Appeal No. 325 of 2016 & IA No. 676 of 2016. Case: Ms DSL Hydrowatt Pvt. Ltd. Vs Himachal Pradesh Electricity Regulatory and Ors.. CEGAT (Customs, Excise & Gold (Control) Appellate Tribunal) & CESTAT (Customs, Excise and Service Tax Appellate Tribunal)
| Case Number | Appeal No. 325 of 2016 & IA No. 676 of 2016 |
| Counsel | For Appellant: Mr. M G Ramachandran Ms. Poorva Saigal Ms. Anushree Bardhan Ms. Ranjitha Ramachandran Mr. Shubham Arya Counsel and For Respondents: Mr. Pradeep Misra Mr. Manoj Kumar Sharma for R-1 Mr. Anand K Ganesan Mr. Sandeep Rajpurohit, advs. |
| Judges | Mrs.Ranjana P. Desai, Chairperson and Mr. I.J. Kapoor, Technical Member |
| Issue | Electricity Act, 2003 - Section 111 |
| Judgement Date | May 18, 2017 |
| Court | CEGAT (Customs, Excise & Gold (Control) Appellate Tribunal) & CESTAT (Customs, Excise and Service Tax Appellate Tribunal) |
Judgment:
Mr. I.J. Kapoor, Technical Member
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The present Appeal is being filed by M/s DSL Hydrowatt Pvt. Ltd. (hereinafter referred to as the "Appellant") under Section 111 of the Electricity Act, 2003 challenging the Order dated 6.10.2016 ("Impugned Order") passed by the Himachal Pradesh Electricity Regulatory Commission (hereinafter referred to as the "State Commission"), in Review Petition No. 26 of 2016 related to determination of project specific tariff for sale of electricity from the 5.4 MW Sarbari - II Small Hydro Plant (hereinafter referred as the ''SHP'') to Himachal Pradesh State Electricity Board Ltd. (Respondent No.2) for the useful life of the plant (i.e. 40 years) starting from 2010-11. The present Appeal is concerning about non-consideration of outage factor of 5% on normative basis for all the years and non- consideration of the royalty actually to be paid to the Government of Himachal Pradesh (GoHP) above 13%.
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The Appellant, M/s DSL Hydrowatt Pvt. Ltd. is a company incorporated under the provisions of the Companies Act, 1956, having its registered office at Sarbari Small Hydro Projects, Village Nagujhore, Distt. Kullu, Himachal Pradesh (HP).
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The Himachal Pradesh Electricity Regulatory Commission is the Electricity Regulatory Commission for the State of Himachal Pradesh, exercising jurisdiction and discharging functions in terms of the Electricity Act, 2003.
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The Respondent Nos. 2, Himachal Pradesh State Electricity Board Ltd. (HPSEBL) is the beneficiary of the SHP of the Appellant.
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Facts of the present Appeal:
a) The Appellant has established 5.4 MW SHP in the State of Himachal Pradesh with Commercial Operation Date (COD) of the SHP as 25.8.2010. This project was earlier envisaged with installed capacity of 4.5 MW which was subsequently increased to 5.4 MW with the approval of GoHP. On 28.2.2009 Implementation Agreement ("IA") was signed between the Appellant and GoHP for SHP based on Detailed Project Report (DPR) submitted by the Appellant to GoHP.
b) The State Commission on 18.6.2007 notified Himachal Pradesh Electricity Regulatory Commission (HPERC) (Power Procurement from Renewable Sources and co-generation by Distribution Licensee) Regulations, 2007 (hereinafter referred to as ''Regulations, 2007''). The State Commission on 18.12.2007 issued generic tariff order for purchase of energy by Respondent No. 2 i.e. HPSEBL from Small Hydro projects of upto 5 MW capacity (hereinafter referred as ''Generic Tariff Order, 2007'').
c) The Appellant on 23.3.2010 filed Petition No. 29 of 2010 with the State Commission for determination of capital cost and levellised tariff for the useful life (40 years) of the SHP. The State Commission on 07.7.2010 passed an Interim Order allowing provisional tariff of Rs. 2.95/kWh in the said petition.
d) The Appellant and the Respondent No. 2 entered into Power Purchase Agreement (PPA) dated 23.8.2010 for sale of power by the Appellant to the Respondent No.2 from the SHP.
e) On the directions of the State Commission, the Appellant filed the amended Petition No. 29 of 2010 on 23.8.2013 for determination of tariff for sale of power from the SHP. The State Commission vide its Order dated 28.4.2016 (hereinafter referred as ''Tariff Order'') determined the levellised tariff of the SHP at the interconnection point for a period of 40 years from COD (i.e. 25.8.2010). This order did not consider at all the outage factor of the plant (5%) and royalty payable in excess of 13% in the computation of project specific tariff.
f) The Appellant on 25.5.2016 filed Review Petition No. 26 of 2016 against the Tariff Order. The State Commission vide order dated 6.10.2016 (Impugned Order) partly allowed the application of outage factor (5%) for the years when the energy injected at the interconnection point is less than 29.87 MUs and again denied the royalty payable in excess of 13% in the computation of tariff.
g) Aggrieved by the Impugned Order read with the Tariff Order, the Appellant has preferred the present appeal.
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QUESTIONS OF LAW
The Appellant has raised the following question of law in the present appeal:
Whether in the facts and circumstances of the case, the State Commission is right in restricting the consideration of the outage factor of the project specific levellised tariff namely only when generation being less than 29.87 MUs of saleable energy and not otherwise as a normative factor?
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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:
a) The State Commission has wrongly inter-related normative parameters of outage factor/ shut down permitted for machine availability and quantum of generation. These are independent and unrelated to each other. The State Commission''s decision to apply outage factor/ shutdown period of 5% to the years when annual generation is less than 29.87 MUs is not justified. This covers the situation when the generation is 28.37 MUs and above. In case generation is less than 28.37 MUs in a particular year, the factor of 5% shutdown/outage factor is not sufficient. Accordingly, 5% shutdown/outage factor is to be provided uniformly for all 40 years.
b) The above decision is against the fundamental concept of tariff determination in hydro power projects and specifically for small hydro projects (upto 25 MW) which are non-conventional and are to be promoted under Section 86 (1) (e) read with Section 61 (h) of the Electricity Act, 2003.
c) The State Commission failed to appreciate that for project specific tariff determination, certain normative parameters are to be considered which are independent of each other. These are water flow, outage factor/shut down, auxiliary consumption and transformation losses. Water availability during entire period of PPA has been considered based on normative parameter (75% dependable water flow) and is entirely to the risk of the Appellant. The Appellant is entitled only to per unit tariff for quantum of energy supplied irrespective of normative quantum of energy determined by the State Commission. Thus, the water flow availability to generate upto 29.87 MUs cannot be considered for adjustment any year in the other normative parameters such as outage factor/shut down. The normative 5% outage factor/shut down period is given considering that the power plant cannot run round the clock 365 days a year and year on year basis for 40 years.
d) The SHP of the Appellant will be given tariff based on the availability of...
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