CASE NO. 93 of Maharashtra State Electricity Distribution Co.Ltd. Maharashtra Energy Development Agency

Transcription

1 Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai Tel /65/69 Fax Website: / www. merc.gov.in CASE NO. 93 of 2015 In the matter of Petition of Green Energy Association regarding non-compliance of Solar Renewable Purchase Obligation for FY by Maharashtra State Electricity Distribution Co. Ltd. Coram Shri Azeez M. Khan, Member Shri Deepak Lad, Member M/s Green Energy Association Maharashtra State Electricity Distribution Co.Ltd. Maharashtra Energy Development Agency.. Petitioner Respondents Appearance For the Petitioner For the Respondents For Consumer Representative : Ms. Dipali Sheth, Advocate : Shri D.H.Kulkarni (Rep.), MSEDCL : Shri P.C.Diwakar (Rep.), MEDA : Dr. Ashok Pendse, TBIA ORDER Dated: 13 January, M/s Green Energy Association (GEA), Sargam, 143, Taqdir Terrace, Near Shirodkar High School, Dr. E. Borjes Road, Parel (E), Mumbai, has filed a Petition on 13 July, 2015 citing Sections 142 and 146 of the Electricity Act (EA), 2003 and Regulation 12.1 of the MERC (Renewable Purchase Obligation, Its Compliance and Implementation of Renewable Energy Certificate Framework) Regulations, 2010 ( RPO Regulations ) for non-compliance of the Solar Renewable Purchase Obligation (RPO) for FY by Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL). MERC Order in Case No. 93 of 2015 Page 1

2 2. GEA s prayers are as follows: In the view of the above, the petitioner respectfully prays that Hon ble Commission may kindly:- 1) The state nodal agency MEDA should be asked to provide the details of the compliance of cumulative Solar RPO for the FY of the OEs. And discharge its duty as per the provisions in the regulation. 2) Since there has been repeated violation and non-compliance of the regulation of the commission by the Obligated Entities the honourable commission is requested to invoke the provisions in the regulation to deal with severity the event of default by the obligated entity. 3) Accordingly the state agency MEDA shall be asked to procure the required number of Certificates to the extent of the shortfall in the fulfillment of the obligations out of the amount in the fund. 4) The Obligated Entities have again defaulted in the compliance of the Solar RPO and shall be penalized under Section 142 of the Electricity Act and the provisions under the regulations. 5) To pass any other order as the Hon ble Commission may deem fit and appropriate under the circumstances of the case and in the interest of justice. 6) To condone any error / omission and to give opportunity to rectify the same; 7) To permit petitioner to make further submissions, addition and alteration to this petition as may be necessary from time to time. 3. The facts as stated in the Petition are summarized below: a. GEA is a registered Association of Companies engaged in the business of Renewable Energy (RE). The major focus of its members is on developing and installing Solar Photo Voltaic (PV) power plants under various policies of the State and Centre and under the Renewable Energy Certificate (REC) mechanism in India. The Association represents the majority of such Companies, who represent about 90% of the investors in the Solar REC mechanism. b. Under Regulation 7 of the RPO Regulations, the minimum quantum of electricity in each category to be procured by every Obligated Entity as a percentage from RE sources (in terms of energy equivalent in kwh) is mentioned below: Year Minimum Quantum of purchase (in %) from RE sources (in terms of energy equivalent in kwh) Solar Non Solar Total (RE) % 5.75% 6% % 6.75% 7% % 7.75% 8% % 8.50% 9% % 8.50% 9% % 8.50% 9% MERC Order in Case No. 93 of 2015 Page 2

3 c. Regulations 8, 8.1, 8.2 and 8.3 consider RECs as valid instruments for the discharge of the mandatory obligations set out in the Regulations. d. Regulation 12 provides for imposition of Regulatory Charges. e. The Solar RPO compliance of the Distribution Licensees, i.e. MSEDCL, Tata Power Co. Ltd (Distribution) (TPC-D), Brihanmumbai Electric Supply & Transport Undertaking (BEST) and Reliance Infrastructure Ltd. (Distribution) (RInfra-D), is as below:- Solar RPO Compliance for FY Distribution Licensees MSEDCL TPC-D BEST RInfra-D Total Power Available for RPO (MU) as per MYT orders Solar RPO (%) 0.50% 0.50% 0.50% 0.50% Total Solar RPO (MU) Approx. Solar Power Available (MU) Solar RECs (MU) Deficit / Surplus (MU) % Compliance f. The present shortfall of MSEDCL will double, with no significant addition of Solar power capacity in the FY g. The Appellate Tribunal for Electricity (ATE), in its Judgment in O.P. No. 1 of 2013 & IA No. 291 & IA No. 420 of 2013, O.P. No. 2 of 2013 & O.P. No. 4 of 2013 dated 20 April, 2015, stated that: The State Commission shall give directions regarding, carry forward/review in RPO and consequential order for default of the distribution licensees/other Obligated Entities as per the RPO Regulations. If the Regulations recognize REC mechanism as a valid instrument to fulfill the RPO, the carry forward/review should be allowed strictly as per the provisions of the Regulations keeping in view of availability of REC. In case of default in fulfilling of RPO by obligated entity, the penal provision as provided for in the Regulations should be exercised. The State Commissions are bound by their own Regulations and they must act strictly in terms of their Regulations. MERC Order in Case No. 93 of 2015 Page 3

4 The provisions in Regulations like power to relax and power to remove difficulty should be exercised judiciously under the exceptional circumstances, as per law and should not be used routinely to defeat the object and purpose of the Regulations. h. Inventory details of the Solar RECs available on Power Exchanges in FY were as below: Sr.No Month, Year Opening Balance RECs Issued RECs Redeemed through Power Exchanges Closing Balance Solar Solar Solar Solar 1 January, February, March, Total i. Vide suo moto Order dated 30 December, 2014 in Petition No. SM/016/2014, the Central Electricity Regulatory Commission (CERC) had further revised the Floor and Forbearance cost of Solar RECs as stated below: Revised Solar REC (Rs/MWh) Old Solar REC Price (Rs/MWh) Forbearance Price Floor Price j. The above Forbearance and Floor Prices are valid for the Control Period upto FY k. Even after the reduction of the cost of Solar RECs, there were three trading sessions at both the Exchanges for the trade of Solar RECs till 31 March, 2015 as mentioned below: l. Month Trading Date January /01/2015 February /02/2015 March /03/2015 m. However, Obligated Entities have not made any attempt at procurement of Solar RECs for compliance of their deficit in Solar RPOs. Solar RECs in the last 3 months also in FY were available in both the Exchanges at the revised Floor Price. MERC Order in Case No. 93 of 2015 Page 4

5 n. The State Agency has not provided the RPO compliance details on its website for the entire FY In its Reply dated 3 November, 2015, the Maharashtra Energy Development Agency (MEDA) has stated as below:- a. As regards the compliance of Solar RPO for FY by MSEDCL, MEDA has already submitted the data to the Commission, as below:- Gross energy consumption (GEC) Solar energy to be procured (0.50%) Solar Hydro Non -Solar Total RE actually procure d against target Target (Incl. Mini/ Micro Hydro) (0.17% ) Mini/ Micro Hydr o Energ y procu red Non-Solar energy to be procured Actually procured Total RE to be procured for Total RE Actually procured RPO % achieved % b. The Shortfall in RPO is as below:- GEC Shortfall in Solar Energy Short fall in Mini Micro Hydro Energy Shortfall in Non Solar Energy MU MU MU Total Shortfall in RPO MU c. MEDA is the State Nodal Agency for implementation of the RPO Regulations, 2010, and is not an Obligated Entity. Therefore, MEDA cannot procure the required number of RECs to the extent of the shortfall in fulfilment of RPO of the Obligated Entities. 5. In its Reply dated 25 February, 2016, MSEDCL has stated as follows:- a. The Commission has conducted suo-moto proceedings for verification of compliance of RPO by Distribution Licensees for each Financial Year. Accordingly, the Commission has initiated suo-moto proceedings for verification of compliance of RPO for FY Hence, the filing of a separate Petition by GEA for verification of RPO compliance of Obligated Entities is unwarranted and unjustified. b. All the Obligated Entities, including MSEDCL, are facing shortage of Solar power for fulfillment of their RPO targets because the capacity addition in the Solar sector is not commensurate with the specified Solar RPO target. During the proceedings of Case No.102 of 2012, the Commission has taken due cognizance of the ground realities, and granted liberty to Obligated Entities to carry forward their Solar RPO shortfall to subsequent years and to fulfill their Solar RPO targets by the end of FY on cumulative basis. In its Order dated 24 December, 2012, the Commission ruled that the MERC Order in Case No. 93 of 2015 Page 5

6 cumulative shortfall in procurement of Solar power by MSEDCL during FY ( MU) and FY ( MU), aggregating to MU, shall be carried forward to subsequent years and be cumulatively fulfilled by FY c. MSEDCL has executed Long Term Power Purchase Agreements (PPAs) for a total capacity of 327 MW as on date to meet its Solar target from FY onwards under various schemes of Govt.of India and from the Maharashtra State Power Generation Co. Ltd. (MSPGCL): Sr. No Project owner Name Location Capacity MW Date of Commissioning Date of MOU/PSA Date of EPA Name of Scheme 1 MSPGCL Chandrapur GBI / MNRE 2 M/s.Clover Solar Pvt.Ltd Supa, Baramati M/s. MSPGCL Chandrapur M/s. Videocon Industries Warora, Chandrapur Migration/ JNNSM 5 Dr. Babasaheb Ambedkar SSKL Osmanabad M/s. Sepset Constructions Ltd Katol M/s. Citra Real Estate Ltd Katol RPSSGP/ JNNSM 8 M/s. MSPGCL Sakri, Dhule MERC 9 M/s. MSPGCL Sakri,Dhule MERC Sai Baba Green Energy Power projects Pvt. Ltd Osmanabad Firestone Trading Company Pvt.Ltd A'nagar NNSM Phase-I, Batch-II 12 MSPGCL Shirshufal, Baramati MERC 13 MSPGCL Koudgaon, Osmanabad MERC 14 MSPGCL Sakri,Dhule MERC 15 Sharda Constructions and corporations Ltd Latur JNNSM Phase-II (Batch-I) MERC Order in Case No. 93 of 2015 Page 6

7 16 17 Vishwaj Energy Pvt. Ltd Solapur Sunil Hitech Solar (Dhule)Pvt.Ltd Solapur IL&FS Devl. Co. Ltd Madhya Pradesh Today green Energy Pvt. Ltd Rajasthan SECI Total JNNSM Phase-II (Batch-III) PSA execution in process = 827 MW d. During FY , 50 MW Solar power projects were commissioned under the Jawaharlal Nehru National Solar Mission (JNNSM) Phase-II (Batch-I) scheme and the power is already being availed by MSEDCL. e. The Government of Maharashtra (GoM) has notified the new composite RE Policy 2015 vide Govt. Resolution dated 20 July, Under that Policy, 2500 MW Solar power projects are proposed to be set up by MSPGCL on a Public-Private Partnership (PPP) model. In view of proposed developments of Solar Energy Projects by MSPGCL/GoM as per the RE Policy 2015 guidelines, MSEDCL shall purchase the Solar power required for fulfilling the RPO target from MSPGCL at the Commission-determined preferential tariff, and the rest shall be purchased through competitive bidding as mandated by the GoM RE Policy f. MSEDCL is allowing Open Access (OA) as per the MERC (Distribution Open Access) Regulations, As per Regulation 26.8, the surplus power, after setting off against the OA consumer consumption in respective 15 minute time-slots, is purchased by MSEDCL at the Average Power Purchase Cost (APPC) rate. That has been permitted to be taken into account for the Solar RPO. g. Further, the power injected by the consumers through Solar Rooftop Net Metering is considered for meeting the Solar RPO target from FY h. MSEDCL has given consent for procurement of 500 MW Solar power under JNNSM Phase-II (Batch-III) State-specific scheme implemented by the nodal agency Solar Energy Corporation of India (SECI). SECI has carried out the tendering process for selection of 500 MW Solar power projects situated in Maharashtra under the scheme, and power sale agreement with SECI is being executed by MSEDCL shortly. Thus, it can be considered that MSEDCL has contracted for 827 MW (327MW+500MW) Solar power till date. i. The Solar RPO target specified by the Commission is on the higher side as compared to the Solar capacity addition that has taken place in the State. In the matter of specifying RPO targets, the guidelines in the National Tariff Policy are relevant and important. MERC Order in Case No. 93 of 2015 Page 7

8 6.4 Non-conventional sources of energy generation including Co-generation: (1) Pursuant to provisions of section 86(1)(e) of the Act, the Appropriate Commission shall fix a minimum percentage for purchase of energy from such sources taking into account availability of such resources in the region and its impact on retail tariffs. j. Further, the ATE, in its Judgment dated 14 November, 2013 in Appeal No. 265 of 2012 in the matter of BEST, has held that; The State Commission first fixed the Renewable Purchase Obligations without ascertaining as to whether power from Renewable Sources is available or not. Para 6.4 (1) of the Tariff Policy requires the State Commission to ascertain that the power from Renewable Energy Sources is available in the region before fixing the Renewable Purchase Obligations. Accordingly, the Commission ought to have ascertained the availability of power from such sources at the approved rate. Only, then, it should have directed the licensees that it would approve the power purchases cost from Renewable Energy sources at rate to be approved by the Commission in future. This was not done by the State Commission in the present case. The approach adopted by the State Commission was incorrect. k. It appears that, while specifying the RPO target, no special study / project / analysis was undertaken by the Commission to ascertain the actual availability / actual RE potential in the State. The above observations made by ATE highlight this. Therefore, the Solar RPO target has remained on the higher side and, due to absence of adequate Solar power, Obligated Entities are in shortfall. Hence, it is necessary to review and reconsider the Solar RPO target considering the ground realities. l. The Commission, vide its Order dated 24 December, 2012 in Case No.102 of 2012, has granted liberty to all Obligated Entities to carry forward their Solar RPO shortfall to subsequent years and to fulfill the Solar RPO on cumulative basis by FY In view of the above, the demand of GEA for initiating action under Sections 142 and 146 is premature and is not tenable. 6. In its further written submission dated 26 February, 2016, GEA has stated as follows:- a. MSEDCL has stated that the Solar RPO achieved is 0.248%, and hence there is a shortfall of 267 MUs in FY The shortfall for FY was MUs, in FY is MUs, in FY is MUs and in FY is MUs, the cumulative shortfall being MUs. b.msedcl has stated that it has made RE procurement of 263 MUs in FY , which is grossly insufficient for compliance of its cumulative shortfall till FY as per the Commission s Order dated December 24, 2012 in Case No. 102 of c. From FY to FY , MSEDCL has been is unable to meet its RPO targets despite being allowed to carry forward and the dispensation to comply cumulatively by FY MERC Order in Case No. 93 of 2015 Page 8

9 d.under Regulation 8.1 of the RPO Regulations, RECs are recognized as valid instruments for the discharge of the RPO. RECs represent the environmental attributes of RE Generation. RECs simply incentivize the Solar energy developers by providing a production subsidy to electricity so generated. It is aimed at addressing the mismatch between the availability of Solar RE resources in the State and the requirement of the Obligated Entities to meet their respective RPOs. Even though RECs only symbolize the energy sold separately and used by another party, they are a recognized means of achieving the mandatory RPO prescribed in the Regulations. e. Under Regulation 10 of the CERC (Terms and Conditions for recognition and issue of RECs for RE Generation) Regulations, 2010 ( CERC REC Regulations ), RECs are valid for 730 days. If every Obligated Entity will be given any waiver or relaxation, the limited trading of RECs will also be stalled and, eventually, the RECs shall lapse. Such lapse of RECs will cause tremendous loss to the investors who had considered the revenue stream of RECs while setting up their Projects to make them economically viable. This would lead to making setting up of Projects under the REC mechanism infructuous. f. Vide Order dated 4 August, 2015 in Case No. 190 of 2014, the Commission had directed MSEDCL to create a RPO Regulatory Fund for purchase of Solar and Non-Solar RECs and/or to purchase power to the extent of the shortfall in RPO, and to comply by 31 March, g.despite having fallen short of the Solar RPO targets, MSEDCL has not made any effort towards procurement of Solar power from the available sources in the State and/or Solar RECs which are readily available h.the efforts made by MSEDCL for achieving the Solar RPO Obligation are still in a limbo and wrought with delay, creating a further shortfall for the coming years. No action plan has been chalked out on by MSEDCL to ensure compliance of its RPO on year on year basis. i. Members of GEA have invested huge sums of money in harnessing Solar power in Maharashtra and relied on the incentives given under the current regulatory regime including, but not limited to, benefits that can be derived under the provisions of the RPO Regulations. The Regulations provide that the RPO has to be complied with by the Obligated Entities, one of whom is MSEDCL. j. In its Order dated 24 December, 2012 in Case No. 102 of 2012, the Commission directed that the cumulative RPO compliance is to be complied with by 31 March, Hence, MSEDCL has one more opportunity to comply with it. If MSEDCL doesn t comply with the RPO, the Commission is empowered to hear the contempt of its own Orders and give directions under Section 142 of EA, k.msedcl has willfully disregarded the Orders of the Commission in the matter. Hence, the Commission ought to initiate stringent action against MSEDCL under the relevant provisions of the EA, 2003, including but not limited to Sections 142, 146 and 149 of the EA, Though the objective of GEA is not subject MSEDCL to such actions, GEA is MERC Order in Case No. 93 of 2015 Page 9

10 constrained to make such request before the Commission only to seek justice by implementation of the Orders of the Commission. l. The Commission may direct MSEDCL to purchase Solar RECs which are mostly available at the Floor Price in the last trading session of FY , unless it is ready to purchase power at the preferential tariff from Solar power developers in the State. 7. At the hearing held on 29 February, 2016, GEA and MSEDCL reiterated their respective submissions. GEA was allowed a week s time for its Rejoinder, if any. Commission s Analysis and Ruling 8. As regards prayer (1) (quoted at para. 2 above) of the Petition seeking that data be furnished by MEDA regarding the Solar RPO compliance by Obligated Entities for FY and the cumulative compliance till then, the Commission notes that MEDA has submitted the details in respect of the Distribution Licensees in these proceedings for FY , and also their cumulative performance in the separate suo moto proceedings initiated by the Commission in which Orders have already been issued and in which GEA took part. As regards the other Obligated Entities, the Commission will be undertaking a separate exercise in coordination with MEDA and others concerned. 9. As regards prayer (3) seeking procurement of RECs by MEDA to fulfil the Solar RPO shortfall by Obligated Entities, the Commission notes that RPO fulfilment is Obligated Entity-specific and that MEDA is the State Nodal Agency and not an Obligated Entity Moreover, Obligated Entities can choose to fulfil their RPO by procurement of power from RE sources, or by purchase of RECs, or by a combination of both. 10. In any case, the Commission has already separately addressed the stand-alone and cumulative Solar RPO shortfalls of the Distribution Licensees for FY in its RPO Compliance Verification Orders in Case Nos. 16 to 19 of While RInfra-D has no stand-alone or cumulative shortfall, BEST and TPC-D have fulfilled their stand-alone RPO, and were earlier allowed by the Commission to fulfil their cumulative shortfall by the end of FY MSEDCL has not achieved its standalone Solar RPO for FY , and had been earlier allowed to meet its cumulative shortfall in FY In the context of GEA s prayers (2) and (4), the Commission notes that it has dealt with MSEDCL s Solar RPO shortfall of FY in its Order dated 14 September, 2016 in Case No. 16 of 2016 as follows: 30. the Commission directs MSEDCL as follows with regard to the shortfall against its stand-alone Solar and Non-Solar (excluding Mini/Micro Hydro) RPO targets for FY : 1) MSEDCL shall constitute a separate RPO Regulatory Charges Fund ; 2) The Fund shall be utilised by MSEDCL to purchase Solar and Non-Solar RECs and/or to procure power so as to fully meet the shortfall against its stand-alone Solar and Non-Solar (excluding Mini/Micro Hydro) RPO targets for FY , as summarized at MERC Order in Case No. 93 of 2015 Page 10

11 para. 19 above, by the end of March, 2017, and the amounts to be deposited into the Fund shall be determined by MSEDCL accordingly from time to time over the remaining period of FY ; 3) Considering the circumstances set out in this Order which have led the Commission to invoke Regulation 12, the expenditure expected for purchase of RECs and/or power procurement from the Fund shall not be passed through to consumers to the extent of the shortfall not met by MSEDCL by the end of FY ) The performance of MSEDCL in this regard shall be reviewed in the RPO compliance verification proceedings for FY and also taken into account in the Mid-Term Review proceedings for the 3rd Multi-Year Tariff Control Period. The Commission has not specified the amounts to be deposited in the Fund since that will depend on the power procurement and/or REC purchase mix opted for by MSEDCL, the actual rate of RECs in the market from time to time, etc. Moreover, MSEDCL need not deposit into the Fund the entire amount estimated to be required in a lumpsum at the outset, but spread it over the remainder of the year depending on its assessment of the market. A similar dispensation had been directed by the Commission in its RPO Compliance Verification Order for FY in Case No. 190 of Considering that Order, the Commission has provisionally disallowed Rs crore, assessed as the RPO compliance cost to the extent of the shortfall in RPO compliance as envisaged in Case No. 190 of 2014, to MSEDCL in its latest Multi-Year Tariff Order dated 3 November, 2016 (Case No. 48 of 2016). 11. The Commission cannot understand why GEA pursued this separate Petition when it was aware that the Distribution Licensees RPO compliance verification for FY was being undertaken separately. While it has entertained the Petition, the Commission does not appreciate the fact that its own as well as the time of other parties has had to be spent on pointless litigation by a Petitioner from whom better might be expected. Whatever be the case, in view of the foregoing, nothing further remains with regard to the present Petition. The Petition of M/s Green Energy Association in Case No. 93 of 2015 stands disposed of accordingly. Sd/- (Deepak Lad) Member Sd/- (Azeez M. Khan) Member MERC Order in Case No. 93 of 2015 Page 11