Via its study, the CERC has attempted to effect an apple-to-apple comparison by gathering detailed relevant data on variables and factors that can affect tariffs with respect to plants associated with winning bids over the past three to four years and then determining the price of electricity from such projects through the cost-plus method and norms for escalations provided in appropriate CERC Tariff Regulations and CERC Notifications on escalation rates.- The levelized prices thus obtained have been compared with the actual levelized tariffs discovered under the competitive bidding process for each project.
- In addition, the exercise assumed that while calculating the price of electricity under the cost plus methodology, the value of interest applicable on the corresponding long-term debt component would be 7.0595% per year, which is the same as the average by NTPC for its Sipat Project. Working capital was taken to be financed at a flat 9% per annum.
- It has also been assumed that there would be about a 0.8% loss of coal in transportation, to add a degree of realism to the exercise.
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