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Tariff Notification for Generating Companies
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The Gazette of India EXTRAORDINARY NOTIFICATION New Delhi, the 30th March, 1992 (As amended vide Notification No. S.O. 36(E) dated 18/19 Jan'94, S.O. 605(E) dated 22nd August, 1994, S.O 39(E) dated 12th Jan.=95, S.O. (E) dated 6th November >95, S.O 151(E)dated 26th February,1997, S.O. 332(E) dated 17.04.1997, S.O. 410 (E) dated 23.05 1997, S.O 429(E) dated 6 June, 1997, S.O. 174(E) dated 9th March 1998; and S.O.496(E) dated 8th June 1998) S.O. 251(E) In exercise of the powers conferred by sub-section (2) of section 43A of the Electricity (Supply) Act, 1948 (54 of 1948), hereinafter referred to as the Said Act, the Central Government hereby determines the factors in accordance with which the tariff for sale of electricity by Generating Companies to the Board and to other persons shall be determined, as follows:- 1. Thermal Power Generating Stations The two-part tariff for sale of electricity from Thermal Power Generating Stations (including gas and Naphtha based stations) shall comprise the recovery of annual fixed charges consisting of interest on loan capital, depreciation, operation and maintenance expenses (excluding fuel), taxes on income reckoned as expenses, return on equity and interest on working capital at a normative level of generation, and energy (variable) charges covering fuel cost recoverable for each unit (kilowatt hours) of energy supplied and shall be based on the following norms: 1.1 The norms of operation and Plant Load Factor as has been laid down by the Authority, for the time being, subject to modifications thereof, if any under Sub-Section (2) of section 43A of the Said Act, namely. I. Plant Load Factor During stabilisation period 4500 hours/Kw/year Subsequent period 6000 hours/Kw/year ii. Station Heat Rate for coal based stations During stabilization period 2600 K. Cal/Kwh Subsequent period 2500 K. Cal/Kwh (In respect of 500 MW units where the boiler feed pumps are electrically operated the heat rate of 40 K. Cal/Kwh shall be reduced from station heat rate) iii. Station Heat Rate for gas and Naphtha based stations For open cycle 2900 K. Cal/Kwh For combined cycle 2000 K. Cal/Kwh iv. Secondary fuel oil consumption for coal based stations During stabilization period 5 ml/Kwh Subsequent period 3.5 ml/Kwh v. Auxiliary Consumption with cooling tower without cooling tower (a) Coal based stations 200 MW series 9.5 per cent 9.0 per cent 500 MW series Steam driven pumps 8.0 per cent 7.5 per cent Electrically driven pumps 9.5 per cent 9.0 per cent (b) Gas and Naphtha based stations Combined cycle 3.0 per cent Open cycle 1.0 per cent (During the stabilization period, normative auxiliary consumption shall be reckoned at 0.5 per cent over and above the figures specified above) vi. Stabilization period Stabilization period commencing from the date of commercial operation shall be reckoned as follows: (a) Thermal 180 days (b) Open cycle gas and Naphtha based station 90 days (c) Combined cycle gas and Naphtha based station 90 days vii. Date of Commercial Operation The date of commercial operation of individual units shall be reckoned as follows:- Thermal Units: Not exceeding 180 days from the date of synchronisation. Gas and Naphtha based Units : From the date of synchronisation. "Explanation:- For removal of doubts, it is clarified that the norms laid down by the Authority are the ceiling norms only and this shall not preclude the Boards and Generating Companies from agreeing to accept improved norms. For the purpose of calculating the tariff, the operating parameters, i.e.=Station Heat Rate=, >Secondary Fuel Oil Consumption= and >Auxiliary Consumption= shall be determined on the basis of actuals or norms, whichever is lower". 1.2 The capital expenditure of the project shall be financed as per the approved financial package set out in the techno-economic clearance of the Authority. The project cost shall include capitalised initial spares. The approved project cost shall be the cost which has been specified in the techno-economic clearance of the Authority. The actual capital expenditure incurred on completion of the project shall be the criterion for the fixation of tariff. Where the actual expenditure exceeds the approved project cost the excesses as approved by the Authority shall be deemed to be the actual capital expenditure for the purpose of determining the tariff. Provided that such excess expenditure is not attributable to the Generating Company or its suppliers or contractors: Provided further that where a power purchase agreement entered between the Generating Company and the Board provides a ceiling on capital expenditure, the capital expenditure shall not exceed such ceiling. Provided also that in case of multi-unit project, the percentage of capital cost as specified by the Authority in its techno-economic clearance shall be considered for fixation of tariff, on commercial operation of the progressive units but in case of delay in commissioning of second or subsequent units from the scheduled date, the project cost, for the period of delay, shall be retrospectively approved for the tariff purpose in the ratio of proportionate allocation of units; Provided further that if the capital cost of the project increases, in comparison to the cost approved in Techno-economic-Clearance, on account of foreign exchange variation or change of law or any other reason not attributable to the Generating Company or its suppliers or contractors and approved by the competent Government. The project developer may approach the Authority with the recommendation of the competent Government, not more than once in a financial year, for the mid-term review of the Capital Cost. Provided further that the Authority may, for special reasons to be specified by the project developer, allow the mid term review of the Capital Cost more than once in a financial year. 1.3 In respect of infirm power, that is sale of electricity prior to commercial operation of the unit, any revenue form such sale (other than the fuel cost ), shall be taken as reduction in Capital expenditure and not as net revenue. 1.4 Extra rupee liability towards interest payment and loan repayment actually incurred, in the relevant year shall be admissible; provided it directly arises out of foreign exchange rate variation and is not attributable to Generating company or their suppliers or contractors. 1.5 The annual fixed charges shall be computed on the following basis: a) Interest on loan capital shall be computed on the outstanding loans, including the schedule of repayment, as per the financial package approved by the Authority. Note: In case a generating company takes land on lease, the leasing charges as determined by the Central Government or the State Government or any statutory body, as the case may be, considered as a pass through item in the tariff in lieu of interest liability of the notional cost of the land. b) The rates of depreciation shall be applicable as notified by Central Government, from time to time. c) Operation and Maintenance expenses including insurance for the first full year, after commissioning of the Plant, shall be calculated as a percentage on the actual capital expenditure as provided in clauses 1.2 on the basis of one of the following alternatives, namely:- (I) at the rate of 2.5 per cent of the actual capital expenditure of ceiling on capital expenditure provided in the power purchase agreement: or (ii) at 2 per cent of the actual capital expenditure on ceiling on capital expenditure provided in the power purchase agreement together with actual expenditure on insurance. provided that total of 2 per cent of the actual capital expenditure on ceiling on capital expenditure provided in the power purchase agreement and the actual expenditure on insurance shall not exceed 3 per cent on the capital expenditure as provided in clause 1.2. "Note-1: The expenditure on the operation and maintenance including insurance, calculated on the basis of 2.5 per cent for the first year, shall be revised in each subsequent year as may be mutually agreed upon between the Board and the Generating Company on the basis of weighted price index. Alternately, the expenditure on operation and maintenance, calculated on the basis of 2 per cent for the first year, shall be revised in each subsequent year on the basis of weighted price index, but the actual expenditure on insurance or ceiling insurance expenses, for the first year shall not be subject to escalation in the subsequent year. Note-2 - In case of multi-unit project, the operation and maintenance expenses, in respect of each unit for the purpose of tariff, shall be allowed on the above Percentage of the capital expenditure calculated in proportion to the capacity of each unit and not on the basis of allocation of capital expenditure in Techno-economic clearance. The escalation shall be allowed after one year, from the date of the commissioning of the units" ; d) Tax on the following income streams, if any, of the Generating Company, to be computed as an expense at actuals:- i) Sixteen per cent. return on equity; ii) The extra rupee liability on account of foreign exchange rate variation in computing the return on equity not exceeding 16 percent. in the currency of the subscribed capital; iii) The amount of grossed up tax that is payable and actually paid by the generating company under income streams mentioned at items (i) and (ii any under or over recoveries of tax shall be adjusted every year on the basis of a certificate of statutory auditors. Note- Tax on other income streams, if any, accruing to the generating company shall not constitute a pass through component in the tariff. Tax on such other incomes shall be payable by the Generating Company. e) Return on equity shall be computed on the paid up and subscribed capital relatable to the generating unit, and shall be 16 per cent of such capital. Explanation-I :- For the purpose of this paragraph, the Generating Company shall, in regard to subscribed equity brought in foreign exchange, have the option to compute the return on equity not exceeding 16 per cent in the currency of the subscribed capital. Explanation-II:- Premium raised by the Generating Company while issuing share capital and investment or internal resources created out of free reserve of existing company, if any, for the funding of the project, shall also be reckoned as paid up capital for the purpose of computing the return on equity, provided such premium amount and internal resources are actually utilised for meeting the capital expenditure of the power generation project and forms part of the approved financial package as set out in the techno-economic clearance accorded by the Authority. f) Interest on Working Capital shall cover: (ii) Fuel cost for one month and reasonable fuel stocks as actually maintained but limited to fifteen days for pit head stations and thirty days for non pit-head stations, calculated on normative plant load factor basis; (ii) sixty days stock of secondary fuel oil, calculated on normative plant load factor basis; (iii) operation and maintenance expenses (cash) for one month; (iv) maintenance spares at actuals subject to a maximum of one per cent of the capital cost but not exceeding one year's requirements less value of one fifth of initial spares already capitalised; and (v) receivables equivalent to two months' average billing for sale of electricity calculated on normative plant load factor basis" 1.6 Full fixed charges shall be recoverable at generation level of 6000 hours/kw/year (4500 hours/kw/year during stabilization period). Payment of fixed charges below the level of 6000 hours/kw/year shall be on prorata basis. There shall not be any payment for fixed charges for generation level above 6000 hours/kw/year. For generation of above 6000 hours/kw/year, the additional incentive payable shall not exceed 0.7 per cent of paid up and subscribed capital, for each percentage point increase of Plant Load Factor above the normative level of 6000 hours/kw/year. While computing the level of generation, the extent of backing down, as ordered by the Regional Electricity Boards or State Load Despatch Center, as the case may be, shall be reckoned as generation achieved. The payment of fixed charges shall be on monthly basis, proportionate to the electricity drawn by the respective Boards and other person. Necessary adjustment based on actual shall be made at the end of each year. Note-1 The additional incentive of return on equity of 0.7 per cent for each percentage increase above the normative level of 6000 hours/kw/year, mentioned above, shall be the maximum ceiling. It shall be open to the Generating Companies and Boards or other power purchasers to negotiate and fix a suitable lower additional incentive, within the above ceiling. Note-2 For Naphtha based thermal plants, the extent of backing down, as ordered by Regional Electricity Boards or the State Load Despatch center, as the case may be, beyond plant Load Factor of 6000 hours/Kw/Year, shall not be reckoned as generation achieved for incentive purpose. Note-3 For Diesel Engine generating units the extent of backing down, as ordered by Regional Electricity Boards or the State Load Despatch Center, as the case may be, beyond Plant Load Factor operation norms laid down by the Central Electricity Authority for the time being, subject to modification therefor, if any, shall not be reckoned as generation achieved for incentive purpose" ; 1.7 Energy (variable) charges shall cover fuel costs and shall be calculated as follows: (a) Primary fuel namely Coal or Gas or Naphtha Quantity shall be computed on the basis of Station Heat Rate (less heat contributed by secondary fuel oil as below, for coal based stations) and gross calorific value of coal or gas or Naphtha actually fired. (b) Secondary fuel oil only for coal based station At normative consumption During stabilization period 5ml/kwh; Subsequent period 3.5ml/kwh. (c) Adjustment on account of variation in price or heat value of fuels Initially Gross Calorific value of coal or gas or Naphtha may be taken as per actual in the preceding three months. Any variation shall be adjusted on a month to month basis on the basis of Gross Calorific Value of coal or gas or Naphtha actually received and burnt and actual landed cost incurred by the Generating Company for procurement of coal, oil or gas or Naphtha as the Gross Calorific Value of coal or gas or Naphtha actually received and burnt and actual landed cost incurred by the Generating Company for procurement of coal, oil or gas or Naphtha as the case may be. 1.8 For payment of bills through letter of credit, a rebate of 2.5 per cent. shall be allowed. If the payments are made by a mode other than through letter of credit but within a period of one month of presentation of bills by the Generating company, a rebate of 1 per cent shall be allowed . 2. Hydro Power Generating Stations The two-part tariff for sale of electricity from hydro power generating stations shall comprise the recovery of annual capacity charge consisting of interest on loan capital, depreciation and energy charges consisting of operation and maintenance expenses, tax on income reckoned as expenses, return on equity and cess/levy on water charges at actuals and interest on working capital at a normative level of generation. 2.1 Definitions for tariff of hydro stations In paragraphs 2 to 2.8, - (I) AAvailability@, in relation to a project, means the capacity of the project, including the generating units, to generate power on availability of water; and the annual availabilities of a project shall be determined as per the following formula:- (H 1 U 1 + H 2 U 2 +..... H n U n ) x 100 Percentage Annual Availability = ---------------------------------------- ( U 1 + U 2 + ....... + U n ) X 8760 Where, U 1 U 2 ............U n are the capacities in Mega Watts of different units, and H 1, H 2 ......... H n are the hours for which the respective units were available for operation during the year; (ii) ADesign Energy@ means the quantum of energy which could be generated in a 90 percent dependable year with 95 percent availability of installed capacity of the station: Explanation- If the total energy generation in the years for which hydrological data is available ( say N years) is arranged in descending order, the ( N+1) x 0.9 th year would represent the 90 per cent dependable year. The 90 per cent dependable year is a year in which the annual energy generation has the probability of being equal to or in excess of 90 per cent of the expected period of operation of the scheme. (iii) AInstalled Capacity@ means the summation of the name plate capacity of the generating units in the station or the capacity as decided in consultation with the Authority from time to time considering the up rating, derating, etc., as may be applicable; (iv) AProject@ includes the complete hydro power generating facility covering all components such as dam, intake water conductor systems, power station, generating units of the scheme as apportioned to power generation and as decided by the Authority; (v) ASecondary Energy@ means the quantum of energy generated in excess of the design energy on an annual basis in the station; (vi) AStation@ means a hydro generating station having an installation of one or more hydro generating units including reversible units. 2.2 The norms of operation as have been laid down by the Authority, for the time being subject to modification thereof, if any, under sub section (2) of section 43 A of the Act are as under:- (I) Normative level of generation (Design Energy): Energy computed in a 90 percent dependable year with 95 percent availability of installed capacity, as set out in techno-economic clearance. (ii) Normative availability of the project: 90 percent availability (iii) Auxiliary consumption: 0.5 percent of energy generated. (iv) Transformation losses (from generation voltage to transmission voltage): 0.5 percent of energy generated. (v) Date of Commercial Operation: Not exceeding 15 days from the date of synchronization. Explanation:- For removal of doubts, it is clarified that the norms laid down by the Authority are the ceiling norms only and this shall not preclude the Boards and Generating Companies from agreeing to accept improved norms. 2.3 (a)The capital expenditure of the project shall be financed as per the approved financial package set out in the techno-economic clearance of the Authority. (b) The project cost shall include capitalized initial spares. The approved project cost shall be the cost which has been specified in the techno-economic clearance of the Authority. 8 The actual capital expenditure incurred on completion of the project shall be a criterion for the fixation of tariff. Where the actual expenditure exceeds the approved project cost, the excess expenditure as approved by the Authority shall be deemed to be the actual capital expenditure, for the purpose of determining the tariff; provided that such excess expenditure is not attributable to the Generating Company or its supplier or contractors: Provided further that where a power purchase agreement entered into between the Generating company and the Board provides a ceiling on capital expenditure, the capital expenditure shall not exceed such ceiling. 2.4 In respect of infirm power, i.e. sale of electricity prior to commercial operation of the unit, any revenue from such sale shall be taken as reduction in capital expenditure and not as net revenue. 2.5 Extra rupee liability towards interest payment and loan repayment actually incurred in the relevant year shall be admissible, provided it directly arises out of foreign exchange rate variation and is not attributable to Generating Company or its suppliers or contractors. 2.6 The annual capacity charges shall be computed on the following basis, namely:- (a) Interest on loan capital shall be computed on the outstanding loans, including the schedule of repayment, as per the financial package approved by the Authority: (b) The rates of depreciation shall be applicable as notified by the Central Government from time to time; or AAdvance Against Depreciation@ shall be applicable at an annual amount not exceeding one-twelfth of the loan amount and limited to the actual loan liability of the year, as per the approved financial package. Explanation I The total of depreciation including Advance Against Depreciation, charged through the tariff shall not exceed 90 per cent of the approved capital cost during the life of the project. Explanation-II In case a generating company takes assets on lease, the leasing charge as approved by the Authority, shall be considered in the capacity charge in lieu of depreciation and interest liability. 2.7 Full capacity charges shall be recoverable in 7,884 hours/year (90 per cent Availability) of operation. Payment of capacity charge below the level of 7,884 hours/year shall be on pro-rata basis. There shall not be any payment of capacity charges for availability level above 7884 hours/years. The capacity charge shall be calculated on monthly basis and denominated in Rs. / kw/ month. 2.8 Total Energy charges for a year shall be computed on the following basis: (a) Operation and maintenance expenses, inclusive of insurance expenses for the first full year after commissioning of the plant, shall be calculated at 1.5 per cent of the approved capital expenditure or the ceilings on capital expenditure as provided in paragraph 2.3 The expenditure on operation and maintenance, inclusive of insurance expenses, in each subsequent year after the first full year of operation shall be revised as may be mutually agreed upon between the Board and Generating Company on the basis of the weighted price index. (b) Tax on income, if any, shall be computed as expense at actuals. Any over recoveries or under recoveries of tax on income shall be adjusted every year on the basis of a certificate of Auditors. (c) Return on Equity shall be computed at 16 per cent on the paid up and subscribed capital relatable to the generating unit. Explanation I: For the purpose of this sub paragraph, the Generating Company shall, in regard to subscribed equity brought in foreign exchange have the option to compute the return on equity not exceeding 16 percent in the currency of the Subscribed Capital. Explanation II Premium raised by the Generating Company while issuing share capital and investment of internal resources created out of free reserve of an existing company, if any, for the funding of the project, shall also be reckoned as paid up capital for the purpose of computing the return on equity, provided such premium amount and internal resources are actually utilized for meeting the capital expenditure of the power generation project and form part of the approved financial package as set out in the techno-economic clearance accorded by the Authority. (d) Interest on Working Capital which covers: ( I) The operation and maintenance expenses for one month; (ii) Maintenance spares at actuals but not exceeding one year=s requirements less value of one fifth of initial spares already capitalized; and (iii) Receivables equivalent to two months of average billing for sale of electricity. (e) Other Miscellaneous charges: As may be specifically applicable to the generating unit/station. These would include cess for the use of water for power generation, if levied, and energy consumption charges for pumped storage schemes as per actual payment made for the energy supplied for purpose of pumping water. 2.9 The per unit cost of primary energy shall be calculated by dividing the total Energy Charges by the Design Energy of the project and shall be denominated as Rupee per Kilo-watt hour. The payment of primary energy charges shall be based on actual generation during the month, limited to the design energy apportioned for the month. For this purpose, the full Design Energy shall be apportioned in the twelve calendar months of the year, as may be mutually agreed between the Board and the Company. 2.10 Incentives: In addition to the >capacity charge= and >primary energy charge=, the company shall be paid incentive as under: (I) For >Availability= of installed capacity above normative level of 90 per cent, the rate of incentive shall be mutually agreed upon between the Generating Company and the Board but it shall not exceed 0.7 per cent return on equity for each percentage point increase in availability. (ii) Energy charges for secondary energy: The rate of incentive for secondary energy shall be mutually agreed between the Board and the Generating Company. However, the maximum payment on this account in any year shall not exceed 10 per cent return on equity. The incentive on account of higher Availability and Secondary Energy shall be payable on a monthly basis subject to a cumulative adjustment in each month of the financial year and final adjustment at the end of the year. 2.11 Deemed Generation If the station has achieved the normative Availability level in a contract year, but actual energy generation falls short of design energy for reasons solely attributable to hydrology, the energy charges for generation up to design energy shall be payable to the Generating Company during the first seven years of operation. In case of reduced generation due to reasons beyond the control of Generating Company and non-availability of Board=s transmission lines or on receipt of backing down instructions from the concerned Regional Electricity Board and it results in spillage of water, the energy loss on account of such spillage shall be considered as deemed generation limited to the design energy. 2.12 For payment of bills through letters of credit, a rebate of 2.5 per cent shall be allowed. Where payments are made otherwise than through opening of Letters of Credit, but within a period of one month of presentation of bills by the Generating company, a rebate of 1 per cent shall be allowed. 3.0 General 3.1 The tariff for the sale of electricity by a Generating Company to a Board may also be determined in deviation of the norms, other than the norms regarding operation and Plant Load Factor, specified in this notification subject to the conditions that- (a) The overall per unit tariff of electricity calculated on the basis of the norms in deviation does not exceed the per unit tariff calculated on the basis of the norms specified in this notification. (b) the concerned State Government has, after satisfying itself, recommended that the deviations made are justified; and 8 the Central Government after satisfying itself that the overall per unit tariff is in accordance with condition (a) above, approves the deviations. 3.2 In case a Generating Company is permitted by the competent Government to supply electricity direct to a consumer in terms of clause (c), sub-section (1), section 43A of the said Act, such sale shall be at mutually negotiated rates, agreed upon between the generating company and the other person(s), subject to the approval of the competent Government. 3.3 This notification shall be applicable for determining the tariffs for sale of electricity from such generating stations, whose financial package for investment is approved by the Authority, on or after the date of its publication in the Official Gazette. 3.4 This notification shall be applicable to such hydro-power generating stations which shall commence commercial operation on or after the 1st January, 1997. Thermal Power Generating Stations Awarded Through Competitive Bidding 4. The two-part tariff for sale of electricity from thermal power generating stations (including gas, naphtha and other liquid fuel based stations) awarded through competitive bidding shall comprise the recovery of annual fixed charge and variable charge (a) Fixed Charge ( I) a component on which foreign exchange escalation shall be payable at actuals; (ii) a component, which shall be indexed to domestic inflation ; (iii) a component on which no escalation shall be payable; (b) Variable Charge Variable charge covering the fuel cost for each unit (kilo watt hours) of energy supplied, shall qualify for indexation on fuel price changes as per actuals. Plant Availability and Dispatchability 4.1 The full fixed charge component would be recoverable at levels determined by the State Government within range of levels of plant or unit availability indicated in the following clause 4.2: Provided that any despatch instruction, requiring plant or unit operation less than the cut off level for plant availability announced by the State Government, shall entitle the private promoter to deemed generation benefits: Provided further that considering the substantial variations in the grid demand, the States may notify, in advance, the dispatchability level of about 50 per cent. of plant capacity. In case availability is below the declared or dispatched level then payment of fixed charges shall be reduced on pro-rata basis. For cases where the actual plant or unit availability is found to be lower compared to declared plant or unit availability the private promoter would be liable to pay misdeclaration penalty as agreed in the Power Purchase Agreement. 4.2 Stabilization Periods and Availability Levels Stabilization period for power generating units of different types and the range of plant availability shall be as follows:- (I) Coal/lignite based plants Plant Availability Factor Stabilization period 60-65% Subsequent period 80-85% (ii) Gas/Naphtha/Liquid fuel based plants (a) Open Cycle Plants Gas Turbines 85-90% (b) Combined Cycle Plants Gas Turbines (in open cycle mode) 85-90% Steam Turbines(in combined cycle mode) Stabilization period 60-65% Subsequent period 85-90% (iii) Diesel Generating Sets 85-90% 4.3 Stabilization Period Stabilization period commencing from the date of first synchronisation of the unit shall be reckoned as follows: Coal/lignite based plants 180 days Gas/Naphtha/Liquid fuel based plants (a) Gas Turbines(in open cycle mode) Nil (b) Steam Turbines (in combined cycle mode) 90 days 4.4 Availability Factor In any period, the Availability Factor of the power station or unit shall be calculated as follows:- 1003ACUnit AvP = __________________ (Ccontracted ) HSP Where, Avp is the Availability factor for the Power Station or Unit in period >P=(expressed as a percentage) 3ACUnit is the sum of Available Capacities of all the units in each >Settlement Period= in the period >P@ (Ccontracted) Contracted Capacity of the Power Station/Unit SP is the number of >Settlement Periods= in the period >P=.Settlement Period means any thirty(30) minute period beginning on the hour or half hour. 4.5 These provisions will also apply to the commissioned generating units of the project till the entire envisaged project capacity is commissioned. 4.6 Incentives (I) An incentive for the first five years of plant operation for commissioning (commercial operation) the unit before the agreed time shall be payable. The incentive shall not exceed additional 2 per cent. of fixed charge component of the first year tariff, depending on the extent to which the units have been commissioned before schedule. Similarly, a penalty for delayed commissioning of generating unit at a rate not below 5 per cent. of the fixed charge of the first year tariff for the first five years shall be payable by the Generating Company. (ii) Incentive payable for performance above the cut off level for Plant Availability indicated in clause 4.2 above, payable for initial few projects for a period to be decided by the State Government in consideration of the power demand supply situation in the State, shall not exceed 01(one) paise per kilo watt hour per percentage point increase in plant or unit availability. The incentives for improved plant performance are to be calculated for the availability of the entire project capacity on an annual basis. 4.7 Norms of Operation for Bid Evaluation Since tariff for the project shall be a function of the bid evaluation criteria, the bid evaluation criteria shall take into account the parameters such as levelised tariff; first or second year variable charge; escalable foreign exchange component in the fixed charge; heat rate and its deration; auxiliary consumption; technical features of plant and equipment or any feature that may be notified by the State Government or the Central Government, from time to time. The norms of operation to be considered for bid evaluation shall be as laid down by the Authority, under sub-section (2) of section 43A of the said Act, or as decided through the competitive bidding process reflecting the market driven efficiency levels in a competitive bidding environment. Note 1.- Levelised tariff T shall mean T = 3 ti mi-1 / 3 mi-1 Where, m = 1 - d, d is the discount factor ti is the tariff for the ith year. Note 2,- The weightage for different parameters for bid evaluation shall be as notified by the competent Government, from time to time, based on sensitivity analysis. Note 3,- The foreign exchange conversion rate, Foreign Exchange escalation rate and the discount rate for purposes of bid evaluation shall be as notified by the competent Government, from time to time. 4.8 In case a Generating Company is permitted by the competent Government to supply electricity direct to a consumer in terms of clause (c), sub-section (1), section 43A of the said Act, such sale shall be at mutually negotiated rates, agreed upon between the generating company and the other person, subject to the approval of the competent Government.
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