Power Grid unfazed by proposed O&M norms changes by CERC

A top official from Power Grid Corporation (POWERGRID) stated that they anticipate "no impact" from proposed changes in Operation & Maintenance (O&M) charges norms by the Central Electricity Regulatory Commission (CERC).

Power Grid Corporation (POWERGRID) expects “no impact” from proposed changes in Operation & Maintenance (O&M) charges norms by Central Electricity Regulatory Commission (CERC), a top company official said.

The official said the company was in discussion with the regulator.
Draft regulations suggest altering the prior 75:25 (sub-station vs transmission line) O&M cost distribution to 65:35 ratio, increasing transmission line charges while decreasing substation charges.

Chairman and Managing Director Ravindra Kumar Tyagi claimed “net impact is almost zero,” with overall O&M charges maintained.
“They have added one more element, ‘reactor’. Earlier, we were not incurring any O&M charges for reactors. Now, reactor charges have been added per MVAR (Mega Volt-Ampere Reactive), similar to transformer charges per MVA capacity, such as Rs 20 lakh or so per MVA. Therefore, those charges have been added. The net impact is negligible almost zero, we are going to receive the same O&M charges as before”, he told investors in an analyst call.

Speaking regarding Return on Equity (ROE), proposed norms suggest existing assets at 15.5 per cent and setting 15 per cent for new projects after April 1, 2024, he said discussions were on with the Central Electricity Regulatory Commission (CERC) and power grid was optimistic that final norms won’t adversely affect the company’s revenue or profitability.

The company was aiming to cross capex of Rs 10,000 crore in the current fiscal.

“Our capex in Q3, on a consolidated basis is Rs 3,444 crore, and for nine months it is Rs 7,690 crore. We are hopeful that this capex will be almost Rs 10,000 crore plus,” he said.
Power Grid’s consolidated income during the December 2023 quarter was Rs 11,820 crore. During the quarter, net profit rose 10 per cent YoY to Rs 4,028 crore.