Petition No. 248/GT/2012. Case: NHDC Limited Vs Madhya Pradesh Power Trading Company Ltd. and Narmada Valley Development Department. Central Electricity Regulatory Commission
| Case Number | Petition No. 248/GT/2012 |
| Counsel | For Appellant: Shri Anurag Seth and Shri Ashish Jain, NHDC |
| Judges | Pramod Deo, Chairperson, S. Jayaraman, Member, V.S. Verma, Member and M. Deena Dayalan, Member |
| Issue | Electricity Law |
| Judgement Date | May 09, 2013 |
| Court | Central Electricity Regulatory Commission |
Order:
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The petitioner, NHDC Limited has filed this petition for approval of tariff in respect of Omkareshwar Hydroelectric Project (8 x 65 MW) (hereinafter referred to as "the generating station") for the period from 1.4.2009 to 31.3.2014 in terms of the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2009 ('the 2009 Tariff Regulations'). The Commission by its order dated 16.1.2012 in Petition No. 265/2010 had determined the annual fixed charges of the generating station for the period from 20.8.2007 to 31.3.2009. Subsequently, the tariff of the generating station for the said period was revised by order dated 14.3.2012 in Petition No. 265/2010 after correction of errors in order dated 16.1.2012. Thereafter, by order dated 5.9.2012 in Review Petition No. 5/2012 in Petition No. 265/2010, the annual fixed charges of the generating station for the period from 20.8.2007 to 31.3.2009 was revised after correction of error in the consideration of weighted average rate of interest on loan. The capital cost (excluding deferred liabilities) allowed for the purpose of tariff for the period from 20.8.2007 to 31.3.2009 in the order dated 14.3.2012 was as under:
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The annual fixed charges allowed by order dated 5.9.2012 for the period from 20.8.2007 to 31.3.2009 was as under:
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This multi-purpose project has been constructed by the petitioner, which is a joint venture between NHPC and the State Government of Madhya Pradesh. It comprises of 520 MW (8x65 MW) of generating capacity for providing annual energy generation of 1167 MUs in a 90% dependable year. Unit I consists of Dam and appurtenant works, Unit-II consists of irrigation system of canals and distributaries being executed by the Government of Madhya Pradesh, Unit-III includes Power house and water conductor system along with allied works in power generation. Thus, Units I and III are essentially for power generation, named as power component and Unit II for irrigation system named as irrigation component. Since Unit-I contributes for power generation as well as for irrigation purpose, its costs is apportioned for power generation and irrigation system depending upon the proportion of water utilization for two systems. The irrigation component is apportioned @16.75% of cost of Unit-I and the balance cost is accounted towards cost of power generation. The State of Madhya Pradesh is the only beneficiary of the project. The dates of commercial operation of all the machines are as under:
Capital cost
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The petitioner has submitted that the anticipated completion cost of R&R works being executed by the Govt. of Madhya Pradesh (the Respondent No. 2 herein) is ` 27617 lakh. As per Clause 4 of the order of approval of project cost by the Ministry of Power, Government of India dated 29.5.2003, the estimated cost of R&R works had been capped at ` 11700.00 lakh and any increase in this cost beyond this cost is to be borne equally by the GoMP and the petitioner. Accordingly, as per terms of CCEA clearance, 50% of the increased R&R cost shall be borne by the Govt. of MP as 'subvention' and the balance 50% cost shall be booked to the project, as cost of Unit-I (Dam).
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The petitioner has claimed the opening capital cost of ` 204732.85 lakh as on 1.4.2009 for the purpose of tariff for power component. The closing capital cost for the purpose of tariff as on 31.3.2009 is ` 204732.85 lakh (excluding un-discharged liability of ` 11406.94 lakh) as per Commission's order dated 14.3.2012 in Petition No. 265/2010. This amount of ` 204732.85 lakh (excluding un-discharged liability of ` 11406.94 lakh) has been considered as the opening capital cost as on 1.4.2009 towards the power component of the generating station.
Additional Capital Expenditure
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Regulation 9 of the 2009 Tariff Regulations, as amended on 21.6.2011 and 31.12.2012, provides as under:
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Additional Capitalisation. (1) The capital expenditure incurred or projected to be incurred, on the following counts within the original scope of work, after the date of commercial operation and up to the cut-off date may be admitted by the Commission, subject to prudence check:
(i) Un-discharged liabilities;
(ii) Works deferred for execution;
(iii) Procurement of initial capital spares within the original scope of work, subject to the provisions of regulation 8;
(iii) Liabilities to meet award of arbitration or for compliance of the order or decree of a court; and
(v) Change in law:
Provided that the details of works included in the original scope of work along with estimates of expenditure, un-discharged liabilities and the works deferred for execution shall be submitted along with the application for determination of tariff.
(2) The capital expenditure incurred or projected to be incurred on the following counts after the cut-off date may, in its discretion, be admitted by the Commission, subject to prudence check:
(i) Liabilities to meet award of arbitration or for compliance of the order or decree of a court;
(ii) Change in law;
(iii) Deferred works relating to ash pond or ash handling system in the original scope of work;
(iv) In case of hydro generating stations, any expenditure which has become necessary on account of damage caused by natural calamities (but not due to flooding of power house attributable to the negligence of the generating company) including due to geological reasons after adjusting for proceeds from any insurance scheme, and expenditure incurred due to any additional work which has become necessary for successful and efficient plant operation; and
(v) In case of transmission system any additional expenditure on items such as relays, control and instrumentation, computer system, power line carrier communication, DC batteries, replacement of switchyard equipment due to increase of fault level, emergency restoration system, insulators cleaning infrastructure, replacement of damaged equipment not covered by insurance and any other expenditure which has become necessary for successful and efficient operation of transmission system:
Provided that in respect sub-clauses (iv) and (v) above, any expenditure on acquiring the minor items or the assets like tools and tackles, furniture, air-conditioners, voltage stabilizers, refrigerators, coolers, fans, washing machines, heat convectors, mattresses, carpets etc. brought after the cut-off date shall not be considered for additional capitalization for determination of tariff w.e.f. 1.4.2009.
(vi) In case of gas/liquid fuel based open/ combined cycle thermal generating stations, any expenditure which has become necessary on renovation of gas turbines after 15 year of operation from its COD and the expenditure necessary due to obsolescence or non-availability of spares for successful and efficient operation of the stations.
Provided that any expenditure included in the R&M on consumables and cost of components and spares which is generally covered in the O&M expenses during the major overhaul of gas turbine shall be suitably deducted after due prudence from the R&M expenditure to be allowed.
(vii) Any capital expenditure found justified after prudence check necessitated on account of modifications required or done in fuel receipt system arising due to non-materialisation of full coal linkage in respect of thermal generating station as result of circumstances not within the control of the generating station.
(viii) Any un-discharged liability towards final payment/withheld payment due to contractual exigencies for works executed within the cut-off date, after prudence check of the details of such deferred liability, total estimated cost of package, reason for such withholding of payment and release of such payments etc.
(ix) Expenditure on account of creation of infrastructure for supply of reliable power to rural households within a radius of five kilometers of the power station if, the generating company does not intend to meet such expenditure as part of its Corporate Social Responsibility.
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The year-wise projected additional capital expenditure pertaining to Unit-I (Dam) and Unit-III (Power House) claimed by the petitioner vide its affidavit dated 12.6.2012, are as under:
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The petitioner, in its original petition had submitted that since it is obligatory for the petitioner to demonstrate the peaking capability equivalent to installed capacity of the generating units and due to restriction of raising the water level in reservoir beyond EL of 189.0 M, the Maximum Continuous Rating (MCR) of only 400 MW (instead of 520 MW) could only be demonstrated, the capital expenditure already made by the petitioner so far can only be capitalized under the provisions of Regulation 9(1) of the 2009 Tariff Regulations. As such, the petitioner has prayed that the additional capital expenditure may be allowed under Regulation 9(1) of the 2009 Tariff Regulations, by considering the cut-off date as 31.3.2012, instead of the cut-off date of 31.3.2009 admitted by the Commission in Petition No. 265/2010. In order to harness the full capacity of 520 MW, the petitioner has been endeavoring for filling the reservoir above the existing permissible level of EL 189.0 M against the FRL of EL 196.60 M and MDDL of EL 193.54 M and the capital expenditure on account of balance R&R works was in progress and presently, construction of bridges is in progress in order to provide easy connectivity to the various villages will become islands consequent to the filing beyond the existing permissible level of EL 189.0 M. However, keeping in view that the prayer of the petitioner for considering the cut-off date as 31.3.2012 was disallowed by the Commission vide its order dated 16.1.2012 in Petition No. 265/2010, the petitioner vide its affidavit dated 12.6.2012, has prayed that the additional capital expenditure claimed under Regulation 9(1) may be considered under Regulation 9(2) of the 2009 Tariff Regulations. It has further submitted that the claim for...
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