Regulatory Commissions cannot reject additional capitalization claims for lacking documentary evidence without prior specific notice.

NTPC (Appellant) filed a petition for tariff determination (2014-2019) for its Talcher Super Thermal Power Station, Stage II

NTPC claimed projected additional capitalization for the installation of Wagon Tipplers and associated works under Regulation 14(3)(x) of the Tariff Regulations, 2014, citing the need to handle BOXN wagons due to coal shortages and the phasing out of BOBR wagons by Railways

The Central Electricity Regulatory Commission (CERC) disallowed the claim in its Impugned Order dated 16.02.2017, stating that NTPC failed to provide documentary evidence of the phasing out of BOBR wagons and that existing coal supplies from MCL appeared sufficient based on normative calculations

NTPC’s subsequent Review Petition was dismissed on 31.08.2017

NTPC appealed, arguing the investment was an operational necessity for safety and efficiency

1. Whether the CERC was justified in rejecting the claim for additional capitalization solely on the ground of non-submission of documentary evidence when the relevant Regulations did not expressly mandate it

2. Whether the CERC erred in its factual analysis regarding coal requirement and availability by using "as billed" GCV instead of "as received" GCV and miscalculating pro-rata coal distribution

The Tribunal applied Regulation 14(3)(x) of the CERC (Terms and Conditions of Tariff) Regulations, 2014, which allows additional capitalization for modifications in fuel receiving systems necessitated by non-materialization of coal supply, subject to a "prudence check"

Regulation 55 of the CERC Conduct of Business Regulations, 1999, alongside Section 79(1)(a) and Section 94 of the Electricity Act, 2003, establishing that the Commission possesses inquisitorial and ancillary powers to seek necessary information to make its jurisdiction effective

Principle that quasi-judicial bodies are not strictly bound by the Indian Evidence Act, 1872, unless expressly stipulated

Precedent in NTPC vs. CERC & Ors (Appeal 25 of 2017) regarding the safety and efficiency of automated unloading

The Tribunal found that Regulation 14(3)(x) does not specifically mandate the submission of "documentary evidence," unlike Regulation 14(3)(vii), yet CERC rejected the claim for lack of such evidence without first exercising its powers to call for it

It noted that while NTPC’s justification was not "clearly articulated," the Commission failed to issue specific directions for clarification during the proceedings

The Tribunal identified a "fundamental error" in the CERC’s calculation of coal requirements: the CERC erroneously shifted from "as fired" GCV to a higher "as billed" GCV (4095.15 kcal/kg) in the Review Order, wrongly assuming no difference between the two for pit-head stations, while ignoring that NTPC was blending imported coal which involves moisture loss and significant transport

The Tribunal emphasized that manual unloading of BOXN wagons is "highly unsafe" and that the prior existence of such wagons does not preclude later investments in efficient unloading infrastructure

The Appeal is allowed, and the Impugned Order dated 16.02.2017 is set aside regarding the disallowance of Wagon Tippler works. The matter is remanded to the CERC for fresh consideration, with directions to seek necessary information from NTPC to satisfy itself of the investment's necessity and to conduct a proper prudence check after hearing all beneficiaries