APTEL Ripple Hits Tariffs: CERC Reworks Fiber-Optic Fees Across Three Periods
In a major retrospective correction, the Central Electricity Regulatory Commission (CERC) has reopened and recomputed tariffs for PGCILâs Northern Region ULDC fiber-optic communication assets after the Appellate Tribunal for Electricity (APTEL) condoned earlier disallowed time overruns.
APTELâs 2022 judgment (Appeal No. 15 of 2016) held that construction delays on two key assets were the consequence of external factors â including delayed participation by UPPTCL and PTCUL, and unavoidable fog-related safety constraints. With these delays no longer attributable to PGCIL, CERC rebuilt the capitalisation figures from the date of commercial operation (COD), triggering a full recalibration of tariffs across multiple regulatory windows.
The outcome is a rare multi-period reset: tariff adjustments across 2009â14, 2014â19, 2019â24, and a revised opening capital base for the ongoing 2024â29 block.
Fiber-Optic Assets at the Core of the ULDC Backbone
The assets under consideration are part of the Northern Region ULDC modernisation programme, which replaced ageing microwave links with a modern fiber-optic communication system using OPGW, underground cable, aerial cable, SDH equipment and a network management system.
Assets 1â4 are classified as system-operation related communication assets under Section 28(4) of the Electricity Act. Asset-5, however, is treated as a transmission element under Section 62 read with Section 79(1)(d), bringing it under a different tariff methodology. CERCâs order therefore spans both families of regulatory treatment.
IDC and IEDC Reinstated â Capital Cost Reset from COD
A central consequence of APTELâs ruling is the reinstatement of Interest During Construction (IDC) and Incidental Expenditure During Construction (IEDC) for Asset-2 and Asset-3. These amounts were previously cut when CERC refused to condone delays back in 2015.
By restoring IDC/IEDC and adding them back to the COD capital cost, CERC altered the foundational asset value used in multiple tariff blocks. Even though the additions themselves are modest, the regulatory impact is significant because all subsequent years depend on the opening capital base.
2009â14: Minor Fee Corrections, Major Structural Shifts
CERC has recomputed fees and charges for 2012â13 and 2013â14 for the affected assets. The adjustments range from âč0.05 lakh to âč2.47 lakh â numerically small, but critical in shaping the capital recovery trajectory.
These revised figures become the opening capital cost for 2014â19, which in turn feeds into 2019â24 and sets the stage for 2024â29. What appears to be a modest historical correction ends up reshaping three tariff cycles.
True-Ups Reworked for 2014â19 and 2019â24
With the corrected capital base flowing forward, CERC recalculated:
normative loanâequity balances
depreciation and capital-recovery factors
interest on loan based on weighted average rates
interest on working capital
This ensures that beneficiaries neither overpay nor underpay relative to the adjusted capital structure.
2024â29: New Period, Clean Opening Balance
For the ongoing control period, CERC has approved fresh fees and charges for communication assets and transmission tariff for Asset-5 under the 2024 Tariff Regulations.
The Commission applied updated O&M trajectories, revised benchmark rates for working capital, and the new tax/gst pass-through framework. Standard regulatory permissions to PGCIL â including income tax recovery, filing for security/insurance expenses, and claiming capital spares â have also been reaffirmed.
A Corrective Exercise with Limited Financial Shock
Despite the years being re-opened and recomputed, the financial impact on beneficiaries is limited: small upward adjustments in 2012â14 and modest realignments in later periods.
But the regulatory cleanup is substantial. CERC has now aligned all periods with APTELâs findings, corrected historical inconsistencies, and ensured the ULDC fiber networkâs asset values reflect actual allowable capitalisation from COD through 2024â29.
A Precedent for Future Delay-Related Appeals
The order reaffirms an important regulatory principle: where delays stem from beneficiary-driven or uncontrollable factors, the CTU cannot be penalised. It also shows how APTELâs decisions cascade into tariff arithmetic many years down the line â affecting both historical true-ups and future tariff frameworks.
For the Northern Regionâs communication backbone, the tariff architecture is now consistent, corrected and transparent â exactly as APTEL intended.
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