RERC Regulations 6Chapter II · General Principles

Section 6 · Forecast of Aggregate Revenue Requirement for the Control Period

(1)

The applicant shall submit the forecast of aggregate revenue requirement and expected revenue from tariff for each year of the Control Period, accompanied by fees applicable, latest by 30th November of the year previous to the start of the Control Period in the format prescribed by the Commission by Order separately.

(2)

Forecast of aggregate revenue requirement

(a)

The applicant shall develop the forecast of aggregate revenue requirement using any one of the following two methodologies:

(i)Assumptions relating to the behaviour of individual variables that comprise the aggregate revenue requirement during the Control Period; or

(ii)Assumptions relating to -

(a)Percentage annual change in a suitable macro-economic or market index, or combination thereof, to which the aggregate revenue requirement of the applicant is correlated; and

(b)

Percentage annual reduction in aggregate revenue requirement due to efficiency or productivity gains proposed to be achieved by the applicant during the Control Period:

(b)Where, for any Control Period, the applicant seeks to change the methodology for forecasting the aggregate revenue requirement, he shall apply to the Commission for approval of change of methodology along with the rationale thereof and such other details as the Commission may require, at least six (6) months before the commencement of such Control Period.

(c)

The Commission may, upon scrutiny of such application and after hearing the affected parties, either

(i)pass an order approving the change of method, subject to such conditions as it may specify in the said order; or

(ii)reject the application for reasons to be recorded in writing, if it is not in accordance with the principles contained in Section 61 of the Act or these Regulations.

(3)

Forecast of expected revenue from tariff and charges The applicant shall develop the forecast of expected revenue from tariff and charges based on the following:

(i)

In the case of a Generating Company, estimates of capacity allocated to Distribution Licensees and expected energy generation for each financial year within the Control Period;

(ii)

In the case of a Transmission Licensee, estimates of transmission capacity allocated to Transmission System Users for each financial year within the Control Period;

(iii)

In the case of a Distribution Licensee, estimates of quantum of electricity supplied to consumers and wheeled on behalf of Distribution System Users for each financial year within the Control Period;

(iv)

Prevailing tariffs as at the date of making the application.

(4)

Upon studying the application, the Commission shall either-

(a)

pass an order approving the forecast of aggregate revenue requirement and expected revenue from tariff and charges for the Control Period, subject to such modifications and conditions as it may specify in the said Order; or

(b)

Reject the application for reasons to be recorded in writing.

(5)

In its MYT Order, the Commission shall specify the variables comprised in the aggregate revenue requirement and expected revenue from tariff and charges of the applicant that shall be reviewed by the Commission as part of the annual performance review;Provided that such variables shall be limited to the major items of cost and revenue forecast of the applicant that, in the Commission's opinion, could have a material impact on the cost of supply of electricity to consumers in the State over the Control Period:Provided further that the variables, as may be stipulated by the Commission under Regulations below, shall form part of the annual performance review, unless exempted by the Commission from such review in its Order.

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