Writ Petition No. 2474 of 2013. Case: Reliance Infrastructure Limited and Ors. Vs State of Maharashtra and Ors.. High Court of Bombay (India)
| Case Number | Writ Petition No. 2474 of 2013 |
| Counsel | For Appellant: Anjali Chandurkar i/b Mulla & Mulla & C.B.C. and For Respondents: Madhubala Kajale, AGP |
| Judges | S. C. Dharmadhikari and G. S. Kulkarni, JJ. |
| Issue | Constitution of India - Articles 14, 19(1)(g), 226; Electricity Act, 2003 - Sections 111, 112, 113, 120, 121, 125, 127, 14, 181, 61, 61(a), 61(c), 86, 86(4), 95 |
| Judgement Date | April 18, 2016 |
| Court | High Court of Bombay (India) |
Judgment:
G. S. Kulkarni, J.
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Rule made returnable forthwith. By consent of the parties and at their request, heard finally.
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By this petition under Article 226 of the Constitution of India, the Petitioners assail Regulation 44.2(d) of the Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2011 (for short "the Regulations") which inter alia provides for the Gross Station Heat Rate (SHR) being a norm in operation of the Thermal Generation Station of the Petitioners situated at Dahanu.
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In short the facts are:
The 1st Petitioner has set up a thermal power station namely the 'Dahanu Thermal Power Station', generating 500 Mega Watt (mw) electricity through two units of 250 MW and thus is a generating as well as a transmission and distribution licensee, under a licence issued to it under Section 14 of the Electricity Act, 2003. (for short "the EA, 2003"). The 1st Petitioner commenced the operation of its first 250 MW unit on 1st July, 1995 and the second unit on January, 1996. The 2nd Respondent - the Maharashtra Electricity Regulatory Commission is constituted under the Maharashtra Electricity Regulatory Commission Act, 1998 and is empowered to fix electricity tariff which was earlier fixed under the Electricity (Supply) Act, 1948. However, after the Electricity Act, 2003 came into force with effect from 10th June, 2003 repealing the provisions of Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998 consolidating the laws inter alia relating to generation, distribution etc. and other variety of aspects concerning the electricity, the 2nd Respondent stands governed under the Electricity Act, 2003 and is discharging functions inter alia under Section 86 of the Electricity Act which includes determination of tariff for electricity generation within the State. Section 86(4) provides that the State Electricity Regulatory Commission in discharging its function shall be guided by the National Electricity Policy and the Tariff Policy.
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The 2nd Respondent had framed the Maharashtra Electricity Regulatory Commissions (Terms and Conditions for Determination of Tariff) Regulations, 2005 (for short "2005 Tariff Regulation") for the period Financial Year 2005 to 2010-11, based on which the tariff for generation of electricity was fixed. These Regulations provided for a separate determination of tariff for generation, transmission, wheeling and retail sale of electricity. So also norms for operation of Thermal Generating Stations were fixed under these Regulations as contained in Regulation 33.1.3. As regards Gross Station Heat Rate (for short 'SHR'), the Regulation provided as under:-
"33.1.3 Gross station heat rate
(a) Gross station heat rate for coal-based generating stations
Note 1
In respect of 500 MW and above Units where the boiler feed pumps are electrically operated, the gross station heat rate shall be 40 kCal/k Wh lower than the station heat rate indicated above.
Note 2
For generating stations having combination of 200/210/250 MW sets and 500 MW and above sets, the normative gross station heat rate shall be the weighted average station heat rate."
The Petitioners state that the above Regulation provided for norms for Gross SHR inter alia for 250MW without any distinction between different generators operating in various power stations in the State and are made applicable across the board for all generators. The Petitioners state that the above regulation prescribed a Station Heat Rate which is a ratio between the heat input and the energy output, that is input to the boiler in the form of fuel which generates electricity. In the event of heat rate being higher, the same reflects the inefficiency of the generating set and if the heat rate is lower, the same reflects the efficiency of the generating set. Notwithstanding the design of the generating set which would give common parameters for all those using similar sets, the operational efficiency or inefficiency of the generator reflects in its performance being better or worse than the norm which is prescribed by the regulator namely the Central Electricity Regulatory Commission (for short 'CERC') or the State Electricity Regulatory Commission. It is stated that this efficiency or inefficiency results in monetary gains or loss to the generator, who would share such gains or loss with the consumer as provided for in the Tariff Regulations. It is stated that these norms are the behaviour of the industry as a whole and are to be prescribed for a group or an industry. Accordingly, the Tariff Regulations specifically prescribed norms for operation of generating stations relating to the Station Heat Rate (SHR). Any variation in the SHR was a controllable factor and any gain or loss as may be approved by the 2nd Respondent is required to be shared with the consumer in accordance with Regulations.
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The 2005 Tariff Regulations were in force till the financial year 2010-11 and the next Multi Year Tariff (MYT) period was thus to commence from 2011-12 and which would end in Financial Year 2015-16. For that purpose in August 2009, the 2nd Respondent published a draft approach paper which was prepared by one ABPS Infrastructure Advisory Pvt.Ltd. inviting comments from the various stakeholders. This draft approach paper in relation to the Gross Station Heat Rate took the average heat rate achieved during the financial year 2004-05 to 2007-08, as the opening level of the heat rate and applied a degradation factor of 0.2% per annum, for specifying the norms for the next control period. According to the Petitioners, this was without any basis. As regards the Petitioners Dahanu Thermal Power Station, the Station Heat Rate norms was prescribed as under:-
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It is the Petitioner's case that the above draft approach paper indicated that the 2nd respondent had made a departure from the tariff required which had provided Station Heat Rate (SHR) of 2500 Kcal / Kwh for all generating stations and to provide separate Station Heat Rates (SHR) for coal based power stations in the State. The Petitioners by their letter dated 23rd October, 2009 submitted their suggestions to the draft approach paper inter alia objecting to the categorization made by the second Respondent in relation to different generating stations being contrary to the Tariff Policy as also the principle adopted by various other Regulatories in the category.
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The 2nd respondent for the multi year tariff period- Financial Year 2011-12 to 2015-16, issued another draft approach paper in July 2010, discarding the earlier draft approach paper. In this draft approach paper, the Station Heat rate (SHR) for different power plants namely coal based power plants of the Maharashtra State Power Generation Corporation (MSPGCL), and Tata Power Company (TPC) and for DTPS i.e. the Petitioner's power station at Dahanu came to be fixed. According to the Petitioners, the earlier Draft Approach Paper of August, 2009 and this Draft Approach Paper of July, 2010 did not have much difference in the Station Heat Rate. On 30th August, 2010, the Respondent No. 2 issued a public notice inviting comments and suggestions on the draft MYT Regulations so published. The Petitioners submitted their comments by their letter dated 26th October, 2010 inter alia stating that the norms should be fixed for groups similarly situated which would define "industry standards" for plants of similar size and vintage, as they would be equitable as also rational.
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The second Respondent thereafter issued the impugned Regulations, 2011 on 4th February, 2011. It is the Petitioners' case that their objections were not considered in notifying the impugned Regulations. The Petitioners are aggrieved by Regulation 44.2(d) by which Gross Station Heat Rate for thermal generating station of the Petitioners was fixed as under:-
"44.2 Gross Station Heat Rate -For existing Generating Stations.
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Existing Coal-based Thermal Generating Stations, other than those covered under clauses (b), (c) and (d), below:
Note 1
In respect of 500 MW and above...
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