Appeal No. 244 of 2012. Case: DPSC Limited Vs West Bengal Electricity Regulatory Commission. APTEL (Appellate Tribunal for Electricity)
| Case Number | Appeal No. 244 of 2012 |
| Counsel | For Appellant: Buddy A. Ranganadhan, Debnath Ghosh, Subir Kumar, Shruti Verma, Shounak Mitra, Atul Shankar Mathur, Sandip Mitra, Ranjitha Ramachandran and A. Bairagi and For Respondents: Prathik Dhar, C.K. Rai and Ravin Dubey |
| Judges | M. Karpaga Vinayagam, Chairperson and Rakesh Nath, Member (T) |
| Issue | Electricity Law |
| Judgement Date | August 26, 2014 |
| Court | APTEL (Appellate Tribunal for Electricity) |
Judgment:
Rakesh Nath, Member (T)
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The present Appeal has been filed by DPSC Ltd. against the order dated 24.08.2012 passed by the West Bengal Electricity Regulatory Commission ("State Commission") approving the Annual Performance Review of the Appellant for the FY 2009-10.
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The Appellant is a generation and distribution utility operating in the Asansol-Raniganj belt of District Burdwan in the State of West Bengal. The Appellant is a Distribution Licensee for the area. The State Commission is the Respondent.
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The brief facts of the case are as under:
a) The Appellant had submitted a Petition on 31.03.2010 for Annual Performance Review (APR) for the FY 2009-10 in terms of Regulation 5.4.2 of the Tariff Regulations 2007, as amended.
b) The said APR Petition was disposed of by the State Commission in terms of Tariff Regulations, 2011 vide the impugned order dated 24.08.2012 wherein part of amounts claimed by the Appellant in relation to Coal and Ash Handling charges, Water charges, Operation and Maintenance charges and Fixed Cost of Dishergarh Power Plant have been disallowed.
c) Aggrieved by the disallowance of the above expenditure in the impugned order dated 24.08.2012, the Appellant has filed this Appeal.
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The Appellant has made the following submissions:
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Coal and Ash Handling charges:
i) In the APR, the Appellant had claimed an amount of Rs. 103.2 lakhs on account of Coal and Ash Handling charges for its Dishergarh and Chinakuri Power Plants, as against Rs. 92.45 lakhs allowed in the tariff order for FY 2009-10. The Appellant gave detailed justification for increase in the expenses along with the difficulties faced by the Appellant in procurement of coal. None of the contentions of the Appellant have been considered by the State Commission in the impugned APR Review Order. On the other hand the State Commission only considered the actual generation at the two power plants and since the actual generation was less than the target set in the tariff order for FY 2009-10, the State Commission admitted the expenses of only Rs. 92.45 lakhs as allowed in the tariff order.
ii) In the original tariff order, the State commission had not passed the Coal and Ash Handling charges with the actual quantum of generation and had only permitted an increase in such expenditure over the previous years to cover the inflationary increase. Hence, while undertaking the APR the State Commission has adopted an entirely new basis of correlating the Coal and Ash Handling charges with actual generation of the power plants.
iii) Coal and Ash Handling charges are a part and parcel of fuel cost. The Coal and Ash Handling charges cannot said to vary only with generation but there are multiple factors like quality of coal, distance travelled for disposing of ash, labour contract rate, revision in minimum wages, etc., which are also responsible for increase in cost under this head. Accordingly, the Coal and Ash Handling charges are uncontrollable.
iv) Under clause 2.5.5 of 2011 Regulations, any uncontrollable cost has to be passed through in the tariff in an appropriate manner by the State Commission.
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Water charges
i) The contentions of the Appellant in respect of Water charges are the same as the contentions on the issue of Coal and Ash Handling charges.
ii) In respect of water charges also the State Commission considered the actual generation at the power plants and as the actual generation was less than the generation target fixed in the original tariff order, the State Commission allowed the same water charges of Rs. 7.17 lakhs as allowed in the original tariff order. This was against the claim of Rs. 7.30 lakhs in the APR Petition.
iii) The Water charges are not only for the boiler but are also meant for water consumed by workers and staff in the Appellant's housing colony which is adjacent to the generation station.
iv) Under the Removable of Difficulties (Fourth) order, the supply of electricity by a generating plant to the colony of its employees is deemed to be part of integral activities of a generating station. On a parity of reasoning, if the maintenance of employees' colony is deemed to be part of the integral activities of generation, the provision of water to the employees would also be an integral part of the activities of a generating station. The associated cost of such activity would not be correlative to the actual generation.
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Repairs and Maintenance costs (R & M):
i) This issue arises only for the distribution system of the Appellant. Repair and Maintenance is a part of the Operation and Maintenance expenses.
ii) In the impugned order the State Commission has merely proceeded on the basis of O & M for distribution functions as "controllable" and has restricted the amount to what was allowed in the main tariff order in contravention to the Tariff Regulations.
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Annual Fixed charges:
i) The recovery of Annual Fixed charges for the generating stations has been determined in the impugned APR order on the basis of actual generation vis-à-vis the targeted generation i.e. the targeted Plant Load Factor.
ii) Under the 2011 Tariff Regulations, the Plant Load Factor is defined differently from the availability of the generating station. The Regulations clearly provide that Fixed charges for non-ABT generating plants is to be calculated on the basis of availability and not Plant Load Factor ("PLF"). However, the capacity charges recovery of the generating stations that are not covered by on-line monitoring display arrangement at SLDC along with dedicated audio communication has to be done on the basis of normative PLF meant for incentive purpose. Thus, the Regulations prescribe different norms of PLF and availability for the thermal generating stations of the Appellant. However, in the impugned order the State Commission has determined the capacity charges not on the basis of availability but on the basis of PLF contrary to the 2011 Tariff Regulations.
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On the above issues we have heard Mr. Buddy Ranganadhan, Learned Counsel for the Appellant and Mr. Pratik Dhar, Learned Counsel for the State Commission.
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On the basis of the rival contentions of the parties, the following questions would arise for our consideration:
i) Whether the State Commission has erred in correlating Coal and Ash Handling charges to the actual generation of the power plants and restricting the actual expenses under this head in the APR to that approved in the original tariff order?
ii) Whether the State Commission has erred in correlating the water charges to the actual generation of the power plants and restricting the actual water charges in the APR to that approved in the original tariff order?
iii) Whether the State Commission has erred in considering the Repair and Maintenance charges for the distribution business of the Appellant as "controllable"...
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