Case No. 27 of In the matter of

Transcription

1 Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai Tel /65/69 Fax Website: Case No. 27 of 2015 In the matter of Petition of Adani Power Maharashtra Ltd. regarding dispute with Maharashtra State Electricity Distribution Co. Ltd. on tariff adjustment due to deviation from Station Heat Rate norm determined in Order dated in Case No. 63 of 2014 for supply of power from Tiroda Thermal Power Station Coram Shri. Azeez M. Khan, Member Shri. Deepak Lad, Member Adani Power Maharashtra Ltd. Maharashtra State Electricity Distribution Co. Ltd. Petitioner Respondent Appearance Representative for the Petitioner: Representative for the Respondent: Consumer Representative: Shri. Naresh Thacker (Advocate) Shri. J. J. Bhatt (Advocate) Smt. Deepa Chawan (Advocate) Shri. Ashok Pendse, TBIA ORDER Dated: 7 April, M/s Adani Power Maharashtra Ltd. (APML) filed a Petition on 5 February, 2015 under Section 86 (1) (f) of the Electricity Act (EA), 2003 for adjudication of its dispute with Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) regarding appropriate adjustment in tariff due to deviation from the approved norms for Station Heat Rate (SHR) determined in Order dated 5 May, 2014 in Case No. 63 of 2014 for supply of 800 MW power from its Tiroda Thermal Power Station (TPS). MERC Order Case No. 27 of 2015 Page 1 of 7

2 2. APML s prayers are as follows: a) to consider Gross SHR of 2358 kcal / kwh or actual whichever is lower as suggested by the Committee. b) To pass such other order/s as this Hon ble Commission may deem fit and proper. 3. The Petition states that: 3.1. The relevant facts of the matter are as follows: i. On 17 November, 2006, MSEDCL initiated the process of procurement of power through Competitive Bidding by issuing a Request for Qualification (RfQ). On 3 February, 2007, APML submitted its response to the RfQ. ii. iii. iv. On 3 April, 2007, MSEDCL issued the Request for Proposal (RfP). APML submitted its bid on 20 February, 2008 and specified the source of fuel based on Ministry of Coal (MoC) s letter dated 6 November, 2007 conveying allocation of Lohara (West) and Lohara (Extn.) Coal Blocks as the sources to APML. The letter stated further that the balance requirement was to be met by coal supply from Coal India Limited (CIL) or its subsidiaries. Subsequently, on 16 May, 2008, APL received the Terms of Reference (ToR) from the Ministry of Environment & Forests for the Lohara Coal Blocks. On 29 July, 2008, based on APML s bid, MSEDCL issued a Letter of Intent (LoI) to APML for supply of 1320 MW power. Thereafter, APML and MSEDCL entered into a Power Purchase Agreement (PPA) on 8 September, v. However, on 25 November, 2009, the Expert Appraisal Committee (EAC) of Ministry of Environment and Forest (MoEF), based on reports of the Govt. of Maharashtra and of the National Tiger Conservation Authority, decided to withdraw the ToR (ToR) for the Lohara Coal Blocks since they fell within the buffer zone of the Tadoba Andheri Tiger Reserve. MoEF recommended to the MoC the allocation of an alternative coal block for Tiroda TPS in lieu of Lohara. vi. vii. Subsequent to withdrawal of the ToR for the Lohara Coal Blocks, APML filed Case No. 68 of 2012 before the Commission as the Plant was rendered unviable because of unforeseen, unprecedented, uncontrollable and un-absorbable rise in cost of fuel arising from subsequent events, and claiming the Performance Bank Guarantees which were not returned by MSEDCL. Vide Order dated 21 August, 2013, the Commission recognized the hardship being faced by APML due to unavailability of coal, and in the absence of any other alternative MERC Order Case No. 27 of 2015 Page 2 of 7

3 arrangement and formed a Committee to look into the details of the case, evaluate the impact of withdrawal of ToR on Unit 2 and 3 of Tiroda TPS and accordingly determine a compensatory charge to be provided to APML, if required. viii. In its Order dated 21 August, 2013, the Commission specified the mechanism for the Interim Tariff: 151. Accordingly, interim relief has been worked out at Rs per kwh consisting of a capacity charge of Rs per kwh and energy charge of Rs per kwh. The interim relief in the form of the above mentioned capacity and energy charges shall be applicable only for sale of power above the initial 520 MW (for which the FSAs have already been signed) supplied from Units 2 and 3 and shall be limited to the remaining 800 MW. This interim relief shall be applicable from the date of commercial operation. This shall mean that the quantity of power supplied beyond 520 MW, in any time block, shall be billed at Rs per kwh (comprising of capacity charge of Rs per kwh and energy charge of Rs per kwh). For the initial 520 MW, Tariff shall be applicable as per PPA dated 8 September, This direction of the Commission shall not alter any other terms and conditions of the abovementioned PPA. ix. The above mechanism was only for interim payment and subject to final decision. The Committee submitted its report on 18 February, 2014, noting as follows: a) The scope of the Committee is limited to evaluate and evolve mechanism to mitigate the hardship on account of energy charges corresponding to Lohara Captive Coal Block with capacity of 800 MW only. b) In this regard, the Committee has recommended the following formula to determine Compensatory Energy Charge: Illustrative Example Energy Charge for Lohara portion as per bid assumption for respective years Actual Energy Cost incurred for 800 MW capacity for respective years Compensatory Energy Charge for 800 MW (C) Formula A B B A # As there is single billing for entire contracted capacity under the PPA, the tariff for 1320 MW would be arrived at based on the revised tariff including compensation for 800 MW and retaining the tariff embedded in the bid stream for the linkage coal. (e.g., Rs. 1.53/kWh for FY 14) MERC Order Case No. 27 of 2015 Page 3 of 7

4 c) The compensation based on the above formula shall be applicable from the commencement of PPA sales. The compensation amount for past period may be determined based on the final decision subject to detailed audit of financials. d) The reimbursement of Compensatory Energy Charge towards actual hardship may be considered as per the mechanism and methodology described in Chapter 7 of the Committee report. e) MSEDCL should maintain cost accounting record as per the statutory provisions and it should be audited periodically. x. After submission of the report, the Commission initiated proceedings in Case No. 63 of By Order dated 5 May, 2014, it granted Compensatory Energy Charges to APML over the bid tariff. xi. Being aggrieved by certain findings of the Commission in that Order, APML filed a Petition in Case No. 131 of 2014 for review, which the Commission dismissed on 30 December, 2014 holding that it was not maintainable However, in view of the hardship being faced by APML due to the difference between SHR actually achieved and the SHR approved by the Commission based on the Central Electricity (CERC) Regulations of 2014, APML has filed the present Petition. There is an impact of around Rs per kwh on account of this issue, which is subject to further change based on actual parameters The Commission has placed a ceiling on actual gross SHR of 2248 kcal/ kwh (= 2151 kcal/ kwh x (1+4.5%)) based on the SHT/ RHT category of 565/ 665 C. However, the actual SHR for the Units under consideration is consistently above the approved SHR of 2248 kcal/ kwh The weighted average SHR actually achieved during the period from April, 2013 to October, 2014 is 2305 kcal/ kwh as against the approved net SHR of 2248 kcal/ kwh. The main reasons for the difference between the actual and the approved SHR are the use of coal with higher moisture content as compared to design coal parameters, operation at low Plant Load Factor (PLF), etc The appropriate ceiling on Gross SHR would be 2380 kcal/ kwh (= 2235 kcal/ kwh x (1+6.5%)) as per the CERC (Terms and Conditions of Tariff) Regulations, Apart from the actual operating conditions that have impacted the SHR, SHR depends not only on the pressure rating but also on super heat and re-heat temperatures of the boiler. The actual SHT/ RHT ratings of APML s super-critical units are 565/ 665 C, whereas the SHT/ RHT rating of 565/ 593 C has been considered by the Commission MERC Order Case No. 27 of 2015 Page 4 of 7

5 while approving the SHR as 2151 kcal/ kwh. If this is corrected, the gross SHR as per the CERC Tariff Regulations will be 2235 kcal/ kwh The impact of SHT and RHT on the SHR has been dealt with in the report on Power Generation from Coal The Commission may consider Gross SHR of 2358 kcal/kwh or actuals, whichever is lower, as suggested by the Committee. The recommendation of the Committee is fair, transparent and based on the actual site conditions. At para. 35 of the Impugned Order, the Commission has held as under: 35. In the Order in Case No. 68 of 2012, the Commission had set the parties to a consultative process and form a Committee which was required to submit a Report outlining the principles and the precise mechanism for calculation of compensatory energy charge. The Committee has submitted its report to the Commission on 18 February, The Commission has conducted suo motu proceedings on the same and has heard the stakeholders in the hearings conducted in this matter. The Commission accepts the Committee Report subject to a few issues such as operational parameters, Commission s philosophy on sharing of RoE as mentioned in this Order From the above, it is clear that the Commission has accepted the Committee report barring a few differences in operational parameters and the sharing of Return on Equity (RoE) Once it is accepted by the Commission and the High Powered Committee that the withdrawal of ToR for Tiroda Coal Block requires APML to import coal, the consequential impact has to then be addressed appropriately Adopting the Committee Recommendation would also fulfil the requirement of Section 61 of the EA, 2003 of safeguarding of consumer interest and at the same time recovery of the cost of electricity in a reasonable manner Allowing actual SHR subject to a ceiling of normative SHR in the Compensatory Tariff formula would allow APML to recover the loss being suffered on account of nonavailability of coal from Lohara Coal Block and renders the Compensatory Tariff mechanism meaningful. Otherwise, the spirit and objective of granting Compensatory Tariff to off-set the hardship arising due to cancellation of Lohara Coal Block would be defeated, and the RoE available to APML would reduce further coupled with the RoE adjustment already approved by the Commission. 4. At the hearing held on 24 March, 2015, MSEDCL stated that the Petition had been served only on 20 March, 2015 and there were some Annexures missing. MSEDCL sought time for submission of its Reply. The Commission allowed time for the Reply and for APML s Rejoinder, if any. MERC Order Case No. 27 of 2015 Page 5 of 7

6 5. At the hearing held on 2 July, 2015, APML stated that the actual SHR of the Plant is is different from the norms specified in Order dated 30 December, 2014 in Case No. 131 of APML had submitted the relevant technical report with its Petition. MSEDCL stated that details of the report were not part of the Petition and were filed subsequently, and required study. The Commission opined that, for transparency and credibility of the actual SHR of the Units under consideration, it requires to be studied by an independent agency, and that the Central Power Research Institute may be engaged for the purpose. Both parties agreed. Accordingly, the Commission has decided to undertake the determination of actual SHR of Units 2 and 3 of Tiroda TPS through CPRI, Bengaluru. Such study will be without prejudice to the respective claims the parties. The CPRI report on the actual SHR would be shared with the parties for their comments. 6. Accordingly, the Commission initially engaged with CPRI on its proposed engagement for the study. 7. The Appellate Tribunal for Electricity (ATE), in its Judgement dated 11 May, 2016 in IA No.191 of 2016 in DFR No.806 of 2016, has ruled as under: In our Judgment dated 7/4/2016 in Appeal No.100 of 2013 and batch matters, we have held that the Appropriate Commission has no regulatory power to grant compensatory tariff to the generating companies where the tariff is discovered by a competitive bidding process under Section 63 of the said Act. We have also held that if a case of Force Majeure or Change in Law is made out, relief available under the PPA can be granted under the adjudicatory power of the Appropriate Commission. Since the Maharashtra Commission has come to a conclusion that the case of Force Majeure event is not made out, it could not have granted compensatory tariff to Adani Power Maharashtra. 8. As the ATE has set aside the Commission s Order in Case Nos. 68 of 2012 and 63 of 2014, the question of assessment of the actual SHR of Units 2 and 3 of Tiroda TPS, improvement measures for reduction in SHR, and improvement trajectory achievable does not arise. 9. The Commission scheduled a hearing on 28 February, However, vide letter dated 20 February, 2017, APML submitted as under: 9.1. The Commission had appointed a Committee to submit a Report indicating the methodology of grant of Compensatory Tariff. After the submission of the Report, the Commission, vide Order dated 5 May, 2014 in Case No. 63 of 2014, granted the Compensatory Tariff. These Orders were challenged before the ATE by Distribution Licensees, Consumer Representatives and APML. Vide Judgment dated 11 May, 2016, and referring to the Full Bench Judgment dated 7 April, 2016, set aside the findings of the Commission regarding its regulatory power to grant Compensatory Tariff. The aspect of whether the withdrawal of ToR which led to inaccessibility of the coal block MERC Order Case No. 27 of 2015 Page 6 of 7

7 and its subsequent de-allocation is a Force Majeure event was kept open to be decided by ATE In view of the above development, APML would like to withdraw the present Petition with liberty to keep all the issues open and to approach the Commission afresh after the disposal of the above Appeals by the ATE. 10. In view of the foregoing, the Commission allows APML to withdraw its Petition, with liberty to approach it afresh depending on the outcome of the ATE proceedings. The Petition of M/s Adani Power Maharashtra Ltd. in Case No. 27 of 2015 stands disposed of as withdrawn. Sd/- (Deepak Lad) Member Sd/- (Azeez M. Khan) Member MERC Order Case No. 27 of 2015 Page 7 of 7