Appeal No. 25 of 2016 and I.A. No. 71 of 2016. Case: Jaiprakash Power Ventures Ltd. Vs Madhya Pradesh Electricity Regulatory Commission and Ors.. APTEL (Appellate Tribunal for Electricity)
| Case Number | Appeal No. 25 of 2016 and I.A. No. 71 of 2016 |
| Counsel | For Appellant: S. Venkatesh, Shashank Khurana, Varun Singh, Pratyush Singh, N. Bhattacharya and Anuj P. Agarwala, Advs. and For Respondents: C.K. Rai, Umesh Prasad, Ashok Upadhyay, Paramhans and Gajender Sinha, Advs. |
| Judges | Ranjana P. Desai, J. (Chairperson) and I.J. Kapoor, Member (T) |
| Issue | Electricity Act, 2003 - Sections 111, 2, 62 |
| Judgement Date | February 13, 2017 |
| Court | APTEL (Appellate Tribunal for Electricity) |
Judgment:
I.J. Kapoor, Member (T)
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The present Appeal is being filed by M/s. Jaiprakash Power Ventures Ltd. (herein after referred to as the "Appellant") under Section 111 of the Electricity Act, 2003 challenging the Order dated 26.11.2014 ("Impugned Order") passed by the Madhya Pradesh Electricity Regulatory Commission (hereinafter referred to as the "State Commission"), in Petition No. 40 of 2012. The Appellant also filed a Review Petition No. 5 of 2015, against the Impugned Order which was also substantially decided against the Appellant vide the State Commission's order dated 08.05.2015 ("Review Order"). The present Appeal is concerning about the part allowance of pre-commissioning fuel expenses, double deduction of revenue earned from the sale of infirm power injected to the grid, inadequate recovery of Capacity Charges and post facto adjustment on account of Non-Tariff Income of the Appellant by the State Commission.
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The Appellant, M/s. Jaiprakash Power Ventures Ltd.(Unit: Jaypee Bina Thermal Power Plant) is a power generating company within the meaning of Section 2 of the Electricity Act, 2003 in the State of Madhya Pradesh supplying power to Respondent Nos. 3, 4 & 5 through Respondent No. 2.
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The Respondent No. 1, Madhya Pradesh Electricity Regulatory Commission is the State Commission for the State of Madhya Pradesh, exercising jurisdiction and discharging functions in terms of the Electricity Act 2003.
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The Respondent No. 2, Madhya Pradesh Power Management Company Ltd. is a holding company for all the three State Distribution Companies of Madhya Pradesh, herein Respondent Nos. 3, 4 & 5 (herein referred as 'discoms') and is vested with the functions of bulk purchase of electricity from the Appellant and supply of electricity in bulk to the discoms, which are responsible for distribution of electricity within its licensed distribution area.
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Facts of the present Appeal:
a) The Appellant has set up phase-1 (2 x 250 MW) of coal based power generating station at Bina, Distt. Sagar (M.P.) based on Memorandum of Understanding (MoLI) dated 12.8.2008 signed between the Appellant and Govt. of M.P. The second phase comprises of 3 x 250 MW units are yet to be installed. As per the Implementation Agreement ("IA") dated 30.01.2009, the Appellant has to provide to the Govt. of M.P. or its Nominated Agency (herein Respondent No. 2), 5% of net power generated by the project on annualized basis at Variable Charges as determined by the State Commission. Further, in case the Appellant was allocated captive coal block in the State of M.P., this quantum of power to be supplied at Variable Charges will be 7.5%.
b) The Power Purchase Agreement (PPA) was signed on 05.01.2011 between the Appellant and the Respondent No. 2 wherein Respondent Nos. 3 to 5 were the Confirming parties for the contracted capacity of 65% from Phase-I i.e. 2 x 250 MW of the project.
c) The PPA for 5% energy on Variable Charges was signed between the Appellant and Govt. of M.P. on 20.7.2011. Govt. of M.P. on its behalf, nominated Respondent No. 2 to receive this energy at Variable Charges as determined by the State Commission.
d) The Unit-1 and Unit-2 of the Jaypee Bina Thermal Power Station commenced commercial operations from 31.08.2012 and 07.04.2013 respectively.
e) In May, 2012 the Appellant filed tariff petition No. 40 of 2012 before the State Commission for determination of tariff for its Bina thermal Power Station. The State Commission vide order dated 12.12.2012 issued provisional tariff order of Unit-1 and vide order dated 29.06.2013 issued provisional tariff order of Unit-2 of the Appellant's Bina thermal power station.
f) In February 2014, the Appellant, under Section 62 of the Electricity Act, filed an application before the State Commission for determination of final tariff of the Bina thermal power station, Phase-I Units for the period 2012-13 to 2015-16. Vide Impugned Order dated 26.11.2014, the State Commission determined the final tariff for 2012-13 & 2013-14 and provisional tariff for years 2014-15 & 2015-16 subject to truing up. Aggrieved by certain aspects of the Impugned Order, the Appellant filed Review Petition No. 5 of 2015 before the State Commission on issues related to pre-commissioning fuel expenses, double deduction of revenue earned from sale of infirm power, interest & finance charges on loan capital and inadequate recovery of capacity charges. The State Commission passed order dated 8.5.2015 on the Review Petition rejecting all the claims of the Appellant except interest & finance charges on loan capital. In this order the State Commission has also made adjustment of Non-Tariff Income for the year 2013-14.
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Aggrieved by the Impugned Order dated 26.11.2014 and order dated 8.5.2015 on the Review Petition passed by the State Commission, the Appellant has preferred the present appeal on following issues:
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Pre-Commissioning Fuel Expenses.
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Double deduction of infirm power.
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Inadequate recovery of Capacity Charges.
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Post Facto Adjustment on account of Non-Tariff Income.
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QUESTIONS OF LAW
The Appellant has raised the following questions of law in the present appeal:
a. Whether the State Commission correctly applied the methodology to arrive at the cost of coal to determine pre-commissioning expenses?
b. Whether the State Commission has correctly disallowed the blending usage of imported coal for the purpose of determination of pre-commissioning fuel expenses?
c. Whether the State Commission is correct in doubly reducing the earning from generation of infirm power contrary to the Regulations?
d. Whether the State Commission has failed to allow proportionate recovery of Capacity Charges left unrecovered due to concessional energy supplied?
e. Whether the State Commission in Review Proceedings can substantially alter the Tariff, which was determined through the Final Tariff Order on a ground, which was neither agitated nor urged by either of the parties. Was the State Commission justified in not giving an opportunity to the Appellant before delivering such Order which was prejudicial to the interests of the Appellant?
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We have heard at length the learned counsel for the parties and considered carefully their written submissions, arguments put forth during the hearings etc. Gist of the same is discussed hereunder.
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The learned counsel for the Appellant has made following arguments/submissions for our consideration on the issues raised by it:
i) Disallowance of Pre-Commissioning Expenses:
a) The State Commission in the Impugned Order and Review Order failed to consider that amount of Rs. 20.79 Cr. as incurred by the Appellant for pre commissioning expenses of Unit-1 were based on weighted average landed cost of consumption of 53,052 MT coal certified by Statutory Auditor vide certificate dated 15.4.2013. The State Commission has erred by holding that average purchase rate for domestic coal is the same as the weighted average price of consumption. The weighted average price of consumption is based on First in First Out (FIFO) basis and is correct method of calculating consumption.
b) The State Commission while calculating pre-commissioning expenses for Unit-2 has ignored the landed cost of imported coal which was purchased for blending with domestic Fuel Supply Agreement (FSA) coal and domestic non-FSA coal. This was required to achieve the Gross Calorific Value (GCV) of the coal for which the boiler was designed by blending with low GCV domestic coal. For achieving Commercial Operation Date (COD), the Appellant has to demonstrate the Maximum Continuous Rating (MCR) through successful trial run and also to demonstrate capability to raise load upto 105% or 110% of the MCR, which would have not been possible with low GCV domestic FSA coal. Based on weighted average price, the pre-commissioning expenses for consumption of 25,326 MT coal works out to Rs. 11.21 Cr. as certified by the Statutory Auditor vide certificate dated 15.4.2013. The State Commission has considered only the rate of domestic coal for arriving at pre commissioning expenses for consumption of 25,326 MT coal for Unit-2.
c) The PPA dated 5.1.2011, signed between the Appellant and the Respondent No. 2 also provides that the primary fuel (coal) can be either domestic or imported coal. Hence the Appellant has rightfully used blended coal for the purpose of commissioning. The disallowance of pre-commissioning expenses by the State Commission is not justified which is based on erroneous grounds. The State Commission has held that the MPERC Tariff Regulations, 2012 do not specify that the coal consumption will be based on FIFO basis. On the other hand, these regulations specify that energy charges are based on landed cost of coal, hence the Appellant is entitled to the full amount incurred on pre-commissioning expenses for Unit-1 and Unit-2. Further, the Electricity Act, 2003 and various regulations of the State Commission do not contemplate disallowance of imported coal for generation of infirm power.
d) The State Commission has also cited the CERC UI/Deviation Settlement Mechanism Regulations and equated domestic coal based projects with imported coal based projects in terms of capping of rate of infirm power supplied by these generators. These CERC Regulations do not bar the domestic coal based power plant from blending the imported coal for generating infirm power but caps the rate of infirm power.
e) The State Commission has also erred in considering average purchase price of coal as against...
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