Tariff escalation formula interpreted: only deviation beyond the permitted band is adjusted, not the full difference from the base factor.

Regulation 2.7(d)(iv) of the CERC Tariff Regulations was interpreted as requiring only the deviation beyond the permitted 4.8% to 7.2% band to be adjusted, not the entire difference from the 6% base escalation factor. The clause was read as clear and unambiguous: 6% operates as the base for revising O&M expenses, deviations within the permitted band are absorbed by utilities and beneficiaries, and only excess deviation is adjusted on the basis of the actual escalation factor. The contrary construction was rejected because the wording left no room for replacement by considerations of logic, convenience, or consumer impact.

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Issues: Whether Regulation 2.7(d)(iv) of the Central Electricity Regulatory Commission (Terms & Conditions of Tariff) Regulations, 2001 requires only the deviation beyond the 4.8% to 7.2% band to be adjusted, or whether the full difference from the 6% base escalation factor must be taken into account.

Analysis: The clause provides that the escalation factor of 6% is the base for revising O&M expenses and that deviations within 20% of that figure are to be absorbed by the utilities and beneficiaries. The language further states that any deviation beyond that limit shall be adjusted on the basis of the actual escalation factor. The wording was found to be clear and unambiguous, leaving no scope to substitute a different construction based on perceived logic, convenience, or consumer impact. The expression "beyond this limit" was read as referring only to the excess outside the permitted band, not to the whole difference from 6%.

Conclusion: The Regulation was held to require adjustment only of the deviation beyond the 4.8% to 7.2% range, and the contrary interpretation was rejected.

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