In Brief
Powergrid Corporation sought reimbursement for replacing three damaged Inter-connecting Transformers at its Rihand I transmission system after they failed due to internal machinery faults and fire in 2006. It claimed additional capitalization of the replacement costs, but CERC and the Appellate Tribunal rejected the claim, holding that replacement is part of operation and maintenance, and that Powergrid's self-insurance policy covered the loss. The Supreme Court dismissed Powergrid's appeals, confirming that fire was the proximate cause of damage, the loss fell within the self-insurance policy's scope, and replacement costs should be financed from the self-insurance reserve as O&M charges, not capitalized.
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