prevalent during first six months of the year

FY 2015-16 has been considered for computation of applicable interest rate. The

average SBI Base Rate of first six months of FY 2015-16 was 9.77%. Therefore,

interest on debt for FY 2015-16 works out to 12.77% (i.e. 9.77%) plus 300 basis

points

43) The normative interest on loan approved by various State Electricity Regulatory

Commissions is tabulated below.

SERC Financial Year Normative interest on loan

GERC FY 2015-16 SBI base rate (average of first six months of

previous financial year) plus 300 basis point

KERC FY 2015-16 12.50%

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MPERC FY 2015-16 12.75%

RERC FY 2015-16 SBI base rate (average of first six months of

previous financial year) plus 300 basis point

44) Thus, the Petitioner requests the Hon’ble Commission to approve the

normative interest rate on loan as 12.77% and a loan tenure of 12 years for

determination of tariff for solar rooftops.

G. Interest on Working Capital

45) The Petitioner would like to submit that the Hon’ble Commission in generic RE

Tariff Order dated January 5, 2015 has specified norm for interest on working

capital norm in line with CERC Regulations. The same is cited below:

“(1) The Working Capital requirement in respect of wind energy projects, Small

Hydro Power, Solar PV and Solar thermal power projects shall be computed in

accordance with the following:

Wind Energy / Small Hydro Power /Solar PV / Solar thermal

a) Operation & Maintenance expenses for one month;

b) Receivables equivalent to 2 (Two) months of energy charges for sale of electricity

calculated on the normative CUF;

c) Maintenance spare @ 15% of operation and maintenance expenses

…………..

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(3) Interest on Working Capital shall be at interest rate equivalent to the average

State Bank of India Base Rate prevalent during the first six months of the previous

year plus 350 basis points”

46) Considering the above regulation average SBI base rate of 9.77% for first six

months of FY 2015-16, the interest on working capital for FY 2015-16 works out to

13.27% (i.e. 9.77% plus 350 basis points)

47) Thus, the Petitioner requests the Hon’ble Commission to approve the interest

rate on working capital as 13.27% in line with CERC Regulations. The

components of working capital to include 1 month of O&M cost, 15% of O&M

cost towards maintenance spares and 2 month of receivables for debtors

H. Return on Equity

48) The Petitioner would like to submit that the Hon’ble Commission in generic RE

Tariff Order dated January 5, 2015 has specified return on equity norms as cited

below:

Sub-Regulation (1) of amended Regulation 16 of the RE Tariff Regulations

provides that the value base for the equity shall be 30% of the capital cost for

generic tariff determination. Sub-Regulation (2) of the said Regulation

stipulates the normative return on equity (ROE) as under:

(a) 20% per annum for the first 10 years, and

(b) 24% per annum from the 11th year onwards.

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49) CERC under its RE Tariff Regulations has also specified norm for return of equity

of 20% pre-tax for the first 10 years followed by 24% pre-tax for 11th year onwards.

50) Similar provisions with regards to normative ROE of 20% pre-tax for the first 10

years followed by 24% pre-tax for 11th year onwards, is approved by other State

Electricity Regulatory Commissions including MERC, RERC for solar rooftop

projects.

51) Considering post tax ROE of 16% and the current corporate and MAT tax

rates (including corporate tax rate of 34.61% and MAT rate of 21.34%), we

request the Hon’ble Commission to consider pre-tax ROE of 20.34% for the

first 10 years followed by 24.47% pre-tax from 11th year onwards

I. Discount Factor

The discount factor considered for the purpose of levellised tariff computation is

equal to the Post Tax weighted average cost of the capital on the basis of normative

debt: equity ratio (70:30) specified in the Regulations. Considering the normative debt

equity ratio and weighted average of the post-tax rates for interest and equity

component, the discount factor is calculated. Interest Rate considered for the loan

component (i.e.70%) of Capital Cost is 12.77% (as explained earlier). For equity

component (i.e. 30%) rate of Return on Equity (ROE) considered at Post Tax ROE of

16% considered. The discount factor derived by this method for all technology is

10.65% i.e. ((12.77% × 0.70 × (1 – 34.61%)) + (16.0% × 0.30)).

J. Proposed Tariff

52) The summary of assumptions proposed by the Petitioner is tabulated below:

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Parameters Value Assumption Remarks

Capital cost for FY

2015-16

Rs 82000/kW Benchmarking with capital

cost approved by various

SERCs and discovered

through bidding route

CUF and deration 19%

As per principle followed by

JERC generic tariff order

dated January 5, 2015 for

solar PV projects

Useful life 25 years As per standard practice

Debt: Equity ratio 70:30 As per standard practice

Term on loan 12 years As per principle followed by

Hon’ble JERC generic tariff

order dated January 5, 2015

Interest on Debt 12.77% As per principle followed by

Hon’ble JERC generic tariff

order dated January 5, 2015

Return on Equity Pre- Tax 20.34% (first

10 years) & 24.47%

(from 11th year

onwards)

As per principle followed by

Hon’ble JERC generic tariff

order dated January 5, 2015

Depreciation rate 5.83% (for first 12

years) and 1.54%

(from 13th year

onwards)

As per principle followed by

Hon’ble JERC generic tariff

order dated January 5, 2015

O&M expenses per

annum

2% of capital cost OR

Rs 1640/kW with

annual escalation of

5.72%

Benchmarking with O&M

norm approved by various

SERCs

25

Parameters Value Assumption Remarks

Components of working

capital

1 month of O&M cost,

15% of O&M cost

towards maintenance

spares and 2 months of

receivables for debtors

As per principle followed by

Hon’ble JERC generic tariff

order dated January 5, 2015

Interest on Working

Capital

13.27%. As per principle followed by

Hon’ble JERC generic tariff

order dated January 5, 2015.

Average SBI Base Rate

(9.77%) plus 350 basis point

53) MNRE in its notification dated 4th March 2016, has notified subsidy benefit to the

account of 70% of benchmark capital cost for grid connected solar rooftop projects

installed in the North east. However, the subsidy benefit is only limited to

residential, institutional (hospitals, education institutes etc.) and no subsidy is

provided to commercial and industrial users. Therefore, it is suggested to determine

separate tariff for entities availing subsidy and not availing subsidy.

54) Based on the above assumptions the levellised tariff for solar rooftop projects with

and without subsidy benefits is tabulated below.

Category Levellised Tariff (Rs/kWh)

Without subsidy Rs 9.49/kWh

With 70% subsidy Rs 4.41/kWh

26

55) The work sheet (assumption sheet) is attached as Annexure I.

PRAYERS

The Petitioner would like to request the Hon’ble Commission:

1) To kindly admit this Petition and grant an opportunity in person before Hon’ble

Commission during hearing on the above matter

2) To determine solar rooftop tariff for projects size from 1 kW to 500 kW on the

power injected into the grid for FY 2016-17, as per cost plus basis regime as

outlined in this Petition.

3) To kindly exempt payment of petition filing fees

4) To condone any inadvertent omissions/ errors/ short comings and permit

Petitioner to add/ change/ modify/ alter this filing and make further submissions

as may be required at a future date.

Date:

Place: (PETITIONER)

27

Annexure I-Tariff assumption sheet

S. No.Assumption

HeadSub-Head Sub-Head (2) Unit Tariff Parameter

1 Power Generation

Capacity

Installed Power Generation Capacity kW 1

Capacity Utilization Factor % 19.00%

Deration Factor % 0.00%

Useful Life Years 25

2 Project Cost

Capital Cost/MW Benchmark cost by MNRE Rs/kW 75000

Cost without subsidy benefit Rs/kW 82000

Cost considering 70% subsidy Rs/kW 29500

3 Sources of Fund

Tariff Period Years 25

Debt: Equity

Debt % 70%

Equity % 30%

Total Debt Amount Rs 20650

Total Equity Amout Rs 8850

Debt Component

Loan Amount Rs 20650

Moratorium Period years 0

Repayment Period(incld Moratorium) years 12

Interest Rate % 12.76%

Equity Component

Equity amount Rs 8850

Return on Equity for first 10 years % p.a 20.34%

RoE Period Year 10

Return on Equity 11th year onwards % p.a 24.47%

Weighted average of ROE 22.82%

Discount Rate 10.64%

4 Financial Assumptions

Fiscal Assumptions

Income Tax(from 11th to 20) % 34.61%

MAT Rate (for first year) % 21.34%

80 IA benefits Yes/No Yes

Depreciation

Depreciation Rate for first 12 years % 5.83%

Depreciation Rate 13th year onwards % 1.54%

5 Working Capital

O&M Charges Months 1

Receivables for Debtors Months 2

Maintenance and Spares % 15%

Interest On Working Capital % 13.26%

6 Operation & Maintenance

power plant (First year) Rs 1640

Total O & M Expenses Escalation % 5.72%