Full Text
RGD. No. D. L.-33004/99
The Gazette of India
EXTRAORDINARY
PART III—Section 4
PUBLISHED BY AUTHORITY
No. 441] NEW DELHI, THURSDAY, JULY 9, 2026/ASHADHA 18, 1948
CG-JK-E-12082026-275398
THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4]
JOINT ELECTRICITY REGULATORY COMMISSION
(For The UT of J&K and the UT of Ladakh)
NOTIFICATION
Jammu, the 18th June, 2026
No. JERC-JKL/Reg/2026/01.—In exercise of the powers conferred on it by sub-Section (2) of Section 181 read
with Section 36, Section 39, Section 40, Section 41, Section 51, Section 61, Section 62, Section 63, Section 64,
Section 65 and Section 86 of the Electricity Act, 2003 (Act No. 36 of 2003) (hereinafter referred to as ‘the Act’), and
all other powers enabling it in this behalf, the Joint Electricity Regulatory Commission for the UT of Jammu &
Kashmir and the UT of Ladakh hereby makes the following Regulations.
Chapter 1: Preliminary
1. Short Title, Commencement and Extent
1.1. These Regulations shall be called the Joint Electricity Regulatory Commission for the UT of Jammu & Kashmir
and the UT of Ladakh (Generation, Transmission and Distribution, Multi Year Tariff), Regulations, 2025.
1.2. These Regulations shall come into force from the date of their publication in the Official Gazette and shall remain
in force till March 31, 2029, unless otherwise reviewed/extended.
1.3. These Regulations extend to the whole of the UT of Jammu & Kashmir and the UT of Ladakh.
2. Definitions
2.1 In these Regulations, unless the context otherwise requires:
1. “Accounting Statements” shall mean for each Financial Year, the balance sheet, the profit and loss
statement, the cash flow statement, and the report of the statutory auditorstogether with notes thereto:
Provided that in case of any local authority engaged in the business of distribution of electricity, the
Accounting Statement shall mean the items, as mentioned above, prepared and maintained in accordance
with the relevant Acts or Statutes as applicable to such local authority;
2. “Act'' shall mean the Electricity Act, 2003 (36 of 2003), as amended from time to time;
3. “Aggregate Revenue Requirement” or “ARR'' shall mean the annual revenue requirement comprising of
allowable expenses and return on capital pertaining to the Generating Company, Transmission Licensee, or
Distribution Licensee, for recovery through tariff and charges determined by the commission, in accordance
with these Regulations;
4. “Allocation Statement” shall mean for each Financial Year, a statement showing the amounts of any
revenue, cost, asset, liability, reserve or provision, etc. determined by apportionment or allocation between
the Distribution Wires Business andRetail SupplyBusiness of aDistribution Licensee;
5. “Allotted Transmission Capacity” shall mean the power transfer in MW between the specified point(s)
of injection and point(s) of drawal allowed to a Long-term Consumer or a Medium-term Consumer on the
Intra-State transmission system under the normal circumstances and the expression “allotment of
transmission capacity” shall be construed accordingly;
6. “Auxiliary Energy Consumption” or “AUX” in relation to a period in the case of a Generating Station
means the quantum of energy consumed by auxiliary equipment of the Generating Station, such as the
equipment being used for the purpose of operating the plant and machinery including switchyard of the
Generating Station and the transformer losses within the Generating Station, expressed as a percentage of the
sum of gross energy generated at the generator terminals of all the units of the Generating Station:
Provided that Auxiliary Energy Consumption shall not include energy consumed for the supply of
power to the housing colony and other facilities at the Generating Station and the power consumed for
construction works at the Generating Station;
7. “Applicant” shall mean a Generating Company, Transmission Licensee, or Distribution Licensee who has
made an application for determination of Aggregate Revenue Requirement and tariff in accordance with the
Act and these Regulations and shall include a Generating Company, Transmission Licensee, or Distribution
Licensee whose tariff is being determined by the Commission on Suo-Motu basis;
8. “Area of Supply” shall mean the area within which a Distribution Licensee is authorised by its license to
supply electricity;
9. “Authority” shall mean the Central Electricity Authority referred to in Section 70 of the Act;
10. “Availability” in relation to a transmission system for a given period shall mean the time in hours during the
period the transmission system is capable of transmitting electricity at its rated voltage expressed in
percentage of total hours in the given period;
11. “Bank Rate” shall mean the Bank Rate declared by the Reserve Bank of India from time to time;
12. “Base Year” shall mean the Year immediately preceding the first Year of the Control Period and used for the
purpose of these regulations;
13. “Bulk Power Transmission Agreement” shall mean an executed Agreement that contains the terms and
conditions under which a Transmission System User is entitled to access the intra-State transmission system
of a Transmission Licensee;
14. “Change in Law” shall mean the occurrence of any of the following events:
a) Enactment, bringing into effect, or promulgation of any new Indian law: or
b) Adoption, amendment, modification, repeal, or re-enactment of any existing Indian law: or
c) Change in interpretation or application of any Indian law by a competent court, Tribunal, or Indian
Governmental Instrumentality, which is the final authority under law for such interpretation or
application: or
d) Change by any competent statutory authority in any condition or covenant of any consent or clearances
or approval; or Licence available or obtained for the project: or
e) Coming into force or change in any bilateral or multilateral agreement/treaty between the Government
of India and any other Sovereign Government having implications for the Generating Station or the
transmission system regulated under these Regulations;
15. “Central Commission” or “CERC” shall mean the Central Electricity Regulatory Commission referred to
in sub-section (1) of Section 76 of the Act;
16. “Commission” shall mean the Joint Electricity Regulatory Commission for the UT of Jammu & Kashmir and
the UT of Ladakh referred to in Section 83 of the Act;
17. “Control Period” shall mean the period of three (3) financial Years from April 1, 2026, to March 31, 2029;
18. “Central Transmission Utility” or “CTU” shall mean any Government company which the Central
Government may notify under sub-section (1) of Section 38 of the Act;
19. “Cut-off Date” shall mean 31st March of the Year closing after two (2) Years from the Year of commercial
operation of the project, and in case the project is declared under commercial operation in the last quarter of
a year, the Cut-off Date shall be 31st March of the Year closing after three (3) Years from the Year of
commercial operation:
Provided that the “Cut-off Date” may be extended by the Commission if it is proved on the basis of
documentary evidence that the capitalisation could not be made within the Cut-off Date for reasons beyond
the control of the project developer;
20. “Consumer” shall be any person who is supplied with electricity for his own use by a Licensee or the
Government or by any other person engaged in the business of supplying electricity to the public under this
Act or any other law for the time being in force and includes any person whose premises are for the time
being connected for the purpose of receiving electricity with the works of a Licensee, the Government or
such other person, as the case may be, but shall be restricted to such Consumers within the Union Territory;
21. “Contracted Capacity” shall mean the capacity in MW contracted by a Transmission System User;
22. “Day” shall mean a day starting at 00.00 hours and ending at 24.00 hours;
23. “Date of Commercial Operation” or “COD” in case of a transmission system shall mean the date declared
by the Transmission Licensee from 00.00 hours, for which an element of the transmission system is in
regular service after successful trial operation for transmitting electricity, and communication signal from
sending end to receiving end:
Provided that where the transmission line or substation is dedicated for the evacuation of power from a
particular Generating Station, the Generating Company and Transmission Licensee shall endeavor to
commission the Generating Station and the transmission system simultaneously as far as practicable and
shall ensure the same through appropriate Implementation Agreement:
Provided also that in case a transmission system or an element thereof is prevented from regular service for
reasons not attributable to the Transmission Licensee or its supplier or its contractors but is on account of the
delay in commissioning of the concerned Generating Station or in commissioning of the upstream or
downstream transmission system, the Transmission Licensee shall approach the Commission through an
appropriate application for approval of the Date of Commercial Operation of such transmission system or an
element thereof:
Provided further that the Date of Commercial Operation for a Generating Station shall be as defined in the
prevalent CERC Tariff Regulations;
24. “De-capitalisation” shall mean reduction in Gross Fixed Assets of the project corresponding to the
removal/deletion of assets as approved by the Commission;
25. “Distribution Business” shall mean the business of operating and maintaining a distribution system for
supplying electricity in the Area of Supply of the Distribution Licensee;
26. “Distribution Licensee” shall mean a Licensee authorised to operate and maintain a distribution system for
supplying electricity to the Consumers in its Area of Supply;
27. “Distribution Wires Business” shall mean the business of operating and maintaining a distribution system
for wheeling of electricity in the Area of Supply of the Distribution Licensee;
28. “Energy Storage System” or “ESS” in relation to the electricity system, means a facility where electrical
energy is converted into any form of energy which can be stored, and subsequently reconverted into
electrical energy and injected back into the grid;
29. “Energy Storage System Developer” or “ESSD” shall mean the entity owning/operating the ESS facility for
storage and supply of power to the beneficiary under these Regulations;
30. “Expected Revenue from Tariff and Charges” shall mean the revenue estimated to accrue to the
Generating Company, Transmission Licensee or Distribution Licensee from the regulated business at the
prevailing tariff;
31. “Electricity Supply Code” shall mean the Electricity Supply Code specified under Section 50 of the Act;
32. “Existing Project” shall mean a project declared under commercial operation prior to April 1, 2024;
33. “Force Majeure Event” shall mean, with respect to any party, any event or circumstance; or combination of
events or circumstances including those stated below, which is not within the reasonable control of, and is
not due to an act of omission or commission of that party and which, by the exercise of reasonable care and
diligence, could not have been avoided, and without limiting the generality of the foregoing, would include
the following events:
a) An Act of God including lightning, drought, fire and explosion, earthquake, volcanic eruption, landslide,
flood, cyclone, typhoon, tornado, geological surprises, or exceptionally adverse weather conditions
which are in excess of the statistical measures for the last hundred Years: or
b) Any act of war, invasion, armed conflict or act of foreign enemy, blockade, embargo, revolution, riot,
insurrection, terrorist or military action: or
c) Industry-wide strikes and labour disturbances having a nationwide impact in India;
34. “Generation Company” shall mean any company or body corporate or association or body of individuals,
whether incorporated or not, or artificial juridical person, which owns or operates or maintains a Generating
Station.
Provided that generation of electricity from renewable sources shall be governed by the applicable
Renewable Energy Tariff Regulations as may be notified by the Commission from time to time;
35. “Generating Station” shall mean any station for generating electricity, including any building and
plant with step-up transformer, switchgear, switch yard, cables, or other appurtenant equipment, if
any, used for that purpose and the site thereof; a site intended to be used for a Generating Station, and
any building used for housing the operating staff of a Generating Station, and where electricity is
generated by water-power, includes penstocks, head, and tail works, main and regulating reservoirs,
dams and other hydraulic works, but does not, in any case, include any sub-station and for the
purpose of these Regulations shall exclude stations generating electricity from renewable sources;
36. “Grid” shall mean the high voltage backbone system of inter-connected transmission lines, sub-stations, and
generating plants;
37. “Gross Station Heat Rate” or “GHR” means the heat energy input in kcal required to generate one kWh of
electrical energy at generator terminals of a thermal Generating Station;
38. “Integrated Utility” means the Departments of Power in the Union Territory of Jammu & Kashmir and the
Union Territory of Ladakh, in its present form or any successor entities performing more than one of the
functions of generation, transmission, and distribution after restructuring thereof;
39. “Licensed Business” means the functions and activities, which the licensee is required to undertake in terms
of the license granted by the Commission or being a deemed licensee under the Act;
40. “Licensee” shall mean a person who has been granted a license under Section 14 of the Act and for the
purpose of these Regulations shall also include an Integrated Utility;
41. “MCLR” shall mean One Year Marginal Cost of Funds based Lending Rate;
42. “Month” shall mean a calendar month as per the Gregorian calendar;
43. “New Project” shall mean a project declared under commercial operation on or after April 1, 2024;
44. “Non-Tariff Income” shall mean income relating to the Licensed Business other than from tariff, excluding
any income from Other Business and, in case of the Retail Supply Business of a Distribution Licensee,
excluding income from wheeling and receipts on account of Cross-Subsidy Surcharge and Additional
Surcharge on charges of wheeling;
45. “Operation and Maintenance expenses” or “O&M expenses” in relation to a Generating Company,
Transmission Licensee or Distribution Licensee shall mean the expenditure incurred on operation and
maintenance of the system by the Generating Company, Transmission Licensee or Distribution Licensee,
and includes the expenditure on manpower, repairs, spares, consumables, insurance and overheads etc.;
46. “Original Project Cost” means the capital expenditure incurred by the Generating Company or the
Transmission Licensee or the Distribution Licensee, as the case may be, within the original scope of the
project up to the Cut-off Date as admitted by the Commission;
47. “Other Business” means any other business of the distribution licensee for optimum utilisation of its assets
within the meaning of Section 51 of the Act;
48. “Prudence Check” shall mean scrutiny of the reasonableness of expenditure incurred or proposed to be
incurred, financing plan, use of efficient technology, cost and time over-run and such other factors as may be
considered appropriate by the Commission for determination of tariff;
49. “Rated Voltage” shall mean the manufacturer's design voltage at which the transmission system is designed
to operate or such lower voltage at which the line is charged, for the time being, in consultation with
Transmission System Users;
50. “Retail Supply Business” means the business of sale of electricity by a distribution licensee to the
consumers within the area of supply in accordance with the terms of the licence for distribution and retail
supply of electricity.
51. “State” shall mean the Union Territory of Jammu & Kashmir and the Union Territory of Ladakh;
52. “State Grid Code” shall mean the Joint Electricity Regulatory Commission for the UT of J&K and the UT
of Ladakh (State Grid Code), Regulations 2023 specified by the Commission under Clause (h) of sub section (1) of Section 86 of the Act;
53. “State Load Despatch Centre” or “SLDC” shall mean the Centre established under sub-section (1) of
Section 31 of the Act;
54. “Transmission Licensee” shall mean a Licensee authorized to establish or operate transmission lines;
55. “Transmission System User” shall mean the Distribution Licensee or Open Access User, as the case may
be, who uses the intra-State transmission network for the purpose of transmission of electricity;
56. “Useful life” in relation to a unit of a Generating Station/Unit, Transmission System, and Distribution
System from the Date of Commercial Operation shall be as defined in Appendix I to these Regulations;
57. “Wheeling” means the operation whereby the distribution system and associated facilities of a distribution
licensee are used by another person for the conveyance of electricity on payment of charges to be determined
under section 62, or under section 42(2);
58. “Wheeling Business" means the business of operating and maintaining a distribution system for the
conveyance of electricity in the area of supply of the distribution licensee.”
59. “Working Day” shall mean a Day on which banks are open for business;
60. “Year” or “Financial Year” shall mean a Financial Year (FY), beginning from 1st April of calendar Year
and ending on 31st March of the next calendar Year.
2.2 Words and expressions occurring in these Regulations and not defined herein but defined in the Act or JERC for
the UT of J&K and the UT of Ladakh (State Grid Code) Regulations 2023 and prevalent CERC Tariff
Regulations shall bear the same meanings as respectively assigned to them in the Act or Grid Code or prevalent
CERC Tariff Regulations and the words and expressions used herein but not specifically defined herein or in the
Act or Grid Code or State Grid Code or prevalent CERC Tariff Regulations shall have the meanings generally
assigned to them in the electricity industry.
2.3 In the interpretation of these Regulations, unless the context otherwise requires:
a) Words in the singular or plural term, as the case may be, shall also be deemed to include the plural or the
singular term, respectively;
b) The terms "include" or "including" shall be deemed to be followed by "but not limited to" regardless of
whether such terms are followed by such phrases or words of like import;
c) References herein to the "Regulations" shall be construed as a reference to these Regulations or as may be
amended or modified by the Commission from time to time in accordance with the applicable laws in force;
d) The headings within the Regulations are inserted for convenience and be read together with the text below for
the purpose of interpretation of these Regulations;
e) References to the Statutes, Regulations or guidelines shall be construed as including all statutory provisions
consolidating, amending, or replacing such Statutes, Regulations, or guidelines, as the case may be, referred
to;
f) In case of inconsistency between any provision of these Regulations and any other Regulations or Orders
passed by the Commission, the provisions of these Regulations shall prevail.
g) The words "Application" or "Petition" shall be interpreted synonymously.
3. Scope of Regulation and extent of application
3.1. The Commission shall determine tariff within the Multi-Year Tariff framework, for all matters for which the
Commission has jurisdiction under the Act, including in the following cases:
a) Supply of electricity by a Generating Company to a Distribution Licensee:
Provided that where a shortage of supply of electricity exists, it may fix the minimum and maximum ceiling
of tariff for the sale or purchase of electricity in pursuance of an agreement, entered into between a
Generating Company and a Distribution Licensee or between Distribution Licensees, for a period not
exceeding one year to ensure reasonable prices of electricity;
b) Intra-State transmission of electricity;
c) Intra-State wheeling of electricity;
d) Retail supply of electricity:
Provided that in case of distribution of electricity in the same area by two or more Distribution Licensees, the
Commission may, for promoting competition among Distribution Licensees, fix only the maximum ceiling of
tariff for retail sale of electricity:
Provided further that where the Commission has allowed Open Access to certain Consumers under sub- section
(2) of Section 42 of the Act, such Consumers, notwithstanding the provisions of clause (d) of sub- section (1) of
Section 62 of the Act, may enter into an agreement with any person for supply or purchase of electricity on such
terms and conditions (including tariff) as may be agreed between them. Such Open Access shall be regulated by
provisions of prevalent Open Access Regulations as amended from time to time.
3.2. These Regulations shall not apply for the determination of tariff in case of the following:
(a) Generating Stations and Transmission Systems whose tariff has been discovered through a transparent
process of competitive bidding in accordance with the competitive bidding guidelines notified by the Central
Government and adopted by the Commission under Section 63 of the Act.
(b) Generating stations of renewable sources of energy, which shall be governed by prevalent Renewable Energy
Tariff Regulations as amended from time to time or any subsequent enactment thereof.
3.3. In accordance with the principles laid out in Regulation 55, Regulation 56, and Regulation 64, the Commission
shall determine Aggregate Revenue Requirement for:
a) Distribution WiresBusiness; and
b) Retail SupplyBusiness.
3.4. The Distribution Licensee shall file an application containing separate details for the determination of Aggregate
Revenue Requirement for Distribution Wires Business and Retail Supply Business, in accordance with
Regulation 55 specified in these Regulations.
3.5. The wheeling charges shall be based on the Aggregate Revenue Requirement determined for the Distribution
Wires Business.
3.6. The Retail Supply tariff for the retail sale of electricity shall be based on the Aggregate Revenue Requirement
determined for the Retail Supply Business.
3.7. The Commission shall also determine Cross-Subsidy Surcharge in addition to the charges for wheeling under the
first proviso to sub-section (2) of Section 42 of the Act, in accordance with prevalent Open Access Regulations,
as amended from time to time.
3.8. The Commission shall also determine Additional Surcharge under sub-section (4) of Section 42 of the Act, in
accordance with prevalent Open Access Regulations as amended from time to time.
4. Norms of operation to be ceiling norms
4.1 For removal of doubts, it is clarified that the norms of operation specified under these Regulations are the
ceiling norms and this shall not preclude the Transmission Licensee or the Distribution Licensee, as the case
may be, and the beneficiaries from accepting improved norms of operation as determined by the Commission
and such improved norms shall be applicable for the determination of tariff.
Chapter 2: General Principles
5. Guiding Principles for MYT Framework
5.1. The Commission shall determine the tariff for matters covered under clauses (a), (b), (c) and (d) of Regulation
3.1, under a Multi-Year Tariff framework with effect from April 1, 2026 (i.e. tariff applicable for FY 2026-27
onwards).
5.2. The Multi Year Tariff framework for determination of Aggregate Revenue Requirement and Expected
Revenue from Tariff and Charges for Generating Company, Transmission Licensee, Distribution Wires
Business and Retail Supply Business shall include the following:
a) Business Plan for the Licensee, for the entire Control Period as submitted to the Commission for approval,
prior to the start of the Control Period;
b) A detailed Multi-Year tariff application comprising of the year-wise forecast of Aggregate Revenue
Requirement for the entire Control Period and determination of Expected Revenue from Tariff and Charges
for the first Year of the Control Period submitted by the Applicant, in formats specified by the Commission
from time to time:
Provided that the performance parameters, whose trajectories have been specified in these Regulations or the
Business Plan or the Multi-Year Tariff Order approved by the Commission, shall form the basis for the
projection of these performance parameters in the Aggregate Revenue Requirement for the entire Control
Period:
c) Determination of year-wise Aggregate Revenue Requirement by the Commission for the entire Control
Period and the tariff for the first Year of the Control Period for the Generating Company, Transmission
Licensee, Distribution Wires Business, and Retail Supply Business;
d) Annual review of performance which shall be conducted vis-a-vis the approved forecast and categorization of
variations in performance into controllable and uncontrollable factors;
e) Annual determination of tariff for the Generating Company, Transmission Licensee, Distribution Wires
Business, and Retail Supply Business, for each Financial Year within the Control Period, based on the
approved forecast, the annual performance review, and truing up exercise;
f) Truing up of previous Year/(s) expenses and revenue by the Commission based on audited accounts vis- a-vis
the approved forecast and categorization of variation in performance as those caused by factors within the
control of the Applicant (controllable factors) and those caused by factors beyond the control of the Applicant
(uncontrollable factors);
g) The mechanism for pass-through of approved gains or losses on account of uncontrollable factors as specified
by the Commission in these Regulations;
h) The mechanism for sharing of approved gains or losses on account of controllable factors as specified by the
Commission in these Regulations.
6. Values for Base Year
6.1 The values for the Base Year of the Control Period shall be determined on the basis of the audited accounts or
provisional accounts of last three (3) Years, as the case may be, and other factors considered relevant by the
Commission;
Provided that, in absence of the availability of audited accounts or provisional accounts of last three (3) Years, the
Commission may benchmark the parameters with other similar utilities to establish the values for Base Year:
Provided further that the Commission may change the values for Base Year and consequently the trajectory of
parameters for Control Period, considering the actual figures from audited accounts.
6.2 The Commission may revisit the performance targets for the Control Period during Annual Performance Review,
carried out in accordance with the proviso to Regulation 5.2 (d).
7. Segregation of Retail Supply and Distribution Wires Business
7.1 The Distribution Licensee shall segregate the accounts of the Licensed Business into Distribution Wires Business
and Retail Supply Business. The ARR for Distribution Wires Business shall be used to determine wheeling
charges. The ARR for Retail Supply Business, which shall include the ARR for Distribution Wires Business, in
accordance with Regulation 58, shall be used to determine retail supply tariff.
7.2 For such period until accounts are segregated, the Licensees shall use the Allocation Statement provided in
Regulation 53.1 to apportion costs and revenues to respective businesses.
8. Business Plan
8.1 The Generation Company, Transmission Licensee, and Distribution Licensee, under affidavit as per the prevalent
Joint Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh (Conduct of Business)
Regulations 2022, as amended from time to time, shall file, for the Commission's approval, a Business Plan for
the Control Period , i.e. FY 2026-27 to FY 2028-29, duly approved by the competent authority by 30th
November of the year prior to the commencement of the Control Period, with such fee, as specified in the
prevalent Joint Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh ( Fees, Fines, and
Charges ) Regulations, 2022, as amended from time to time:
Provided that in case the Commission issues guidelines and formats from time to time, the same shall be adhered
to by the Generation Company, Transmission Licensee, and Distribution Licensee while submitting the Business
Plan.
8.2 The Business Plan filed by the Generation Company shall inter-alia contain;
(a) Capital investment plan, which shall include details of the investments planned by the Generating Company
for existing stations along with its cost-benefit analysis, yearly phasing of capital expenditure along with the
source of funding, financing plan, and corresponding capitalisation schedule. This plan shall be
commensurate with R&M schemes and proposed efficiency improvements for various plants of the
company;
(b) The capital investment plan shall show separately, ongoing projects that will spill over into the years under
review, and new projects (along with justification) that will commence in the years under review but may be
completed within or beyond the tariff period;
(c) The Generating Company shall submit plant-wise details of the capital structure and cost of financing
(interest on debt and return on equity), after considering the existing market conditions, terms of the existing
loan agreements, risks associated with generation business and creditworthiness;
(d) Details related to major shutdown of machines, if any;
(e) Trajectory of performance parameters;
8.3 The Business Plan filed by the Transmission Licensee shall inter-alia contain:
a) Projections for the growth of load in the transmission network;
b) Capital Investment Plan for each Year of the Control Period commensurate with load growth, transmission
loss reduction trajectory, and quality improvement measures proposed in the Business Plan in accordance
with Regulation 8.5;
c) Capital structure of each scheme proposed and the cost of financing (interest on debt and return on equity),
terms of the existing loan agreements, etc.;
d) Performance targets items such as transmission loss, availability of transmission system, transformer failure
rate, and any other parameters for quality of supply for each year of the Control Period, consistent with the
Capital Investment Plan proposed by the Transmission Licensee;
e) Projections for the number of employees during each Year of the Control Period based on proposed
recruitments and retirement;
f) Proposals in respect of income from Other Businesses for each Year of the Control Period.
8.4 The Business Plan filed by the Distribution Licensee for the Control Period shall comprise of but not be
limited to the following:
a) Capital Investment Plan for each Year of the Control Period commensurate with load growth, distribution
loss reduction trajectory, and quality improvement measures proposed in the Business Plan in accordance
with Regulation 8.5;
b) Capital Structure of each scheme proposed and the cost of financing (interest on debt and return on equity),
terms of the existing loan agreements, etc.;
c) Sales Forecast for each Consumer category and sub-categories for each Year of the Control Period in
accordance with Regulation 8.6;
d) Power Procurement Plan based on the Sales Forecast and distribution loss trajectory for each Year of the
Control Period in accordance with Regulation 8.8;
e) Targets for distribution loss for each Year of the Control Period consistent with the Capital Investment Plan
proposed by the Licensee;
f) Projections for the number of employees during each Year of the Control Period based on proposed
recruitments and retirement;
g) Proposals in respect of income from Other Businesses for each Year of the Control Period.
8.5 Capital Investment Plan
a) The Capital Investment Plan to be submitted as part of the Business Plan shall show separately, ongoing
projects that will spill into the financial year under review and new projects (along with justification) that
will commence but may be completed within or beyond the tariff period for the purpose of investment,
Capital Structure, implementation schedule, quarter-wise capital expenditure and capitalization schedule,
financing plan, cost-benefit analysis, improvement in operational efficiency envisaged in the Control Period
owing to proposed investment and such details for ongoing projects that will spill over into the Control
Period under review along with justification;
b) The Capital Investment Plan proposed by the Transmission Licensee shall be in conformity with the plans
made by the Authority/Central Transmission Utility and with the Capital Investment Plan of the Distribution
Licensee;
c) During the Annual Performance Review, the Commission shall monitor the progress of the actual capital
expenditure incurred by the Licensee vis-a-vis the approved capital expenditure. The Licensees shall submit
the actual capital expenditure incurred along with the annual performance review, true-up, and determination
of tariff filing;
d) In case, during the Annual Performance Review, the cumulative (starting from the first Year of the Control
Period up to the current Year) actual capital expenditure incurred is less than 50% of the cumulative
approved capital expenditure, the Commission shall true-up the ARR elements relevant to actual capital
expenditure in the current Year and remaining Years of the Control Period;
e) In case the capital expenditure is required for emergency work which has not been approved in the Capital
Investment Plan, the Licensee shall submit an application containing all relevant information along with
reasons justifying the emergency nature of the proposed work seeking approval of the Commission:
Provided that in case capital expenditure is required for emergency work or unforeseen situations to mitigate
the threat to life and property and if prior intimation thereof to the Commission shall cause any irreparable
loss or injury, the Licensee may undertake that capital expenditure and submit the details along with adequate
justification for ex post facto approval of the Commission:
Provided further that for the purpose of Regulation 8.5(e) above, such approved capital expenditure shall be
treated as a part of both the actual capital expenditure incurred by the Licensee and approved capital
expenditure by the Commission;
f) The Licensee shall submit a report for every quarter detailing the progress of the capital expenditure and
capitalization undertaken against that proposed in the Capital Investment Plan, on or before the last Day of
the month succeeding the respective quarter for review by the Commission.
8.6 Sales Forecast
The sales Forecast in the Business Plan shall be done as per the provisions of the prevalent Power Purchase and
Procurement Process Regulations.
8.7 Treatment of Distribution Loss
The power purchase requirement of the Distribution Licensee at the Transmission-Distribution interface point,
shall be computed by grossing up the sales with the distribution losses approved by the Commission:
Provided that the Commission may stipulate the target distribution losses in accordance with Regulation 17 as
part of the Order on Business Plan:
Provided further that the Distribution Licensee shall submit the details of area-wise distribution losses viz.
Circles/Divisions/Distribution Centres for the relevant years, in accordance with the formats prescribed by the
Commission:
Provided also that the area-wise distribution losses shall separately indicate the distribution losses in each
Distribution Franchisee area within its License area, for the relevant years, if applicable.
8.8 Power Procurement Plan
The Distribution Licensee shall prepare a plan for procurement of power and the same shall be done as per the
provisions of the prevalent Power Purchase and Procurement Process Regulations and prevalent Resource
Adequacy Regulations.
Provided further that such power procurement plan may include long-term, medium-term and short- term sources
of power procurement, in accordance with these Regulations and the relevant Resource Adequacy Plan prepared
under the prevalent Resource Adequacy Regulations.
8.9 On receipt of the Business Plan application, the Commission shall either:
a) Issue an Order approving the Business Plan for the entire Control Period; orb) Reject the Plan for reasons
to be recorded in writing, as the Commission may deem appropriate:
Provided that the Applicant shall be given a reasonable opportunity of being heard before rejecting its application.
9. Multi-Year Tariff Application
9.1 The applicant shall, based on the Business Plan, submit the forecast of Aggregate Revenue Requirement and
expected revenue from the tariff, for the Control Period by way of a Petition in accordance with the Joint
Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh (Conduct of Business) Regulations
2022 as amended from time to time , by 30th November of the year prior to the commencement of the Control
Period and accompanied by such fee payable, as specified in the prevalent Joint Electricity Regulatory
Commission for the UT of J&K and the UT of Ladakh ( Fees, Fines, and Charges ) Regulations, 2022, as
amended from time to time.
9.2 The application shall also be accompanied by the true-up Petition based on the latest available audited accounts
and the annual performance review for the current Year based on the actual performance during the first six
Months of the Year and estimates for the subsequent six Months. Applicant shall develop the forecast of
Aggregate Revenue Requirement using the assumptions relating to the behaviour of individual variables that
comprise the Aggregate Revenue Requirement during each year of the Control Period, including inter-alia
detailed category-wise sales and demand projections, power procurement plan, Capital Investment Plan,
trajectories of parameters specified in these Regulations and Business Plan, in accordance with guidelines and
formats, as may be specified by the Commission from time to time.
9.3 The Applicant shall develop the forecast of Expected Revenue from Tariff and Charges based on the following:
a) In the case of a Generating Company, estimates of the quantum of electricity to be generated by each unit/
station for ensuing Financial Year within the Control Period;
b) In the case of a Transmission Licensee, estimates of the transmission capacity allocated to Transmission
System Users for ensuing Financial Year within the Control Period;
c) In the case of a Distribution Licensee, estimates of the quantum of electricity to be supplied to Consumers
and to be wheeled on behalf of distribution system users for the ensuing Financial Year within the Control
Period;
d) Prevailing tariff as on the date of making the application.
9.4 Based on the forecast of Aggregate Revenue Requirement for the first Year of the Control Period and Expected
Revenue from Tariff and Charges, the Generating Company, Transmission Licensee and Distribution Licensee
for the Distribution Wires Business and Retail Supply Business, shall propose the tariff for the first Year of
Control Period:
Provided that the tariff proposed by Distribution Licensee shall be in accordance with Section 62 of the Act and
these Regulations.
9.5 The Applicant shall provide full details supporting the forecast, including but not limited to details of past
performance, proposed initiatives for achieving efficiency or productivity gains, technical studies, contractual
arrangements and/ or secondary research, to enable the Commission to assess the reasonableness of the forecast.
9.6 On receipt of the application, the Commission shall either:
a) Issue an Order approving the Aggregate Revenue Requirement for the entire Control Period and the tariff for
the first Year of the Control Period; or
b) Reject the application for reasons to be recorded in writing, as the Commission may deem appropriate:
Provided that the Applicant shall be given a reasonable opportunity of being heard before rejecting its
application.
10. Trajectory for Specific Variables
10.1 The Commission, while approving the Business Plan and/ or Multi Year Tariff Petition, may stipulate a trajectory
for certain variables, including but not limited to Auxiliary consumption, Station Heat Rate, O&M expenses,
distribution losses etc.;
Provided that the utilities shall adhere to the norms as specified in the Order on Business Plan and/or Multi Year
tariff petition;
10.2 The trajectory stipulated by the Commission in the Order approving the Business Plan submitted by the
applicant, shall be followed while approving the Aggregate Revenue Requirement and/or expected revenue from
tariff and charges.
10.3 The Commission shall specify the yearly AT&C loss reduction trajectory for the control period with due regard
to the AT&C loss approved in the True Up of the previous control period. The yearly AT&C loss trajectory for
the control period shall not be changed/ modified, other than under exceptional conditions approved by the
Commission.
11. Annual Performance Review, Truing-up and tariff determination during the Control Period
11.1 The Generating Company, Transmission Licensee and Distribution Licensee shall file an application for the
annual performance review of the current year, truing up of the previous Year or the Year for which the audited
accounts are available and determination of tariff for each of the ensuing Years on or before 30th November of
each year, in formats specified by the Commission from time to time:
Provided that the Generating Company, Transmission Licensee, or Distribution Licensee, as the case may be,
shall submit to the Commission information in such form as may be specified by the Commission, together with
the audited accounts, 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;
11.2 The scope of the annual performance review, truing up, and tariff determination for each year shall be a
comparison of the performance of the Generating Company, Transmission Licensee, or Distribution Licensee
with the approved forecast of Aggregate Revenue Requirement and Expected Revenue from Tariff and Charges
and shall comprise of the following:
a) True-up: a comparison of the audited performance of the Applicant for the Financial Year for which the true up is being carried out with the approved forecast for such previous Financial Year, subject to the prudence
check;
b) Annual Performance Review: a comparison of the revised performance targets of the Applicant for the
current Financial Year with the approved forecast in the Tariff Order corresponding to the Control Period for
the current Financial Year subject to prudence check;
c) Tariff determination for the ensuing Year of the Control Period based on the revised forecast of the
Aggregate Revenue Requirement for the Year;
d) Review of compliance with directives issued by the Commission from time to time;
e) Other relevant details, if any
11.3 Upon completion of the exercise, the Commission shall attribute any variations or expected variations in
performance for variables specified under Regulation 12, to factors within the control of the Applicant
(controllable factors) or to factors beyond the control of the Applicant (uncontrollable factors):
Provided that any variations or expected variations in performance, for variables other than those specified under
Regulation 12 below shall be attributed entirely to controllable factors.
11.4 Upon completion of the exercise, the Commission shall pass an order recording.
a) Components of approved cost pertaining to the uncontrollable factors, which were not recovered during the
previous year, to be passed through in tariff as per Regulation 13 of these Regulations:
b) Approved aggregate gain or loss on account of controllable factors, and the amount of such gains or such
losses that may be shared in accordance with Regulation 14 of these Regulations:
c) Carrying cost shall be allowed for a Generating Company, Transmission Licensee, or Distribution Licensee
on the amount of revenue gap/surplus for the period from the date on which such gap/surplus has become
due, i.e., from the end of the Year for which true-up has been done, till the end of the Year in which it is
addressed, on the basis of actual rate of loan taken by the Licensee to fund the deficit in revenue:
Provided that carrying cost on the amount of revenue gap shall be allowed subject to prudence check and
submission of documentary evidence for having incurred the carrying cost in the years prior to the year in
which the revenue gap is addressed:
Provided also that if no loan has been taken to fund revenue deficit, the Commission shall allow Carrying
Cost on a simple interest basis at one (1) Year State Bank of India (SBI) MCLR /any replacement thereof as
notified by RBI for the time being in effect applicable for 1 Year period, as may be, applicable as on 1st April
of the relevant Year plus 100 basis points;
Provided further that in case of revenue surplus, the Commission shall charge the Licensee a Carrying Cost
from the date on which such surplus has become due, i.e., from the end of the Year for which true- up has
been done, till the end of the Year in which it is addressed on simple interest basis at one (1) Year State Bank
of India (SBI) MCLR / any replacement thereof as notified by RBI for the time being in effect applicable for
1 Year period, as may be, applicable as on 1st April of the relevant Year plus 100 basis points.
d) Revision of estimates and tariff for the ensuing Financial Year.
12. Uncontrollable and Controllable factors
12.1 For the purpose of these Regulations, the term "uncontrollable factors" for a Transmission or Distribution
Licensee shall comprise of the following factors, which were beyond the control of the Licensee, and could not
be mitigated by the Licensee:
a) Force Majeure events;
b) Change in Law, judicial pronouncements and Orders of the Central Government, State Government or
Commission;
c) Variation in the number or mix of Consumers or quantities of electricity supplied to Consumers;
d) Inter-state and Intra-State Transmission losses;
e) Variation in the cost of power purchase due to variation in the rate of power purchase from approved sources,
subject to clauses in the power purchase agreement or arrangement approved by the Commission;
f) Inflation;
g) Transmission Charges for a Distribution Licensee;
h) Variation in market interest rates for long-term loans;
i) Employee expenses limited to one-time payment owing requirements of a pay commission and terminal
liability of employees;
j) Taxes and Statutory levies;
k) Taxes on income;
l) Income from the realisation of bad debts written off:
Provided that where the Applicant believes, for any variable not specified above, that there is a material
variation or expected variation in performance for any Financial Year on account of uncontrollable factors,
such Applicant may apply to the Commission for inclusion of such variable at the Commission's discretion,
under this Regulation for such Financial Year:
12.2 For the purpose of these Regulations, the term “controllable factors” shall comprise of the factors which were
within the control of the Licensee, shall inter-alia, include:
a) Variations in capitalisation 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) Variation in Interest and Finance Charges, Return on Equity, and Depreciation and Working capital
requirements on account of variation in capitalisation, as specified in clause (a) above;
c) Variations in Aggregate Technical and Commercial (AT&C) losses of Distribution Licensee in accordance
with CEA Guidelines for computation of AT&C Loss. The detailed methodology for computation of AT&C
loss has been indicated at Appendix-II to these regulations;
d) Distribution Losses which are measured as the difference between total energy input for sale to all its
consumers and sum of the total energy billed in its license area in the same year;
e) Availability of transmission system;
f) Failure to meet the standards specified in the prevalent Standard of Performance for Distribution Licensees
Regulation, as amended from time to time;
g) Variations in labour productivity;
h) Variation in O&M Expenses, except to the extent of inflation;
i) Bad debts written off, in accordance with the provisions of Regulation 65:
j) Variations in Wires Availability and Supply Availability.
13. Mechanism for pass through of gains or losses on account of uncontrollable factors
13.1 Approved aggregate gain or loss to the Generating Company, Transmission Licensee or Distribution Licensee on
account of uncontrollable factors shall be pass-through as an adjustment in the tariff of the Generating Company,
Transmission Licensee or Distribution Licensee over such period as may be specified in the Order of the
Commission passed under these Regulations:
13.2 The Generating company, Transmission Licensee or Distribution Licensee shall submit such details of the
variation between expenses incurred and revenue earned and the figures approved by the Commission, in the
specified format to the Commission, along with the detailed computations and supporting documents as may be
required for verification by the Commission.
14. Mechanism for sharing of gains or losses on account of controllable factors
14.1 The approved aggregate gain to the Generating Company, Transmission Licensee or Distribution Licensee on
account of controllable factors must be shared in following manner: -
(a) Two-third of the amount of such gain shall be passed on as a rebate in tariff over such period as may be
stipulated in the Order of the Commission;
(b) The balance amount, which will amount to one-third of such gain, may be utilised at the discretion of the
Generating Company, Transmission Licensee or Distribution Licensee.
14.2 The approved aggregate loss, if any to the Generating Company, Transmission Licensee or Distribution Licensee
on account of controllable factors shall be shall be dealt in the following manner:
(a) One-third of the amount of such loss shall be passed on as an additional charge in tariff over such period as
may be stipulated in the Order of the Commission; and
(b) The balance amount, which will amount to two-third of such loss, shall be absorbed by the Licensee.
14.3 The gain or loss on account of other controllable factors, unless otherwise specifically provided by the
Commission shall be to the account of the Generating Company, Transmission Licensee or Distribution
Licensee.
15. Determination of Tariff
15.1 The proceedings to be held by the Commission for the determination of tariff shall be in accordance with the
prevalent Joint Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh (Conduct of
Business) Regulations 2022, as amended from time to time.
15.2 Notwithstanding anything contained in these Regulations, the Commission shall at all times have the authority,
either on Suo-Motu basis or on a Petition filed by the Generating Company, Transmission Licensee or
Distribution Licensee, to determine the tariff, including terms and conditions thereof:
Provided that such determination of tariff may be pursuant to an agreement or arrangement or otherwise whether
or not previously approved by the Commission and entered into at any time before or after the applicability of
these Regulations.
15.3 Notwithstanding anything contained in these Regulations, the Commission shall adopt the tariff, if such tariff has
been determined through a transparent process of bidding in accordance with the guidelines issued by the Central
Government:
Provided that the Applicant shall provide such information as the Commission may require for satisfying itself
that the guidelines issued by the Central Government in this regard have been duly followed.
15.4 Determination of Tariff for an existing Generation Station:
a) Where the Commission has, at any time prior to the date of effectiveness of these Regulations, approved a
power purchase agreement or arrangement between a Generating Company and a Distribution Licensee or
has adopted the tariff contained therein for supply of electricity from an existing generating unit/station, the
tariff for supply of electricity by the Generating Company to the Distribution Licensee shall be in accordance
with tariff mentioned in such power purchase agreement or arrangement for such period as may be so
approved or adopted by the Commission;
b) Where, as on the date of effectiveness of these Regulations, the power purchase agreement or arrangement
between a Generating Company and a Distribution Licensee for supply of electricity from an existing
Generating Station has not been approved by the Commission or the tariff contained therein has not been
adopted by the Commission or where there is no power purchase agreement or arrangement, the supply of
electricity by such Generating Company to such Distribution Licensee after the date of effectiveness of these
Regulations shall be in accordance with a power purchase agreement approved by the Commission:
Provided that an application for approval of such power purchase agreement or arrangement shall be made
by the Distribution Licensee to the Commission within a period of three (3) months from the date of
notification of these Regulations:
Provided further that the supply of electricity shall be allowed to continue under the present agreement or
arrangement, as the case may be, until such time as the Commission approves of such power purchase
agreement and shall be discontinued forthwith if the Commission rejects, for reasons recorded in writing,
such power purchase agreement or arrangement.
15.5 Determination of Tariff for a new Generating Station:
a) The tariff for the supply of electricity by a Generating Company to a Distribution Licensee from a new
generating unit/station shall be in accordance with the tariff as per the power purchase agreement approved
by the Commission.
15.6 Determination of Tariff for Transmission, Distribution Wires Business and Retail Supply Business:
a) The Commission shall, based on an application made by the Transmission or Distribution Licensees in
accordance with the Regulations 16 determine the tariff for:
(i). Transmission of electricity, in accordance with the terms and conditions contained in Chapter 5 of these
Regulations;
(ii). Distribution Wires Business, in accordance with the terms and conditions contained in Chapter 6 of
these Regulations; and
(iii). Retail Supply Business, in accordance with the terms and conditions contained in Chapter 7 of these
Regulations.
16. Filing Procedure
16.1 An application for approval of the Business Plan shall be made by 30th November of the year prior to the
commencement of the Control Period, in accordance with the prevalent Joint Electricity Regulatory Commission
for the UT of J&K and the UT of Ladakh (Conduct of Business) Regulations 2022, and accompanied by a such
fee payable, as specified in the prevalent Joint Electricity Regulatory Commission for the UT of J&K and the UT
of Ladakh (Fees, Fines, and Charges) Regulations 2022.
16.2 An application for determination of tariff shall be made by 30th November every year, in such form and in such
manner as specified in this Regulation and accompanied by such fees as specified in the prevalent Joint
Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh (Fees, Fines, and Charges)
Regulations 2022 as amended from time to time.
16.3 The proceedings to be held by the Commission for the determination of tariff shall be in accordance with the
prevalent Joint Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh (Conduct of
Business) Regulations 2022, as amended from time to time.
16.4 The Applicant shall provide, as part of its Petition to the Commission, in such formats as specified by the
Commission from time to time, full details of its calculation of the Aggregate Revenue Requirement and
Expected Revenue from Tariff and Charges, and thereafter, shall furnish such further information or particulars
or documents as the Commission may reasonably require to assess such calculation:
Provided that the Petition shall be accompanied by, where relevant, tariff and charges revision proposal showing
category-wise tariff for recovery of Aggregate Revenue Requirement for the respective Year of the Control
Period:
Provided further that the Commission may specify additional/alternative formats for details to be submitted by
the Applicant, from time to time, as it may reasonably require for assessing the Aggregate Revenue Requirement
and for determining the tariff.
Provided further that the information for the previous year shall be based on audited accounts and the same
should be filed along with audited accounts for the previous year:
16.5 The Generating Company or Transmission Licensee or Distribution Licensee shall, along with the aforesaid
petition, submit a statement on the status of compliance of directives, if any, issued by the Commission in its
previous tariff order.
16.6 The petition for determination of tariff shall include the details of actual subsidy received from the State
Government vis-a-vis claimed by the Distribution Licensee and the true-up petition for the previous year:
16.7 The Petition shall be supported by an affidavit of the person acquainted with the facts stated in the application.
16.8 Upon receipt of a complete Petition accompanied by all requisite information, particulars and documents in
compliance with all the requirements specified in these Regulations, the Petition shall be deemed to be received
and the Commission shall intimate to the Applicant regarding the acceptance of Petition.
16.9 The Commission may seek clarifications and additional information on inadequacies in the application, if any,
within 14 (fourteen) days of filing the application for approval of the Business Plan and application for
determination of tariff, as the case may be.
16.10 The Generating Company or Transmission Licensee or Distribution Licensee shall respond within the next 10
(ten) days to the Commission with all clarification and information as required.
16.11 The Applicant shall, within seven (7) Days after acceptance of the Petition by the Commission, publish a notice
of its Petition in at least two English and two Vernacular languages daily newspapers having wide circulation in
the relevant area:
Provided that the Applicant shall make available a hard copy of the complete Petition to any person, at such
locations and at such rates as may be stipulated by the Commission:
Provided also that the Applicant shall also provide on its internet website, in text searchable format or in
downloadable spreadsheet format furnishing detailed computations, the Petition filed before the Commission
along with all regulatory filings, information, particulars and documents in the manner stipulated by the
Commission:
Provided also that the web link to such information mentioned shall be easily accessible, archived for
downloading and be prominently displayed on the Applicant's internet website:
Provided further that the Applicant may be exempted by the Commission from providing any such information,
particulars, or documents, which are confidential in nature.
16.12 The suggestions and objections, if any, on the proposal for determination of tariff, may be filed before the
Secretary, Joint Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh, by any person
within the timeline specified in the notice so published, with a copy to the Applicant.
16.13 The Applicant shall within seven (7) days from the date of publication of the notice as aforesaid, submit to the
Commission on affidavit the details of the notice published and shall also file copies of the newspapers wherein
the notice has been published.
16.14 The Applicant shall file its comments on the suggestions and objections, if any, received in response to its
application within the time limit specified by the Commission.
16.15 Notwithstanding anything contained in these Regulations, in case of delay/ non-submission of the application
for approval of the Business Plan and application for determination of tariff, as the case may be, the Commission
may initiate Suo-Motu proceedings for the determination of Tariff as feel appropriate.
Provided that in the event of the licensee not filing the application despite the aforesaid proceeding, the
Commission may on its own, decide the tariff based on the previous year's tariff details and after incorporating
suitable adjustments.
Provided further that the Commission may also pass directions under Section 129 and/or Section 142 of the Act
if required.
17. Tariff Order
17.1 The Commission shall, within one hundred and twenty (120) Days from the date of acceptance of the complete
Petition, subject to the petitioner providing information subsequently sought by the Commission in a timely
manner and after considering all suggestions and objections received from the various stakeholders:
a) Issue a Tariff Order, or
b) Reject the application for reasons to be recorded in writing if such application is not in accordance with the
provisions of the Act and Regulations made thereunder or the provisions of any other law for the time being
in force:
Provided that an Applicant shall be given a reasonable opportunity of being heard before rejecting its application.
17.2 The tariff so published shall be in force from the date specified in the said Order and shall, unless amended or
revoked, continue to be in force for such period as may be stipulated therein.
17.3 The Applicant shall publish the tariff approved by the Commission in at least two English and two vernacular
languages daily newspapers having wide circulation in the State of location of Generating Company or
Transmission Licensee or Area of Supply of Distribution Licensee, as the case may be, display the approved
tariff schedule on its internet website, and make available for sale a booklet containing such tariff to any person
upon payment of reasonable charges.
18. True-up Order
18.1 The Commission shall approve the True-up expenses either as part of the Tariff Order or issue Order for True-up
of expenses preceding the Tariff order of the ensuing year.
18.2 An Order for True-up of Expenses shall be issued on annual basis.
18.3 An Order for True-up of Expenses shall be on the basis of expense estimates made at the beginning of the year
under consideration and actual expenses booked in the audited books of account of the Distribution Licensee for
the year.
19. Adherence to Tariff Order
19.1 No tariff or part of any tariff may ordinarily be amended more frequently than once in a Year, except in respect
of any changes expressly permitted under the terms of any fuel surcharge formula as may be specified.
19.2 If any Generating Company or Licensee recovers a price or charge exceeding the tariff determined by the
Commission under Section 62 of the Act and in accordance with these Regulations, the excess amount shall be
payable to the person who has paid such price or charge, along with interest equivalent to the carrying cost
prevailing during the relevant period, without prejudice to any other liability to which such Generating Company
or Licensee may be subject:
Provided that such interest payable to any party shall not be allowed to be recovered through the Aggregate
Revenue Requirement of the Licensee:
Provided further that the Licensee shall maintain separate details of such interest paid or payable by it, and shall
submit them to the Commission along with its Petition.
20. Subsidy Mechanism
20.1 If the Government requires to grant any subsidy to any Consumer or class of Consumers in the tariff determined
by the Commission, the Government shall, notwithstanding any direction which may be given under Section 108
of the Act, pay in advance the amount to compensate the Distribution Licensee/person affected by the grant of
subsidy, as a condition for the Licensee or any other person concerned to implement the subsidy provided for by
the Government, in the manner specified in these Regulations:
Provided that no such direction of the Government shall be operative if the payment is not made in accordance
with the provisions contained in these Regulations, and the tariff fixed by the Commission shall be applicable
from the date of issue of orders by the Commission in this regard.
Provided that in case the UT Government decide to extend financial support /subsidy in the form of grant in aid
support to the power utilities till it achieves turnaround in T&D sector as envisaged in the ‘Financial Feasibility
Plan for the distribution utilities of UT of J&K and UT of Ladakh’ prepared by the Committee constituted by
JKPDD, Government of J&K vide order No 164-PDD of 2019 dated 20th September 2019. The Commission
shall factor - in such grant in support in tariff computation and construed it as tariff related revenue subsidy
provided under Section 65 of the Electricity Act 2003. It is desirable that the UT Government shall provide the
subsidy to the intended class of consumer as envisaged in Section 65 of the Electricity Act.
Chapter 3: Financial Principles
21. Financial Principles for a Generating Company and a Transmission Company
21.1 The Capital Cost for a Generating Company and a Transmission Company shall be determined by the
Commission, guided by the relevant provisions of these Regulations, subject to prudence check. The Capital Cost
so determined shall form the basis of the determination of tariffs for Existing Projects and New Projects.
21.2 The norms for Additional Capitalisation, Renovation, and Modernisation for a Generating Company shall be in
accordance with these Regulations.
21.3 The financial principles including principles governing Debt to Equity Ratio, Return on Equity, Interest on Loan,
Foreign Exchange Risk Variation, Interest on Working Capital, treatment of Tax on Income, norms for working
capital, etc. for a Generating Company and a Transmission Company shall be as specified in this chapter of these
Regulations.
22. Financial Principles for Distribution Business
22.1 The financial principles specified in the subsequent sections of this Chapter of these Regulations shall be
applicable to the Distribution Licensee.
23. Capital Cost
23.1 Capital cost for an existing capital investment Project shall include:
a) The Capital Cost admitted by the Commission prior to April 1, 2026 duly trued up on April 1, 2026;
b) Additional Capitalisation and De-capitalisation for the respective year of tariff as determined in accordance
with Regulation 24; and
c) Expenditure on account of renovation and modernisation as admitted by this Commission in accordance with
Regulation 26.
23.2 Capital cost for a new capital investment Project shall include:
a) The expenditure incurred or projected to be incurred up to date of commercial operation of the project;
b) Interest During Construction (IDC) and financing charges on the actual loan amount;
c) Interest During Construction (IDC) and Incidental Expenditure During Construction (IEDC) specified in
these Regulations;
d) Capitalised initial spares subject to the ceiling rates specified in these Regulations;
e) Expenditure on account of Additional Capitalisation and De-capitalisation for the respective year of the tariff
as determined in accordance with Regulation 24; and
f) Adjustment of any revenue earned by the Generating Company, Transmission Licensee, and Distribution
Licensee by using the assets before CoD;
g) The expenses incurred by the Licensee on obtaining the right of way, as admitted by the Commission after
prudence check;
h) Any gain or loss on account of foreign exchange rate variation pertaining to the loan amount availed up to the
Date of Commercial Operation, as admitted by the Commission after prudence check:
Provided that any gain or loss on account of foreign exchange rate variation pertaining to the loan amount availed
up to the Date of Commercial Operation shall be adjusted only against the debt component of the capital cost:
Provided further that the capital cost of the assets forming part of the Project but not put to use or not in use shall
be excluded from the capital cost:
Provided also that the Licensee shall submit documentary evidence in support of its claim of assets being put to
use.
23.3 The capital cost admitted by the Commission after prudence check shall form the basis for determination of
tariff:
Provided that prudence check may include scrutiny of the reasonableness of the capital expenditure, financing
plan including the choice and manner of funding, interest during construction, use of efficient technology, cost
over-run and time over-run, and such other matters as may be considered appropriate by the Commission for
determination of tariff.
23.4 The approved capital cost shall be considered for determination of tariff and if sufficient justification is provided
for any escalation in the capital cost, the same may be considered by the Commission subject to prudence check:
Provided that in case the actual capital cost is lower than the approved capital cost, then the actual capital cost
shall be considered for determination of tariff of the Licensee.
Provided also that where power purchase agreement or transmission or wheeling agreement provides for a ceiling
of capital cost, the capital cost admitted by the Commission shall take into consideration such ceiling for
determination of tariff.
23.5 The actual capital expenditure on Date of Commercial Operation for the original scope of work based on audited
accounts of the Transmission Licensee and Distribution Licensee, limited to original cost may be considered
subject to prudence check by the Commission.
23.6 The capital cost may include initial spares capitalised as a percentage of the Plant and Machinery cost up to Cut
off Date, subject to the following ceiling norms:
a) Transmission Line & Distribution Line - 1%
b) Transmission Sub-station & Distribution Sub-station (Green Field) - 4%
c) Transmission Sub-station (Brown Field) - 6%
d) Series Compensation devices and HVDC Station - 4%
e) Gas Insulated Sub-station (GIS) - 5%
f) Communication System - 3.5%
23.7 Any expenditure on the replacement, renovation and modernization or extension of life of old fixed assets, as
applicable to the Transmission Licensee and Distribution Licensee, shall be considered after writing off the net
value of such replaced assets from the original capital cost and shall be calculated as follows:
Net Value of Replaced Assets = OCFA – AD – CC
Where;
OCFA: - Original capital cost of Replaced Assets;
AD: -Accumulated depreciation pertaining to the Replaced Assets
CC: - Total Consumer Contribution pertaining to the Replaced Assets:
Provided further that the amount of insurance proceeds received, if any, towards damage to any asset requiring
its replacement shall be first adjusted towards outstanding actual or normative loan and the balance amount, if
any, shall be utilised to reduce the capital cost of such replaced asset, and any further balance amount shall be
considered as Non-Tariff Income.
23.8 Interest During Construction (IDC):
a) Interest during construction shall be computed corresponding to the loan from the date of infusion of debt
fund, and after taking into account the prudent phasing of funds up to Scheduled COD.
b) In case of additional costs on account of IDC due to delay in achieving the Scheduled COD, the generating
company or the transmission licensee, or the distribution licensee as the case may be, shall be required to
furnish detailed justifications with supporting documents for such delay including prudent phasing of funds:
Provided that if the delay is not attributable to the generating company or the transmission licensee or the
distribution licensee as the case may be, and is due to uncontrollable factors as specified in Regulation 12 of
these Regulations, IDC may be allowed after due prudence check and taking into account prudent phasing of
funds.
23.9 Incidental Expenditure During Construction (IEDC):
a) Incidental expenditure during construction shall be computed from the zero dates and after taking into
account pre-operative expenses up to Scheduled COD:
Provided that any revenue earned during the construction period up to Scheduled COD on account of interest
on deposits or advances, or any other receipts may be taken into account for the reduction in incidental
expenditure during construction.
b) In case of additional costs on account of IEDC due to delay in achieving the Scheduled COD, the generating
company or the transmission licensee, or the distribution licensee as the case may be, shall be required to
furnish detailed justification with supporting documents for such delay including the details of incidental
expenditure during the period of delay and liquidated damages recovered or recoverable corresponding to the
delay:
Provided that if the delay is not attributable to the generating company or the transmission licensee or the
distribution licensee, as the case may be, and is due to uncontrollable factors as specified in Regulation 12,
IEDC may be allowed after due prudence check:
Provided further that where the delay is attributable to an agency or contractor or supplier engaged by the
generating company or the transmission licensee or the distribution licensee, the liquidated damages
recovered from such agency or contractor or supplier shall be kept in view while computing the capital cost.
c) In case the time over-run beyond Scheduled COD is not admissible after due prudence, the increase of capital
cost on account of cost variation corresponding to the period of time overrun may be excluded from
capitalization irrespective of price variation provisions in the contracts with supplier or contractor of the
generating company or the transmission licensee or the distribution licensee.
24. Additional Capitalization and De-capitalisation
24.1 The capital expenditure, actually incurred or projected to be incurred, in respect of a New Project or an Existing
Project, on the following counts within the original scope of work, after the Date of Commercial Operation and
up to the Cut-off Date may be admitted by the Commission, subject to prudence check:
a) Undischarged liabilities recognized to be payable at a future date;
b) Works deferred for execution;
c) Procurement of initial capital spares within the original scope of work, in accordance with the provisions of
Regulation 23.6;
d) Liabilities to meet award of arbitration or for compliance with the order or decree of a court of law; and
e) Change in law or compliance with any existing law:
Provided that the details of works asset-wise/work-wise included in the original scope of work along with
estimates of expenditure, liabilities recognized to be payable at a future date, and the works deferred for
execution shall be submitted along with the application for determination of tariff.
24.2 The capital expenditure incurred or projected to be incurred in respect of the New Project on the following counts
within the original scope of work after the Cut-off Date may be admitted by the Commission, subject to prudence
check:
a) Liabilities to meet award of arbitration or for compliance with the order or decree of a court of law;
b) Change in law or compliance with any existing law;
c) Any liability for works executed prior to the Cut-off Date, after prudence check of the details of such
undischarged liability, the total estimated cost of the package, reasons for such withholding of payment and
release of such payments, etc.
24.3 The capital expenditure, in respect of the Existing Project, incurred or projected to be incurred on the following
counts after the Cut-off Date, may be admitted by the Commission, subject to prudence check:
a) Liabilities to meet award of arbitration or for compliance with the order or decree of a court of law;
b) Change in law or compliance of any existing law;
c) Any expenses to be incurred on account of the need for higher security and safety of the capital asset as
advised or directed by appropriate Government agencies or statutory authorities responsible for national
security/internal security;
d) Any liability for works executed prior to the Cut-off Date, after prudence check of the details of such
undischarged liability, total estimated cost of package, reasons for such withholding of payment and release
of such payments etc.;
e) Any liability for works admitted by the Commission after the Cut-off Date to the extent of discharge of such
liabilities by actual payments;
f) Any additional capital expenditure, which has become necessary for efficient operation of the transmission
system. The claim shall be substantiated with the technical justification duly supported by the documentary
evidence like test results carried out by an independent agency in case of deterioration of assets, report of an
independent agency in case of damage caused by natural calamities, obsolescence of technology, up
gradation of capacity for the technical reason such as increase in fault level; and
g) In case of transmission system, any additional expenditure on items such as relays, control and
instrumentation, computer system, power line carrier communication, DC batteries, replacement due to
obsolesce of technology, replacement of switchyard equipment due to increase of fault level, tower
strengthening, communication equipment, emergency restoration system, insulators cleaning infrastructure,
replacement of porcelain insulator with polymer insulators, replacement of damaged equipment not covered
by insurance and any other expenditure which has become necessary for successful and efficient operation of
transmission system:
Provided that any expenditure on acquiring the minor items or the assets including tools and tackles, furniture,
air-conditioners, voltage stabilizers, refrigerators, coolers, computers, fans, washing machines, heat convectors,
mattresses, carpets, etc., bought after the Cut-off Date shall not be considered for additional capitalization for
determination of tariff:
Provided further that if any expenditure has been claimed under Renovation and Modernisation (R&M) or repairs
and maintenance under O&M Expenses, the same expenditure cannot be claimed under this Regulation.
24.4 Impact of additional capitalization on the tariff, as the case may be, shall be considered during truing up of each
Financial Year of the Control Period.
24.5 In case of de-capitalisation of assets of a generating company or the distribution licensee or the transmission
licensee, as the case may be, the original cost of such asset as on the date of de-capitalisation shall be deducted
from the value of gross fixed asset and corresponding loan as well as equity shall be deducted from outstanding
loan and the equity respectively in the year such de-capitalisation takes place, duly taking into consideration the
year in which it was capitalised.
25. Consumer Contribution, Deposit Work, Grant and Capital Subsidy
25.1 The works carried out by the Transmission Licensee and Distribution Licensee after obtaining a part or all of the
funds from the users shall be classified as Deposit Works;
25.2 Capital works undertaken by the Generating Company, Transmission Licensee and Distribution Licensee
utilizing grants received from the State and Central Governments, including funds under various schemes shall
be classified under the category of Grants;
25.3 The works carried out with any other grant of similar nature or such amount received without any obligation to
return the same and with no interest costs attached to such subvention shall also be classified as works performed
through consumer contribution, deposit work, capital subsidy or grant.
25.4 The expenses on such capital expenditure shall be treated as follows:
a) Normative O&M expenses as specified in these Regulations shall be allowed;
b) The debt-to-equity ratio shall be considered in accordance with Regulation 26, after deducting the amount of
financial support provided through consumer contribution, deposit work, capital subsidy, or grant;
c) Depreciation to the extent of works performed through consumer contribution, deposit work, capital subsidy,
or grant shall not be allowed as specified in Regulation 30;
d) Provisions related to return on equity, as specified in Regulation 27, shall not be applicable to the extent of
financial support provided through consumer contribution, deposit work, capital subsidy, or grant;
e) Provisions related to interest on loan capital, as specified in Regulation 28, shall not be applicable to the
extent of financial support provided through consumer contribution, deposit work, capital subsidy, or grant.
26. Debt to Equity Ratio
26.1 In the case of Existing Projects, debt to equity ratio allowed by the Commission for the determination of tariff for
the period ending shall be considered:
Provided that in case of retirement or replacement or De-capitalisation of the assets, the equity capital approved
as mentioned above, shall be reduced to the extent of 30% (or actual equity component based on documentary
evidence, if it is lower than 30%) of the original cost of such assets:
Provided further that in case of retirement or replacement or De-capitalisation of the assets, the debt capital
approved as mentioned above, shall be reduced to the extent of the outstanding debt component based on
documentary evidence, or the normative loan component, as the case may be, of the original cost of such assets.
26.2 For New Projects, the debt-equity ratio as on the Date of Commercial Operation shall be 70:30 of the amount of
capital cost approved by the Commission under Regulation 23, after prudence checks for determination of tariff:
Provided that where equity actually deployed is less than 30% of the capital cost of the capitalized asset, the
actual equity shall be considered for determination of tariff:
Provided also that if the equity actually deployed is more than 30% of the capital cost, equity in excess of 30%
shall be treated as a normative loan for the Licensee for determination of tariff:
Provided also that the Distribution Licensee or Transmission Licensee or Generating Company shall submit
documentary evidence for the actual deployment of equity and explain the source of funds for the equity:
Provided also that the equity invested in foreign currency shall be designated in Indian rupees on the date of each
investment:
Provided further that the premium, if any, raised by the Distribution Licensee or Transmission Licensee or
Generating Company while issuing share capital and investment of internal resources created out of its free
reserves, for the funding of the scheme, shall be reckoned as paid up capital for the purpose of computing return
on equity, provided such premium amount and internal resources are actually utilized for meeting the capital
expenditure of the transmission system or the distribution system, and are within the ceiling of 30% of capital
cost approved by the Commission.
26.3 Any expenditure incurred or projected to be incurred on or after April 1, 2026, as may be admitted by the
Commission, as additional capital expenditure for determination of tariff, and renovation and modernisation
expenditure for life extension shall be serviced in the manner specified in this Regulation.
27. Return on Equity (RoE)
27.1 Return on Equity shall be computed on the paid-up equity capital determined in accordance with Regulation 26
for the assets put to use.
Provided that Return on Equity shall be allowed in two parts, i.e., Base Return on Equity and Additional Return
on Equity for Distribution Licensees of the UT of Jammu & Kashmir and the UT of Ladakh.
Provided also that in case of Generation Company and Transmission Licensee the Return on Equity shall be
allowed as Base Return on Equity only.
27.2 The Base Return on Equity for the Distribution Wires Business and Retail Supply Business of the Distribution
Licensee shall be allowed on the equity capital determined in accordance with Regulation 26 and Regulation 50
for the assets put to use at base rate of fourteen (14%) per cent per annum.
27.3 The Base Return on Equity for the Generating Company and Transmission Licensee shall be allowed on the
equity capital determined at the rate of fourteen (14%) per cent per annum.
27.4 Additional Return on Equity (RoE) for Distribution Licensees: The Additional Return on Equity (RoE) of
1.5% shall be allowed at the time of true-up subject to the following: -
i. If the Meterisation of unmetered domestic consumers is within Timelines specified under Central
Government Schemes or through directives issued by this Commission an Additional RoE of 0.50% shall be
allowed.
ii. If the actual Repairs and Maintenance expenses in a year are more than 95% of the approved Repairs and
Maintenance expenses for that year, an Additional Return on Equity of 0.50% shall be allowed.
iii. Further, an Additional RoE of 0.5% shall be allowed at the discretion of the Commission on compliance of
directives issued by this Commission through Tariff Order or Suo-Moto proceedings.
28. Interest and finance charges on Loan capital and Security Deposit
28.1 The loans arrived at in the manner indicated in Regulation 26 on the assets put to use, shall be considered as
gross normative loans for the calculation of interest on the loan:
Provided that interest and finance charges on capital works in progress shall be excluded:
Provided further that in case of De-capitalisation or retirement or replacement of assets, the loan capital shall be
reduced to the extent of the outstanding loan component of the original cost of the de-capitalized or retired or
replaced assets, based on documentary evidence.
.
28.2 The normative loan outstanding as on April 1, 2026, shall be worked out by deducting the cumulative repayment
as admitted by the Commission up to March 31, 2026, from the approved gross normative loan.
28.3 Notwithstanding any moratorium period availed by the Distribution Licensee or Transmission Licensee or
Generating Company, as the case may be, the repayment of the loan shall be considered from the first year of
commercial operation of the project and shall be equal to the annual depreciation allowed in accordance with
Regulation 30.
28.4 The rate of interest shall be the weighted average rate of interest calculated on the basis of the actual loan
portfolio of the previous year after providing appropriate accounting adjustment for interest capitalised:
Provided also that if there is no actual loan for a particular Year but the normative loan is still outstanding, the
last available weighted average rate of interest for the actual loan shall be considered:
Provided further that if the Transmission Licensee or the Distribution Licensee or Generating Company, as the
case may be does not have actual loan, then one (1) Year State Bank of India (SBI) MCLR / any replacement
thereof as notified by RBI for the time being in effect applicable for one (l) Year period, as may be applicable as
on 1st April of the relevant Year plus 100 basis points shall be considered as the rate of interest for the purpose of
allowing the interest on the normative loan.
28.5 The interest on the loan shall be calculated on the normative average loan of the Year by applying the weighted
average rate of interest:
Provided that at the time of truing up, the normative average loan of the Year shall be considered on the basis of
the actual asset capitalisation approved by the Commission for the Year.
28.6 The Distribution Licensee or Transmission Licensee or Generating Company, shall make every effort to re
finance the loan as long as it results in net savings on interest, and in that event the costs associated with such re
financing shall be borne by the beneficiaries and the net savings on interest shall be shared between the
beneficiaries and the Distribution Licensee, as the case may be, in the ratio of 1:2.
Provided that the changes to the terms and conditions of the loans shall be reflected from the date of such
refinancing.
28.7 The above interest computation shall exclude the interest on the loan amount, normative or otherwise, to the
extent of the capital cost funded by consumer contribution, deposit work, capital subsidy or grant, carried out by
the Distribution Licensee or Transmission Licensee or Generating Company.
28.8 The finance charges incurred for obtaining loans from financial institutions for any Year shall be allowed by the
Commission at the time of Truing-up, subject to prudence check
28.9 The excess interest during construction on account of time and/or cost overrun as compared to the approved
completion schedule and capital cost or on account of excess drawal of the debt funds disproportionate to the
actual requirement based on Scheme completion status, shall be allowed or disallowed partly or fully on a case
to-case basis, after prudence check by the Commission:
Provided that where the excess interest during construction is on account of delay attributable to an agency or
contractor or supplier engaged by the Distribution Licensee or Transmission Licensee or Generating Company,
any liquidated damages recovered from such agency or contractor or supplier shall be taken into account for
computation of capital cost:
Provided further that the extent of liquidated damages to be considered shall depend on the amount of excess
interest during construction that has been allowed by the Commission.
28.10 Interest shall be allowed on the amount held as security deposit by the Distribution Licensee, held in cash from
Retail Consumers at the Rate, as per provisions given in prevailing Supply Code Regulations, as on 1st April of
the Financial Year in which the Petition is filed:
Provided that at the time of truing-up, the interest on the amount of security deposit for the Year shall be
considered on the basis of the actual interest paid by the Licensee during the Year, subject to prudence check by
the Commission.
29. Foreign Exchange Rate Variation (FERV)
29.1 The Distribution Licensee or Transmission Licensee or Generating Company may hedge foreign exchange
exposure in respect of the interest on foreign currency loan and repayment of foreign loan acquired for the
transmission system or distribution system, in part or in full at its discretion.
29.2 The Distribution Licensee or Transmission Licensee or Generating Company shall be permitted to recover the
cost of hedging of foreign exchange rate variation corresponding to the foreign debt, in the relevant Year as an
expense, subject to prudence check by the Commission, and extra rupee liability corresponding to such variation
shall not be allowed against the hedged foreign debt.
29.3 To the extent that the foreign exchange exposure is not hedged, any extra rupee liability towards interest payment
and loan repayment corresponding to the foreign currency loan in the relevant Year shall be allowed subject to
prudence check by the Commission.
30. Depreciation
30.1 The value base for the purpose of depreciation shall be the capital cost of the asset admitted by the Commission:
Provided that the depreciation shall be allowed after reducing the approved original cost of the retired or replaced
or decapitalized assets:
Provided also that no depreciation shall be allowed on the assets financed through consumer contribution, deposit
work, capital subsidy, or grant.
30.2 The salvage value of the asset shall be considered as 10% and depreciation shall be allowed up to a maximum of
90% of the capital cost of the asset.
30.3 Land other than the land held under the lease shall not be a depreciable asset and its cost shall be excluded from
the capital cost while computing the depreciable value of the assets.
30.4 The depreciation for a Distribution Licensee or Transmission Licensee or Generating Company shall be
calculated annually, based on the Straight-Line Method, over the Useful Life of the asset at rates specified in
Appendix–I of the Regulations for assets declared in commercial operation after 31st March 2026.
Provided that the balance depreciable value as on 31st March 2026 closing after a period of 15 years from the
date of commercial operation shall be spread over the balance useful life of the assets.
30.5 In the case of existing assets, the balance depreciable value as on April 1, 2026, shall be worked out by deducting
the cumulative depreciation as admitted by the Commission up to March 31, 2026, from the gross depreciable
value of the assets. The rate of depreciation shall be continued to be charged at the rate specified in Appendix-I
till cumulative depreciation reaches 70%. Thereafter, the remaining depreciable value shall be spread over the
remaining life of the asset such that maximum depreciation does not exceed 90%.
30.6 The depreciation shall be chargeable from the first year of commercial operations. In case of projected
commercial operation of the assets during the Year, depreciation shall be computed based on the average of
opening and closing value of assets:
Provided that depreciation shall be re-calculated during truing-up for assets capitalised at the time of truing up of
each Year of the Control Period, based on documentary evidence of asset capitalised by the Applicant and
reflected in the Audited Account, subject to the prudence check of the Commission.
30.7 The Distribution Licensee or Transmission Licensee or Generating Company shall provide the list of assets
added during each Year of Control Period and list of assets completing 90% of depreciation in the Year along
with Petition for annual performance review, true-up and tariff determination for ensuing Year.
31. Interest on Working Capital
31.1 The norms for working capital for Generating Company shall be as specified in Chapter 4 of these Regulations.
31.2 The norms for working capital for Transmission Licensee shall be as specified in Chapter 5 of these Regulations.
31.3 The norms for working capital for Distribution Wires Business and Retail Supply Business shall be as specified
in Chapter 6 and Chapter 7 of these Regulations.
31.4 The interest on working capital shall be a payable on normative basis notwithstanding that the Licensee has not
taken a working capital loan from any outside agency or has exceeded the working capital loan based on the
normative figures.
31.5 The rate of interest on working capital shall be equal to one (l) Year State Bank of India (SBI) MCLR / any
replacement thereof as notified by RBI for the time being in effect applicable for one (l) Year period, as may be
applicable as on 1st April of the Financial Year in which the Petition has filed plus 200 basis points.
32. Tax on income
32.1 The Commission in its MYT Order shall provisionally approve Income Tax payable for each Year of the Control
Period, if any, based on the actual income tax paid, including cess and surcharge on the same, if any, as per the
latest audited accounts available for the Distribution Licensee or Transmission Licensee or Generating Company,
subject to prudence check.
32.2 Variation between Income Tax actually paid, including cess and surcharge on the same, if any, and approved, if
any, on the income stream of the business of the Distribution Licensee or Transmission Licensee or Generating
Company shall be reimbursed to/recovered from the Distribution Licensee or Transmission Licensee or
Generating Company, based on the documentary evidence submitted at the time of truing up of each Year of the
Control Period, subject to prudence check.
32.3 Under-recovery or over-recovery of any amount from the Consumers on account of such tax having been passed
on to them shall be adjusted every Year on the basis of income-tax assessment under the Income-Tax Act, 1961,
as certified by the statutory auditors. The Distribution Licensee or Transmission Licensee or Generating
Company may include this variation in its truing up Petition:
Provided that tax on any income stream other than the core business shall not be a pass-through component in
tariff and tax on such other income shall be borne by the Distribution Licensee or Transmission Licensee or
Generating Company.
33. Rebate
33.1 The rebate for early payment earned by the Distribution Licensee or Transmission Licensee or Generating
Company shall be considered under Non-Tariff Income for the Distribution Licensee or Transmission Licensee
or Generating Company.
33.2 All rebates/incentives provided by the Generating Company or Transmission Licensee to the beneficiaries shall
be allowed as an expense for the Generating Company or Transmission Licensee, as the case may be.
33.3 Penalties paid, if any, by the Distribution Licensee or Transmission Licensee or Generating Company shall not
be allowed as an expense for the Generating Company or Licensee.
34. Bad and doubtful debts.
34.1 The Commission may allow a provision for bad and doubtful debts up to one percent (1%) of the estimated
annual revenue of the distribution licensee, subject to the actual writing of bad debts by it in the previous years.
Provided further that where the total amount of such provisioning allowed in previous years for bad and doubtful
debts exceeds five (5) percent of the receivables at the beginning of the year, no such appropriation shall be
allowed which would have the effect of increasing the provisioning beyond the said maximum.
35. Late Payment Surcharge
35.1 In case the payment of bills of generating company or transmission charges by a beneficiary is delayed beyond a
period of 45 days from the date of presentation of bills, a late payment surcharge shall be levied on the billed
amount in accordance with the prevalent CERC Tariff Regulations. The Distribution Licensee shall claim the
late payment surcharge from the consumers as per norms specified by the Commission in the tariff order.
35.2 The delayed payment charge earned and the interest on delayed payment surcharge earned by the Generating
Company, Transmission Licensee or the Distribution Licensee shall not be considered under its Non-Tariff
Income.
35.3 The delayed payment charge paid or payable by the Distribution Licensee to the Generating Company or the
Transmission Licensee shall not be allowed as an expense for such Distribution Licensee.
35.4 All payments by a Distribution Licensee to a Generating Company for power procured from it or by a user of a
transmission system to a Transmission Licensee shall be first adjusted towards Delayed Payment Charge and
thereafter, towards monthly charges, starting from the longest overdue bill.
36. Income from Other Business
36.1 The revenue from other business shall be treated as income to the extent authorised by the Commission under
Sections 41 and 51 of the Electricity Act, 2003.
36.2 Where the Transmission Licensee or Distribution Licensee is engaged in any Other Business, the income from
such business shall be shall be calculated by the Commission appropriately:
Provided that the Licensee shall follow a reasonable basis for allocation of all joint and common costs between
the transmission or distribution business and the Other Business and prepare Accounting Statements accordingly.
Provided further that where the sum total of the direct and indirect costs of such Other Business exceeds the
revenues from such Other Business, no amount shall be allowed to be added to the Aggregate Revenue
Requirement of the Licensee on account of such Other Business.
37. Operations & Maintenance Expenses (O&M) expenses
37.1 The Operation and Maintenance expenses for the Distribution Licensee or Transmission Licensee or
Generating Company shall be computed in accordance with following provisions.
37.2 Operation and Maintenance (O&M) expenses shall comprise of the following:
a) Employee (EMP) expenses -salaries, wages, pension contribution and other employee costs;
b) Administrative and General (A&G) expenses including insurance charges, if any; and
c) Repairs and Maintenance (R&M) expenses.
37.3 O&M expenses for the nth Year of the Control Period shall be approved based on the formula given below:
= ( ) x (1 + ) + Growth Factor(G) + Provisions
Where,
– Employee expenses for the nth Year;
– Average of the Employee expenses for (n-2)th, (n-3)th, and (n-4)th year, excluding any one-time
expenses;
[Illustration: To find out the EMPn, (EMPfor FY 2026-27), the EMPn-1 (i.e. EMPfor FY 2025-26) will be the average of
employee expenses of past three years (i.e. EMPfor FY 2024-25, EMPfor FY 2023-24, and EMPfor FY 2022-23 ). The
determined EMPfor FY 2026-27 will be considered during ARR and Tariff for FY 2026-27 as well as during true-up
of FY 2026-27, as normative employee expenses for FY 2026-27]
– is the average increase in Consumer Price Index (CPI) for immediately preceding three (3) financial
Years before the Year for which the expenses are determined;
Growth Factor(G) – Shall be Year-on-Year/CAGR/any escalation factor considered for projecting the employee
expenses considering future recruitment/retirement plans or requirement of additional manpower;
Provision: Provision for expenses beyond control of the Distribution Licensee or Transmission Licensee or
Generating Company and expected one-time expenses as specified above for any particular year.
b) Repairs and Maintenance(R&M) Expense
Repairs and Maintenance expense shall be calculated based on average of Actual R&M expenses incurred for
previous years escalated by Wholesale Price Index (WPI) as per the following formula:
= ( ) x (1 + )
Where,
– Repair and Maintenance expenses for the nth Year;
– Average of the Repair and Maintenance expenses of Distribution Licensee or Transmission Licensee
or Generating Company for the (n-2)th, (n-3)th, and (n-4)th Year;
[Illustration: For R&Mn (i.e. R&Mfor FY 2026-27), the R&Mn-1 (i.e. R&Mfor FY 2025-26) will be the average of actual
R&Mfor FY 2024-25, R&Mfor FY 2023-24, and R&Mfor FY 2022-23.]
– is the average increase in the Wholesale Price Index (CPI) for immediately preceding three (3)
financial Years before the Year for which the expenses are determined;
c) Administrative and General Expense
A&G expense shall be computed on average of actual A&G expenses of previous years escalated by wholesale
price index (WPI) and adjusted by provisions for confirmed initiatives (like IT initiatives as proposed by the
Distribution Licensee or Transmission Licensee or Generating Company and validated by the Commission) or
other expected one-time expenses, and shall be governed by following formula:
=( ) x (1 + ) + Provision
Where,
– Administrative and General expenses for the nth Year;
– Average of the Administrative and General expenses for (n-2)th, (n-3)th, and (n-4)th Year, excluding
any one-time expenses;
[Illustration: For A&Gfor FY 2026-27, the A&Gn-1 (i.e. A&Gfor FY 2025-26) will be the average of actual A&Gfor FY 2024-25,
A&Gfor FY 2023-24, and A&Gfor FY 2022-23.]
– is the average increase in the Wholesale Price Index (CPI) for immediately preceding three (3)
Years before the Year for which the expenses are determined;
Provision: Cost for any new initiatives or other one-time expenses as proposed and validated by the Commission
d) Terminal liabilities
Terminal liabilities of employees of the Distribution Licensee or Transmission Licensee or Generating Company
including pension expenses etc. shall be approved as per actuals submitted by the Distribution Licensee or
Transmission Licensee or Generating Company, subject to prudence check or be established through actuarial
studies. Additionally, any variation due to changes recommended by the pay commission shall be allowed
separately by the Commission, subject to prudence check.
37.4 For the purpose of estimation under Business Plan, the same value of factors – and
shall be used for all three Years of the Control Period. However, the Commission shall consider the actual values of
the factors – and during the ARR and truing up exercise for the Year for which ARR and
true up is being carried out.
38. Regulatory Asset
38.1In case of abnormal variation in income or expenses resulting in substantial revenue gap, full recovery of which
in a single year is not feasible, the Commission may allow creation of Regulatory Asset as per guidelines
provided in clause 8.2.2 of the Tariff Policy 2016 and its amendments and suitably provide provision for its
recovery through tariff or as a surcharge within a period not exceeding seven years. Further, such Regulatory
Asset, if created, shall not be more than three percent of the approved Annual Revenue Requirement, except
exceptional cases. Amortisation of the regulatory asset so created shall be dealt in accordance with the Tariff
Policy, provided that the Commission may allow a carrying cost on Regulatory Asset at such rates as the
Commission may deem fit.
Chapter 4: Generation
39. Applicability
39.1The Regulations contained in this Chapter shall apply for determination of tariff for supply of electricity to
Distribution Licensee from a Generating Station located in the UT of Jammu & Kashmir & the UT of Ladakh.
39.2 The Commission shall be guided by the terms and conditions contained in this Chapter in determining the tariff
for supply of electricity by a Generating Company to a Distribution Licensee in the following cases:
a) Where such tariff is pursuant to a power purchase agreement or arrangement entered into subsequent to the
date of effectiveness of these Regulations; or
b) Where such tariff is pursuant to a power purchase agreement or arrangement entered into prior to the date of
effectiveness of these Regulations and either the Commission has not previously approved such
agreement/arrangement or the agreement/arrangement envisages that the tariff shall be based on the Tariff
Regulations notified by the Commission; or
c) Where the Distribution Licensee is engaged in the business of generation of electricity, in determining the
price at which electricity is supplied by the Generating Station of the Distribution Licensee to its Retail
Supply Business.
39.3 Notwithstanding anything contained in this Chapter 4, the Commission shall adopt the tariff if such tariff has
been determined through transparent process of bidding in accordance with the guidelines issued by the Central
Government.
40. Components of Tariff
40.1The Aggregate Revenue Requirement (or annual fixed cost (AFC) as mentioned in this chapter) for a Generation
Company shall comprise of the following components:
a. Return on Equity;
b. Interest and finance charges on Loan;
c. Depreciation;
d. Interest on Working Capital;
e. Operation and maintenance expenses;
f. Income tax
Less:
g. Non-Tariff Income;
h. Income from Other Business, to the extent specified in these Regulations
40.2 The treatment of each of the above components shall be in accordance with the provisions given in these
Regulations, in the Chapter 3.
41. Norms of Working Capital for Generating Company
44.1The Hydro Generating Company shall be allowed interest on the estimated level of working capital for the
Financial Year computed as per the following components: (i) Receivables equivalent to 45 days of annual fixed
cost, (ii) Maintenance spares @ 15% of operation and maintenance expenses including security expenses; and
(iii) Operation and maintenance expenses, including security expenses for one month.
42. Non-Tariff Income
42.1.The Generating Company shall submit full details of its forecast of Non-Tariff Income to the Commission in
such form as may be stipulated by the Commission.
42.2.The Non-Tariff Income shall include:
a) Income from rent of land or buildings;
b) Income from sale of scrap;
c) Income from investments;
d) Income from investment of Contingency Reserves
e) Income from sale of ash/rejected coal;
f) Interest income on advances to suppliers/contractors;
g) Net Income from supply of electricity by the Generating Company to the housing colonies of its operating staff and
supply of electricity by the Generating Company for construction works at the generating Station, after adjusting the
expenses incurred for supply of such electricity;
h) Income from rental from staff quarters;
i) Income from rental from contractors;
j) Income from hire charges from contactors and others;
k) Income from advertisements;
l) Income from sale of tender documents;
m) Any other Non-Tariff Income:
43. Recovery of Aggregate Revenue Requirement for a Generating Company
43.1 The tariff for the supply of electricity from a hydro generating station shall comprise a capacity charge and an
energy charge to be derived in the manner as specified in these Regulations, as may be applicable, for recovery of the
aggregate revenue requirement or annual fixed cost consisting of the components referred to in Regulation 40 of these
regulations.
43.2 The annual fixed cost (or aggregate revenue requirement) of a hydro generating station shall be recovered on a
monthly basis under capacity charge and energy charge, which shall be payable by the beneficiaries in proportion to
their respective allocation in the saleable capacity of the generating station, i.e., in the capacity excluding the free
power.
43.3 The capacity charge payable to a hydro generating station for a calendar month shall be:
AFC x 0.5 x (NDM / NDY) x (PAFM / NAPAF) (in Rupees)
Where, AFC = Annual fixed cost specified for the year, in Rupees
NAPAF = Normative plant availability factor in percentage
NDM = Number of days in the month
NDY = Number of days in the year
PAFM = Plant availability factor achieved during the month, in percentage
The PAFM shall be computed in accordance with the following formula:
Where,
AUX = Normative auxiliary energy consumption in percentage
DCi = Declared capacity (in ex-bus MW) for the ith day of the month, which the station can deliver for at least
three (3) hours, as certified by the nodal load dispatch centre after the day is over.
IC = Installed capacity (in MW) of the complete generating station
N = Number of days in the month
43.4 The energy charge shall be payable by every beneficiary for the total energy scheduled to be supplied to the
beneficiary, excluding free energy, if any, during the calendar month, on the ex-bus basis, at the computed
energy charge rate. The total energy charge payable to the generating company for a month shall be:
Energy Charges = (Energy charge rate in Rs. / kWh) x {Scheduled energy (ex-bus) for the month in kWh} x (100
– FEHS) / 100
43.5 Energy charge rate (ECR) in Rupees per kWh on ex-power plant basis, for a hydro generating station, shall
be determined up to three decimal places based on the following formula:
ECR = AFC x 0.5 x 10 / {DE x (100 – AUX) x (100 – FEHS)}
Where,
DE = Annual design energy specified for the hydro generating station.
FEHS = Free energy for State, in per cent, if any.
Provided that in case actual generation from a hydro generating station is less than the design energy on account
of hydrology factor for continuous four years, the generating company may approach the Commission with
documentary evidence, during true-up application, for recovery of such shortfall in energy charges, which may
be approved by the Commission after prudence check.
Provided that in case the energy charge rate (ECR) for a hydro generating station, computed as per above
formula, exceeds one hundred and thirty paise per kWh, and the actual saleable energy in a year exceeds {DE x
(100- AUX) x (100 - FEHS) /10000} MWh, the energy charge for the energy in excess of the above shall be
billed at one hundred and thirty paise per kWh only.
43.6 The fixed cost of a pumped storage hydro generating station shall be computed on an annual basis, based on
norms specified under these regulations, and recovered on a monthly basis as a capacity charge. The capacity
charge shall be payable by the beneficiaries in proportion to their respective allocation in the saleable capacity
of the generating station;
43.7The capacity charge payable to a pumped storage hydro generating station for a calendar month shall be:
(AFC x NDM / NDY) (In Rupees), if actual Generation during the month is ≧ 75 % of the Pumping Energy
consumed by the station during the month and {(AFC x NDM / NDY) x (Actual Generation during the month
during peak hours/ 75% of the Pumping Energy consumed by the station during the month) (in Rupees)}, if
actual
Generation during the month is < 75 % of the Pumping Energy consumed by the station during the month.
Where,
AFC = Annual fixed cost specified for the year, in Rupees
NDM = Number of days in the month
NDY = Number of days in the year:
Provided that there would be adjustments at the end of the year based on actual generation and actual pumping
energy consumed by the station during the year.
The energy charge shall be payable by every beneficiary for the total energy scheduled to be supplied to the
beneficiary in excess of the design energy plus 75% of the energy utilized in pumping the water from the lower
elevation reservoir to the higher elevation reservoir, at a flat rate equal to the average energy charge rate of 20
paise
per kWh, if any, during the calendar month, on ex power plant basis.
Energy charge payable to the generating company for a month shall be:
= 0.20 x {(Scheduled energy (ex-bus) for the month in kWh- Design Energy for the month (DEm)) + 75% of
the energy utilized in pumping the water from the lower elevation reservoir to the higher elevation reservoir of
the month)}/ 100.
Where,
DEm = Design energy for the month specified for the hydro generating station, in MWh:
Provided that in case the Scheduled energy in a month is less than the Design Energy for the month plus 75%
of the energy utilized in pumping the water from the lower elevation reservoir to the higher elevation reservoir of
the month, then the energy charges payable by the beneficiaries shall be zero;
Provided that if the energy for the pumping of water from lower reservoir to upper reservoir is arranged by the
generating company, the charges for the pumping energy till the ex-Bus of the generating station shall be payable
by the beneficiaries in proportion to their respective allocation in the saleable capacity of the generating station.
43.8The payment of Capacity Charge and Energy Charge for Thermal Generating Stations and Supplementary
Energy Charge with respect to Thermal Generating Stations shall be as per the prevailing CERC Regulations.
43.9 Variations between actual net injection and scheduled net injection for the generating stations, and variations
between actual net drawl and scheduled net drawl for the beneficiaries shall be treated as their respective deviations
and charges for such deviations shall be governed by the prevailing intra-state (Deviation Settlement Mechanism and
Related matters) Regulations published by the Commission.
Provided that the Deviation Charges paid or earned by the Generating Companies in accordance with applicable
intra-state (Deviation Settlement Mechanism and Related matters) Regulations, shall not be recoverable/adjusted
from the Beneficiaries through Tariff:
44. Norms of operation
44.1The norms of operation for a Generating Station including Normative annual plant availability factor (NAPAF),
Normative Annual Plant Load Factor (NAPLF), Gross Station Heat Rate, Auxiliary Consumption etc. shall be in
accordance with these Regulations, as given below.
44.2 Normative Annual Plant Availability Factor (NAPAF):
(1) The following normative annual plant availability factor (NAPAF) shall apply to hydro generating station:
(a) Storage and Pondage type plants with head variation between Full Reservoir Level (FRL) and Minimum
Draw Down Level (MDDL) of up to 8%, and where plant availability is not affected by silt: 90%;
(b) In the case of storage and pondage type plants with head variation between full reservoir level and minimum
draw down level is more than 8% and when plant availability is not affected by silt, the month-wise peaking
capability as provided by the project authorities in the DPR (approved by CEA or the State Government) shall
form the basis of fixation of NAPAF;
(c) Pondage type plants where plant availability is significantly affected by silt: 85%.
(d) Run-of-river generating stations: NAPAF to be determined plant-wise, based on 10-day design energy data,
moderated by past experience where available/relevant.
(e) A further allowance may be made by the Commission while determining the NAPAF under special circumstances i.e.
abnormal silt problem or other operating conditions and known plant limitations.
(f) When head variation between FRL and MDDL is more than 8%, following multiplying factors shall be applied:
Multiplying factor for head variation = (Head at MDDL/Rated Head) x 0.5+0.52
44.3 In the case of pumped storage hydro generating stations, the quantum of electricity required for pumping
water from the down-stream reservoir to the up-stream reservoir shall be arranged by the beneficiaries duly taking into
account the transmission and distribution losses up to the bus bar of the generating station. In return, beneficiaries
shall be entitled to an equivalent energy of 75% of the energy utilized in pumping the water from the lower elevation
reservoir to the higher elevation reservoir from the generating station during peak hours, and the generating station
shall be under obligation to supply such quantum of electricity during peak hours:
Provided that in the event of the beneficiaries failing to supply the desired level of energy during off-peak hours, there
will be a pro-rata reduction in their energy entitlement from the station during peak hours:
Provided further that the beneficiaries may assign or surrender their share of capacity in the generating station, in part
or in full, or the capacity may be reallocated by the Central Government, and in that event, the owner or assignee of
the capacity share shall be responsible for arranging the equivalent energy to the generating station in off-peak hours,
and be entitled to corresponding energy during peak hours in the same way as the original beneficiary was entitled.
Provided that the Generation Company viz. Jammu & Kashmir Power Development Corporation Limited
(JKPDCL) shall conduct a detailed study to ascertain the plant-wise NAPAF for the twenty-two (22) Hydro
Electric Power Stations (HEPs) and submit the same before the Commission under a separate petition. Based on
the study report, the Commission shall determine the plant-wise NAPAF for the HEPs of JKPDCL; until then the
NAPAF of 85% shall be considered.
Provided that the guidelines for calculation of NAPAF is laid down in Appendix-III to these Regulations.
44.4 Auxiliary Energy Consumption (AEC):
+-----+-----------------------------------+-----------------------------------+
| Type of Station | AFC | |
| | Installed Capacity above 200 MW | Installed Capacity up to 200 MW |
+=====+===================================+===================================+
| Surface | | |
| Rotating Excitation | 0.7% | 0.7% |
| Static | 1.0% | 1.2% |
| Underground | | |
| Surface | 0.9% | 0.9% |
| Rotating Excitation | 1.2% | 1.3% |
+-----+-----------------------------------+-----------------------------------+
Chapter 5: Intra-State Transmission
45. Applicability
45.1The Regulations contained in this Chapter shall apply for the determination of tariff for access and use of the
intra- State transmission system in the UT of Jammu & Kashmir and the UT of Ladakh.
46. Components of tariff
46.1The annual transmission charges for each Financial Year of the Control Period shall provide for the recovery of
the Aggregate Revenue Requirement of the Transmission Licensee for the respective Financial Year of the
Control Period, as reduced by the amount of Non-Tariff Income, income from Other Business and short-term
open access charges as approved by the Commission:
Provided that in case of competitively awarded transmission system projects in pursuance of Section 63 of the
Act and in accordance with guidelines for competitive bidding for transmission, the annual transmission charges
shall be as per the annual Transmission Service Charges (TSC) quoted by such competitively awarded
transmission projects.
Provided also that all new Intra-State Transmission Project costing above the threshold limit as decided by the
Commission and meeting other conditions as laid down in Appendix-IV shall be developed through Tariff Based
Competitive Bidding (TBCB).
46.2 The annual transmission charges of the Transmission Licensee shall be determined by the Commission on the
basis of an application for determination of Aggregate Revenue Requirement made by the Transmission Licensee
in accordance with Chapter 2 of these Regulations.
46.3 The Aggregate Revenue Requirement for a Transmission Licensee shall comprise the following components:
a) Return on Equity;
b) Depreciation;
c) Interest and Finance Charges on Loan Capital;
d) Interest on Working Capital and deposits from Transmission System Users;
e) Operation and maintenance expenses;
f) Income Tax
Less:
g) Income from Open Access Charges;
h) Non-Tariff Income;
i) Income from Other Business, to the extent specified in these Regulations:
46.4 The treatment of each of the above components shall be in accordance with these Regulations as given under the
Chapter 3.
Provided that prior period income/expenses shall be allowed by the Commission at the time of truing up based on
audited accounts, on a case-to-case basis, subject to prudence check.
47. Norms of Working Capital for Transmission Licensee
47.1The Transmission Licensee shall be allowed interest on the estimated level of working capital for the Financial
Year computed as per the following components:
(i) Receivables equivalent to 45 days of annual fixed cost,
(ii) Maintenance spares @ 15% of operation and maintenance expenses including security expenses; and
(iii) Operation and maintenance expenses, including security expenses for one month.
48. Non-Tariff Income
48.1.The Non-Tariff Income for a Transmission Licensee shall include:
a) Income from rent of land or buildings;
b) Income from sale of scrap;
c) Income from investments;
d)Income from investments of Contingency Reserves;
e) Interest income on advances to suppliers/contractors;
f) Income from rental from staff quarters;
g) Income from rental from contractors;
h) Income from hire charges from contactors and others;
i) Supervision charges for capital works;
j) Income from advertisements;
k) Income from sale of tender documents;
l) Any other Non-Tariff Income
49. Norms of Operations for Transmission Licensee
49.1The norms of operations for a Transmission Licensee shall be according to the Normative Annual Transmission
System Availability Factor (NATAF).
49.2 (a) For recovery of Annual Fixed Cost, NATAF shall be as under:
(1) AC system: 98.00%;
(2) HVDC bi-pole links 95.00% and HVDC back-to-back stations: 95.00%:
Provided that the normative annual transmission availability factor of the HVDC bi-pole links shall be 85% for
the first twelve months from the date of commercial operation.
(b) For Incentive, NATAF shall be as under:
(1) AC system: 98.50%;
(2) HVDC bi-pole links and HVDC back-to-back Stations: 97.50%:
Provided that no Incentive shall be payable for availability beyond 99.75%:
Provided further that for AC, actual outage hours shall be considered for computation of availability up to two
tripping per year. After two tripping in a year, for every tripping, an additional 12 hours of outage shall be
considered in addition to the actual outage hours:
Provided also that in case of an outage of a transmission element affecting evacuation of power from a generating
station, outage hours shall be multiplied by a factor of 2.
49.3 Computation and Payment of Transmission Charge for Intra-State Transmission System:
(1) The fixed cost of the transmission system forming part of the transmission system shall be computed on an
annual basis, in accordance with norms contained in these regulations, aggregated as appropriate, and recovered
on a monthly basis as transmission charge from the users, who shall share these charges in the manner specified
in clause (2) of this Regulation.
(2) The Transmission charge (inclusive of incentive) payable for a calendar month for the transmission system or
part shall be computed for each region separately for the AC and DC system as under:
For AC system:
a) For TAFMn≦98.00%
AFC x (NDMn/NDY) x (TAFMn/98.00%)
b) For TAFMn: 98.00%<TAFMn< 98.50%
AFC x (NDMn/NDY) x (1)
c) For TAFMn: 98.50%
AFC x (NDMn/NDY) x (TAFM/98.50%)
d) For TAFMn> 99.75%
AFC x (NDMn/NDY) x (99.75%/98.50%)
Where,
AFC = Annual Fixed Cost specified for the year in Rupees
NDMn = Number of days in nth month
NDY = Number of days in the year
TAFMn = Transmission System availability factor for the nth month, in percent computed in accordance with
Appendix IV.
For HVDC bi-pole links and HVDC back-to-back Stations:
TC1= AFC x (NDM1 / NDY) x (TAFM1/NATAF)
ss
TC2 = AFC x (NDM2 / NDY) x (TAFM2/NATAF) – TC1
TC3 = AFC x (NDM3 / NDY) x (TAFM3/NATAF) - (TC1+TC2)
TC4 = AFC x (NDM4 / NDY) x (TAFM4/NATAF) - (TC1+TC2+TC3)
....
TC11 = AFC x (NDM11/NDY) x (TAFM11/NATAF) - (TC1+TC2+....+TC10)
TC12= AFC x (TAFY/NATAF) - (TC1+TC2+....+TC11);
If,
(i) TAFM: 95.00%< TAFM < 97.50%, then TAFM=NATAF;
(ii) TAFM: 97.50%≦ TAFM ≦ 99.75%, then NATAF=97.50%; and
(iii) For TAFM ≧ 99.75%, then TAFM=99.75% and NATAF= 97.50%.
Where,
TCn = Transmission charges inclusive of incentive up to the nth month
AFC = Annual fixed cost specified for the year in rupees
NATAF = Normative Annual Transmission Availability Factor in percentage
NDMn = No of days up to the end of the nth month of the financial year
NDY = No. of days in the year
TAFMn. = Transmission availability factor up to the end of the nth month of the year in percentage computed in
accordance with Appendix -IV
TAFY = Transmission availability factor in per cent for the year
50. Transmission Loss
50.1The energy losses in the transmission system of the Transmission Licensee, as determined by the State Load
Despatch Centre, shall be borne by the Transmission System Users in proportion to their usage of the intra- State
transmission system.
51. Sharing of charges for Intra-State Transmission Network
51.1The Aggregate Revenue Requirement of the Transmission Licensee, as approved by the Commission, shall be
shared by all long-term users and medium-term users of the transmission system on a monthly basis in the ratio of
their respective “Allotted Transmission Capacity” to the total Allotted Transmission Capacity, in accordance with
the following formula:
= (Transmission ARR / 12) x ( /SCC)
Where,
= Annual Transmission Charges payable by the nth long-term user or medium-term user of the
transmission system;
Transmission ARR = Aggregate Revenue Requirement of the Transmission Licensee, determined in accordance
with these Regulations;
= Allotted Transmission Capacity by the nth long-term user or medium-term user of the transmission
system;
SCC = Sum of Allotted Transmission Capacity by all long-term users and medium-term users of the transmission
system:
Provided that the , shall be payable on a monthly basis by each long-term user or medium-term user of the
transmission system and shall be collected by the “State Transmission Utility (STU)”.
51.2 The short-term Open Access Consumers shall pay transmission charges on Rs/MW/day basis determined in
accordance with applicable Open Access Regulations, published by the Commission, as amended from time to
time.
51.3 75% of charges collected from the short-term Open Access Consumers shall be adjusted towards reduction in the
charges payable by the long-term and medium-term Open Access Consumers. The remaining 25% of the charges
collected from short-term Open Access users shall be retained by the Transmission Licensee.
52. Consequential Impact of any Government of India Scheme
52.1The consequential impact of any Government of India scheme for waiver/reduction of transmission charges,
incentives, and losses for any entity/ies, on the transmission charges payable by the other entities, shall be
addressed through separate Orders to be issued by the Commission from time to time.
Chapter 6: Distribution Wires Business
53. Separation of Accounts of Distribution Licensee
53.1Every Distribution Licensee shall segregate accounts for Distribution Wires Business and Retail Supply Business
and shall prepare an Allocation Statement. The wheeling charges pertaining to Distribution Wires Business of the
Distribution Licensee shall be determined by the Commission on the basis of these segregated accounts:
Provided that in case complete accounting segregation has not been done, the following Allocation Statement
shall be applicable:
Table 1: Allocation Statement for segregation of Distribution Wires Business and Retail Supply Business
+------------------------------------+---------------------+------------------------+
| Particulars | Wires Business (%) | Retail Supply Business (%) |
+====================================+=====================+========================+
| Power Purchase Expenses | 0% | 100% |
| Inter-State Transmission Charges | 0% | 100% |
| Intra-State Transmission Charges | 0% | 100% |
| Employee Expenses | 40% | 60% |
| Administration & General Expenses | 50% | 50% |
| Repair & Maintenance Expenses | 90% | 10% |
| Capital Cost | 90% | 10% |
| Depreciation | 90% | 10% |
| Interest on Long-term Loan Capital | 90% | 10% |
| Interest on working capital and on | | |
| consumer security deposits | 10% | 90% |
| Bad Debts Written off | 0% | 100% |
| Income Tax | 90% | 10% |
| Non-Tariff Income | 10% | 90% |
| Income from Other Business | 50% | 50% |
+------------------------------------+---------------------+------------------------+
Provided further that the above Allocation Statement shall be applied for all or any of the heads of expenditure
and revenue, where actual accounting separation has not been done between the Distribution Wires Business and
Retail Supply Business.
54. Applicability
54.1The Regulations contained in this Chapter shall apply to the determination of wheeling charges for usage of
distribution wires of a Distribution Licensee by a distribution system user, other than retail supply Consumers.
55. Aggregate Revenue Requirement for Distribution Wires Business
55.1The wheeling charges for Distribution Wires Business of the Distribution Licensee shall provide for the recovery
of the Aggregate Revenue Requirement, which shall comprise of the following:
a) Return on Equity;
b) Interest and finance charges on Loan;
c) Depreciation;
d) Interest on Working Capital and deposits from distribution system users;
e) Operation and maintenance expenses;
f) Income Tax;
Less:
g) Non-Tariff income;
h) Income from Other Business, to the extent specified in these Regulations:
Provided that Return on Equity, Interest on Loan Capital, Depreciation, Interest on Working Capital, Interest on
deposits from Consumers and distribution system users, and Income Tax for Distribution Wires Business shall be
allowed in accordance with the provisions specified in Chapter 3 of these Regulations:
Provided further that prior period income/expenses shall be allowed by the Commission at the time of truing up
based on audited accounts, on a case-to-case basis, subject to prudence check:
Provided also that all penalties and compensation payable by the Licensee to any party for failure to meet any
Standards of Performance or for damages, as a consequence of the orders of the Commission, Courts, Consumer
Grievance Redressal Forum, and Ombudsman, etc., shall not be allowed to be recovered through the Aggregate
Revenue Requirement:
Provided also that the Distribution Licensee shall maintain separate details of such penalties and compensation
paid or payable by the Licensee, if any, and shall submit them to the Commission along with its Petition.
56. Operation and Maintenance (O&M) expenses for Distribution Wires Business
56.1The Operation and Maintenance expenses for the Distribution Wires Business shall be computed in accordance
with these Regulations in the Chapter 3.
57. Norms of Working Capital for Distribution Wires Business
57.1The Distribution Licensee shall be allowed interest on the estimated level of working capital for the Distribution
Wires Business for the Financial Year, computed as follows:
a) O&M Expenses for one (1) month; plus
b) Maintenance spares at 40% of Repair and Maintenance (R&M) Expenses for one (1) month; plus
c) Receivables equivalent to two (2) months of the expected revenue from charges for use of distribution wires
at the prevailing tariff;
Less
d) Amount, if any, held as security deposits under clause (b) of sub-section (1) of Section 47 of the Act from
distribution system users except the security deposits held in the form of Bank Guarantees:
Provided that at the time of truing up for any Year, the working capital requirement shall be re-calculated on the
basis of the values of components of working capital approved by the Commission in the truing up.
58. Non-Tariff Income
58.1The amount of Non-Tariff Income relating to the Distribution Wires Business as approved by the Commission
shall be deducted from the Aggregate Revenue Requirement in determining the wheeling charges of the
Distribution Wires Business of the Distribution Licensee:
Provided that the Distribution Licensee shall submit full details of its forecast of Non-Tariff Income to the
Commission along with its application for determination of wheeling charges.
58.2 The Non-Tariff Income shall inter-alia include:
a) Income from rent of land or buildings;
b) Income from sale of scrap;
c) Income from statutory investments;
d) Income from interest on contingency reserve investment;
e) Interest on advances to suppliers/contractors;
f) Rental from staff quarters;
g) Rental from contractors;
h) Income from hire charges from contactors and others;
i) Income from advertisements, etc.;
j) Miscellaneous receipts;
k) Excess found on physical verification;
l) Deferred Income from grant, subsidy, etc., as per Annual Accounts;
m) Prior period income, etc.:
Provided that the interest/dividend earned from investments made out of Return on Equity corresponding to the
Distribution Wires Business of the Distribution Licensee shall not be included in Non-Tariff Income.
59. Determination of wheeling Charges
59.1The Commission shall specify the Wheeling Charge of Distribution Wires Business of the Distribution Licensee
in its Order passed under sub-section (3) of Section 64 of the Act:
Provided that the revenue from wheeling charges paid by the distribution system users other than the retail
Consumers under the above proviso shall be used to reduce the Aggregate Revenue Requirement of the
Distribution Wires Business to be recovered from the retail Consumers of the concerned Distribution, as
amended from time to time.
60. Wheeling Losses
60.1The Distribution Licensee shall be allowed to recover, in kind, the approved level of wheeling losses arising from
the operation of the distribution system, as stipulated in the respective Tariff Order.
Chapter 7: Retail Supply of Electricity
61. Applicability
61.1These Regulations shall apply to determination of tariff for retail supply of electricity by a Distribution Licensee
to its Consumers.
62. Aggregate Revenue Requirement for Retail Supply Business
62.1The tariff for retail supply of the Distribution Licensee shall provide for the recovery of the Aggregate Revenue
Requirement of the Retail Supply Business for the respective Years of the Control Period, as approved by the
Commission and comprising the following components:
a) Cost of own power generation and power purchase expenses from various sources including JKPCL;
b) Inter-State transmission charges;
c) RLDC fees;
d) Intra-State transmission charges;
e) SLDC fees and charges;
f) Balance Aggregate Revenue Requirement for Distribution Wires Business, as determined under Chapter 6 of
these Regulations, after deducting income from wheeling charges payable by distribution system users other
than the retail Consumers getting electricity supply from the same Distribution Licensee in accordance with
prevalent Open Access Regulations, as amended from time to time;
g) Provision for bad and doubtful debts;
h) Return on Equity capital;
i) Operation and Maintenance Expenses;
j) Depreciation;
k) Interest and finance charges on Loan Capital;
l) Interest on Working Capital;
m) Interest on consumer security deposits;
n) Income Tax;
Less
o) Non-Tariff income;
p) Income from Other Business, to the extent specified in these Regulations;
q) Receipts on account of Cross-Subsidy Surcharge;
r) Receipts on account of Additional Surcharge:
Provided that Depreciation, Interest on Loan Capital, Interest on Working Capital, Interest on consumer security
deposits, Contribution to Contingency Reserves, Return on Equity, and Income Tax for Retail Supply Business
shall be allowed in accordance with the provisions specified in Chapter 3 of these Regulations:
Provided further that prior period income/expenses shall be allowed by the Commission at the time of truing up
based on audited accounts, on a case-to-case basis, subject to prudence check:
Provided also that all penalties and compensation payable by the Licensee to any party for failure to meet any
Standards of Performance or for damages, as a consequence of the orders of the Commission, Courts, Consumer
Grievance Redressal Forum, and Ombudsman, etc. or penalty imposed by Commission on Licensee for non
compliance with Renewable Purchase Obligations in accordance, as amended from time to time shall not be
allowed to be recovered through the Aggregate Revenue Requirement:
Provided also that the Distribution Licensee shall maintain separate details of such penalties and compensation
paid or payable by the Licensee, if any, and shall submit them to the Commission along with its Petition.
62.2 The tariff for retail supply by the Distribution Licensee shall be determined by the Commission on the basis of a
Petition for determination of tariff filed by the Distribution Licensee in accordance with Chapter 2 of these
Regulations:
Provided that the Aggregate Revenue Requirement of the Distribution Licensee shall be allocated or apportioned
between the Distribution Wires Business and Retail Supply Business in accordance with Table 1 in Regulation
53.1, till the accounts for Distribution Wires Business and Retail Supply Business are not separated:
Provided further that the tariff for retail supply may comprise of any combination of fixed/demand charges,
energy charges, and any other charges, for the purpose of recovery from the Consumers, as may be stipulated by
the Commission:
Provided also that the Commission may determine the area-wise tariff for Distribution Licensee based on the
performance parameters as may be stipulated by the Commission.
63. Power Procurement Planning
63.1The Distribution Licensee shall prepare a plan for procurement of power (in MW/ MU) to serve the demand for
electricity in its area of supply and submit such plan to the Commission for approval in accordance with the
prevalent Joint Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh (Power Purchase and
Procurement Process) Regulations 2023 and Joint Electricity Regulatory Commission for UT of J&K and UT of
Ladakh (Framework for Resource Adequacy) Regulations, 2024.
64. Power Purchase Quantum and Cost
64.1.The power purchase quantum and cost shall be calculated in accordance with the prevalent Joint Electricity
Regulatory Commission for the UT of Jammu & Kashmir and the UT of Ladakh (Power Purchase and
Procurement Process) Regulations 2023.
65. Fuel and Power Purchase Adjustment Surcharge (FPPAS)
65.1.The Fuel and power purchase adjustment surcharge (FPPAS) formula has been specified as provided in Section
62(4) of the Electricity Act 2003, for recovery/adjustment of increase or decrease in power purchase cost on
monthly basis.
65.2.Fuel and Power Purchase Adjustment Surcharge shall be computed and charged by JKPCL/distribution licensee,
in month, on the basis of actual variation, in cost of fuel and power purchase for the power procured during
the month. For example, the fuel and power purchase adjustment surcharge on account of changes in
tariff for power supplied during the month of April of any financial year shall be computed and billed in the
month of June of the same financial year:
Provided that the computation for FPPAS shall be done according to the formula specified by the Commission
and billed to consumers on a monthly basis automatically and JKPCL/distribution licensee must submit the
detailed calculation before the Commission on a quarterly basis for post-facto approval.
Provided that in case the distribution licensee fails to compute and charge fuel and power purchase adjustment
surcharge within this time line, except in case of any force majeure condition, its right for recovery of costs on
account of fuel and power purchase adjustment surcharge shall be forfeited and, in such cases, the right to
recovery the fuel and power purchase adjustment surcharge determined during true-up shall also be forfeited.
65.3.The distribution licensee may decide, fuel and power purchase adjustment surcharge or a part thereof, to be
carried forward to the subsequent month in order to avoid any tariff shock to consumers, but the carry forward of
fuel and power purchase adjustment surcharge shall not exceed a maximum duration of two months and such
carry forward shall only be applicable, if the total fuel and power purchase adjustment surcharge for a Billing
Month, including any carry forward of fuel and power purchase adjustment surcharge over the previous month
exceeds twenty per cent of variable component (i.e. energy charge) of approved tariff.
65.4.The distribution licensee shall submit all necessary details of the variation between expenses incurred and the
fuel and power purchase adjustment surcharge recovered, and the detailed computations and supporting
documents, as required by the Commission, during true up of the normal tariff.
65.5.To ensure smooth implementation of the fuel and power purchase adjustment surcharge mechanism and its
recovery, the distribution licensee shall ensure that the licensee billing system is updated to take this into account
and a unified billing system shall be implemented to ensure that there is a uniform billing system irrespective of
the billing and metering vendor through interoperability or use of open-source software as available.
65.6.The licensee shall publish all details including the fuel and power purchase adjustment surcharge formula,
calculation of monthly fuel and power purchase adjustment surcharge, and recovery of fuel and power purchase
adjustment surcharge (separately for automatic and approved portions) on its website and archive the same
through a dedicated web address.
65.7.Computation of Fuel and Power Purchase Adjustment Surcharge: The formula for Computation of Fuel and
Power Purchase Adjustment Surcharge (FPPAS) for nth month is as follows:
Monthly FPPAS for nth Month (%) = (A-B) *C÷ {Z*(1˗ Distribution losses in %÷100)} * ABR
Where,
“nth” month means the month in which billing of fuel and power purchase adjustment surcharge component is
done. This fuel and power purchase adjustment surcharge is due to changes in tariff for the power supplied in
;
“A” is Total units procured in Month (in kWh) from all Sources including Long-term, Medium –term
and Short-term Power purchases (To be taken from the bills issued to JKPCL);
“B” is bulk sale of power from all Sources in Month. (in kWh) = (to be taken from provisional
accounts to be issued by State Load Dispatch Centre by the 10th day of each month);
“C” is incremental Average Power Purchase Cost= Actual average Power Purchase Cost (PPC) from all Sources
in month (Rs./kWh) (computed) - Approved average Power Purchase Cost (PPC) from all Sources
(Rs./kWh) (to be taken from tariff order);
“Z” = [{Actual Power purchased from all the sources outside the State in Month. (in kWh) * (1 –
Inter-state transmission losses in % /100) + Power purchased from all the sources within the State (in kWh)} *(1
– Intra-state losses in %/100) – B] in kWh
“ABR” = Average Billing Rate for the year (to be taken from the Tariff Order in Rs/kWh)
“Distribution Losses (in %)” = Target Distribution Losses (from Tariff Order)
“Inter-state transmission Losses (in %)” = As per Tariff Order
“Intra-state transmission Losses (in %)” = As per Tariff Order
65.8.The Power Purchase Cost shall exclude any charges on account of Deviation Settlement Mechanism.
65.9.Other charges which include Ancillary Services and Security Constrained Economic Despatch shall not be
included in Fuel and Power Purchase Adjustment Surcharge and adjusted though the true-up approved by the
Commission.
66. Transmission Charges
66.1The Distribution Licensee shall be allowed to recover transmission charges payable for access to and use of the
intra-State transmission system in accordance with the tariff approved by the Commission under Chapter 5 of
these Regulations and the inter-state transmission system as per prevalent CERC Tariff Regulations.
67. Operation and Maintenance (O&M) expenses for Retail Supply Business
67.1The Operation and Maintenance Expenses for the Retail Supply Business shall be computed in accordance with
Chapter 3 of these Regulations.
68. SLDC Fees & Charges
68.1The Distribution Licensee shall be allowed to recover SLDC fees and charges payable to SLDC in accordance
with the tariff approved by the Commission. Further, the distribution licensee shall be allowed to recover RLDC
fees
69. Provision for bad and doubtful debts
69.1.The provision for bad and doubtful debts shall be dealt in accordance with Chapter 3 of these Regulations.
70. Norms of Working Capital for Retail Supply Business
70.1The Working Capital for Retail Supply Business shall be determined in accordance with Regulation 58 of these
Regulations
71. Non-Tariff Income
71.1The amount of Non-Tariff Income relating to the retail supply of electricity as approved by the Commission shall
be deducted from the Aggregate Revenue Requirement in calculating the tariff for retail supply of electricity by
the Distribution Licensee:
Provided that the Distribution Licensee shall submit full details of its forecast of Non-Tariff Income to the
Commission along with its application for determination of tariff.
71.2 The Non-Tariff Income shall inter-alia include:
a) Income from rent of land or buildings;
b) Income from sale of scrap;
c) Income from statutory investments;
d) Interest on advances to suppliers/contractors;
e) Rental from staff quarters;
f) Rental from contractors;
g) Income from hire charges from contactors and others;
h) Income from advertisements, etc.;
i) Meter/metering equipment/service line rentals;
j) Service charges;
k) Consumer charges;
l) Recovery for theft and pilferage of energy;
m) Rebate availed on account of timely payment of bills;
n) Miscellaneous receipts;
o) Deferred Income from grant, subsidy, etc., as per Annual Accounts;
p) Prior period income, etc.:
Provided that the interest/dividend earned from investments made out of Return on Equity corresponding to the
Retail Supply Business of the Distribution Licensee shall not be included in Non-Tariff Income:
Provided further that any income earned by a Distribution Licensee by sale of power to other Distribution
Licensees or to Consumers as per Section 49 of the Act using the existing power purchase agreements or bulk
supply capacity allocated to the Distribution Licensee's Area of Supply shall be reduced from the Aggregate
Revenue Requirement of the Distribution Licensee for the purpose of determination of tariff. Such reduction
shall be carried out in accordance with Joint Electricity Regulatory Commission for the UT of J&K and the UT
of Ladakh (Power Purchase and Procurement Process of Licensees) Regulations, as applicable.
72. Receipts on account of Cross-Subsidy Surcharge and Additional Surcharge
72.1The Cross-Subsidy Surcharge received by the Distribution Licensee in accordance with the prevalent Open
Access Regulations as amended from time to time, at the rate approved by the Commission shall be deducted
from the Aggregate Revenue Requirement, at the time of truing up.
72.2 The Additional surcharge received by the Distribution Licensee in accordance with the prevalent Open Access
Regulations as amended from time to time, at the rate approved by the Commission shall be deducted from the
Aggregate Revenue Requirement, at the time of truing up.
73. Distribution Losses
73.1.The Distribution Licensee shall recover the approved level of distribution losses arising from the Retail Supply of
electricity.
73.2.The Commission may stipulate a trajectory for distribution losses for the Control Period in accordance with these
Regulations, as part of the Multi Year Tariff Order.
73.3.Any variation between the actual level of distribution losses and the approved level shall be dealt with, as part of
the Truing up exercise in accordance with Regulation 18.
74. Determination of Tariff
74.1 The Commission may categorize Consumers on the basis of their load factor, power factor, voltage, total
consumption of electricity during any specified period or the time at which the supply is required or the
geographical position of any area, the nature of supply and the purpose for which the supply is required and any
other factor as considered appropriate by the Commission.
74.2 The Commission shall endeavor to determine cost of supply for each category/ sub-category of Consumers.
74.3 The Commission shall endeavor to reduce gradually the cross-subsidy between Consumer categories with respect
to the cost of supply in accordance with the provisions of the Act.
74.4 The tariff proposal by Licensee and the tariff determination by the Commission shall be based on the following
principles:
a) The tariff for all categories shall preferably be two parts, consisting of fixed and variable charges.
b) The fixed charges in tariff shall progressively reflect actual fixed cost incurred by Distribution Licensee;
c) The overall retail supply tariff for different Consumer categories shall progressively reflect the cost of supply
for respective categories of Consumers;
d) The tariff for residential Consumers shall be set considering the affordability of tariff for various class of
Consumers;
e) The tariff shall be set in such a manner that it may not present a tariff shock to any category of Consumers.
Chapter 8: Energy Storage Systems
75. Applicability
75.1 These Regulations shall apply to determination of tariff for Energy Storage Systems.
75.2 The Commission shall be guided by the terms and conditions contained in this chapter in determining the
Tariff for ESS, in the following cases:
a. where the existing Generating company or Transmission Licensee engaged in the business of Energy
Storage of Electricity;
b. where the Energy Storage System Developer (ESSD) engaged in the business of Energy Storage of
Electricity and has contractual arrangement with existing Generating Company or Transmission Licensee or
Distribution Licensee for providing Energy Storage Services to such Utility;
c. where the Distribution Licensee is engaged in the business of Energy Storage of electricity, in determining
the conversion price at which off-peak electricity is converted into peak electricity by the Energy Storage
business of the Distribution Licensee to its Retail Supply business.
d. where such Tariff is pursuant to a power purchase agreement or arrangement entered into subsequent to the
date of coming into effect of these Regulations; or
e. where such Tariff is pursuant to a power purchase agreement or arrangement entered into prior to the date
of coming into effect of these Regulations, and the Commission has approved such agreement or
arrangement, and the agreement or arrangement envisages that the Tariff shall be based on the Tariff
Regulations prevailing at that time;
76. Petition for determination of Energy Storage Tariff
76.1. An ESSD shall file a Petition for determination of Tariff in accordance with the provisions of Chapter 2 of
these Regulations.
76.2. Tariff in respect of ESS, under these Regulations may be determined Stage-wise, Unit-wise or for the whole
ESS:
Provided that the terms and conditions for determination of Tariff for ESS specified in this Chapter shall
apply in like manner to Stages or Units or the ESS, as the case may be.
76.3. Where the Tariff is being determined for a Stage or Unit of an ESS, the ESSD shall adopt a reasonable basis
for allocation of capital cost relating to common facilities and allocation of joint and common costs across
all Stages or Units, as the case may be:
Provided that the ESSD shall maintain an Allocation Statement providing the basis for allocation of such
costs, which shall be duly audited and certified by the statutory auditors and submit such audited and
certified statement to the Commission along with the Petition for determination of Tarif.
76.4. The ESSD shall file the Petition for determination of provisional Tariff for new ESS, at least six months prior
to the anticipated date of commercial operation of ESS Unit or Stage or System as a whole, as the case may
be.
76.5. The ESSD shall file a Petition for determination of provisional Tariff for new ESS based on capital
expenditure incurred and projected to be incurred up to the date of commercial operation and additional
capital expenditure incurred, duly certified by the statutory auditors:
Provided that the Petition shall contain details of underlying assumptions for the projected capital cost and
additional capital cost, wherever applicable.
76.6. In the case of new projects, the ESSD may be allowed provisional Tariff by the Commission from the
anticipated date of commercial operation, based on the projected capital expenditure, subject to prudence
check.
76.7. If the date of commercial operation is likely to be delayed beyond six months from the date of issue of the
order approving the provisional Tariff, the ESSD may submit a Petition for seeking extension of the validity
of the applicability of the provisional Tariff, giving details of the present status of completion and
justification for the delay in project completion, which may be considered by the Commission after
necessary prudence check.
76.8. The ESSD shall file the Petition for determination of final Tariff for ESS within six months from the date of
commercial operation of Energy Storage Unit or Stage or System as a whole, as the case may be, based on
the audited capital expenditure and capitalisation as on the date of commercial operation:
Provided that in case of more than one Unit in the ESS, such Petition shall be filed for each Unit as and
when such Unit achieves COD and without waiting for the COD of the entire Station.
76.9. The final Tariff determination for the new ESS shall be done by the Commission based on prudence check of
the audited capital expenditure and capitalisation as on the date of commercial operation.
76.10. Where the actual Capital Cost incurred on year-to-year basis is less than the Capital Cost approved for
determination of provisional Tariff by the Commission, by five percent or more, the ESSD shall refund to
the Beneficiaries the excess Tariff realised corresponding to excess Capital Cost, along with interest at the
Base Rate, as prevalent on the first day of April of the respective Year, plus 150 basis points.
76.11. Where the actual Capital Cost incurred on year to year basis is more than the Capital Cost approved for
determination of provisional Tariff by the Commission, by five percent or more, the ESSD shall, subject to
the approval of the Commission, recover from the Beneficiaries the shortfall in Tariff corresponding to such
decrease in Capital Cost, along with interest at the Base Rate, as prevalent on the first day of April of the
respective Year, plus 150 basis points.
77. Adoption of Tariff for ESS under Competitive Bidding
77.1 Notwithstanding anything contained in these Regulations, the Commission shall adopt the Tariff for ESS if
such Tariff has been determined through a transparent process of bidding in accordance with the guidelines
issued by the Central Government under Section 63 of the Act:
Provided that the Petitioner shall provide such information as the Commission may require to satisfy itself
that the guidelines issued by the Central Government have been duly followed.
78. Components of Tariff
78.1 The Tariff for ESS shall comprise of two parts, namely, Capacity Charge and Incentive for Cycle Efficiency
above Design Cycle Efficiency.
78.2 The Annual Fixed Charges shall comprise the following components:
a) Operation & Maintenance Expenses;
b) Depreciation;
c) Interest and finance charges on Loan Capital;
d) Interest on Working Capital;
e) Return on Equity;
Less:
f) Non-Tariff Income;
Provided that Return on Equity for the ESS shall be allowed in accordance with the provisions specified in
the Chapter 3 of these Regulations.
Provided that all penalties and compensation payable by the ESS Developer or Generating Company or
Licensee to any party for failure to comply with any directions or for damages, as a consequence of the orders
of the Commission, Courts, etc., shall not be allowed to recover through the Aggregate Revenue
Requirement:
Provided also that the ESSD or Generating Company or Licensee shall maintain separate details of such
penalties and compensation paid or payable by the ESSD or Generating Company or Licensee, if any, and
shall submit them to the Commission along with its Petition
79. Determination of Tariff of Standalone Battery Energy Storage System (BESS)
79.1 The Petition for BESS shall include the details like:
a) Capital Cost of BESS,
b) Availability of BESS
c) Conversion Efficiency or Design Round trip Efficiency of the BESS,
d) Other technical parameters such as depth of discharge, deration factors etc.
e) No of Cycles during the useful life,
f) Useful life of BESS. Useful life of Battery System and Useful life of Balance of system separately,
g) Operation and Maintenance Expenses,
h) Design parameters of number of hours of Charging and number of hours of Discharging during 24-hour
cycle.
i) Charging power arrangement for charging of BESS.
j) Rate of charge per minute (Maximum/Minimum)
k) Rate of discharge per minute (Maximum/Minimum)
79.2 Capital Cost: Capital cost shall be considered in the manner as specified under Chapter 3 of these
Regulations.
79.3 Additional Capital Expenditure: Additional capital expenditure shall be considered in the manner as
specified in Chapter 3 of these Regulations.
79.4 Capital Structure:
a) Debt-equity ratio as on the date of commercial operation shall be considered in the manner as specified in
Chapter 3 of these Regulations.
b) Debt-equity ratio for additional capital expenditure admitted by the Commission under these Regulations
shall be considered in the manner as specified Chapter 3 of these Regulations.
79.5 Operating Parameters for BESS
a) Round-trip Efficiency of BESS shall be minimum 75% for each monthly operating period.
b) The Normative annual availability of the BESS shall be 95%.
Annual Availability of BESS = Mean of the system availabilities of all time blocks during the year in which
Beneficiary has scheduled power for charging/discharging the BESS.
Availability in a time block = Actual injection or drawal MU(A) / Scheduled injection or drawal MU(B) x 100
Where,
i refers to the ith time-block (15 minutes) in the year where MUi (B)≠ 0,
MUi(A)= Agreed Despatch Schedule between Licensee or Beneficiary and BESSD which shall be finally
sent to MSLDC for Charging/Discharging in the ith time block, in MUs,
MUi(B)= Despatch Schedule provided by Distribution Licensee or Beneficiary to BESSD for
Charging/Discharging in the ith time block, in MUs.
c) Normative Depth of Discharge for BESS shall be 90%.
d) Battery pack performance degradation shall be considered as 1% per year.
e) Average Ramp Rate for BESS shall be 75% of rated capacity/minute.
79.6 Depreciation
a) Depreciation in respect of BESS shall be computed from the date of commercial operation by applying
Straight Line Method.
Provided that the remaining depreciable value as on 31st March of the year closing after a period of 15 years
from the effective date of commercial operation of the station shall be spread over the balance useful life of
the assets.
Provided that, Useful life of Battery Pack shall be 12 Years whereas balance of system’s useful life shall be
25 years.
b) The value base for the purpose of depreciation shall be the capital cost of the asset admitted by the
Commission:
Provided that,
i. freehold land or assets purchased from grant shall not be considered as depreciable assets and their cost
shall be excluded from the capital cost while computing depreciable value of the assets;
ii. where the allotment of freehold land is conditional and is required to be returned, the cost of such land
shall be part of value base for the purpose of depreciation, subject to prudence check by the Commission; and
iii. lease hold land shall be amortized over the lease period or remaining life of the BESS, whichever is lower.
c) The salvage value of an asset shall be considered as 10% of the capital cost of the asset:
i. zero for IT equipment and software;
ii. zero or as agreed by the BESS Developer with the State Government for land; and
Provided also that any depreciation disallowed on account of lower availability of the BESS or transmission
system, as the case may be, shall not be allowed to be recovered at a later stage during the useful life or the
extended life.
d) Depreciation in respect of BESS shall be arrived at annually by applying depreciation rates or on the basis of
expected useful life as specified in Annexure I.
80. Interest on Loan
80.1 Interest on loan, including normative loan, if any, shall be arrived at by considering the weighted average rate
of interest calculated on the basis of actual loan portfolio, in accordance with Chapter 3 of these Regulations.
81. Interest on Working Capital
81.1 The working capital of the BESS shall cover:
a) Operation and maintenance expenses for one month.
b) Maintenance spares at one per cent of the opening Gross Fixed Assets for the Year; and
c) Receivables against the availability for Energy Storage Service equivalent to forty-five days of the annual
fixed charges approved, and excluding incentive, if any:
d) The rate and payment of interest on working capital shall be determined in accordance with the Regulation in
the Chapter 3 of these Regulations.
82. O&M Expenses for BESS
82.1. The Normative Operation and Maintenance expenses in respect of BESS shall be allowed One Percentage
(1%) of the capital expenditure as on its date of commercial operation.
Provided that, the Operation and Maintenance expenses for each subsequent year and in the Truing-up of the
respective years of the Control Period shall be determined in the same manner as specified in Regulation 37.
Provided also that, the Normative O&M expenses shall be Trued up at the end of the Control Period and
Treatment to the variation in the normative and actual O&M expenses shall be as per Regulation 14.
82.2. Computation and Payment of Capacity Charge
a) The fixed cost of BESS achieving COD after April 1, 2026 shall be computed on annual basis, based on
norms specified under these Regulations, and recovered on monthly basis as Capacity Charge.
b) The Capacity Charge shall be payable by the Beneficiaries in proportion to their respective allocation in the
saleable capacity of the BESS:
Monthly BESS Availability = Actual injection or drawal MWh(i)(A) / Scheduled injection or drawal MWh(i)(B) x 100
where,
i refers to the ith time-block (15 minutes) in the month where MWh (i) (B)≠ 0.
MWh (i)(A) = Agreed Despatch Schedule between Licensee or Beneficiary and BESS which shall
be finally sent to SLDC for Charging/Discharging in the ith time block, in MUs.
MWh (i)(B) = Despatch Schedule provided by Distribution Licensee or Beneficiary to BESS for
Charging/Discharging in the ith time block, in MUs.
Annual Availability of BESS = Mean of the system availabilities of all time blocks during the
year in which Beneficiary has scheduled power for charging/discharging the BESS.
The Normative annual availability of the BESS shall be 95%
Monthly Capacity Charge payment for BESS linked to Monthly Availability Factor shall be payable
as per following formula:
CC1 = (AFC) × (1∕12) × (EAFM1∕NAEAF)
CC2 = (AFC) × (1∕6) × (EAFM2∕NAEAF) subject to ceiling of ceiling of {(AFC) × (1∕6)} − {CC1}
CC3 = (AFC) × (1∕4) × (EAFM3∕NAEAF) subject to ceiling of ceiling of {(AFC) × (1∕4)} − {CC1
+ CC2}
CC4 = (AFC) × (1∕3) × (EAFM4∕NAEAF) subject to ceiling of ceiling of {(AFC) × (1∕3)} − {CC1 + CC2
+ CC3}
CC5 = (AFC) × (5∕12) × (EAFM5∕NAEAF) subject to ceiling of ceiling of {(AFC) × (5∕12)} − {CC1
+ CC2 + CC3 + CC4}
CC6 = (AFC) × (1∕2) × (EAFM6∕NAEAF) subject to ceiling of ceiling of {(AFC) × (1∕2)} − {CC1 + CC2
+ CC3 + CC4 + CC5}
CC7 = (AFC) × (7∕12) × (EAFM7∕NAEAF) subject to ceiling of ceiling of {(AFC) × (7∕12)} − {CC1
+ CC2 + CC3 + CC4 + CC5 + CC6}
CC8 = (AFC) × (2∕3) × (EAFM8∕NAEAF) subject to ceiling of ceiling of {(AFC) × (2∕3)} − {CC1 + CC2
+ CC3 + CC4 + CC5 + CC6 + CC7}
CC9 = (AFC) × (3∕4) × (EAFM9∕NAEAF) subject to ceiling of ceiling of {(AFC) × (3∕4)} − {CC1 + CC2
+ CC3 + CC4 + CC5 + CC6 + CC7 + CC8}
CC10 = (AFC) × (5∕6) × (EAFM10∕NAEAF) subject to ceiling of ceiling of {(AFC) × (5∕6)} − {CC1
+ CC2 + CC3 + CC4 + CC5 + CC6 + CC7 + CC8 + CC9}
CC11 = (AFC) × (11∕12) × (EAFM11∕NAEAF) subject to ceiling of ceiling of {(AFC) × (11∕12)}
− {CC1 + CC2 + CC3 + CC4 + CC5 + CC6 + CC7 + CC8 + CC9 + CC10}
CC12 = (AFC) × (EAFM11∕NAEAF) subject to ceiling of ceiling of {(AFC) − {CC1 + CC2 + CC3 + CC4
+ CC5 + CC6 + CC7 + CC8 + CC9 + CC10 + CC11}}
Where,
CCn= Capacity Charge for the Month (n);
AFC = Annual Fixed Cost;
EAFMn = Monthly BESS Availability Factor achieved during nth Month;
NAEAF= Normative Annual BESS Availability Factor.
Provided that, the Availability of BESS shall be considered in both Charging and Discharging mode for the
computation of Capacity Charge as specified above. Provided also that there would be adjustment at the end of the
year based on actual generation and actual energy consumed by the BESS during the year.
82.3 Incentive for Cycle Efficiency Above Normative Cycle Efficiency
a) Incentive for Cycle Efficiency above Normative Cycle Efficiency shall be payable by every Beneficiary for
the total energy scheduled to be supplied to the Beneficiary in excess of the 75% of the energy consumed, at
a flat rate equal to the 20 paise per kWh on ex bus basis. Provided that in case the energy generated in a
month is less than the 75% of the energy consumed for the month, then the Incentive payable by the
Beneficiaries shall be zero.
b) In case of BESS, the quantum of electricity required for charging the batteries shall be arranged by the
Beneficiary/ies duly taking into account the transmission losses and distribution losses up to the bus bar of
the BESS system, and in return, Beneficiaries shall be entitled to energy during peak hours equivalent to
75% of the energy utilized in charging the Batteries and the BESS shall be under obligation to supply such
quantum of electricity during peak hours.
83. Billing and Payment of Charges
83.1.The Billing and Payment of Annual Fixed Charges, Capacity Charges and Incentives for ESS, shall be done
on a monthly basis.
Chapter 9: Miscellaneous
84. Saving of Inherent Power of the Commission
84.1Nothing in these Regulations shall be deemed to limit or otherwise affect the inherent power of the Commission
to make such orders as may be necessary for ends of justice or to prevent the abuse of the process of the
Commission.
84.2 Nothing in these Regulations shall bar the Commission from adopting in conformity with the provisions of the
Act, a procedure, which is at variance with any of the provisions of these Regulations, if the Commission, in
view of the special circumstances of a matter or class of matters and for reasons to be recorded in writing, deems
it necessary or expedient for dealing with such a matter or class of matters.
84.3 Nothing in these Regulations shall, expressly or by implication, bar the Commission to deal with any matter or
exercise any power under the Act for which no Regulations have been framed, and the Commission may deal
with such matters, powers and functions in a manner it thinks fit.
85. Issue of Orders and Practice Directions
85.1Subject to the provision of the Act and these Regulations, the Commission may, from time to time, issue Orders
and Practice directions with regard to the implementation of these Regulations and procedure to be followed on
various matters.
86. Power to amend
86.1The Commission may, at any time, vary, alter, modify or amend any provisions of these regulations following the
due process of Law.
87. Power to remove difficulties
87.1If any difficulty arises in giving effect to the provisions of these Regulations, the Commission may, by general or
specific order, make such provisions not inconsistent with the provisions of the Act, as may appear to be
necessary for removing the difficulty.
88. Power of Relaxation
88.1The Commission, for reasons to be recorded in writing, may relax any of the provisions of these Regulations on
its own motion or on an application made before it by an interested person.
89. Interpretation
89.1If a question arises relating to the interpretation of any provision of these Regulations, the decision of the
Commission shall be final.
90. Repeal
90.1The Joint Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh (Generation,
Transmission and Distribution Multi Year Tariff) Regulations, 2023 shall stand repealed from the date of coming
into force of these Regulations and any reference to these Regulations in any of the Regulations, standards, codes
or procedures of the Joint Electricity Regulatory Commission shall be deemed to be replaced by the Joint
Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh (Generation, Transmission and
Distribution Multi Year Tariff) Regulations, 2025.
90.2 Notwithstanding such repeal, anything done or purported to have been done under the repealed Regulations so far
as it is not inconsistent with these Regulations shall be deemed to have been done or purported to have been done
under these Regulations.
90.3 These Regulations are in addition to and not in derogation of the other Regulations /Codes issued by the
Commission.
By Order of the Commission.
MOHD. ASHRAF, (JKAS) Secy. JERC
[ADVT.-III/4/Exty./210/2026-27]
Appendix -I: Depreciation Schedule and Useful Life for assets
[Refer to Regulation 2.1 (54) and Regulation 30.4 ]
a) Generation and Transmission Assets
The Useful Life and depreciation rates for generation and transmission assets shall be as specified in the
prevalent CERC Tariff Regulations.
b) Distribution Assets
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The Gazette of India
EXTRAORDINARY
PART III—Section 4
PUBLISHED BY AUTHORITY
No. 441] NEW DELHI, THURSDAY, JULY 9, 2026/ASHADHA 18, 1948
CG-JK-E-12082026-275398
JOINT ELECTRICITY REGULATORY COMMISSION
(For The UT of J&K and the UT of Ladakh)
NOTIFICATION
Jammu, the 18th June, 2026
No. JERC-JKL/Reg/2026/01.—In exercise of the powers conferred on it by sub-Section (2) of Section 181 read
with Section 36, Section 39, Section 40, Section 41, Section 51, Section 61, Section 62, Section 63, Section 64,
Section 65 and Section 86 of the Electricity Act, 2003 (Act No. 36 of 2003) (hereinafter referred to as ‘the Act’), and
all other powers enabling it in this behalf, the Joint Electricity Regulatory Commission for the UT of Jammu &
Kashmir and the UT of Ladakh hereby makes the following Regulations.
Chapter 1: Preliminary
1. Short Title, Commencement and Extent
1.1. These Regulations shall be called the Joint Electricity Regulatory Commission for the UT of Jammu & Kashmir
and the UT of Ladakh (Generation, Transmission and Distribution, Multi Year Tariff), Regulations, 2025.
1.2. These Regulations shall come into force from the date of their publication in the Official Gazette and shall remain
in force till March 31, 2029, unless otherwise reviewed/extended.
1.3. These Regulations extend to the whole of the UT of Jammu & Kashmir and the UT of Ladakh.
2. Definitions
2.1 In these Regulations, unless the context otherwise requires:
1. “Accounting Statements” shall mean for each Financial Year, the balance sheet, the profit and loss
statement, the cash flow statement, and the report of the statutory auditorstogether with notes thereto:
Provided that in case of any local authority engaged in the business of distribution of electricity, the
Accounting Statement shall mean the items, as mentioned above, prepared and maintained in accordance
with the relevant Acts or Statutes as applicable to such local authority;
2. “Act'' shall mean the Electricity Act, 2003 (36 of 2003), as amended from time to time;
3. “Aggregate Revenue Requirement” or “ARR'' shall mean the annual revenue requirement comprising of
allowable expenses and return on capital pertaining to the Generating Company, Transmission Licensee, or
Distribution Licensee, for recovery through tariff and charges determined by the commission, in accordance
with these Regulations;
4. “Allocation Statement” shall mean for each Financial Year, a statement showing the amounts of any
revenue, cost, asset, liability, reserve or provision, etc. determined by apportionment or allocation between
the Distribution Wires Business andRetail SupplyBusiness of aDistribution Licensee;
5. “Allotted Transmission Capacity” shall mean the power transfer in MW between the specified point(s)
of injection and point(s) of drawal allowed to a Long-term Consumer or a Medium-term Consumer on the
Intra-State transmission system under the normal circumstances and the expression “allotment of
transmission capacity” shall be construed accordingly;
6. “Auxiliary Energy Consumption” or “AUX” in relation to a period in the case of a Generating Station
means the quantum of energy consumed by auxiliary equipment of the Generating Station, such as the
equipment being used for the purpose of operating the plant and machinery including switchyard of the
Generating Station and the transformer losses within the Generating Station, expressed as a percentage of the
sum of gross energy generated at the generator terminals of all the units of the Generating Station:
Provided that Auxiliary Energy Consumption shall not include energy consumed for the supply of
power to the housing colony and other facilities at the Generating Station and the power consumed for
construction works at the Generating Station;
7. “Applicant” shall mean a Generating Company, Transmission Licensee, or Distribution Licensee who has
made an application for determination of Aggregate Revenue Requirement and tariff in accordance with the
Act and these Regulations and shall include a Generating Company, Transmission Licensee, or Distribution
Licensee whose tariff is being determined by the Commission on Suo-Motu basis;
8. “Area of Supply” shall mean the area within which a Distribution Licensee is authorised by its license to
supply electricity;
9. “Authority” shall mean the Central Electricity Authority referred to in Section 70 of the Act;
10. “Availability” in relation to a transmission system for a given period shall mean the time in hours during the
period the transmission system is capable of transmitting electricity at its rated voltage expressed in
percentage of total hours in the given period;
11. “Bank Rate” shall mean the Bank Rate declared by the Reserve Bank of India from time to time;
12. “Base Year” shall mean the Year immediately preceding the first Year of the Control Period and used for the
purpose of these regulations;
13. “Bulk Power Transmission Agreement” shall mean an executed Agreement that contains the terms and
conditions under which a Transmission System User is entitled to access the intra-State transmission system
of a Transmission Licensee;
14. “Change in Law” shall mean the occurrence of any of the following events:
a) Enactment, bringing into effect, or promulgation of any new Indian law: or
b) Adoption, amendment, modification, repeal, or re-enactment of any existing Indian law: or
c) Change in interpretation or application of any Indian law by a competent court, Tribunal, or Indian
Governmental Instrumentality, which is the final authority under law for such interpretation or
application: or
d) Change by any competent statutory authority in any condition or covenant of any consent or clearances
or approval; or Licence available or obtained for the project: or
e) Coming into force or change in any bilateral or multilateral agreement/treaty between the Government
of India and any other Sovereign Government having implications for the Generating Station or the
transmission system regulated under these Regulations;
15. “Central Commission” or “CERC” shall mean the Central Electricity Regulatory Commission referred to
in sub-section (1) of Section 76 of the Act;
16. “Commission” shall mean the Joint Electricity Regulatory Commission for the UT of Jammu & Kashmir and
the UT of Ladakh referred to in Section 83 of the Act;
17. “Control Period” shall mean the period of three (3) financial Years from April 1, 2026, to March 31, 2029;
18. “Central Transmission Utility” or “CTU” shall mean any Government company which the Central
Government may notify under sub-section (1) of Section 38 of the Act;
19. “Cut-off Date” shall mean 31st March of the Year closing after two (2) Years from the Year of commercial
operation of the project, and in case the project is declared under commercial operation in the last quarter of
a year, the Cut-off Date shall be 31st March of the Year closing after three (3) Years from the Year of
commercial operation:
Provided that the “Cut-off Date” may be extended by the Commission if it is proved on the basis of
documentary evidence that the capitalisation could not be made within the Cut-off Date for reasons beyond
the control of the project developer;
20. “Consumer” shall be any person who is supplied with electricity for his own use by a Licensee or the
Government or by any other person engaged in the business of supplying electricity to the public under this
Act or any other law for the time being in force and includes any person whose premises are for the time
being connected for the purpose of receiving electricity with the works of a Licensee, the Government or
such other person, as the case may be, but shall be restricted to such Consumers within the Union Territory;
21. “Contracted Capacity” shall mean the capacity in MW contracted by a Transmission System User;
22. “Day” shall mean a day starting at 00.00 hours and ending at 24.00 hours;
23. “Date of Commercial Operation” or “COD” in case of a transmission system shall mean the date declared
by the Transmission Licensee from 00.00 hours, for which an element of the transmission system is in
regular service after successful trial operation for transmitting electricity, and communication signal from
sending end to receiving end:
Provided that where the transmission line or substation is dedicated for the evacuation of power from a
particular Generating Station, the Generating Company and Transmission Licensee shall endeavor to
commission the Generating Station and the transmission system simultaneously as far as practicable and
shall ensure the same through appropriate Implementation Agreement:
Provided also that in case a transmission system or an element thereof is prevented from regular service for
reasons not attributable to the Transmission Licensee or its supplier or its contractors but is on account of the
delay in commissioning of the concerned Generating Station or in commissioning of the upstream or
downstream transmission system, the Transmission Licensee shall approach the Commission through an
appropriate application for approval of the Date of Commercial Operation of such transmission system or an
element thereof:
Provided further that the Date of Commercial Operation for a Generating Station shall be as defined in the
prevalent CERC Tariff Regulations;
24. “De-capitalisation” shall mean reduction in Gross Fixed Assets of the project corresponding to the
removal/deletion of assets as approved by the Commission;
25. “Distribution Business” shall mean the business of operating and maintaining a distribution system for
supplying electricity in the Area of Supply of the Distribution Licensee;
26. “Distribution Licensee” shall mean a Licensee authorised to operate and maintain a distribution system for
supplying electricity to the Consumers in its Area of Supply;
27. “Distribution Wires Business” shall mean the business of operating and maintaining a distribution system
for wheeling of electricity in the Area of Supply of the Distribution Licensee;
28. “Energy Storage System” or “ESS” in relation to the electricity system, means a facility where electrical
energy is converted into any form of energy which can be stored, and subsequently reconverted into
electrical energy and injected back into the grid;
29. “Energy Storage System Developer” or “ESSD” shall mean the entity owning/operating the ESS facility for
storage and supply of power to the beneficiary under these Regulations;
30. “Expected Revenue from Tariff and Charges” shall mean the revenue estimated to accrue to the
Generating Company, Transmission Licensee or Distribution Licensee from the regulated business at the
prevailing tariff;
31. “Electricity Supply Code” shall mean the Electricity Supply Code specified under Section 50 of the Act;
32. “Existing Project” shall mean a project declared under commercial operation prior to April 1, 2024;
33. “Force Majeure Event” shall mean, with respect to any party, any event or circumstance; or combination of
events or circumstances including those stated below, which is not within the reasonable control of, and is
not due to an act of omission or commission of that party and which, by the exercise of reasonable care and
diligence, could not have been avoided, and without limiting the generality of the foregoing, would include
the following events:
a) An Act of God including lightning, drought, fire and explosion, earthquake, volcanic eruption, landslide,
flood, cyclone, typhoon, tornado, geological surprises, or exceptionally adverse weather conditions
which are in excess of the statistical measures for the last hundred Years: or
b) Any act of war, invasion, armed conflict or act of foreign enemy, blockade, embargo, revolution, riot,
insurrection, terrorist or military action: or
c) Industry-wide strikes and labour disturbances having a nationwide impact in India;
34. “Generation Company” shall mean any company or body corporate or association or body of individuals,
whether incorporated or not, or artificial juridical person, which owns or operates or maintains a Generating
Station.
Provided that generation of electricity from renewable sources shall be governed by the applicable
Renewable Energy Tariff Regulations as may be notified by the Commission from time to time;
35. “Generating Station” shall mean any station for generating electricity, including any building and
plant with step-up transformer, switchgear, switch yard, cables, or other appurtenant equipment, if
any, used for that purpose and the site thereof; a site intended to be used for a Generating Station, and
any building used for housing the operating staff of a Generating Station, and where electricity is
generated by water-power, includes penstocks, head, and tail works, main and regulating reservoirs,
dams and other hydraulic works, but does not, in any case, include any sub-station and for the
purpose of these Regulations shall exclude stations generating electricity from renewable sources;
36. “Grid” shall mean the high voltage backbone system of inter-connected transmission lines, sub-stations, and
generating plants;
37. “Gross Station Heat Rate” or “GHR” means the heat energy input in kcal required to generate one kWh of
electrical energy at generator terminals of a thermal Generating Station;
38. “Integrated Utility” means the Departments of Power in the Union Territory of Jammu & Kashmir and the
Union Territory of Ladakh, in its present form or any successor entities performing more than one of the
functions of generation, transmission, and distribution after restructuring thereof;
39. “Licensed Business” means the functions and activities, which the licensee is required to undertake in terms
of the license granted by the Commission or being a deemed licensee under the Act;
40. “Licensee” shall mean a person who has been granted a license under Section 14 of the Act and for the
purpose of these Regulations shall also include an Integrated Utility;
41. “MCLR” shall mean One Year Marginal Cost of Funds based Lending Rate;
42. “Month” shall mean a calendar month as per the Gregorian calendar;
43. “New Project” shall mean a project declared under commercial operation on or after April 1, 2024;
44. “Non-Tariff Income” shall mean income relating to the Licensed Business other than from tariff, excluding
any income from Other Business and, in case of the Retail Supply Business of a Distribution Licensee,
excluding income from wheeling and receipts on account of Cross-Subsidy Surcharge and Additional
Surcharge on charges of wheeling;
45. “Operation and Maintenance expenses” or “O&M expenses” in relation to a Generating Company,
Transmission Licensee or Distribution Licensee shall mean the expenditure incurred on operation and
maintenance of the system by the Generating Company, Transmission Licensee or Distribution Licensee,
and includes the expenditure on manpower, repairs, spares, consumables, insurance and overheads etc.;
46. “Original Project Cost” means the capital expenditure incurred by the Generating Company or the
Transmission Licensee or the Distribution Licensee, as the case may be, within the original scope of the
project up to the Cut-off Date as admitted by the Commission;
47. “Other Business” means any other business of the distribution licensee for optimum utilisation of its assets
within the meaning of Section 51 of the Act;
48. “Prudence Check” shall mean scrutiny of the reasonableness of expenditure incurred or proposed to be
incurred, financing plan, use of efficient technology, cost and time over-run and such other factors as may be
considered appropriate by the Commission for determination of tariff;
49. “Rated Voltage” shall mean the manufacturer's design voltage at which the transmission system is designed
to operate or such lower voltage at which the line is charged, for the time being, in consultation with
Transmission System Users;
50. “Retail Supply Business” means the business of sale of electricity by a distribution licensee to the
consumers within the area of supply in accordance with the terms of the licence for distribution and retail
supply of electricity.
51. “State” shall mean the Union Territory of Jammu & Kashmir and the Union Territory of Ladakh;
52. “State Grid Code” shall mean the Joint Electricity Regulatory Commission for the UT of J&K and the UT
of Ladakh (State Grid Code), Regulations 2023 specified by the Commission under Clause (h) of sub section (1) of Section 86 of the Act;
53. “State Load Despatch Centre” or “SLDC” shall mean the Centre established under sub-section (1) of
Section 31 of the Act;
54. “Transmission Licensee” shall mean a Licensee authorized to establish or operate transmission lines;
55. “Transmission System User” shall mean the Distribution Licensee or Open Access User, as the case may
be, who uses the intra-State transmission network for the purpose of transmission of electricity;
56. “Useful life” in relation to a unit of a Generating Station/Unit, Transmission System, and Distribution
System from the Date of Commercial Operation shall be as defined in Appendix I to these Regulations;
57. “Wheeling” means the operation whereby the distribution system and associated facilities of a distribution
licensee are used by another person for the conveyance of electricity on payment of charges to be determined
under section 62, or under section 42(2);
58. “Wheeling Business" means the business of operating and maintaining a distribution system for the
conveyance of electricity in the area of supply of the distribution licensee.”
59. “Working Day” shall mean a Day on which banks are open for business;
60. “Year” or “Financial Year” shall mean a Financial Year (FY), beginning from 1st April of calendar Year
and ending on 31st March of the next calendar Year.
2.2 Words and expressions occurring in these Regulations and not defined herein but defined in the Act or JERC for
the UT of J&K and the UT of Ladakh (State Grid Code) Regulations 2023 and prevalent CERC Tariff
Regulations shall bear the same meanings as respectively assigned to them in the Act or Grid Code or prevalent
CERC Tariff Regulations and the words and expressions used herein but not specifically defined herein or in the
Act or Grid Code or State Grid Code or prevalent CERC Tariff Regulations shall have the meanings generally
assigned to them in the electricity industry.
2.3 In the interpretation of these Regulations, unless the context otherwise requires:
a) Words in the singular or plural term, as the case may be, shall also be deemed to include the plural or the
singular term, respectively;
b) The terms "include" or "including" shall be deemed to be followed by "but not limited to" regardless of
whether such terms are followed by such phrases or words of like import;
c) References herein to the "Regulations" shall be construed as a reference to these Regulations or as may be
amended or modified by the Commission from time to time in accordance with the applicable laws in force;
d) The headings within the Regulations are inserted for convenience and be read together with the text below for
the purpose of interpretation of these Regulations;
e) References to the Statutes, Regulations or guidelines shall be construed as including all statutory provisions
consolidating, amending, or replacing such Statutes, Regulations, or guidelines, as the case may be, referred
to;
f) In case of inconsistency between any provision of these Regulations and any other Regulations or Orders
passed by the Commission, the provisions of these Regulations shall prevail.
g) The words "Application" or "Petition" shall be interpreted synonymously.
3. Scope of Regulation and extent of application
3.1. The Commission shall determine tariff within the Multi-Year Tariff framework, for all matters for which the
Commission has jurisdiction under the Act, including in the following cases:
a) Supply of electricity by a Generating Company to a Distribution Licensee:
Provided that where a shortage of supply of electricity exists, it may fix the minimum and maximum ceiling
of tariff for the sale or purchase of electricity in pursuance of an agreement, entered into between a
Generating Company and a Distribution Licensee or between Distribution Licensees, for a period not
exceeding one year to ensure reasonable prices of electricity;
b) Intra-State transmission of electricity;
c) Intra-State wheeling of electricity;
d) Retail supply of electricity:
Provided that in case of distribution of electricity in the same area by two or more Distribution Licensees, the
Commission may, for promoting competition among Distribution Licensees, fix only the maximum ceiling of
tariff for retail sale of electricity:
Provided further that where the Commission has allowed Open Access to certain Consumers under sub- section
(2) of Section 42 of the Act, such Consumers, notwithstanding the provisions of clause (d) of sub- section (1) of
Section 62 of the Act, may enter into an agreement with any person for supply or purchase of electricity on such
terms and conditions (including tariff) as may be agreed between them. Such Open Access shall be regulated by
provisions of prevalent Open Access Regulations as amended from time to time.
3.2. These Regulations shall not apply for the determination of tariff in case of the following:
(a) Generating Stations and Transmission Systems whose tariff has been discovered through a transparent
process of competitive bidding in accordance with the competitive bidding guidelines notified by the Central
Government and adopted by the Commission under Section 63 of the Act.
(b) Generating stations of renewable sources of energy, which shall be governed by prevalent Renewable Energy
Tariff Regulations as amended from time to time or any subsequent enactment thereof.
3.3. In accordance with the principles laid out in Regulation 55, Regulation 56, and Regulation 64, the Commission
shall determine Aggregate Revenue Requirement for:
a) Distribution WiresBusiness; and
b) Retail SupplyBusiness.
3.4. The Distribution Licensee shall file an application containing separate details for the determination of Aggregate
Revenue Requirement for Distribution Wires Business and Retail Supply Business, in accordance with
Regulation 55 specified in these Regulations.
3.5. The wheeling charges shall be based on the Aggregate Revenue Requirement determined for the Distribution
Wires Business.
3.6. The Retail Supply tariff for the retail sale of electricity shall be based on the Aggregate Revenue Requirement
determined for the Retail Supply Business.
3.7. The Commission shall also determine Cross-Subsidy Surcharge in addition to the charges for wheeling under the
first proviso to sub-section (2) of Section 42 of the Act, in accordance with prevalent Open Access Regulations,
as amended from time to time.
3.8. The Commission shall also determine Additional Surcharge under sub-section (4) of Section 42 of the Act, in
accordance with prevalent Open Access Regulations as amended from time to time.
4. Norms of operation to be ceiling norms
4.1 For removal of doubts, it is clarified that the norms of operation specified under these Regulations are the
ceiling norms and this shall not preclude the Transmission Licensee or the Distribution Licensee, as the case
may be, and the beneficiaries from accepting improved norms of operation as determined by the Commission
and such improved norms shall be applicable for the determination of tariff.
Chapter 2: General Principles
5. Guiding Principles for MYT Framework
5.1. The Commission shall determine the tariff for matters covered under clauses (a), (b), (c) and (d) of Regulation
3.1, under a Multi-Year Tariff framework with effect from April 1, 2026 (i.e. tariff applicable for FY 2026-27
onwards).
5.2. The Multi Year Tariff framework for determination of Aggregate Revenue Requirement and Expected
Revenue from Tariff and Charges for Generating Company, Transmission Licensee, Distribution Wires
Business and Retail Supply Business shall include the following:
a) Business Plan for the Licensee, for the entire Control Period as submitted to the Commission for approval,
prior to the start of the Control Period;
b) A detailed Multi-Year tariff application comprising of the year-wise forecast of Aggregate Revenue
Requirement for the entire Control Period and determination of Expected Revenue from Tariff and Charges
for the first Year of the Control Period submitted by the Applicant, in formats specified by the Commission
from time to time:
Provided that the performance parameters, whose trajectories have been specified in these Regulations or the
Business Plan or the Multi-Year Tariff Order approved by the Commission, shall form the basis for the
projection of these performance parameters in the Aggregate Revenue Requirement for the entire Control
Period:
c) Determination of year-wise Aggregate Revenue Requirement by the Commission for the entire Control
Period and the tariff for the first Year of the Control Period for the Generating Company, Transmission
Licensee, Distribution Wires Business, and Retail Supply Business;
d) Annual review of performance which shall be conducted vis-a-vis the approved forecast and categorization of
variations in performance into controllable and uncontrollable factors;
e) Annual determination of tariff for the Generating Company, Transmission Licensee, Distribution Wires
Business, and Retail Supply Business, for each Financial Year within the Control Period, based on the
approved forecast, the annual performance review, and truing up exercise;
f) Truing up of previous Year/(s) expenses and revenue by the Commission based on audited accounts vis- a-vis
the approved forecast and categorization of variation in performance as those caused by factors within the
control of the Applicant (controllable factors) and those caused by factors beyond the control of the Applicant
(uncontrollable factors);
g) The mechanism for pass-through of approved gains or losses on account of uncontrollable factors as specified
by the Commission in these Regulations;
h) The mechanism for sharing of approved gains or losses on account of controllable factors as specified by the
Commission in these Regulations.
6. Values for Base Year
6.1 The values for the Base Year of the Control Period shall be determined on the basis of the audited accounts or
provisional accounts of last three (3) Years, as the case may be, and other factors considered relevant by the
Commission;
Provided that, in absence of the availability of audited accounts or provisional accounts of last three (3) Years, the
Commission may benchmark the parameters with other similar utilities to establish the values for Base Year:
Provided further that the Commission may change the values for Base Year and consequently the trajectory of
parameters for Control Period, considering the actual figures from audited accounts.
6.2 The Commission may revisit the performance targets for the Control Period during Annual Performance Review,
carried out in accordance with the proviso to Regulation 5.2 (d).
7. Segregation of Retail Supply and Distribution Wires Business
7.1 The Distribution Licensee shall segregate the accounts of the Licensed Business into Distribution Wires Business
and Retail Supply Business. The ARR for Distribution Wires Business shall be used to determine wheeling
charges. The ARR for Retail Supply Business, which shall include the ARR for Distribution Wires Business, in
accordance with Regulation 58, shall be used to determine retail supply tariff.
7.2 For such period until accounts are segregated, the Licensees shall use the Allocation Statement provided in
Regulation 53.1 to apportion costs and revenues to respective businesses.
8. Business Plan
8.1 The Generation Company, Transmission Licensee, and Distribution Licensee, under affidavit as per the prevalent
Joint Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh (Conduct of Business)
Regulations 2022, as amended from time to time, shall file, for the Commission's approval, a Business Plan for
the Control Period , i.e. FY 2026-27 to FY 2028-29, duly approved by the competent authority by 30th
November of the year prior to the commencement of the Control Period, with such fee, as specified in the
prevalent Joint Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh ( Fees, Fines, and
Charges ) Regulations, 2022, as amended from time to time:
Provided that in case the Commission issues guidelines and formats from time to time, the same shall be adhered
to by the Generation Company, Transmission Licensee, and Distribution Licensee while submitting the Business
Plan.
8.2 The Business Plan filed by the Generation Company shall inter-alia contain;
(a) Capital investment plan, which shall include details of the investments planned by the Generating Company
for existing stations along with its cost-benefit analysis, yearly phasing of capital expenditure along with the
source of funding, financing plan, and corresponding capitalisation schedule. This plan shall be
commensurate with R&M schemes and proposed efficiency improvements for various plants of the
company;
(b) The capital investment plan shall show separately, ongoing projects that will spill over into the years under
review, and new projects (along with justification) that will commence in the years under review but may be
completed within or beyond the tariff period;
(c) The Generating Company shall submit plant-wise details of the capital structure and cost of financing
(interest on debt and return on equity), after considering the existing market conditions, terms of the existing
loan agreements, risks associated with generation business and creditworthiness;
(d) Details related to major shutdown of machines, if any;
(e) Trajectory of performance parameters;
8.3 The Business Plan filed by the Transmission Licensee shall inter-alia contain:
a) Projections for the growth of load in the transmission network;
b) Capital Investment Plan for each Year of the Control Period commensurate with load growth, transmission
loss reduction trajectory, and quality improvement measures proposed in the Business Plan in accordance
with Regulation 8.5;
c) Capital structure of each scheme proposed and the cost of financing (interest on debt and return on equity),
terms of the existing loan agreements, etc.;
d) Performance targets items such as transmission loss, availability of transmission system, transformer failure
rate, and any other parameters for quality of supply for each year of the Control Period, consistent with the
Capital Investment Plan proposed by the Transmission Licensee;
e) Projections for the number of employees during each Year of the Control Period based on proposed
recruitments and retirement;
f) Proposals in respect of income from Other Businesses for each Year of the Control Period.
8.4 The Business Plan filed by the Distribution Licensee for the Control Period shall comprise of but not be
limited to the following:
a) Capital Investment Plan for each Year of the Control Period commensurate with load growth, distribution
loss reduction trajectory, and quality improvement measures proposed in the Business Plan in accordance
with Regulation 8.5;
b) Capital Structure of each scheme proposed and the cost of financing (interest on debt and return on equity),
terms of the existing loan agreements, etc.;
c) Sales Forecast for each Consumer category and sub-categories for each Year of the Control Period in
accordance with Regulation 8.6;
d) Power Procurement Plan based on the Sales Forecast and distribution loss trajectory for each Year of the
Control Period in accordance with Regulation 8.8;
e) Targets for distribution loss for each Year of the Control Period consistent with the Capital Investment Plan
proposed by the Licensee;
f) Projections for the number of employees during each Year of the Control Period based on proposed
recruitments and retirement;
g) Proposals in respect of income from Other Businesses for each Year of the Control Period.
8.5 Capital Investment Plan
a) The Capital Investment Plan to be submitted as part of the Business Plan shall show separately, ongoing
projects that will spill into the financial year under review and new projects (along with justification) that
will commence but may be completed within or beyond the tariff period for the purpose of investment,
Capital Structure, implementation schedule, quarter-wise capital expenditure and capitalization schedule,
financing plan, cost-benefit analysis, improvement in operational efficiency envisaged in the Control Period
owing to proposed investment and such details for ongoing projects that will spill over into the Control
Period under review along with justification;
b) The Capital Investment Plan proposed by the Transmission Licensee shall be in conformity with the plans
made by the Authority/Central Transmission Utility and with the Capital Investment Plan of the Distribution
Licensee;
c) During the Annual Performance Review, the Commission shall monitor the progress of the actual capital
expenditure incurred by the Licensee vis-a-vis the approved capital expenditure. The Licensees shall submit
the actual capital expenditure incurred along with the annual performance review, true-up, and determination
of tariff filing;
d) In case, during the Annual Performance Review, the cumulative (starting from the first Year of the Control
Period up to the current Year) actual capital expenditure incurred is less than 50% of the cumulative
approved capital expenditure, the Commission shall true-up the ARR elements relevant to actual capital
expenditure in the current Year and remaining Years of the Control Period;
e) In case the capital expenditure is required for emergency work which has not been approved in the Capital
Investment Plan, the Licensee shall submit an application containing all relevant information along with
reasons justifying the emergency nature of the proposed work seeking approval of the Commission:
Provided that in case capital expenditure is required for emergency work or unforeseen situations to mitigate
the threat to life and property and if prior intimation thereof to the Commission shall cause any irreparable
loss or injury, the Licensee may undertake that capital expenditure and submit the details along with adequate
justification for ex post facto approval of the Commission:
Provided further that for the purpose of Regulation 8.5(e) above, such approved capital expenditure shall be
treated as a part of both the actual capital expenditure incurred by the Licensee and approved capital
expenditure by the Commission;
f) The Licensee shall submit a report for every quarter detailing the progress of the capital expenditure and
capitalization undertaken against that proposed in the Capital Investment Plan, on or before the last Day of
the month succeeding the respective quarter for review by the Commission.
8.6 Sales Forecast
The sales Forecast in the Business Plan shall be done as per the provisions of the prevalent Power Purchase and
Procurement Process Regulations.
8.7 Treatment of Distribution Loss
The power purchase requirement of the Distribution Licensee at the Transmission-Distribution interface point,
shall be computed by grossing up the sales with the distribution losses approved by the Commission:
Provided that the Commission may stipulate the target distribution losses in accordance with Regulation 17 as
part of the Order on Business Plan:
Provided further that the Distribution Licensee shall submit the details of area-wise distribution losses viz.
Circles/Divisions/Distribution Centres for the relevant years, in accordance with the formats prescribed by the
Commission:
Provided also that the area-wise distribution losses shall separately indicate the distribution losses in each
Distribution Franchisee area within its License area, for the relevant years, if applicable.
8.8 Power Procurement Plan
The Distribution Licensee shall prepare a plan for procurement of power and the same shall be done as per the
provisions of the prevalent Power Purchase and Procurement Process Regulations and prevalent Resource
Adequacy Regulations.
Provided further that such power procurement plan may include long-term, medium-term and short- term sources
of power procurement, in accordance with these Regulations and the relevant Resource Adequacy Plan prepared
under the prevalent Resource Adequacy Regulations.
8.9 On receipt of the Business Plan application, the Commission shall either:
a) Issue an Order approving the Business Plan for the entire Control Period; orb) Reject the Plan for reasons
to be recorded in writing, as the Commission may deem appropriate:
Provided that the Applicant shall be given a reasonable opportunity of being heard before rejecting its application.
9. Multi-Year Tariff Application
9.1 The applicant shall, based on the Business Plan, submit the forecast of Aggregate Revenue Requirement and
expected revenue from the tariff, for the Control Period by way of a Petition in accordance with the Joint
Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh (Conduct of Business) Regulations
2022 as amended from time to time , by 30th November of the year prior to the commencement of the Control
Period and accompanied by such fee payable, as specified in the prevalent Joint Electricity Regulatory
Commission for the UT of J&K and the UT of Ladakh ( Fees, Fines, and Charges ) Regulations, 2022, as
amended from time to time.
9.2 The application shall also be accompanied by the true-up Petition based on the latest available audited accounts
and the annual performance review for the current Year based on the actual performance during the first six
Months of the Year and estimates for the subsequent six Months. Applicant shall develop the forecast of
Aggregate Revenue Requirement using the assumptions relating to the behaviour of individual variables that
comprise the Aggregate Revenue Requirement during each year of the Control Period, including inter-alia
detailed category-wise sales and demand projections, power procurement plan, Capital Investment Plan,
trajectories of parameters specified in these Regulations and Business Plan, in accordance with guidelines and
formats, as may be specified by the Commission from time to time.
9.3 The Applicant shall develop the forecast of Expected Revenue from Tariff and Charges based on the following:
a) In the case of a Generating Company, estimates of the quantum of electricity to be generated by each unit/
station for ensuing Financial Year within the Control Period;
b) In the case of a Transmission Licensee, estimates of the transmission capacity allocated to Transmission
System Users for ensuing Financial Year within the Control Period;
c) In the case of a Distribution Licensee, estimates of the quantum of electricity to be supplied to Consumers
and to be wheeled on behalf of distribution system users for the ensuing Financial Year within the Control
Period;
d) Prevailing tariff as on the date of making the application.
9.4 Based on the forecast of Aggregate Revenue Requirement for the first Year of the Control Period and Expected
Revenue from Tariff and Charges, the Generating Company, Transmission Licensee and Distribution Licensee
for the Distribution Wires Business and Retail Supply Business, shall propose the tariff for the first Year of
Control Period:
Provided that the tariff proposed by Distribution Licensee shall be in accordance with Section 62 of the Act and
these Regulations.
9.5 The Applicant shall provide full details supporting the forecast, including but not limited to details of past
performance, proposed initiatives for achieving efficiency or productivity gains, technical studies, contractual
arrangements and/ or secondary research, to enable the Commission to assess the reasonableness of the forecast.
9.6 On receipt of the application, the Commission shall either:
a) Issue an Order approving the Aggregate Revenue Requirement for the entire Control Period and the tariff for
the first Year of the Control Period; or
b) Reject the application for reasons to be recorded in writing, as the Commission may deem appropriate:
Provided that the Applicant shall be given a reasonable opportunity of being heard before rejecting its
application.
10. Trajectory for Specific Variables
10.1 The Commission, while approving the Business Plan and/ or Multi Year Tariff Petition, may stipulate a trajectory
for certain variables, including but not limited to Auxiliary consumption, Station Heat Rate, O&M expenses,
distribution losses etc.;
Provided that the utilities shall adhere to the norms as specified in the Order on Business Plan and/or Multi Year
tariff petition;
10.2 The trajectory stipulated by the Commission in the Order approving the Business Plan submitted by the
applicant, shall be followed while approving the Aggregate Revenue Requirement and/or expected revenue from
tariff and charges.
10.3 The Commission shall specify the yearly AT&C loss reduction trajectory for the control period with due regard
to the AT&C loss approved in the True Up of the previous control period. The yearly AT&C loss trajectory for
the control period shall not be changed/ modified, other than under exceptional conditions approved by the
Commission.
11. Annual Performance Review, Truing-up and tariff determination during the Control Period
11.1 The Generating Company, Transmission Licensee and Distribution Licensee shall file an application for the
annual performance review of the current year, truing up of the previous Year or the Year for which the audited
accounts are available and determination of tariff for each of the ensuing Years on or before 30th November of
each year, in formats specified by the Commission from time to time:
Provided that the Generating Company, Transmission Licensee, or Distribution Licensee, as the case may be,
shall submit to the Commission information in such form as may be specified by the Commission, together with
the audited accounts, 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;
11.2 The scope of the annual performance review, truing up, and tariff determination for each year shall be a
comparison of the performance of the Generating Company, Transmission Licensee, or Distribution Licensee
with the approved forecast of Aggregate Revenue Requirement and Expected Revenue from Tariff and Charges
and shall comprise of the following:
a) True-up: a comparison of the audited performance of the Applicant for the Financial Year for which the true
up is being carried out with the approved forecast for such previous Financial Year, subject to the prudence
check;
b) Annual Performance Review: a comparison of the revised performance targets of the Applicant for the
current Financial Year with the approved forecast in the Tariff Order corresponding to the Control Period for
the current Financial Year subject to prudence check;
c) Tariff determination for the ensuing Year of the Control Period based on the revised forecast of the
Aggregate Revenue Requirement for the Year;
d) Review of compliance with directives issued by the Commission from time to time;
e) Other relevant details, if any
11.3 Upon completion of the exercise, the Commission shall attribute any variations or expected variations in
performance for variables specified under Regulation 12, to factors within the control of the Applicant
(controllable factors) or to factors beyond the control of the Applicant (uncontrollable factors):
Provided that any variations or expected variations in performance, for variables other than those specified under
Regulation 12 below shall be attributed entirely to controllable factors.
11.4 Upon completion of the exercise, the Commission shall pass an order recording.
a) Components of approved cost pertaining to the uncontrollable factors, which were not recovered during the
previous year, to be passed through in tariff as per Regulation 13 of these Regulations:
b) Approved aggregate gain or loss on account of controllable factors, and the amount of such gains or such
losses that may be shared in accordance with Regulation 14 of these Regulations:
c) Carrying cost shall be allowed for a Generating Company, Transmission Licensee, or Distribution Licensee
on the amount of revenue gap/surplus for the period from the date on which such gap/surplus has become
due, i.e., from the end of the Year for which true-up has been done, till the end of the Year in which it is
addressed, on the basis of actual rate of loan taken by the Licensee to fund the deficit in revenue:
Provided that carrying cost on the amount of revenue gap shall be allowed subject to prudence check and
submission of documentary evidence for having incurred the carrying cost in the years prior to the year in
which the revenue gap is addressed:
Provided also that if no loan has been taken to fund revenue deficit, the Commission shall allow Carrying
Cost on a simple interest basis at one (1) Year State Bank of India (SBI) MCLR /any replacement thereof as
notified by RBI for the time being in effect applicable for 1 Year period, as may be, applicable as on 1st April
of the relevant Year plus 100 basis points;
Provided further that in case of revenue surplus, the Commission shall charge the Licensee a Carrying Cost
from the date on which such surplus has become due, i.e., from the end of the Year for which true- up has
been done, till the end of the Year in which it is addressed on simple interest basis at one (1) Year State Bank
of India (SBI) MCLR / any replacement thereof as notified by RBI for the time being in effect applicable for
1 Year period, as may be, applicable as on 1st April of the relevant Year plus 100 basis points.
d) Revision of estimates and tariff for the ensuing Financial Year.
12. Uncontrollable and Controllable factors
12.1 For the purpose of these Regulations, the term "uncontrollable factors" for a Transmission or Distribution
Licensee shall comprise of the following factors, which were beyond the control of the Licensee, and could not
be mitigated by the Licensee:
a) Force Majeure events;
b) Change in Law, judicial pronouncements and Orders of the Central Government, State Government or
Commission;
c) Variation in the number or mix of Consumers or quantities of electricity supplied to Consumers;
d) Inter-state and Intra-State Transmission losses;
e) Variation in the cost of power purchase due to variation in the rate of power purchase from approved sources,
subject to clauses in the power purchase agreement or arrangement approved by the Commission;
f) Inflation;
g) Transmission Charges for a Distribution Licensee;
h) Variation in market interest rates for long-term loans;
i) Employee expenses limited to one-time payment owing requirements of a pay commission and terminal
liability of employees;
j) Taxes and Statutory levies;
k) Taxes on income;
l) Income from the realisation of bad debts written off:
Provided that where the Applicant believes, for any variable not specified above, that there is a material
variation or expected variation in performance for any Financial Year on account of uncontrollable factors,
such Applicant may apply to the Commission for inclusion of such variable at the Commission's discretion,
under this Regulation for such Financial Year:
12.2 For the purpose of these Regulations, the term “controllable factors” shall comprise of the factors which were
within the control of the Licensee, shall inter-alia, include:
a) Variations in capitalisation 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) Variation in Interest and Finance Charges, Return on Equity, and Depreciation and Working capital
requirements on account of variation in capitalisation, as specified in clause (a) above;
c) Variations in Aggregate Technical and Commercial (AT&C) losses of Distribution Licensee in accordance
with CEA Guidelines for computation of AT&C Loss. The detailed methodology for computation of AT&C
loss has been indicated at Appendix-II to these regulations;
d) Distribution Losses which are measured as the difference between total energy input for sale to all its
consumers and sum of the total energy billed in its license area in the same year;
e) Availability of transmission system;
f) Failure to meet the standards specified in the prevalent Standard of Performance for Distribution Licensees
Regulation, as amended from time to time;
g) Variations in labour productivity;
h) Variation in O&M Expenses, except to the extent of inflation;
i) Bad debts written off, in accordance with the provisions of Regulation 65:
j) Variations in Wires Availability and Supply Availability.
13. Mechanism for pass through of gains or losses on account of uncontrollable factors
13.1 Approved aggregate gain or loss to the Generating Company, Transmission Licensee or Distribution Licensee on
account of uncontrollable factors shall be pass-through as an adjustment in the tariff of the Generating Company,
Transmission Licensee or Distribution Licensee over such period as may be specified in the Order of the
Commission passed under these Regulations:
13.2 The Generating company, Transmission Licensee or Distribution Licensee shall submit such details of the
variation between expenses incurred and revenue earned and the figures approved by the Commission, in the
specified format to the Commission, along with the detailed computations and supporting documents as may be
required for verification by the Commission.
14. Mechanism for sharing of gains or losses on account of controllable factors
14.1 The approved aggregate gain to the Generating Company, Transmission Licensee or Distribution Licensee on
account of controllable factors must be shared in following manner: -
(a) Two-third of the amount of such gain shall be passed on as a rebate in tariff over such period as may be
stipulated in the Order of the Commission;
(b) The balance amount, which will amount to one-third of such gain, may be utilised at the discretion of the
Generating Company, Transmission Licensee or Distribution Licensee.
14.2 The approved aggregate loss, if any to the Generating Company, Transmission Licensee or Distribution Licensee
on account of controllable factors shall be shall be dealt in the following manner:
(a) One-third of the amount of such loss shall be passed on as an additional charge in tariff over such period as
may be stipulated in the Order of the Commission; and
(b) The balance amount, which will amount to two-third of such loss, shall be absorbed by the Licensee.
14.3 The gain or loss on account of other controllable factors, unless otherwise specifically provided by the
Commission shall be to the account of the Generating Company, Transmission Licensee or Distribution
Licensee.
15. Determination of Tariff
15.1 The proceedings to be held by the Commission for the determination of tariff shall be in accordance with the
prevalent Joint Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh (Conduct of
Business) Regulations 2022, as amended from time to time.
15.2 Notwithstanding anything contained in these Regulations, the Commission shall at all times have the authority,
either on Suo-Motu basis or on a Petition filed by the Generating Company, Transmission Licensee or
Distribution Licensee, to determine the tariff, including terms and conditions thereof:
Provided that such determination of tariff may be pursuant to an agreement or arrangement or otherwise whether
or not previously approved by the Commission and entered into at any time before or after the applicability of
these Regulations.
15.3 Notwithstanding anything contained in these Regulations, the Commission shall adopt the tariff, if such tariff has
been determined through a transparent process of bidding in accordance with the guidelines issued by the Central
Government:
Provided that the Applicant shall provide such information as the Commission may require for satisfying itself
that the guidelines issued by the Central Government in this regard have been duly followed.
15.4 Determination of Tariff for an existing Generation Station:
a) Where the Commission has, at any time prior to the date of effectiveness of these Regulations, approved a
power purchase agreement or arrangement between a Generating Company and a Distribution Licensee or
has adopted the tariff contained therein for supply of electricity from an existing generating unit/station, the
tariff for supply of electricity by the Generating Company to the Distribution Licensee shall be in accordance
with tariff mentioned in such power purchase agreement or arrangement for such period as may be so
approved or adopted by the Commission;
b) Where, as on the date of effectiveness of these Regulations, the power purchase agreement or arrangement
between a Generating Company and a Distribution Licensee for supply of electricity from an existing
Generating Station has not been approved by the Commission or the tariff contained therein has not been
adopted by the Commission or where there is no power purchase agreement or arrangement, the supply of
electricity by such Generating Company to such Distribution Licensee after the date of effectiveness of these
Regulations shall be in accordance with a power purchase agreement approved by the Commission:
Provided that an application for approval of such power purchase agreement or arrangement shall be made
by the Distribution Licensee to the Commission within a period of three (3) months from the date of
notification of these Regulations:
Provided further that the supply of electricity shall be allowed to continue under the present agreement or
arrangement, as the case may be, until such time as the Commission approves of such power purchase
agreement and shall be discontinued forthwith if the Commission rejects, for reasons recorded in writing,
such power purchase agreement or arrangement.
15.5 Determination of Tariff for a new Generating Station:
a) The tariff for the supply of electricity by a Generating Company to a Distribution Licensee from a new
generating unit/station shall be in accordance with the tariff as per the power purchase agreement approved
by the Commission.
15.6 Determination of Tariff for Transmission, Distribution Wires Business and Retail Supply Business:
a) The Commission shall, based on an application made by the Transmission or Distribution Licensees in
accordance with the Regulations 16 determine the tariff for:
(i). Transmission of electricity, in accordance with the terms and conditions contained in Chapter 5 of these
Regulations;
(ii). Distribution Wires Business, in accordance with the terms and conditions contained in Chapter 6 of
these Regulations; and
(iii). Retail Supply Business, in accordance with the terms and conditions contained in Chapter 7 of these
Regulations.
16. Filing Procedure
16.1 An application for approval of the Business Plan shall be made by 30th November of the year prior to the
commencement of the Control Period, in accordance with the prevalent Joint Electricity Regulatory Commission
for the UT of J&K and the UT of Ladakh (Conduct of Business) Regulations 2022, and accompanied by a such
fee payable, as specified in the prevalent Joint Electricity Regulatory Commission for the UT of J&K and the UT
of Ladakh (Fees, Fines, and Charges) Regulations 2022.
16.2 An application for determination of tariff shall be made by 30th November every year, in such form and in such
manner as specified in this Regulation and accompanied by such fees as specified in the prevalent Joint
Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh (Fees, Fines, and Charges)
Regulations 2022 as amended from time to time.
16.3 The proceedings to be held by the Commission for the determination of tariff shall be in accordance with the
prevalent Joint Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh (Conduct of
Business) Regulations 2022, as amended from time to time.
16.4 The Applicant shall provide, as part of its Petition to the Commission, in such formats as specified by the
Commission from time to time, full details of its calculation of the Aggregate Revenue Requirement and
Expected Revenue from Tariff and Charges, and thereafter, shall furnish such further information or particulars
or documents as the Commission may reasonably require to assess such calculation:
Provided that the Petition shall be accompanied by, where relevant, tariff and charges revision proposal showing
category-wise tariff for recovery of Aggregate Revenue Requirement for the respective Year of the Control
Period:
Provided further that the Commission may specify additional/alternative formats for details to be submitted by
the Applicant, from time to time, as it may reasonably require for assessing the Aggregate Revenue Requirement
and for determining the tariff.
Provided further that the information for the previous year shall be based on audited accounts and the same
should be filed along with audited accounts for the previous year:
16.5 The Generating Company or Transmission Licensee or Distribution Licensee shall, along with the aforesaid
petition, submit a statement on the status of compliance of directives, if any, issued by the Commission in its
previous tariff order.
16.6 The petition for determination of tariff shall include the details of actual subsidy received from the State
Government vis-a-vis claimed by the Distribution Licensee and the true-up petition for the previous year:
16.7 The Petition shall be supported by an affidavit of the person acquainted with the facts stated in the application.
16.8 Upon receipt of a complete Petition accompanied by all requisite information, particulars and documents in
compliance with all the requirements specified in these Regulations, the Petition shall be deemed to be received
and the Commission shall intimate to the Applicant regarding the acceptance of Petition.
16.9 The Commission may seek clarifications and additional information on inadequacies in the application, if any,
within 14 (fourteen) days of filing the application for approval of the Business Plan and application for
determination of tariff, as the case may be.
16.10 The Generating Company or Transmission Licensee or Distribution Licensee shall respond within the next 10
(ten) days to the Commission with all clarification and information as required.
16.11 The Applicant shall, within seven (7) Days after acceptance of the Petition by the Commission, publish a notice
of its Petition in at least two English and two Vernacular languages daily newspapers having wide circulation in
the relevant area:
Provided that the Applicant shall make available a hard copy of the complete Petition to any person, at such
locations and at such rates as may be stipulated by the Commission:
Provided also that the Applicant shall also provide on its internet website, in text searchable format or in
downloadable spreadsheet format furnishing detailed computations, the Petition filed before the Commission
along with all regulatory filings, information, particulars and documents in the manner stipulated by the
Commission:
Provided also that the web link to such information mentioned shall be easily accessible, archived for
downloading and be prominently displayed on the Applicant's internet website:
Provided further that the Applicant may be exempted by the Commission from providing any such information,
particulars, or documents, which are confidential in nature.
16.12 The suggestions and objections, if any, on the proposal for determination of tariff, may be filed before the
Secretary, Joint Electricity Regulatory Commission for the UT of J&K and the UT of Ladakh, by any person
within the timeline specified in the notice so published, with a copy to the Applicant.
16.13 The Applicant shall within seven (7) days from the date of publication of the notice as aforesaid, submit to the
Commission on affidavit the details of the notice published and shall also file copies of the newspapers wherein
the notice has been published.
16.14 The Applicant shall file its comments on the suggestions and objections, if any, received in response to its
application within the time limit specified by the Commission.
16.15 Notwithstanding anything contained in these Regulations, in case of delay/ non-submission of the application
for approval of the Business Plan and application for determination of tariff, as the case may be, the Commission
may initiate Suo-Motu proceedings for the determination of Tariff as feel appropriate.
Provided that in the event of the licensee not filing the application despite the aforesaid proceeding, the
Commission may on its own, decide the tariff based on the previous year's tariff details and after incorporating
suitable adjustments.
Provided further that the Commission may also pass directions under Section 129 and/or Section 142 of the Act
if required.
17. Tariff Order
17.1 The Commission shall, within one hundred and twenty (120) Days from the date of acceptance of the complete
Petition, subject to the petitioner providing information subsequently sought by the Commission in a timely
manner and after considering all suggestions and objections received from the various stakeholders:
a) Issue a Tariff Order, or
b) Reject the application for reasons to be recorded in writing if such application is not in accordance with the
provisions of the Act and Regulations made thereunder or the provisions of any other law for the time being
in force:
Provided that an Applicant shall be given a reasonable opportunity of being heard before rejecting its application.
17.2 The tariff so published shall be in force from the date specified in the said Order and shall, unless amended or
revoked, continue to be in force for such period as may be stipulated therein.
17.3 The Applicant shall publish the tariff approved by the Commission in at least two English and two vernacular
languages daily newspapers having wide circulation in the State of location of Generating Company or
Transmission Licensee or Area of Supply of Distribution Licensee, as the case may be, display the approved
tariff schedule on its internet website, and make available for sale a booklet containing such tariff to any person
upon payment of reasonable charges.
18. True-up Order
18.1 The Commission shall approve the True-up expenses either as part of the Tariff Order or issue Order for True-up
of expenses preceding the Tariff order of the ensuing year.
18.2 An Order for True-up of Expenses shall be issued on annual basis.
18.3 An Order for True-up of Expenses shall be on the basis of expense estimates made at the beginning of the year
under consideration and actual expenses booked in the audited books of account of the Distribution Licensee for
the year.
19. Adherence to Tariff Order
19.1 No tariff or part of any tariff may ordinarily be amended more frequently than once in a Year, except in respect
of any changes expressly permitted under the terms of any fuel surcharge formula as may be specified.
19.2 If any Generating Company or Licensee recovers a price or charge exceeding the tariff determined by the
Commission under Section 62 of the Act and in accordance with these Regulations, the excess amount shall be
payable to the person who has paid such price or charge, along with interest equivalent to the carrying cost
prevailing during the relevant period, without prejudice to any other liability to which such Generating Company
or Licensee may be subject:
Provided that such interest payable to any party shall not be allowed to be recovered through the Aggregate
Revenue Requirement of the Licensee:
Provided further that the Licensee shall maintain separate details of such interest paid or payable by it, and shall
submit them to the Commission along with its Petition.
20. Subsidy Mechanism
20.1 If the Government requires to grant any subsidy to any Consumer or class of Consumers in the tariff determined
by the Commission, the Government shall, notwithstanding any direction which may be given under Section 108
of the Act, pay in advance the amount to compensate the Distribution Licensee/person affected by the grant of
subsidy, as a condition for the Licensee or any other person concerned to implement the subsidy provided for by
the Government, in the manner specified in these Regulations:
Provided that no such direction of the Government shall be operative if the payment is not made in accordance
with the provisions contained in these Regulations, and the tariff fixed by the Commission shall be applicable
from the date of issue of orders by the Commission in this regard.
Provided that in case the UT Government decide to extend financial support /subsidy in the form of grant in aid
support to the power utilities till it achieves turnaround in T&D sector as envisaged in the ‘Financial Feasibility
Plan for the distribution utilities of UT of J&K and UT of Ladakh’ prepared by the Committee constituted by
JKPDD, Government of J&K vide order No 164-PDD of 2019 dated 20th September 2019. The Commission
shall factor - in such grant in support in tariff computation and construed it as tariff related revenue subsidy
provided under Section 65 of the Electricity Act 2003. It is desirable that the UT Government shall provide the
subsidy to the intended class of consumer as envisaged in Section 65 of the Electricity Act.
Chapter 3: Financial Principles
21. Financial Principles for a Generating Company and a Transmission Company
21.1 The Capital Cost for a Generating Company and a Transmission Company shall be determined by the
Commission, guided by the relevant provisions of these Regulations, subject to prudence check. The Capital Cost
so determined shall form the basis of the determination of tariffs for Existing Projects and New Projects.
21.2 The norms for Additional Capitalisation, Renovation, and Modernisation for a Generating Company shall be in
accordance with these Regulations.
21.3 The financial principles including principles governing Debt to Equity Ratio, Return on Equity, Interest on Loan,
Foreign Exchange Risk Variation, Interest on Working Capital, treatment of Tax on Income, norms for working
capital, etc. for a Generating Company and a Transmission Company shall be as specified in this chapter of these
Regulations.
22. Financial Principles for Distribution Business
22.1 The financial principles specified in the subsequent sections of this Chapter of these Regulations shall be
applicable to the Distribution Licensee.
23. Capital Cost
23.1 Capital cost for an existing capital investment Project shall include:
a) The Capital Cost admitted by the Commission prior to April 1, 2026 duly trued up on April 1, 2026;
b) Additional Capitalisation and De-capitalisation for the respective year of tariff as determined in accordance
with Regulation 24; and
c) Expenditure on account of renovation and modernisation as admitted by this Commission in accordance with
Regulation 26.
23.2 Capital cost for a new capital investment Project shall include:
a) The expenditure incurred or projected to be incurred up to date of commercial operation of the project;
b) Interest During Construction (IDC) and financing charges on the actual loan amount;
c) Interest During Construction (IDC) and Incidental Expenditure During Construction (IEDC) specified in
these Regulations;
d) Capitalised initial spares subject to the ceiling rates specified in these Regulations;
e) Expenditure on account of Additional Capitalisation and De-capitalisation for the respective year of the tariff
as determined in accordance with Regulation 24; and
f) Adjustment of any revenue earned by the Generating Company, Transmission Licensee, and Distribution
Licensee by using the assets before CoD;
g) The expenses incurred by the Licensee on obtaining the right of way, as admitted by the Commission after
prudence check;
h) Any gain or loss on account of foreign exchange rate variation pertaining to the loan amount availed up to the
Date of Commercial Operation, as admitted by the Commission after prudence check:
Provided that any gain or loss on account of foreign exchange rate variation pertaining to the loan amount availed
up to the Date of Commercial Operation shall be adjusted only against the debt component of the capital cost:
Provided further that the capital cost of the assets forming part of the Project but not put to use or not in use shall
be excluded from the capital cost:
Provided also that the Licensee shall submit documentary evidence in support of its claim of assets being put to
use.
23.3 The capital cost admitted by the Commission after prudence check shall form the basis for determination of
tariff:
Provided that prudence check may include scrutiny of the reasonableness of the capital expenditure, financing
plan including the choice and manner of funding, interest during construction, use of efficient technology, cost
over-run and time over-run, and such other matters as may be considered appropriate by the Commission for
determination of tariff.
23.4 The approved capital cost shall be considered for determination of tariff and if sufficient justification is provided
for any escalation in the capital cost, the same may be considered by the Commission subject to prudence check:
Provided that in case the actual capital cost is lower than the approved capital cost, then the actual capital cost
shall be considered for determination of tariff of the Licensee.
Provided also that where power purchase agreement or transmission or wheeling agreement provides for a ceiling
of capital cost, the capital cost admitted by the Commission shall take into consideration such ceiling for
determination of tariff.
23.5 The actual capital expenditure on Date of Commercial Operation for the original scope of work based on audited
accounts of the Transmission Licensee and Distribution Licensee, limited to original cost may be considered
subject to prudence check by the Commission.
23.6 The capital cost may include initial spares capitalised as a percentage of the Plant and Machinery cost up to Cut
off Date, subject to the following ceiling norms:
a) Transmission Line & Distribution Line - 1%
b) Transmission Sub-station & Distribution Sub-station (Green Field) - 4%
c) Transmission Sub-station (Brown Field) - 6%
d) Series Compensation devices and HVDC Station - 4%
e) Gas Insulated Sub-station (GIS) - 5%
f) Communication System - 3.5%
23.7 Any expenditure on the replacement, renovation and modernization or extension of life of old fixed assets, as
applicable to the Transmission Licensee and Distribution Licensee, shall be considered after writing off the net
value of such replaced assets from the original capital cost and shall be calculated as follows:
Net Value of Replaced Assets = OCFA – AD – CC
Where;
OCFA: - Original capital cost of Replaced Assets;
AD: -Accumulated depreciation pertaining to the Replaced Assets
CC: - Total Consumer Contribution pertaining to the Replaced Assets:
Provided further that the amount of insurance proceeds received, if any, towards damage to any asset requiring
its replacement shall be first adjusted towards outstanding actual or normative loan and the balance amount, if
any, shall be utilised to reduce the capital cost of such replaced asset, and any further balance amount shall be
considered as Non-Tariff Income.
23.8 Interest During Construction (IDC):
a) Interest during construction shall be computed corresponding to the loan from the date of infusion of debt
fund, and after taking into account the prudent phasing of funds up to Scheduled COD.
b) In case of additional costs on account of IDC due to delay in achieving the Scheduled COD, the generating
company or the transmission licensee, or the distribution licensee as the case may be, shall be required to
furnish detailed justifications with supporting documents for such delay including prudent phasing of funds:
Provided that if the delay is not attributable to the generating company or the transmission licensee or the
distribution licensee as the case may be, and is due to uncontrollable factors as specified in Regulation 12 of
these Regulations, IDC may be allowed after due prudence check and taking into account prudent phasing of
funds.
23.9 Incidental Expenditure During Construction (IEDC):
a) Incidental expenditure during construction shall be computed from the zero dates and after taking into
account pre-operative expenses up to Scheduled COD:
Provided that any revenue earned during the construction period up to Scheduled COD on account of interest
on deposits or advances, or any other receipts may be taken into account for the reduction in incidental
expenditure during construction.
b) In case of additional costs on account of IEDC due to delay in achieving the Scheduled COD, the generating
company or the transmission licensee, or the distribution licensee as the case may be, shall be required to
furnish detailed justification with supporting documents for such delay including the details of incidental
expenditure during the period of delay and liquidated damages recovered or recoverable corresponding to the
delay:
Provided that if the delay is not attributable to the generating company or the transmission licensee or the
distribution licensee, as the case may be, and is due to uncontrollable factors as specified in Regulation 12,
IEDC may be allowed after due prudence check:
Provided further that where the delay is attributable to an agency or contractor or supplier engaged by the
generating company or the transmission licensee or the distribution licensee, the liquidated damages
recovered from such agency or contractor or supplier shall be kept in view while computing the capital cost.
c) In case the time over-run beyond Scheduled COD is not admissible after due prudence, the increase of capital
cost on account of cost variation corresponding to the period of time overrun may be excluded from
capitalization irrespective of price variation provisions in the contracts with supplier or contractor of the
generating company or the transmission licensee or the distribution licensee.
24. Additional Capitalization and De-capitalisation
24.1 The capital expenditure, actually incurred or projected to be incurred, in respect of a New Project or an Existing
Project, on the following counts within the original scope of work, after the Date of Commercial Operation and
up to the Cut-off Date may be admitted by the Commission, subject to prudence check:
a) Undischarged liabilities recognized to be payable at a future date;
b) Works deferred for execution;
c) Procurement of initial capital spares within the original scope of work, in accordance with the provisions of
Regulation 23.6;
d) Liabilities to meet award of arbitration or for compliance with the order or decree of a court of law; and
e) Change in law or compliance with any existing law:
Provided that the details of works asset-wise/work-wise included in the original scope of work along with
estimates of expenditure, liabilities recognized to be payable at a future date, and the works deferred for
execution shall be submitted along with the application for determination of tariff.
24.2 The capital expenditure incurred or projected to be incurred in respect of the New Project on the following counts
within the original scope of work after the Cut-off Date may be admitted by the Commission, subject to prudence
check:
a) Liabilities to meet award of arbitration or for compliance with the order or decree of a court of law;
b) Change in law or compliance with any existing law;
c) Any liability for works executed prior to the Cut-off Date, after prudence check of the details of such
undischarged liability, the total estimated cost of the package, reasons for such withholding of payment and
release of such payments, etc.
24.3 The capital expenditure, in respect of the Existing Project, incurred or projected to be incurred on the following
counts after the Cut-off Date, may be admitted by the Commission, subject to prudence check:
a) Liabilities to meet award of arbitration or for compliance with the order or decree of a court of law;
b) Change in law or compliance of any existing law;
c) Any expenses to be incurred on account of the need for higher security and safety of the capital asset as
advised or directed by appropriate Government agencies or statutory authorities responsible for national
security/internal security;
d) Any liability for works executed prior to the Cut-off Date, after prudence check of the details of such
undischarged liability, total estimated cost of package, reasons for such withholding of payment and release
of such payments etc.;
e) Any liability for works admitted by the Commission after the Cut-off Date to the extent of discharge of such
liabilities by actual payments;
f) Any additional capital expenditure, which has become necessary for efficient operation of the transmission
system. The claim shall be substantiated with the technical justification duly supported by the documentary
evidence like test results carried out by an independent agency in case of deterioration of assets, report of an
independent agency in case of damage caused by natural calamities, obsolescence of technology, up
gradation of capacity for the technical reason such as increase in fault level; and
g) In case of transmission system, any additional expenditure on items such as relays, control and
instrumentation, computer system, power line carrier communication, DC batteries, replacement due to
obsolesce of technology, replacement of switchyard equipment due to increase of fault level, tower
strengthening, communication equipment, emergency restoration system, insulators cleaning infrastructure,
replacement of porcelain insulator with polymer insulators, replacement of damaged equipment not covered
by insurance and any other expenditure which has become necessary for successful and efficient operation of
transmission system:
Provided that any expenditure on acquiring the minor items or the assets including tools and tackles, furniture,
air-conditioners, voltage stabilizers, refrigerators, coolers, computers, fans, washing machines, heat convectors,
mattresses, carpets, etc., bought after the Cut-off Date shall not be considered for additional capitalization for
determination of tariff:
Provided further that if any expenditure has been claimed under Renovation and Modernisation (R&M) or repairs
and maintenance under O&M Expenses, the same expenditure cannot be claimed under this Regulation.
24.4 Impact of additional capitalization on the tariff, as the case may be, shall be considered during truing up of each
Financial Year of the Control Period.
24.5 In case of de-capitalisation of assets of a generating company or the distribution licensee or the transmission
licensee, as the case may be, the original cost of such asset as on the date of de-capitalisation shall be deducted
from the value of gross fixed asset and corresponding loan as well as equity shall be deducted from outstanding
loan and the equity respectively in the year such de-capitalisation takes place, duly taking into consideration the
year in which it was capitalised.
25. Consumer Contribution, Deposit Work, Grant and Capital Subsidy
25.1 The works carried out by the Transmission Licensee and Distribution Licensee after obtaining a part or all of the
funds from the users shall be classified as Deposit Works;
25.2 Capital works undertaken by the Generating Company, Transmission Licensee and Distribution Licensee
utilizing grants received from the State and Central Governments, including funds under various schemes shall
be classified under the category of Grants;
25.3 The works carried out with any other grant of similar nature or such amount received without any obligation to
return the same and with no interest costs attached to such subvention shall also be classified as works performed
through consumer contribution, deposit work, capital subsidy or grant.
25.4 The expenses on such capital expenditure shall be treated as follows:
a) Normative O&M expenses as specified in these Regulations shall be allowed;
b) The debt-to-equity ratio shall be considered in accordance with Regulation 26, after deducting the amount of
financial support provided through consumer contribution, deposit work, capital subsidy, or grant;
c) Depreciation to the extent of works performed through consumer contribution, deposit work, capital subsidy,
or grant shall not be allowed as specified in Regulation 30;
d) Provisions related to return on equity, as specified in Regulation 27, shall not be applicable to the extent of
financial support provided through consumer contribution, deposit work, capital subsidy, or grant;
e) Provisions related to interest on loan capital, as specified in Regulation 28, shall not be applicable to the
extent of financial support provided through consumer contribution, deposit work, capital subsidy, or grant.
26. Debt to Equity Ratio
26.1 In the case of Existing Projects, debt to equity ratio allowed by the Commission for the determination of tariff for
the period ending shall be considered:
Provided that in case of retirement or replacement or De-capitalisation of the assets, the equity capital approved
as mentioned above, shall be reduced to the extent of 30% (or actual equity component based on documentary
evidence, if it is lower than 30%) of the original cost of such assets:
Provided further that in case of retirement or replacement or De-capitalisation of the assets, the debt capital
approved as mentioned above, shall be reduced to the extent of the outstanding debt component based on
documentary evidence, or the normative loan component, as the case may be, of the original cost of such assets.
26.2 For New Projects, the debt-equity ratio as on the Date of Commercial Operation shall be 70:30 of the amount of
capital cost approved by the Commission under Regulation 23, after prudence checks for determination of tariff:
Provided that where equity actually deployed is less than 30% of the capital cost of the capitalized asset, the
actual equity shall be considered for determination of tariff:
Provided also that if the equity actually deployed is more than 30% of the capital cost, equity in excess of 30%
shall be treated as a normative loan for the Licensee for determination of tariff:
Provided also that the Distribution Licensee or Transmission Licensee or Generating Company shall submit
documentary evidence for the actual deployment of equity and explain the source of funds for the equity:
Provided also that the equity invested in foreign currency shall be designated in Indian rupees on the date of each
investment:
Provided further that the premium, if any, raised by the Distribution Licensee or Transmission Licensee or
Generating Company while issuing share capital and investment of internal resources created out of its free
reserves, for the funding of the scheme, shall be reckoned as paid up capital for the purpose of computing return
on equity, provided such premium amount and internal resources are actually utilized for meeting the capital
expenditure of the transmission system or the distribution system, and are within the ceiling of 30% of capital
cost approved by the Commission.
26.3 Any expenditure incurred or projected to be incurred on or after April 1, 2026, as may be admitted by the
Commission, as additional capital expenditure for determination of tariff, and renovation and modernisation
expenditure for life extension shall be serviced in the manner specified in this Regulation.
27. Return on Equity (RoE)
27.1 Return on Equity shall be computed on the paid-up equity capital determined in accordance with Regulation 26
for the assets put to use.
Provided that Return on Equity shall be allowed in two parts, i.e., Base Return on Equity and Additional Return
on Equity for Distribution Licensees of the UT of Jammu & Kashmir and the UT of Ladakh.
Provided also that in case of Generation Company and Transmission Licensee the Return on Equity shall be
allowed as Base Return on Equity only.
27.2 The Base Return on Equity for the Distribution Wires Business and Retail Supply Business of the Distribution
Licensee shall be allowed on the equity capital determined in accordance with Regulation 26 and Regulation 50
for the assets put to use at base rate of fourteen (14%) per cent per annum.
27.3 The Base Return on Equity for the Generating Company and Transmission Licensee shall be allowed on the
equity capital determined at the rate of fourteen (14%) per cent per annum.
27.4 Additional Return on Equity (RoE) for Distribution Licensees: The Additional Return on Equity (RoE) of
1.5% shall be allowed at the time of true-up subject to the following: -
i. If the Meterisation of unmetered domestic consumers is within Timelines specified under Central
Government Schemes or through directives issued by this Commission an Additional RoE of 0.50% shall be
allowed.
ii. If the actual Repairs and Maintenance expenses in a year are more than 95% of the approved Repairs and
Maintenance expenses for that year, an Additional Return on Equity of 0.50% shall be allowed.
iii. Further, an Additional RoE of 0.5% shall be allowed at the discretion of the Commission on compliance of
directives issued by this Commission through Tariff Order or Suo-Moto proceedings.
28. Interest and finance charges on Loan capital and Security Deposit
28.1 The loans arrived at in the manner indicated in Regulation 26 on the assets put to use, shall be considered as
gross normative loans for the calculation of interest on the loan:
Provided that interest and finance charges on capital works in progress shall be excluded:
Provided further that in case of De-capitalisation or retirement or replacement of assets, the loan capital shall be
reduced to the extent of the outstanding loan component of the original cost of the de-capitalized or retired or
replaced assets, based on documentary evidence.
.
28.2 The normative loan outstanding as on April 1, 2026, shall be worked out by deducting the cumulative repayment
as admitted by the Commission up to March 31, 2026, from the approved gross normative loan.
28.3 Notwithstanding any moratorium period availed by the Distribution Licensee or Transmission Licensee or
Generating Company, as the case may be, the repayment of the loan shall be considered from the first year of
commercial operation of the project and shall be equal to the annual depreciation allowed in accordance with
Regulation 30.
28.4 The rate of interest shall be the weighted average rate of interest calculated on the basis of the actual loan
portfolio of the previous year after providing appropriate accounting adjustment for interest capitalised:
Provided also that if there is no actual loan for a particular Year but the normative loan is still outstanding, the
last available weighted average rate of interest for the actual loan shall be considered:
Provided further that if the Transmission Licensee or the Distribution Licensee or Generating Company, as the
case may be does not have actual loan, then one (1) Year State Bank of India (SBI) MCLR / any replacement
thereof as notified by RBI for the time being in effect applicable for one (l) Year period, as may be applicable as
on 1st April of the relevant Year plus 100 basis points shall be considered as the rate of interest for the purpose of
allowing the interest on the normative loan.
28.5 The interest on the loan shall be calculated on the normative average loan of the Year by applying the weighted
average rate of interest:
Provided that at the time of truing up, the normative average loan of the Year shall be considered on the basis of
the actual asset capitalisation approved by the Commission for the Year.
28.6 The Distribution Licensee or Transmission Licensee or Generating Company, shall make every effort to re
finance the loan as long as it results in net savings on interest, and in that event the costs associated with such re
financing shall be borne by the beneficiaries and the net savings on interest shall be shared between the
beneficiaries and the Distribution Licensee, as the case may be, in the ratio of 1:2.
Provided that the changes to the terms and conditions of the loans shall be reflected from the date of such
refinancing.
28.7 The above interest computation shall exclude the interest on the loan amount, normative or otherwise, to the
extent of the capital cost funded by consumer contribution, deposit work, capital subsidy or grant, carried out by
the Distribution Licensee or Transmission Licensee or Generating Company.
28.8 The finance charges incurred for obtaining loans from financial institutions for any Year shall be allowed by the
Commission at the time of Truing-up, subject to prudence check
28.9 The excess interest during construction on account of time and/or cost overrun as compared to the approved
completion schedule and capital cost or on account of excess drawal of the debt funds disproportionate to the
actual requirement based on Scheme completion status, shall be allowed or disallowed partly or fully on a case
to-case basis, after prudence check by the Commission:
Provided that where the excess interest during construction is on account of delay attributable to an agency or
contractor or supplier engaged by the Distribution Licensee or Transmission Licensee or Generating Company,
any liquidated damages recovered from such agency or contractor or supplier shall be taken into account for
computation of capital cost:
Provided further that the extent of liquidated damages to be considered shall depend on the amount of excess
interest during construction that has been allowed by the Commission.
28.10 Interest shall be allowed on the amount held as security deposit by the Distribution Licensee, held in cash from
Retail Consumers at the Rate, as per provisions given in prevailing Supply Code Regulations, as on 1st April of
the Financial Year in which the Petition is filed:
Provided that at the time of truing-up, the interest on the amount of security deposit for the Year shall be
considered on the basis of the actual interest paid by the Licensee during the Year, subject to prudence check by
the Commission.
29. Foreign Exchange Rate Variation (FERV)
29.1 The Distribution Licensee or Transmission Licensee or Generating Company may hedge foreign exchange
exposure in respect of the interest on foreign currency loan and repayment of foreign loan acquired for the
transmission system or distribution system, in part or in full at its discretion.
29.2 The Distribution Licensee or Transmission Licensee or Generating Company shall be permitted to recover the
cost of hedging of foreign exchange rate variation corresponding to the foreign debt, in the relevant Year as an
expense, subject to prudence check by the Commission, and extra rupee liability corresponding to such variation
shall not be allowed against the hedged foreign debt.
29.3 To the extent that the foreign exchange exposure is not hedged, any extra rupee liability towards interest payment
and loan repayment corresponding to the foreign currency loan in the relevant Year shall be allowed subject to
prudence check by the Commission.
30. Depreciation
30.1 The value base for the purpose of depreciation shall be the capital cost of the asset admitted by the Commission:
Provided that the depreciation shall be allowed after reducing the approved original cost of the retired or replaced
or decapitalized assets:
Provided also that no depreciation shall be allowed on the assets financed through consumer contribution, deposit
work, capital subsidy, or grant.
30.2 The salvage value of the asset shall be considered as 10% and depreciation shall be allowed up to a maximum of
90% of the capital cost of the asset.
30.3 Land other than the land held under the lease shall not be a depreciable asset and its cost shall be excluded from
the capital cost while computing the depreciable value of the assets.
30.4 The depreciation for a Distribution Licensee or Transmission Licensee or Generating Company shall be
calculated annually, based on the Straight-Line Method, over the Useful Life of the asset at rates specified in
Appendix–I of the Regulations for assets declared in commercial operation after 31st March 2026.
Provided that the balance depreciable value as on 31st March 2026 closing after a period of 15 years from the
date of commercial operation shall be spread over the balance useful life of the assets.
30.5 In the case of existing assets, the balance depreciable value as on April 1, 2026, shall be worked out by deducting
the cumulative depreciation as admitted by the Commission up to March 31, 2026, from the gross depreciable
value of the assets. The rate of depreciation shall be continued to be charged at the rate specified in Appendix-I
till cumulative depreciation reaches 70%. Thereafter, the remaining depreciable value shall be spread over the
remaining life of the asset such that maximum depreciation does not exceed 90%.
30.6 The depreciation shall be chargeable from the first year of commercial operations. In case of projected
commercial operation of the assets during the Year, depreciation shall be computed based on the average of
opening and closing value of assets:
Provided that depreciation shall be re-calculated during truing-up for assets capitalised at the time of truing up of
each Year of the Control Period, based on documentary evidence of asset capitalised by the Applicant and
reflected in the Audited Account, subject to the prudence check of the Commission.
30.7 The Distribution Licensee or Transmission Licensee or Generating Company shall provide the list of assets
added during each Year of Control Period and list of assets completing 90% of depreciation in the Year along
with Petition for annual performance review, true-up and tariff determination for ensuing Year.
31. Interest on Working Capital
31.1 The norms for working capital for Generating Company shall be as specified in Chapter 4 of these Regulations.
31.2 The norms for working capital for Transmission Licensee shall be as specified in Chapter 5 of these Regulations.
31.3 The norms for working capital for Distribution Wires Business and Retail Supply Business shall be as specified
in Chapter 6 and Chapter 7 of these Regulations.
31.4 The interest on working capital shall be a payable on normative basis notwithstanding that the Licensee has not
taken a working capital loan from any outside agency or has exceeded the working capital loan based on the
normative figures.
31.5 The rate of interest on working capital shall be equal to one (l) Year State Bank of India (SBI) MCLR / any
replacement thereof as notified by RBI for the time being in effect applicable for one (l) Year period, as may be
applicable as on 1st April of the Financial Year in which the Petition has filed plus 200 basis points.
32. Tax on income
32.1 The Commission in its MYT Order shall provisionally approve Income Tax payable for each Year of the Control
Period, if any, based on the actual income tax paid, including cess and surcharge on the same, if any, as per the
latest audited accounts available for the Distribution Licensee or Transmission Licensee or Generating Company,
subject to prudence check.
32.2 Variation between Income Tax actually paid, including cess and surcharge on the same, if any, and approved, if
any, on the income stream of the business of the Distribution Licensee or Transmission Licensee or Generating
Company shall be reimbursed to/recovered from the Distribution Licensee or Transmission Licensee or
Generating Company, based on the documentary evidence submitted at the time of truing up of each Year of the
Control Period, subject to prudence check.
32.3 Under-recovery or over-recovery of any amount from the Consumers on account of such tax having been passed
on to them shall be adjusted every Year on the basis of income-tax assessment under the Income-Tax Act, 1961,
as certified by the statutory auditors. The Distribution Licensee or Transmission Licensee or Generating
Company may include this variation in its truing up Petition:
Provided that tax on any income stream other than the core business shall not be a pass-through component in
tariff and tax on such other income shall be borne by the Distribution Licensee or Transmission Licensee or
Generating Company.
33. Rebate
33.1 The rebate for early payment earned by the Distribution Licensee or Transmission Licensee or Generating
Company shall be considered under Non-Tariff Income for the Distribution Licensee or Transmission Licensee
or Generating Company.
33.2 All rebates/incentives provided by the Generating Company or Transmission Licensee to the beneficiaries shall
be allowed as an expense for the Generating Company or Transmission Licensee, as the case may be.
33.3 Penalties paid, if any, by the Distribution Licensee or Transmission Licensee or Generating Company shall not
be allowed as an expense for the Generating Company or Licensee.
34. Bad and doubtful debts.
34.1 The Commission may allow a provision for bad and doubtful debts up to one percent (1%) of the estimated
annual revenue of the distribution licensee, subject to the actual writing of bad debts by it in the previous years.
Provided further that where the total amount of such provisioning allowed in previous years for bad and doubtful
debts exceeds five (5) percent of the receivables at the beginning of the year, no such appropriation shall be
allowed which would have the effect of increasing the provisioning beyond the said maximum.
35. Late Payment Surcharge
35.1 In case the payment of bills of generating company or transmission charges by a beneficiary is delayed beyond a
period of 45 days from the date of presentation of bills, a late payment surcharge shall be levied on the billed
amount in accordance with the prevalent CERC Tariff Regulations. The Distribution Licensee shall claim the
late payment surcharge from the consumers as per norms specified by the Commission in the tariff order.
35.2 The delayed payment charge earned and the interest on delayed payment surcharge earned by the Generating
Company, Transmission Licensee or the Distribution Licensee shall not be considered under its Non-Tariff
Income.
35.3 The delayed payment charge paid or payable by the Distribution Licensee to the Generating Company or the
Transmission Licensee shall not be allowed as an expense for such Distribution Licensee.
35.4 All payments by a Distribution Licensee to a Generating Company for power procured from it or by a user of a
transmission system to a Transmission Licensee shall be first adjusted towards Delayed Payment Charge and
thereafter, towards monthly charges, starting from the longest overdue bill.
36. Income from Other Business
36.1 The revenue from other business shall be treated as income to the extent authorised by the Commission under
Sections 41 and 51 of the Electricity Act, 2003.
36.2 Where the Transmission Licensee or Distribution Licensee is engaged in any Other Business, the income from
such business shall be shall be calculated by the Commission appropriately:
Provided that the Licensee shall follow a reasonable basis for allocation of all joint and common costs between
the transmission or distribution business and the Other Business and prepare Accounting Statements accordingly.
Provided further that where the sum total of the direct and indirect costs of such Other Business exceeds the
revenues from such Other Business, no amount shall be allowed to be added to the Aggregate Revenue
Requirement of the Licensee on account of such Other Business.
37. Operations & Maintenance Expenses (O&M) expenses
37.1 The Operation and Maintenance expenses for the Distribution Licensee or Transmission Licensee or
Generating Company shall be computed in accordance with following provisions.
37.2 Operation and Maintenance (O&M) expenses shall comprise of the following:
a) Employee (EMP) expenses -salaries, wages, pension contribution and other employee costs;
b) Administrative and General (A&G) expenses including insurance charges, if any; and
c) Repairs and Maintenance (R&M) expenses.
37.3 O&M expenses for the nth Year of the Control Period shall be approved based on the formula given below:
O&Mn = (R&MMn + EMPn + A&Gn) + Terminal Liabilities;
a) Employee Cost
Employee cost shall be computed on average of actual employee expenses of previous years escalated by
consumer price index (CPI) and suitable Growth Factor and further adjusted by provisions for expenses
beyond the control of the Distribution Licensee or Transmission Licensee or Generating Company such as
recovery/adjustment of terminal benefits, implications of Pay Commission, arrears and Interim Relief,
governed by the following formula:
EMPn = (EMPn-1) x (1 + CPIInflation) + Growth Factor(G) + Provisions
Where,
EMPn – Employee expenses for the nth Year;
EMPn-1 – Average of the Employee expenses for (n-2)th, (n-3)th, and (n-4)th year, excluding any one-time
expenses;
[Illustration: To find out the EMPn, (EMPfor FY 2026-27), the EMPn-1 (i.e. EMPfor FY 2025-26) will be the average of
employee expenses of past three years (i.e. EMPfor FY 2024-25, EMPfor FY 2023-24, and EMPfor FY 2022-23 ). The
determined EMPfor FY 2026-27 will be considered during ARR and Tariff for FY 2026-27 as well as during true-up
of FY 2026-27, as normative employee expenses for FY 2026-27]
CPIInflation – is the average increase in Consumer Price Index (CPI) for immediately preceding three (3) financial
Years before the Year for which the expenses are determined;
Growth Factor(G) – Shall be Year-on-Year/CAGR/any escalation factor considered for projecting the employee
expenses considering future recruitment/retirement plans or requirement of additional manpower;
Provision: Provision for expenses beyond control of the Distribution Licensee or Transmission Licensee or
Generating Company and expected one-time expenses as specified above for any particular year.
b) Repairs and Maintenance(R&M) Expense
Repairs and Maintenance expense shall be calculated based on average of Actual R&M expenses incurred for
previous years escalated by Wholesale Price Index (WPI) as per the following formula:
R&Mn = (R&Mn-1) x (1 + WPIInflation)
Where,
R&Mn – Repair and Maintenance expenses for the nth Year;
R&Mn-1 – Average of the Repair and Maintenance expenses of Distribution Licensee or Transmission Licensee
or Generating Company for the (n-2)th, (n-3)th, and (n-4)th Year;
[Illustration: For R&Mn (i.e. R&Mfor FY 2026-27), the R&Mn-1 (i.e. R&Mfor FY 2025-26) will be the average of actual
R&Mfor FY 2024-25, R&Mfor FY 2023-24, and R&Mfor FY 2022-23.]
WPIInflation – is the average increase in the Wholesale Price Index (CPI) for immediately preceding three (3)
financial Years before the Year for which the expenses are determined;
c) Administrative and General Expense
A&G expense shall be computed on average of actual A&G expenses of previous years escalated by wholesale
price index (WPI) and adjusted by provisions for confirmed initiatives (like IT initiatives as proposed by the
Distribution Licensee or Transmission Licensee or Generating Company and validated by the Commission) or
other expected one-time expenses, and shall be governed by following formula:
A&Gn = (A&Gn-1) x (1 + WPIInflation) + Provision
Where,
A&Gn – Administrative and General expenses for the nth Year;
A&Gn-1 – Average of the Administrative and General expenses for (n-2)th, (n-3)th, and (n-4)th Year, excluding
any one-time expenses;
[Illustration: For A&Gfor FY 2026-27, the A&Gn-1 (i.e. A&Gfor FY 2025-26) will be the average of actual A&Gfor FY 2024-25,
A&Gfor FY 2023-24, and A&Gfor FY 2022-23.]
WPIInflation – is the average increase in the Wholesale Price Index (CPI) for immediately preceding three (3)
Years before the Year for which the expenses are determined;
Provision: Cost for any new initiatives or other one-time expenses as proposed and validated by the Commission
d) Terminal liabilities
Terminal liabilities of employees of the Distribution Licensee or Transmission Licensee or Generating Company
including pension expenses etc. shall be approved as per actuals submitted by the Distribution Licensee or
Transmission Licensee or Generating Company, subject to prudence check or be established through actuarial
studies. Additionally, any variation due to changes recommended by the pay commission shall be allowed
separately by the Commission, subject to prudence check.
37.4 For the purpose of estimation under Business Plan, the same value of factors – CPIInflation and WPIInflation
shall be used for all three Years of the Control Period. However, the Commission shall consider the actual values of
the factors – CPIInflation and WPIInflation during the ARR and truing up exercise for the Year for which ARR and
true up is being carried out.
38. Regulatory Asset
38.1In case of abnormal variation in income or expenses resulting in substantial revenue gap, full recovery of which
in a single year is not feasible, the Commission may allow creation of Regulatory Asset as per guidelines
provided in clause 8.2.2 of the Tariff Policy 2016 and its amendments and suitably provide provision for its
recovery through tariff or as a surcharge within a period not exceeding seven years. Further, such Regulatory
Asset, if created, shall not be more than three percent of the approved Annual Revenue Requirement, except
exceptional cases. Amortisation of the regulatory asset so created shall be dealt in accordance with the Tariff
Policy, provided that the Commission may allow a carrying cost on Regulatory Asset at such rates as the
Commission may deem fit.
Chapter 4: Generation
39. Applicability
39.1The Regulations contained in this Chapter shall apply for determination of tariff for supply of electricity to
Distribution Licensee from a Generating Station located in the UT of Jammu & Kashmir & the UT of Ladakh.
39.2 The Commission shall be guided by the terms and conditions contained in this Chapter in determining the tariff
for supply of electricity by a Generating Company to a Distribution Licensee in the following cases:
a) Where such tariff is pursuant to a power purchase agreement or arrangement entered into subsequent to the
date of effectiveness of these Regulations; or
b) Where such tariff is pursuant to a power purchase agreement or arrangement entered into prior to the date of
effectiveness of these Regulations and either the Commission has not previously approved such
agreement/arrangement or the agreement/arrangement envisages that the tariff shall be based on the Tariff
Regulations notified by the Commission; or
c) Where the Distribution Licensee is engaged in the business of generation of electricity, in determining the
price at which electricity is supplied by the Generating Station of the Distribution Licensee to its Retail
Supply Business.
39.3 Notwithstanding anything contained in this Chapter 4, the Commission shall adopt the tariff if such tariff has
been determined through transparent process of bidding in accordance with the guidelines issued by the Central
Government.
40. Components of Tariff
40.1The Aggregate Revenue Requirement (or annual fixed cost (AFC) as mentioned in this chapter) for a Generation
Company shall comprise of the following components:
a. Return on Equity;
b. Interest and finance charges on Loan;
c. Depreciation;
d. Interest on Working Capital;
e. Operation and maintenance expenses;
f. Income tax
Less:
g. Non-Tariff Income;
h. Income from Other Business, to the extent specified in these Regulations
40.2 The treatment of each of the above components shall be in accordance with the provisions given in these
Regulations, in the Chapter 3.
41. Norms of Working Capital for Generating Company
44.1The Hydro Generating Company shall be allowed interest on the estimated level of working capital for the
Financial Year computed as per the following components: (i) Receivables equivalent to 45 days of annual fixed
cost, (ii) Maintenance spares @ 15% of operation and maintenance expenses including security expenses; and
(iii) Operation and maintenance expenses, including security expenses for one month.
42. Non-Tariff Income
42.1.The Generating Company shall submit full details of its forecast of Non-Tariff Income to the Commission in
such form as may be stipulated by the Commission.
42.2.The Non-Tariff Income shall include:
a) Income from rent of land or buildings;
b) Income from sale of scrap;
c) Income from investments;
d) Income from investment of Contingency Reserves
e) Income from sale of ash/rejected coal;
f) Interest income on advances to suppliers/contractors;
g) Net Income from supply of electricity by the Generating Company to the housing colonies of its operating staff and
supply of electricity by the Generating Company for construction works at the generating Station, after adjusting the
expenses incurred for supply of such electricity;
h) Income from rental from staff quarters;
i) Income from rental from contractors;
j) Income from hire charges from contactors and others;
k) Income from advertisements;
l) Income from sale of tender documents;
m) Any other Non-Tariff Income:
43. Recovery of Aggregate Revenue Requirement for a Generating Company
43.1 The tariff for the supply of electricity from a hydro generating station shall comprise a capacity charge and an
energy charge to be derived in the manner as specified in these Regulations, as may be applicable, for recovery of the
aggregate revenue requirement or annual fixed cost consisting of the components referred to in Regulation 40 of these
regulations.
43.2 The annual fixed cost (or aggregate revenue requirement) of a hydro generating station shall be recovered on a
monthly basis under capacity charge and energy charge, which shall be payable by the beneficiaries in proportion to
their respective allocation in the saleable capacity of the generating station, i.e., in the capacity excluding the free
power.
43.3 The capacity charge payable to a hydro generating station for a calendar month shall be:
AFC x 0.5 x (NDM / NDY) x (PAFM / NAPAF) (in Rupees)
Where, AFC = Annual fixed cost specified for the year, in Rupees
NAPAF = Normative plant availability factor in percentage
NDM = Number of days in the month
NDY = Number of days in the year
PAFM = Plant availability factor achieved during the month, in percentage
The PAFM shall be computed in accordance with the following formula:
PAFM = 1000 × N / (N x IC x (100 − AUX)%)
Where,
AUX = Normative auxiliary energy consumption in percentage
DCi = Declared capacity (in ex-bus MW) for the ith day of the month, which the station can deliver for at least
three (3) hours, as certified by the nodal load dispatch centre after the day is over.
IC = Installed capacity (in MW) of the complete generating station
N = Number of days in the month
43.4 The energy charge shall be payable by every beneficiary for the total energy scheduled to be supplied to the
beneficiary, excluding free energy, if any, during the calendar month, on the ex-bus basis, at the computed
energy charge rate. The total energy charge payable to the generating company for a month shall be:
Energy Charges = (Energy charge rate in Rs. / kWh) x {Scheduled energy (ex-bus) for the month in kWh} x (100
– FEHS) / 100
43.5 Energy charge rate (ECR) in Rupees per kWh on ex-power plant basis, for a hydro generating station, shall
be determined up to three decimal places based on the following formula:
ECR = AFC x 0.5 x 10 / {DE x (100 – AUX) x (100 – FEHS)}
Where,
DE = Annual design energy specified for the hydro generating station.
FEHS = Free energy for State, in per cent, if any.
Provided that in case actual generation from a hydro generating station is less than the design energy on account
of hydrology factor for continuous four years, the generating company may approach the Commission with
documentary evidence, during true-up application, for recovery of such shortfall in energy charges, which may
be approved by the Commission after prudence check.
Provided that in case the energy charge rate (ECR) for a hydro generating station, computed as per above
formula, exceeds one hundred and thirty paise per kWh, and the actual saleable energy in a year exceeds {DE x
(100- AUX) x (100 - FEHS) /10000} MWh, the energy charge for the energy in excess of the above shall be
billed at one hundred and thirty paise per kWh only.
43.6 The fixed cost of a pumped storage hydro generating station shall be computed on an annual basis, based on
norms specified under these regulations, and recovered on a monthly basis as a capacity charge. The capacity
charge shall be payable by the beneficiaries in proportion to their respective allocation in the saleable capacity
of the generating station;
43.7The capacity charge payable to a pumped storage hydro generating station for a calendar month shall be:
(AFC x NDM / NDY) (In Rupees), if actual Generation during the month is ≧ 75 % of the Pumping Energy
consumed by the station during the month and {(AFC x NDM / NDY) x (Actual Generation during the month
during peak hours/ 75% of the Pumping Energy consumed by the station during the month) (in Rupees)}, if
actual
Generation during the month is < 75 % of the Pumping Energy consumed by the station during the month.
Where,
AFC = Annual fixed cost specified for the year, in Rupees
NDM = Number of days in the month
NDY = Number of days in the year:
Provided that there would be adjustments at the end of the year based on actual generation and actual pumping
energy consumed by the station during the year.
The energy charge shall be payable by every beneficiary for the total energy scheduled to be supplied to the
beneficiary in excess of the design energy plus 75% of the energy utilized in pumping the water from the lower
elevation reservoir to the higher elevation reservoir, at a flat rate equal to the average energy charge rate of 20
paise
per kWh, if any, during the calendar month, on ex power plant basis.
Energy charge payable to the generating company for a month shall be:
= 0.20 x {(Scheduled energy (ex-bus) for the month in kWh- Design Energy for the month (DEm)) + 75% of
the energy utilized in pumping the water from the lower elevation reservoir to the higher elevation reservoir of
the month)}/ 100.
Where,
DEm = Design energy for the month specified for the hydro generating station, in MWh:
Provided that in case the Scheduled energy in a month is less than the Design Energy for the month plus 75%
of the energy utilized in pumping the water from the lower elevation reservoir to the higher elevation reservoir of
the month, then the energy charges payable by the beneficiaries shall be zero;
Provided that if the energy for the pumping of water from lower reservoir to upper reservoir is arranged by the
generating company, the charges for the pumping energy till the ex-Bus of the generating station shall be payable
by the beneficiaries in proportion to their respective allocation in the saleable capacity of the generating station.
43.8The payment of Capacity Charge and Energy Charge for Thermal Generating Stations and Supplementary
Energy Charge with respect to Thermal Generating Stations shall be as per the prevailing CERC Regulations.
43.9 Variations between actual net injection and scheduled net injection for the generating stations, and variations
between actual net drawl and scheduled net drawl for the beneficiaries shall be treated as their respective deviations
and charges for such deviations shall be governed by the prevailing intra-state (Deviation Settlement Mechanism and
Related matters) Regulations published by the Commission.
Provided that the Deviation Charges paid or earned by the Generating Companies in accordance with applicable
intra-state (Deviation Settlement Mechanism and Related matters) Regulations, shall not be recoverable/adjusted
from the Beneficiaries through Tariff:
44. Norms of operation
44.1The norms of operation for a Generating Station including Normative annual plant availability factor (NAPAF),
Normative Annual Plant Load Factor (NAPLF), Gross Station Heat Rate, Auxiliary Consumption etc. shall be in
accordance with these Regulations, as given below.
44.2 Normative Annual Plant Availability Factor (NAPAF):
(1) The following normative annual plant availability factor (NAPAF) shall apply to hydro generating station:
(a) Storage and Pondage type plants with head variation between Full Reservoir Level (FRL) and Minimum
Draw Down Level (MDDL) of up to 8%, and where plant availability is not affected by silt: 90%;
(b) In the case of storage and pondage type plants with head variation between full reservoir level and minimum
draw down level is more than 8% and when plant availability is not affected by silt, the month-wise peaking
capability as provided by the project authorities in the DPR (approved by CEA or the State Government) shall
form the basis of fixation of NAPAF;
(c) Pondage type plants where plant availability is significantly affected by silt: 85%.
(d) Run-of-river generating stations: NAPAF to be determined plant-wise, based on 10-day design energy data,
moderated by past experience where available/relevant.
(e) A further allowance may be made by the Commission while determining the NAPAF under special circumstances i.e.
abnormal silt problem or other operating conditions and known plant limitations.
(f) When head variation between FRL and MDDL is more than 8%, following multiplying factors shall be applied:
Multiplying factor for head variation = (Head at MDDL/Rated Head) x 0.5+0.52
44.3 In the case of pumped storage hydro generating stations, the quantum of electricity required for pumping
water from the down-stream reservoir to the up-stream reservoir shall be arranged by the beneficiaries duly taking into
account the transmission and distribution losses up to the bus bar of the generating station. In return, beneficiaries
shall be entitled to an equivalent energy of 75% of the energy utilized in pumping the water from the lower elevation
reservoir to the higher elevation reservoir from the generating station during peak hours, and the generating station
shall be under obligation to supply such quantum of electricity during peak hours:
Provided that in the event of the beneficiaries failing to supply the desired level of energy during off-peak hours, there
will be a pro-rata reduction in their energy entitlement from the station during peak hours:
Provided further that the beneficiaries may assign or surrender their share of capacity in the generating station, in part
or in full, or the capacity may be reallocated by the Central Government, and in that event, the owner or assignee of
the capacity share shall be responsible for arranging the equivalent energy to the generating station in off-peak hours,
and be entitled to corresponding energy during peak hours in the same way as the original beneficiary was entitled.
Provided that the Generation Company viz. Jammu & Kashmir Power Development Corporation Limited
(JKPDCL) shall conduct a detailed study to ascertain the plant-wise NAPAF for the twenty-two (22) Hydro
Electric Power Stations (HEPs) and submit the same before the Commission under
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