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Transmission Licence – Fee reimbursement from beneficiaries

17 December, 2013

The Electricity Appellate Tribunal has held that the transmission licensee, not paying any license fee prior to the amendment, is entitled to reimbursement of the said licence fee paid by it later and that the same can be directed to be passed through to the beneficiaries. It was held that licence fee cannot be allowed to be paid by the transmission licensee out of its profits in the changed circumstances.          

Before the Tribunal, it was contended that since the licence fee has become a new component of cost to the transmission licence under O&M stage of the project, in case of the projects for which tariff is to be decided under the provisions of 2004 and 2009 regulations which do not specifically capture the cost associated with the licence fee, there is a requirement to categorize licence fee as an expense and allow reimbursement to the transmission licensees.            

Earlier the Central Commission had rejected the contention of the beneficiaries that licence fee is in the nature of eligibility fee to carry on the business of transmission and accordingly, the licensees should bear the licence fee from their own profits. [Uttar Pradesh Power Corporation Ltd. v. Central Electricity Regulatory Commission - Appellate Tribunal for Electricity Order dated 3-12-2013 in Appeal No. 87 of 2012]
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