Before the MAHARASHTRA ELECTRICITY … 58 42/Order-42 of 2017-27032018.pdf · Maharashtra State...
Transcript of Before the MAHARASHTRA ELECTRICITY … 58 42/Order-42 of 2017-27032018.pdf · Maharashtra State...
Order in Case No. 42 of 2017 Page 1 of 35
Before the
MAHARASHTRA ELECTRICITY REGULATORY COMMISSION
World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai 400005
Tel. 022 22163964/65/69 Fax 22163976
Email: [email protected]
Website: www.mercindia.org.in / www. merc.gov.in
CASE No. 42 of 2017
Suo moto review of status and requirement of upcoming Generation Projects of
Maharashtra State Power Generation Co. Ltd.
Coram
Shri. Azeez M. Khan, Member
Shri. Deepak Lad, Member
Appearance
For Maharashtra State Power Generation Co. Ltd. Shri Vijay Rathod
For Maharashtra State Electricity Distribution Co. Ltd. Shri Paresh Bhagwat
For Authorised Consumer Representatives Ms. Ashwini Chitnis, Prayas
Ms. Ann Josey, Prayas
Dr. Ashok Pendse, TBIA
ORDER
Date: 27 March, 2018
The Commission initiated proceedings, vide Notice dated 24 March, 2017, to determine the
final Tariff of the new Generating Units of Maharashtra State Power Generation Co. Ltd.
(MSPGCL) and to review the status and requirement of upcoming Units under its PPA with
Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL).
2. In its Order dated 3 March, 2014 in Case No. 54 of 2013, the Commission had approved the
provisional Tariff for MSPGCL’s upcoming Koradi Units 8, 9 and 10, Chandrapur Units 8
and 9 and Parli Unit 8. Vide its letter dated 17 December, 2016, MSPGCL submitted the
Order in Case No. 42 of 2017 Page 2 of 35
Unit-wise actual and expected Commercial Operation Dates (COD) of the following new and
upcoming Units as below:
Table 1 – COD status of new and upcoming Units, submitted by MSPGCL
Sr. No Unit Commercial Operation Date
1. Koradi Unit 8 15 December, 2015
2. Koradi Unit 9 22 November,2016
3. Chandrapur Unit 8 4 June, 2016
4. Chandrapur Unit 9 24 November,2016
5. Parli Unit 8 19 November,2016
6. Koradi Unit 10 31 December, 2016 (expected)
3. Regulation 38.9 of the MYT Regulations, 2015 provides that a Generating Company shall
file a Tariff Petition for determination of the final Tariff of a Generating Unit within 6
months of its COD:
“38.9 The Generating Company shall file the Petition for determination of
final Tariff for new Generating Station within six months from the date of
commercial operation of Generating Unit or Stage or Generating Station as a
whole, as the case may be, based on the audited capital expenditure and
capitalisation as on the date of commercial operation:
Provided that in case of more than one Unit in the Generating Station, such
Petition shall be filed for each Unit as and when such Unit achieves COD and
without waiting for the COD of the entire Station.”
4. In its last MYT Order dated 31 August, 2016 in Case No. 46 of 2016, the Commission
directed MSPGCL to review the financial viability of those Generation Projects which are at
early stages of planning considering the alternative sources and modalities that may be
available to MSEDCL and its demand-supply position, the proposed retirement plan of old
Units and macro-level developments which could have adverse financial implications before
pursuing them further, and to submit its report within 3 months. The Commission also
directed MSPGCL to not take further steps towards such Projects proposed for supply to
MSEDCL which are at the planning stage or in which contracts have not been awarded, till
the Commission takes a view in the matter.
5. In its Orders in Case Nos. 103 of 2010, Case No.71 of 2011 and 78 of 2013, the Commission
had approved 21 upcoming Projects with installed capacity of 11320 MW. Out of these,
Units with capacity of 2000 MW have been in operation, and Projects of 3230 MW capacity
have recently achieved COD.
Order in Case No. 42 of 2017 Page 3 of 35
6. Vide letter dated 29 November, 2016, MSPGCL has submitted the status of new Units which
have achieved COD, and also of future Units which are under active consideration.
7. With regard to upcoming Units with capacity of 6090 MW, in its letter dated 29 November,
2016, MSPGCL has stated that, vide Board Resolution dated 27 January, 2016, it has decided
to construct a 500 MW Solar Power Plant instead of a 3300 MW Thermal Power Station
(TPS) at Dondaicha, Distt. Dhule. Of the remaining, the proposed 2790 MW Uran Gas-based
TPS (GTPS) expansion (1220 MW) is kept in abeyance considering the gas shortage. For
Projects at Nashik and Bhusawal (660 MW each), the decision is pending for State
Transmission Utility (STU) feasibility to bring that power to Mumbai. For Paras Thermal
Power Station (TPS) (1 x 250 MW), decision regarding construction is expected to be taken
after development of the Mahajanwadi Coal Block.
8. In this background, the Commission, vide its Notice dated 27 March, 2017, initiated these
suo moto proceedings for determination of the Final Tariff for the new Units in accordance
with Regulation 12.3 of the MYT Regulations, 2015, and for review of the status and
requirement of upcoming Units. The Commission asked MSPGCL to file its written
submission well before the hearing.
9. In its response dated 17 April, 2017, MSPGCL stated as follows:
9.1. Under Clause 4.1 of the approved PPA between MSPGCL and MSEDCL, the ex-Bus
energy available from the entire generating capacity of MSPGCL, as given in
Schedules 1 and 2, is allotted to MSEDCL. Schedule 1 relates to “Generating Capacity
of MSPGCL covered under this agreement as on 6th
June, 2005” and Schedule 2 is for
“Generating capacity of MSPGCL covered under this agreement after 6th
June 2005”.
9.2. The PPA was amended on 24 December, 2010 and 17 April, 2013 through Addendum
No. 1 and 2, respectively. As per Addendum No. 1, some of the vintage Units were
deleted from Schedule 1 and upcoming Projects (26 Units with total capacity of 15030
MW) were added to Schedule 2.
9.3. As per Addendum No. 2 dated 17 April, 2013, Nashik Units 1 & 2 have been deleted
from Schedule 1, and the capacity for the proposed Paras Unit 5 was reduced from 660
MW to 250 MW in Schedule 2.
9.4. MSPGCL and MSEDCL had approached the Commission for approval of these
Amendments to the original PPA in Case Nos. 103 of 2010 and 71 of 2011 (Review
Petition) (Addendum 1) and Case No. 78 of 2013 (Addendum 2).
Order in Case No. 42 of 2017 Page 4 of 35
9.5. Vide its Orders in those Cases, the Commission accorded approval to the addition of 21
Units (capacity addition of 12000 MW) to the original PPA. Of this 12000 MW
approved capacity addition, 2000 MW capacity (Paras Unit 4 - 250 MW, Parli Unit 7 -
250 MW, Khaperkheda Unit 5 - 500 MW and Bhusawal Units 4 and 5 - 1000 MW (2 x
500 MW)) have already been commissioned and have declared COD by 3 January,
2015. The Capital Cost and final Tariff for these 2000 MW Units has already been
approved by the Commission.
9.6. Meanwhile, in its endeavor to increase the power generating capacity in Maharashtra,
MSPGCL has developed three new super-critical Units at Koradi (Units 8, 9 and 10) of
660 MW each. MSPGCL has also undertaken expansion Projects for capacity addition
at Chandrapur (Units 8 & 9 – 500 MW each) and Parli (Unit 8 – 250 MW).
9.7. The Commission in its MYT Order for the 2nd
Control Period (upto FY 2015-16) dated
3 March, 2014 in Case No. 54 of 2013 had approved a provisional Tariff for Koradi
Units 8, 9 & 10, Chandrapur Units 8 & 9 and Parli Unit 8 from the actual date of COD
till determination of final Tariff. The Commission directed MSPGCL to file a Petition
for determination of their final tariff within 6 months from COD:
“The Commission directs MSPGCL to file the Petitions for determination of final
Tariff for the upcoming Units within 6 months from the date of COD for the
respective Unit. The provisional Tariff approved by the Commission for the
upcoming Units shall be applicable from the actual date of COD till the
determination of final Tariff by the Commission for those respective Units.”
9.8. COD of Koradi Unit 8 was declared on 16 December, 2015. Thus, as per the MYT
Regulations, 2011 or even the MYT Regulations, 2015, MSPGCL was expected to
submit the Petition for final Tariff by June 15, 2016.
9.9. MSPGCL had submitted its response to this directive vide letter dated 29.11.2016,
stating as follows:
i. The future Projects, the current status of Projects in the PPA with MSEDCL
approved by the Commission and which are at early stage of planning is
provided in the Table below:
Order in Case No. 42 of 2017 Page 5 of 35
Table 2 - Status of Generation Projects, as submitted by MSPGCL
ii. Most of the future Projects were envisaged as brownfield Projects taking into
view the resources available at the present locations and also the demand
forecast as per the Central Electricity Authority (CEA)’s 18th
Electric Power
Survey (EPS) Report. As the actual scenario is far removed from the EPS
projections, instead of implementing the Projects as envisaged, MSPGCL has
already decided to keep these Projects in abeyance till FY 2020-21 and thus has
not undertaken further works on these Projects.
iii. After release of the 19th
EPS, the revised projections for FY 2016-17 to FY
2020-21 and projections for FY 2021-22 to FY 2026-27 will be available. Based
on such data, MSPGCL will review the Action Plan for the future Projects.
Particulars Capacity Remarks
Dondaicha Approved vide BR
No 2008/445 dt.19.03.2009 2x660
Approved installation of 500 MW Solar
Power Park at Dondaicha instead of 5 x
660 MW
Approved Expansion Project
vide BR No 2009/502
dt.13.07.2009
3x 660
BR No. 2016/1913 dated
27.01.2016
Solar park
500 MW
Nashik : Replacement Project
Approved vide BR No.2010/670
dt.15.09.2010 1x 660 MW
1. STU is requested to take up feasibility
study to bring electricity island city.
2. Clearance for chimney height from
station commandant Devlali in process.
Paras BR no. 2012/1330
meeting dated 30.05.2012
Decision regarding construction will be
reviewed after development of Mahajan-
wadi coal block
Bhusawal TPS: BR No.
2009/583 date 25 Nov, 2009 1x660 MW
BTPS Project may be decided after STU
feasibility study (Electricity for Load
concentrated area in island city)
Uran: Approved CCCP vide BR
No. 2012/1296 dated 04/05/2012
1220 MW
In view of prevailing gas supply shortage,
MoP, GoI has given directives to keep the
project in abeyance. Accordingly
MSPGCL has suspended the turnkey
contract tendering process.
Order in Case No. 42 of 2017 Page 6 of 35
iv. MSPGCL will apprise the Commission regarding such review, as and when it
will take place, and seek the necessary directives/guidelines of the Commission.
v. As regards retirement of old Units, the Ministry of Power (MoP), Govt. of India
(GoI) in August, 2015, requested CEA to prepare a report on “Replacement of
old and inefficient Units by supercritical Units” for optimum utilization of
scarce natural resources like land, water and coal. In line with the CEA Report,
MSPGCL has decided to retire the following Units, as already submitted in its
last MYT Tariff Petition.
a) Bhusawal Unit 2
b) Parli Unit 3.
c) Koradi Unit 5, after completion of Renovation and Modernisation (R&M)
of Unit 6.
d) Chandrapur Units 1&2.
vi. As regards the remaining old Units (especially 210 MW Units), MSPGCL is
analysing the demand-supply situation in wake of the recent capacity addition of
around 2570 MW so as to chalk out the retirement plan of these Units.
MSPGCL shall apprise the Commission in due course after finalization of such
retirement plan.
9.10. Regarding the ongoing Projects, MSPGCL vide its letter dated 17 December, 2016
had approached the Commission for permission to submit a consolidated Petition
for approval of the capital cost and tariff of all the new Units together after
finalization of their audited accounts. MSPGCL had mentioned the practical
difficulties in filing a Petition for an individual Unit (in case of a TPS with multiple
new Units), most significantly, in segregating the cost and impact of the common
assets on the initial Unit:
“As per MYT regulation, 2015, in case of station having multiple Units, the
petition for individual Unit is to be filed without waiting for the COD for
entire station, however in this regard MSPGCL would like to mention the
practical difficulties in segregation of costs and impact of the common costs
on the initial Unit.
Firstly, the ordering for such Units is done for the station as a whole. Hence
the segregation of some of the costs into different Units is difficult. Also, in
such case as the essential common costs are getting loaded on the initial
Unit, the capital cost for the first Unit gets apparently inflated for the petition
purpose and accordingly gets reflected in AFC for the initial Unit in the first
year. Thus it may not give a true and correct picture regarding cost and tariff
Order in Case No. 42 of 2017 Page 7 of 35
of the project. Also many of the issues pertaining to project are common for
all Units and secondly it would be convenient to have these issues presented
and discussed together for the station as a whole.”
9.11. However, the Commission, vide its Notice dated 24 March, 2017, initiated a suo
moto hearing to review the status of upcoming Projects and capital cost and Tariff
determination of new Units.
9.12. With reference to this Notice, with regard to the upcoming Projects and retirement
of capacity, MSPGCL is considering two issues: capacity addition in lieu of old
Units (replacement plan) and retirement of Units.
9.13. Rationale for Units’ retirement plan
(i) As per guidelines of CEA, the Units of capacity 210 MW or 200 MW which are
completing 25 years of service and are not operating efficiently are to be
considered for retirement and replacement by super-critical Units, based on
techno-economic study (ref. CEA letter dated 07.03.2017).
(ii) Also, as per the draft National Electricity Plan (NEP), retirement of old and
inefficient Units of TPS and replacing them with new and more efficient Units is
one of the major initiatives taken by GoI. The identified Units are planned for
retirement in a phased manner along with the matching capacity addition in the
respective States, so as to have no impact on the power supply position in the
States/country.
(iii)Ministry of Coal, GoI India has formulated a policy on automatic transfer of
Letter of Allotment (LOA)/coal linkage (granted to old plants) to new plants in
case of scrapping of old Units and replacing them with new higher efficiency
super-critical Units. (Illustration: for setting up a new super-critical plant of 1000
MW capacity, at least 500 MW of old capacity is required to be retired, and old
plants can be clubbed together to achieve this). The additional coal required shall
be accorded priority in allocation subject to availability on best-effort basis from
Coal India Ltd. (CIL).
(iv) Considering the above, MSPGCL is planning to consider retirement of 200 MW/
210 MW Units till FY 2029-30 in phased manner after completion of 40 years of
service.
Order in Case No. 42 of 2017 Page 8 of 35
9.14. Rationale for selection of Units for replacement plan
(i) Replacement of Units is proposed on the basis of retirement of 200 MW / 210
MW capacity Units, mainly to avail the benefit of reduction in Variable Cost
due to better plant efficiency and reduction in environmental impacts. With
super-critical capacity replacing sub-critical Units, there is significant
reduction in Variable Cost.
(ii) The replacement of these Units is planned considering expected rate of growth
of demand and grid stability issues. It is also envisaged that there will not be
any significant supply shortfall due to retirement of Units and also there will
not be any significant addition in generation capacity (thermal) till 2022 as
envisaged in the draft NEP.
(iii)Even though MSPGCL has considered the replacement of old Units after
completion of 40 years, it is proposed to consider the age of retirement of old
Units till the declaration of COD of the replacement Unit, whichever is later.
(iv) The replacement these Units is generally planned at existing the locations so
that the existing facilities at these locations can be utilised.
(v) With replacement of Units with higher capacity, there is no significant capacity
addition. Thus, this plan may not affect the Power Purchase Plan of MSEDCL.
(Proposed capacity retirement is of 3705 MW and proposed replacement is
3440 MW, i.e. effective capacity reduction of 265 MW).
9.15. MSPGCL’s Action Plan for upcoming Units for capacity addition or as replacement
Units:
Order in Case No. 42 of 2017 Page 9 of 35
Table 3 - Action Plan proposed by MSPGCL for upcoming and replacement Units
PPA
Status
Upcoming Units Status Status of
Replacement Units
PPA
Approved
Bhusawal Unit 6
(660 MW) (B.R.
No. MSPGCL /
BM-62 / Item -
14 dated
10.12.2009
GoM Approval
GR No. Prakalp-
2010/Pr.Kr.3/Urj
a-4 dated 6th
October 2010)
All clearances available. Tender process put
on hold. The Unit was proposed to be
implemented against the retired Bhusawal
Unit 1 (1 X 50 MW) and Paras Unit 2 (1 X 55
MW). Thus there was withdrawal of 105 MW
capacity against which 660 MW capacity was
to be added. Now it is proposed to implement
the Project as replacement Unit against the
already closed 105 MW capacity and also
already closed 3 X 210 MW Units, namely
Chandrapur Unit 1 & 2, Parli Unit 3. Thus
now it is replacing 660 MW against retired
735 MW. Proposed to resume the tender
process in FY 2017-18 so that Unit will be
available by end of FY 2021-22, with
anticipated Project period of 48 months.
Chandrapur Units 1
& 2: Already
closed.
Parli Unit 3:
Already closed.
PPA
Approved
Nashik Unit6
(660 MW) (B.R.
No. MSPGCL /
BM-76 / Item -
76.13 dated
15.09.2010
GoM Approval
GR No. Prakalp-
2011/Pr.Kr.313/
Urja-4 dated 29th
December 2011)
Aviation clearance is pending, STU to carry
out feasibility study for evacuating the
electricity to island city. As per earlier
proposal this Unit was to be implemented as
replacement Unit against retired Nashik Unit
1 & 2 (2 X125 MW). Thus there was
withdrawal of 250 MW against which 660
MW was to be added. Now it is proposed to
implement this Project as replacement Unit
against the already closed 250 MW capacity
and additionally against 3 X 210 MW Units at
Nashik TPS proposed for closure during FY
2017-18 to FY 2020-21, after completion of
40 years of service. Thus now it is replacing
660 MW against retired/proposed to be
retiring 880 MW. Project implementation to
be started in FY 2018-19 such that Unit
expected to be commissioned in FY 2022-23,
with anticipated Project period of 48 months.
Nashik Units 1 & 2:
already Closed
Nashik Unit 3:
Completes 40 years
in April 2019
Nashik Unit 4:
Completes 40 years
in July 2020
Nashik Unit 5 :
Completes 40 years
in Jan 2021
Order in Case No. 42 of 2017 Page 10 of 35
PPA
Status
Upcoming Units Status Status of
Replacement Units
PPA
Approved
Paras Unit 5 (250
MW) (B.R. No.
MSPGCL / BM-
119 / Item - 4
dated
13.06.2012)
Initially it was proposed to add 660 MW at
Paras as extension Unit. However due to non-
availability of water, it was proposed to
reduce the capacity of the Unit to 250 MW.
Now as per the revised National Tariff Policy,
the usage of Sewage Treated Water from
within 50 km. area is mandatory for a
Thermal Units and at Paras water from Akola
Municipal Corporation can be availed for the
new Unit. Also as per MoP, no new Sub-
critical Unit to be erected henceforth.
Therefore MSPGCL is proposing to undertake
this Project as replacement project of 660
MW against 3 X 210 MW Units which are
already retired or are proposed to be retired
during FY 2022-23, namely Bhusawal Units
2&3 and Koradi Unit 5.
Accordingly the Project activities will be
undertaken in FY 2019-20 such that the Unit
will get commissioned during FY 2023-24,
with anticipated Project period of 48 months.
Bhusawal Unit 2:
Presently not in
service. Completes
40 years in August
2019
Koradi Unit 5:
Presently not in
service.
Completes 40 years
in July 2018.
Bhusawal Unit 3:
Presently in service.
Completes 40 years
in May 2022.
PPA
Approved
Uran Expansion
(1220 MW)
Expansion of project is held up due to non-
availability of gas. Important from Power Mix
point of view considering RE capacity
addition. Hence, MSPGCL has proposed to
develop this Project as and when the gas
supply situation improves.
Considering RE
capacity addition
and the technical
advantage of
ramping
up/coasting down
period of Gas
Turbine comparing
to Conventional
Steam Turbine
Uran GTPS
expansion is kept in
abeyance but not
eliminated.
Order in Case No. 42 of 2017 Page 11 of 35
PPA
Status
Upcoming Units Status Status of
Replacement Units
PPA
Approved
Dondaicha (5 X
660 MW) -- JV
Project
1. Part of the land to be used for development
of Solar Park (500 MW) and Solar
generation plant.
2. Hence MSPGCL proposes to relinquish
PPA for 3 X 660 MW capacity.
3. Amongst the remaining 2 X 660 MW
capacity, MSPGCL proposes to develop
the Units at a different location near to coal
source such that there will be lower VC
advantage as compared to VC at
Dondaicha.
4. The Project at new location is proposed
after FY 2021-22 such that Units will get
commissioned after FY 2023-24.
Proposed to
relinquish PPA for
3 X 660 MW
capacity
And
Proposed diversions
1. Umred (2 x
660MW)
PPA
Signed but
not
approved
Latur (2 X 660
MW) -- JV
Project
Proposed Project was in land acquisition
stage. Partial land was purchased by
MSPGCL.
Project abandoned
due to non-
availability of fuel
and the land
acquired was
transferred for Solar
PV Project.
PPA
Signed but
not
approved
Dhopave (3 X
660 MW) -- JV
As Per BR dated 23 September, 2015, the
Project closure by taking up the issue with
GoM for cancellation of the Project.
NA
Proposed
future
projects (
as
replaceme
nt Units)
Nashik Unit 7
(660 MW)
Nashik Unit 7 was proposed to be
implemented as replacement project against
210 MW Units proposed for retirement during
FY 2022-23 to FY 2027-28, after completion
of 40 years of service. (Koradi Unit 7 and
Parli Units 4 & 5). This replacement can be
done with due consent from MSEDCL and
approval from MERC. The Project activities
will be undertaken after FY 2021-22 such that
the Unit will get commissioned during FY
2027-28, with anticipated Project period of 48
months.
Koradi Unit 7:
Completes 40 years
in Jan 2023
Parli 4 : Completes
40 years in March
2025
Parli Unit 5 :
Completes 40 years
in Dec 2027
Order in Case No. 42 of 2017 Page 12 of 35
PPA
Status
Upcoming Units Status Status of
Replacement Units
Proposed
future
projects
(as
replaceme
nt Units)
Dherand 800
MW
Proposed to be implemented as Replacement
Project against 4 X 210 MW Units proposed
for closure during FY 2024-25 to FY 2029-
30, after completion of 40 years of service
(namely Chandrapur Units 3 and 4 and
Khaperkheda Units 1 and 2).
The Project activities will be undertaken after
FY 2024-25 such that the Unit will get
commissioned during FY 2029-30, with
anticipated Project period of 48 months.
Chandrapur Unit 3 :
Completes 40 years
in May 2025
Chandrapur Unit 4 :
Completes 40 years
in Mar 2026
Khaperkheda Unit 1
:Completes 40
years in Mar 2029
Khaperkheda Unit 2
:Completes 40
years in January,
2030
9.16. In view of the above, MSPGCL proposes retirement of 3705 MW and capacity of
proposed replacement Units of 3440 MW, i.e. effective reduction in capacity of 265
MW.
Table 4 - Units proposed to be removed from PPA
Sr.no Particulars Remarks
1 Approved new Units capacity proposed for
relinquishment Dondaicha 3 X 660 MW
2 Approved new Units capacity proposed at alternate
location
Umred 2 X 660 MW in place
of Dondaicha 2 x 660 MW
3 Unapproved new Units capacity proposed for
removal from PPA
Latur (2 X 660 MW)--JV
Project
Dhopave (3 X 660 MW) -- JV
9.17. Thus, the overall thermal capacity addition proposed by MSPGCL till FY 2029-30
is 1055 MW. Even though MSPGCL has considered replacement of old Units after
completion of 40 years, it is proposed to consider the age of retirement of old Units
till the declaration of COD of the replacement Unit, whichever is later. MSPGCL’s
Action Plan for Units’ retirement is as follows:
Order in Case No. 42 of 2017 Page 13 of 35
Table 5 – MSPGCL’s proposed Action Plan for retirement of Units
Plan for Retirement of Units till FY 2029-30
Unit Capacity
In MW
Date of
Commercial
Operation
Date of
completion
of 40 years
of service
Current status and Proposal
Koradi Unit 5 200 15/07/1978 14/07/2018
Presently not in service. To be
retired after completion of EE R
& M work for Koradi Unit 6.
Nashik Unit 3 210 26/04/1979 25/04/2019 To be retired after completion
of 40 years
Bhusawal Unit 2 210 30/08/1979 29/08/2019
Presently not in service. As per
MSPGCL’s Petition for 3rd
MYT Control Period, this Unit
was proposed for retirement
from April 2016. However the
Unit was kept in service till 10th
February, 2017 as per request
from MSEDCL.
Nashik Unit 4 210 10/07/1980 09/07/2020 To be retired after completion
of 40 years
Parli Unit 3 210 10/10/1980 09/10/2020 Already closed
Nashik Unit 5 210 30/01/1981 29/01/2021 To be retired after completion
of 40 years
Koradi Unit 6 210 30/03/1982 29/03/2022 To be continued in service as R
& M work undertaken.
Bhusawal Unit 3 210 04/05/1982 03/05/2022 To be retired after completion
of 40 years
Koradi Unit 7 210 13/01/1983 12/01/2023 To be retired after completion
of 40 years
Chandrapur Unit 1 210 15/08/1983 14/08/2023 Already closed
Chandrapur Unit 2 210 11/07/1984 10/07/2024 Already closed
Parli Unit 4 210 26/03/1985 25/03/2025
Presently under Reserve
Shutdown as approved in order
dated. 30.08.2016 in Case
No.46 of 2016
Chandrapur Unit 3 210 03/05/1985 02/05/2025 To be retired after completion
of 40 years
Chandrapur Unit 4 210 08/03/1986 07/03/2026 To be retired after completion
of 40 years
ParliUnit 5 210 31/12/1987 30/12/2027
Presently under Reserve
Shutdown as approved in order
dated. 30.08.2016 in Case
No.46 of 2016
Order in Case No. 42 of 2017 Page 14 of 35
Plan for Retirement of Units till FY 2029-30
Unit Capacity
In MW
Date of
Commercial
Operation
Date of
completion
of 40 years
of service
Current status and Proposal
Khaperkheda Unit 1 210 26/03/1989 25/03/2029 To be retired after completion
of 40 years
Khaperkheda Unit 2 210 08/01/1990 07/01/2030 To be retired after completion
of 40 years
Chandrapur Unit 5 500 22/03/1991 21/03/2031 Completion of 40 years is
beyond FY 2029-30
Chandrapur Unit 6 500 11/03/1992 10/03/2032 Completion of 40 years is
beyond FY 2029-30
Chandrapur Unit 7 500 01/10/1997 30/09/2037 Completion of 40 years is
beyond FY 2029-30
Khaperkheda Unit 3 210 31/05/2000 30/05/2040 Completion of 40 years is
beyond FY 2029-30
Khaperkheda Unit 4 210 07/01/2001 06/01/2041 Completion of 40 years is
beyond FY 2029-30
9.18. As per the Action Plan above, MSPGCL is planning to undertake the capacity
addition plan as well as capacity retirement and replacement plan till FY 2029-30.
The Plan was shared with MSEDCL for concurrence and, after consent from
MSEDCL for the proposed amendments, the modified / amended PPA will be
signed. Subsequently, MSPGCL and MSEDCL will approach the Commission for
approval of the amended PPA.
9.19. As regards the capital cost and tariff determination for the new Units,
a. COD of Koradi Unit8 (600MW) was declared on 16 December, 2015, Koradi
Unit 9 (660 MW) on 22 November, 2016 and Koradi Unit 10 (660 MW) on 17
January, 2017.
b. COD of Chandrapur Unit 8 (500MW) was declared on 4 June, 2016 and
Chandrapur Unit 9 (500 MW) on 24 November, 2016.
c. COD of Parli Unit 8 (250 MW) was declared on 19 November, 2016.
9.20. Considering the practical difficulties in filing a Petition for individual Units in
segregating the cost and impact of the common assets on the initial Unit, MSPGCL
had initially planned to submit a consolidated Petition. Therefore, it was in the
Order in Case No. 42 of 2017 Page 15 of 35
process of finalization of the consolidated data, which has resulted in non-
submission of the Petition for Koradi Unit 8 and Chandrapur Unit 8 within the 6
months period specified in Regulation 38.9 of the MYT Regulations, 2015.
9.21. In accordance with the suo moto Notice, MSPGCL has filed a Petition on 17 April,
2017 for approval of capital cost and determination of Tariff for Koradi Unit 8 and
Chandrapur Unit 8, in whose case the period of 6 months from COD has past.
9.22. Further, MSPGCL shall approach the Commission for the approval of capital cost
and tariff for the remaining Units (Koradi Units 9 and 10, Chandrapur Unit 10 and
Parli Unit 8) as an addendum to this Petition within 6 months of the COD of the
respective Units.
10. At the hearing held on 20 April, 2017:
10.1. MSPGCL reiterated its submissions on the following issues through a
presentation:
(i) Status of filing of Petition for approval of Capital Cost and
Determination of Final Tariff for New Units.
(ii) Cancellation of other upcoming Units for which PPA have been
executed and their consequent removal from the approved PPA.
10.2. MSPGCL requested that it may be allowed to file a consolidated Petition for
determination of Station-wise Tariff, since ordering for Koradi Units 8, 9, 10 and
Chandrapur Units 8, 9 was done for the Station as whole and segregation of costs
between different Units is difficult. The common costs would get loaded on the
initial Unit and, therefore, the cost of such Units may get inflated. Moreover,
delay in receipt of equipment at site has caused delay in execution of the Projects,
so it would be difficult to substantiate and apportion the delay Unit-wise. In order
to give a comprensive picture, it is proposing to submit a Station-wise
consolidated Petition for determination of Station-wise tariff. MSPGCL has also
filed a Petition for Koradi Unit 8 and Chandrapur Unit 8 on 17 April, 2017. For
the other Units for which COD has recently been achieved, it is proposing to file a
Petition within six months of their COD.
10.3. To a query on the status of the upcoming Units for which PPA has been approved,
MSPGCL stated that the Commission has approved the PPA for 11590 MW, of
which it has already commissioned 5230 MW. MSPGCL has retired Bhusawal
Order in Case No. 42 of 2017 Page 16 of 35
Unit 2, Parli Unit 3 and Chandrapur Units 1 and 2 and proposes to retire Koradi
Unit 5 after completion of R&M of Unit 6. From the approved PPA, it proposed
to relinquish 3 out of 5 X 660 MW, and the balance 2 X 660 MW of Dondaicha
would be shifted to another location. MSPGCL does not intend to pursue
proposed the Latur and Dhopave Projects. Thus, Dondaicha (3 X 660), Latur and
Dhopave need to be removed from the PPA. The Ministry of Coal has a Policy in
place for transfer of LOA/coal linkage of old plants to new plants in case of
scrapping of such Units and replacing them with new higher efficiency super-
critical Units.
10.4. For the balance capacity of 6360 MW(11590-5230) listed below, MSPGCL is
planning to commission it in a phased manner.
Table 6 - Proposed Plan of MSPGCL
Sr.No Particulars Capacity in MW
a. Uran Expansion Block I and Block II 1220 MW (1x406 MW and 1x814 MW )
b. Bhusawal Unit 6 660 MW (1x 660 MW)
c. Dondaicha (1 to 5 Units) 3300 MW (5x660 MW)
d. Nashik Unit 6 660 (1x660 MW)
e. Paras Unit 5 250 MW (1x250 MW)
10.5. MSPGCL is also planning to retire the remaining old Units, especially the 210
MW Units, after analysing the demand-supply situtation and recent capacity
addition of 2570 MW. MSPGCL is considering retirement of old Units after 40
years, but they may be retired earlier depending upon COD of the upcoming
Units.
10.6. MSEDCL stated that:
a. Vide its letter dated 18 April, 2017, it had requested 3 weeks to study the
matter and submit its reply, since it has receievd MSPGCL’s submission
only on 17.04.2017.
b. The data for the 19th
EPS is under finalisation and, depending upon the load
growth in certain areas, MSEDCL will study the requirement of proposed
Projects and present it in its submission.
10.7. Ms. Ashwini Chitinis, on behalf of Prayas (Energy Group) (‘Prayas’), an
Authorised Consumer Representative, stated that:
Order in Case No. 42 of 2017 Page 17 of 35
a. Prayas appreciates the Commission’s intiative at this stage, when there is
uncertainity about MSEDCL’s demand. MSPGCL’s plan to retire its old Units
after 40 years of operation needs to be concurrent with MSEDCL’s demand
and also take into consideration efficiency and performance of such old Units.
MSPGCL may also have to consider the envirnomental norms notified by
Ministry of Environment and Forests (MoEF), GoI and corresponding capital
expenditure that may be required on its fully depreciated Units.
b. Capacity addition plan of MSPGCL may be looked at in tandem with
MSEDCL’s existing PPA under Sections 62 and 63, Memorandum of
Understanding (MoU) with National Thermal Power Corporation (NTPC) and
the status of contracted capacity under competetive bidding.
c. Since the submission of MSPGCL is not yet received by Prayas, the
Commission may allow a week to send the additional data requirements to
MSPGCL and to respond thereafter.
10.8. Dr. Ashok Pendse, on behalf of Thane-Belapur Industries Association (TBIA), an
Authorised Consumer Representative, stated that:
a. MSPGCL has proposed to operate its Units upto 40 years and gradually
replace its 210 MW Units with 660 MW super-critical Units. Station Heat
Rate (SHR), efficiency, etc. may be considered while doing so. Unit 5 of
Tata Power Co. Ltd. (Generation) (TPC-G) has completed 32 years and
Reliance Infrastructure Ltd. (Generation) (RInfra-G)’s Dahanu TPS has
completed 24 years. Therefore, the Commission may have uniform
guidelines for their operation and further steps.
b. MSPGCL has proposed 660MW at Nashik, whereas MSEDCL is already
having a PPA with an Independent Power Producer (IPP) at Nashik under
Section 63, and it needs to clarified as to whether MSPGCL is proposing to
compete in terms of Tariff with it. In addition, MSEDCL has tied up for 1000
MW with Solar Energy Corporation of India (SECI) at around Rs 4 per unit.
It will, therefore, be necessary to look into the power requirement of
MSEDCL as a whole in these circumstances.
c. The Commission in its MYT Order has approved the Provisional Energy
Charges for upcoming Units of MSPGCL. Based on that approval, the
relevant Unit gets scheduled in the Merit Order Despatch (MOD). However,
Order in Case No. 42 of 2017 Page 18 of 35
at the time of True-up, the Generating Company recovers the difference
between the Provisional and the actual Tariff, which burdens the consumers.
10.9. MSPGCL responded that:
a. The basis of 40 years is the time required for implementation of new Units.
After COD of the new Units, these old Units may even be phased out earlier.
b. As regards the gap between Provisional and final Tariff, the Commission has
revised the Provisional Energy Charges in its MYT Order, and the rates
reflected in the MOD are inclusive of Fuel Adjustment Charge (FAC) as per
the directives of the Commission in its Daily Order in Case No. 125 of 2016.
Hence, these are the actual rates, and there will no gap to be recovered at a
later stage. Truing up will affect only the Annual Fixed Cost (AFC) as the
Commission has approved the provisional AFC at 80% of the Fixed Cost of
the Projects.
c. With regard to the surplus power scenario, MSPGCL commissioning of new
Units will take place over a period of 6 years and the demand postion may
vary substantially. The MoP, in August, 2015, requested CEA to prepare a
report on “Replacement of old and inefficient Units by supercritical Units” for
optimum utilization of scarce natural resources like land, water and coal.
Hence, in coming years, some of the existing 210 MW Units will be replaced
with super-critical Units.
10.10. The Commission noted that MSPGCL has filed its Petition for Capital Cost and
Final Tariff Determination for Koradi Unit 8 and Chandrapur Unit 8 on 17 April,
2017, and that matter will be heard separately. It observed that Koradi Unit 9, 10,
Chandrapur Unit 9 and Parli Unit 8 have achieved COD between November, 2016
to January, 2017. The Commission in the past has determined Capital Cost and
Final Tariff Unit-wise. Although some of the ordering may be done for the Station
as whole, the segregation of costs of Boiler Turbine Generator (BTG) and
Balance of Plant (BOP) may not be difficult. The main intention of the
Regulations requiring submission of a Petition for Capital Cost approval within
six months after COD was to ensure that the final Tariff is determined in time
without increasing the Carrying Cost and Interest During Construction which
ultimately leads to increase in Tariff. Hence, the Commission directed MSPGCL
to file its Petition for Capital Cost and Final Tariff for Koradi Units 9, 10,
Chandrapur Unit 9 and Parli Unit 8 within a month.
Order in Case No. 42 of 2017 Page 19 of 35
10.11. As regards planned /upcoming Units, the Commission directed MSPGCL and
MSEDCL to discuss the matter and submit their proposal within 30 days,
considering the power requirement vis a vis which Units will be required to be
retired or replaced bearing in mind the load centre, transmission availability, etc.
The proposal should be submitted considering the existing MSEDCL PPA under
Sections 62 and 63, MoUs signed with NTPC and the PPA under consideration.
11. In its submission dated 15 May, 2017, Prayas stated as follows:
11.1. Welcome initiative: Power purchase planning is one of the most crucial functions
of a Distribution Company as it accounts for more than 70% of its overall revenue
requirement. Given the possibility of migration, continued high reliance on short-
term market for power procurement, increase in Open Access and rapid reduction
in renewable energy prices, capacity addition by Discoms has become
challenging. MSEDCL is already power surplus and plans to back down
significant capacity (more than 4000 MW) in the next few years. In light of the
seriousness of this issue, the Commission’s decision “to initiate a suo moto
proceeding and hear MSPGCL on the determination of Capital Cost and Final
Tariff for New Units in accordance with the Regulations and cancellation of
certain other upcoming Units and their consequent removal from the PPA.” is a
welcome and much-needed initiative.
11.2. Scope of the review: MSEDCL purchases power from Central, State and private
Generating Stations. Most of the PPAs contracted with private Generators in the
last few years are under Section 63, whereas the capacity tied up with State and
Central sector plants is under Section 62. From MSEDCL’s point of view, its
demand as well as capacity from all these sources needs to be considered in a
holistic way otherwise there would be a danger of not factoring in certain
capacities and their slippages. Hence, this review should not be limited to
MSPGCL but should also include all the capacity that has been contracted by
MSEDCL but is yet to be commissioned. Specifically, the review should cover all
long term power purchase contracts and MoUs of MSEDCL with Central, State or
private Projects.
11.3. Demand assessment: Demand forecasting is the first step of any capacity addition
planning process and, therefore, such review should be based on a sound and
rational estimation of MSEDCL’s demand. In this regard, the following points
need to be considered:
Order in Case No. 42 of 2017 Page 20 of 35
a. Sales migration: More than half of MSEDCL’s sales costs are higher than the
cost of Roof-top Solar PV installations. Figure 1 provided by Prayas shows
this. Considering this and the fact Solar PV prices have been rapidly falling,
one can expect significant sales migration in the next few years. Moreover,
despite the levy of Additional Surcharge, rising tariffs will also increase
Open Access sales and migration due to captive power options.
b. Unreliability and non-applicability of CEA estimates: MSEDCL has always
relied on CEA’s EPS estimates and has avoided undertaking any rigorous,
independent and scientific demand assessment exercise on its own. The CEA
estimates have consistently over-projected demand. There is consistent over-
estimation of peak demand from the 13th
EPS to the 18th
EPS. In the past,
when MSEDCL’s overall demand was growing at a rate much higher than
the rate of its capacity addition, such over-projection did not matter because
the projected capacity was never added to that extent. However, the situation
is starkly different now. MSEDCL has more than 4000 MW of surplus
capacity and a negative growth rate in respect of some of its high-paying
consumers.
The EPS demand estimates include demand from Open Access consumers
and do not have special provisions to account for consumers with Roof-top
Solar installations. Under such circumstances, it would be incorrect to rely on
CEA estimates especially because, with increasing Open Access and captive
consumption, the EPS estimates at State level do not represent the Utility’s
demand anymore. The projected growth rate in each EPS has been high even
though, with the revision of base in each EPS, there is a downward revision
of total demand. Prayas has shown the data till the 18th
EPS. It is quite
possible that the 19th EPS will also show a fall in demand projections due to
revision of base year for projections but would still continue to project a high
growth rate for the future. It is important that MSEDCL should follow the
MYT Regulations and project its demand rather than relying on EPS
estimates.
c. Emerging trends:
i. The draft NEP published by CEA notes that:
“It is expected that the share of non-fossil based installed capacity
(Nuclear + Hydro + Renewable Sources) will increase to 46.8% by the
end of 2021-22 and will further increase to 56.5% by the end of 2026-27
considering capacity addition of 50,025 MW coal based capacity
Order in Case No. 42 of 2017 Page 21 of 35
already under construction and likely to yield benefits during 2017-22
and no coal based capacity addition during 2022-27.”
Further, the study projects Plant Load Factors (PLFs) of 45%-55% for
all the coal-based capacity in the medium and long term. Thus, the
broader trend suggests a shift away from long-term base load contracts.
ii. In a recent development, the Uttar Pradesh Government has cancelled
the bids conducted in 2016 to procure 3800 MW of power from IPPs.
According to media reports, the decision was taken after the MoP and
Uttar Pradesh Power Corporation (UPPCL) observed that adequate
electricity would be available in the State between FY 2017-18 and FY
2021-22.
iii. The recent bids for Solar PV resulted in price discovery of Rs. 2.44 per
Unit for 500 MW of capacity at the Bhadla Solar Park in Rajasthan.
News reports indicate that the winning bid was not an outlier as the other
bids were in a narrow band with a difference of only 1 or 2 paise per
unit. The earlier lower bid discovered was Rs. 2.62 per unit in a bidding
round concluded just a few days before this discovery. Such discoveries
and the falling prices of storage options indicate that Solar is now in a
position to seriously compete with conventional generation sources.
Hence, in terms of choosing least-cost options for power procurement,
any Discom will have to factor in these developments and devise its
plans accordingly.
d. Compliance with MYT Regulations: Regulation 19 of the MYT Regulations,
2015 requires all Distribution Companies to prepare a detailed power
procurement plan. Regulation 19.2 states the following in this regard:
“The power procurement plan of the Distribution Licensee shall comprise
the following:—
a) A quantitative forecast of the unrestricted base load and peak load
for electricity within its area of supply;
b) An estimate of the quantities of electricity supply from the identified
sources of power purchase, including own generation if any;
c) An estimate of availability of power to meet the base load and peak
load requirement:
Provided that such estimate of demand and supply shall be on month-
wise basis in Mega-Watt (MW) as well as expressed in Million Units
(MU);
Order in Case No. 42 of 2017 Page 22 of 35
d) Standards to be maintained with regard to quality and reliability of
supply, in accordance with the relevant Regulations of the
Commission;
e) Measures proposed for energy conservation, energy efficiency, and
Demand Side Management;
f) The requirement for new sources of power procurement, including
augmentation of own generation capacity, if any, and identified new
sources of supply, based on (a) to (e) above;
g) The sources of power, quantities and cost estimates for such
procurement:
Provided that the forecast or estimates contained in the long-term
procurement plan shall be separately stated for peak and off-peak
periods, in terms of quantities of power to be procured (in MU) and
maximum demand (in MW):
Provided further that the forecast or estimates for the Control Period
from FY 2016-17 to FY 2019-20 shall be prepared for each month
over the Control Period:
Provided also that the long-term procurement plan shall be a cost-
effective plan based on available information regarding costs of
various sources of supply.”
e. Considering all the above factors, MSEDCL may be directed to submit
detailed information on the following:
i. Least-cost power procurement plan in accordance with Regulation 19.2.
ii. Demand scenarios considering different assumptions for sales migration
on account of Open Access, Net Metering, and captive consumption.
MSEDCL should also specify the scenario that it considers most
realistic.
iii. Status of all the capacity that is contracted till date by MSEDCL from
different sources such as Central, State and private sectors, including
Renewable Energy (RE) procurement targets as per the Renewable
Purchase Obligation (RPO) Regulations and other RE capacity addition
plans for the next 5 years, if any.
iv. Projections for backing down of thermal capacity over the next 5 years
in light of changes in demand and supply after factoring in new
Order in Case No. 42 of 2017 Page 23 of 35
contracted capacity that is expected to be commissioned during this
period, if any.
11.4. Comments regarding MSPGCL’s presentation: During the hearing held on 20
April, MSPGCLmade a presentation highlighting several issues and its views on
each of them. Following are Prayas’ comments on each of the issues raised by
MSPGCL:
a. Petitions for already commissioned Units: In line with the requirements of the
MYT Regulations and also considering the fact that despatch and backing
down decisions are taken at Unit level, MSPGCL should submit Unit-wise
Petitions for capital cost approval and tariff determination for all the recently
commissioned Units.
b. Retirement age: MSPGCL has proposed a retirement age of 40 years as
against 25 years for its existing capacity. However, such decision cannot be
unilateral and needs to be evaluated with respect to demand-supply situation
of MSEDCL, efficiency and performance of the Units in question, additional
capital expenditure that may be needed to ensure efficient performance and
compliance with new environmental regulations. In this regard, the
commission may direct MSPGCL to submit data and analysis considering the
above factors to justify its proposal. Without undertaking detailed cost-benefit
analysis of such Units considering all the issues above and factoring in
detailed demand assessment of MSEDCL, no permission should be granted to
extend the PPA for such Units.
c. Status of PPA with MSEDCL: In its presentation, MSPGCL has provided a
list of Projects for which PPA has been approved and some for which such
approval is pending. Some of these Units are already commissioned and are
generating. Prayas’ comments on each set of Units are as below:
i. The 6090 MW of capacity for which PPA has been approved but Projects
are yet to be constructed, as in the Table below, should be kept in abeyance
till the present review is completed.
ii. Based on the detailed assessment of MSEDCL’s demand-supply position
and after exploring all the possible alternatives, if the capacity projected in
the Table meets the least-cost planning criteria as per the MYT
Regulations, 2015, then, subject to the findings of the present review
Order in Case No. 42 of 2017 Page 24 of 35
process, that said capacity or part of it, as the case may be, can be
considered for further approval as per due process.
iii. Till such time, MSPGCL should be restrained from undertaking any capital
expenditure on these Projects. If MSPGCL undertakes any capex for these
Projects in the intervening period without explicit approval from the
Commission, it should not be allowed to be passed on to consumers.
iv. The 3300 MW of capacity for which PPA has not been approved should
also be treated similarly, and no capex should be allowed to be undertaken
for any Project preparation activities for these Projects.
Table 7 - Status of MSPGCL Capacity and PPA with MSEDCL, and
remarks of Prayas
Sr.
No
Power Station Unit Capacity (MW) Remarks
1. Parli TPS Unit 7 250 Commissioned and currently
generating Units for which
capital costs have been
approved and tariff has been
determined
2. Paras TPS Unit 4 250
3. Khaperkheda TPS Unit 5 500
4. Bhusawal TPS Unit 4 500
5. Bhusawal TPS Unit 5 500
6. Chandrapur TPS Unit 8 500 Capital cost and Tariff needs to
be decided. Separate
proceedings would be intiated
and PEG will submit its
comments accordingly
7. Chandrapur TPS Unit 9 500
8. Parli TPS Unit 8 250
9. Koradi TPS Unit 8 660
10. Koradi TPS Unit 9 660
11. Koradi TPS Unit 10 660
Currently generating Projects with
binding PPA
5230
12. Uran GTPS CCPP Block I 406 These PPAs should be kept in
abeyance and no further
expenditure should be allowed
towards these Projects till the
review process is completed
and further directions are issued
by the Commission.
13. Uran GTPS CCPP Block II 814
14. Bhusawal TPS Unit 6 660
15. Dondaicha TPS Unit 1 660
16. Dondaicha TPS Unit 2 660
17. Dondaicha TPS Unit 3 660
18. Dondaicha TPS Unit 4 660
19. Dondaicha TPS Unit 5 660
20. Nashik TPS Unit 6 660
21. Paras TPS Unit 5 250
Capacity for which PPA has been
approved but cancellation is proposed
6090
22. Latur Coal Based
(2x660 MW) or
Unit-1
&2
1320 These PPAs should NOT be
signed and no expenditure
Order in Case No. 42 of 2017 Page 25 of 35
Sr.
No
Power Station Unit Capacity (MW) Remarks
Gas based (1500
MW) JV project
should be allowed towards any
Projects preparation activities
for these Projects 23. Dhopawe TPS Unit1 to
3
1980
Capacities without approved PPA 3300
12. Vide its letter dated 17 May, 2017, MSPGCL sought time upto 20 June, 2017 for submitting
its proposal, which the Commission gave. Vide letter 17 June, 2017, MSPGCL again sought
additional time of 60 days stating that the issue regarding the status of upcoming Units was
discussed in Maharashtra State Electricity Board Holding Co. Ltd. (MSEBHCL) Board
meeting on 31 May, 2017, and its decision is to be apprised to Government of Maharashtra
(GoM). As the matter is under consideration of GoM, MSPGCL sought another 60 days. The
Commission granted 30 days’ further extension for submission of the details on upcoming
Units.
13. Vide its letter dated 9 November, 2017, MSPGCL stated as follows:
13.1. MSPGCL had earlier submitted the following as its proposed plan for retirement
and replacement of 210 MW Units:
a. Retirement plan: Considering expected service life of 40 years, most of the 210
MW Units were proposed to be retired by FY 2029-30 in phased manner. Only
the Khaperkheda Unit 3& 4 and Koradi Unit 6 were proposed to be kept in
service beyond FY 2029-30.
b. Replacement plan: In line with the initiatives taken by GoI for the retirement of
old and inefficient Units of TPS and replacing them with new and more efficient
Units (with coal linkages retained), it the expansion future Projects under
approved PPA s between MSPGCL and MSEDCL were proposed to be
considered as replacement Projects.
Thus, the plan submitted to the Commission as the proposed plan for the Units under the
approved PPA was as below:
Order in Case No. 42 of 2017 Page 26 of 35
Table 8 - Proposed MSPGCL Plan for commissioning of Units
Upcoming Units as per
approved PPA
Retiring Units and their status, date of completion of 40
years of service
Bhusawal Unit 6
(660 MW)
Bhusawal Unit 1 (1 X 50 MW): Already closed.
Paras Unit 2 (1 X 55 MW): Already closed.
Chandrapur Unit 1 &2 (2 X 210 MW): Already closed.
Parli Unit 3 (1 X 210 MW): Already closed.
Nashik Unit 6
(660 MW)
Nashik Unit 1, 2 (2 x 125 MW): Already Closed
Nashik Unit 3 (210 MW): In service, April 2019
Nashik Unit4 (210 MW): In service, July 2020
Nashik Unit 5 (210 MW): In service, Jan 2021
Paras Unit 5 (250 MW) :
Proposed to enhance
capacity to 660 MW
Bhusawal Unit 2 (210 MW): Not in service, August 2019
Koradi Unit 5 (200 MW): Not in service, July 2018
Bhusawal Unit 3 (210 MW): In service, May 2022.
Uran Expansion
(1220 MW)
Considering RE capacity addition and the technical advantage
of ramping up/coasting down period of Gas Turbine comparing
to Conventional Steam Turbine Uran Gas based expansion is
kept in abeyance but not eliminated.
Dondaicha ( 5 X 660 MW)
-- JV Project
Proposed to relinquish PPA for 3 X 660 MW capacity
And proposed diversions 1. Umred ( 2 x 660MW)
Latur (2 X 660 MW)
-- JV Project
To be deleted as Project abandoned due to non-availability of
fuel and the land acquired was transferred for Solar PV Project.
Dhopave (3 X 660 MW)
-- JVProject To be deleted as Project abandoned
Table 9 - New Units proposed by MSPGCL
New Projects proposed as
replacement Projects Retiring Units and their status
Nashik Unit 7 (660 MW)
Koradi Unit 7 (210 MW): In service, January, 2023
Parli Unit 4 ( 210 MW): Presently Not in service, proposed
for retirement March 2025
Parli Unit 5 ( 210 MW): Not in service, proposed for
retirement in December, 2027
Dherand (800 MW)
Chandrapur Unit 3 ( 210 MW): In service, May, 2025
Chandrapur Unit 4 ( 210 MW): In service, March, 2026
Khaperkheda Unit 1 ( 210 MW): In service, March, 2029
Khaperkheda Unit 2 ( 210 MW): In service, January, 2030
Order in Case No. 42 of 2017 Page 27 of 35
13.2. The Commission, vide Daily Order dated 20 April, 2017, directed MSPGCL and
MSEDCL to discuss the matter and submit their proposal, considering the power
requirement vis-a-vis which Units will be required to be retired or replaced
bearing in mind the load centre, transmission availability, etc.
13.3. Accordingly, the matter was also discussed in the MSEBHCL Board meeting on
31.05.2017. The Energy Minister and Chairman, MSEBHCL directed that the
matter be discussed between the Chairman-cum-Managing Directors (CMDs) of
the three Companies and get the final plan approved by MD, MSEBHCL in
consultation with CMD, MSPGCL, CMD MSEDCL and CMD Maharashtra State
Electricity Transmission Co. Ltd. (MSETCL), and thereafter be submitted to
GoM.
13.4. At the meeting dated 12 June, 2017 held by Principal Secretary (Energy), GoM to
discuss MSPGCL and MSEDCL-related issues, in the context of the proposed
Bhusawal Unit 6 Project, MSPGCL was directed to review the retirement and
replacement plan taking into consideration the demand scenario in Maharashtra
Grid in near future.
13.5. Further, during the Energy Department Review meeting on 22 June, 2017, the
Energy Minister has directed MSPGCL to revise the replacement plan taking into
consideration the comments / inputs of MSEDCL on future demand scenario and
submit it for approval.
13.6. Accordingly the following revised replacement plan is now approved by GoM.
Table 10 - Replacement Plan submitted by MSPGCL after approval of GoM
Sr.
No.
Proposed replacement
Units
Retiring Units and status of the same, date for
completion of 40 years of service PPA status
1 Bhusawal Unit 6 (660
MW)
Bhusawal Unit 2 (210 MW): Not in service, August
2019.Bhusawal Unit 3 (210 MW): In service, May
2022.
Nashik Unit 3 (210 MW) : In service, April 2019
(Retiring capacity 630 MW)
PPA
approved by
MERC
Order in Case No. 42 of 2017 Page 28 of 35
Sr.
No.
Proposed replacement
Units
Retiring Units and status of the same, date for
completion of 40 years of service PPA status
2
Umred/Koradi ( 2 X
800MW) (Ultra super-
critical technology)
Proposed as
replacement Project of
ultra-super critical
technology with new
Units near the coal
mines to avail the
benefits of lower VC
due to low SHR and
low coal cost.
Nashik Unit 4 (210 MW): In service, July 2020
Nashik Unit 5 (210 MW): In service, Jan, 2021.
Koradi Unit 5 (200 MW): Not in service, July 2018.
Koradi Unit 7 (210 MW): In service, Jan 2023
Parli Unit 4 (210 MW):Not in service, March, 2025
Parli Unit 5 (210 MW): Not in service, Dec, 2027.
Chandrapur Unit 3 (210 MW): In service, May
2025.
Chandrapur Unit 4 (210 MW): In service, March,
2026
(Retiring capacity 1670 MW)
PPA will be
amended
and will
approach the
Commission
for
approval.
3
Dherand (1X 800MW)
Proposed as
replacement Project of
ultra-super-critical
technology
Chandrapur Unit 1 & 2 (2 X 210 MW): Already
closed
Parli Unit 3 (210 MW) : Already closed
Khaperkheda Unit 1 ( 210 MW): In service, March
2029
Khaperkheda Unit 2 ( 210 MW): In service, Jan
2030
(Retiring capacity 1050 MW)
PPA will be
amended
and will
approach the
Commission
for approval
13.7. Summary of submission:
a. The Dhopave and Latur Projects, on which no progress has been made, are
proposed to be deleted from the PPA.
b. The Uran GTPS expansion plan is to be kept in abeyance till further directions
from GoI, clarity on gas supply scenario and RE integration issues.
c. As regards the other upcoming new / expansion Units under approved PPA
(namely Nashik Unit 6, Paras Unit 5 and Dondaicha Units), there has been
some progress on some of these Projects. Hence, it is proposed to keep these in
abeyance till FY 2021-22, by which time there will be more clarity on actual
demand growth, voltage profile issues, actual RE capacity addition under Solar
Power Mission 2022 and its impact on grid stability, etc.
Order in Case No. 42 of 2017 Page 29 of 35
14. At the hearing held on 19 December, 2017:
14.1. MSPGCL made a presentation highlighting compliance of the following two
directions issued by the Commission:
(i) Status of filing of Petition for approval of Capital Cost and Determination of
Final Tariff for New Units.
(ii) Cancellation of certain upcoming Units for which PPAs have been executed
and their consequent removal from the approved PPA.
14.2. MSPGCL stated that:
i. It has filed its Petition in Case No. 59 of 2017 for approval of Capital Cost and
determination of Final Tariff for the new Koradi Units 8, 9 & 10, Chandrapur
Units 8 & 9 and Parli Unit 8, and the Commission has passed the Order in the
matter on 14 December, 2017. Accordingly, the first direction has been complied
with.
ii. As regards the second direction, the GoM has approved a replacement plan for
MSPGCL’s old 210 MW Units after completion of 40 years of service. The
replacement plan includes commissioning of new Units of equivalent capacity at
the same or different locations after retirement of the old Units. With this, there
would not be any net capacity addition, as envisaged under the NEP.
iii. The Dhopave and Latur Projects, in which there is no progress, are proposed to
be deleted from the PPA.
iv. The Uran expansion Project is to be kept in abeyance till further directions from
the GoI, clarity on the gas supply scenario and RE integration issues.
v. As regards the other upcoming new /expansion Units under the approved PPA,
(namely Nashik Unit 6, Paras Unit 5 and Dondaicha Units), it is proposed to
keep these in abeyance till FY 2021-22, by which time there will be more clarity
on actual demand growth, voltage profile issues, actual RE capacity addition and
its impact on grid stability, etc.
vi. Umred (2 x 800 MW) and Dherand (800 MW) Projects are proposed as
replacement Projects for other old 210 MW Units, and feasibilty of these
Projects is being studied which will be finalised within 2/3 months.
Order in Case No. 42 of 2017 Page 30 of 35
14.3. To a query of the Commission, MSPGCL stated that PPA approval for the
Dondaicha Units (5 x 660 MW) will be utilized for new Generating Units at other
locations.
14.4. The Commission observed that the existing PPA between MSPGCL and MSEDCL
is a Project-specific PPA. New Generating Units cannot be automatically included
in the PPA in place of other Generating Units and MSEDCL has to approach the
Commission for approval of the proposed changes to the PPA. Instead of a
replacement plan, MSPGCL should provide details pertaining to Units under the
PPA on which there is no progress and MSPGCL’s proposal regarding their
continuation/cancellation along with justification.
14.5. MSEDCL stated that it is agreed to the continuation of Bhusawal Unit 6. To a query
of the Commission, MSEDCL stated that it needs 2 more months to review the
necessity of MSPGCL’s other upcoming Units which are listed in the PPA, after
taking into consideration its other PPAs, RE additions and MSEDCL’s demand
projections.
14.6. Dr. Ashok Pendse, on behalf of TBIA, stated that:
i. There is already a power surplus situation in the State and the
Distribution Licensees are required to pay the fixed charges to the
Generating Companies even when the power is not required.
ii. It is the Distribution Licensee which has to decide whether it needs new
Units after the retirement of existing Units.
iii. The Distribution Licensee should ideally first explore the option of
entering into PPAs under Section 63 of the EA, 2003 instead of Section
62 of EA, 2003.
iv. The issue of retirement of Generating Units and continuation of the
PPAs is relevant to other Generating Companies also.
14.7. The Commission observed that, even if MSPGCL and MSEDCL agree to enter into
an agreement under Section 62 of the EA, 2003, MSEDCL needs to show that the
electricity proposed to be procured from MSPGCL is competitive as compared to
other sources.
Order in Case No. 42 of 2017 Page 31 of 35
14.8. Ms. Ann Josey, on behalf of Prayas, stated that the Generating Units where no
construction work has taken place should not be a part of the PPA. If MSPGCL
intends to go ahead with such Units, it should be at MSPGCL’s risk and it should
identify other buyers for the electricity generated from such Units.
14.9. The Commission observed that MSPGCL’s submission does not take into
consideration factors such as projected RE generation, future demand-supply
scenario in the State, MSEDCL’s other PPAs, competitiveness of MSPGCL’s
Units, MSEDCL’s RPO obligations, etc. and proceeds on the premise that new
Units can be installed in place of old Units retired/being retired and the PPA can be
continued with certain amendments for the proposed new Units as well.
14.10. After due deliberation with MSEDCL, MSPGCL needs to carry out a realistic
assessment considering the above issues, and approach the Commission afresh with
its proposal and road-map. The Commission in its final Order would also indicate
any other considerations and modalities based on which MSPGCL would file a
fresh Petition regarding cancellation of certain upcoming Units and their
consequent removal from the PPA.
Commission’s Analysis and Ruling
15. The Commission initiated these proceedings with regard to the following:
a) Determination of capital cost and final Tariff of MSPGCL’s newly
commissioned Generating Units; and
b) Review of the status of upcoming Generation Projects of MSPGCL as per the
PPA signed with MSEDCL, which may include cancellation of some Units and
their consequent removal from the PPA.
16. With regard to (a) above, MSPGCL filed a separate Petition in Case No. 59 of 2017 for
determination of the Capital Cost and Tariff for the new Koradi Unit 8 and
Chandrapur Unit 8 which had been commissioned. Subsequently, MSPGCL added
Koradi Units 9 & 10, Chandrapur Unit 9 and Parli Unit 8 to its Petition. The
Commission has issued its Order in that Case on 14 December, 2017. Thus, that matter
has now been decided. The present proceedings are, therefore, limited to (b) above.
17. In its last MYT Order for MSPGCL in Case No. 46 of 2017, the Commission had stated
as follows:
Order in Case No. 42 of 2017 Page 32 of 35
“7.2.10 …MSPGCL is also directed to review the financial viability of those
Generation Projects which are at early stages of planning considering the
alternative sources and modalities that may be available to MSEDCL and its
demand-supply position, the proposed retirement plan of the old Units and macro-
level developments which could have adverse financial implications before
pursuing them further, and submit its report within 3 months. The Commission will
take a view on all such Projects for supply of power to MSEDCL considering these
factors and the power likely to be available from alternative sources, including
through competitive bidding. The Commission also directs MSPGCL to not take
further steps for such Projects which are in planning for supply of power to
MSEDCL and the contracts have not been awarded, till the Commission takes a
view in the matter.”
The review of the status and requirement of proposed and upcoming Generation
Projects of MSPGCL for supply of power to MSEDCL was initiated in this context.
18. During these proceedings, MSPGCL has submitted the following revised Generating
Unit replacement plan:
Sr.
No.
Proposed
Replacement Units
Retiring Units and their status, date of
completion of 40 years of service PPA status
1 Bhusawal Unit 6 (660
MW)
Bhusawal Unit 2 (210 MW): Not in service,
August 2019.
Bhusawal Unit 3 (210 MW): In service, May
2022.
Nashik Unit 3 (210 MW) : In service, April 2019
(Retiring capacity 630 MW)
PPA
approved by
Commission
2
Umred/ Koradi (2 x
800 MW) (Ultra
super-critical
technology) –
Proposed as
replacement with new
Units near coal mines
with lower Variable
Cost due to lower
SHR and coal cost.
Nashik Unit 4 (210 MW): In service, July 2020
Nashik Unit 5 (210 MW): In service, Jan. 2021
Koradi Unit 5 (200 MW): Not in service, July
2018.
Koradi Unit 7 (210 MW): In service, Jan 2023
Parli Unit 4 (210 MW): Not in service, March,
2025
Parli Unit 5 (210 MW): Not in service, Dec,
2027.
PPA will be
amended,
MSPGCL
will
approach
Commission
for
approval.
Order in Case No. 42 of 2017 Page 33 of 35
Sr.
No.
Proposed
Replacement Units
Retiring Units and their status, date of
completion of 40 years of service PPA status
Chandrapur Unit 3 (210 MW): In service, May
2025.
Chandrapur Unit 4 ( 210 MW): In service,
March, 2026
(Retiring capacity 1670 MW)
3
Dherand (800 MW)
Proposed as
replacement Project
of ultra-super critical
technology
Chandrapur Unit 1 & 2 (2 X 210 MW): Already
closed
Parli Unit 3 (210 MW) : Already closed
Khaperkheda Unit 1 ( 210 MW): In service,
March 2029
Khaperkheda Unit 2 ( 210 MW): In service, Jan.
2030
(Retiring capacity 1050 MW)
PPA will be
amended,
MSPGCL
will
approach
Commission
for approval
19. With regard to the locations of the newly-proposed Projects, while some rationale has
been given in respect of Umred (or Koradi), the proposed Dherand location, which is in
Raigad District, has not been explained considering that it is proposed for replacement
of Units at Khaparkheda, Parli and Chandrapur. (The Commission notes that Tata
Power Co. Ltd. (Generation) had earlier conceived of a Project at Dherand for supply
to Mumbai and for which land was being acquired by Maharashtra Industrial
Development Corporation.)
20. MSPGCL proposes to keep the Uran GTPS expansion in abeyance till further
directions from GoI, clarity on the gas supply scenario and RE integration issues.
MSPGCL has also stated that the Dhopave and Latur Generation Projects, on which no
progress has been made, would be deleted from the PPA. The Commission notes,
however, that the Dhopave and Latur Projects are, in fact, not in the PPA: in its Order
in Case No. 71 of 2011, the Commission had rejected MSPGCL’s proposal to include
them.
21. On the other upcoming Units envisaged under the PPA (Nashik Unit 6, Paras Unit 5
and Dondaicha Units 1 to 5), MSPGCL has stated there has been only ‘some’ progress.
It has proposed to keep these in abeyance till FY 2021-22, by which time it expects more
clarity on actual demand growth, voltage profile issues, actual RE capacity addition
and its impact on grid stability, etc.
Order in Case No. 42 of 2017 Page 34 of 35
22. The Commission notes that CEA’s 19th EPS has recently been published. However, it is
evident from the foregoing that the comprehensive evaluation which was expected from
MSPGCL of the upcoming and other proposed Generation Projects considering all the
relevant factors and including the assessments of the procurer, MSEDCL, has not yet
been undertaken. The replacement plan proposed by MSPGCL and even the
considerations on which some upcoming Projects are proposed to be kept on hold for
the time being are based on the presumption that MSPGCL would continue to supply
MSEDCL from upcoming or newly proposed Units (at the same or other locations)
when its existing Units are retired, and would entirely meet MSEDCL’s additional
future requirements by further additions to MSPGCL’s generation capacity.
23. Irrespective of demand-supply projections, that presumption has no basis and is not
tenable without considering the optimum mix of alternative sources and types of energy
(e.g.. RE power, subject to grid stability considerations) available; the options of
procurement modalities (regulated under Section 62, or competitive bidding under
Section 63 of the EA, 2003) and tie-up periods in terms of the appropriate combination
of long-term and medium-term commitments; and their comparitive cost-effectiveness.
MSEDCL has also stated that it needs more time to review the necessity of MSPGCL’s
upcoming Units listed in the PPA, after taking into consideration its other PPAs, RE
additions and MSEDCL’s demand projections. Hence, while closing the Case for
orders, the Commission had concluded at the last hearing and recorded in its Daily
Order dated 19 December, 2017 as follows:
“7. The Commission observed that, even if MSPGCL and MSEDCL agree to
enter into an agreement under Section 62 of the EA, 2003, MSEDCL needs to
show that the electricity proposed to be procured from MSPGCL is competitive
as compared to other sources.
…9. The Commission observed that MSPGCL’s submission does not take into
consideration factors such as projected RE generation, future demand-supply
scenario in the State, MSEDCL’s other PPAs, competitiveness of MSPGCL’s
Units, MSEDCL’s RPO obligations, etc. and proceeds on the premise that new
Units can be installed in place of old Units retired/being retired and the PPAs
can be continued with certain amendments for the proposed new Units as well.
10. After due deliberation with MSEDCL, MSPGCL needs to carry out a
realistic assessment considering the issues raised above, and approach the
Commission afresh with its proposal and road-map…”
Order in Case No. 42 of 2017 Page 35 of 35
24. MSPGCL shall approach the Commission afresh accordingly. In the meantime, it
shall not take any effective steps in pursuance of the Generation Projects approved
in the PPA or the other Projects now proposed in these proceedings which are at the
planning stage or in respect of which contracts which had not been awarded at the
time of the last MYT Order. Any capital expenditure incurred on these Projects
shall be at MSPGCL’s own risk and cost.
Sd/- Sd/-
(Deepak Lad) (Azeez M. Khan)
Member Member