The Tamil Nadu Electricity Regulatory Commission (TNERC) has issued draft regulations to determine the fees and charges for the state load despatch centre (SLDC).

Stakeholders must submit their feedback on the draft Tamil Nadu Electricity Regulatory Commission (Determination of State Load Despatch Centre Fees and Charges) Regulations, 2026, by May 29, 2026.

Applicability

The regulations cover the determination of the SLDC’s aggregate revenue requirement (ARR), annual charges, scheduling and system operation charges, annual performance review, true-up, and recovery of revenue gaps or surplus.

The charges will apply to all users of Tamil Nadu’s intrastate transmission system or SLDC services. These include power generators, transmission and distribution companies, open access consumers, captive users, traders, power exchanges, energy storage systems, aggregators, and renewable energy park developers.

The draft regulations propose a control period from the financial year (FY) 2028 to FY 2032. The SLDC will continue to levy fees and charges under the existing regulations or Commission orders until the commencement of the new control period from FY 2028.

Filing Procedure

The SLDC must file its MYT petition, along with the business plan, by November 30 of FY 2027. The petition must include the ARR and proposed fees and charges for each year of the control period. It would be supported by financial data, schedules, and documents prescribed under the regulations.

The Commission plans to issue the ARR and fee order by March 31 of FY 2027.

The SLDC must also file annual true-up petitions for the financial years immediately preceding each annual filing during the control period, along with the annual performance review for the ongoing and following financial years, by November 30 annually.

The true-up will compare actual performance and the approved ARR. It will also cover approved recovery, actual billing, collections, revenue gap or surplus, and the proposed pass-through or refund. Any variations in the ARR, fees, and charges incurred by the SLDC from the figure approved by the Commission must be classified as controllable or uncontrollable.

Variations due to changes in law, force majeure, statutory revisions, or other external factors may be treated as uncontrollable. Differences arising from inefficiency, delays, avoidable expenditure, or non-compliance may be considered controllable.

The annual performance review will compare the approved capital expenditure, capitalization, interest on loans, working capital interest, return on equity, depreciation, operation and maintenance (O&M) expenses, and revenue with revised estimates.

The SLDC can file a mid-term review petition by November 30, 2029. They cannot file the petition before April 1, 2029.

Methodology for FY 2023 to FY 2027 True-Up

The SLDC must file the true-up for FY 2023 to FY 2026, the annual performance review for FY 2027, and the MYT petition for FY 2028 to FY 2032.

The FY 2027 true-up must be filed with the FY 2028 annual performance review by November 2027. The SLDC must submit auditor-certified allocation statements for FY 2023 to FY 2027, segregating assets, liabilities, expenses, and income. This is because SLDC costs were embedded in Tamil Nadu Transmission Corporation’s ARR, and no standalone SLDC tariff orders existed.

Controllable and Uncontrollable Factors

The draft regulations mandate that the SLDC must file a business plan along with its MYT petition for the control period. The plan must include the capital investment, financing, and manpower plans. It must also include the O&M, user, and non-tariff income projections, as well as system improvement measures for each year.

The SLDC must also prepare a detailed capital expenditure (CAPEX) plan for creating new assets during the control period, which is approved by the competent authority or the head of the organization.

The plan must include financing arrangements and physical targets for each year.

The CAPEX must cover infrastructure upgradation, modernization, automation, expansion, asset replacement, adoption of advanced IT and communication systems, cybersecurity requirements, research and development projects, disaster recovery control centers, land procurement, civil works, and safety-related infrastructure.

CAPEX for the SLDC, sub-load dispatch center (LDC), and renewable energy management centers will be treated as a single consolidated capital expenditure plan. Any additional CAPEX needed to force majeure, changes in law, or regulatory directions may be considered during true-up, annual performance review, or mid-term review.

If such additional CAPEX exceeds 5% of the approved figure for the control period, the SLDC may file a separate petition within 60 days of the start of work.

Determining ARR

The SLDC’s ARR will include return on equity, interest on loans, depreciation, O&M expenses, working capital interest, Regional Load Despatch Centre fees, Southern Regional Power Committee charges, taxes, duties, cess, levies, and Tamil Nadu State Power Committee expenses. Non-tariff and other income attributable to SLDC operations will be deducted from the ARR.

SLDC Charges

The capital cost admitted as of March 31, 2027, after truing up costs for FY 2023 to FY 2027, will be the opening capital cost from April 1, 2027, for determining annual LDC charges during FY 2028 to FY 2032.

The capital cost must include control center assets, supervisory control and data acquisition, energy management system, wide area monitoring system, communication systems, market management systems, cybersecurity infrastructure, security operating centre, network operating centre, data management systems, metering and accounting support systems, office infrastructure, backup systems, disaster recovery systems, Tamil Nadu State Power Committee assets, sub-LDCs, and Renewable Energy Management Centres.

The draft regulations propose a normative debt-equity ratio of 70:30  for admitted capital cost.

Return on equity will be calculated on a pre-tax basis at a rate of 15.5%, grossed up for the applicable effective tax rate.

Under the draft regulations, interest on loans will be calculated on the outstanding loan amount linked to the admitted capital cost, using the weighted average interest rate of the SLDC’s actual or allocated loan portfolio.

If no actual SLDC loan exists, the transmission company’s loan portfolio will be used. If no loan exists, the one-year SBI Marginal Cost of Funds-based Lending Rate as of April 1 of the relevant financial year will apply. Any refinancing benefits must be passed on to SLDC users.

Depreciation

TNERC proposed that depreciation for SLDC assets be calculated on the Commission-approved capital cost using the straight-line method.

Salvage value will be 10%, limiting depreciation to 90% of capital cost, while IT equipment and software will have no salvage value and can be fully depreciated. Freehold land will not be depreciable, while leasehold land will be amortized over the lease period. Fully depreciated, unused, or obsolete assets must be shown separately, and depreciation will apply from the first year of commercial operation.

This May, TNERC adopted the tariff discovered for Tamil Nadu Power Distribution Corporation’s procurement of 500 MW of pumped storage capacity.

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