Case No. 125 of Smt. Chandra Iyengar, Chairperson Shri Azeez M. Khan, Member Shri Deepak Lad, Member

Transcription

1 Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION 13 th Floor, Centre No.1, World Trade Centre, Cuffe Parade, Mumbai Tel: /65/69 Fax: Website: / Case No. 125 of 2014 In the matter of Petition of M/s Shree Chhatrapati Shahu Sahakari Sakhar Karkhana Ltd. for clarification and benefit of Order dated in Case No. 63 of Smt. Chandra Iyengar, Chairperson Shri Azeez M. Khan, Member Shri Deepak Lad, Member M/s. Shree Chhatrapati Shahu Sahakari Sakhar Karkhana Ltd.... Petitioner V/s 1. Maharashtra State Electricity Distribution Company Ltd. 2. Maharashtra State Electricity Transmission Company Ltd. Respondents Appearance For Petitioner : Shri Bhushan Mahadik (Adv.) For Respondent No. 2 : Shri Parag Patil (Rep.) : Shri. K.M. Jadhav (Rep.) ORDER Dated: 3 rd December, 2014 M/s. Shree Chhatrapati Shahu Sahakari Sakhar Karkhana Ltd.(SCSSSKL), Tal. Kagal, Distt. Kolhapur has filed a Petition on 13 June, 2014 under Section 86(1)(e) of the Electricity Act (EA), 2003 read with Regulations 92 and 95 of the MERC (Conduct of Business) Regulations, 2004 for clarification and benefit of the Commission s Order dated in Case No. 63 of MERC Order in Case No. 125 of 2014 Page 1 of 7

2 2. The prayers of SCSSSKL are as follows: a) to clarify the Order dated 28 th September 2007, under Section 86(1) (e) of the Electricity Act, 2003 and the Regulation Nos. 92 and 95 of the Maharashtra Electricity Regulatory Commission (Conduct of Business) Regulations, 2004 and pass with retrospective effect and give the benefit of the aforesaid order to the Petitioner; b) give directions to the Respondents to refund an amount of Rs /- Lakh which was paid for SCADA & PLCC equipments by the Petitioner; 3. The facts and contentions as stated in the Petition and further written submission dated 7 August, 2014 are as follows: 3.1 SCSSSKL manufactures white crystal sugar at Kagal, Distt. Kolhapur. The byproducts are molasses and bagasse. SCSSSKL has a 12.5 MW bagasse based cogeneration plant, and entered into an agreement with the Maharashtra State Electricity Development Co. Ltd. (MSEDCL) on 5 April, 2006 for sale of surplus power from this plant. It was completed and surplus power supplied to MSEDCL accordingly. 3.2 As per the agreement, SCSSSKL paid the Maharashtra State Electricity Transmission Co. Ltd. (MSETCL) Rs lakh for the following work in respect of the plant: a) Rs lakh towards the cost of work to be executed by MSETCL (50% interest free refundable in advance); and b) Rs lakh towards cost of works to be executed by MSETCL for PLC, SCADA and metering equipments. 3.3 In its Order dated 8 August, 2005 in Case No. 37 of 2003, the Commission provided that the Renewable Energy (RE) project holder shall bear the cost of project switchyard and inter-connection facilities at the site up to the point of energy metering. Beyond that point, it should be borne by the State Transmission Utility. The RE project holder should bear the cost of evacuation facilities up to 50% as an interest free advance, which is refundable to him n five annual installments after one year of commissioning. 3.4 On a Review Petition of the Maharashtra Non-Conventional Energy Producers Association (MNCEPA) in Case No. 63 of 2006, the Commission vide Order dated 28 September, 2007 had ruled that, since they form part of the evacuation arrangements beyond the point of energy metering, the capital cost related to Supervisory Control and Data Acquisition System (SCADA) and Power Line MERC Order in Case No. 125 of 2014 Page 2 of 7

3 Carrier Communication (PLCC) should be borne by MSETCL/concerned Transmission Licensee and recovered through its Aggregate Revenue Requirement (ARR). Hence SCSSSKL is entitled to refund of Rs lakh. 3.5 After learning that the cost of SCADA and PLCC is to be borne by MSETCL and not the RE project holder, SCSSSKL wrote to MSETCL on 8 August and 4 November, 2009 and 18 August, In its replies dated 27 December, 2010 and 6 December, 2013, MSETCL denied refund of the cost incurred by SCSSSKL towards SCADA and PLCC. 3.6 The Commission has wide inherent powers under Section 86(1)(e) of EA 2003 and Regulations 92 and 95 of its Conduct of Business Regulations, In Case No. 63 of 2006, the Commission stated that SCADA and PLCC are part of evacuation facilities, which are the concern of the State Transmission Utility (STU). The Commission has also implied that every Licensee under connection agreement shall be charged to recover the capital cost of SCADA and PLCC incurred by the concerned Licensee. SCSSSKL also has a similar case as that of the Petitioners in the (review) Case No. 63 of 2006 and (principal) Case No. 37 of In its Reply dated 8 October, 2014, MSETCL has submitted that: 4.1 SCSSSKL executed an Energy Purchase Agreement (EPA) with MSEDCL on 5 April, 2006 for supply of surplus power from its co-generation project. The scheme for power evacuation from the plant was sanctioned by MSETCL at an estimated cost of Rs lakh. The scope of work to be executed for the evacuation facilities was prepared as per the Commission s Order dated 16 August, 2002 in Case Nos. 8/9/10/15/17/18/19/20/21 of The scope of work was bifurcated into part A consisting of works to be executed by MSETCL at its own cost, and part B to be executed by MSETCL at the cost of the developer. 4.2 MSETCL agrees with the Commission s ruling in Case No. 63 of 2006 that SCADA/PLCC form part of evacuation arrangements beyond the point of energy metering. However, the scope of works identified by MSETCL for the evacuation facilities of SCSSSKL s power plant was based on the position obtaining before the Commission s Order in Case No. 63 of The scope of work for the evacuation facilities identified by MSETCL along with the cost of scheme for refundable and non-refundable portion were agreed to by SCSSSKL. MSETCL has been following the same policy with all co-generation plants with regard to the cost sharing of the evacuation facilities. 4.4 To SCSSSKL s request to refund the amount incurred by it towards SCADA, PLCC and metering equipments, vide letter 27 December, 2010 MSETCL informed it that the scheme for evacuation facilities of its plant had been approved by MSETCL on the terms and conditions prevailing under its policy at that time, MERC Order in Case No. 125 of 2014 Page 3 of 7

4 which had been intimated to SCSSSKL. There is no specific provision in the Commission s Order in Case No. 63 of 2006 to effect a refund with retrospective effect. 4.5 SCSSSKL s claim for refund of SCADA and PLCC cost, being prior to the ruling in that Case, is not tenable as it would amount to giving it retrospective effect. Hence SCSSSKL s claim for refund cannot be considered. 5. At the hearing on 27 October, 2014, SCSSSKL set out the chronology of Commission s Orders regarding bagasse-based co-generation plants and its own project. The Commission s generic Orders dated 16 August, 2002, and thereafter dated 8 August, 2005 in Case No. 37 of 2003 was applicable to all such projects until The EPA was signed on 5 April, 2006 and the plant commissioned on 15 March, Clause 4 of the EPA refers to evacuation facilities. The subsequent Order dated 28 September, 2007 on the review Petition explicitly refers to the treatment of SCADA/PLCC as a part of the dispensation for evacuation facilities. Thereafter, in 2009, SCSSKL wrote to MSETCL, who replied after a year that there was no provision to refund the cost by retrospective application of the Commission s Order. 6. During the hearing, MSETCL submitted that the treatment of SCADA/PLCC was not explicitly mentioned in the 2002 and 2005 Orders. Hence, it had implemented the dispensation only after the Commission addressed the issue in its 2007 Order. If its ruling were to be applied retrospectively, a large number of past cases would have to be re-opened. The Commission asked why the Petitioner had agreed in 2006 to the EPA which did not provide for refund of SCADA/PLCC cost. SCSSSKL responded that it had no option but to sign the EPA. Moreover, the position that evacuation arrangements would include SCADA/PLCC for the purpose of apportionment of works became clear after the Order of However, there can be no estoppel on the operation of law. The Commission asked why the Petitioner had come before it after so many years and not soon after its 2007 Order, SCSSSKL responded that it approached MSETCL in 2008 (admittedly two years after signing the EPA). The EPA was a standard document which developers had no option but to accept. 7. In its additional submission dated 28 October, 2014, SCSSSKL has cited the provisions relating to bearing of costs of project switchyard and inter-connection facilities upto the point of energy metering and its modalities as set out in the Order dated 16 August, 2002, contending that they imply that SCADA/PLCC are also included (as made explicit in the subsequent Order of 2007). In this respect, the EPA entered into in 2006 was contrary to the principles laid down. Therefore, such contrary provisions in the EPA are void ab initio. MERC Order in Case No. 125 of 2014 Page 4 of 7

5 Commission s Analysis and Ruling 8. The Commission notes that SCSSSKPL has approached the Commission several years after the EPA (in 2006), the relevant Order of the Commission (2007), commissioning of its plant (2008) and first rejection by MSETCL of its claim for refund (2009). 9. In its Order dated 16 August, 2002 in Case Nos. 8/9/10/15/17/18/19/20/21 of 2001 concerning purchase of power from bagasse-based co-generation projects, the Commission had held as follows: 4.4 Evacuation Facilities The Developer shall bear the cost of project switchyard and interconnection facilities at the project site upto the point of energy metering. The MSEB [Maharashtra State Electricity Board] will bear the cost of transmission lines and associated facilities beyond the point of energy metering for the evacuation of power. The Developer(s) shall provide an interest free advance to the MSEB equivalent to an amount of 50% of the cost of works to be carried out by the MSEB for power evacuation purposes. In case there is more than one Developer sharing the transmission line/evacuation facilities to be set up by the MSEB, the advance amount shall be shared amongst the Developer(s) in equal proportion. The MSEB shall refund the above interest free advance to the Developer(s), in five equal installments, spread over the period of five years, commencing from one year after the date of commissioning of the respective Co-generation projects. 10. SCSSSKL entered into an EPA with MSEDCL on 5 April, 2006 for supply of surplus power from its co-generation plant. The Commission notes that the provision regarding evacuation facilities at Clause 4 of the EPA is virtually the same as the Commission s dispensation in Order dated 16 August, 2002 cited above. However, Clause 3 of Schedule II of the EPA dealing with Interconnection Procedures provides that Generator shall provide, at Generator s expense, all revenue meters, revenue metering transformers and devices, and SCADA remote terminal units in accordance with MSEDCL s specifications. Thus, by entering into the EPA, SCSSSKL accepted and was in agreement on the apportionment of costs and responsibilities set out therein, including the provision that the expenditure on SCADA and PLCC would be borne by it. The provisions of the EPA regarding bearing of costs of evacuation facilities and of SCADA also appear to be based on the interpretation of the Commission s Order dated 16 August, 2002 prevailing at that time. MERC Order in Case No. 125 of 2014 Page 5 of 7

6 11. In Case No. 63 of 2006, MNCEPA had sought review of related Orders of the Commission dated 16 August, 2006 (Case No. 6 of 2006) and 8 August, 2005 (Case No. 37 of 2003). One of the issues was regarding sharing of expenses towards evacuation facilities and metering equipment between the procurer and RE developer. MNCEPA had submitted that MSEDCL is not contributing towards SCADA and PLCC, which are new expenditures, as a part of evacuation arrangements. On this point, the Commission, in its Order dated 28 September, 2007, ruled as follows: 16. the matter regarding evacuation expenses (sharing of costs for associated facilities beyond the point of energy metering from the project switchyard for SCADA/PLCC and metering) requires to be tested against the requirements laid down under Regulation 17 of MERC (State Grid Code) Regulations, 2006, which provides as under: 17 Communication Facilities Reliable and efficient speech and data communication systems shall be provided to facilitate necessary communication and data exchange, and supervision/control of the State Grid by the State Load Dispatch Centre, under normal and abnormal conditions All Users and Transmission Licensees shall provide the required facilities at their respective ends as specified in the Connection Agreement: Provided that the equipments/devices for communication and data exchange shall be provided considering the guidelines of State Load Dispatch Centre, the interface requirements and other such guidelines/specifications as applicable. The Commission understands that as SCADA/PLCC forms part of evacuation arrangement beyond the point of energy metering, the question of RE developer bearing the cost of the same does not arise. Further, it is evident from MSETCL s submission that it has devised specific dispensation only in case of RE projects requiring such RE projects to bear costs for SCADA/PLCC and the same is not applicable for communication facilities forming part of evacuation arrangement in case of conventional generators. MSETCL continues to bear cost of SCADA/PLCC system in case of conventional generators and is entitled to recover the same through it Annual Revenue Requirement. The Commission opines that ideally, provisions dealing with Communication facilities under Connection Agreement as envisaged under Regulation 14 of MERC (State Grid Code) Regulations, 2006 should address this aspect. While MSETCL is yet to submit Model Connection Agreement for approval, there is no reason why the provisions related to Communication Facilities under Model Connection Agreement should be distinct in case of conventional generation projects and RE generation projects. Accordingly, the Commission rules that capital costs related to SCADA /PLCC should be borne by MERC Order in Case No. 125 of 2014 Page 6 of 7

7 MSETCL/concerned transmission licensee and it shall be entitled to recover the same through its ARR over the period. The Commission further directs MSETCL to suitably incorporate the clauses under draft Model Connection Agreement. 12. Thus, while it can be argued that SCADA and PLCC are always an intrinsic part of the evacuation arrangements beyond the point of energy metering in cases of bagasse-based co-generators such as SCSSSKL also, the issue of apportionment of expenses on these components in the scope of evacuation arrangements beyond the metering point was newly brought up in Case No. 63 of 2006 and expressly addressed by the Commission in its Order dated 28 September, 2007, which also directed MSETCL to incorporate suitable clauses in the draft Model Connection Agreement. Consequently, and quite apart from the fact that it had accepted the terms of the EPA cited above by entering into it, SCSSSKL s claim for refund of expenses on this count prior to the Commission s ruling is not tenable as it would tantamount to giving it a retrospective effect. The Petition of M/s Shree Chhatrapati Shahu Sahakari Sakhar Karkhana Ltd. in Case No. 125 of 2014 stands disposed of accordingly. Sd/- Sd/- Sd/- (Deepak Lad) (Azeez M. Khan) (Chandra Iyengar) Member Member Chairperson MERC Order in Case No. 125 of 2014 Page 7 of 7