Operating nuclear power plants, commissioned before April 1, 2022, will have a RoE of 15.5 per cent.
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Nuclear power projects commissioned after April 1, 2022, will have the freedom to adopt either a constant Return on Equity (RoE) of 15.5 per cent for the operating life of the plant or a variable RoE over the period of the Power Purchase Agreement (PPA).
However, operating nuclear power plants, commissioned before April 1, 2022, will have a RoE of 15.5 per cent. These are part of the tariff norms for the sale of electricity by the atomic power stations notified by the Department of Atomic Energy (DAE).
“Central government, in consultation with the Central Electricity Authority (CEA), determines the norms with which the tariff for sale of electricity by the atomic power stations to the State electricity boards (SEBs) and to other persons shall be determined,” the notification said.
Financial norms
“For new power projects commissioned after April 1, 2022, generating companies can adopt a constant RoE of 15.5 per cent throughout the operating life,” the notification said.
The company can also adopt a variable RoE profile over a PPA period, starting with lower RoE during initial years gradually increasing and later decreasing, such that the PV of the RoE over the PPA period remains same as the Present Value (PV) of the constant RoE of 15.5 per cent over the same period, it added.
“Equity capital has been defined as the capital for stations for the purpose of fixation of tariff shall be reckoned as the total cumulative investment less the borrowed funds used for the station paid up and subscribed capital and internal surplus utilised for the station,” it said.
The equity shall not be reduced irrespective of whether the capital assets have been depreciated or not, it added.
On debt-equity, the government mandated that the debt equity structure for future pressurised heavy water reactors (PHWRs) shall be in a 70:30 ratio.
However, for the units under operation and projects under construction, the funding structure already fixed may be adopted, the norms state.
“For future projects other than PHWRs, the debt equity ratio is to be decided by the government on a case-to-case basis, depending on the maturity of technology and the constraints of the financing arrangement,” it added.
In case the actual equity exceeds 30 per cent of the capital expenditure in a future project, the ROE should be applicable only on the notional equity i.e. 30 per cent of the capital and excess amount will be treated as notional loan at the same interest rate as of debt component of the capital.
Operational standards
The norms specify that the “realistic achievable capacity” of the power station approved by the Atomic Energy Commission shall be adopted.
Besides, the plant load factor (PLF), or capacity utilisation, of the 12 nuclear power stations is in the range of 68.5-80 per cent.
The government also specified that there will be no stabilisation period for atomic power stations.
The Annual Fuel Recovery Charge (AFRC) in case of PHWRs shall be so fixed that the present value of charges over a period of fifteen years at a discount rate of 12 per cent shall be equal to the value of initial half charge of fuel.
Published on July 9, 2025
