Review Petition No. 19/2011 in Petition No. 90/2010. Case: NHPC Ltd., Faridabad Vs Punjab State Electricity Board, Patiala and Ors.. Central Electricity Regulatory Commission
| Case Number | Review Petition No. 19/2011 in Petition No. 90/2010 |
| Judges | Shri S. Jayaraman, Member and Shri V.S. Verma, Member |
| Issue | Electricity Law |
| Judgement Date | August 31, 2012 |
| Court | Central Electricity Regulatory Commission |
Order:
1. Petition No. 90/2010 was filed by the petitioner, NHPC, for approval of generation tariff of Bairasiul Hydroelectric Project (3 x 66 MW) (hereinafter referred to as "the generating station") for the period from 1.4.2009 to 31.3.2014, based on the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2009 ('the 2009 Tariff Regulations') and the Commission by its order dated 15.6.2011 determined the annual fixed charges for the period 2009-14, as under:
(`in lakh)
| 2009-10 | 2010-11 | 2011-12 | 2012-13 | 2013-14 |
|
| Return on Equity | 1386.33 | 1392.44 | 1406.01 | 1416.93 | 1427.62 |
| Interest on Loan | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Depreciation | 744.30 | 760.59 | 800.89 | 839.10 | 885.68 |
| Interest on Working Capital | 344.82 | 362.47 | 381.76 | 401.99 | 423.49 |
| O&M Expenses | 6005.74 | 6349.26 | 6712.44 | 7096.39 | 7502.31 |
| Total | 8481.19 | 8864.76 | 9301.10 | 9754.42 | 10239.10 |
Aggrieved by the said order, the petitioner has filed this review application seeking review of the order dated 15.6.2011 on the following issues, namely:
(a) Disallowance of additional capitalization on certain assets/items for 2009-14 and;
(b) Error in the calculation of O&M expenses.
2. By order dated 14.11.2011, the application was admitted on the above issues and notices were issued to the respondents. Reply to the application has been filed by PSPCL (Respondent No.1) and BRPL (Respondent no. 3) and the petitioner has filed its rejoinder to the said replies.
3. During the hearing on 12.1.2012, the representative of the petitioner made his submissions on the above issues and prayed that the order dated 15.6.2011 be reviewed for the reasons mentioned in the application. The learned counsel for the respondent, BRPL and the representative of the respondent, PSPCL have, in general, submitted that the Commission has given detailed reasons in its order for disallowance of the expenditure for capitalization and the petitioner cannot be allowed to give fresh justification now and/or re-argue his case on the ground that there is an error apparent on the face of record. They have also submitted that the power of review is to be exercised by the Commission only for correction of clerical or arithmetical errors/mistakes in the order and not for correction of any error in judgment and hence the application for review of order was not maintainable. The learned counsel for respondent, BRPL while pointing out that none of the grounds raised for review of the order has been justified by the petitioner, has submitted that a review is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected, but lies only for patent error. In this regard, the learned counsel placed reliance on the decision of the Hon'ble Supreme Court in Parsion Devi & ors-v-Sumitra Devi & ors (1997) 8 SCC 715 and judgments of the Appellate Tribunal for Electricity dated 27.5.2011 in Review Petition No. 13/2010 (in Appeal No. 56/2008), judgment dated 12.8.2011 in Review Petition No. 2/2011 (in Appeal No. 26/2008, judgment dated 24.3.2009 in Review Petition No. 1/2009 (in Appeal No. 64/2008), judgment dated 26.8.2011 in Review Petition No. 1 of 2011 (in Appeal No. 24 of 2010) and the judgment dated 19.1.2011 in Review Petition No. 7/2009 (in Appeal No. 85/2007) and submitted copies of the same.
4. Heard the parties and examined the documents on record. We now proceed to consider the issues raised by the petitioner, as discussed in subsequent paragraphs.
5. In accordance with Rule 1 Order 47 of the Code of Civil Procedure (CPC), a person aggrieved by an order may apply for a review under the following circumstances:
(a) On discovery of new and important matter or evidence which after exercise of due diligence was not within his knowledge or could not be produced by him at a time when the order was made;
(b) An error apparent on the face of the record;
(c) For any other sufficient reason.
(A) Disallowance of additional capitalization on certain assets/items for 2009-14
6. The petitioner has sought review of order dated 15.6.2011 against the disallowance of certain assets for additional capitalization which are examined hereunder:
(i) Numerical Protection relays during 2009-10 and 33 kV Vacuum Circuit Breaker (VCB) during 2011-12
7. The petitioner in its original petition had claimed capitalization of expenditure of `21.00 lakh for purchase of Numerical protection relays during 2009-10 and for `5.00 lakh towards 33 kV Vacuum Circuit Breaker (VCB) during 2011-12 by submitting as under:
Numerical protection relays:
Electromechanical relays are installed since commissioning of power House & become obsolete and spare relays/parts are not easily available in the market. Hence in order to decrease the down time and increase the reliability of the system it has been decided to purchase a new Numerical Protection Relays.
33 kV Vacuum Circuit Breaker (VCB)
These are commissioned during the construction of Power Station and outlived their useful life. Hence proposed to purchase a new 33 kv VCB.
8. Based on the above submissions, the Commission in its order dated 15.6.2011 had disallowed the capitalization of these assets on the ground that "the expenditure is on assets in the nature of replacement. Moreover, the gross value of the original assets has also not been furnished by the petitioner".
9. In justification of its claim, the petitioner has now submitted as under:
Numerical protection relays
it is to submit that Electromagnetic Relays are installed since commissioning of power station & have become obsolete. Their spare relays / parts are also not easily available in the market. Hence in order to decrease the down time and increase the reliability of the system it has been decided to purchase new Numerical Protection Relays as technological advancement. However, existing Electro-mechanical relays shall not be taken out from the panel; it will work in parallel with the new Numerical Protection Relay as the scrap value of the Electro-mechanical relays is negligible.
Though old relays are purchased before commissioning along with relay panel which houses number of relays and no separate cost of individual relays are available. However, Engineering estimated Gross Value of old electro-mechanical relay is `3.40 lakh.
In view of above justification Hon'ble Commission is requested to reconsider the proposed capitalization of Numerical Protection Relay after deducting the gross value of old electromechanical relay.
33 kV Vacuum Circuit Breaker (VCB)
In this regard it is to submit that existing Minimum Oil Circuit Breakers (MOCBs) were commissioned during the construction of Bairasiul Power Station in late seventies. These MOCBs are very old, obsolete in nature and spares are not easily available in the market. So for the smooth operation of power station it is proposed to purchase new 33 kV VCBs as replacement of old MOCBs. Gross value of old MOCBs is `4.46 lakh.
10. From the submissions made by the petitioner in the original petition it was ascertained that these expenditures were in the nature of replacement and hence were not allowed. Now, the petitioner has submitted that both the old electromagnetic relays and Minimum Oil Circuit Breakers (MOCBs) were installed at the commissioning of the power station and have become obsolete and its spare relays/parts are not easily available in the market therefore the purchase of Numerical protection relay and 33 kV Vacuum Circuit Breaker have become necessary for the smooth operation of the plant. The petitioner has now also submitted the estimated gross value of old electro-mechanical relay and old MOCBs as `3.40 lakh and `4.46 lakh, respectively. In view of the above, it is felt that the assets which are for successful, efficient and reliable plant operation could be considered for capitalization and additional capitalization may be allowed accordingly. Hence, review of order on this count is allowed.
(ii) PMG/Tooth Generator
11. As regards capitalization of expenditure in respect of PMG/Tooth Generator for Rs 30.00 lakh during 2012-13, the petitioner in its original petition had submitted that the said asset is necessary "To make the system compatible with the existing / proposed control and automation system"
12. The Commission in its order, after considering the above submissions had disallowed the capitalization of expenditure on the ground that "the expenditure is on assets in the nature of replacement. Moreover, the gross value of the original assets has also not been furnished by the petitioner".
13. In justification of its claim, the petitioner has now submitted as under:
the existing equipments was commissioned in the Bairasiul power station as part of main Generating Plant & Machineries (GPM). Hence individual value of asset is not available in the records of Bairasiul Power Station. Tooth generator has been proposed in place of Permanent Magnet Generator (PMG), as OEM of PMG has intimated that these are currently not in use for Governor System.
In view of above justification Hon'ble Commission is requested to reconsider the proposed capitalization of Tooth Generator after deducting the gross value of old PMG as 10% of new asset.
14. Based on the submissions of the petitioner and the documents on record, the claim of the petitioner for additional capital of PMG/Tooth generator amounting to ` 30 lakh can be considered since these equipments were a part of the main generating plant and machineries therefore the value of the individual asset are not available on record of the power station. We have examined the issue and found that the above asset is necessary for efficient operation of the power station. Hence, the gross value of the old asset can be considered as 10% of the new asset. Hence, the review is allowed.
(iii) Digital Relay Test kit, DG Set and Unit's Mechanical over speed protection system
15. The petitioner, in its...
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