RERC Regulations 8Chapter II · General Principles

Section 8 · Annual Review of Performance

(1)

Where the aggregate revenue requirement and expected revenue from tariff and charges of a Generating Company or Licensee is covered under a multi-year tariff framework, then such Generating Company or Licensee, as the case may be, shall be subject to an annual performance review during the Control Period in accordance with this Regulation.

(2)

The Licensee or Generating Company shall make an application for annual performance review by November 30th of every year:Provided that the Licensee or Generating Company, as the case may be, submit to the Commission information in such form as may be stipulated by the Commission from time to time, together with the Accounting Statements, extracts of books of account and such other details as the Commission may require to assess the reasons for and extent of any variation in financial performance from the approved forecast of aggregate revenue requirement and expected revenue from tariff and charges:Provided further that the application for annual performance review shall be submitted to and dealt with by the Commission in the manner provided under the procedure for Determination of Tariff under these Regulations for submission of and dealing with an application for determination of tariff and within the time limit specified in the Regulations for such application.

(3)

The scope of the Annual Performance Review shall be a comparison of the performance of the Generating Company or Licensee with the approved forecast of aggregate revenue requirement and expected revenue from tariff and charges and shall comprise the following:

(a)

A comparison of the audited performance of the applicant for the previous financial year with the approved forecast for such previous financial year and truing up of expenses and revenue subject to prudent check including pass through of impact of uncontrollable factors ;

(b)

Computation of the sharing of gains and losses on account of controllable factors for the previous year ;

(c)

Revision of estimates for the ensuing financial year, if required, based on audited financial results for the previous financial year.

(4)

The applicant shall submit the information required for APR in such form as may be stipulated by the Commission from time to time.

(5)

Upon completion of the review, the Commission shall attribute any variations or expected variations in performance, for variables stipulated under this Regulation, to factors within the control of the applicant (controllable factors) or to factors beyond the control of the applicant (uncontrollable factors):Provided, however, that where the applicant or any interested or affected party believes, for any variable not stipulated while specifying this Regulation, that there is a material variation or expected variation in performance, for any financial year, on account of uncontrollable factors, such applicant or interested or affected party may apply to the Commission for inclusion of such variable, at the Commission's discretion, in the review under this Regulation above for such financial year.

(6)

The "uncontrollable factors" shall include the following factors which were beyond the control of, and could not be mitigated by, the applicant, as determined by the Commission. Some examples of uncontrollable factors are as follows:

(a)

Force Majeure events, such as acts of war, fire, natural calamities, etc.;

(b)

Change in law, judicial pronouncements and Orders of the Central Government, State Government or Commission;

(c)

Economy wide influences such as unforeseen changes in inflation rate, market interest rates, taxes and statutory levies;

(d)

Variation in fuel cost on account of variation in coal, oil and all primary-secondary fuel prices;

(e)

Variation in power purchase expenses for the distribution licensees;

(f)

Variation in freight rates;

(g)

Variation on account of change in hydro-thermal mix due to adverse natural events; and

(h)

Variation in number or mix of consumers or quantities of electricity supplied to the consumers.

(7)

Some illustrative variations or expected variations in the performance of the applicant which may be attributed by the Commission to controllable factors include, but are not limited to, the following:

(a)

Variations in capital expenditure on account of time and/or cost overruns/ efficiencies in the implementation of a capital expenditure project not attributable to an approved change in scope of such project, change in statutory levies or force majeure events;

(b)

Variations in technical and commercial losses, including bad debts;

(c)

Variations in performance parameters;

(d)

Variations in working capital requirements;

(e)

Failure to meet the standards specified in the RERC (Standards of Performance) Regulations, except where exempted in accordance with those Regulations;

(f)

Variations in labour productivity;

(g)

Variation in operation & maintenance expenses;

(h)

Variation in financing pattern due to variation in capital expenditure;

(i)

Variation in quality of supply;

(j)

Coal transit losses.

(8)

A Generating Company or Licensee may, as a result of additional information not previously known or available to him at the time the forecast under Regulation 6 was developed, apply for a modification in the approved forecast of aggregate revenue requirement and expected revenue from tariff and charges for the remainder of the Control Period, as part of the annual performance review:Provided that the Generating Company or Licensee may be allowed a modification of the approved forecast under this Regulation not more than once in each Control Period.

(9)

The Commission may, as a result of additional information not previously known or available to the Commission at the time the forecast under Regulation 6 was developed, if it so deems appropriate, either suo motu or on an application made by any interested or affected party, modify the approved forecast of aggregate revenue requirement and expected revenue from tariff and charges for the remainder of the Control Period, as part of the annual performance review.

(10)

The Commission shall review an application made to it under Regulation 6 and Regulation 8 above in the same manner as the original application for determination of tariff and upon completion of such review, either approve the proposed modification with such changes as it deems appropriate or reject the application made for reasons to be recorded in writing.

(11)

Upon completion of the annual performance review, the Commission pass an order recording -

(a)

The approved aggregate gain or loss to the Generating Company or Licensee on account of uncontrollable factors and the mechanism by which the Generating Company or Licensee shall pass through such gains or losses in accordance with Regulation 9;

(b)

The approved aggregate gain or loss to the Generating Company or Licensee on account of controllable factors and the amount of such gains or such losses that may be shared in accordance with Regulation 10

(c)

The approved modifications to the forecast of the Generating Company or Licensee for the ensuing year, if any;

(12)

The cumulative surplus/deficit determined by the Commission in accordance with these Regulations on account of truing up of the ARR of a generating company or a licensee for the last year of the Control Period shall be carried forward to the next Control Period.

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