CERC has continuation of the 15.5% regulated return on equity (RoE) for power companies despite a reduction in benchmark interest rate since 2014. Graphic: MintShares of NTPC Ltd and Power Grid Corp. of India Ltd gained 1.7% and 3.7% on Monday after the sector regulator proposed continuation of current incentives. The regulated RoE has been maintained despite a noticeable reduction in interest rates. Apart from the regulated RoE, utilization levels, operating efficiency and scope of cost recovery also influence NTPC’s earnings. The last tariff regulation changed the basis for incentive calculation from plant availability to utilization levels, making a significant dent to NTPC’s earnings.

Source: Mint December 18, 2018 01:41 UTC