North Eastern Electric Power Corporation Limited

(A Government of India Enterprise)

Filing of tariff petition against the Completed Power Stations of the Corporation as per the guidelines of Central Electricity Regulatory Commission (CERC).

Billing on sale of power to the various beneficiaries.

Realisation of revenue from the various beneficiaries .

Reconciliation of Accounts with various benficiaries

Bulk Power Supply Agreement (BPSA) with the beneficiaries against completed Power Station.

Power Purchase Agreement (PPA) against upcoming Power Station.

Coordination With :-

• Ministry Of Power

• Central Electricity Authority(CEA)

• CERC

• North Eastern Regional Power Committee (NERPC)

• Regional Load Dispatch Centre (RLDC)

• SEB's, Power Departments of States

• Other Power Utilities

NEEPCO presently owns and operates total 5(five) number of Power Projects, out of which 3(three) are Hydro Power Projects and 2(two) are Thermal Power Projects, all of which are situated in the North Eastern Region of India. The total installed capacity of these projects is 1130 MW, comprising of 755 MW of Hydro Power and 375 MW of Thermal Power. The details of these projects are given below:

The Generating Stations of NEEPCO feed power at the bus-bar of the concerned power stations to the regional grid. The power is being transmitted to Bulk Power Consumers through the transmission system owned and operated by the Central Transmission Utility (CTU), namely Powergrid Corporation of India Limited and State Transmission Utilities (STU). The North Eastern Regional Power Committee and North Eastern Regional Load Dispatch Centre, which are the apex bodies designated for integrated operation of power system and proper control and management of the Regional Grid, further control and regulate the generation and transfer of power to the respective beneficiaries.

The Bulk Power Consumers or the beneficiaries are billed against the energy made available to them from above generating stations as per the Regional Energy Accounts issued by the NERPC based on the allocation of power from the Generating Stations to the Bulk Power Consumer as given by GOI from time to time and as well as the day-to-day scheduling done by NERLDC. The terms and conditions of sale of energy by NEEPCO is governed by Bulk Power Supply Agreements / Power Purchase Agreements signed by NEEPCO with the beneficiary States and SEBs. The realization of dues from the beneficiaries is governed by the Tripartite Agreement (TPA) signed between the Govt. of India , the Reserve Bank of India and the respective State Governments.

Each operating power station of the Corporation has a separate tariff. At present, the tariff of the Power Stations of is determined by the Central Electricity Regulatory Commission (CERC). The CERC determines the tariff of the power stations in terms of Annual Fixed Charges (AFC) as per the provisions of Central Electricity Regulatory Commission (Terms & Conditions of Tariff) Regulations, 2009. The following are the components of AFC:

i) Interest on Loan.

ii) Depreciation.

iii) Return on Equity.

iv) Interest on Working Capital.

v) O&M Expenses.

The Availability Based Tariff (ABT) came into force in the North Eastern Region with effect from 01.11.2003. Under the ABT regime, the generator has to declare its generation availability on a day-to-day basis to the Regional Load Dispatch Centre (RLDC), which is presently being operated by PGCIL. Against this, the beneficiaries have to give their requisition to the RLDC. The RLDC draws up the final generation and drawal schedules to be adhered to by the generators and the beneficiaries respectively.

Unscheduled Interchange (UI) charges is imposed on those constituents of the Grid i.e. the generators and the beneficiaries, who deviate from the final schedule. Presently, the maximum UI rate is Rs.7.35/kWh for under-generation/over-generation by the generator or under-drawal/over-drawal by the beneficiaries at grid frequency between 50.30Hz and 49.20Hz. Provided that Unscheduled Interchange rate shall be capped at Rs.4.08 per kWh (“hereinafter UI Cap Rate”) for all generating stations using coal or lignite or gas supplied under Administered Price Mechanism (APM) as the fuel, in case when actual generation is higher or lower than the scheduled generation in the frequency range between 50.3 Hz and upto 49.2 Hz.

AFC is recoverable on a pro-rata basis, depending on the actual Plant Availability Factor achieved by the Power Station against the Normative Annual Plant Availability Factor stipulated in the CERC (Terms & Conditions of Tariff) Regulations, 2009. The Plant Availability Factor in relation to a generating station for any period means the average of the daily declared capacities (DCs) for all the days during that period expressed as a percentage of the installed capacity in MW reduced by the normative auxiliary energy consumption.

In the case of Hydro Stations, the 50% of AFC is to be recovered as Capacity Charges and the balance 50% as Primary Energy Charges on monthly basis as per the formulae laid down in the Central Electricity Regulatory Commission (Terms & Conditions of Tariff) Regulations, 2009 and the respective final tariff orders.

In the case of Thermal Stations, generators are entitled to recover the fuel charge or energy charge apart from the AFC based on the normative Heat Rate as stipulated in the Central Electricity Regulatory Commission (Terms & Conditions of Tariff) Regulations, 2009.

At present, the Bulk Power Consumers of NEEPCO are:

(i)  Assam State Electricity Board.

(ii) Meghalaya State Electricity Board.

(iii) Tripura State Electricity Corporation Ltd.

(iv) Department of Power, Govt. of Arunachal Pradesh.

(v) Electricity Department, Govt. of Manipur.

(vi) Power & Electricity Department, Govt. of Mizoram.

(vii)  Department of Power, Govt. of Nagaland.

The new tariff period has now begun i.e. 2009-10 to 2013-14. The earlier tariff period was 2004-2009. Tariff petitions for the new period 2009-14 are under currently under preparation in respect of all the Power Stations of NEEPCO. As per the Central Electricity Regulatory Commission (Terms & Conditions of Tariff) Regulations, 2009, until finalization of tariff orders for this new tariff period, the tariffs as ordered by CERC for the last year of the earlier tariff period i.e. 2008-09 shall be adopted provisionally for the purpose of billing.

Since commencement of commercial generation in 1984, the energy generation and revenue earning of the Corporation have grown significantly.

NEEPCO has adopted a monthly billing cycle against the sale of power from its various Power Stations based upon the Regional Energy Accounts issued by the NERPC. The billing is done centrally by the Commercial Department at the Corporate Headquarters on monthly basis in accordance with the tariff orders and terms & conditions of the tariff notification issued by the CERC for each power station. Payments are primarily received through revolving and irrevocable Letters of Credit opened by the beneficiaries in favour of NEEPCO. Additional payments (e.g. supplementary bills, surcharge, etc.) are received through cheques from the beneficiaries. Since the implementation of the recommendations of the Montek Singh Ahluwalia Committee for one-time settlement of old dues through a securitization scheme, the circumstances of the Corporation have drastically improved. This scheme made it compulsory for the beneficiaries to open of letters of credit on one hand and on the other hand, special incentives were to be offered by the generators to the beneficiaries for prompt payments. As a result, NEEPCO's realization of current dues for last four years has touched 100 percent. A surcharge @ 1.25% per month is levied, if payments are not made by the beneficiaries within a period of 60 days from the date of billing.

The sales versus receipt for last five years are shown below.

(Rs. in Crore)