Petition No. 183/2009. Case: NTPC Ltd. Vs Uttar Pradesh Power Corporation Ltd. and Ors.. Central Electricity Regulatory Commission
| Case Number | Petition No. 183/2009 |
| Judges | Pramod Deo, Chairperson, S. Jayaraman and V.S. Verma, Members |
| Issue | Electricity Law |
| Judgement Date | April 20, 2011 |
| Court | Central Electricity Regulatory Commission |
Order:
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The Petitioner has made this application for approval of the revised fixed charges after considering the impact of additional capital expenditure incurred during the period 2008-09 for Rihand STPS, Stage-II (1000 MW), (hereinafter referred to as "the generating station") based on the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2004 (hereinafter referred to as "the 2004 regulations"). The Petitioner has made the following specific prayers:
(i) Revision of capital base for tariff based on judgment of Hon'ble ATE dated 10.12.2008 in Appeal No. 151/2007 as brought out at para 5.1, 5.2 & 5.5 above.
(ii) Additional capital expenditure incurred during 2008-09.
(iii) Approve recovery of filling fee of this petition from Respondents.
(iv) Allow recovery of Income Tax from the beneficiaries as per the CERC Regulations for the period 2004-09.
(v) Pass any other order in this regard as the Hon'ble Commission may find appropriate in the circumstances pleaded above.
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The generating station has a total capacity of 1000 MW with two units of 500 MW each. The date of commercial operation of the generating station is 1.4.2006. The tariff of the generating station for the period 15.8.2005 to 31.3.2009 was determined by the Commission vide its order dated 15.10.2007 in Petition No. 106/2006 based on the capital cost of ` 136682.29 lakh as on date of commercial operation of Unit-I i.e. 15.8.2005 and ` 264673.76 lakh as on date of commercial operation of Unit-II (or the generating station) i.e.1.4.2006. Subsequently, the Commission vide its order dated 30.12.2009 in Petition No. 97/2008 revised the tariff of the generating station, after taking in to account the additional capital expenditure incurred during the period from 15.8.2005 to 31.3.2008. The capital cost on various dates, as approved by the Commission, is as under:
(` in lakh)
Particulars
2005-06 (15.8.2005 to 31.3.2006)
2006-07
2007-08
2008-09
Opening Capital Cost
137461.05
265664.80
276866.84
282554.17
Additional capital expenditure
16250.14
11202.03
5687.33
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Closing Capital Cost
153711.19
276866.84
282554.17
282554.17
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The annual fixed charges approved by the Commission by order dated 30.12.2009 is as under:
(` in lakh)
Particulars
2005-06 (15.8.2005 to 31.3.2006)
2006-07
2007-08
2008-09
Interest on Loan
7484
13240
12524
11473
Interest on Working Capital
1538
2996
3064
3086
Depreciation
5273
9798
10103
10205
Advance Against Depreciation
3131
4733
6914
7607
Return on Equity
6115
11393
11748
11867
O & M Expenses
4865
10120
10520
10950
TOTAL
28406
52279
54874
55189
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The Petitioner has claimed the annual fixed charges taking into account the principles laid down in the tariff orders of the Commission and the judgment dated 13.6.2007 in Appeal Nos. 139 to142 etc of 2006, 10, 11 and 23 of 2007 and judgments dated 10.12.2008 and 16.3.2009 in Appeal Nos. 151 & 152/2007 and Appeal Nos. 133,135 etc of 2008 of the Appellate Tribunal passed against the various tariff orders of the Commission for the period 2004-09 in respect of the generating stations of the Petitioner.
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We now proceed to examine the prayer of the Petitioner for determination of tariff based on the principles laid down in the judgments of the Appellate Tribunal dated 13.6.2007 in Appeal Nos. 139 to142 etc of 2006, 10, 11 and 23 of 2007 and judgments dated 10.12.2008 and 16.3.2009 in Appeal Nos. 151 & 152/2007 and Appeal Nos. 133,135 etc of 2008 of the Appellate Tribunal in subsequent paragraphs.
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The Petitioner filed Appeal Nos. 139 to142 etc of 2006 before the Appellate Tribunal challenging the various orders of the Commission determining tariff for its generating stations during the period 2004-09. The Appellate Tribunal by its judgment dated 13.6.2007 allowed the said appeals and remanded the matters for redetermination by the Commission. Against the said judgment the Commission has filed 20 appeals before the Hon'ble Supreme Court (in C.A. Nos. 5434/2007 to 5452/2007 and 5622/2007) on issues such as:
(a) Consequences of refinancing of loan;
(b) Treating of depreciation as deemed repayment of loan;
(c) Cost of maintenance spares related to additional capitalization;
(d) Depreciation availability up to 90% in the event of disincentive; and
(e) Impact of de-capitalization of assets on cumulative repayment of loan
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The Hon'ble Supreme Court on 26.11.2007 granted an interim order of stay of the operation of the order dated 13.6.2007 of the Appellate Tribunal. However, on 10.12.2007, the Hon'ble Supreme Court passed an interim order as under:
Learned Solicitor General appearing on behalf of the National Thermal Power Corporation stated that pursuant to the remand order, following five issues shall not be pressed for fresh determination:
(a) Consequences of refinancing of loan;
(b) Treating of depreciation as deemed repayment of loan;
(c) Cost of maintenance spares related to additional capitalization;
(d) Depreciation availability up to 90% in the event of disincentive; and
(e) Impact of de-capitalization of assets on cumulative repayment of loan The Commission may, however, proceed to determine other issues.
It is clarified that this order shall apply to other cases also.
In view of this, the interim order passed by the Court on 26th November, 2007, is vacated. The interlocutory applications are, accordingly, disposed of.
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The Petitioner in its application has submitted that it has been advised that the statement of the Solicitor General of India (SGI) before the Hon'ble Supreme Court resulting in the interim order dated 10.12.2007 does not restrict it from claiming additional capitalization based on the principles laid down by the Appellate Tribunal in its judgment dated 13.6.2007 and that the effect of the statement of SGI was that it would not seek fresh determination pursuant to the remand order. The Petitioner has also submitted that the Hon'ble Supreme Court has not stayed further proceedings before the Commission for determination of additional capitalization and even if it was construed as stay, the decision of the court (Appellate Tribunal) does not become non est.
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The Hon'ble Supreme Court in its interim order dated 26.11.2007 had granted stay on the operation of the judgment dated 13.6.2007 of the Appellate Tribunal. In view of the undertaking given by the Solicitor General of India on behalf of the Petitioner that "the five issues shall not be pressed for fresh determination", the Hon'ble Supreme Court vacated the interim order dated 26.11.2007 and directed that "the Commission may proceed to determine the other issues". It was clarified that "this order shall apply to other cases also". It is the contention of the Petitioner that the undertaking before the Hon'ble Supreme Court does not restrict it from claiming additional capitalization based on the principle laid down by the Appellate Tribunal.
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One more prayer of the Petitioner in the application is for revision of capital cost of the generating station considering the un-discharged liabilities, in terms of the judgments dated 10.12.2008 and 16.3.2009 in Appeal Nos. 151 & 152/2007 and Appeal Nos. 133,135 etc of 2008.
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The Commission in some of the petitions filed by the Petitioner (Rihand and Ramagundam generating stations) revised the tariff for the period 2004-09 based on additional capital expenditure incurred, after deducting un-discharged liabilities, on the ground that "the expenditure for the liability incurred for which payment was not made would not come under the category 'actual expenditure incurred". Against the orders, appeals were filed by the Petitioner before the Appellate Tribunal (Appeal No 151&152/2007) and the Appellate Tribunal by its judgment dated 10.12.2008 held as under:
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Accordingly, we allow both the appeals in part. We direct that the Appellant be allowed to recover capital cost incurred including the portion of such cost which has been retained or has not yet been paid for. We also direct that in case the Commission attributes any loan taken at the corporate level to a particular project under construction and considers any repayment out of it before the date of commercial operation the sum deployed for such repayment would earn interest as pass through in tariff.
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The Commission is directed to give effect to the directions given herein in the truing up exercise and consequent subsequent tariff orders.
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Similar appeals (Appeal Nos. 133, 135,136 and 148/2008) were filed by the Petitioner before the Appellate Tribunal against the orders of the Commission in respect of other generating stations by the Petitioner on the question of deduction of un-discharged liabilities, IDC etc. The Appellate Tribunal, following its judgment dated 10.12.2008 ibid, allowed the claim of the Petitioner and directed the Commission to give effect to the directions contained in the said judgments.
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Against the judgments of the Appellate Tribunal dated 10.12.2008 and 16.3.2009 as above, the Commission has filed Civil Appeal Nos. 4112-4113/2009 and Civil Appeal Nos. 6286 to 6289/2009 before the Hon'ble Supreme Court. These Civil Appeals are pending and there is no stay of the operation of the judgments of the Appellate Tribunal.
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The distinction between the main tariff petition and the petition for additional capitalization could not be made since tariff for 2004-09 was a composite package which needs to be determined on the same principle. Also, the Appellate Tribunal in its judgment dated 4.2.2011 in Appeal No. 92/2010 (NTPC v. CERC & ors) has observed that pendency of civil appeals against the judgment of the Appellate Tribunal dated 13.6.2007 before the Hon'ble Supreme Court is not a ground to ignore the orders of the Appellate Tribunal. The Commission is in the process of filing Civil Appeal against this judgment. In...
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