before the haryana electricity regulatory … · a) the petitioner has established a coal based...
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BEFORE THE HARYANA ELECTRICITY REGULATORY COMMISSION BAYS No. 33-36, SECTOR-4, PANCHKULA- 134112, HARYANA
Case No. HERC/PRO - 54 of 2017
DATE OF HEARING DATE OF ORDER
25.10.2018 15.11.2018
IN THE MATTER OF:
Petition under section 86 of the Electricity Act, 2003 inter alia seeking approval of the Commission for installation of equipments (as detailed in the Petition) pursuant to the MoEFCC notification dated 07.12.2015, to enable the Petitioner to comply with the same and to in turn continue to supply power.
Petitioner
Lanco Amarkantak Power Ltd. (LAPL)
Respondents
1. PTC India Ltd. (PTC) 2. Haryana Power Purchase Centre, Panchkula (HPPC)
Present
On behalf of the Petitioner (LAPL)
1. Shri Deepak Khurana, Advocate.
2. Shri Anil Sharma, Advocate.
3. Shri Vamsi Krishna Boppana, GM
On behalf of the Respondent No. 2 (HPPC)
1. Ms. Sonia Madan, Advocate
2. Shri R.K. Sharma, CE/HPPC
3. Shri Randeep Singh, SE/HPPC.
4. Shri Ravi Juneja, AEE/HPPC.
5. Shri Vikrant Saini, AEE/HPPC.
6. Shri Pawan Bains, XEN/HPPC
QUORUM
Shri Jagjeet Singh, Chairman
ORDER
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Brief Background of the Case
1. M/s. Lanco Amarkantak Private Limited (hereinafter referred to as LAPL or the
petitioner) has filed the present petition seeking approval of applicability of the MoEFCC
notification dated 07.12.2015 as change in law in accordance with Regulation 13 of the
HERC Tariff Regulations 2008 and to approve the resultant Capital Cost, increased
Auxiliary Energy Consumption and to consider shut down period of 60 days as deemed
availability.
2. The submissions of the petitioner herein i.e. M/s. LAPL is set out briefly below:-
a) The Petitioner has established a coal based thermal power plant having capacity of
300 MW i.e. Unit-II at Pathadi village, Korba District, Chhattisgarh.
b) The Respondent No. 1 (hereinafter referred to “PTC /Respondent No. 1”) is an
inter-state trader of electricity under the Act.
c) The Respondent No. 2 (hereinafter referred to as “HPPC/Respondent No. 2”) is the
entity responsible for procurement of power in the State of Haryana.
d) The Petitioner and the Respondent No. 1 had entered into a Power Purchase
Agreement (“PPA”) dated 19.10.2005 for sale of 273 MW (net power output) from the
Petitioner’s aforesaid 300 MW thermal Power Plant Unit – II in the State of Chhattisgarh
to Respondent No. 1 at a tariff which was to be determined as per the applicable CERC
Tariff Regulations, with a maximum cap of Rs.2.32 per unit as per the PPA.
e) The Respondent No. 1 entered into a Power Sale Agreement dated 21.9.2006
(“PSA”) with Haryana Power Generation Corporation Ltd. (presently represented by
Respondent No. 2 herein) for sale of the power purchased by the Respondent No. 1 from
the Petitioner under the PPA.
f) In view of the changed circumstances including force majeure events, introduction
of New Coal Distribution Policy and execution of Implementation Agreement by the
Petitioner with Government of Chhattisgarh, the Respondent No. 1 filed a petition before
this Commission seeking revision of tariff under the PSA. This petition of the Respondent
No. 1 for revision of tariff was opposed by the Respondent No. 2. The Petitioner objected
to the jurisdiction of this Commission.
g) Meanwhile, the Respondent No. 1 failed to fulfil its condition precedent of
obtaining and maintaining long term open access even after being issued a one year prior
notice by the Petitioner. Accordingly the Petitioner, during the pendency of the said
above-proceedings, was constrained to terminate the PPA on 11.01.2011.
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h) This Commission vide its order dated 02.02.2011 held that it had jurisdiction and
further restrained the Petitioner from revising its price for sale of power and further
restrained the Petitioner from selling the contracted power to a third party.
i) Aggrieved by the abovementioned Order dated 02.02.2011 passed by this
Commission, the Petitioner approached the Appellate Tribunal on 07.02.2011 by means
of an appeal being Appeal No. 15 of 2011. In the said Appeal, the Tribunal passed an
interim order dated 23.03.2011, whereby this Commission’s order dated 02.02.2011 was
partially stayed in terms of the following directions:
“11. Thus, we are inclined to grant interim stay of impugned order to the extent
indicated above. Accordingly, the Petitioner is permitted to supply 35% of
power to Chhattisgarh Government Company and is directed to supply the
balance power to the PTC (R-3) so that PTC (R-3) can discharge its obligation
to the Power Generation Corporation (R-2) in pursuance of the PSA entered
into between them.”
j) In terms of the interim order dated 23.03.2011, the Petitioner w.e.f. 07.05.2011
commenced 35% supply of power from its Unit-II to CSPTCL and balance to Respondent
No. 1. However, the price/tariff at which the power was to be supplied by the Petitioner
was not specified in the said Order.
k) The Hon’ble Tribunal dismissed the Appeal of the Petitioner i.e. Appeal No. 15 of
2011 on 04.11.2011 and upheld the jurisdiction of this Commission, while directing that
pending decision by the Hon’ble Appellate Tribunal on the contentions raised by CSTPCL
(the Petitioner in Appeal No.52/2011), “the interim order dated 23.03.2011 passed by us
will be in force till the final order is passed by the State Commission.”
l) The Petitioner challenged the said Order of the Hon’ble Tribunal by filing an
Appeal before the Hon’ble Supreme Court being Civil Appeal No. 10329/2011.
m) While issuing notice on the said appeal, the Hon’ble Supreme Court passed the
following interim order dated 16.12.2011:-
“(i) The Petitioner will continue to supply electricity as per the interim Order of
the Tribunal dated 23rd March, 2011;
(ii) Without prejudice to the rights and contentions of the parties and pending
further orders, the State Electricity Regulatory Commission, Haryana will
fix/approve the tariff for sale and purchase of power for the period in question about
which there is a dispute between the Petitioner and PTC.
The State Electricity Regulatory Commission, Haryana will decide the dispute
uninfluenced by the observations made in the impugned orders passed before today,
by the Appellate Tribunal and/or any other Authority in this case. All arguments on
both sides are kept open. Liberty is given to the parties to make a proper application
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supported by relevant documents before the State Electricity Regulatory
Commission, Haryana, within four weeks.”
As such, the Hon’ble Supreme Court protected the Petitioner by directing this
Commission to fix the tariff to be paid by the Respondents for the mandated supply of
power by the Petitioner to the Respondents dehors the capped rate under the PPA.
n) The Petitioner approached this Commission to fix/approve the tariff for the period
in question i.e. for the power supplied from 07.05.2011 to 31.12.2011 and for the power
proposed to be supplied during the balance period of the year 2011-12 i.e. 01.01.2012 to
31.03.2012 and for the year 2012-13.
o) The said petition was disposed of by this Commission by it’s order dated
17.10.2012 holding that the capped tariff of Rs 2.32/kWh in the PPA shall prevail.
p) The Petitioner filed an Appeal before the Hon’ble Tribunal against the Order dated
17.10.2012 passed by this Commission being Appeal No. 65 of 2013.
q) The Hon’ble Tribunal allowed the said appeal being Appeal No.65/2013 vide its
order dated 03.01.2014 thereby directing this Commission to re-determine the tariff
within two months from the date of communication of the judgment dehors the PPA.
r) Accordingly, the Petitioner approached this Commission for re-determination of
tariff.
s) This Commission determined the tariff of Rs. 2.8875/kWh for FY 2011-12 and
Rs.2.9218/kWh for the FY 2012-13 comprising of capacity charges and variable charges
in accordance with HERC Tariff Regulations, 2008, vide order dated 23.01.2015.
t) The aforesaid determination of the tariff by the Commission was challenged by the
Respondent No. 2 before the Hon’ble Tribunal by way of Appeal No. 107/2015 and the
same is pending adjudication. Further, the Petitioner has also filed an appeal before the
Hon’ble Tribunal being Appeal No. 117 of 2015 seeking enhancement of the tariff
determined by this Commission, which is also pending adjudication.
u) It is pertinent to mention that currently, 95% power from Unit-II of the Petitioner
is being supplied to the Respondents at the tariff determined by this Commission vide
Order dated 23.01.2015 and the balance 5% power is being supplied to CSPDCL.
v) That the MoEFCC issued a Notification dated 07.12.2015 notifying the
Environment Protection Rules, 2015, which came into force from the date of their
publication in the Official Gazette i.e. from 08.12.2015. By way of the said notification, the
Central Government has specified certain standards to be met by thermal power plants
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on various parameters such as Water Consumption, Particulate Matter, Sulphur Dioxide
(SO2), Oxides of Nitrogen (NOx), Mercury (Hg) and Water Consumption.
w) That main plant & equipments of the Power Station (which came into commercial
operation w.e.f. 07.05.2011) were designed, engineered and procured in the year 2005-
06. The construction thereof had commenced during 2006-09, and as such the
designs/manufacturing of the equipments were based on the then prevailing norms for
environmental emissions. That being so, in view of the changed environmental norms as
notified by the MoEFCC vide its aforementioned notification dated 07.12.2015, the Power
Station requires upgradation and which in turn would lead to additional investment in
the plant and equipment. The said position was notified by Petitioner to the Respondent
No. 1 herein vide letter dated 05.05.2016, being a notice for Change in Law under
Regulation 13 of the Haryana Electricity Regulatory Commission (Terms and Conditions
for Determination of Generation Tariff) Regulations, 2008, which provides for additional
capitalization on account of Change in Law or compliance of an existing law.
x) That in pursuance of the aforementioned Notification dated 07.12.2015, a Special
TCC meeting of the ‘Western Regional Power Committee’ (‘WRPC’) was convened in
Mumbai to discuss the agenda of Phasing out thermal generating units in the Western
Region which did not have space for installation of FGD for compliance of new MoEFCC
Norms of SOx emissions. A perusal of the Minutes of the said meeting would show that
the Generators raised a concern that for installation of FGD they would have to incur
heavy expenditure, with the cost of power also to increase because of increase in
Auxiliary Power consumption and O & M Cost – to which the said generators were
advised to raise the said concerns with the CERC or the State commission, CEA, MoP. The
said Minutes also, inter-alia, enlisted the thermal generating Units which had been
planned to be phased out. The said List, however, inadvertently mentioned the Power
Station of Petitioner herein.
y) With reference to the aforesaid Minutes of Special TCC, the Petitioner herein vide
its letter dated 24.04.2017 brought to the attention of WRPC that the name of its Power
station had been wrongly mentioned in the list of units to be phased out. It was expressly
brought out therein that Petitioner’s Power Station had enough space available for
installation of the proposed FGD and other associated system. Accordingly, it was
requested to correct the same in the records.
z) That in the meantime, the Petitioner, in furtherance of its aforementioned Notice
dated 05.05.2016, once again brought to the aforesaid Change in Law to notice of the
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Respondents, vide its letter dated 26.04.2017. By the said letter, the Petitioner brought to
the notice of the Respondents, the changes brought out by the Amended Norms vis-à-vis
the Old Norms, and the upgradation of equipment required to comply with the
Environmental standards set out by the MoEFCC.
aa) That neither of the Respondents has replied to the aforesaid letters of the
Petitioner.
bb) That the Petitioner has conducted a detailed study of its current emissions from
the plant. Based on the baseline emissions of the plant, only SO₂ and NOx reduction is
required. Hg reduction is not required for Petitioner plant. A summary of the Pollutants
percentage reduction required is given below:
POLLUTANTS UNIT 2
CURRENT COAL
PM, % Reduction Required Not Required
SO2, % Reduction Required 66.41
NOx, % Reduction Required 20.42
Hg, % Reduction Required Not Required
In view of the above position, SO₂ and NOx control technology/ equipment needs to
be installed for plant of Petitioner.
cc) That the Petitioner has prepared a Detailed Project Report (“DPR”) on the impact
of installing and operating the aforesaid installations for its thermal power project
(2x300 MW). The said DPR provides a detailed analysis of the systems required to be
installed to comply with the revised norms, the process to be followed for installation and
other indicative capital cost & operating cost details for both the Units (Unit- I and Unit-
II) of the Petitioner. For the present Petition, the indicative capital cost and operating cost
for Unit-II have been considered at 50% of the overall cost indicated in the DPR for the
Project (2x300 MW). The timeline considered for completing the installation and
commissioning of FGD and SCR is planned to be carried out in a time span of 36 months
from the date of award of the contract.
i. A comparative analysis of the standards/norms existing prior to the
MoEFCC Notification dated 07.12.2015 vis-à-vis the revised norms
introduced by the said notification are briefly stated as under:
A. Sulphur Dioxide (SOx) Emissions
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I. As brought out above, prior to the MoEFCC Notification dated
07.12.2015, no norms was specified with regards to SOx
emission from the Thermal Power Plants. No such
requirement was specified in the environmental clearances
granted by MOEF for the Petitioner’s Project and accordingly
the Petitioner did not consider any cost towards the same in
the capital cost of the Petitioner’s Project. However, the
Amendment Rules stipulate that SOx Emissions from the
Project is to be kept below 600 mg/NM3. With the current
quality of domestic coal being fired at Petitioner project, the
SOx emission is expected to be higher than the norms
specified in the Amendment Rules.
II. It is submitted that the Petitioner has conducted a detailed
study of the different technologies like Wet FGD, Ammonia
based FGD, SemiDry FGD, ReACT and the different technically
feasible combinations of aforementioned technologies and has
come to the conclusion that only Wet FGD would be the most
cost effective in meeting the category 2 limits i.e. 600
mg/Nm3. The Wet FGD life-cycle capital cost is significantly
below all the other SO₂ reduction system options that were
considered. Therefore, the Petitioner is required to install
Flue Gas Desulfurization (“FGD”) and associated equipments
as part of the Project to meet the MOEFCC compliance.
III. It is submitted that installation of the FGD will also lead to an
increase in auxiliary power consumption of the Unit in the
range of 1.8 % - 2.25% which needs to be considered by the
Commission for the purpose of computation of Tariff.
IV. It is submitted that an economic analysis of making technical
changes in the existing stack vis-a-vis the option of installing a
new stack was done in the detailed project report, in which it
was concluded that opting for a new stack for Wet FGD is
cheaper than making technical changes in the existing stack.
For the purpose of carrying out the interconnection, about 60
days of shutdown of the Unit is required for installation and
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commissioning of the FGD. It is submitted that non-
availability of the Unit due to installation activities of the FGD
System be considered as Deemed Availability for the purpose
of making payment of Fixed charges to Petitioner.
V. The indicative capital cost for the Wet FGD systems include
the following features:
(i) Flue Gas Desulfurization Vessels and Associated Equipment
(ii) Reagent preparation system and byproduct dewatering
system
(iii) Wastewater treatment system
(iv) New stack with borosilicate glass lining for acid corrosion
protection Flue Gas Ductwork
(v) Draft System Stiffening
(vi) Tanks, Pumps, and Interconnecting Piping
(vii) Bulk Material Handling Equipment for limestone and
byproduct
(viii) Raw Water Treatment System
(ix) New centrifugal ID fans, VFDs and supporting equipment
(x) Auxiliary Transformers and Electrical equipment
VI. The Annual O&M costs for the Wet FGD technologies consist
of the following cost categories:
(i) Operating labor costs
(ii) Maintenance materials and labor
(iii) Reagent
(iv) Byproduct disposal (including fly ash)
(v) Auxiliary power
(vi) ID or booster fan power costs
(vii) Service water costs
VII. The costs of reagent (limestone), byproduct disposal, and
auxiliary power are variable annual costs that differ with the
amount of SO₂ removed.
A Summary of Cost Estimates for Wet FGD Technology & Associated
Systems for Unit 2 (50% of total cost) is given in the table below:-
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Item Description Cost Estimate (50% of total cost) in Rs. Crores Capital Costs ₹ 191.13
O&M Costs per Annum ₹ 17.87
Note- The above cost is excluding Interest During Construction and
generation loss due to shut down required for construction.
B. Re: oxides of nitrogen emission limited to 300mg/NM3
I. It is submitted that the Amendment Rules stipulate that Oxides of
Nitrogen emission is to be kept below 300mg/NM3. It is submitted
that this is a new condition.
II. It is submitted that the Petitioner has conducted a detailed study
of different technologies like SNCR, SCR, Induct SCR, a new LNB
with OFA, ReACT and the different technically feasible
combinations of aforementioned technologies and has come to the
conclusion that only SCR would be the most cost effective in
meeting the category 2 limits i.e. 300 mg/Nm3. The SCR life-cycle
capital cost is significantly below all the other NOx reduction
system options that were considered. Therefore, in order to
comply with the MOEFCC changed norm, the Petitioner is required
to install SCR Systems.
III. It is submitted that for the purpose of carrying out the
interconnection, about 60 days of shutdown of the Unit is required
for installation and commissioning of the SCR. It is submitted that
non-availability of the Unit due to installation activities of the SCR
System be considered as Deemed Availability for the purpose of
making payment of Fixed charges to Petitioner. The outage of
about 60 days of the Unit shall be taken up for installation of FGD
and SCR systems.
IV. The indicative capital cost for the SCR systems include the
following features:
(i) Reactor / Selective catalytic reduction housing (ii) SCR Catalyst (iii) Ammonia dosing system (iv) Ducting (v) Ash hoppers
V. The Annual O&M costs for the SCR system consist of the following
cost categories:
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(a) Operating labor costs (b) Maintenance materials and labor (c) Catalyst (d) Anhydrous ammonia (e) Auxiliary power (f) Dilution water costs
VI. A Summary of Cost Estimates for the SCR systems for Unit 2 (50%
of the total cost) are given in the table below:
Item Description Cost Estimate (50% of total cost) in Rs. Cr. Capital Costs ₹ 150.18 O&M Costs per Annum ₹ 5.73
Note- The above cost is excluding Interest During Construction
and generation loss due to shut down required for construction.
C. Re: Mercury emission limited to 0.03mg/NM3
I. That the Amendment Rules stipulate that Mercury emissions are to
be limited to 0.03 mg/NM3.
II. That the Petitioner has conducted a preliminary assessment which
indicates that it is already in compliance with the aforesaid
condition.
III. That the Petitioner reserves its right to approach this Commission in
the event that any additional measures need to be implemented
involving additional installation cost and /or operating cost to
comply with the aforesaid condition.
D. Maximum specific water consumption of all existing Cooling Tower
bases plants to be reduced to 3.5M3/MWh
I. Prior to the MoEFCC Notification dated 07.12.2015, there was no
restriction on consumption of water. However, under the
Amendment Rules, the maximum water consumption for all existing
Cooling Towers based plants, such as that of the Petitioner is limited
to 3.5M3/MWh.
II. That the Petitioner has conducted a preliminary assessment which
indicates that it is currently in compliance with the aforesaid
condition. Further, upon installation of the wet FGD system
(required for meeting the SO₂ emission norms), the water
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consumption would continue to remain within the limit prescribed
in the Amendment Rules.
IV. That the Petitioner reserves its right to approach this Commission in
the event any additional measures need to be implemented
involving additional installation cost and /or operating cost to
comply with the aforesaid condition.
E. Re: Particulate Matter Emission limited to 50 mg/Nm3.
I. That the Amendment Rules stipulate that the particle matter
emissions is to be limited below 50 mg/Nm3.
II. That the Petitioner has conducted a preliminary assessment which
indicates that it is already in compliance with the aforesaid
condition.
dd) That in view of the above facts, the Petitioner is filing the present Petition to
obtain approval of the Appropriate Commission i.e. this Commission regarding the
applicability of Change in Law Provisions for the MoEFCC notification dated 07.12.2015,
to enable the Petitioner to comply with the same, and in turn continue to supply power.
ee) That the Petitioner reserves its right to approach this Commission in the event
that any additional measures need to be implemented involving additional installation
cost and /or operating cost to comply with the aforesaid condition.
GROUNDS FOR CLAIMING RELIEFS:-
ff) That the notification dated 07.12.2015 issued by the MoEFCC has revised the
norms/parameters for emission of Particulate Matter as compared to the
norms/parameters existing on the COD of the Petitioner’s Project. Further, the said
notification has introduced additional limits for the Power Project as regards the
emission norms for Sulphur Dioxide, Oxides of Nitrogen, the amount of cooling water to
be used per unit, installation of Cooling Tower. It is thus clear that the notification issued
by the MoEFCC constitutes a Change in Law under the HERC Tariff Regulations and has
substantial impact on the capital cost and operational cost of the Project. In the light of
the above, the additional cost being incurred on account of the additions/modifications
etc. is to be added to the Capital Cost subject to approval by the Commission. The said
approval would be fundamental for determining the tariff recovery based on such
additional investment and for securing financing from financial institutions. In the
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absence of such approvals, the implementation and/ or compliance of the MoEFCC
Notification would be practically impossible.
gg) That the Amendment Rules issued by the MoEFCC has changed the very basis on
which the Petitioner had conceived and set up the aforementioned Power Project. The
applicable environment norms at the time of installation/commissioning of the
Petitioner’s Project have undergone a substantial change by virtue of MoEFCC’s
notification dated 07.12.2015, as detailed above, which require the Petitioner to
undertake substantial and major capital works and modifications in order to be continue
to operate its Project and continue to supply the power. Such capital works and
modifications would require substantial capital expenditure during the Operating Period
apart from recurring Operational expenditure. It would also lead to increase in cost due
to change in operational parameters. In this regard, the initial assessment of expenditure
required (capital expenditure and operational expenditure) for complying with the
revised norms prescribed in the MoEFCC Notification is quite substantial at approx. Rs.
365 crores for 300 MW Unit-II. To incur an expenditure of such magnitude, the Petitioner
would be required to arrange for funds from the lenders. It is in the aforesaid factual
backdrop, that the Petitioner herein has filed the present Petition under Section 86 of the
Electricity Act seeking regulatory certainty qua the treatment of such costs and in
principal approval of the capital cost to be incurred by the Petitioner for installation,
operation and maintenance of the FGD, SCR and associated Systems.
hh) That the expenditure to be incurred by the Petitioner in order to comply with the
MoEFCC notification ought to be allowed to be recovered as pass through in the tariff
inasmuch as the same is occasioned by a change in law and in the nature of a statutory
expense and therefore beyond the control of the Petitioner. The Petitioner has no option
but to incur the said cost. The objective behind the Electricity Act, 2003 and the Tariff
Policy also includes ensuring the viability of the generators and in order to maintain the
viability of the Petitioner. Non-recovery of cost incurred on the Project will make the
Project unviable thereby resulting in the asset becoming stranded. This would defeat the
objectives of the Electricity Act, 2003 and the Tariff Policy, inasmuch as substantial
expenditure is required to be incurred to undertake the works in compliance with the
MoEFCC notification to adhere to the revised norms. Not only would it require one time
capital expenditure, there would be impact on the recurring Operation and Maintenance
Costs as well as increase in Auxiliary Consumption etc. This in turn would lead to
increase in the cost of generation of power. Accordingly, it becomes important to have a
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regulatory certainty of the treatment to be given to such costs. Furthermore, in order to
arrange the funds from lenders to undertake the works, an in-principle approval from the
regulatory is required in order to ensure that the cost so incurred would be required
from the tariff. This is important to ensure funding from the lenders in the absence of
which, the compliances to be done in terms of the MoEFCC notification would be
rendered virtually impossible. Therefore, it is of utmost importance for the Petitioner to
approach this Hon’ble Commission with the present petition to have certainty in the
matter.
ii) That the Minutes of meeting of the WRPC, supports the case of the Petitioner
herein, in as much as, a bare of the same would show that the Generators raised a
concern that for installation of FGD they would have to incur heavy expenditure, with the
cost of power also to increase because of increase in Auxiliary Power consumption and O
& M Cost – to which the said generators were advised to raise the said concerns with the
CERC or the State commission, CEA, MoP.
jj) That the Petitioner is entitled to approval & consent with regards to applicability
of Change in Law for the MoEFCC notification dated 07.12.2015, to enable the Petitioner
to comply with the same, and to in turn continue to supply power. It is most respectfully
submitted that in case the Petitioner is not adequately secured in such manner, the same
would not only be gravely prejudicial to the Petitioner but would also defeat the object of
the Electricity Act, 2003.
kk) That the Petitioner shall be suffering on account of absence of approval & consent
with regards to applicability of Change in Law for the MoEFCC notification dated
07.12.2015.
ll) That the present Petition is being filed without prejudice to Petitioner’s rights and
contentions in the Civil Appeal No. 10329/2011 and Civil Appeal No. 3800/2014 pending
before the Hon’ble Supreme Court.
RELIEFS SOUGHT:-
(a) Approve the applicability of the MoEFCC notification dated 07.12.2015 as Change
in Law in accordance with Regulation 13 of the HERC Tariff Regulations 2008;
(b) Pass an Order granting in-principle approval to:
i) Capital Cost of approx. Rs 191.13 Crore along with O&M cost of approx. Rs.
17.87 Crore per annum expected to be incurred by the Petitioner’s Project
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towards installation & O&M of the FGD and associated system, apart from
the Cost incurred towards financing/interest and other incidental
expenditure thereto during the construction period.
ii) Capital Cost of approx. Rs 150.18 Crore along with O&M cost of approx. Rs.
5.73 Crore per annum expected to be incurred by the Petitioner’s Project
towards installation & O&M of the SCR and associated system, apart from
the Cost incurred towards financing/interest and other incidental
expenditure thereto during the construction period;
iii) Increase in Auxiliary Energy consumption of about 1.8-2.25% due to
installation & O&M of additional FGD & SCR systems for the purpose of
computation of tariff;
iv) Time period of about 60 days required for Shut down of the Unit required
for interconnection during the installation and commissioning of the FGD,
SCR and other associated systems which shall be considered as deemed
availability under the PPA for the purpose of payment of capacity charges;
Proceedings in the Case
3. The case was first heard on 18.09.2017, wherein the Petitioner mainly reiterated
the contents of its Petition, which for the sake of brevity, have not been reproduced here.
4. Per contra, Ld. Advocate for the Respondent No. 2 i.e. HPPC raised the issue of
Jurisdiction of this Commission to deal with any question of law as the power is being
supplied as per the Interim direction of the Hon’ble Supreme Court and Govt. of
Chhattisgarh is also recipient of 5% power from the project. HPPC submitted that the
Jurisdiction to decide whether the MoEFCC notification dated 07.12.2015 constitutes
Change in Law, is with the Hon’ble Central Electricity Regulatory Commission. The Ld.
Advocate Smt. Sonia Madan, appearing for HPPC, further argued that in any case relief
cannot be granted unless expenses have been actually incurred by the Petitioner. Further,
she argued that there is no provision in the statues/regulations regarding in-principle
approval of such expenses. The Ld. Advocate also argued at length on the status of the
Petitioner as a generator having composite scheme of supply to more than one State.
Regarding this she provided reliance on the Judgement dated 11.04.2017 passed by the
Hon’ble Supreme Court in Civil Appeal No. 5399-5400 of 2016 (Energy Watchdog Vs.
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CERC and Ors etc.). The Commission heard the arguments of Ltd. Advocate(s) appearing
for PTC and Lanco as well.
5. Upon hearing the parties, the Commission vide its Interim Order dated
25.09.2017, directed as under:-
a) All the parties should file their argument (in the hearing held on 18.09.2017)
in writing.
b) The Petitioner may file rejoinder to the reply filed by HPPC as well as issued
raised in the hearing held on 18.09.2017, within 7 days from the date of this
Order.
6. In pursuant to the Interim Order of the Commission dated 25.09.2017, M/s. LAPL
filed its reply on the objection raised by Respondent No. 2 (HPPC) regarding the
jurisdiction of this Commission. The Petitioner has submitted as under:-
a) That the present petition has been filed seeking approval of applicability of the
notification dated 07.12.2015 issued by MoEFCC whereby the Environment
(Protection Rules), 1986 were amended to set new emissions norms, inter alia, for
emission of oxides of Sulphur (SOx) and Oxides of Nitrogen (NOx) in Thermal
Power Plants as Change in Law within the meaning of HERC Regulations 2008. In
order to achieve the said revised norms, additional systems and more particularly
Flue Gas Desulphurizer (for SOx) and Selective Catalytic Reduction (for NOx) are
required to be installed in 300 MW Unit-II of the Petitioner’s Thermal Power Plant,
which would result in incurring capital expenditure. The Petitioner has also
sought in principle approval of this Commission to the capital cost required to be
incurred for installation of the said systems as well as the O & M cost to be
incurred on the said systems. The Petitioner has also sought in principal approval
for increase in auxiliary energy consumption resulting from installation and O&M
of the additional systems.
b) That the Respondent in its reply has raised an objection to the jurisdiction of this
Commission. The objection is raised on the basis that the Hon’ble Supreme Court in
its judgment dated 11.04.2017 in Civil Appeal No. 5399 – 5300 of 2016, titled
Energy Watch Dog Vs. Central Electricity Regulatory Commission & Ors. has laid
down that any issue / dispute with regard to generation and sale of power under a
composite scheme within the meaning of Section 79(1)(b) of the Electricity Act,
2003 confers exclusive jurisdiction on the CERC and, therefore, the issue raised in
the present Petition can only be adjudicated by CERC as the Petitioner has two
beneficiaries i.e. State of Haryana and State of Chhattisgarh from its Unit 2. The said
16
objection is raised in para 4 of the reply, which is reproduced hereunder for ready
reference of the Commission:-
“4. That the instant petition is misconceived and without proper jurisdiction. It is
pertinent to note in this regard that the Petitioner has one more beneficiary other
than the Answering Respondent, i.e. State of Chhattisgarh, which has long term
arrangement with the Petitioner. In view of the law laid down by the Hon'ble
Supreme Court in Civil Appeal no. 5399/2016, for any issue/dispute with regard to
the generation and sale of power under a composite scheme within the meaning of
Section 79(1) (b) of the Act, the Hon'ble Central Commission alone has the
jurisdiction. The question as to whether the installation and commissioning of
FGD/SRC system in view of the MoEF notification dated 07.12.2015 falls under the
definition of 'Change in law' and can only be adjudicated by the Hon'ble Central
Commission as it affects two beneficiaries, i.e. State of Haryana and State of
Chhattisgarh.”
c) That the objection raised by the Respondent No. 2 is untenable. In the present
case, admittedly, the supply of power is taking place pursuant to and in terms
of interim directions issued by the Hon’ble Appellate Tribunal (vide Order
dated 23.03.2011) and continued by the Hon’ble Supreme Court (vide Order
dated 16.12.2011) and therefore the parties to the present proceedings are
governed solely by the said interim directions. In this regard, following
admitted facts are being submitted:-
i) In Appeals filed by the Petitioner and Chhattisgarh State Power Trading
Company Ltd. against the order dated 02.02.2011 passed by this Commission
whereby the Commission had held that it had jurisdiction to adjudicate upon
the disputes arising out of PPA between Petitioner and Respondent No. 1 and
PSA between Respondent No. 1 and Respondent No. 2, the Hon’ble Tribunal
passed an interim order dated 23.03.2011 directing the Petitioner to supply
35% power generated from its 300 MW Unit-II, to Chhattisgarh (as
Chhattisgarh was entitled to 35% power under Implementation Agreement
with the Petitioner) and the remaining power to Respondent No. 1 for onward
supply to Respondent No. 2,. The appeal of the Petitioner was dismissed, the
jurisdiction of this Commission was upheld vide Order dated 04.04.2011
passed by the Hon’ble Appellate Tribunal, however, the interim order dated
23.03.2011 qua supply of power was directed to be continued.
17
ii) Pursuant to the said interim order, the supply of power from unit-II of the
Petitioner commenced on 07.05.2011.
iii) In Appeal being Civil Appeal No. 10329/ 2011 filed by the Petitioner against
the aforesaid order of the Appellate Tribunal, before the Hon’ble Supreme
Court, an interim order dated 16.12.2011 was passed whereby the direction
for supply of power by the Appellate Tribunal vide its order dated 23.03.2011
was continued. The Hon’ble Supreme Court issued further directions to this
Commission to fix / approve the tariff for sale and purchase of power. The
relevant portion of the order is reproduced hereunder:-
“… … …
Pending hearing and final disposal of the appeal, we issue following
directions:
(i) The appellant will continue to supply electricity as per the interim
order of the Tribunal dated 23rd March, 2011;
(ii) Without prejudice to the rights and contentions of the parties and
pending further orders, the State Electricity Regulatory
Commission, Haryana will fix / approve the tariff for sale and
purchase of power for the period in question about which there is
a dispute between the appellant and PTC.
The State Electricity Regulatory Commission, Haryana by
observations made in the impugned orders passed before today, by the
Appellate Tribunal and / or any other Authority in this case. All
arguments on both sides are kept open. Liberty is given to the parties
to make a proper application supported by relevant documents before
the State Electricity Regulatory Commissioner, Haryana, within four
weeks.”
iv) In terms of the aforesaid order passed by the Hon’ble Supreme Court, the
Petitioner applied to this Commission to determine the tariff. The Commission
vide its order dated 17.10.2012, determined the tariff. However, the
Commission came to a conclusion that as the PPA contains capped tariff of
Rs.2.32/kWh, the said capped tariff shall prevail.
v) The Petitioner challenged the said Order by filing an appeal before the
Appellate Tribunal being Appeal No. 65/ 2013. The said Appeal was allowed
vide judgment dated 03.01.2014 and the Appellate Tribunal directed this
18
Commission to re-determine the tariff in accordance with HERC Regulations,
2008, de-hors the PPA.
vi) Pursuant to the said order, the Commission vide its order dated 23.01.2015
determined the tariff afresh.
d) The above undisputed facts make it evident that the supply of power from
Petitioner’s Unit-II is taking place pursuant to and in terms of the interim
order dated 16.12.2011 passed by the Hon’ble Supreme Court and at a tariff
determined by this Commission pursuant to the directions issued by the
Hon’ble Supreme Court/Hon’ble Appellate Tribunal. The jurisdiction of this
Commission is fixed by the Hon’ble Supreme Court and, therefore, cannot be
altered till as long as the Order dated 16.12.2011 passed by the Hon’ble
Supreme Court is in force. By way of an interim-ad-hoc mechanism, the Hon’ble
Supreme Court has chosen this Commission for fixing/ approving the tariff for sale
and purchase of power for the period in question about which there is a dispute
between the parties. Not only this Commission has determined the tariff
pursuant to the said order of the Hon’ble Supreme Court, it has also issued
appropriate order dated 12.07.2016 subsequently directing the
Respondents to pay the differential tariff (Rs 99 crores approx.) for the
power supplied by the Petitioner, as per the tariff determined vide order
dated 23.01.2015. Further, in its latest order dated 18.05.2017, this
Commission has allowed the Petitioner to source alternate coal for meeting
its coal requirements to continue optimum utilisation and efficient
operations of its Unit-II. Thus, this Commission continues to exercise
jurisdiction in the matters arising before it since 16.12.2011 (date of interim
order of Hon’ble Supreme Court) and consequently the jurisdiction to entertain
the present Petition lies only with this Commission. Any other contention or
view would be contrary to the Order passed by the Hon’ble Supreme
Court/Hon’ble Appellate Tribunal.
e) That, the tariff has been determined by this Commission as per HERC Regulations,
2008 and supply of power is taking place on the said basis. Therefore, the
jurisdiction to determine as to whether the amendment in the Environment
(Protection) Rules, 1986 amounts to Change in Law within the meaning of
HERC Regulations 2008 or not also lies with this Commission, as the
Regulations which fall for consideration are framed by this Commission.
19
f) Therefore, assuming without admitting and for the sake of argument that the
Petitioner is supplying power to State of Haryana and State of Chhattisgarh from
its Unit-II on interim basis till further orders are passed in this matter by Hon’ble
Supreme Court and thus having a composite scheme under Section 79(1)(b) of the
Act,, still this Commission’s jurisdiction, which is conferred by the Hon’ble
Supreme Court, cannot be taken away or altered. In fact, in view of the order of
the Hon’ble Supreme Court, contending that any other Commission can
exercise jurisdiction over the parties in question amounts to showing
disregard to the order of the Hon’ble Supreme Court.
g) It is submitted that in so far as the Petitioner, the Respondent No.1, the
Respondent No.2 and this Commission (who is Respondent No.1 in the Civil
Appeal pending before the Hon’ble Supreme Court) are concerned, the said
parties are bound by the order of the Hon’ble Supreme Court. Consequently, it
cannot be urged by the Respondent No. 2 that this Hon’ble Commission does not
have jurisdiction to entertain the present Petition. In view of the above position,
the objection raised by the Respondent No. 2 that the jurisdiction to
entertain the present petitioner lies with the CERC, is in teeth of the interim
Order dated 16.12.2011 passed by the Hon’ble Supreme Court, apart from
being misconceived and without any merit.
h) That without prejudice to the above and even otherwise, the Petitioner does not
fulfil the requirements of composite scheme of arrangement within the meaning of
Section 79(1)(b) of the Act and as laid down by the Hon’ble Supreme Court in
Energy Watchdog case (supra).
i) From Paras 20 to 29 of the said judgment in Energy Watchdog case (supra), the
Hon’ble Supreme Court has discussed and laid down the principles governing
jurisdiction of the CERC under Section 79(1)(b) of the Act. In Para 23 of the said
judgment the court has observed that “the PPA which deals with generation and
sale of electricity, will either will have to be governed by the State Commission or the
Central Commission. The State Commission’s jurisdiction is only where generation
and supply takes place within the state. On other hand, the moment generation and
sale takes place in more than one State, the central Commission becomes the
appropriate Commission under the Act.” It is important to note that in the both the
scenario i.e. generation and sale within the state and generation and sale in
more than one state, the court has qualified such generation and sale under
20
the PPA. Therefore, it follows that in order to have a composite scheme of
generation and sale, PPA is a must. This becomes clear from Paras 28 and 29 of the
said judgment, wherein the Court relies upon the definition of composite scheme
given in Para 5.11 (j) of the tariff policy dated 06.06.2006 (as amended on
28.01.2016). As per the said definition, long term or medium term PPA with at
least 10% of the capacity of the project to a distribution licensee outside the
state in which the project is located is a condition precedent for composite
scheme.
j) That in the present case, only 5% power is being supplied to the State of
Chhattisgarh from Unit-II of the Petitioner, that too at variable charges only. The
Petitioner does not have any PPA with the State of Chhattisgarh for the said
supply. The remaining 95% power from Unit-II of the Petitioner is being supplied
to Respondent No. 1 for onward supply to Respondent No.2. Thus, it is clear that
neither the supply to Haryana nor to Chhattisgarh is a supply under PPA and
instead is in terms of the Hon’ble Supreme Court’s and APTEL’s order, de-hors the
PPA. Therefore, the condition precedent for composite scheme is not met in the
present case.
k) That in Para 4 of the reply, the Respondent No. 2 has raised another contention as
regards the jurisdiction of this Hon’ble Commission. The Respondent No. 2 has
stated that the jurisdiction for grant of approval to pass through the cost of
installation and commissioning of additional systems as regards Unit-I of the
Petitioner lies with Madhya Pradesh Electricity Regulatory Commission as power
from Unit-I is being supplied solely to Discoms of Madhya Pradesh. The
Respondent No. 2 has alleged that the Petitioner has not disclosed the status of
any similar reference filed by the Petitioner before the MPERC and has further
stated that view of MPERC is essential to be considered before this Commission
passes an order in the present Petition.
l) That it is submitted that a similar petition has been filed by the Petitioner before
the MPERC in respect of Unit-I of the Petitioner. The said petition was filed on
20.07.2017 i.e. after the filing of the present petition.
m) The contention of the Respondent No.2 that the view of MPERC on the said issue is
essential for this commission to consider the present petition is totally
misconceived. Admittedly, this Commission has determined tariff for supply of
power from Unit-II of the Petitioner to the Respondents. In such determination of
21
tariff, this Commission has considered the capital cost incurred on Unit-II of the
Project alone. All other parameters in respect of tariff determination have been
considered exclusively of Unit-II. In so far as Unit-I is concerned, the tariff and
capital cost for the said Unit has been approved by MPERC. It is, thus, clear that the
tariff determination exercise for both the Units is separate and distinct and has
been conducted by two different Commissions. The pendency of the Petition
before the MPERC, thus, has no bearing on the present Petition which is to be
decided by this Commission separately. It is, thus, clear that the objection raised
by the Respondent No. 2 is untenable and meritless and, therefore, deserves to be
rejected.
n) This Commission had also enquired the outcome of similar Petitions filed before
other Regulatory Commissions. In this regard, the Petitioner has been able to
locate an Order dated 20.03.2017 passed by the CERC in Petition No. 72/MP/2016
(Maithon Power Limited v. Damodar valley Corporation and Ors.) and Order dated
27.04.2017 passed by UPERC in Petition No. 1132/2016 (Rosa Power Supply
Company Ltd.). The Petitioner submits that the said judgments are distinguishable
on facts and the Petitioner reserves its rights to refer to the said judgments for
their true scope and effect, at the time of hearing on merits of the present Petition.
7. The Respondent No. 1 i.e. M/s. PTC filed its reply as under:-
a) That Hon’ble Supreme Court, vide its interim order dated 16.12.2011 in Civil
Appeal No. 10329 of 2011 titled as Lanco Amarkantak Power Limited vs. Haryana
Electricity Regulatory Commission & Ors. was put in place an interim arrangement
relating to supply of power and directed determination of tariff by this
Commission. It is further submitted that pending adjudication of the said Civil
Appeal, this Commission may have jurisdiction on all tariff related matters
including change of law.
b) That Hon’ble Supreme Court in its judgment dated 11.04.2017 in Civil Appeal No.
5399 – 5300 of 2016, titled Energy Watch Dog Vs. Central Electricity Regulatory
Commission & Ors. has held that in any issue/ dispute with regard to generation
and sale of power under a composite scheme within the meaning of Section
79(1)(b) of the Electricity Act, 2003, Hon’ble CERC will have jurisdiction.
c) That keeping in view of the position of law and also interim order dated
16.12.2011 and pendency of Civil Appeal No. 10329 of 2011 before Hon’ble
22
Supreme Court, the Commission may pass appropriate orders and the Respondent
No. 1 will abide by such decision.
8. The Respondent No. 2 i.e. HPPC filed its reply as under:-
a) That the instant petition is misconceived and without proper jurisdiction. It is
pertinent to note in this regard that the Petitioner has one more beneficiary other
than the Answering Respondent, i.e. State of Chhattisgarh, which has long term
arrangement with the Petitioner through Implementation Agreement. In view of
the law laid down by the Hon'ble Supreme Court in Civil Appeal no. 5399/2016,
for any issue/dispute with regard to the generation and sale of power under a
composite scheme within the meaning of Section 79(1) (b) of the Act, the Hon'ble
Central Commission alone has the jurisdiction. It is relevant here to reproduce the
operative part of the judgment, which is a under -
" ...................... Jurisdiction of the Central Commission
20. The appellants have argued before us that the expression “composite scheme” mentioned in Section 79(1) must necessarily be a scheme in which there is uniformity of tariff under a PPA where there is generation and sale of electricity in more than one State. It is not enough that generation and sale of electricity in more than one State be the subject matter of one or more PPAs, but that something more is necessary, namely, that there must be a composite scheme for the same. 21. In order to appreciate and deal with this submission, it is necessary to set out Section 2(5) of the Act which defines appropriate Government as follows: “2. Definitions. In this Act, unless the context otherwise requires, (5) "Appropriate Government" means, - (a) the Central Government, - (i) in respect of a generating company wholly or partly owned by it; (ii) in relation to any inter-State generation, transmission, trading or supply of electricity and with respect to any mines, oil-fields, railways, national highways, airports, telegraphs, broadcasting stations and any works of defence, dockyard, nuclear power installations; (iii) in respect of the National Load Despatch Centre; and Regional Load Despatch Centre; (iv) in relation to any works or electric installation belonging to it or under its control ; (b) in any other case, the State Government, having jurisdiction under this Act;” Sections 25 and 30 also have some bearing and are set out as under : “25. Inter-State, regional and inter-regional transmission. For the purposes of this Part, the Central Government may, make region-wise demarcation of the country, and, from time to time, make such modifications therein as it may consider necessary for the efficient, economical and integrated transmission and supply of electricity, and in particular to facilitate voluntary interconnections and co-
23
ordination of facilities for the inter-State, regional and inter-regional generation and transmission of electricity. 30. Transmission within a State. The State Commission shall facilitate and promote transmission, wheeling and inter-connection arrangements within its territorial jurisdiction for the transmission and supply of electricity by economical and efficient utilisation of the electricity.” 22. The scheme that emerges from these Sections is that whenever there is inter-State generation or supply of electricity, it is the Central Government that is involved, and whenever there is intra-State generation or supply of electricity, the State Government or the State Commission is involved. This is the precise scheme of the entire Act, including Sections 79 and 86. It will be seen that Section 79(1) itself in sub-sections (c), (d) and (e) speaks of inter-State transmission and inter-State operations. This is to be contrasted with Section 86 which deals with functions of the State Commission which uses the expression “within the State” in sub-clauses (a), (b), and (d), and “intra-state” in sub-clause (c). This being the case, it is clear that the PPA, which deals with generation and supply of electricity, will either have to be governed by the State Commission or the Central Commission. The State Commission’s jurisdiction is only where generation and supply takes place within the State. On the other hand, the moment generation and sale takes place in more than one State, the Central Commission becomes the appropriate Commission under the Act. What is important to remember is that if we were to accept the argument on behalf of the appellant, and we were to hold in the Adani case that there is no composite scheme for generation and sale, as argued by the appellant, it would be clear that neither Commission would have jurisdiction, something which would lead to absurdity. Since generation and sale of electricity is in more than one State obviously Section 86 does not get attracted. This being the case, we are constrained to observe that the expression “composite scheme” mean anything more than a scheme for generation and sale of electricity in more than one State. 23. This also follows from the dictionary meaning [(Mc-Graw-Hill Dictionary of Scientific and Technical Terms (6th Edition), and P.Ramanatha Aiyar’s Advanced Law Lexicon (3rd Edition)] of the expression “composite”: (a) ‘Composite’ – “A re-recording consisting of at least two elements. A material that results when two or more materials, each having its own, usually different characteristics, are combined, giving useful properties for specific applications. Also known as composite material.” (b) ‘Composite character’ – “A character that is produced by two or more characters one on top of the other.” (c) ‘Composite unit” – “A unit made of diverse elements.” The aforesaid dictionary definitions lead to the conclusion that the expression “composite” only means “consisting of at least two elements”. In the context of the present case, generation and sale being in more than one State, this could be referred to as “composite”. 24. Even otherwise, the expression used in Section 79(1)(b) is that generating companies must enter into or otherwise have a “composite scheme”. This makes it clear that the expression “composite scheme” does not have some special meaning – it is enough that generating companies have, in any manner, a scheme for generation and sale of electricity which must be in more than one State.
24
25. We must also hasten to add that the appellant’s argument that there must be commonality and uniformity in tariff for a “composite scheme” does not follow from the Section. 26. Another important facet of dealing with this argument is that the tariff policy dated 6th June, 2006 is the statutory policy which is enunciated under Section 3 of the Electricity Act. The amendment of 28th January, 2016 throws considerable light on the expression “composite scheme”, which has been defined for the first time as follows: “5.11 (j) Composite Scheme: Sub-section (b) of Section 79(1) of the Act provides that Central Commission shall regulate the tariff of generating company, if such generating company enters into or otherwise have a composite scheme for generation and sale of electricity in more than one State. Explanation: The composite scheme as specified under section 791) of the Act shall mean a scheme by a generating company for generation and sale of electricity in more than one State, having signed long-term or medium-term PPA prior to the date of commercial operation of the project (the COD of the last unit of the project will be deemed to be the date of commercial operation of the project) for sale of at least 10% of the capacity of the project to a distribution licensee outside the State in which such project is located.” 27. That this definition is an important aid to the construction of Section 79(1)(b) cannot be doubted and, according to us, correctly brings out the meaning of this expression as meaning nothing more than a scheme by a generating company for generation and sale of electricity in more than one State. .............."
The law laid down by the Hon'ble Apex Court is explicit from a plain reading of the
Judgment. The only test laid down by the Hon'ble Supreme Court for upholding
jurisdiction of the Central Commission in case of Composite Scheme is sale of electricity in
more than one State.
b) The question as to whether the installation and commissioning of FGD/SRC
system in view of the MoEF notification dated 07.12.2015 falls under the
definition of 'Change in law' can only be adjudicated by the Hon'ble Central
Commission as it affects two beneficiaries, i.e. State of Haryana and State of
Chhattisgarh. Further, Unit-1 of the Petitioner's Project is dedicated to Madhya
Pradesh.
c) That the issues raised by Petitioner in the present petitions has implications on all
the beneficiaries (State of Haryana, State of Chattisgarh and State of Madhya
Pradesh).
d) That the Order passed by Madhya Pradesh Electricity Regulatory Commission in a
Petition filed by the Petitioner in respect of Unit-1 of the Project seeking
25
declaration that the shifting of delivery point is on account of Change in Law
within the meaning of Article 12.1.1(i) of the PPA dated 11.05.2005 and Article
12.1 of PSA dated 30.05.2005. The petitioners had also sought declaration of their
entitlement for tariff adjustment payment as per the PPA and PSA read with the
respective Implementation Mechanism. The Hon'ble MPERC in its order dated
24.08.2017 in Petition number 19 of 2017 titled as PTC India Ltd. and anr. v M.P.
Power Management Company Ltd, Jabalpur, has dismissed the petition on the
ground of jurisdiction.
e) it is further humbly submitted that this Commission is the appropriate authority
to assess tariff in accordance with HERC Tariff Regulations, 2008 in terms of Order
of the Hon'ble Supreme Court dated 16.12.2011. However, any other issue which
affects all the beneficiaries of the Petitioner's project can only be adjudicated by
the Hon'ble CERC as it has the residual authority on all issues impacting more than
one beneficiary. In that view, once the issue raised by the petitioner is adjudicated
by the Hon'ble CERC, this Commission can assess the resultant impact on tariff
after the expenditure has been incurred as per decision of the Hon'ble Supreme
Court taking into consideration actual expenditure incurred or the cost approved
by Hon'ble CERC, if any, whichever is lower. Thus, the Central Commission alone
had the necessary jurisdiction to embark upon the issues raised by the petitioner
in present case.
MAIN ARGUMENTS ADVANCED BY THE CLAIMANT
During the course of arguments, the claimant made the following submissions:
The Hon'ble Commission has the appropriate jurisdiction in view of the Supreme Court
Order dated 16.02.2011.
The scheduling of power by the Respondent no.2 does not fall under the Composite
Scheme as the power is being scheduled as per interim arrangement made by order of
Hon'ble Supreme Court and there is no long term PPA in operation.
The respondent submits that the contention of the claimant on both counts is devoid of
merit and deserves dismissal. The submissions of the respondent refuting the above
stated submissions are as under:
26
1. The Hon'ble Commission has the appropriate jurisdiction in view of the Supreme
Court Order dated 16.02.2011.
The said contention of the Petitioner is incorrect and denied. As stated above, the
Hon'ble Supreme Court in its interim order dated 16.02.2011 has conferred a
limited jurisdiction on this Hon'ble Commission, i.e. for the purpose of
determination of tariff in accordance with HERC Tariff Regulations, 2008. The
operative part of the interim order reproduced hereinabove evince that there is
nothing in the order that authorize this Hon'ble Commission to adjudicate issues
for which statutory power under Section 79 is conferred to Hon'ble CERC.
It is further reiterated that this Hon'ble Commission is the appropriate authority
only to assess tariff in accordance with HERC Tariff Regulations, 2008 in terms of
Order of the Hon'ble Supreme Court dated 16.12.2011. However, any other issue
which affects all the beneficiaries of the Petitioner's project can only be
adjudicated by the Hon'ble CERC as it has the residual authority on all issues
impacting more than one beneficiary. In that view, once the issue raised by the
petitioner is adjudicated by the Hon'ble CERC, this Hon'ble Commission can
assess the resultant impact on tariff after the expenditure has been incurred as per
decision of the Hon'ble Supreme Court taking into consideration actual
expenditure incurred or the cost approved by Hon'ble CERC, if any, whichever is
lower.
2. The scheduling of power by the Respondent no.2 does not fall under the
Composite Scheme as the power is being scheduled as per interim arrangement
made by order of Hon'ble Supreme Court and there is no long term PPA in
operation.
This contention of Petitioner is incorrect and denied. At the outset, the
submissions raised above are reiterated to assert that the Petitioner is supplying
power to more than one state and the issue raised by the Petitioner in this Petition
affects all the beneficiaries. Therefore, in terms of Section 79 (1) (b) of the
Electricity Act, 2003, Hon'ble CERC alone has the jurisdiction to adjudicate this
issue.
The contention of the petitioner regarding there being no long term PPA in
Operation, it is humbly submitted that in view of the interim order of the Hon'ble
Supreme Court dated 18.09.2015 in Civil Appeal no. 10389/2011, the interim
27
supply of power to the answering respondent has been recognized as equivalent
to supply of power in terms of having a subsisting long term PPA. The relevant
part of the said order is reproduced hereunder for the kind consideration of this
Hon'ble Commission.
"..........
The learned counsel for respondent no. 8 submitted that the power generating plants
for the supply of coal fall into two categories specified in the office memorandum of
the Government of India, MInistry of Coal dated 30th June, 2015. The first category is
of the generating companies which have subsisting long term power purchase
agreements and the second which do not have such agreements. In view of the fact
that the application chose to terminate his existing power purchase agreement with
respondent no. 3, the applicant is not entitled to clam supply of coal under the first
category. In response to a specific query, the learned counsel for respondent no. 8
made a clear statement that they have enough coal to supply to the application
herein subject to the various legal objections of the respondent.
Shri Harish Salve, learned senior counsel appearing for the appellant
submitted that though the legal obligations to open a Letter of Credit for an amount
Rs. 13.82 crores in favour of respondent no. 9 is that of respondent no. 3 in view of
the predicament in which the application is placed, the respondent no. 3 without
prejudice to the applicant's legal rights in this behalf.
In the circumstances mentioned above, in view of the interim order dated
16.12.2011 of this Court under which the application is obliged to continue to supply
of power we deem it appropriate to direct respondent No.8 to supply coal to the
appellant treating the appellant to be falling under category no. 1 referred to earlier
during the pendency of this appeal without prejudice to the legal right of respondent
no. 8 which can be determined at the time of the disposal of the appeal."
From the foregoing, it would be seen that the issues raised by the Petitioner in the instant
petition cannot be adjudicated by this Hon'ble Commission for want of Jurisdiction.
Commission’s Analysis & Order 9. The case was finally heard on 25.10.2018, wherein the parties mainly re-iterated
their earlier submissions, which for the sake of brevity has not been reproduced here.
28
The Commission has examined the contents of the Petition filed/ additional submissions
made by the parties and observed that the contention of the Respondent i.e. HPPC
regarding the jurisdiction of this Commission to decide the issue, has some force. The
Commission has earlier determined tariff for the supply of power by the Petitioner to the
Respondents in compliance to the directions of Hon'ble Supreme Court vide its interim
order dated 16.12.2011 which was limited to the determination of tariff in accordance
with HERC Tariff Regulations, 2008 only. When the power is being supplied under the
interim arrangement and tariff is determined de-hors the PPA, the existence of PPA, its
terms & conditions including its period are to be determined afresh. Till all these issues
are settled, the Commission finds itself unable to decide the issue of jurisdiction.
10. In view of the above and without going into the merits of the case, the petition is
disposed of for want of jurisdiction of the Commission in the matter.
This order is signed, dated and issued by the Haryana Electricity Regulatory
Commission on 15.11.2018.
Date: 15.11.2018 (Jagjeet Singh) Place: Panchkula Chairman