MADHYA PRADESH ELECTRICITY REGULATORY COMMISSION

Transcription

1 MADHYA PRADESH ELECTRICITY REGULATORY COMMISSION 5 th Floor, "Metro Plaza", Bittan Market, Bhopal SMP No. 50 of 2015 PRESENT: Dr. Dev Raj Birdi, Chairman A. B. Bajpai, Member Alok Gupta, Member IN THE MATTER OF: Review and determination of energy charges for supply of electricity to the distribution licensees in the state by M/s Essar Power M.P. Ltd (Mahan Project), from its 2X600 MW coal based Power Project (in the levellised tariff adopted by the Commission in terms of PPA dated ), using coal from auctioned or allotted coal mines under Coal Mines (Special Provisions) Second Ordinance, 2014 and Rules framed thereunder 1. M/s Essar Power M.P. Ltd. Respondents 2. M.P. Power Management Company Ltd., Jabalpur M. P. Electricity Regulatory Commission Page 1

2 ORDER (Passed on this day of 9 th December, 2016) 1. M.P. Power Management Company Ltd. (earlier M.P. Power Trading Company Ltd.) had initiated a Competitive Bidding Process in the year 2007 on behalf of Distribution Companies in the state in terms of Section 63 of the Electricity Act, 2003 and the guidelines issued by the Central Government in this regard. Pursuant to the said Bidding Process, M/s Essar Power M.P. Ltd. was selected to supply Contracted Capacity of 150 MW power from its 2x600 MW Mahan Thermal Power Project in District Singrauli, Madhya Pradesh with the commencement date of supply as COD of Unit 1. Accordingly, a Power Purchase Agreement was executed on 29 th October, 2010 between the respondents in this matter for supply of 150 MW power on long term basis (for a period of 25 years from COD of Unit 1) at a levellised tariff of Rs. 2.45/kWh. Vide Order dated 9 th August, 2011 in Petition No. 33/2010, the Commission adopted the aforesaid levellised tariff for procurement of 150 MW power by M.P. Power Management Company Ltd. from 2x600 MW Thermal Power Project of M/s Essar Power M.P. Ltd. in accordance with the terms and conditions of the aforesaid PPA signed by both Respondents and filed with the Commission. As per the said PPA, the fuel was specified as Coal from Domestic Captive Coal Mine. 2. Mahan Coal Block, located at distance of 4 km from the power station, was allocated jointly to M/s Essar Power M.P. Ltd. and Hindalco Industries Ltd. for supply of coal to the power projects of the allottees. The mine was proposed to be operated by a Joint Venture Company namely Mahan Coal Limited. M/s Essar Power M.P. Ltd. has executed the Coal Offtake Agreement with Mahan Coal Ltd. with entitlement of 60% of the coal excavated from the said Coal Mine. The coal production from Mahan Coal Mine had not commenced as on 31 st March, Hon ble Supreme Court of India, vide its Judgment dated 25 th August, 2014 read with its order dated 24 th September, 2014 in Writ Petition (Criminal) No. 120 of 2012 (Manohar Lal Sharma vs. Principal Secretary & Ors.) had cancelled allotment of 204 coal blocks. Vide same order dated 24 th September, 2014, Hon ble Supreme Court of India cancelled the allocation of some coal blocks in the state of Madhya Pradesh. The allocation of Mahan Coal Mine to Mahan Coal Ltd. also stood cancelled by the said order of the Hon ble Supreme Court of India. Also, it was mentioned in the aforesaid order that the cancellation of coal block shall be with M. P. Electricity Regulatory Commission Page 2

3 effect from 31 st March, Subsequent to the Hon ble Supreme Court of India s above Judgment, the Coal Mines (Special Provisions) Ordinance, 2014 read with Coal Mines (Special Provisions) Second Ordinance, 2014 were promulgated by the Central Government. The Coal Mines (Special Provisions) Rules, 2014 were framed for auction and allotment of all coal blocks which were subject to cancellation pursuant to the Hon ble Supreme Court of India Judgment. 5. During the auctioning process of Tokisud (North) Coal Mine, M/s Essar Power M.P. Limited emerged as the successful bidder and was allotted the aforesaid Coal Mine for the end use of power generation at its 2x600 MW coal based Power Station at Village Bandhora, Post Karsualal, Tehsil Mada, District Singrauli (M.P.). 6. Vide its letter dated 16 th April, 2015, Ministry of Power, Government of India requested the State Governments to issue directions to respective State Electricity Regulatory Commissions under Section 108 of the Electricity Act, 2003 to ensure that the benefits of coal being sourced by the generating stations from the auctioned or allotted coal mines under Coal Mines (Special Provisions) Second Ordinance, 2014 (Coal Act) and Rules framed thereunder, are passed on to consumers. 7. Vide letter No. F-03-08/2013/13 dated 18 th May 2015, Govt. of Madhya Pradesh (GoMP), Energy Department issued the following directions to the Commission (MPERC) under Section 108 of the Electricity Act, 2003: 3.1 The Madhya Pradesh Electricity Regulatory Commission, shall review and determine the energy charges for cost plus Power Purchase Agreements under Section 62 or that in tariff bid based Power Purchase Agreements under Section 63, as the case may be, and shall review the components of the fuel price of energy charges including. a. Run of Mine (RoM) price of coal as per auction or allotment of coal mine; b. Transportation cost along with distance to the end use power plant (rail, road and other modes separately). c. Washery charges, if any; M. P. Electricity Regulatory Commission Page 3

4 d. Crushing charges; e. Royalty/duties and levies etc; f. Other charges. 3.2 The Madhya Pradesh Electricity Commission, while determining the components of energy charges, shall ensure the following:- a. Run of Mine (RoM) price of coal as quoted for the said coal block during coal block auction on the basis of which the block has been awarded, or Run of Mine cost of the coal as per allotment, as the case may be, shall be allowed for the purpose of determining the fuel cost throughout the tenure of the Power Purchase Agreement. In addition to this, the bidder will be eligible to recover an amount of Rs. 100 per metric tonne, as per clause of Standard Tender Document for Coal Block Auction / Allotment (for Power Sector). The Standard Tender Document also provides for escalation in Run of Mine price of coal and in the amount of Rs. 100 per metric tonne, which will be factored in while determining the energy charges: Provided that the quoted Additional Premium, if any, shall not be reckoned for the purpose of determination of tariff of electricity as per corrigendum 3 to clause issued on 31 st January, 2015 of the Standard Tender Document (Power Sector) for coal block auction. The relevant extracts of Standard Tender Document (Power Sector) are enclosed for ready reference. b. As far as coal transportation, washery charges and crushing charges are concerned, the rates should not exceed the benchmark rates of Coal India Ltd., Railway freight rates, benchmarks determined, if any, by Central Electricity Regulatory Commission or Madhya Pradesh Electricity Regulatory Commission or by any other appropriate authority. Where there are multiple benchmarks available, the Madhya Pradesh Electricity Regulatory Commission will be free to adopt the most appropriate benchmark; c. Gross Calorific Value (GCV) as quoted in coal auction would in normal circumstances be used as reference Gross Calorific Value for the purpose of determining the quantum of coal required for power generation. However, in the event of variation in actual value M. P. Electricity Regulatory Commission Page 4

5 of Gross Calorific Value of mined coal, if any, such variation may be allowed based on joint sampling and testing of mined coal in accordance with the provisions of Power Purchase Agreement; d. Further, for power generation capacity already contracted through tariff bid based Power Purchase Agreements under Case-1/Design Build Finance, Own & Operate bids, the allocation of coal block under the provisions of the Coal Mines (Special Provisions), Ordinance 2014 shall be treated as Change in Law to enable the revision in tariff downwards in accordance with provisions of Power Purchase Agreement; and e. The revision of tariff undertaken by the Madhya Pradesh Regulatory Commission as above shall not lead to higher energy charges and total tariff throughout the tenure of Power Purchase Agreement than that which would have been obtained as per terms and conditions of the existing Power Purchase Agreement. 8. Vide letter dated 27 th May, 2015, M.P. Power Management Co. Ltd., Jabalpur (MPPMCL) also submitted certain information in this matter and requested the Commission for conducting an exercise as advised by GoMP for downward revision in tariff in respect of IPPs having PPAs with MPPMCL. 9. Vide Notice dated 20 th August, 2015, the Commission registered the subject Suo- Motu Petition to review the tariff adopted vide its order dated 09 th August, 2011 in Petition No. 33/2010 for supply of 150 MW power by M/s Essar Power M.P. Ltd. to M.P. Power Management Company Ltd. 10. Notices were issued to M.P. Power Management Company Ltd., and M/s Essar Power M.P. Ltd. The respondents were directed to file a detailed reply covering all the relevant facts and documents on affidavit atleast 10 days before the date of the hearing. The date of hearing in the matter was fixed on 29 th September, M.P. Power Management Co. Ltd. filed its response by affidavit dated 23 rd September, By affidavit dated 28 th September, 2015, M/s Essar Power M.P. Ltd. had sought adjournment of hearing in the matter stating that it is engaged in discussions with MPPMCL and would need some time to come back to the Commission in connection with the Suo-Motu Petition. M. P. Electricity Regulatory Commission Page 5

6 11. The case was heard on 24 th November, 2015, 15 th December, 2015, 19 th January, 2016, 8 th March, 2016, 26 th April 2016, 24 th May, 2016,21 st June 2016, 23 rd August, 2016, 20 th September, 2016, 18 th October, 2016 and 22 nd November, The information sought from M/s Essar Power M.P. Ltd. and its responses to the same are detailed in the following sections of this order. 12. The list of abbreviations used in the Order with full form is enclosed at Annexure-1 of the Order. PROCEDURAL HISTORY 13. In reply to the notice issued by the Commission, MPPMCL by its affidavit dated 23 rd September, 2015 broadly submitted the following: (i) That, the Mahan Coal Field, in view of the order dated in Civil Appeal No. 120/2012 with 463/2012, 515/2012 and 283/2013 in the case of Manoharlal Sharma Vs. the Principal Secretary & ors. were deallocated on Thereafter, Tokisud (N) mine was allocated through bidding process to M/s. Essar Power MP Ltd. from (ii) That, further in view of GoMP s direction to Hon. MPERC under Section 108 of Electricity Act, 2003, Hon. Commission may be pleased to revise the tariff downwards, under the provisions of Coal Mines (Special Provision), Ordinance, 2014, considering the change in allocation of coal block as Change in Law. (iii) That, for the present, the answering respondent is not in better possession of the facts and figures to the cost of coal on re-allocation and the exact date on which the mines were actually deallocated and thereafter re-allocated to the Generator. The same are in better possession of the Generator and awaited to be brought on record in its instance. (iv) That, the answering respondent has written to Respondent No. 2 seeking facts and data regarding various aspects of coal cost and upon receipt of information, shall submit its comments. 14. In response to the Notice issued by the Commission, M/s Essar Power M.P. Ltd., by its affidavit dated 28 th September, 2015, seeking adjournment in the matter, had submitted the following: M. P. Electricity Regulatory Commission Page 6

7 (i) That the bid submitted by the applicant for supply of 150 MW power to MPPMCL/Respondent was premised on availability of coal from the Mahan Coal Block, and usage of coal from the said Mahan Coal Block. However, Hon ble Supreme Court vide order dated in Mahohar Lal Sharma Vs. the Principle Secretary & Ors being W.P. (Crl) No. 120 of 2012 reported as (2014) 9 SCC 516 declared the allocation of the coal blocks were done in an arbitrary manner by the Government of India. (ii) Pursuant to the judgement of the Hon ble Supreme Court which led to the de-allocation of captive coal mine, the PPA as was entered into by the applicant and the MPPMCL on the premise that the power will be supplied based on the designated fuel source has been substantially altered as compared to the bargain arrived at the time of entering into the PPA. (iii) Immediately after de-allocation of the captive coal block, the applicant vide notice dated notified the MPPMCL of the occurrence of a force majeure event in terms of Article 12.5 of the PPA. The applicant made it clear that in the absence of the coal block, it was not in a position to comply with its obligations under the PPA. (iv) Subsequently, the applicant vide letter dated 26 th March, 2015, issued the notice for frustration of the PPA, which has become void because of being effected by force majeure events and let to frustration/ termination of the PPA because of the impossibility of its performance. (v) That, the notice of Suo-Motu petition hearing was received by the applicant on 27 th August, Further, vide the said notice the applicant was directed to file a detailed reply alongwith certain information and document for the purpose of determination of the variable charges. (vi) The applicant is engaged in discussion with MPPMCL and would need some time to come back to the Hon ble Commission in connection with the Suo- Motu petition. (vii) That in the interest on Justice, the matter may be adjourned on and the next date may be fixed in the matter. 15. In view of the request made by M/s Essar Power M.P. Ltd., the date of hearing in the subject matter was rescheduled on 24 th November, The first hearing in the matter was held on 24 th November, During the course of hearing held on 24 th November, 2015, the Commission observed that M/s Essar Power M.P. Ltd. by M. P. Electricity Regulatory Commission Page 7

8 affidavit dated 20 th November, 2015 again sought four weeks time for providing the required information, data and documents in the matter. 16. Vide Commission s order dated 24 th November 2016, M/s Essar Power M.P. Ltd. was directed to file the following information/documents with the Commission by 10 th December, 2015: a. Computations of Quoted Non-Escalable Fuel Energy Charge for each year in terms of the PPA executed and submitted to the Commission (in Petition No. 33/2010), in MS Excel with appropriate formulae and linkages along with detailed write-up on the assumptions regarding Station Heat Rate, year wise landed coal price, year wise fuel mix, Gross Calorific Value of coal, Auxiliary Consumption, and Secondary fuel oil, if any. b. The following information with respect to Coal Mine Mahan cancelled vide order dated 24 th September, 2014 passed by Hon ble Supreme Court of India: Copy of Fuel Supply Agreement with respect to the de-allocated Coal Mine. Detailed computations of Landed Coal price (`/MT) for each year during the term of the PPA with MPPMCL along with detailed write up on the assumptions therein for the de-allocated Coal Mine. Statement of Landed Coal price for the coal procured from the Mine (`/MT) during each month from COD of Unit No. 1 till cancellation of the Coal Mine (if applicable). Copies of sample coal bills for the coal procured from the Mine (if applicable). c. Technical details of the generating station in the format prescribed in Form A of the MPERC (Furnishing of Technical Details by Generating Companies) Regulations, d. Documentary evidence for the guaranteed performance parameters of the generating station. e. The following information with respect to the Coal Mine allotted to M/s Essar Power under the Coal Mines (Special Provisions) Second Ordinance, 2014: Copy of the Tender Document floated by the Nominated Agency for auction of the allotted Coal Mine. Copy of Mine Dossier. M. P. Electricity Regulatory Commission Page 8

9 Copy of Allotment Order issued. Copy of Coal Mine Development and Production Agreement. Detailed write up on the current status of Mine Development and yearwise phasing of coal production. Detailed write up on crushing facilities at the Coal Mine. Detailed write up on washery facilities for improving the coal quality, if any proposed, along with cost benefit analysis. Detailed write up on transportation infrastructure for transporting coal from the Mine to the generating station. Detailed write up on statutory levies and duties payable from the coal extraction stage till coal arrival at the generating station. Detailed break up of computations of Landed Coal Price (`/MT) from the coal mine allotted to M/s Essar Power M.P. Ltd. along with detailed write-up on the assumptions therein for each year from FY onwards for entire life of the Project considering the provisions of bidding documents including corrigendum for Coal Auctioning (for Power Sector). 17. M/s Essar Power M.P. Ltd. was also directed to serve copies of all its submissions made to the Commission (under the subject Suo-Motu Petition) along with all above-mentioned details/documents on all Respondents in this matter at the earliest but not later than 10 th December, The next hearing in the matter was held on 15 th December, By affidavit dated 11 th December, 2015, M/s Essar Power M.P. Ltd. broadly submitted the following: It is respectfully submitted that the bid submitted by the Respondent No. 1 for supply of 150 MW power to MPPMCL/ Respondent No. 2 was premised on availability of coal from the Mahan Coal block and usage of Coal from the said Mahan Coal Block. However, by its Judgment and Order of the Hon ble Supreme Court of India ( Hon ble Supreme Court ) dated and passed in Writ Petition (Crt.) No. 120 of 2012 titled as M.L. Sharma Vs. The Principal Secretary & Ors, reported as (2014) 9 SCC 516, Hon ble Supreme Court held that the allocation of coal block were done in an arbitrary and illegal manner by the Government of India and consequently, Hon ble Supreme Court cancelled all the coal blocks allocated between the M. P. Electricity Regulatory Commission Page 9

10 period 1993 to Subsequently to the de-allocation of Mahan Coal Block by the Hon ble Supreme Court, the answering Respondent has written to Respondent No. 2 informing about the frustration of the PPA in light of this judgment and the consequential termination of the PPA dated It is pointed out that the Respondent No. 2 has indicated its reservations with regards to such termination. However, the same does not take away the effect of the termination as communicated by the answering respondent. Moreover, this issue can neither be gone into nor forms part of the subject of discussion in the present proceedings. In view of the fact that the PPA between answering Respondent and Respondent No. 2 no longer subsists and stands terminated, therefore no purpose would be served for this Hon ble Commission to enter into an examination with regards to the effect of the price offer made by the answering Respondent for the Tokisud (North) coal mine on the energy charges under the erstwhile Case-1 PPA. The PPA now having come to an end, the question of supply of power under the same does not arise and accordingly, the exercise of working out the energy charges under such PPA would be a futile exercise having no practical implication. 19. During the course of hearing held on 15 th December 2015, MPPMCL sought time to respond on the submissions of M/s Essar Power M.P. Ltd. 20. Vide order dated 18 th December 2016, the Commission directed MPPMCL to file its response on the above submission of M/s Essar Power M.P. Ltd. by 11 th January, MPPMCL was also directed to inform the monthly details of power if any, received by it from 2x600 MW TPP of M/s Essar Power M.P. Ltd. in this matter till date and if not, the reasons for the same. 21. The next hearing in the matter was held on 19 th January, By affidavit dated 18 th January, 2016, MPPMCL broadly submitted the following: (i) It is most clearly submitted that the PPA dated , between the parties, has not at all frustrated on the strength of the notice dated 3 rd M. P. Electricity Regulatory Commission Page 10

11 October, 2014 issued by M/s. Essar to MPPMCL. (ii) It is submitted that M/s. Essar had issued the said notice misconstruing the de-allocation to be a force majeure. The answering respondent, vide its letter in reply dated 18 th May, 2015, as contained in Annexure R-2 filed herewith, had categorically denied and disputed that the said de-allocation of mine was not a force-majeure event in strict terms of the PPA. (iii) The answering respondent had also noticed that M/s. Essar had emerged as a successful bidder and obtained allocation of the coal mines of Tokisud (North) in the State of Jharkhand. Vide said reply, the answering respondent has also apprised that in view of the Order No /9/2014-CA-III, dated 26 th December, 2014 of the Ministry of Coal, Govt. of India, seeking to ensure that benefit of coal is passed on to the consumers, is a change-in-law and this shall enable the appropriate Commission to revise the tariffs downwards in PPA s under Case-1. Disputing the noticed averments of force-majeure and apprising M/s. Essar of change-in-law position, the answering respondent had disputed the said notice. M/s. Essar, too, did not further dispute the said reply of the answering respondent and continued to perform its obligations, in as much as it has extended its performance guarantee for an amount of Rs. Eleven Crores and Twenty Lacs only from date till current period expiring on (iv) The said termination notice dated 3 rd October, 2014 has not attained finality and does not have a binding force. It was absolutely incorrect on the part of M/s. Essar on the last date of hearing, i.e., , to plead and argue that the PPA has been frustrated on strength of said notice. (v) The answering respondent was taken to surprise on such misleading submissions made on instructions of M/s. Essar. It was in these circumstances, the counsel appearing for MPPMCL had to seek to obtain further instructions from MPPMCL in this regard. Such misleading practice on the part of M/s. Essar is highly objectionable as it amounts to false pleadings and misleading Hon ble Commission also. (vi) It is submitted that, M/s. Essar has not supplied any power to MPPMCL from M. P. Electricity Regulatory Commission Page 11

12 any of its units in the generating station in pursuance of the PPA in context. MPPMCL has written series of letters, copies of which are cumulatively filed herewith as Annexure R-3 in this regard to M/s. Essar requesting it to schedule power in terms of the PPA. But the fact remains that M/s. Essar has not scheduled any power to MPPMCL in pursuance of the PPA. (vii) The object of the impugned directions and initiation of present proceedings are only to achieve downward revision of tariff in view of aforesaid legal position and all the objections made by M/s. Essar seem to be out of place and far from interest of justice. (viii) That, M/s. Essar Power Ltd. has abstained from submitting the facts and figures relating to, at least, Unit No. 1 of its generating station, which has attained its CoD, and is called upon to submit the same at the earliest to that the aforesaid necessitated objects may be achieved in the larger public/ consumers interest of the State. 22. In view of the above, the Commission directed M/s Essar Power M.P. Ltd. to file its reply on the above submissions of MPPMCL by 15 th February, During the course of next hearing in the matter held on 8 th March, 2016, M/s Essar Power M.P. Ltd. submitted that it has filed a petition before this Commission on 5 th March, 2016 challenging the basis of existence of the PPA entered between the parties. M/s Essar Power M.P. Ltd. further submitted that the Suo-Motu proceedings initiated by the Commission is subject to the outcome of the aforesaid petition filed by it and requested the Commission to stall the subject Suo-Motu proceedings till the disposal of the aforesaid petition. Having gone through its submissions, the Commission found no merit in its aforesaid contention to stall the subject Suo-Motu proceedings for the issues related to termination of the PPA since the issues related to termination of the PPA need to be dealt separately in other Petition No.12 of 2016 filed by M/s Essar Power M.P Ltd. Accordingly, vide its order dated 14 th March, 2016, the Commission directed M/s Essar Power M.P. Ltd. to file all the details/documents/information as sought in the Commission s order dated 27 th November, 2015 in this matter, by 18 th April, During the course of next hearing held in this matter on 26 th April 2016, the M. P. Electricity Regulatory Commission Page 12

13 Commission was informed that M/s Essar Power MP Ltd Company had preferred as Appeal against the Commission s daily order dated 14 th March, 2016 (hearing held on 8 th March, 2016) in the subject matter, before the Hon ble Appellate Tribunal for Electricity. The matter was seized of by Hon ble Appellate Tribunal for Electricity in its daily order dated 22 nd April, 2016 in Appeal No. 83 of 2016 and IA No. 200 of Hon ble Appellate Tribunal for Electricity disposed of the aforesaid Appeal at the admission stage vide its Order dated 16 th May, 2016 in Appeal No. 83 of 2016 and IA No. 200 of 2016, with the following observations and directions:..learned counsel for the State Commission states that she has been instructed to inform this Tribunal that both the petitions i.e. SMP No.50 of 2015 and Petition No.12 of 2016 will be taken up simultaneously for hearing and would be disposed of together. We accept this statement. Both the petitions shall be disposed of simultaneously after hearing all the parties independently and in accordance with law. We make it clear that the Appellant will have to cooperate with the State Commission. The Appellant shall make all possible efforts to furnish information, which the State Commission shall call upon it to furnish. (Emphasis supplied) 26. During the course of next hearing held on 24 th May, 2016, M/s Essar Power M.P. Ltd. submitted some of the details/documents/information sought vide Commission s daily order dated 27 th November, 2015 in the subject matter. Vide Commission s order dated 24 th May 2016, M/s Essar Power M.P. Ltd. was directed to serve copies of all details/documents/information on other Respondent also. The Commission directed MPPMCL also to submit its response by 15 th June, 2016 on the submissions made by M/s Essar Power M.P. Ltd With respect to the Computations of Quoted Non-Escalable Fuel Energy Charge for each year in terms of the PPA executed and submitted to the Commission (in Petition No. 33/2010) sought by the Commission, M/s Essar Power M.P. Ltd. submitted that: The data and assumptions sought pertain to seven (7) years back when the bid was submitted. M. P. Electricity Regulatory Commission Page 13

14 No such basis was required for a competitively bid tender and hence the exact details/basis to justify the quoted tariff are not readily available. The information sought is not readily available with it and the Company is trying to trace the details for submission to the Commission. 28. With respect to the allotted Coal Mine under the Coal Mines (Special Provisions) Second Ordinance, 2014, M/s Essar Power M.P. Ltd. broadly submitted the following information pertaining to Tokisud (North) Coal Mine: a. Copy of the Tender Document b. Copy of Mining Plan c. Copy of vesting order dated 23 rd March, 2015 issued by the Ministry of Coal, Government of India in favour of M/s Essar Power M.P. Ltd. for utilization in the specified end use plant, viz., Essar Power M.P. Ltd. of 1200 MW capacity with total coal entitlement of MMT. d. Copy of Coal Mine Development and Production Agreement dated 2 nd March, 2015 and Amendment Agreements dated 16 th March, 2015 and 6 th May, 2015 thereto. e. M/s Essar Power M.P. Ltd. submitted that after the vesting of Tokisud (North) Coal Mine through the auction process, it had applied to all the concerned departments for transfer of clearances and approvals granted to the previous operator in its favour and the major clearances pertaining to Environment and Forests have been transferred while the following clearances are awaited: i. Transfer of land ii. No Objection Certificate (NOC) from Chief Controller of Explosives magazine iii. Execution of Mining Lease iv. Mine Opening Permission f. M/s Essar Power M.P. Ltd. submitted that it is following up with Ministry of Coal for furnishing the Resettlement and Rehabilitation documents executed by the prior allottee, which are important for the fulfilment of the Resettlement and Rehabilitation obligations. g. M/s Essar Power M.P. Ltd. submitted that as per the approved Mine Plan, the scheduled yearly coal production is 1 MMTPA in the first year of operation and 2.32 MMTPA from second year of operation. M. P. Electricity Regulatory Commission Page 14

15 h. Crushing facilities at the Coal Mine: M/s Essar Power M.P. Ltd. submitted that as per the original plan, the coal seams would be drilled and blasted using explosives. The coal would be then loaded onto coal haul trucks by excavators or loaders to haul the coal to the coal handling plant. The coal handling plant is envisaged to be installed at mine mouth to receive coal from mine and store it temporarily and crush it before loading onto trucks for onward transportation to Railway Siding. The coal hauled to the coal handling plant would be dumped into feeder breakers to crush the coal from Run of Mine size to 200 mm size. Thereafter, the crushed coal would be crushed in rotary breakers to 100 mm size and the stones are segregated. The segregated stones would be stacked into a shale bunker and sized coal is stacked in the coal yard in coal handling plant through stacker reclaimer. The stacked coal would then be loaded onto coal hoppers by reclaimer and the conveyor system. The coal from coal hoppers would be gravity fed into coal trucks for transporting to railway siding at Tokisud railway station. The coal handling plant equipment ordered by the prior allottee has been vested during the auction process. The coal handling plant equipment has been lying at site from last two years. The complete availability and state of being of the equipment need to be assessed. While the coal handling plant is to be installed, the redesigning of the same to match the requirements of the plant is being evaluated and the detailed note would be provided after finalisation of the same. i. Washery Facility: M/s Essar Power M.P. Ltd. submitted that the need of washery facilities would be ascertained after ascertaining the coal quality after the operations commence. j. Transportation Infrastructure: The coal to Tokisud Railway Siding would be transported by trucks for a distance of 6 km. The trucks would unload the coal onto the platform which would then be loaded into empty wagons by front end loaders. A silo loading system is envisaged for loading coal into wagons after ascertaining its feasibility. The coal would be weighed while leaving the coal handling plant and entering the railway siding to check of pilferages. Further, an in motion weigh bridge would be placed on the tracks to weigh the wagons. The coal would be transported to the nearest railway siding at the plant end (Singrauli/Mahadiya) and then via trucks to the plant. M. P. Electricity Regulatory Commission Page 15

16 The feasibility for development of captive siding would be required to be done for long term. For smooth transportation of the coal from Singrauli/Mahadiya station to power plant, the existing combination of National Highway/State Highway and major district road could be used after proper strengthening and widening for uninterrupted supply over a longer period of time. k. Statutory Levies and Duties payable: The details of various statutory levies and duties payable from mining to transportation to power plant were submitted by M/s Essar Power MP Ltd by its affidavit dated 23 rd May M/s Essar Power M.P. Ltd. submitted that the above information has been submitted in deference to the Commission s order. However, the same is without prejudice to its earlier submissions that the coal from Tokisud (North) Coal Mine may or may not be utilised, as and when the mine is operational for supply of power under the concerned PPA. It also submitted that the present exercise is no more than an academic exercise and the details provided herein would be finally crystallised once the mine is operational and clarity on the other modalities is obtained. M/s Essar Power Ltd further submitted that the present exercise should be ideally initiated once the Tokisud (North) mine is ready for production. At this stage, the Company cannot certify to any cost computation merely based on agreements, mining plans or projected mode of operation. (Emphasis supplied) l. Estimated Production Cost: M/s Essar Power M.P. Ltd. submitted that it cannot certify to any cost computation at this stage when the mine is not operational. 29. On scrutiny of the reply filed by M/s Essar Power M.P. Ltd. during the course of hearing held on 24 th May, 2016, it was observed that a number of requisite documents/information were missing in the aforesaid reply. The observations of the Commission were communicated to M/s Essar Power M.P. Ltd. in Commission s daily order dated 27 th June, Accordingly, M/s Essar Power M.P. Ltd. was M. P. Electricity Regulatory Commission Page 16

17 again directed by the Commission to file all such missing information/ documents alongwith the remaining information by 17 th July Vide its letter dated 9 th July, 2016, MPPMCL filed its additional submissions and requested for making additional submissions in the subject matter. Considering the request, MPPMCL was allowed to file the same by 17 th July, 2016 after serving a copy of the same on the other respondent. 31. By affidavit dated 20 th July, 2016, M/s Essar Power M.P. Ltd. made the following submissions: i. With respect to the de-allocated Coal Mine Mahan, M/s Essar Power M.P. Ltd. submitted the following information: a. Copy of Coal Offtake Agreement executed between Mahan Coal Ltd. and M/s Essar Power M.P. Ltd. for offtake of coal from Mahan Coal Mine for consumption in M/s Essar Power M.P. Ltd. ii. Technical details of the generation station in Form A of the MPERC (Furnishing of Technical Details by Generating Companies) Regulations, M/s Essar Power M.P. Ltd. submitted the copy of Offshore Supply Contract in support of the guaranteed performance parameters. 32. By affidavit dated 22 nd August, 2016, M/s Essar Power M.P. Ltd. broadly submitted the following: (a) That EPMPL at the very outset submits that the reference to documents/ information relating to Mahan coal blocks in EPMPL s reply dated was an inadvertent mistake as there was no occasion for EPMPL to provide such information to this Hon ble Commission in the present proceedings. It is submitted that the information sought by this Hon ble Commission in relation to Mahan Coal Block on earlier occasions and vide its Daily Order dated is not relevant to the subject Petition and are in the nature of roving and fishing enquiry. (b) That principally this Hon ble Commission has to examine the submissions made by EPMPL in relation to Tokisud (North) Coal block and subject the M. P. Electricity Regulatory Commission Page 17

18 same to prudency test. It is respectfully submitted that this Hon ble Commission cannot in the present proceedings, delve into queries which are not in fact or otherwise relevant to present proceedings. Since Mahan Coal Block is not a question in issue in the present proceedings, this Hon ble Commission by seeking information in relation to the same is indulging in roving and fishing enquires which are delaying the present proceedings. (c) Hence, in view of the aforesaid it is respectfully submitted that this Hon ble Commission may therefore adjudicate the present proceedings as per the information and data in relation to the Tokisud coal block. 33. The next hearing in the matter was held on 23 rd August, During the course of hearing, the Commission observed that despite clear directives of Hon ble Appellate Tribunal for Electricity to M/s Essar Power M.P. Ltd. in Appeal No. 83 of 2016 for submission of the information sought by the Commission, M/s Essar Power M.P. Ltd. is stalling the proceedings in the subject matter by not submitting the information as sought and deciding itself the limitation of information to be considered by the Commission in the subject matter. The Commission reiterated that the details/information as sought in the subject matter are essentially required for computation of levellised tariff, besides several other parameters to be determined as outcome of this Suo-Motu Petition. Accordingly, the Commission once again directed M/s Essar Power M.P. Ltd. to submit the computations of Quoted Non-Escalable Fuel Energy Charge for each year in terms of the PPA executed and submitted to the Commission (in Petition No. 33/2010), in MS Excel with appropriate formulae and linkages along with detailed write-up on the assumptions regarding Station Heat Rate, year wise landed coal price, year wise fuel mix, Gross Calorific Value of coal, Auxiliary Consumption, and Secondary fuel oil, if any latest by 16 th September, During the course of next hearing held on 20 th September 2016, the Commission observed that M/s Essar Power M.P. Ltd. by its affidavit dated 19 th September, 2016 reiterated its contention and broadly stated the following: (a) It is further pointed out that even if it is assumed, without admitting, that any computation in relation to energy charges was infact made based on the assumption as indicated by this Hon ble Commission in its Order, the same would have no relevance whatsoever pursuant to the cancellation of Mahan M. P. Electricity Regulatory Commission Page 18

19 Coal Block on the basis of which, such computation must, if at all, had been carried out. Further, any assumption in relation to year wise Fuel Mix, GCV, Landed Coal Price, Station Heat Rate, Auxiliary Consumption or use of Secondary Fuel would be dependant to the quality of fuel available to EPMPL from any particular identified source. (b) Since the Mahan Coal Block has been cancelled and is no longer available with EPMPL, any assumption made on that basis also stands obliterated and the basic underlying commercial consideration that may have been taken at the time of bidding for the energy charges, stands substantially altered thereby resulting in frustration of the contract itself. Therefore, the purported reliance placed by this Hon ble Commission on any such assumption is without any basis whatsoever and completely irrelevant for the present proceedings. (c) It is to be noted that the Respondent is in receipt of termination notice vide letter dated from Government of India, Ministry of Coal, Office of Nominated Authority terminating the Coal Mines Development and Production Agreement ( CMDPA ) dated , copy of the termination letter is attached herewith. (d) The assumption as called for by this Hon ble Commission in its Order dated are not available with EPMPL and therefore it is not in a position to provide such information to this Hon ble Commission and also considering the termination of the Tokisud coal block and the information sought is of no relevance. (Emphasis supplied) weeks. During the said hearing, MPPMCL had sought adjournment of hearing for four 35. During the course of next hearing held on 18 th October 2016, the Commission observed that M/s Essar Power M.P. Ltd. had not submitted the computations of Quoted Non-Escalable Fuel Energy Charge for each year in terms of the PPA executed and submitted to the Commission (in Petition No. 33/2010), in MS Excel with appropriate formulae and linkages along with detailed write-up on the assumptions regarding Station Heat Rate, year wise landed coal price, year wise M. P. Electricity Regulatory Commission Page 19

20 fuel mix, Gross Calorific Value of coal, Auxiliary Consumption, and Secondary fuel oil, if any. The Commission also noted that the following is mentioned in the Termination Notice issued by the Ministry of Coal on 15 th September, 2016,: On completion of notice period of 15 business days on , the CMPDA and Vesting Order shall stand terminated and the Performance Security and all other payments made by the Successful Bidder shall be appropriated and the Successful Bidder shall not be entitled to any benefits under the CMPDA. 36. M/s Essar Power M.P. Ltd. could not inform the updated status regarding the above Termination Notice issued by the Government of India, Ministry of Coal regarding Tokisud North Coal Mine. M/s Essar Power M.P. Ltd. had sought adjournment of hearing in the matter. 37. Considering the status of information and the request made by M/s Essar Power M.P. Ltd., the Commission once again directed M/s Essar Power M.P. Ltd. to submit the computations of Quoted Non-Escalable Fuel Energy Charge for each year in terms of the PPA executed and submitted to the Commission (in Petition No. 33/2010), in MS Excel with appropriate formulae and linkages along with detailed write-up on the assumptions regarding Station Heat Rate, year wise landed coal price, year wise fuel mix, Gross Calorific Value of coal, Auxiliary Consumption, and Secondary fuel oil, if any. 38. The Commission also directed M/s Essar Power M.P. Ltd. to submit the updated status on the aforementioned Termination Notice issued by Ministry of Coal. 39. During the course of next hearing held on 22 nd November, 2016, the Commission observed the following: (i) By Affidavit dated 10 th November, 2016, M/s Essar Power M.P. Ltd. filed its reply to the Commission s directives issued vide its daily order dated 22 nd October, (ii) Despite repeated directives by the Commission, M/s Essar Power M.P. Ltd. had not submitted the desired information regarding computations of quoted non-escalable Fuel Energy Charge for each year in the PPA. M. P. Electricity Regulatory Commission Page 20

21 (iii) M/s Essar Power M.P. Ltd. informed that it has complied with the conditions laid down in the Termination Notice issued by Ministry of Coal regarding payment of third instalment of upfront payment on 28 th September 2016 and it has sought time for execution of mining lease. (iv) Pursuant to M/s Essar Power M.P. Ltd. s request, the Termination Notice was kept in abeyance for two months from the date of notice i.e., 05 th October 2016 by the Ministry of Coal. (v) M/s Essar Power M.P. Ltd. further informed that it has submitted all the required documents with applicable Stamp Duty to the State Government of Jharkhand for execution of Mining Lease on 26 th October It has requested the State Government of Jharkhand for transfer of land in its favour. The State Government of Jharkhand is in the process to issue demand note towards stamp duty and registration charges to complete the transfer process. 40. With the above observations, the subject Suo-Motu petition was reserved for orders. COMMISSION S ANALYSIS 41. Based on the submissions made by both Respondents in the matter i.e., M/s Essar Power M.P. Ltd. and MPPMCL, the Commission has observed the following: (I) Vide order dated 24 th November, 2015, the Commission sought the computations of Quoted Non-Escalable Fuel Energy Charge for each year in terms of the PPA dated 29 th October, In response to the same, M/s Essar Power M.P. Ltd., without making any reference to the information sought by the Commission, contended that the PPA no longer subsists and stands terminated subsequent to the de-allocation of Mahan Coal Block and in light of its notice to MPPMCL dated 3 rd October, On the other hand, MPPMCL disagreed to the contention of M/s Essar Power M.P. Ltd. regarding termination of the PPA. Subsequently, M/s Essar Power M.P. Ltd. filed a separate Petition ( Petition No.12 of 2016) on 5 th March, 2016 (just the last working day before the hearing on 8 th M. P. Electricity Regulatory Commission Page 21

22 March, 2016) challenging the basis of existence of the PPA. MPPMCL had again disagreed to the contention of M/s Essar Power M.P. Ltd. regarding termination of the PPA. (II) After hearing the parties on 8 th March, 2016, the Commission directed M/s Essar Power M.P. Ltd. to file all details/documents/information sought latest by 18 th April, 2016 else appropriate action to be initiated under the relevant provisions of the Electricity Act, Subsequently, M/s Essar Power M.P. Ltd. preferred an appeal before the Hon ble Appellate Tribunal for Electricity against Commission s daily order dated 14 th March, 2016 along with an Interim Application for Stay on the Commission s proceedings in the subject matter. Hon ble Appellate Tribunal for Electricity, while disposing of the Appeal filed by M/s Essar Power M.P. Ltd. vide its Daily Order dated 16 th May, 2016 made it clear that M/s Essar Power M.P. Ltd. would have to co-operate with the Commission make all possible efforts to furnish information sought by the Commission. It was only after the directions of Hon ble Appellate Tribunal for Electricity, that M/s Essar Power M.P. Ltd. submitted some of the information sought by the Commission. However, the complete information sought by the Commission has not been submitted by M/s Essar Power M.P. Ltd. till date. M/s Essar Power M.P. Ltd. even contended that such information sought by the Commission are not relevant for the subject Suo- Motu proceedings thereby deciding itself the limitation of information to be considered by the Commission. (III) The initial contention of M/s Essar Power M.P. Ltd. for non-submission of the computations of Quoted Non-Escalable Fuel Energy Charge for each year in terms of the PPA dated 29 th October, 2010 was that the exact details/basis to justify the quoted price is not readily available with it and the information as sought is being traced by it for submission to the Commission. Subsequently, M/s Essar Power M.P. Ltd submitted that any computation made earlier in relation to the energy charges were required to be made for submission of bid tariff and the same would have no relevance pursuant to the cancellation of Mahan Coal Block. Although the Commission is not deciding on the merits of this submission of M/s Essar Power M.P. Ltd., such repeated submissions could only impress upon the Commission that M/s Essar Power M.P. Ltd., being a commercial business concern, either made the competitive bid based on arbitrary assumptions or the computations for the same, if any, were not archived properly. This appears to be an arbitrary and M. P. Electricity Regulatory Commission Page 22

23 very strange submission. 42. It is pertinent to mention that the Commission in SMP No. 51 of 2015 has determined the landed price of coal from Tokisud (North) Coal Mine to M/s Essar Power M.P. Ltd and reviewed the energy charges for supply of power. The determination of Energy Charge in SMP No. 51 of 2015 was possible as the same was for supply of power under the PPA under Section 62 of the Electricity Act, 2003 wherein the norms of operation are governed by the Tariff Regulations of the Commission. For the subject Suo-Motu proceedings, not only the landed price of coal from Tokisud (North) Coal Mine is important but also the information related to assumed landed price of coal from Mahan Coal Mine for each year along with the assumptions of norms of operation are critical for review of Quoted Non-Escalable Fuel Energy Charge for each year in terms of the PPA dated 29 th October, The Commission has time and again stressed upon the fact that the levellised tariff cannot be reviewed under the instant exercise without having the basic assumptions of several values considered by M/s Essar Power M.P. Ltd. based on which the levellised tariff was worked out earlier and placed before the Commission for adoption in Petition No. 33/2010. In the absence of the same, the Commission is not in a position to review the energy charge adopted vide its Order dated 9 th August, 2011 in Petition No. 33/2010 for procurement of 150 MW power by MPPMCL from 2x600 MW TPP of M/s Essar Power M.P. Ltd. 44. M/s Essar Power M.P. Ltd. In its primary submissions contended that the PPA stands terminated in light of its Notice issued to MPPMCL regarding the deallocation of Mahan Coal Mine, which was disagreed by MPPMCL. M/s Essar Power M.P. Ltd. has already filed a separate petition No. 12 of 2016 regarding its dispute with Respondent No.2 on the issue of termination of PPA. The Commission has dealt with the aforesaid petition separately and the aforesaid petition has been disposed of by the Commission on 8 th December 2016 by simultaneously holding the proceedings in the subject SMP and also the Petition No.12 of 2016 as per the observations and directives of Hon ble Appellate Tribunal for Electricity in Appeal No. 83 of Hence, the issues in the aforesaid petition No.12 of 2016 are not discussed in this order. 45. M/s Essar Power M.P. Limited submitted that as the production from Tokisud North M. P. Electricity Regulatory Commission Page 23

24 Coal Block is not sufficient for operation of the Plant and hence it will be carrying out various permutation and combinations in terms of fuel requirement for the Project. M/s Essar Power M.P. Limited also submitted that the present exercise of determination of Energy Charges for supply of power to MPPMCL has no relevance considering that Tokisud coal may or may not be used and this exercise of determination of energy charges would be relevant only once coal production from the Tokisud coal block commences. 46. The Commission has observed that it is amply clear from the Vesting Order that the Tokisud (North) Coal Mine is allocated for the end use in 2x600 MW generating station of M/s Essar Power M.P. Ltd. In this regard Clause 8.1 of CMPDA stipulates as follows: Except as otherwise provided in this clause 8, the coal extracted from the Coal Mine shall be utilised by the Successful Bidder strictly in the Specified End Use Plant; and shall not be utilised for any other purposes whatsoever, either directly or indirectly. 47. Further, Clause 9.1.1of the CMPDA provides that the Successful Bidder can utilise the coal for sale of power on merchant basis, subject to maximum of 15% of the linked generation capacity of the end use plant. Explanation to Clause 9.1 of CMPDA stipulates that power sold on merchant basis means power sold outside medium and long term Power Purchase Agreements (PPAs) contracted under Section 62 or Section 63 of the Electricity Act, M/s Essar Power M.P. Ltd. while submitting the technical details of the plant to the Commission in this matter has submitted the details of tied up capacity as follows: GoMP : 5% of electric output MPPMCL : 12.5% of Installed Capacity Essar Steel Limited : 16.67% 49. Based on the above submission, it is observed that in this case, a substantial capacity of end use plant is yet to be tied up. Under such circumstances, at this stage, it can be assumed that the power tied up with MPPMCL under the PPA will be supplied by utilising the coal of Tokisud (North) coal block. As and when the position for capacity tie up for end use plant changes, the issue of utilisation of coal M. P. Electricity Regulatory Commission Page 24