DETERMINATION OF COST OF PRODUCTION OF ELECTRICITY AT GENERATING STATIONS

I. For the purposes of the First and Third Schedules, the cost of production of electricity at a generating station shall be ascertained by calculating and taking into account the following costs, charges and allowances in respect of the year of account, namely: (a) Sums expended for fuel, oil, water and stores consumed, for salaries and wages, and any contribution by the licensee for pensions provident fund, superannuation and insurance of officers and other employees, for repairs and maintenance and for renewals not chargeable to capital account; (b) Sums paid in respect of the station for insurance and as rents, rates and taxes (including all taxes payable on income and profits); (c) The proportion of management and general establishment charges properly attributable to the station; (d) Any other expenses on revenue account properly attributable to the station; (e) Interest on the depreciated cost of the station shown in the books of the undertaking and properly attributable to the station (whether defrayed out of capital or revenue) and interest on working capital properly attributable to the station and the production of electricity therein: Provided that for the purpose of ascertaining the principal on which interest is payable within the meaning of this clause, there shall be left out of account any part of principal on which interest is payable out of capital; (f) An allowance for depreciation of an amount determined in respect of the station in accordance with the provisions of para. VI of the Sixth Schedule. II. For the purposes of Cl. (e) of para. I- (i) “Depreciated cost of the station” means original cost thereof as determined in accordance with the provisions of sub-paragraph (6) of para. XVII of the Sixth Schedule less the amount written off or set aside on account of depreciation on fixed assets and the amount written off in respect of intangible assets thereof in the books of the undertaking before or after the commencement of this Act; (ii) The rate of interest shall be,- (a) On such part of the principal on which interest is payable within the meaning of the said clause as has been advanced on loan by the Board under para. I of the First Schedule, the actual rate charged by the Board plus one-half of one per centum per annum on the loan in the year of account; (b) On the balance of the said principal- (i) Where the licensee owning the station is a local authority, the average rate payable in the year of account on the money raised by that authority for the purpose of the station; (ii) In any other case, the Reserve Bank rate ruling at the beginning of that year plus two per centum.