In a decision set to have ramifications on numerous generating stations and beneficiaries on the treatment of revenue gap in tariff determination, the Central Electricity Regulatory Commission (‘CERC’) in its order dated 17.04.2024 in Petition No. 118/MP/2023 has held that in terms of Regulation 8(13) of the 2014 Tariff Regulations and Regulations 10(7) of the 2019 Tariff Regulations, the differential tariff is to be considered as the principal amount and the applicable simple interest at the rate equal to the bank rate prevailing as on 1st April of the respective year, is to be added to the principle amount, to arrive at the amount finally recoverable. This amount is then to be recovered in a staggered manner in six equal monthly instalments without further interest.
The Petition was filed by PSPCL seeking quashing of the two invoices dated 06.02.2023 and 06.03.2023. By way of the said invoices, NTPC had claimed interest on each and of the six instalments and had thus claimed interest on interest.
CERC while interpreting the applicable regulations has rejected NTPC' contention by holding that the phrase ‘in six equal monthly instalments’ in the Tariff Regulations has to be given their natural meaning and that there is no question of applying any other rule of interpretation. The CERC has also negated the contention of NTPC and held that general principle of restitution by way of payment of carrying cost is not applicable because the tariff regulations specifically provide for the manner of recovery of arrears as well as the interest applicable.
The entire Order can be read here.
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