Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION ... 58 42/Order-122 of...
Transcript of Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION ... 58 42/Order-122 of...
Order in Case No. 122 of 2014 Page 1 of 98
Before the
MAHARASHTRA ELECTRICITY REGULATORY COMMISSION
World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai 400 005
Tel. 022 - 22163964/65/69 Fax No. 022 - 22163976
Email: [email protected]
Website: www.merc.gov.in/ www.mercindia.org.in
Case No. 122 of 2014
IN THE MATTER OF
Petition of Maharashtra State Power Generation Company Ltd for Approval of final
True up for FY 2012-13
Coram
Smt. Chandra Iyengar, Chairperson
Shri.Azeez M. Khan, Member
Shri. Deepak Lad, Member
ORDER
Dated: 16 March, 2015
The Maharashtra State Power Generation Co. Ltd. has filed a Petition on 11 June,
2014 for Final True-up for FY 2012-13 under the provisions of Section 61, Section 62
and Section 86(1)(a)(b) of the Electricity Act, 2003 and Part C and Part E of MERC
(Terms and Conditions of Tariff) Regulations, 2005. The Commission, in exercise of
powers vested in it under Section 61 and Section 62 of the Electricity Act, 2003 and
all other powers enabling it in this behalf, and taking into consideration all the
submissions made by MSPGCL, issues raised during the Public Hearing, and all other
relevant material, issues the following Order.
Order in Case No. 122 of 2014 Page 2 of 98
TABLE OF CONTENTS
1 BACKGROUND AND BRIEF HISTORY ................................................................ 9
1.1 BACKGROUND ................................................................................................................... 9
1.2 MERC ORDER ON APPROVAL OF ARR AND TARIFF FOR FY 2012-13 .................... 9
1.3 MERC ORDER ON REVIEW PETITION ON THE ORDER DATED 21 JUNE 2012 IN
CASE NO. 6 OF 2012 (CASE NO. 77 OF 2012) ................................................................. 9
1.4 REVIEW PETITION ON COMMISSION‟S ORDER IN CASE NO. 77 OF 2012 ............. 9
1.5 MERC ORDER ON APPROVAL OF CAPITAL COST AND TARIFF FOR
KHAPERKHEDA UNIT # 5 FOR FY 2012-13 ................................................................. 10
1.6 MERC ORDER ON APPROVAL OF MYT FOR THE CONTROL PERIOD FROM FY
2013-14 TO FY 2015-16 ..................................................................................................... 10
1.7 PETITION FOR FINAL TRUE-UP FOR FY 2012-13 ....................................................... 10
1.8 ADDITIONAL SUBMISSIONS ......................................................................................... 11
1.9 ADMISSION OF THE PETITION AND PUBLIC PROCESS .......................................... 11
1.10 ORGANISATION OF THE ORDER ................................................................................. 12
2 OBJECTIONS RECEIVED, MSPGCL’S RESPONSE AND COMMISSION’S
RULING...................................................................................................................... 13
2.1 OPERATING CAPACITY ................................................................................................. 13
2.2 PLANT LOAD FACTOR ................................................................................................... 13
2.3 ENERGY GENERATION .................................................................................................. 14
2.4 COST OF GENERATION .................................................................................................. 16
2.5 DISCREPANCIES IN DATA SUBMITTED ..................................................................... 17
2.6 BUNKERED CALORIFIC VALUE OF COAL ................................................................. 17
2.7 PRICE OF IMPORTED COAL .......................................................................................... 18
2.8 TRANSIT LOSS ................................................................................................................. 19
2.9 INTEREST ON WORKING CAPITAL ............................................................................. 19
2.10 EXPENSES TOWARDS ASSETS NOT OWNED BY THE COMPANY ........................ 20
2.11 INCOME TAX .................................................................................................................... 20
2.12 OTHER DEBITS ................................................................................................................. 21
2.13 EXPENSES SIDE TRUE UP .............................................................................................. 22
2.14 REVENUE SIDE TRUE UP ............................................................................................... 22
2.15 FINANCIAL BURDEN ON CONSUMERS ...................................................................... 23
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2.16 DELAY IN FILING OF PETITION FOR BHUSAWAL UNIT # 4 AND BHUSAWAL
UNIT # 5 ............................................................................................................................. 24
2.17 CARRYING COST ON REVENUE GAP FOR FY 2012-13 ............................................ 25
2.18 MERIT ORDER DESPATCH ............................................................................................ 25
2.19 FORMAT OF PUBLIC NOTICE ....................................................................................... 26
2.20 WATER SHORTAGE FOR POWER GENERATION ...................................................... 26
3 APPROACH OF THIS ORDER .............................................................................. 28
3.1 APPLICABLE TARIFF REGULATIONS ......................................................................... 28
3.2 SCOPE OF THE PETITION ............................................................................................... 28
4 TRUE UP FOR FY 2012-13 ...................................................................................... 30
4.1 KEY CONCERNS IN FY 2012-13 ..................................................................................... 30
4.1.1 WATER SHORTAGE FOR POWER GENERATION AT PARLI TPS ...................................... 30
4.1.2 GAS SHORTAGE FOR URAN GTPS ......................................................................................... 34
4.1.3 PERFORMANCE PARAMETERSFOR KHAPERKHEDA UNIT # 5 ........................................ 35
4.2 NORMS OF OPERATION ................................................................................................. 37
4.2.1 AVAILABILITY ........................................................................................................................... 37
4.2.2 AUXILIARY CONSUMPTION ................................................................................................... 40
4.2.3 GROSS GENERATION AND NET GENERATION ................................................................... 42
4.2.4 STATION HEAT RATE (SHR) .................................................................................................... 43
4.2.5 SECONDARY FUEL OIL CONSUMPTION (SFOC) ................................................................. 46
4.2.6 TRANSIT LOSS ............................................................................................................................ 48
4.3 VARIABLE CHARGES ..................................................................................................... 50
4.3.1 LANDED FUEL PRICES ............................................................................................................. 50
4.3.2 CALORIFIC VALUE OF FUELS................................................................................................. 51
4.3.3 FUEL COST .................................................................................................................................. 52
4.3.4 OTHER VARIABLE CHARGES ................................................................................................. 53
4.3.5 VARIABLE CHARGES................................................................................................................ 55
4.4 CAPITAL EXPENDITURE (CAPEX) AND CAPITALISATION.................................... 56
4.4.1 CAPITALISATION IN FY 2012-13 ............................................................................................. 56
4.5 ANNUAL FIXED CHARGES ............................................................................................ 59
4.5.1 OPERATION AND MAINTENANCE (O&M) EXPENSES ....................................................... 59
4.5.2 DEPRECIATION INCLUDING ADVANCE AGAINST DEPRECIATION (AAD) .................. 64
4.5.3 INTEREST AND FINANCE CHARGES ..................................................................................... 65
4.5.4 RETURN ON EQUITY(ROE) ...................................................................................................... 67
Order in Case No. 122 of 2014 Page 4 of 98
4.5.5 INCOME TAX .............................................................................................................................. 68
4.5.6 LEASE RENT FOR HYDRO POWER STATIONS..................................................................... 69
4.5.7 INTEREST ON WORKING CAPITAL ........................................................................................ 70
4.5.8 OTHER DEBITS ........................................................................................................................... 71
4.5.9 PRIOR PERIOD ITEMS ............................................................................................................... 72
4.5.10 REDUCTION IN AFC ON ACCOUNT OF NON-ACHIEVEMENT OF TARGET
AVAILABILITY ........................................................................................................................... 73
4.5.11 REVENUE SIDE TRUE UP ......................................................................................................... 74
4.5.12 NON-TARIFF INCOME ............................................................................................................... 74
4.5.13 REVENUE FROM SURCHARGE ............................................................................................... 75
4.5.14 FINAL TRUE UP FOR FY 2012-13 ............................................................................................. 76
4.6 EXPENSES TOWARDS ASSETS NOT OWNED BY THE COMPANY ........................ 80
4.6.1 PAYMENTS MADE TO NHAI AND TIDC ................................................................................ 80
4.7 CARRYING COST ON PROVISIONAL FIXED COST OF KHAPERKHEDA UNIT # 5
............................................................................................................................................. 83
4.8 CARRYING COST ON LEASE RENT FOR GHATGHAR PSS FOR FY 2012-13 ........ 86
4.9 REVISION OF O&M EXPENSES FOR GHATGHAR PSS ............................................. 87
4.10 CARRYING COST ON REVENUE GAP APPROVED FOR PREVIOUS YEARS ........ 88
4.11 CARRYING COST ON AMOUNTS ALLOWED ............................................................. 89
4.12 TOTAL AMOUNT ALLOWED IN THIS ORDER ........................................................... 92
5 RULINGS OF THE COMMISSION ....................................................................... 94
Order in Case No. 122 of 2014 Page 5 of 98
LIST OF TABLES
TABLE 3-1: OPERATING THERMAL GENERATION CAPACITY FOR TRUE UP FOR FY 2012-13 ........... 28
TABLE 4-1: AVAILABILITY APPROVED BY THE COMMISSION ON TRUE UP FOR FY 2012-13 (%) .... 39
TABLE 4-2: AUXILIARY CONSUMPTION APPROVED BY THE COMMISSION ON TRUE UP FOR FY
2012-13 (%) ............................................................................................................................................ 41
TABLE 4-3: GROSS GENERATION AND NET GENERATION APPROVED BY THE COMMISSION IN
TRUE UP FOR FY 2012-13 (MU) ........................................................................................................ 42
TABLE 4-4: REASONS FOR DEVIATION IN SHR AS SUBMITTED BY MSPGCL ....................................... 43
TABLE 4-5: NORMATIVE SHR COMPUTED BY THE COMMISSION FOR URAN GTPS FOR FY 2012-13
................................................................................................................................................................ 45
TABLE 4-6: SHR APPROVED BY THE COMMISSION ON TRUE UP FOR FY 2012-13 (KCAL/KWH) ...... 45
TABLE 4-8: SECONDARY FUEL OIL CONSUMPTION APPROVED BY THE COMMISSION ON TRUE UP
FOR FY 2012-13 (ML/KWH) ................................................................................................................ 48
TABLE 4-9: TRANSIT LOSS APPROVED BY THE COMMISSION ON TRUE UP FOR FY 2012-13 (%) ..... 50
TABLE 4-10: FUEL PRICES CONSIDERED BY THE COMMISSION FOR TRUE UP FOR FY 2012-13 ....... 51
TABLE 4-12: FUEL COST APPROVED BY THE COMMISSION ON TRUE UP FOR FY 2012-13 (RS.
CRORE) ................................................................................................................................................. 52
TABLE 4-13: OTHER VARIABLE CHARGES FOR FY 2012-13 (RS. CRORE) ............................................... 53
TABLE 4-14: REASONS FOR INCREASE IN OTHER VARIABLE CHARGES SUBMITTED BY MSPGCL 54
TABLE 4-15: TOTAL NORMATIVE VARIABLE CHARGES APPROVED BY THE COMMISSION ON
TRUE UP FOR FY 2012-13 (RS. CRORE) ........................................................................................... 55
TABLE 4-17: O&M EXPENSES APPROVED BY THE COMMISSION ON TRUE UP FOR FY 2012-13 (RS.
CRORE) ................................................................................................................................................. 63
TABLE 4-18: DEPRECIATION INCLUDING AAD APPROVED BY THE COMMISSION ON TRUE UP FOR
FY 2012-13 (RS. CRORE) ..................................................................................................................... 64
TABLE 4-19: INTEREST AND FINANCE CHARGES APPROVED BY THE COMMISSION ON TRUE UP
FOR FY 2012-13 (RS. CRORE) ............................................................................................................ 66
TABLE 4-20: RETURN ON EQUITY APPROVED BY THE COMMISSION ON TRUE UP FOR FY 2012-13
(RS. CRORE) ......................................................................................................................................... 67
TABLE 4-21: TAXES PAID IN FY 2012-13 (RS. CRORE) .................................................................................. 68
TABLE 4-22: INTEREST ON WORKING CAPITAL APPROVED BY THE COMMISSION ON TRUE UP
FOR FY 2012-13 (RS. CRORE) ............................................................................................................ 70
TABLE 4-23: AFC DISALLOWED ON TRUE UP FOR FY 2012-13 (RS. CRORE) .......................................... 73
TABLE 4-24: SUMMARY OF REVENUE FOR TRUE UP OF FY 2012-13 ....................................................... 74
TABLE 4-25: TRUE UP FOR FY 2012-13 AS SUBMITTED BY MSPGCL (RS. CRORE)................................ 76
TABLE 4-26: SUMMARY OF TRUE UP FOR FY 2012-13 AS SUBMITTED BY MSPGCL (RS. CRORE) .... 77
TABLE 4-27: SUMMARY OF TRUE UP APPROVED BY THE COMMISSION FOR FY 2012-13 (RS.
CRORE) ................................................................................................................................................. 79
TABLE 4-28: EXPENSES TOWARDS PAYMENT MADE TO TIDC AND NHAI ............................................ 82
TABLE 4-30: CARRYING COST ON REVENUE GAP FOR FY 2012-13 AS SUBMITTED BY MSPGCL (RS.
CRORE) ................................................................................................................................................. 89
TABLE 4-32: TOTAL PRINCIPAL AMOUNT ALLOWED BY THE COMMISSION FOR RECOVERY (RS.
CRORE) ................................................................................................................................................. 91
TABLE 4-33: CARRYING COST ON THE PRINCIPAL AMOUNT ALLOWED BY THE COMMISSION FOR
RECOVERY (RS. CRORE) ................................................................................................................... 92
Order in Case No. 122 of 2014 Page 6 of 98
TABLE 4-34: TOTAL AMOUNT APPROVED BY THE COMMISSION ON FINAL TRUE UP FOR FY 2012-
13 (RS. CRORE) .................................................................................................................................... 93
Order in Case No. 122 of 2014 Page 7 of 98
LIST OF ABBREVIATIONS
ABT Availability Based Tariff
AFC Annual Fixed Cost
APM Administered Pricing Mechanism
ARR Aggregate Revenue Requirement
ATE/APTEL Appellate Tribunal for Electricity
A&G Administrative & General
CAPEX/Capex Capital Expenditure
CEA Central Electricity Authority
CERC Central Electricity Regulatory Commission
CHP Coal Handling Plant
CIL Coal India Limited
COD Commercial Operation Date
CPI Consumer Price Index
CPRI Central Power Research Institute
DPR Detailed Project Report
EA 2003 Electricity Act, 2003
FO Furnace Oil
FSA Fuel Supply Agreement
FY Financial Year
GAIL Gas Authority of India Limited
GCV Gross Calorific Value
GFA Gross Fixed Assets
GoM Government of Maharashtra
GoMWRD Government of Maharashtra- Water Resource Department
GTPS Gas Turbine Power Station
HPS Hydro Power Station
IPP Independent Power Project
IWC Interest on Working Capital
kcal kilo calories
kcal/kWh kilo calories per kilowatt hour
kg Kilogram
kV kilo Volt
kW kilo Watt
kWh Kilo Watt hour
KWDTA Krishna Water Dispute Tribunal Award
LDO Light Diesel Oil
LoA Letter of Assurance
LSHS Low Sulphur Heavy Stock
m3 Cubic Meter
Order in Case No. 122 of 2014 Page 8 of 98
MAT Minimum Alternative Tax
MCL Mahanadi Coalfields Ltd.
MCM Million Cubic Meter
MERC/Commission Maharashtra Electricity Regulatory Commission
Mkcal Million kilo calories
MMBTU Million Metric British Thermal Units
MMSCMD Million Metric Standard Cubic Metre per Day
MMT Million Metric Tonne
MoU Memorandum of Understanding
MSEB Maharashtra State Electricity Board
MSEDCL/
MAHADISCOM
Maharashtra State Electricity Distribution Co. Ltd.
MSETCL Maharashtra State Electricity Transmission Company Ltd.
MSLDC/SLDC Maharashtra State Load Despatch Centre
MSPGCL Maharashtra State Power Generation Company Ltd
MT Metric Tonnes
MTPA Million Tonne per Annum
MU Million Units
MW Mega Watt
MYT Multi Year Tariff
NHAI National Highways Authority of India
NTI Non Tariff Income
O&M Operations and Maintenance
P&G Test Performance & Guarantee Test
PLF Plant Load Factor
PPA Power Purchase Agreement
PSS Pumped Storage Station
R&M Repair & Maintenance
RoE Return on Equity
SECL South Eastern Coalfields Ltd
SFO Secondary Fuel Oil
SFOC Secondary Fuel Oil Consumption
SHP Small Hydro Power Plant
SHR Station Heat Rate
TIDC Tapi Irrigation Development Corporation
TMC Thousand Million Cubic feet
TVS Technical Validation Session
WCL Western Coalfields Ltd.
WPI Wholesale Price Index
Order in Case No. 122 of 2014 Page 9 of 98
1 BACKGROUND AND BRIEF HISTORY
1.1 Background
MSPGCL is a Company formed under the Government of Maharashtra General
Resolution No. ELA-1003/P.K.8588/Bhag-2/Urja-5 dated 24 January, 2005 with
effect from 6 June, 2005 according to the provisions envisaged in Part XIII of the
Electricity Act, 2003. MSPGCL is a Company registered under the Companies Act,
1956.
The Provisional Transfer Scheme was notified under Section 131(5) (g) of the
Electricity Act, 2003 on 6 June, 2005 to re-organize the erstwhile Maharashtra State
Electricity Board (MSEB) into the following four successor Companies:
MSEB Holding Company Ltd.
Maharashtra State Power Generation Company Ltd. (MSPGCL)
Maharashtra State Electricity Transmission Company Ltd. (MSETCL)
Maharashtra State Electricity Distribution Company Ltd. (MSEDCL)
1.2 MERC Order on approval of ARR and Tariff for FY 2012-13
The Commission vide its Order dated 21 June, 2012 in Case No. 6 of 2012 approved
the Final True-up for FY 2010-11, and Aggregate Revenue Requirement (ARR) and
Tariff for FY 2011-12 and FY 2012-13.
1.3 MERC Order on Review Petition on the Order dated 21 June 2012 in Case
No. 6 of 2012 (Case No. 77 of 2012)
MSPGCL filed a Review Petition under affidavit on 3 August, 2012 under the
provisions of Regulation 85 of MERC (Conduct of Business) Regulations, 2004
seeking review of the Order dated 21 June, 2012 in Case No. 6 of 2012 in the matter
of final True up for FY 2010-11, and approval of ARR and Tariff for FY 2011-12 and
FY 2012-13. The Commission, vide its Order dated 8 February, 2013 in Case No. 77
of 2012 revised the final True up for FY 2010-11.
1.4 Review Petition on Commission’s Order in Case No. 77 of 2012
MSPGCL filed a Petition numbered as Case No. 43 of 2013 for review of the
Commission‟s Order dated 8 February, 2013 in Case No. 77 of 2012. In the hearing
held on 29 April, 2013 in Case No. 43 of 2013, the Commission dismissed the case on
the grounds that “Review on review was not maintainable”. During the said hearing
the Commission suggested that MSPGCL may include its issues on the Commission‟s
Order on Review Petition in Case No. 77 of 2012 along with the MYT Petition for the
Control Period from FY 2013-14 to FY 2015-16. MSPGCL included the same as a
Order in Case No. 122 of 2014 Page 10 of 98
separate section in its MYT Petition for the Control Period FY 2013-14 to FY 2015-
16.
1.5 MERC Order on approval of Capital Cost and Tariff for Khaperkheda
Unit # 5 for FY 2012-13
The Commission, vide its Order dated 4 September, 2013 in Case No. 44 of 2013
approved the Capital Cost and Tariff for Khaperkheda Unit # 5 for FY 2012-13.
1.6 MERC Order on approval of MYT for the Control Period from FY 2013-
14 to FY 2015-16
The Commission, vide its Order dated 3 March, 2014 and the Corrigendum dated 19
March, 2014 approved the final True-up for FY 2011-12, and APR for FY 2012-13
and Multi Year Tariff for the Control Period from FY 2013-14 to FY 2015-16.
1.7 Petition for final True-up for FY 2012-13
MSPGCL submitted the Petition for final True-up for FY 2012-13 based on the actual
audited expenditure for FY 2012-13 on 11 June, 2014. The prayers in the Petition are
as follows:
“
i. Condone the delay in submission of the Petition.
ii. Admit this Petition.
iii. Grant an expeditious hearing of this petition.
iv. Approve the technical Performance on a realistic basis giving the
cognizance to rationale detailed in this petition.
v. Approve the final true-up for FY 2012-13 along with other expenses and
carrying cost to the extent claimed by MSPGCL in accordance with the
submissions and rationale submitted in this petition. Allow MSPGCL to
recover the true up amount of FY 2012-13 from the date of this order in
three equal monthly installments.
vi. Approve the carrying cost on the True Up amount of FY 2012-13 from
the date of this order in three equal monthly installments.
vii. Approve the carrying cost on the True Up amount from FY 2005-06 to
FY 2011-12 pursuant to Hon‟ble APTEL‟s judgment.
viii. Approve carrying cost on the provisional fixed cost of Khaperkheda Unit
5.
Order in Case No. 122 of 2014 Page 11 of 98
ix. Approve carrying cost on lease rent of Ghatghar PSS for FY 2012-13.
x. Approve additional True Up along with carrying cost for the period FY
2008-09 to FY 2011-12 for Ghatghar PSS O&M expenses.
xi. Provide appropriate directives to MSEDCL for the payment of the
aforesaid true-up amount.
xii. Condone any shortcomings/deficiencies in the petition and allow
MSPGCL to submit additional information/data at a later stage as may
be required.
xiii. Provide the workable excel model used by the Hon‟ble Commission for
approval of True up amount of the Petitioner.”
The Technical Validation Session was held on 22 July, 2014. The list of individuals,
who participated in the TVS held on 22 July, 2014, is provided at Appendix 1.
Preliminary data gaps were forwarded to MSPGCL vide the emails dated 8 July, 23
July and 30 July, 2014. MSPGCL submitted its replies to the preliminary data gaps
vide its letters dated 4 August, 8 August, 14 August, 19 August, 2 September, 6
September and 11 September, 2014.
1.8 Additional Submissions
MSPGCL, vide its letter dated 13 October, 2014, made additional submission on
revision of O&M expenses of Ghatghar PSS in line with the MERC (Terms and
Conditions of Tariff) Regulations, 2005 and provide for True up accordingly.
Additional information was sought from MSPGCL vide email dated 11 November,
2014 and MSPGCL submitted its replies vide its letter dated 01 December, 2014.
1.9 Admission of the Petition and Public Process
The Commission admitted the Petition on 13 October, 2014. In accordance with
Section 64 of the Electricity Act, 2003, the Commission directed MSPGCL to publish
its Petition in the prescribed abridged form and manner to ensure adequate public
participation. The Commission also directed MSPGCL to reply expeditiously to all
the suggestions and objections received from the stakeholders on its Petition.
MSPGCL issued the public notice in newspapers inviting suggestions and objections
from stakeholders on its Petition. The public notice was published in Times of India,
Indian Express, Pudhari and Punyanagari newspapers on 6 November, 2014. The
copies of MSPGCL‟s Petition and its summary were made available at MSPGCL‟s
offices and on MSPGCL‟s website (www.mahagenco.in). The copy of the public
notice and the executive summary of the Petition were also available on the website of
Order in Case No. 122 of 2014 Page 12 of 98
the Commission (www.mercindia.org.in/www.merc.gov.in) in downloadable format.
The public notice specified that the suggestions and objections, either in English or
Marathi, may be filed in the form of an affidavit along with proof of service on
MSPGCL.
The Public Hearing was held on 9 December, 2014 at the Commission‟s office. The
list of individuals who participated in the public hearing is provided at Appendix 2.
The Commission has ensured that the due process as contemplated under the law to
ensure transparency and public participation was followed at every stage meticulously
and adequate opportunity was given to all the persons concerned to file their say in
the matter.
1.10 Organisation of the Order
The Order is organised in the following 4 Sections:
Section 1 of the Order provides a brief history of the quasi-judicial regulatory
process undertaken by the Commission. For the sake of convenience, a list of
abbreviations with their expanded forms has been included.
Section 2 of the Order lists out the various suggestions and objections
submitted by the stakeholders in writing as well as during the Public Hearing
before the Commission. Various suggestions and objections have been
summarized, followed by the response of MSPGCL and the rulings of the
Commission on each of the issues.
Section 3 deals with the approach of this Order.
Section 4 deals with the approval of final True-up for FY 2012-13.
Section 5 sets out the Rulings of the Commission.
Order in Case No. 122 of 2014 Page 13 of 98
2 OBJECTIONS RECEIVED, MSPGCL’S RESPONSE AND
COMMISSION’S RULING
2.1 Operating capacity
Tata Motors Ltd. submitted that the operating capacity of MSPGCL as per the Petition
is 10737 MW, which includes Bhusawal Unit # 4 of 500 MW. The operating capacity
of MSPGCL as on 31 March, 2013, as per CEA is 11478 MW. The total hydro
generation capacity as per CEA is less than that declared by MSPGCL by 179 MW.
The operating capacity of MSPGCL as on 31 March, 2013 does not include the
capacity of Bhusawal Unit # 5 even though it had achieved full load on 30 March,
2012. Tata Motors Ltd requested the Commission to obtain necessary clarification
from MSPGCL. Kolhapur Zilha Sahakari Pani Purotha Sanstheche Sahakari Sangh
submitted that new generating stations should be given priority over the old
generating stations.
MSPGCL’s reply
MSPGCL submitted that the installed capacity as per CEA is inclusive of the
withdrawn capacity of Koradi TPS (1040 MW), Bhusawal Unit # 4 and Unit # 5, and
the variation in hydro generation capacity (179 MW).
MSPGCL added that the scope of the True up Petition for FY 2012-13 is limited to
the final true up of revenue and expenses of existing old Units, Paras Unit # 3 and
Unit # 4, Parli Unit # 6 and Unit # 7 and Khaperkheda Unit # 5. Bhusawal Unit # 4
was commissioned on 16 November, 2012 and Bhusawal Unit # 5 was commissioned
on 3 January, 2014. MSPGCL has filed a separate Petition for approval of capital cost
and Tariff for these Units.
Commission’s ruling
The Commission has taken note of the submissions of the stakeholders and MSPGCL.
2.2 Plant Load Factor
Maharashtra Veej Grahak Sanghatana (MVGS) submitted that the PLF of MSPGCL‟s
Stations, except Nasik TPS, is very low in comparison to the normative PLF and is in
the range of 42.72% to 75.67%. For FY 2011-12, the average PLF of MSPGCL as per
CEA was 59.21% whereas the average PLF for Central Sector was 82.12% and the
national average PLF was 73.47%. For FY 2012-13, the average PLF of MSPGCL as
per CEA is 58.10%, whereas the average PLF for Central Sector is 79.18%, and
national average PLF is 69.93%.For FY 2013-14, the average PLF of MSPGCL is
Order in Case No. 122 of 2014 Page 14 of 98
51.70% whereas the average PLF for Central Sector is 76.11% and national average
PLF is 65.55%.
Tata Motors Limited submitted that MSPGCL has submitted the average PLF for its
thermal power stations as 60.24% and for gas power station as 63.86% for FY 2012-
13, whereas the average PLF as per the Annual Financial Report of MSPGCL is
65.27% for FY 2012-13. The lower PLF has resulted in higher cost of generation.
MSPGCL’s reply
MSPGCL submitted that the PLF of MSPGCL‟s stations was low on account of water
shortage at Parli TPS and coal related problems, which are beyond its control. The
imported coal usage was to the extent of 3 MMT in FY 2012-13. The lower PLF on
account of coal related problems is experienced nationwide as evidenced in the
decreasing trend of average PLF at the national level over the years.
The PLF of MSPGCL‟s stations is certified by SLDC based on the operating installed
capacity whereas the computation of PLF by CEA includes the derated capacity of
MSPGCL as well as Bhusawal Unit # 4 and Unit # 5.
Commission’s ruling
The Commission has taken note of the submissions made by stakeholders and
MSPGCL. The Commission, while carrying out the truing up, has analysed all these
aspects in detail in Section 4 of the Order. The Commission understands that the FSA
also contains certain provisions enabling the Generating Company to impose penalties
on fuel suppliers for not meeting the conditions laid down in the FSA.Further, due
consideration needs to be given to factors like quantum of fuel available, technical
constraints in blending of fuel, vintage of the Units, and other real time constraints in
the operation of the stations.
2.3 Energy Generation
Tata Motors Ltd submitted that the total generation of MSPGCL as per CEA is less
than that reported by MSPGCL by 368.77 MU and the total generation as per
MSLDC is more than that reported by MSPGCL by 128.34 MU. Tata Motors Limited
requested the Commission to obtain necessary clarification from MSPGCL regarding
the same. Further, the actual gross generation of MSPGCL for FY 2012-13 is lower
than its projected generation in Case No. 6 of 2012 by 24.15% and is lower than the
gross generation approved by the Commission by 29.11%.The net generation has
further reduced due to the actual auxiliary consumption of 10.52% being higher than
9.18% approved by the Commission. MSPGCL finalised the long term FSA for
Bhusawal Unit # 4 and Unit # 5 in January, 2013 which is 10 months after achieving
Order in Case No. 122 of 2014 Page 15 of 98
full load and hence, both the Units have operated on lower PLF. Tata Motors Limited
requested the Commission to consider the sharing of gains and losses while carrying
out the true up for FY 2012-13.
MVGS submitted that the actual net generation for FY 2012-13 is 33662.32 MU as
against the net generation of 46750.26 MU approved by the Commission.
Shri Gorge John submitted that detailed action plan needs to be sought from
MSPGCL to avoid the shortfall in generation in the coming years.
Kolhapur Zilha Sahakari Pani Purotha Sanstheche Sahakari Sangh submitted that
continuous improvement is required in the performance of the power stations.
MSPGCL’s reply
MSPGCL submitted that the difference in energy generation as submitted by
MSPGCL and as per CEA is on account of the difference in operating capacity as per
CEA and the operating capacity within the scope of the True up Petition for FY 2012-
13. The generation from MSPGCL‟s stations submitted in the Petition is as certified
by SLDC. The loss in generation in FY 2012-13 was 170.60 MU on account of
reduction in demand, 2245.27 MU on account of water shortage in Parli TPS and
9429.70 MU on account of coal related problems aggregating to 11845.57 MU. The
actual coal realisation in FY 2012-13 was only 72% in quantitative terms and only
55% in qualitative terms.
Due to lower PLF, the auxiliary consumption in percentage terms has increased in
comparison to that approved by the Commission in the Tariff Order. Further, the
inferior coal quality, water shortage at Parli TPS, gas shortage at Uran GTPS, and the
generator stator failure at Koradi TPS has led to deviation in performance parameters.
MSPGCL submitted that the fixed charge approved by the Commission is based on
the normative parameters, which are trued up based on the prudence check of the
actual expenses. Further, the full fixed cost recovery shall be allowable only on
achievement of Target Availability. The loss due to disallowed fixed cost, on account
of reasons within the control of the generating company, is being borne by the
generating company and is not being passed on to the consumers.
Commission’s ruling
The Commission has taken note of the submissions made by stakeholders and
MSPGCL. The Commission, while carrying out the truing up, has analysed all these
aspects in detail in Section 4 of the Order.
The Commission acknowledges that the MSPGCL approached the Competition
Commission of India on the coal related issues and Competition Commission of India
Order in Case No. 122 of 2014 Page 16 of 98
in its Order dated 9 December, 2013 observed that the provisions of the fuel supply
agreements executed with Coal India Ltd. are in contravention to the Competition
Act, 2002. The said Order of the Competition Commission of India has been
challenged by Coal India Ltd. in Competition Appellate Tribunal.
2.4 Cost of Generation
MVGS submitted that the lower generation has led to burden on the consumers due to
increase in cost of generation. The average cost of generation for MSPGCL for FY
2012-13 is Rs. 4.20 /kWh and this is higher in comparison to average power purchase
cost for MSEDCL from IPPs, tied up through Case 1 bidding.
The Millowners‟ Association (TMA) submitted that the cost of generation from hydro
power stations for MSPGCL is higher. The fixed charge for MSPGCL‟s stations
varies from Rs. 1.74/kWh to Rs. 3.34/kWh. The power purchase from stations with
higher fixed cost should be met from IPPs through long-term arrangements. The
variable cost for MSPGCL‟s stations varies from Rs. 2.10/kWh to Rs. 4.57/kWh and
this wide variation needs to be analysed. TMA requested the Commission to direct
MSPGCL to bring down the cost of generation to a reasonable level.
Kolhapur Zilha Sahakari Pani Purotha Sanstheche Sahakari Sangh submitted that the
cost of generation should be reduced by comparing with other generating companies.
MSPGCL’s reply
MSPGCL submitted that the cost of generation has increased due to the lower
generation on account of factors beyond its control.
The fixed charge approved by the Commission is based on the normative parameters,
which are trued up based on the prudence check of the actual expenses. Further, the
full fixed cost recovery shall be allowable only on achievement of Target Availability.
The loss due to disallowed fixed cost, on account of reasons within the control of the
generating company, is being borne by the generating company and is not being
passed on to the consumers. Thus, the tariff for the consumers shall remain at the
approved level only. Parli TPS has experienced water shortage for power generation
and Uran GTPS has experienced lower gas availability.
The variable cost of generation depends upon the landed price of coal, which includes
the transportation cost. In the case of Nasik TPS, the transportation cost is Rs.
1353/MT, which is around 31% of the landed coal price. The landed price of coal is
under the limited control of the generating company.
Order in Case No. 122 of 2014 Page 17 of 98
Commission’s ruling
The cost of generation for each station depends on the approved performance
parameters and the landed price of fuel. The Commission has trued up the cost of
generation for FY 2012-13 after carrying out due prudence check of the performance
parameters and the fuel cost as discussed in Section 4 of the Order.
The Commission is of the view that the tariff for sale of electricity discovered under
Case-1 bidding for competitive procurement of power by various procurers is not
comparable to the yearly tariff determined under Tariff Regulations as such tariffs
quoted under Case 1 bidding are levelised tariffs for the purpose of evaluation of bids
and the actual yearly tariff will vary based on escalation rates approved by Central
Electricity Regulatory Commission (CERC) from time to time. Further, the
Commission is of the view that the tariff of generating stations cannot be compared
without giving due consideration to the age of the Units, operational history of the
Units and other ground realties. The Tariff Regulations also provide for
incentive/disincentive to the Generating Companies in case of any variation in cost
from that approved by the Commission.
2.5 Discrepancies in data submitted
MVGS submitted that the average cost of generation submitted by MSPGCL for FY
2012-13 is Rs. 3.76/kWh whereas MSEDCL, in Case No. 38 of 2014, has submitted
the average power purchase cost from MSPGCL as 3.93/kWh. The difference of Rs.
0.17/kWh amounts to Rs. 1418.58 Crore.
MSPGCL’s reply
MSPGCL submitted that the power purchase cost as represented by MSEDCL in Case
No. 38 of 2014 includes the tariff of Bhusawal Unit # 4 and Unit # 5 and certain prior
period recoveries, which are not a part of its Petition for True up for FY 2012-13.
Commission’s ruling
The Commission has taken note of the submissions of the stakeholders and MSPGCL.
The Commission while approving the power purchase cost of MSEDCL takes into
consideration the generation cost approved by the Commission for MSPGCL.
2.6 Bunkered calorific value of coal
Tata Motors Ltd submitted that even after blending of imported coal with domestic
coal, the resultant calorific value of blended coal is not closer to the design value of
the generating stations and the SHR has not improved either. Tata Motors Ltd
Order in Case No. 122 of 2014 Page 18 of 98
submitted that from the data submitted by MSPGCL, although the calorific value of
imported coal is 1.7 to 1.8 times more than the domestic coal, the calorific value of
blended coal is substantially lower than weighted average calorific value. MSPGCL
has not submitted the details of reduction in calorific value of coal due to stacking.
The difference between the calorific value of bunkered coal and the weighted average
calorific value is more than 150 kcal/kg for many of the generating stations. Tata
Motors Ltd requested the Commission to constitute a Committee to investigate the
same along with recommendations for reducing the same within 150 kcal/kg.
MSPGCL has not adhered to the guidelines of CERC/MoP for calculating the
calorific value of bunkered coal.
MSPGCL’s reply
MSPGCL submitted that pursuant to the Commission‟s directive in the Order dated
18 June, 2012 in Case No. 6 of 2012, a two Member Committee was constituted to
study the reasons for stacking loss and the Committee submitted its report along with
recommendations. As the recommendations were implemented at the end of FY 2012-
13, significant improvement in stacking loss could not be observed in FY 2012-13.
Substantial improvement in reduction in stacking loss could be observed in FY 2013-
14, which are as low as 59.9 kcal/kg for one generating station. As per the current
practice, there is no methodology available for separate measurement of stacking loss
for domestic coal and imported coal.
Commission’s ruling
The Commission has taken note of the submissions of the stakeholders and MSPGCL
including the stacking loss improvement achieved in FY 2013-14. Further, this issue
has been discussed in Section 4 of the Order.
2.7 Price of imported coal
Tata Motors Ltd submitted that the price of imported coal as submitted in the Petition
is 2.75 to 3 times higher than that of domestic coal. The cost of imported coal has
reduced considerably from 70 USD/MT in 2009 to 57.32 USD/MT in 2014. Tata
Motors Ltd requested the Commission to validate the price of imported coal
considered by MSPGCL vis-à-vis the market value.
MSPGCL’s reply
MSPGCL submitted that the imported coal is procured yearly by means of
competitive bidding with prices linked to international indices, which is the procedure
adopted by the central generating stations.
Order in Case No. 122 of 2014 Page 19 of 98
Commission’s ruling
The Commission has trued up the fuel cost for FY 2012-13 after due prudence check
of the actual fuel prices incurred by MSPGCL, based on audited statements.
2.8 Transit Loss
Tata Motors Ltd submitted that the transit loss for MSPGCL‟s stations for FY 2012-
13 is 0.87% as per the Annual Report, whereas the transit loss has been submitted as
1.17% in the true up Petition. The higher transit loss has resulted in increase in price
of coal and its impact is to the tune of Rs. 40.66 Crore. Tata Motors Ltd requested the
Commission to disallow this additional amount on account of higher transit loss.
MSPGCL’s reply
MSPGCL submitted that corrective measures have been taken to reduce the transit
loss by reducing the coal theft, and periodical calibration of and maintenance of
weighbridges. Claims for transit loss have been lodged with the Railways. With the
corrective measures, the transit loss has reduced, which is as low as 0.45% for one
generating station in FY 2013-14.
Commission’s ruling
The Commission has taken note of the submissions of the stakeholders and MSPGCL.
The Commission has approved the transit loss in accordance with the provisions of
Tariff Regulations including sharing of gains and losses.
2.9 Interest on Working Capital
Tata Motors Ltd submitted that MSPGCL should utilise the Security Deposit amount
available with MSEDCL for meeting its working capital requirements so that interest
on working capital is not required while determining its ARR. Tata Motors Ltd
requested the Commission to disallow the interest on working capital for MSPGCL
for FY 2012-13.
MSPGCL’s reply
MSPGCL and MSEDCL are two separate corporate entities in the position of seller
and buyer of power. The security deposit collected from the end consumers is to the
entitlement of MSEDCL and MSPGCL has no access to the same. The interest on
working capital claimed by MSPGCL is in accordance with the provisions of the
MERC Tariff Regulations, 2005.
Order in Case No. 122 of 2014 Page 20 of 98
Commission’s ruling
MSPGCL and MSEDCL are two separate corporate entities. As per the provisions of
Tariff Regulations, MSPGCL is entitled to the normative interest on working capital
in accordance with the provisions of MERC Tariff Regulations, 2005. Further, as per
MERC Tariff Regulations, 2005, the interest on working capital is a controllable
parameter and accordingly gains and loss in interest on working capital with respect
to normative interest on working capital is shared in accordance with the provisions of
Tariff Regulations.
2.10 Expenses towards assets not owned by the company
Tata Motors Ltd submitted that the amount paid by MSPGCL towards the dam and
Road Over Bridge (ROB) for Bhusawal TPS should not be booked under revenue
expenditure as per the accounting practices. Tata Motors Ltd requested the
Commission to issue suitable guidelines to MSPGCL regarding the same and not
consider the same in ARR for FY 2012-13.
MSPGCL’s reply
MSPGCL submitted that the payments made to TIDC and NHAI have been booked
under revenue expenditure as per the accounting practice as recommended by the
Expert Advisory Committee of Institute of Chartered Accountants of India in a similar
matter.
Commission’s ruling
The Commission has taken note of the submissions of the stakeholders and MSPGCL.
The analysis of the Commission regarding the same has been detailed in Section 4 of
the Order.
2.11 Income Tax
Tata Motors Limited submitted that the actual income tax paid by MSPGCL for FY
2012-13 is Rs. 234.69 Crore as against Rs. 134 Crore approved by the Commission in
the Tariff Order for FY 2012-13. MSPGCL has paid Rs. 17.92 Crore towards „interest
payable‟ in FY 2012-13. Tata Motors Ltd requested the Commission to direct
MSPGCL to submit the explanation in this regard.
MSPGCL’s reply
MSPGCL submitted that as per the provisions of the Income Tax Act, advance
Income Tax has to be deposited with the Income Tax Authorities in four instalments
Order in Case No. 122 of 2014 Page 21 of 98
in proportion of not less than 15%, 45%, 75% and 100% of the advance tax liability
on or before 15 June, 15 September, 15 December and 15 March of the respective
financial years. Further, the final balance amount is payable in the form of self
assessment tax at the time of filing of return. Interest has to be paid when advance tax
is not paid in the stipulated portion on the specified dates and also for the period
between end of financial year and payment of self assessment tax.
In FY 2012-13, income has been received in the form of true up order for FY 2010-11
and during the last quarter of the year. Since, this additional revenue was unknown
while paying the instalments of advanced tax, the balance amount of tax had to be
deposited in the form of self-assessment tax. As a result interest has been paid, as
observed in the Income Tax Return.
Commission’s ruling
The Commission has taken note of the submissions of the stakeholders and MSPGCL.
The analysis of the Commission regarding the same has been detailed in Section 4 of
the Order.
2.12 Other debits
Tata Motors Limited submitted that the expenses submitted by MSPGCL towards
miscellaneous losses and write off, loss on obsolescence of stores and write off of bad
debts amounting to Rs. 127.83 Crore is due to non-performance and hence, should not
be allowed in ARR for FY 2012-13.
MSPGCL’s reply
MSPGCL submitted that as per the Accounting Standards prescribed in the
Companies Act, physical verification of the inventory is carried out and slow-moving,
non-moving and obsolete items are identified. The difference between opening
provision and closing provision is debited/credited to Profit and Loss account as loss
on obsolescence of stores.
The provision for doubtful debts has been made against the recovery of claims from
coal washery operators on account of dispute in the contract and the dispute being
sub-judice.
Commission’s ruling
The Commission has taken note of the submissions of the stakeholders and MSPGCL.
The analysis of the Commission regarding the same has been detailed in Section 4 of
the Order.
Order in Case No. 122 of 2014 Page 22 of 98
2.13 Expenses side true up
Shri George John submitted that 50% of the Return on Equity should be withheld till
the action plan to avoid shortfall in generation in the coming years is submitted.
Kolhapur Zilha Sahakari Pani Purotha Sanstheche Sahakari Sangh submitted that the
employee‟s performance rating needs to be linked to the performance of the
corresponding generating station.
MSPGCL’s reply
MSPGCL submitted that the fixed charge approved by the Commission is based on
the normative parameters, which are trued up based on the prudence check of the
actual expenses. Further, the full fixed cost recovery shall be allowable only on
achievement of Target Availability. The loss due to disallowed fixed cost, on account
of reasons within the control of the generating company, is being borne by the
generating company and is not being passed on to the consumers.
Commission’s ruling
The Commission has taken note of the submissions of the stakeholders. The truing up
is carried out in accordance with the provisions of MERC Tariff Regulations, 2005
and as submitted by MSPGCL, the loss due to increase in expenses on account of
non-achievement of normative parameters is shared between MSPGCL and
Distribution Licensee in the ratio of 2:1. Further, as per the Tariff Regulations, the full
Fixed Charge recovery is allowed at normative availability and in case of reduction in
availability, Fixed Charges are allowed on pro-rata basis, which is borne by
MSPGCL.
2.14 Revenue side true up
Tata Motors Ltd submitted that the amount of Rs. 1075.13 Crore, pertaining to
MSPGCL, allowed by the Commission for recovery in its Order dated 5 September,
2013 in Case No. 95 of 2013 was already paid by the consumers during the months of
September, 2013 to February, 2014. However, pursuant to ATE‟s Judgment in Appeal
No. 295 of 2013, the said Order of the Commission was set aside. Tata Motors Ltd
requested the Commission to allow the refund of the said amount from MSPGCL by
suitable Order along with sharing mechanism for gains and losses in accordance with
MERC (Terms and Conditions of Tariff) Regulations, 2005.
Tata Motors Ltd. submitted that MSPGCL has not considered the revenue from
surcharge amounting to Rs. 567.01 Crore, non-tariff income amounting to Rs. 219.18
Crore and income from Bhusawal Solar while arriving at the revenue from sale of
power for FY 2012-13. Tata Motors Ltd submitted that delayed payment surcharge
Order in Case No. 122 of 2014 Page 23 of 98
need to be considered in the revenue, as the sale of power to MSEDCL is governed by
a Power Purchase Agreement and non-payment of the delayed payment surcharge by
MSEDCL need to be taken up by MSPGCL with the Commission. Tata Motors Ltd
requested the Commission not to allow loss of revenue on account of operational
deficiencies of MSPGCL and MSEDCL.
MSPGCL’s reply
MSPGCL submitted that the Commission‟s Order in Case No. 95 of 2013 pertains to
the recovery in FY 2013-14 and hence, does not pertain to the True up for FY 2012-
13.
The non-tariff income considered for revenue side true up pertains to the operating
generation capacity within the scope of the True up Petition for FY 2012-13. The
delayed payment surcharge has been levied in accordance with the provisions of the
PPA as it is the only mechanism available to safeguard against the payments deferred
by MSEDCL. MSPGCL further submitted that as per the Tariff Regulations,
MSPGCL is allowed 2 months receivables as part of Working Capital and in case of
delay in receipt of payment, MSPGCL has to borrow additional loan from the market.
Moreover, the surcharge amount has not been recovered by MSPGCL.
Commission’s ruling
The Commission has taken note of the submissions of the stakeholders and MSPGCL.
The analysis of the Commission regarding the same has been detailed in Section 4 of
the Order.
2.15 Financial burden on consumers
MVGS submitted that the cost of generation of MSPGCL is higher by Rs. 1/kWh to
Rs. 1.50/kWh in comparison to other generating companies like NTPC and IPPs and
this amounts to a financial burden of Rs. 4000 Crore to Rs. 6000 Crore on the
consumers.
Kolhapur Zilha Sahakari Pani Purotha Sanstheche Sahakari Sangh, Maharashtra State
Irrigation Federation, Karveer Taluka Sahakari dharanvha Panipurotha sanstheche
sahakari Sangh and Shri Hanuman Cooperative Water Supply Society Ltd. submitted
that despite repeated directives of the Commission, the performance of MSPGCL has
not improved and this is leading to financial burden on the consumers. They requested
the Commission not to increase the tariff for agricultural consumers.
Order in Case No. 122 of 2014 Page 24 of 98
MSPGCL’s reply
MSPGCL submitted that the tariff, which have been realised pursuant to competitive
bidding for procurement of power, have undergone upward revision in recent times on
account of various reasons as evidenced nation-wide. MSPGCL submitted that the
tariff realised in the recently concluded competitive bids for procurement of power by
Distribution Licensees are higher than the cost of generation of MSPGCL.
The actual expenses of MSPGCL are subject to prudence check by the Commission
during truing up and only the prudent expenses are allowed. The inefficiencies of
MSPGCL are not passed on to the consumers. As regards the tariff for agricultural
consumers, MSPGCL is only a generating company supplying power to the
Distribution Licensee, MSEDCL, and hence the matter is not related to MSPGCL.
Commission’s ruling
The detailed analysis of truing up for FY 2012-13 is discussed in Section 4 of the
Order.
2.16 Delay in filing of Petition for Bhusawal Unit # 4 and Bhusawal Unit # 5
Tata Motors Ltd submitted that Bhusawal Unit # 4 had achieved full load on 7 March,
2012 and was commissioned on 16 November, 2012. Bhusawal Unit # 5 had achieved
full load on 30 March, 2012 and was commissioned on 3 January, 2014. The
stabilisation period specified in MERC (Terms and Conditions of Tariff) Regulations,
2005 is 180 days and in comparison to the same, the stabilisation period for Bhusawal
Unit # 4 is 253 days and for Bhusawal Unit # 5 is 644 days. MSPGCL submitted the
revenue from Bhusawal Unit # 4 as Rs. 449.32 Crore for FY 2012-13 but has not
submitted the number of units generated during the stabilisation period and post
stabilisation period. Tata Motors Ltd requested the Commission to consider the same
while finalising the Tariff for Bhusawal Unit # 4 and Bhusawal Unit # 5. Tata Motors
Ltd requested the Commission to approve the AFC and Variable Charges for
Bhusawal Unit # 4 in accordance with MERC (Terms and Conditions of Tariff)
Regulations, 2005.
MSPGCL’s reply
MSPGCL submitted that Truing up Petition for FY 2012-13 does not include
Bhusawal Unit # 4 and Bhusawal Unit # 5 for which the separate Petition has been
filed with the Commission for approval of Capital Cost and Tariff, hence the
concerned issue raised will be addressed in that Petition.
Order in Case No. 122 of 2014 Page 25 of 98
Commission’s ruling
The submission of the stakeholder pertains to Bhusawal Unit # 4 and Unit # 5 for
which MSPGCL has filed a separate Petition and hence, does not pertain to the True
up Petition for FY 2012-13.
2.17 Carrying cost on revenue gap for FY 2012-13
Tata Motors Ltd submitted that the present Petition has been filed with a delay of 18
months and hence, carrying cost on the trued up expenses for FY 2012-13 is not
allowable.
MSPGCL’s reply
MSPGCL submitted that the carrying cost has been claimed in accordance with the
Judgment of the Appellate Tribunal for Electricity in Review Petition No. 13 of 2012
in Appeal No. 203 of 2010. MSPGCL during the hearing submitted that the
Commission may suitably adjust the carrying cost on account of delay in filing of
Petition by MSPGCL.
Commission’s ruling
The Commission has taken note of the submissions of the stakeholders and MSPGCL.
The analysis of the Commission regarding the same has been detailed in Section 4 of
the Order.
2.18 Merit Order Despatch
MVGS submitted that the average cost of generation of MSPGCL‟s Stations is
varying from Rs. 3.03/kWh to Rs. 6.96/kWh. Out of the 11 generating stations, the
cost of generation of 9 stations is more than Rs. 4/kWh, the cost of generation of 5
stations is more than Rs. 5/kWh, and the cost of generation of 2 stations is more than
Rs. 6/kWh. The power purchase of MSEDCL should be based on Merit Order
Despatch.
MSPGCL’s reply
MSPGCL submitted that in the State of Maharashtra, MSEDCL is purchasing power
from various sources as per the merit order schedule prepared by MSLDC. MSPGCL
submitted that in such schedule, the power plants are ranked on the basis of their
variable cost and the Units with the least variable cost are dispatched first followed by
the Units with incrementally higher variable cost depending upon the load
requirement of MSEDCL.
Order in Case No. 122 of 2014 Page 26 of 98
Commission’s ruling
The sale of power from MSPGCL to MSEDCL is governed under the provisions of
the Power Purchase Agreement between MSPGCL and MSEDCL, which has been
approved by the Commission. The tariff for sale of electricity from MSPGCL to
MSEDCL is approved by the Commission in accordance with relevant provisions of
Tariff Regulations framed under the enabling provisions of Section 61 of the
Electricity Act, 2003.
The present ABT mechanism allows MSLDC to schedule energy by applying merit
order to the entire State of Maharashtra. In this mechanism, all the generating Units of
the State are ranked in the order of the variable cost and the costliest Unit is
dispatched the last.
2.19 Format of Public Notice
TMA submitted that the format of the Public Notice should give critical data for easy
interpretation.
Shri. George John submitted that the Public Notice should include the reasons for
deviation in performance parameters.
Commission’s ruling
The Commission has taken note of the suggestions of the stakeholders and some of
the aspects may be included in public notices to be published in future. However, the
Public Notice is an abridged form of the Petition and the executive summary as well
as the detailed Petition is also made available for easy access to the stakeholders.
2.20 Water shortage for power generation
Transparent Energy Systems Pvt. Ltd. (TESL) submitted that the water shortage for
power generation for Parli TPS should not be considered as force majeure as
requested by MSPGCL and the increase in fuel cost on account of deviation in
performance parameters should not be allowed. Further, MSPGCL should submit the
supporting provisions of the PPA with MSEDCL, which provides for treatment of
water shortage situation as force majeure.
TESL submitted that water scarcity due to scanty rainfall in Marathwada and
Vidarbha regions is going to be aggravated in the future and hence, the thermal power
stations of MSPGCL located in these regions are vulnerable to the same. MSPGCL
has not submitted any preventive measures to avoid this potential crisis. TESL
Order in Case No. 122 of 2014 Page 27 of 98
requested the Commission to direct the MSPGCL for time-bound and mandatory use
of air cooled condensers in place of water cooled condensers as water consumption
could be reduced to 80%. Air cooled condenser technology is a proven technology
and is being used in power stations with aggregate installed capacity more than 7000
MW.TESL requested the Commission to encourage the distribution companies in
Maharashtra to preferentially purchase power from power stations with air cooled
condenser technology to ensure that power availability will not be affected by water
scarcity.
The impact of water scarcity for generation for Parli Unit # 6 and Unit # 7 for FY
2012-13 is Rs. 43.85 Crore. The shortfall in generation from Parli Unit # 6 and Unit #
7 on account of water shortage in FY 2012-13 is 965 MU and MSPGCL has suffered
loss in revenue due to the said shortfall in generation. The average power purchase
cost of MSEDCL has increased due to the shortfall in generation from Parli Unit # 6
and Unit # 7 by procurement of power from other sources at higher prices.
MSPGCL’s reply
MSPGCL submitted that adequate water availability for power generation was
ensured at the planning stage for Parli Unit # 6 and Unit # 7. The power stations in
Parli had been in operation since 1971 and such a situation of water shortage for
power generation as witnessed in FY 2012-13 had never occurred. The water shortage
for power generation on account of drought, qualifies to be treated as Force Majeure
in accordance with Regulation 17.6 of the MERC (Terms and Conditions of Tariff)
Regulations, 2005 and Article 11 of the PPA with MSEDCL.
Use of air cooled condenser poses operational difficulties such as the decrease of
efficiency at higher ambient temperatures, additional space required for the cooling
system and increase in capital cost. MSPGCL submitted that techno-economic
feasibility study could be undertaken for retrofitting the existing cooling system with
dry cooling system. Further, efforts have been taken to minimise the water utilisation
by MSPGCL by recovery of ash water and usage of sewage water.
Commission’s ruling
As regards the issue of impact of water shortage on performance parameters, the
Commission has carried out the detailed analysis as discussed in Section 4 of the
Order. The Commission directs MSPGCL to submit the internal studies conducted for
adoption of recent technological developments in its power stations and the findings
thereof.
Order in Case No. 122 of 2014 Page 28 of 98
3 APPROACH OF THIS ORDER
3.1 Applicable Tariff Regulations
The Commission approved the ARR and Tariff for FY 2012-13 for MSPGCL vide its
Order dated June 21, 2012 in Case No. 6 of 2012 in accordance with MERC (Terms
and Conditions of Tariff) Regulations, 2005. MSPGCL filed the Petition for approval
of final True-up for FY 2012-13 in accordance with the provisions of MERC (Terms
and Conditions of Tariff) Regulations, 2005.
It is to be noted that MERC (Terms and Conditions of Tariff) Regulations, 2005 were
applicable till the end of FY 2010-11. The Commission notified the MERC (Multi
Year Tariff) Regulations, 2011 to be applicable from FY 2011-12 to FY 2015-16.
However, the Commission exempted MSPGCL from applicability of MERC MYT
Regulations, 2011 for a period of 2 years vide its Order dated 23 August, 2011 in
Case No. 44 of 2011. The Commission approved the Multi Year Tariff for MSPGCL
for the period FY 2013-14 to FY 2015-16 vide its Order in Case No. 54 of 2013.
Hence, the applicable Regulations for FY 2012-13 are MERC (Terms and Conditions
of Tariff) Regulations, 2005 and the Commission has carried out the final True up for
FY 2012-13 for MSPGCL based on the prudence check of the audited expenditure
and revenue in accordance with the provisions of MERC (Terms and Conditions of
Tariff) Regulations, 2005.
3.2 Scope of the Petition
MSPGCL‟s Petition for final True up for FY 2012-13 deals with the True up of the
expenses and income related to operating thermal generation capacity as shown in the
table below and hydro power stations with total installed capacity of 2579 MW owned
by GoMWRD and operated by MSPGCL:
Table 3-1: Operating thermal generation capacity for True up for FY 2012-13
Sl.
No. Station/Unit
Capacity
(MW)
1 Bhusawal 420
2 Chandrapur 2340
3 Khaperkheda 840
4 Koradi 620
5 Nasik 630
6 Parli 630
7 Uran 672
8 Paras Unit # 3 250
9 Paras Unit # 4 250
Order in Case No. 122 of 2014 Page 29 of 98
Sl.
No. Station/Unit
Capacity
(MW)
10 Parli Unit # 6 250
11 Parli Unit # 7 250
12 Khaperkheda Unit # 5
(Commissioned on 16 April, 2012) 500
Total 7652
MSPGCL has filed a separate Petition for approval of Capital Cost and Tariff for
Bhusawal Unit # 4 and Unit # 5 and the final Tariff is yet to be approved for
Bhusawal Unit # 4 and Unit # 5.
Order in Case No. 122 of 2014 Page 30 of 98
4 TRUE UP FOR FY 2012-13
4.1 Key concerns in FY 2012-13
4.1.1 Water shortage for power generation at Parli TPS
MSPGCL’s submission
4.1.1.1 The day to day industrial and drinking water required for Parli TPS
(including Unit # 6 and Unit # 7) and colony is managed from Khadka
barrage at about 22 km from the station. The live storage capacity of this
barrage is 5 MCM. The naturally collected water in the Khadka dam during
the rainy season is sufficient for up to December, and for the rest of the
period, agreement has been executed for release of required water from
Jayakwadi / Majalgaon dam with GoMWRD.
4.1.1.2 The daily water requirement of Parli TPS (including Unit # 6 and Unit # 7) is
about 100000 M3 per day. In FY 2012-13, the water from Khadka barrage
was expected to be sufficient for up to 15 December, 2012 only. On account
of scanty rainfall in the Marathwada region in FY 2012-13, the Majalgaon
and Jayakwadi dam level remained below Minimum Draw Down Level
(MDDL) for the entire period. Hence, Parli TPS (including Unit # 6 and Unit
# 7) faced unprecedented acute water crisis for the first time since its
commissioning. As there was no possibility of getting water from
Majalgaon/ Jayakwadi dams, MSPGCL scouted for water from Mudgal dam,
which is the only possible alternative source, for 5 MCM. Meanwhile, in
order to conserve water and to maximize output, the Units had to be run in
the best possible combination.
4.1.1.3 Govt. of Maharashtra had approved release of 5 MCM water for Parli TPS
(including Unit # 6 and Unit # 7) from Mudgal dam. However, opposition
from local farmers led to release of 3 MCM water only and out of this, only
1 MCM water reached Khadka barrage. The total generation lost on account
of water shortage for power generation at Parli TPS in FY 2012-13 was 2425
MU on account of shut down of Unit # 3 for 47 days, Unit # 4 for 142 days,
Unit # 5 for 46 days, Unit # 6 for 110 days and Unit # 7 for 76 days.
MSPGCL requested the Commission to consider the water shortage situation
as force majeure and approve the actual Availability for Parli TPS (including
Unit # 6 and Unit # 7) for FY 2012-13.
Order in Case No. 122 of 2014 Page 31 of 98
Commission’s Analysis
4.1.1.4 The Commission observes that the Revenue and Forest Department, Govt. of
Maharashtra vide its Resolution dated 22 August, 2012 notified the drought
situation in 122 talukas in Maharashtra, which includes Aurangabad and
Parbhani. In the said Government Resolution, it had been notified that the
onset of rainfall had been delayed in FY 2012-13 and the shortfall in rainfall
led to acute shortage of water.
4.1.1.5 Article 11 of the PPA dated 1 April, 2009 between MSPGCL and MSEDCL
stipulates as under:
“11. ARTICLE 11: FORCE MAJEURE
11.1 A force majeure means any event or circumstance or combination of
both including those stated below and on which the Affected Party has no
control, that wholly or partly prevents or incapacitates the Affected Party in
performing its obligations under this Agreement, even after the affected party
having taken all reasonable care or it having complied with prudent utility
practices:
(a) act of God, including, but not limited to lightning, drought, fire and
explosion, accident, terrorist activities like sabotage, explosion or…………..
11.2 The Affected Party shall give notice to the other Party of any event or
force majeure as soon as reasonably practicable, but not later than seven (7)
days after the date of which such Party knew or should reasonably have
known of the commencement of the event of force majeure…………….
11.3 The Affected Party shall give notice to the other Party of (i) the
cessation of the relevant event of force majeure; and (ii) the cessation of the
effects of such event of force majeure on the performance of its rights or
obligations under this Agreement, as soon as practicable after becoming
aware of each of these cessations.
11.4 In case of force majeure conditions prevails more than 100 days both
the parties may mutually agree to rescind/defer the agreement or portion
thereof which have been affected due to such force majeure conditions on
such terms and conditions between the parties.
11.5 To the extent not prevented by a force majeure event pursuant to 11.2,
the Affected Party shall continue to perform its obligations pursuant to this
Order in Case No. 122 of 2014 Page 32 of 98
Agreement. The Affected Party shall put their best efforts to mitigate the
effect of force majeure as soon as possible.
11.6 Available Relief for a force majeure event shall be limited to and extent
that no Party shall be in breach of its obligations pursuant to this Agreement
to the extent that the performance of its obligations was prevented hindered
or delayed due to a force majeure event.”
4.1.1.6 The Commission finds that the PPA between MSPGCL and MSEDCL
defines drought as a force majeure event. The Commission asked MSPGCL
to submit the supporting documents regarding the actions taken in
accordance with the provisions of the PPA on account of water shortage for
power generation at Parli TPS.
4.1.1.7 Regulation 17.6 of the MERC (Terms and Conditions of Tariff) Regulations,
2005 specifies as under:
“17.6 Upon completion of the review under Regulation 17.5 above, the
Commission shall attributeany variations or expected variations in
performance, for variables stipulated under Regulation 15.6 above, to
factors within the control of the applicant (controllable factors) or to
factors beyond the control of the applicant (uncontrollable factors):
….
Explanation – for the purpose of these Regulations, the term “uncontrollable
factors” shall include the following factors which were
beyond the control of, and could not be mitigated by, the
applicant, as determined by the Commission-
(a) Force Majeure Events;
(b) changes in law, judicial pronouncements and Orders of the Central
Government, State Government or Commission;
(c) economy-wide influences, such as unforeseen changes in inflation rate,
market-interest rates, taxes and statutory levies.
…..”
4.1.1.8 MERC (Terms and Conditions of Tariff) Regulations, 2005 defines a force
majeure event as reproduced below:
Order in Case No. 122 of 2014 Page 33 of 98
“"Force Majeure Event" means, with respect to any party, any event or
circumstance which is not within the reasonable control of, or due to an act
or omission of, that party and which , by the exercise of reasonable care
and diligence,, that party is not able to prevent, including, without limiting
the generality of the foregoing:
(i) acts of God, including but not limited to lightning storm, action of the
elements, earthquakes, flood, drought and natural disaster;
….”
4.1.1.9 Thus, in accordance with the provisions of MERC (Terms and Conditions of
Tariff) Regulations, 2005, the water shortage for power generation at Parli
TPS qualifies to be considered as an uncontrollable factor subject to the same
being justified.
4.1.1.10 The Commission asked MSPGCL to submit the effect on performance
parameters for Parli TPS (including Unit # 6 and Unit # 7) separately on
account of water shortage and for other reasons, and the performance
parameters for the period during water shortage and for other periods.
MSPGCL submitted that during the water shortage period, the Units had
been running initially on partial load and were subsequently withdrawn in a
phased manner. MSPGCL submitted that the performance parameters
submitted in the Petition pertain to the operation period for Parli TPS.
The Commission asked MSPGCL to submit the supporting documents
regarding its efforts to procure water allocation for Parli TPS (including Unit
# 6 and Unit # 7) in the wake of scanty rainfall. MSPGCL submitted the
correspondence with the concerned authorities of Aurangabad and Parbhani
regarding the allocation of water from Mudgal dam. The Commission, after
scrutiny of the material placed on record, is of the view that inspite of efforts
by MSPGCL, water shortage for power generation could not be mitigated.
4.1.1.11 The Commission approves the actual Availability for Parli TPS
(including Unit # 6 and Unit # 7) for allowing the fixed cost recovery, as
the water shortage situation was beyond MSPGCL's control.
4.1.1.12 MSPGCL submitted that water shortage for power generation for Parli TPS
(including Unit # 6 and Unit # 7) had impacted the performance parameters.
MSPGCL requested the Commission to consider the actual performance
Order in Case No. 122 of 2014 Page 34 of 98
parameters for Parli TPS (including Unit # 6 and Unit # 7) in the true up of
fuel cost for FY 2012-13.
4.1.1.13 The Commission approves the actual performance parameters for Parli
TPS (including Unit # 6 and Unit # 7) in the true up of fuel cost for FY
2012-13.
4.1.2 Gas shortage for Uran GTPS
MSPGCL’s submission
4.1.2.1 MSPGCL submitted that the actual Availability for Uran GTPS in FY 2012-
13 was lower than normative Availability of 80% on account of lower receipt
of gas. The actual availability of gas from all sources was 885.73 MMSCM
as against the requirement of 1314 MMSCM to achieve the normative
Availability of 80%. MSPGCL requested the Commission to approve the
actual Availability for Uran GTPS for FY 2012-13 considering the gas
shortage as an uncontrollable factor. Further, MSPGCL submitted that the
lower gas receipt led to operation of the plant in open cycle mode resulting in
higher SHR and requested the Commission to approve the actual SHR for
true up of fuel expenses for FY 2012-13.
Commission’s Analysis
4.1.2.2 The Commission asked MSPGCL to submit the supporting documents for
substantiating the actual gas receipt in FY 2012-13 for Uran GTPS and to
substantiate the workings of Availability based on actual gas availability for
FY 2012-13.
4.1.2.3 MSPGCL submitted the copies of fuel bills for FY 2012-13 for Uran GTPS
and the computations of achievable Availability corresponding to the actual
gas availability.
4.1.2.4 The Commission, after scrutiny of the material placed on record and in
accordance with the approach adopted by the Commission in the Order dated
3 September, 2013 in Case No. 28 of 2013 has considered the actual
Availability for allowing the fixed cost recovery for Uran GTPS for FY
2012-13. Further, the Commission has computed the normative SHR for
Order in Case No. 122 of 2014 Page 35 of 98
Uran GTPS based on the actual generation in combined cycle mode and open
cycle mode for true up of the fuel cost for FY 2012-13.
4.1.2.5 The Commission, considering the gas shortage, approves the actual
Availability of Uran GTPS for allowing the fixed cost recovery for FY
2012-13.
4.1.3 Performance Parametersfor Khaperkheda Unit # 5
MSPGCL’s submission
4.1.3.1 MSPGCL submitted that the actual coal realisation for Khaperkheda Unit # 5
was only 42% of the overall coal requirement. The significant shortages in
coal supply, stabilisation period in monsoon season and CHP problems
impacted the stable operations and hence, the performance parameters during
the stabilisation period have deviated from the normative performance
parameters. MSPGCL requested the Commission to relax the performance
parameters for Khaperkheda Unit # 5 on account of the same.
Commission’s Analysis
4.1.3.2 MERC Tariff Regulations, 2005 specify the stabilisation period for new
generating stations as 180 days from the date of commercial operation.
4.1.3.3 The Commission, in the Order dated 4 September, 2013 in Case No. 44 of
2013 on approval of capital cost and tariff for Khaperkheda Unit # 5 for FY
2012-13, ruled as under:
“5.1.46 In view of the above, the Commission at this stage has not carried
out the detailed analysis of the reasons of variation in performance
parameters with respect to norm approved in Regulations in FY 2012-13.
The Commission is of the view that it will be more appropriate to analyse
the reasons of variation in performance parameters once the P&G Test
reports are available for assessing the reasons of variation in performance
parameters under controllable and uncontrollable factors. The Commission
while carrying out the truing up for FY 2012-13 based on audited accounts
will analyse the reasons of variation in performance parameters and
accordingly assess the sharing of gains and losses on account of
Order in Case No. 122 of 2014 Page 36 of 98
controllable and uncontrollable factors as per provisions of MERC Tariff
Regulations, 2005.
5.1.47 Considering the submissions of MSPGCL regarding substantial
shortfall in coalavailability and other factors, which affected the
performance duringstabilisation period, the Commission on provisional
basis has considered theactual performance parameters during the
stabilisation period, which shall besubject to final truing up. As regards post
stabilisation period, the Commissionobserved that the variation in
performance parameters as compared to norms ismarginal and in some of
the months, the actual performance was even betterthan the normative
parameters. Considering the marginal variation inperformance parameters
during post stabilisation period, it is more important toanalyse the P&G
Test reports for proper assessment of variation in performance parameters.
The Commission, therefore at this stage has provisionally approved the
performance parameters as per the norms specified in MERC Tariff
Regulations, 2005 for post stabilisation period subject to final Truing up for
FY2012-13.”
4.1.3.4 MSPGCL submitted the Performance & Guarantee (P&G) Test Report for
Khaperkheda Unit # 5 except for the ESP. From the P&G Test Report for
Khaperkheda Unit # 5, it is observed that the tests have been conducted
successfully and most of the performance parameters achieved during the
P&G Test were better or very close to the guaranteed performance
parameters. However, as discussed in detail in Order in Case No. 44 of 2013,
the performance during stabilisation period was in deviation to norms due to
various factors such as significant shortages in coal supply, stabilisation
period in monsoon season and CHP problems and the performance post
stabilisation period have improved significantly.
4.1.3.5 In light of the foregoing, the Commission approves the actual
performance parameters for Khaperkheda Unit # 5 during the
stabilisation period while carrying out the truing up for FY 2012-13. For
the post stabilisation period, the Commission has approved the
normative performance parameters as specified in MERC (Terms and
Conditions of Tariff) Regulations, 2005 while carrying out true up for
FY 2012-13.
Order in Case No. 122 of 2014 Page 37 of 98
4.2 Norms of operation
4.2.1 Availability
The Commission, in its Order dated 21 June, 2012 in Case No. 6 of 2012 and
the Order dated 4 September, 2013 in Case No. 44 of 2013, approved the
Target Availability for recovery of full fixed charges for FY 2012-13. As
against the same, MSPGCL submitted the actual Availability for FY 2012-
13. The actual Availability for all the Stations except Nasik TPS was lower
than the Target Availability approved by the Commission for FY 2012-13.
4.2.1.1 MSPGCL submitted the SLDC Certificate for the actual Availability for FY
2012-13. The Commission observes that the actual Availability submitted by
MSPGCL for FY 2012-13 is same as the Availability certified by SLDC.
4.2.1.2 MSPGCL submitted that the actual realisation of domestic coal in FY 2012-
13 was lower than that guaranteed under the Fuel Supply Agreements
(FSAs). The shortage in domestic coal could be substituted with imported
coal with some limitations and accordingly, 3 MMT of imported coal has
been used in FY 2012-13.The actual Availability is lower than the normative
Availability on account of coal related problems.
4.2.1.3 MSPGCL submitted that the actual Availability for Koradi TPS for FY
2012-13 was lower than the Normative Availability on account of insulation
failure of generator stator of Unit # 5. The existing generator was
manufactured in the year 1975 and commissioned in the year 1978 with
bituminous insulation. The Unit has completed its fair service life of 25
years. MSPGCL requested the Commission to approve the actual
Availability for Koradi TPS considering generator failure as uncontrollable
event.
Order in Case No. 122 of 2014 Page 38 of 98
Commission’s Analysis
4.2.1.4 For Parli TPS (including Unit # 6 and Unit # 7),Uran GTPSand ,and
Khaperkheda Unit # 5 during the stabilisation period,the Commission has
approved the actual Availability for recovery of full fixed charges. For
Koradi TPS, the Commission does not find the reasons submitted by
MSPGCL to be prudent, as capital expenditure schemes for the upkeep of the
Stations are being approved by the Commission every year and MSPGCL
should have taken preventive maintenance for avoiding such eventualities.
For other stations, the Commission observes that MSPGCL has stated coal
related issues for not achieving target Availability. As regards the poor coal
quality, ATE in its Judgment dated 19 April, 2012 in Review Petition No. 9
of 2011 in Appeal No. 199 of 2010 has opined as under:
“We do not accept that the quality of coal is totally beyond the control of the
appellant. If the quality of raw coal supplied by the coal companies is poor,
the appellant has to make arrangements for washing of coal and blending
with superior quality of coal”
4.2.1.5 As per the Judgment of the Appellate Tribunal for Electricity, quality of coal
is not totally beyond the control of MSPGCL and MSPGCL can take other
steps such as utilisation of washed coal, imported coal, etc., to improve the
performance of its Stations and MSPGCL has already taken some of these
steps to a certain extent.
4.2.1.6 MSPGCL, during the Public Hearing, submitted that Parli TPS, Koradi TPS
and Khaperkheda Unit # 5 had station-specific issues in FY 2012-13 and the
performance parameters of its stations had improved in subsequent years.
MSPGCL submitted that in accordance with the MERC (Terms and
Conditions of Tariff) Regulations, 2005, recovery of full fixed charges is on
achievement of target Availability and pro-rata reduction shall be carried out
on account of non-achievement of target Availability.
Order in Case No. 122 of 2014 Page 39 of 98
4.2.1.7 As per MERC Tariff Regulations, 2005, full recovery of AFC is allowed
only in case the actual Availability is equal to or higher than the target
Availability. Accordingly, the recovery of AFC, except for Parli TPS
(including Unit # 6 and Unit # 7), Uran GTPS and Khaperkheda Unit # 5
during the stabilisation period, has been reduced on a pro-rata basis in case
the generating station has achieved Availability lower than the target
Availability. The following tables show the details of Availability approved
in Tariff Order, actual Availability achieved and that considered by the
Commission for true up purposes:
Table 4-1: Availability approved by the Commission on true up for FY
2012-13 (%)
Sl.
No. Station/Unit
Tariff
Order
True up
Petition
Approved on
true up
1 Bhusawal 80.00% 57.84% 80.00%
2 Chandrapur 80.00% 70.97% 80.00%
3 Khaperkheda 80.00% 75.61% 80.00%
4 Koradi 73.94% 48.42% 73.94%
5 Nasik 78.58% 83.45% 78.58%
6 Parli 80.00% 44.32% 44.32%
7 Uran 80.00% 63.86% 63.86%
8 Paras Unit # 3 80.00% 74.36% 80.00%
9 Paras Unit # 4 80.00% 66.51% 80.00%
10 Parli Unit # 6 80.00% 43.38% 43.38%
11 Parli Unit # 7 80.00% 42.80% 42.80%
12 Khaperkheda Unit # 5
Stabilisation Period
(16 April, 2012 to 12
October, 2012)
32.85%* 34.39% 34.39%
Post Stabilisation Period
(13 October, 2012 to 31
March, 2013)
80.00% 73.64% 80.00%
*Approved on provisional basis in the Tariff Order
Order in Case No. 122 of 2014 Page 40 of 98
4.2.2 Auxiliary Consumption
Commission’s Analysis
4.2.2.1 The Commission, in its Order dated 21 June, 2012 in Case No. 6 of 2012 and
the Order dated 4 September, 2013 in Case No. 44 of 2013, approved the
auxiliary consumption for FY 2012-13. As against the same, MSPGCL
submitted the actual auxiliary consumption for FY 2012-13. The actual
auxiliary consumption for FY 2012-13 for Nasik TPS, Uran GTPS and
Khaperkheda Unit # 5 during the post stabilisation period is lower than the
auxiliary consumption approved by the Commission in the Tariff Order..
4.2.2.2 MSPGCL submitted that the auxiliary system for a power plant is based on
design parameters and deviation from such design parameters leads to excess
auxiliary consumption. The higher auxiliary consumption is on account of
the following:
The lower GCV of bunkered coal in comparison to the design GCV
led to firing more quantum of coal of inferior GCV in order to derive
the required heat input. This in turned to overloading of coal mills,
running of additional mills, overloading of ID fans and ash
evacuation system, resulting in higher auxiliary consumption.
The actual generation in FY 2012-13 was lower on account of poor
coal qualityand hence, the auxiliary consumption as a percentage of
gross generation is higher.
4.2.2.3 The Commission asked MSPGCL to submit the month-wise auxiliary
consumption for its Stations. The Commission observes that the auxiliary
consumption during the monsoon period is much higher than the normative
auxiliary consumption. The Commission observes that the poor coal
qualityduring the monsoon season led to increase in auxiliary consumption
for the year. However, for Nasik TPS, the actual auxiliary consumption is
lower than that approved in the Tariff Order. Also, it is unfortunate that the
auxiliary consumption of the newly commissioned Units like Paras Unit # 3
and Paras Unit # 4 is also higher than the normative auxiliary consumption
consistently achieved in the past.
4.2.2.4 The Commission, during the truing up exercise for the previous years, had
directed MSPGCL to sort out the coal related problems in accordance with
the contractual conditions at the highest level. MSPGCL is blending
imported coal for improving the coal quality. MSPGCL, in the Public
Hearing submitted that the Competition Commission of India had taken a
Order in Case No. 122 of 2014 Page 41 of 98
serious note of the coal related problems being faced by the Utilities
procuring power from Coal India Ltd. in its Order dated 9 December, 2013.
However, the said Order of the Competition Commission of India was
challenged by Coal India Ltd. in Competition Appellate Tribunal.
4.2.2.5 The Commission, in the true up for the previous years, had not considered
the coal related problems as prudent reason for relaxing the performance
parameters. Further, as regards the higher auxiliary consumption in percentage
terms due to lower gross generation, the Commission is of the view that this
reason will also be applicable when the actual generation is on higher side,
and the auxiliary consumption is reported lower in percentage terms, for
which MSPGCL would be entitled for efficiency gains. In case the reasons
given by MSPGCL are accepted for higher auxiliary consumption, then the
same would be applicable when generation has increased as compared to
normative generation and the mechanism of approving normative parameters
and sharing of gains and losses for better/under performance will not have
any sanctity.
4.2.2.6 For some of the stations, the actual auxiliary consumption achieved is lower
than the same approved in Tariff Order, while for some of the stations; the
actual auxiliary consumption is higher than the same approved in Tariff
Order. MSPGCL has submitted the sharing of gains and losses in accordance
with the provisions of MERC (Terms and Conditions of Tariff) Regulations,
2005. The Commission has considered the normative auxiliary consumption,
except for Parli TPS (including Unit # 6 and Unit # 7) and Khaperkheda Unit
# 5 during stabilisation period, for truing up purposes, and has considered the
difference between actual auxiliary consumption and normative auxiliary
consumption for computing the sharing of efficiency gain/loss for FY 2012-
13 in accordance with the provisions of MERC (Terms and Conditions of
Tariff) Regulations. For Parli TPS (including Unit # 6 and Unit # 7) and
Khaperkheda Unit # 5 during stabilisation period, the Commission has
considered the actual performance parameters in true up for FY 2012-13.
4.2.2.7 The auxiliary consumption approved by the Commission in true up for FY
2012-13 is as shown in the Table given below:
Table 4-2: Auxiliary Consumption approved by the Commission on true up
for FY 2012-13 (%)
Sl.
No. Station/Unit
Tariff
Order
True up
Petition
Approved
on true up
1 Bhusawal 10.80% 11.25% 10.80%
Order in Case No. 122 of 2014 Page 42 of 98
Sl.
No. Station/Unit
Tariff
Order
True up
Petition
Approved
on true up
2 Chandrapur 8.91% 9.39% 8.91%
3 Khaperkheda 9.77% 10.54% 9.77%
4 Koradi 10.81% 13.33% 10.81%
5 Nasik 11.80% 10.99% 11.80%
6 Parli 11.32% 12.75% 12.75%
7 Uran 2.40% 2.24% 2.40%
8 Paras Unit # 3 9.00% 9.99% 9.00%
9 Paras Unit # 4 9.00% 10.44% 9.00%
10 Parli Unit # 6 9.00% 12.15% 12.15%
11 Parli Unit # 7 9.00% 11.10% 11.10%
12 Khaperkheda Unit # 5
Stabilisation Period (16 Apr, 2012 to 12 Oct, 2012)
11.45%* 11.34% 11.34%
Post Stabilisation Period (13 Oct, 2012 to 31 Mar, 2013)
7.50% 6.58% 7.50%
*Approved on provisional basis in the Tariff Order
4.2.3 Gross Generation and Net Generation
Commission’s Analysis
4.2.3.1 MSPGCL submitted the SLDC Certificate for the actual PLF for FY 2012-
13. The Commission observes that the actual PLF submitted by MSPGCL
for FY 2012-13 matches the PLF certified by SLDC. Hence, the Commission
approves the gross generation for FY 2012-13 as submitted by MSPGCL.
The Commission has approved the net generation for FY 2012-13 based on
the approved auxiliary consumption for FY 2012-13. The gross generation
and net generation approved by the Commission for FY 2012-13 is as shown
in the Table given below:
Table 4-3: Gross Generation and Net Generation approved by the
Commission in true up for FY 2012-13 (MU)
Sl.
No. Station/Unit
Tariff Order True up Petition Approved on true up
Gross
Generation
Net
Generation
Gross
Generation
Net
Generation
Gross
Generation
Net
Generation
1 Bhusawal 2943.36 2625.48 2040.24 1810.74 2040.24 1819.89
2 Chandrapur 16398.72 14937.59 14066.82 12746.55 14066.82 12813.47
3 Khaperkheda 5886.72 5311.59 5381.17 4813.78 5381.17 4855.43
4 Koradi 4344.96 3875.27 2492.00 2159.78 2492.00 2222.61
5 Nasik 4415.04 3894.07 4243.25 3776.91 4243.25 3742.55
6 Parli 4415.04 3915.26 2337.43 2039.52 2337.43 2039.52
7 Uran 4709.38 4596.35 3741.04 3657.19 3741.04 3651.26
8 Paras Unit # 3 1752.00 1594.32 1572.34 1415.18 1572.34 1430.83
Order in Case No. 122 of 2014 Page 43 of 98
Sl.
No. Station/Unit
Tariff Order True up Petition Approved on true up
Gross
Generation
Net
Generation
Gross
Generation
Net
Generation
Gross
Generation
Net
Generation
9 Paras Unit # 4 1752.00 1594.32 1401.21 1254.87 1401.21 1275.10
10 Parli Unit # 6 1752.00 1594.32 939.15 825.04 939.15 825.04
11 Parli Unit # 7 1752.00 1594.32 930.49 827.22 930.49 827.22
12 Khaperkheda Unit
# 5
Stabilisation Period
(16 Apr, 2012 to 12
Oct, 2012) 737.08 652.71 737.08 653.52 737.08 653.52
Post Stabilisation
Period (13 Oct, 2012 to 31
Mar, 2013)
1433.62 1326.10 1433.62 1339.22 1433.62 1326.10
For the year 2170.70 1978.81 2170.70 1992.73 2170.70 1979.61
13 Total 52291.92 47511.69 41315.82 37319.50 41315.82 37482.51
4.2.4 Station Heat Rate (SHR)
Commission’s Analysis
4.2.4.1 The Commission, in its Order dated 21 June, 2012 in Case No. 6 of 2012 and
the Order dated 4 September, 2013 in Case No. 44 of 2013, approved the
SHR for FY 2012-13. As against the same, MSPGCL submitted the actual
SHR for FY 2012-13.
4.2.4.2 The actual SHR of Bhusawal TPS, Chandrapur TPS, Khaperkheda TPS,
Nasik TPS, Parli TPS, Paras Unit # 3 and Paras Unit # 4 is lower than the
normative SHR approved by the Commission. The reasons submitted by
MSPGCL for deviation in SHR for other Stations is as shown in the Table
given below:
Table 4-4: Reasons for deviation in SHR as submitted by MSPGCL
Station Reason for Deviation in SHR
Koradi TPS There was forced utilization of secondary oil during the rainy season,
which has led to an increase in the SHR of the station.
Uran GTPS Lower availability of gas led to operation of the plant in open cycle
mode resulting in higher SHR.
Parli Unit # 6
and Unit # 7
On account of acute shortage of water for power generation, only one
Unit was operated at a time and partial loading for a significant period of
time led to increase in SHR.
Khaperkheda The average quantum of coal received by the Unit was only 42% of the
overall coal requirement. On account of the above, the average loading
Order in Case No. 122 of 2014 Page 44 of 98
Station Reason for Deviation in SHR
Unit # 5 on the Unit was around 320 MW leading to partial operations and higher
secondary oil consumption. Accordingly, the SHR of the Unit has been
on a higher side.
4.2.4.3 The Commission asked MSPGCL to submit the month-wise SHR for its
Stations. The Commission observed that the SHR during the monsoon period
was much higher than the normative SHR for coal based generating
stations.The Commission, in the true up for the previous years, had not
considered the coal related problems as prudent reason for relaxing the
performance parameters. Further, if the actual performance parameters,
which are controllable in nature, are considered for true up irrespective of
whether the actual performance parameters are better or worse in comparison
to the normative performance parameters, then it would result in MSPGCL
and the consumers foregoing their legitimate efficiency gain on account of
better performance parameters and unilateral loading of the efficiency loss
on the consumers on account of underperformance. Hence, the Commission
had stipulated the mechanism of approving the normative parameters and
sharing of gains and losses for better/under performance in the Tariff
Regulations, which shall have sanctity in the approval of final true up.
4.2.4.4 For some of the stations, the actual station heat rate achieved is lower than
the same approved in Tariff Order, while for some of the stations, the actual
station heat rate is higher than the same approved in Tariff Order. MSPGCL
submitted the sharing of gains and losses in accordance with the provisions
of MERC (Terms and Conditions of Tariff) Regulations, 2005. MSPGCL has
estimated the sharing of variation in fuel cost on account of variation in
performance parameters by comparing the actual fuel cost with the fuel cost
computed considering the normative performance parameters.
4.2.4.5 The Commission has considered the normative SHR, except for Parli TPS
(including Unit # 6 and Unit # 7) and Khaperkheda Unit # 5 during
stabilisation period, for truing up purposes, and has considered the sharing of
efficiency gain/loss for FY 2012-13. For Parli TPS (including Unit # 6 and
Unit # 7) and Khaperkheda Unit # 5 during stabilisation period, the
Commission has considered the actual SHR in the true up for FY 2012-13.
4.2.4.6 The Commission has computed the normative SHR for Uran GTPS for FY
2012-13 based on the normative SHR of 1980 kcal/kWh for combined cycle
mode of operation and 2685 kcal/kWh for open cycle mode of
Order in Case No. 122 of 2014 Page 45 of 98
operationconsidering actual gross generation in combined cycle mode of
operation and open cycle mode of operation. The normative SHR computed
by the Commission for Uran GTPS for FY 2012-13 is as shown in the Table
given below:
Table 4-5: Normative SHR computed by the Commission for Uran GTPS
for FY 2012-13
Sl.
No. Particulars Units Value
1 Gross Generation
Combined Cycle MU 3631.29
Open Cycle MU 109.75
Total MU 3741.04
2 Normative SHR
Combined Cycle kcal/kWh 1980.00
Open Cycle kcal/kWh 2685.00
3 Resultant SHR kcal/kWh 2000.68
4.2.4.7 The SHR approved by the Commission in true up for FY 2012-13 is as
shown in the Table given below:
Table 4-6: SHR approved by the Commission on true up for FY 2012-13
(kcal/kWh)
Sl.
No. Station/Unit
Tariff
Order
True-up
Petition*
Approved on
true up
1 Bhusawal 2791.50 2788.39 2791.50
2 Chandrapur 2698.31 2660.74 2698.31
3 Khaperkheda 2612.68 2608.50 2612.68
4 Koradi 2825.52 2849.14 2825.52
5 Nasik 2756.50 2731.70 2756.50
6 Parli 2868.20 2837.99 2837.99
7 Uran 1980.00 2020.42 2000.68
8 Paras Unit # 3 2500.00 2479.95 2500.00
9 Paras Unit # 4 2500.00 2477.08 2500.00
10 Parli Unit # 6 2500.00 2625.22 2625.22
11 Parli Unit # 7 2500.00 2593.15 2593.15
12 Khaperkheda Unit # 5
Stabilisation Period (16 April, 2012 to 12 Oct, 2012)
2814.00** 2802.40 2802.40
Post Stabilisation Period (13 Oct, 2012 to 31 March, 2013)
2450.00 2519.50 2450.00
*as submitted in the excel formats
** approved on provisional basis in the Tariff Order
Order in Case No. 122 of 2014 Page 46 of 98
4.2.4.8 Further, as SHR is a controllable performance parameter, the Commission
has computed the sharing of gains/losses as per MERC Tariff Regulations,
2005.
4.2.5 Secondary Fuel Oil Consumption (SFOC)
Commission’s Analysis
4.2.5.1 The Commission, in its Order dated 21 June, 2012 in Case No. 6 of 2012 and
the Order dated 4 September, 2013 in Case No. 44 of 2013, approved the
secondary fuel oil consumption for FY 2012-13. As against the same,
MSPGCL submitted the actual auxiliary consumption for FY 2012-13. The
actual secondary fuel oil consumption for FY 2012-13 for Chandrapur TPS,
Nasik TPS, Paras Unit # 3 and Paras Unit # 4 lower than the secondary fuel
oil consumption approved by the Commission in the Tariff Order.
4.2.5.2 The reasons for the higher secondary fuel oil consumption submitted by
MSPGCL are given below:
Table 4-7: Reasons for deviation in Secondary Fuel Oil Consumption submitted by
MSPGCL
Sl.
No. Station Reasons for deviation in secondary fuel oil consumption
1 Bhusawal
The overall utilization during the non-monsoon period had
been less than the norm of 2 ml/kWh. The consumption
during the monsoon period had been more than norms on
account of issues associated with the intrinsic nature of the
WCL coal being used during such periods.
2 Khaperkheda
The higher secondary oil consumption is on account of flame
instability due to poor coal quality together with issues
associated with usage of WCL coal during monsoon season.
The consumption during monsoon season is significantly
higher than the norms on account of the above, leading to an
overall deviation in consumption of secondary oil.
3 Koradi
The specific oil consumption is typically higher during the
monsoon period from Jun to Oct 2012. Receipt of wet WCL
coal leads to issues in bunkering, CHP, and choking
problems, leading to higher oil consumption.
4
Parli (including
Unit # 6 and Unit
# 7)
There had been an acute water shortage in the region due to
which the units had to run on partial loads requiring
significant oil support for stabilization.
Order in Case No. 122 of 2014 Page 47 of 98
Sl.
No. Station Reasons for deviation in secondary fuel oil consumption
5 Khaperkheda
Unit # 5
There has been significant shortages in coal especially during
the stabilization period, which was during monsoon
season,which impacted the stable operations of the Unit
resulting in partial load operations, higher outages, and
increase in secondary oil consumption.
4.2.5.3 MSPGCL submitted that in Paras Unit # 3, there was considerable drop in
PLF during the monsoon season, whichled to higher oil consumption.
However, due to better performance during the remaining period, the overall
oil consumption for the year was less than the normative value. With wet,
muddy, sticky coal received in certain stations during monsoon season, the
oil consumption was significantly higher, which could not be offset by the
lower oil consumption during the remaining period, and this resulted in
overall oil consumption for the year being higher than the normative value.
4.2.5.4 The Commission asked MSPGCL to submit the month-wise secondary fuel
oil consumption for its stations for FY 2012-13. The Commission observes
that the secondary fuel oil consumption during the monsoon period is higher
than the normative secondary fuel oil consumption but the same had been
offset by much lower secondary fuel oil consumption during non-monsoon
period. However, for some of the stations, this could not be achieved. The
Commission is of the view that MSPGCL was able to curtail the secondary
fuel oil consumption below the normative level in some of the stations on
annual basis, and hence, does not find any reason to relax the norms for some
of the stations. The Commission, in the true up for the previous years, had
not considered the coal related problems as prudent reason for relaxing the
performance parameters.
4.2.5.5 MSPGCL submitted the sharing of gains and losses in accordance with the
provisions of MERC (Terms and Conditions of Tariff) Regulations, 2005.
MSPGCL has estimated the sharing of variation in fuel cost on account of
variation in performance parameters by comparing the actual fuel cost with
the fuel cost computed considering the normative performance parameters.
Order in Case No. 122 of 2014 Page 48 of 98
4.2.5.6 The Commission has considered the normative secondary fuel oil
consumption, except for Parli TPS (including Unit # 6 and Unit # 7)and
Khaperkheda Unit # 5 during stabilisation period in the true up for FY 2012-
13. For Parli TPS (including Unit # 6 and Unit # 7) and Khaperkheda Unit #
5 during stabilisation period, the Commission has considered the actual
secondary fuel oil consumption in true up for FY 2012-13. The secondary
fuel oil consumption approved by the Commission on true up for FY 2012-
13 is as shown in the Table given below:
Table 4-8: Secondary fuel oil consumption approved by the Commission on
true up for FY 2012-13 (ml/kWh)
Sl.
No. Station/Unit
Tariff
Order
True up
Petition
Approved
on true up
1 Bhusawal 2.00 3.63 2.00
2 Chandrapur 2.00 1.56 2.00
3 Khaperkheda 2.00 5.99 2.00
4 Koradi 2.81 6.92 2.81
5 Nasik 3.00 1.48 3.00
6 Parli 2.00 7.40 7.40
7 Paras Unit # 3 2.00 1.61 2.00
8 Paras Unit # 4 2.00 1.64 2.00
9 Parli Unit # 6 2.00 6.59 6.59
10 Parli Unit # 7 2.00 5.03 5.03
11 Khaperkheda Unit # 5
Stabilisation Period
(16 April, 2012 to 12 Oct, 2012) 15.32 15.32 15.32
Post Stabilisation Period
(13 Oct, 2012 to 31 Mar, 2013) 2.00 2.39 2.00
4.2.5.7 Further, as Secondary Fuel Oil Consumption is a controllable performance
parameter, the Commission has computed the sharing of gains/losses as per
MERC Tariff Regulations, 2005.
4.2.6 Transit Loss
Commission’s Analysis
4.2.6.1 The Commission, in its Order dated 21 June, 2012 in Case No. 6 of 2012 and
the Order dated 4 September, 2013 in Case No. 44 of 2013, approved the
transit loss for FY 2012-13. As against the same, MSPGCL submitted the
actual transit loss for FY 2012-13. The actual transit loss for FY 2012-13 is
lower than the normative transit loss of 0.80% except for Koradi TPS, Nasik
TPS and Khaperkheda Unit # 5.
Order in Case No. 122 of 2014 Page 49 of 98
4.2.6.2 The Commission asked MSPGCL to submit the justification for higher
transit loss for some of the stations.
4.2.6.3 MSPGCL submitted that the reasons for higher transit loss are evaporation of
surface moisture in transit, deviations in weighbridge measurements, coal
theft during transit, and long distances involved in coal transportation. The
higher transit loss in Nasik TPS during the period December 2012 to
February 2013 was due to diversion of coal rakes from Rajnagar, Jamuna,
Bijuri, Kumda, Govinda, Bhatgaon collieries and under loading of rakes. The
transit loss of 4.03% for Koradi TPS wasdue to under loading of rakes and
pilferage due to long distance transportation of coal. For Khaperkheda Unit #
5, the under loading of rakes and pilferage due to long distance
transportation of coal resulted in higher transit loss. MSPGCL requested the
Commission to allow actual transit loss treating the same as uncontrollable.
4.2.6.4 MSPGCL further submitted during the Public Hearing that appropriate
measures have been initiated for curtailing the transit loss and claims have
been lodged with the appropriate authorities. Further, if the actual
performance parameters, which are controllable in nature, are considered for
true up irrespective of whether the actual performance parameters are better
or worse in comparison to the normative performance parameters, then it
would result in MSPGCL and the consumers foregoing their legitimate
efficiency gain on account of better performance parameters and unilateral
loading of the efficiency loss on the consumers on account of
underperformance. Hence, the Commission had stipulated the mechanism of
approving the normative parameters and sharing of gains and losses for
better/under performance in the Tariff Regulations, which shall have sanctity
in the approval of final true up.
4.2.6.5 MSPGCL submitted the sharing of gains and losses in accordance with the
provisions of MERC (Terms and Conditions of Tariff) Regulations, 2005.
MSPGCL has estimated the sharing of variation in fuel cost on account of
variation in performance parameters by comparing the actual fuel cost with
the fuel cost computed considering the normative performance parameters.
4.2.6.6 The Commission has considered the normative transit loss, except for Parli
TPS (including Unit # 6 and Unit # 7) and Khaperkheda Unit # 5 during
stabilisation period, for truing up purposes, and has considered the sharing of
efficiency gain/loss for FY 2012-13. For Parli TPS (including Unit # 6 and
Unit # 7) and Khaperkheda Unit # 5 during stabilisation period, the
Order in Case No. 122 of 2014 Page 50 of 98
Commission has considered the actual transit loss in true up for FY 2012-13
considering the water shortage for power generation as uncontrollable factor.
4.2.6.7 The Commission has approved the normative transit loss of 0.80% for FY
2012-13, as shown in the Table given below:
Table 4-9: Transit loss approved by the Commission on true up for FY
2012-13 (%)
Sl.
No. Station/Unit
Tariff
Order
True-up
Petition Allowable
1 Bhusawal 0.80% 0.79% 0.80%
2 Chandrapur 0.80% 0.28% 0.80%
3 Khaperkheda 0.80% 0.33% 0.80%
4 Koradi 0.80% 4.03% 0.80%
5 Nasik 0.80% 1.72% 0.80%
6 Parli 0.80% 0.80% 0.80%
7 Paras Unit # 3 0.80% 0.57% 0.80%
8 Paras Unit # 4 0.80% 0.65% 0.80%
9 Parli Unit # 6 0.80% 0.78% 0.78%
10 Parli Unit # 7 0.80% 0.80% 0.80%
11 Khaperkheda Unit # 5
Stabilisation Period
(16 Apr, 2012 to 12 Oct, 2012) 0.80% 1.30% 1.30%
Post Stabilisation Period
(13 Oct, 2012 to 31 Mar, 2013) 0.80% 1.30% 0.80%
4.2.6.8 Further, since Transit Loss is a controllable performance parameter, the
Commission has computed the sharing of gains/losses as per MERC Tariff
Regulations, 2005.
4.3 Variable Charges
4.3.1 Landed Fuel Prices
Commission’s Analysis
4.3.1.1 MSPGCL has submitted the station-wise actual domestic coal price based on
the actual transit loss. The Commission has re-computed the station-wise
landed price of domestic coal considering the approved transit loss. The
Commission has considered the landed price of imported coal as submitted
by MSPGCL. For Uran GTPS, the Commission has considered the actual gas
prices as submitted by MSPGCL. The fuel prices considered by the
Order in Case No. 122 of 2014 Page 51 of 98
Commission on true up for FY 2012-13 are as shown in the Table given
below:
Table 4-10: Fuel prices considered by the Commission for true up for FY
2012-13
Sl.
No. Station/Unit
Coal
FO LDO APM
Gas
RIL
Gas Indian
Coal
Imported
Coal
Rs./MT Rs./kL Rs./kL Rs./m3 Rs./m3
1 Bhusawal 2515 6881 43618 58001 - -
2 Chandrapur 1890 6517 43724 57646 - -
3 Khaperkheda 1984 8638 46799 55371 - -
4 Koradi 3345 - 45463 43353 - -
5 Nasik 4408 8083 45818 45679 - -
6 Parli 2545 - 45247 56241 - -
7 Uran - - - - 8178 13623
8 Paras Unit # 3 2218 - 48902 60252 - -
9 Paras Unit # 4 2169 - 48706 62845 - -
10 Parli Unit # 6 2492 - 45142 59832 - -
11 Parli Unit # 7 2508 - 44866 58409 - -
12 Khaperkheda Unit # 5
- -
Stabilisation Period (16 Apr, 2012 to 12 Oct,
2012) 1795 6240 46799 55371 - -
Post Stabilisation
Period (13 Oct, 2012 to 31 Mar,
2013)
1786 6240 46799 55371 - -
4.3.2 Calorific Value of fuels
Commission’s Analysis
4.3.2.1 The MERC (Terms and Conditions of Tariff) Regulations, 2005 specifies
that the gross calorific value of fuel should be considered on „as fired‟
basis and further, the achievable performance parameters have been
approved by the Commission based on the tests conducted by CPRI, which
were also done based on bunkered calorific value of blended coal. Therefore,
the Commission in accordance with the practice adopted in previous Orders
for carrying out the true up of fuel expenses, has considered the bunkered
calorific value and actual proportion (blending) of domestic coal and
imported coal for each Station, as submitted by MSPGCL. The following
Table provides the details of calorific value considered by the Commission
for true up for FY 2012-13:
Order in Case No. 122 of 2014 Page 52 of 98
Table 4-11: Calorific value of fuels considered by the Commission for true
up for FY 2012-13
Sl.
No. Station/Unit
Coal
FO LDO APM
Gas RIL Gas Indian
Coal
Imported
Coal
Bunkered
Coal
kcal/kg kcal/kg kcal/kg kcal/SM3 kcal/SM3
1 Bhusawal 2968 5643 3066 10276 10491 - -
2 Chandrapur 3203 5184 3146 9884 10621 - -
3 Khaperkheda 2867 5113 2896 10206 10619 - -
4 Koradi 3572 - 3303 10134 10559 - -
5 Nasik 3427 5774 3433 10156 10552 - -
6 Parli 3247 - 3247 10146 10479 - -
7 Uran - - - - - 8537 8511
8 Paras Unit # 3 3312 - 3162 10164 10500 - -
9 Paras Unit # 4 3312 - 3124 10182 10505 - -
10 Parli Unit # 6 3211 - 3211 10147 10367 - -
11 Parli Unit # 7 3247 - 3247 10154 10510 - -
12 Khaperkheda Unit
# 5 - -
Stabilisation
Period (16 Apr, 2012 to 12
Oct, 2012)
2991 5452 2928 10196 10603 - -
Post Stabilisation
Period (13 Oct, 2012 to 31
Mar, 2013)
2754 4529 3034 10169 10620 - -
4.3.3 Fuel Cost
Commission’s Analysis
4.3.3.1 Based on the approved performance parameters and fuel prices and calorific
value of fuels as discussed above, the total fuel cost approved by the
Commission on true up for FY 2012-13, is as shown in the Table given
below:
Table 4-12: Fuel cost approved by the Commission on true up for FY 2012-
13 (Rs. Crore)
Sl.
No. Station/Unit
True up
Petition
Approved on
true up
1 Bhusawal 609.36 597.92
2 Chandrapur 2954.66 3030.14
3 Khaperkheda 1338.09 1260.93
4 Koradi 804.55 738.21
Order in Case No. 122 of 2014 Page 53 of 98
Sl.
No. Station/Unit
True up
Petition
Approved on
true up
5 Nasik 1662.80 1686.23
6 Parli 588.42 588.42
7 Uran 791.63 783.90
8 Paras Unit # 3 283.99 289.54
9 Paras Unit # 4 251.20 256.12
10 Parli Unit # 6 215.73 215.73
11 Parli Unit # 7 204.82 204.82
12 Khaperkheda Unit # 5
Stabilisation Period
(16 Apr, 2012 to 12 Oct, 2012) 193.89 193.89
Post Stabilisation Period
(13 Oct, 2012 to 31 Mar, 2013) 386.59 373.46
For the year 580.48 567.34
13 Total 10285.73 10219.29
4.3.3.2 The Commission approves the fuel cost of Rs. 10219.29 Crore on true up for
FY 2012-13 considering the approved performance parameters, fuel prices
and calorific value of fuels. Further, as variation in fuel cost as submitted by
MSPGCL and as approved by the Commission on true up is on account of
variations in performance parameters, which are controllable factors, the
Commission has carried out the sharing of gains and losses of fuel cost in
accordance with the provisions of MERC Tariff Regulations, 2005.
4.3.4 Other variable charges
Commission’s Analysis
4.3.4.1 The Commission, in its Order dated 21 June, 2012 in Case No. 6 of 2012 and
the Order dated 4 September, 2013 in Case No. 44 of 2013, approved the
other variable charges for FY 2012-13. As against the same, the actual other
variable charges for FY 2012-13, as submitted by MSPGCL is as shown in
the Table given below:
Table 4-13: Other variable charges for FY 2012-13 (Rs. Crore)
Sl.
No. Station/Unit
Tariff
Order
True up
Petition
1 Bhusawal 24.63 25.21
2 Chandrapur 64.49 81.99
3 Khaperkheda 20.31 32.86
4 Koradi 34.57 52.48
5 Nasik 34.13 61.57
6 Parli 46.50 56.88
Order in Case No. 122 of 2014 Page 54 of 98
Sl.
No. Station/Unit
Tariff
Order
True up
Petition
7 Uran 0.95 0.63
8 Paras Unit # 3 9.30 13.75
9 Paras Unit # 4 28.35 13.75
10 Parli Unit # 6 9.92 22.78
11 Parli Unit # 7 14.02 22.49
12 Khaperkheda Unit # 5 16.15 15.37
13 Total Thermal 303.32 399.76
14 Hydro 0.00 0.66
15 Total MSPGCL 303.32 400.42
4.3.4.2 The Commission asked MSPGCL to submit the reasons for the increase in
other variable charges. MSPGCL submitted that the other variable charges
have increased due to the increase in coal handling contract charges. The
reasons for increase in other variable charges submitted by MSPGCL are as
shown in the Table given below:
Table 4-14: Reasons for increase in other variable charges submitted by
MSPGCL
Sl.
No. Station/Unit Reasons for increase in other variable charges
1 Chandrapur Increase in coal handling contract charges due to rise in
contract labour charges and increase in quantity of coal
handled during the year.
2 Khaperkheda Rail track maintenance cost has been considered in coal
handling contract charges. Cost of water has increased due to
higher consumption of water and settlement of disputed bills
pertaining to previous period, in FY 2012-13.
3 Koradi Other coal related charges have increased due to the
performance incentive payable to SECL. Cost of water has
increased.
4 Nasik Coal handling contract charges have increased due to rise in
loading component by around 80%-90% and increase in
labour rates. Additional contracts for supply and laying of
tarpaulins have been initiated for covering coal and bunkering
of dry coal in monsoon season.
Major loss of coal stock due to stones and shale, moisture
evaporation from the stacked coal, and windage loss during
crushing, stacking and reclaiming of coal.
Order in Case No. 122 of 2014 Page 55 of 98
Sl.
No. Station/Unit Reasons for increase in other variable charges
5 Parli Water shortage for power generation in FY 2012-13 led to
purchase of water at higher rates applicable for special
release, from Majalgaon dam and Jaikawadi dam during the
period April 2012 to June 2012. The rates applicable for
special release are Rs. 115.20/m3 for industrial water and Rs.
3.79/m3 for domestic water as against the rates of Rs.
11.40/m3 and Rs. 0.79/m
3 applicable for general release.
6 Parli Unit # 6
7 Parli Unit # 7
4.3.4.3 After scrutiny of the information placed on record, the Commission
considers it prudent to approve the actual other variable charges for FY
2012-13.
4.3.4.4 The Commission approves the other variable charges of Rs. 400.42 Crore on
true up for FY 2012-13.
4.3.5 Variable charges
Commission’s Analysis
4.3.5.1 The total variable charges approved by the Commission on true up for FY
2012-13 are as shown in the Table given below:
Table 4-15: Total Normative variable charges approved by the Commission
on true up for FY 2012-13 (Rs. Crore)
Sl.
No. Station/Unit
Fuel Cost Other variable
charges
Total variable charges
at Performance
Parameters approved
by the Commission
True up
Petition
Approved
on true up
True up
Petition
Approved
on true up
True up
Petition
Approved
on true up
1 Bhusawal 609.36 597.92 25.21 25.21 634.57 623.13
2 Chandrapur 2954.66 3030.14 81.99 81.99 3036.64 3112.12
3 Khaperkheda 1338.09 1260.93 32.86 32.86 1370.95 1293.79
4 Koradi 804.55 738.21 52.48 52.48 857.04 790.69
5 Nasik 1662.80 1686.23 61.57 61.57 1724.37 1747.80
6 Parli 588.42 588.42 56.88 56.88 645.30 645.30
7 Uran 791.63 783.90 0.63 0.63 792.26 784.53
8 Paras Unit # 3 283.99 289.54 13.75 13.75 297.74 303.29
9 Paras Unit # 4 251.20 256.12 13.75 13.75 264.96 269.87
10 Parli Unit # 6 215.73 215.73 22.78 22.78 238.52 238.52
Order in Case No. 122 of 2014 Page 56 of 98
Sl.
No. Station/Unit
Fuel Cost Other variable
charges
Total variable charges
at Performance
Parameters approved
by the Commission
True up
Petition
Approved
on true up
True up
Petition
Approved
on true up
True up
Petition
Approved
on true up
11 Parli Unit # 7 204.82 204.82 22.49 22.49 227.30 227.30
12 Khaperkheda
Unit # 5 580.48 567.34 15.37 15.37 595.84 582.71
13 Total Thermal 10285.73 10219.29 399.76 399.76 10685.49 10619.05
14 Hydro - - 0.66 0.66 0.66 0.66
15
Total
(Including
Thermal and
Hydro)
10285.73 10219.29 400.42 400.42 10686.15 10619.71
4.3.5.2 The Commission approves the total variable charges of Rs. 10619.71
Crore on true up for FY 2012-13.
4.3.5.3 Further, as the total variable charges are at the performance parameters
approved by the Commissionand the performance parameters are the
controllable factors, the Commission has carried out the sharing of gains and
losses on account of variations in performance parameters as discussed
subsequently in the Order.
4.4 Capital expenditure (capex) and capitalisation
4.4.1 Capitalisation in FY 2012-13
MSPGCL’s submission
4.4.1.1 MSPGCL submitted the actual capitalisation of Rs. 197.30 Crore for FY
2012-13 as against the capitalisation of Rs. 473.10 Crore approved by the
Commission.
4.4.1.2 MSPGCL submitted that although the schemes approved by the Commission
are being implemented,however, on account of lead time in supply of
equipment by the manufacturers, adequate timeline to facilitate participation
in the tendering process, due-diligence on the quoted prices by the bidders,
etc., the implementation process might deviate from the initially envisaged
schedule. The additional capitalisation for Paras Unit # 4 has been claimed in
accordance with the provisions of Regulation 30.3 of the MERC (Terms and
Conditions of Tariff) Regulations, 2005.
Order in Case No. 122 of 2014 Page 57 of 98
4.4.1.3 The COD of Paras Unit # 4 is 31 August, 2010. MERC (Terms and
Conditions of Tariff) Regulations, 2005 defines the cut-off date as date of the
first financial year closing after 365 days of the date of commissioning.
Hence, the additional capitalisation claimed by MSPGCL for Paras Unit # 4
is after the cut-off date and shall be governed by Regulation 30.3 of the
MERC (Terms and Conditions of Tariff) Regulations, 2005, as reproduced
below:
Commission’s Analysis
4.4.1.4 Regulation 30.3 of the MERC (Terms and Conditions of Tariff) Regulations,
2005 specifies as under:
“30.3 The capital expenditure of the following nature actually incurred after
thecut-offdate may be allowed by the Commission for inclusion in the original cost
of
project, subject to prudence check:
(i) Deferred liabilities relating to works/services within the original
scope of work;
(ii) Liabilities to meet award of arbitration or for compliance of the
order or decree of a court;
(iii) On account of change in law;
(iv) Any additional works/services which have become necessary for
efficient and successful operation of the generating station, but not
included in the original project cost; and
(v) Deferred works relating to ash pond or ash handling system in the
original scope of work.”
4.4.1.5 MSPGCL, in reply to a specific query of the Commission, submitted the
details of additional capitalisation claimed for Paras Unit # 4. The
Commission, after scrutiny of the material placed on record, finds that the
additional capitalisation claimed by MSPGCL is allowable under Regulation
30.3 of the MERC (Terms and Conditions of Tariff) Regulations, 2005 as it
pertains to deferred liabilities within the original scope of work.
4.4.1.6 The Commission observed that MSPGCL has claimed the capitalisation of
Rs. 17.03 Crore for Koradi TPS in FY 2012-13 under the head „transfer of
Order in Case No. 122 of 2014 Page 58 of 98
generator stator from Bhusawal TPS. MSPGCL submitted that the additional
capitalisation of Rs. 17.03 Crore approved by the Commission for Bhusawal
TPS in FY 2011-12 had been transferred to Koradi TPS and capitalised in
FY 2012-13. Accordingly, the assets have been deducted from Bhusawal
TPS in FY 2012-13. The Commission has observed that the assets of Rs.
17.03 Crore have been deducted from Bhusawal TPS in FY 2012-13 and the
same had been added for Koradi TPS in FY 2012-13. Hence, the
Commission finds the submission of MSPGCL in order.
4.4.1.7 The Commission has verified the actual capitalisation claimed by MSPGCL
as against the capex schemes already approved by the Commission. The
Commission‟s rationale for approving the capitalisation for FY 2012-13 in
this Order is discussed below:
DPR schemes (above Rs. 10 Crore each):100% capitalisation
approved for all DPR schemes capitalised in the year (Schemes above
individual cost more than Rs. 10 Crore) and where in-principle
approval has been obtained from the Commission.
Non-DPR schemes (Schemes less than Rs. 10 Crore each): the
Commission has analysed the cost benefit analysis on non-DPR
schemes submitted by MSPGCL and accordingly approved the
capitalisation of non-DPR schemes for which cost benefit analysis
has been submitted to the satisfaction of the Commission.
4.4.1.8 The summary of actual capitalisation and capitalisation approved by the
Commission on true up for FY 2012-13 is as shown in the Table given
below:
Table 4-16: Capitalisation approved by the Commission on true up for FY
2012-13 (Rs. Crore)
Sl.
No. Station/Unit
Tariff
Order
True up
Petition
Approved
on true up
1 Bhusawal 123.43 10.83 10.83
2 Chandrapur 85.33 45.65 45.65
3 Khaperkheda 30.00 11.77 11.77
4 Koradi 5.96 22.31 22.31
5 Nasik 28.16 7.61 7.61
6 Parli 37.75 0.54 0.54
7 Uran 3.91 4.24 4.24
Order in Case No. 122 of 2014 Page 59 of 98
Sl.
No. Station/Unit
Tariff
Order
True up
Petition
Approved
on true up
8 Hydro 0.00 5.70 5.70
9 Paras Unit # 3 1.14 0.00 0.00
10 Paras Unit # 4 0.45 80.77 80.77
11 Parli Unit # 6 98.66 0.06 0.06
12 Parli Unit # 7 0.00 7.82 7.82
13 Khaperkheda Unit # 5 58.31 0.00 0.00
14 Total 473.10 197.30 197.30
4.4.1.9 The Commission approves the capitalisation of Rs. 197.30 Crore on true
up for FY 2012-13 as claimed by MSPGCL.
4.5 Annual Fixed Charges
4.5.1 Operation and Maintenance (O&M) expenses
MSPGCL’s submission
4.5.1.1 The Commission, in its Order dated 21 June, 2012 in Case No. 6 of 2012 and
the Order dated 4 September, 2013 in Case No. 44 of 2013, approved the
O&M expenses of Rs. 1564.29 Crore for FY 2012-13. As against the same,
MSPGCL submitted the actual O&M expenses for FY 2012-13 as Rs.
1651.52 Crore.
4.5.1.2 MSPGCL submitted that the deviation in O&M expenses is on account of the
following reasons:
a. Year-on-Year increase in pay revision amount
b. O&M expenses for Ghatghar PSS
c. Non-consideration of gross expenses in the base year of FY 2006-07
d. Gratuity and leave encashment
e. Increase in R&M expenses
4.5.1.3 MSPGCL submitted that with the allowance of pay revision, the base O&M
expenses have changed, but for projection purposes, the previous base of
O&M expenses had been considered and the impact of pay revision had been
allowed separately. MSPGCL submitted that the impact of pay revision
should have been also included in the base expenses, as approved by the
Order in Case No. 122 of 2014 Page 60 of 98
Commission on true up for FY 2011-12 in the Order dated 3 March, 2014 in
Case No. 54 of 2013.
4.5.1.4 MSPGCL submitted that the O&M expenses for Ghatghar PSS for FY 2012-
13 had been approved by escalating the actual O&M expenses for FY 2010-
11 with the applicable escalation rates.Ghatghar PSS was commissioned on
16 September, 2008 and Unit # 1 was leased to MSPGCL on 17 August,
2009 and Unit # 2 was leased to MSPGCL on 3 January, 2011. The approval
for O&M expenses for Ghatghar PSS was sought for the first time in the
Petition dated 10 December, 2011 in Case No. 6 of 2012. The Commission
issued the Order on approval of lease rental for Ghatghar PSS on 27
December, 2012 in Case No. 2 of 2012.
4.5.1.5 MSPGCL submitted that the MERC Tariff Regulations, 2005 specifies the
O&M expenses for new hydro generating stations at 1.50% of the approved
original project cost. MSPGCL requested the Commission to determine the
normative O&M expenses for Ghatghar PSS in accordance with the
provisions of MERC Tariff Regulations, 2005. The actual O&M expenses of
Ghatghar PSS for FY 2012-13 are Rs. 6.06 Crore.
4.5.1.6 MSPGCL submitted that in FY 2006-07, the annual accounts were prepared
as per principles of ESAAR, wherein the capitalisation of expenses was
apportioned to various stations and field units based on the closing Work in
Progress.Under ESAAR, the overall expenses towards employees working in
projects and also for operating stations were capitalized in the proportion of
the closing value of capital work in progress in respective departments.
Therefore, in FY 2006-07, part of O&M expenses in the operating stations
also got capitalized besides 100% capitalisation for employees working in
projects and construction departments. From FY 2007-08, the Company has
started preparing the annual accounts as per the Companies Act, 1956
wherein only the expenses towards the projects and construction functions
have been capitalised. MSPGCL requested the Commission to re-examine
this fundamental aspect and allow the O&M expenses during the true up for
FY 2012-13.
4.5.1.7 MSPGCL submitted that the actual expense towards gratuity and leave
encashment was Rs. 135.84 Crore in FY 2012-13, which is an increase of
32% over the actual expenses in FY 2011-12. The actuarial variation report
for FY 2012-13 has been submitted along with the Petition. The expenses
Order in Case No. 122 of 2014 Page 61 of 98
towards gratuity and leave encashment are independent of the escalation
rates approved by the Commission and are uncontrollable in nature.
4.5.1.8 MSPGCL submitted that most of its Units have outlived the useful life of 25
years and hence, the R&M expenses for vintage Units have increased.
Commission’s Analysis
4.5.1.9 The Commission observed that there has been removal of vintage Units in
Nasik TPS in FY 2011-12. The Commission has calculated the station-wise
O&M expenses on MW basis using the approved expenses for FY 2011-12
and by applying the escalation rate of 8.35% approved by the Commission
for FY 2012-13 in Case No. 44 of 2013. The Commission, in the Order dated
3 March, 2014 in Case No. 54 of 2013 had acknowledged the fact that the
base O&M expenses had undergone revision on account of the allowance of
pay revision and accordingly approved the escalation in the escalable
component of the pay revision amount in the final true up for FY 2011-12.
Similarly, apart from the normative expenses, the Commission has
considered the impact of pay revision in the final true up for FY 2012-13 by
considering the escalation rate of 8.35%.
4.5.1.10 With regards to the revision of O&M expenses for Ghatghar PSS, the
Commission in the Order dated 11 November, 2014 in Case No. 103 of 2014
ruled as under:
“41. In its impugned Orders, the Commission has not separately approved
the O&M expenses for Ghatghar PSS. Instead, as in earlier Tariff
Orders for MSPGCL, it has approved the O&M expenses for Hydro
Power Stations (HPS) operated by MSPGCL as a whole. The Tariff
Regulations, 2005 specify O&M expenses for new HPS as 1.50% of the
approved original project cost. The Commission has not approved the
project cost of Ghatghar PSS and hence the tariff of Ghatghar PSS
since it is owned by the WRD, GoM and leased to MSPGCL for
operation. Instead, the Commission has approved the Lease Rent for
the HPS operated by MSPGCL, and the O&M expenses as per the
methodology proposed by MSPGCL in its MYT Petition.
42. The O&M expenses for the HPS were approved in the MYT Order in
accordance with the MYT Regulations and the approach of MSPGCL
in its MYT Petition. In its Order dated 21 June, 2012 in Case No. 6 of
Order in Case No. 122 of 2014 Page 62 of 98
2012, the Commission approved the O&M expenses for FY 2011-12
and FY 2012-13 in accordance with its Tariff Regulations, 2005, and
the expenses for the second Control Period FY 2013-14 to FY 2015-16
in accordance with MYT Regulations, 2011. Thereafter, the
Commission had issued two further Orders. MSPGCL did not raise the
issue regarding the O&M expenses of Ghatghar PSS during those
proceedings.”
4.5.1.11 Hence, the Commission does not find any merit in revisiting this issue.
4.5.1.12 As regards to the non-consideration of gross expenses in the base year, ATE
vide its Judgment dated 28 November, 2013 had dismissed the Review
Petition No. 6 of 2013 in Appeal No. 47 of 2012 in which MSPGCL had
raised the issue of gross expenses in the base year. Hence, the Commission
does not find any merit in revisiting this issue.
4.5.1.13 The Commission observes that the actual O&M expenses for some of the
Stations are lower than the normative O&M expenses. If the actual
performance parameters, which are controllable in nature, are considered for
true up irrespective of whether the actual performance parameters are better
or worse in comparison to the normative performance parameters, then it
would result in MSPGCL and the consumers foregoing their legitimate
efficiency gain on account of better performance parameters and unilateral
loading of the efficiency loss on the consumers on account of
underperformance. Hence, the Commission had stipulated the mechanism of
approving the normative parameters and sharing of gains and losses for
better/under performance in the Tariff Regulations, which shall have sanctity
in the approval of final true up.
4.5.1.14 MSPGCL has submitted the sharing of gains and losses in accordance with
the provisions of MERC (Terms and Conditions of Tariff) Regulations,
2005. MSPGCL has computed the sharing of variation in O&M expenses by
comparing the actual O&M expenses and the normative O&M expenses
computed in accordance with the provisions of MERC Tariff Regulations,
2005. Accordingly, MSPGCL has computed the normative O&M expenses
of 1594.58 Crore. The Commission has observed that the normative O&M
expenses for Ghatghar PSS have been computed by MSPGCL in accordance
with the provisions of MERC (Terms and Conditions of Tariff) Regulations,
2005. The Commission also observed that MSPGCL has considered the
escalation factor of 8.31% for computing the normative O&M expenses
Order in Case No. 122 of 2014 Page 63 of 98
(excluding pay revision amount) for FY 2012-13 while the Commission has
approved the escalation factor of 8.35%.The Commission in the final true up
for FY 2011-12 had trued up the O&M expenses for Ghatghar PSS by
escalating the actual O&M expenses for FY 2010-11. MSPGCL has
requested the Commission to reconsider, since, the Commission in the final
true up for FY 2010-11 had trued up the O&M expenses for Ghatghar PSS
based on the actual expenses. Hence, the Commission allows the differential
amount between the actual O&M expenses of Ghatghar PSS for FY 2011-12
and that approved in the final true up for FY 2011-12 in this Order.
4.5.1.15 The revised total normative O&M expenses for FY 2012-13 as approved by
the Commission are Rs. 1586.48 Crore. The Commission has approved the
actual O&M expenses for Ghatghar PSS for FY 2012-13. Further, O&M
expenses being controllable, the Commission has considered the variation in
actual and approved normative O&M expenses as efficiency gain/loss and
has carried out the sharing of gains and losses in accordance with MERC
Tariff Regulations. The revised normative O&M expenses approved by the
Commission on true up for FY 2012-13 are as shown in the Table given
below:
Table 4-17: O&M expenses approved by the Commission on true up for FY
2012-13 (Rs. Crore)
Sl.
No. Station/Unit
Tariff
Order
True-up
Petition
Approved on
true up
1 Bhusawal 118.28 151.91 120.03
2 Chandrapur 381.43 423.72 387.96
3 Khaperkheda 162.50 178.78 165.29
4 Koradi 163.12 171.95 164.02
5 Nasik 149.70 189.46 152.26
6 Parli 174.79 130.86 177.59
7 Uran 59.17 60.09 59.56
8 Hydro 92.02 109.46 95.12
9 Paras Unit # 3 47.47 55.01 48.14
10 Paras Unit # 4 45.20 55.01 45.21
11 Parli Unit # 6 47.47 39.86 48.14
12 Parli Unit # 7 45.20 39.86 45.21
13 Khaperkheda Unit # 5 77.94 45.57 77.94
14 Total 1564.29 1651.52 1586.48
Order in Case No. 122 of 2014 Page 64 of 98
4.5.1.16 The Commission approves the normative O&M expenses of Rs. 1586.48
Crore on true up for FY 2012-13 in accordance with the approach
adopted in previous Orders.
4.5.1.17 Further, as O&M expenses is a controllable parameter as defined under
MERC Tariff Regulations, 2005, the Commission has computed the sharing
of gains/losses on the basis of normative O&M expenses and actual O&M
expenses.
4.5.2 Depreciation including Advance Against Depreciation (AAD)
Commission’s Analysis
4.5.2.1 The Commission, in its Order dated 21 June, 2012 in Case No. 6 of 2012 and
the Order dated 4 September, 2013 in Case No. 44 of 2013, approved the
depreciation including AAD for FY 2012-13 as Rs. 682.25 Crore. As against
the same, the depreciationincluding AAD for FY 2012-13 as submitted by
MSPGCL is Rs. 817.89 Crore.
4.5.2.2 MSPGCL submitted that the depreciation including AAD has been computed
in accordance with the provisions of MERC Tariff Regulations, 2005. The
depreciation on assets capitalised during the year has been considered on
pro-rata basis from the date of capitalisation.
4.5.2.3 The Commission has considered the approved closing GFA for FY 2011-12
as the opening GFA for FY 2012-13. The depreciation on opening GFA has
been computed in accordance with the provisions ofMERC Tariff
Regulations, 2005. The depreciation on assets capitalised during the year has
been computed on pro-rata basis from the date of capitalisation. Further,
Advance against Depreciation has been computed in accordance with the
provisions of MERC Tariff Regulations, 2005. The depreciation including
AAD approved by the Commission on true up for FY 2012-13 is as shown in
the Table below:
Table 4-18: Depreciation including AAD approved by the Commission on
true up for FY 2012-13 (Rs. Crore)
Sl.
No. Station/Unit
Tariff
Order
True-up
Petition
Approved on
true up
1 Bhusawal 16.36 17.41 17.40
2 Chandrapur 78.85 110.17 110.16
3 Khaperkheda 84.55 85.27 85.27
4 Koradi 26.39 16.79 17.24
5 Nasik 22.98 39.97 39.97
Order in Case No. 122 of 2014 Page 65 of 98
Sl.
No. Station/Unit
Tariff
Order
True-up
Petition
Approved on
true up
6 Parli 19.83 34.87 34.87
7 Uran 1.79 2.34 2.30
8 Hydro 6.98 8.78 8.78
9 Paras Unit # 3 101.78 103.60 103.60
10 Paras Unit # 4 51.77 80.28 80.28
11 Parli Unit # 6 98.57 127.34 127.34
12 Parli Unit # 7 51.36 68.71 68.71
13 Khaperkheda Unit # 5 121.04 120.53 120.53
14 Total 682.25 816.06 816.45
15 HO Depreciation 0.00 1.83 1.83
16 Total 682.25 817.89 818.28
4.5.2.4 The Commission approves the depreciation including Advance Against
Depreciation of Rs. 818.28 Crore on true up for FY 2012-13, in
accordance with the Regulation 34.4 of the MERC Tariff Regulations,
2005.
4.5.2.5 The reasons for variation in depreciation including AAD for Koradi TPS and
Uran GTPS is because of computational error in the treatment of asset
deduction during the year in the computations of AAD for those stations
submitted by MSPGCL.
4.5.3 Interest and finance charges
Commission’s Analysis
4.5.3.1 The Commission, in its Order dated 21 June, 2012 in Case No. 6 of 2012 and
the Order dated 4 September, 2013 in Case No. 44 of 2013, approved the
interest and finance charges of Rs. 680.94 Crore for FY 2012-13. As against
the same, MSPGCL submitted the actual interest and finance charges for FY
2012-13 as Rs. 671.36 Crore.
4.5.3.2 MSPGCL submitted that the interest expenses have been computed in
accordance with the approach adopted by the Commission in Case No. 6 of
2012. The interest expenses pertain to the loan portfolio for the operating
stations within the scope of the true up Petition for FY 2012-13. MSPGCL
has submitted the reconciliation of interest expenses and loan balances with
the audited accounts for FY 2012-13.
Order in Case No. 122 of 2014 Page 66 of 98
4.5.3.3 The Commission, in the true up of previous years had considered the
normative debt equity ratio of 70:30 for the additional capitalisation.
Accordingly, if the actual loan availed is less than 70% of the capitalisation,
normative loan has been considered with the interest rate of 12%. In line
with the same approach, the Commission has computed the interest expenses
for FY 2012-13.The approved closing loan balances for FY 2011-12 has
been considered as the opening loan balances for FY 2012-13. The
Commission has considered the actual interest rates for the actual loan
portfolio. For normative loans, the interest rate of 12% has been considered.
The Commission has considered the actual finance charges for FY 2012-13.
The interest and finance charges approved by the Commission on true up for
FY 2012-13 are shown in the Table below:
Table 4-19: Interest and finance charges approved by the Commission on
true up for FY 2012-13 (Rs. Crore)
Sl.
No. Station/Unit
Tariff
Order
True-up
Petition
Approved
on true up
1 Bhusawal
108.28
6.86 6.86
2 Chandrapur 31.03 30.98
3 Khaperkheda 9.94 9.88
4 Koradi 12.71 12.71
5 Nasik 11.59 11.57
6 Parli 14.13 14.07
7 Uran 8.88 8.88
8 Hydro 6.73 6.72
9 Paras Unit # 3 59.77 59.84 59.84
10 Paras Unit # 4 102.31 110.91 110.91
11 Parli Unit # 6 64.47 63.86 63.85
12 Parli Unit # 7 88.32 95.29 95.31
13 Khaperkheda Unit # 5 257.79 239.58 239.58
14 Total 680.94 671.36 671.15
4.5.3.4 The Commission approves the interest and finance charges of Rs. 671.15
Crore on true up for FY 2012-13 as against Rs 671.36 Crore claimed by
MSPGCL.
4.5.3.5 The reason for marginal variation in interest and finance charges for some
stations is on account of the variation in the opening loan balances of the
normative loans for the respective stations.
Order in Case No. 122 of 2014 Page 67 of 98
4.5.4 Return on Equity(RoE)
Commission’s Analysis
4.5.4.1 The Commission, in its Order dated 21 June, 2012 in Case No. 6 of 2012 and
the Order dated 4 September, 2013 in Case No. 44 of 2013, approved the
Return on Equity of Rs. 656.51 Crore for FY 2012-13. As against the same,
MSPGCL submitted the Return on Equity for FY 2012-13 as Rs. 662.90
Crore.
4.5.4.2 MSPGCL submitted that the Return on Equity has been computed at the rate
of 14% on the opening equity base in accordance with the MERC Tariff
Regulations, 2005.
4.5.4.3 The Commission has considered the approved closing equity base for FY
2011-12 as the opening equity base for FY 2012-13. The return on equity has
been computed at the rate of 14% on the opening equity base in accordance
with the MERC Tariff Regulations, 2005. The Return on Equity approved by
the Commission on true up for FY 2012-13 is as shown in the Table given
below:
Table 4-20: Return on Equity approved by the Commission on true up for
FY 2012-13 (Rs. Crore)
S
l.
No.
Station/Unit Tariff
Order
True-up
Petition
Approved
on true up
1 Bhusawal 15.08 15.71 15.71
2 Chandrapur 109.90 111.40 111.40
3 Khaperkheda 127.98 129.09 129.09
4 Koradi 17.34 18.17 18.17
5 Nasik 29.87 27.81 27.81
6 Parli 19.61 20.79 20.79
7 Uran 39.12 39.31 39.31
8 Hydro 0.03 0.46 0.46
9 Paras Unit # 3 59.88 59.85 59.85
10 Paras Unit # 4 41.48 40.83 40.83
11 Parli Unit # 6 61.59 64.44 64.44
12 Parli Unit # 7 51.45 51.78 51.78
13 Khaperkheda Unit # 5 83.18 83.27 83.18
14 Total 656.51 662.90 662.81
4.5.4.4 The Commission approves the Return on Equity of Rs. 662.81 Crore on
true up for FY 2012-13 considering the opening equity for FY 2012-13.
Order in Case No. 122 of 2014 Page 68 of 98
4.5.4.5 The variation in RoE for Khaperkheda Unit # 5 is on account of variation in
the equity base as approved by the Commission in the Order dated 4
September, 2013 in Case No. 44 of 2013 and that considered by MSPGCL in
its true up petition for FY 2012-13.
4.5.5 Income Tax
Commission’s Analysis
4.5.5.1 The Commission had approved the income tax of Rs. 131.34 Crore in the
Tariff Order for FY 2012-13. As against the same, MSPGCL has submitted
Rs. 234.69 Crore towards taxes paid in FY 2012-13. MSPGCL has submitted
the acknowledgment of Income Tax Return and Wealth Tax Return.The
details of taxes paid in FY 2012-13 by MSPGCL are as shown in the Table
given below:
Table 4-21: Taxes paid in FY 2012-13 (Rs. Crore)
S.
No. Particulars
True-up
Petition
1 Advance Tax 96.10
2 TDS 0.13
3 Self-Assessment Tax 138.45
4 Wealth Tax 0.01
5 Total 234.69
4.5.5.2 MSPGCL submitted that as per provisions of Income Tax Act, 1961,
advance tax is paid in four instalments on 15th
of June, September, December
and March every year. At the time of finalization of accounts, the tax
liability for the year is worked out and booked as tax expenditure in Profit
&Loss Account and second effect as provision for income tax in Balance
Sheet. If advance tax paid during the year is lesser compared to the tax
liability ascertained, the differential tax is paid by way of self-assessment tax
at the time of filing return. The advance tax and self-assessment tax
payments are booked to Advance Income Tax Account, which gets reflected
in the balance sheet. In the True-up petition for the corresponding financial
years, MSPGCL has been claiming such tax actually paid (advance tax plus
self-assessment tax) as part of the Annual Revenue Requirement (ARR).
4.5.5.3 With respect to the assessment for the respective assessment years, it has
been a practice adopted by the Income Tax department, whereby refunds, if
Order in Case No. 122 of 2014 Page 69 of 98
any, are adjusted by the Income Tax authorities against demand for other
years and therefore, such refunds are not released in cash.In FY 2011-12,
refund order has been received for assessment year 2008-09. This refund has
been adjusted by the Income Tax department against a previous demand for
assessment year 2006-07, and therefore, such refund has not been received in
cash. The assessment for AY 2008-09 being complete, accordingly,
MSPGCL has netted off the provision for income tax against the income tax
paid for AY 2008-09 (advance tax plus self-assessment tax). For assessment
years other than AY 2008-09, the proceedings are pending in various forums,
and therefore, the advance tax/provision balances are retained and not netted-
off. These adjustments will be carried out only when the proceedings are
complete in all respects. No refund in Income Tax has been received during
FY 2012-13.
4.5.5.4 For FY 2012-13, the company has paid income tax on MAT basis as per the
provisions of Section 115 JB of the Income Tax Act, 1961, since the
unabsorbed depreciation / business losses carried forward from earlier years
were available for set off. Further, MAT credit has not been utilized so far.
4.5.5.5 The Commission approves the actual taxes paid by MSPGCL to the tune
of Rs. 234.69 Crore on true up for FY 2012-13.
4.5.6 Lease rent for hydro power stations
Commission’s Analysis
4.5.6.1 The Commission has approved the lease rent for hydro power stations of Rs.
331.22 Crore for FY 2012-13 in the Order dated 21 June, 2012 in Case No. 6
of 2012. Vide the Order dated 27 December, 2012 in Case No. 2 of 2012, the
Commission has approved the lease rent for Ghatghar PSS. Further, vide the
Order dated 27 April, 2012 in Case No. 5 of 2012, the Commission has
revised the lease rent for the hydro stations and accordingly allowed the
recovery of Rs. 7.36 Crore in FY 2012-13. Thus, the total lease rent for
hydro power stations paid by MSPGCL is Rs. 458.88 Crore.
4.5.6.2 The Commission approves the lease rent for hydro power stations of Rs.
458.88 Crore ontrue up for FY 2012-13 in accordance with the
Commission’s Orders on approval of Lease Rent for hydro power
stations.
Order in Case No. 122 of 2014 Page 70 of 98
4.5.7 Interest on Working Capital
Commission’s Analysis
4.5.7.1 The Commission, in its Order dated 21 June, 2012 in Case No. 6 of 2012 and
the Order dated 4 September, 2013 in Case No. 44 of 2013, approved the
Interest on Working Capitalof Rs. 580.69 Crore for FY 2012-13. As against
the same, the normative Interest on Working Capital for FY 2012-13 as
submitted by MSPGCL is Rs. 562.67 Crore.
4.5.7.2 MSPGCL submitted that the normative interest on working capital has been
computed in accordance with the provisions of MERC Tariff Regulations,
2005. The actual interest on working capital as per the books of accounts for
FY 2012-13 is Rs. 547.61 Crore. MSPGCL has submitted the reconciliation
of interest on working capital with the audited accounts for FY 2012-13.
4.5.7.3 The Commission has computed the normative interest on working capital for
FY 2012-13 in accordance with the provisions of MERC Tariff Regulations,
2005. The rate of interest on working capital has been considered as 14.75%
which is the short-term PLR of SBI at the time of filing of tariff petition for
FY 2012-13. The interest on working capital approved by the Commission
on true up for FY 2012-13 is as shown in the Table given below:
Table 4-22: Interest on working capital approved by the Commission on
true up for FY 2012-13 (Rs. Crore)
S.
No. Station/Unit
Tariff
Order
True-up
Petition
Approved on
true up
1 Bhusawal 38.99 31.29 39.61
2 Chandrapur 142.41 142.58 162.79
3 Khaperkheda 63.99 69.35 70.15
4 Koradi 50.28 40.65 54.88
5 Nasik 64.37 76.07 76.35
6 Parli 48.82 32.17 34.78
7 Uran 36.00 36.09 35.91
8 Hydro 12.41 16.76 16.21
9 Paras Unit # 3 20.16 21.21 22.35
10 Paras Unit # 4 19.86 19.87 22.03
11 Parli Unit # 6 22.45 19.17 19.56
12 Parli Unit # 7 21.41 17.29 17.55
13 Khaperkheda Unit # 5 39.54 40.18 45.04
14 Total 580.69 562.67 617.21
Order in Case No. 122 of 2014 Page 71 of 98
4.5.7.4 The Commission approves the normative interest on working capital of
Rs. 617.21 Crore in accordance with the Regulation 34.5 of MERC
Tariff Regulations, 2005.
4.5.7.5 Further, as interest on working capital is a controllable parameter as defined
under MERC Tariff Regulations, 2005, the Commission has computed the
sharing of gains/losses on the basis of normative interest on working capital
and actual interest on working capital.
4.5.8 Other debits
MSPGCL’s submission
4.5.8.1 MSPGCL has submitted the other debits of Rs. 134.02 Crore for FY 2012-
13. Other debits comprise of Rs. 65.70 Crore towards loss on obsolescence
of stores, Rs. 1.51 Crore towards other losses, and Rs. 61.92 Crore towards
bad and doubtful debts written off against various recoveries from coal
washery operators. MSPGCL submitted the reconciliation of other debits
with the audited accounts for FY 2012-13.
Commission’s Analysis
4.5.8.2 The Commission asked MSPGCL to submit the justification of other debits.
MSPGCL submitted that the provision towards bad and doubtful debts
against recovery of claims from coal washery operators has been made since
the matter of coal washing contract is under dispute and sub-judice and the
recovery of the same is doubtful.
4.5.8.3 MSPGCL submitted that for ensuring reliable operations of its generation
capacity, adequate spares and other raw materials have to be maintained. All
capital items are being procured subject to regulatory prudence check
wherein a DPR is prepared for the schemes and other relevant details are
approved by the Commission. From FY 2007-08, MSPGCL has migrated to
the revised accounting system prescribed under Companies Act, 1956. As a
part of this process,the Company has been following the Accounting
Standards prescribed under the Companies Act. In accordance with
provisions of Accounting Standards, annual physical verification of
inventory is conducted to identify slow-moving, non-moving and obsolete
items in the inventory and provision is made for 30% value of slow-moving,
60% value of non-moving and 100% value ofobsolete items in the Books of
Order in Case No. 122 of 2014 Page 72 of 98
Accounts. The difference between opening provision and closing provision is
debited / credited to Profit & LossAccount asloss on obsolescence of stores.
4.5.8.4 However, practically, certain items do not get consumed in routine manner
but the same are utilized during annual and capital overhauls, hence,
consumption pattern of such items appear irregular. Such items create
increase/decrease in slow/non-moving inventory. Further, the inventory
items also get shifted from slow moving to non-moving category and result
in modification in the provision. In case of reduction in provision on account
slow / non-moving / obsolescence stock /spares, the same is credited to P&L
account.
4.5.8.5 The Commission, after scrutiny of the material placed on record, has
approved Rs. 65.70 Crore towards loss on obsolescence of stores. However,
the Commission stresses that this cannot be taken as a precedent for making
similar claims in future.
4.5.8.6 The Commission directs MSPGCL to submit its inventory management
principles and measures adopted to curtail the losses on obsolescence of
stores. The Commission also directs MSPGCL to submit the detailed list
of obsolete items on which such loss is generally incurred.
4.5.8.7 Further, the Commission has not allowed the loss of Rs. 60.33 Crore
pertaining to the provision made against the recoveries from coal washery
operators, as the matter is sub judice. MSPGCL is directed to apprise the
Commission after the final settlement of the same and appropriateview shall
be taken thereafter.
4.5.8.8 Thus, the Commissionhas approved the other debits of Rs. 73.69 Crore on
true up for FY 2012-13.
4.5.9 Prior period items
Commission’s Analysis
4.5.9.1 Prior period items are income or expenses, which arise in the current period
as a result of errors or omissions in the preparation of the financial
statements of one or more prior periods. As per the audited financial
statements for FY 2012-13, there has been recognition of prior period
reduction in income of Rs. 17.41 Crore, and prior period expenses of Rs.
2.98 Crore, aggregating to Rs. 20.39 Crore. MSPGCL submitted the
Order in Case No. 122 of 2014 Page 73 of 98
reconciliation of prior period expenses with the audited accounts for FY
2012-13.
4.5.9.2 The Commission, in the true up for FY 2012-13, has allowed the actual net
prior period expenses as submitted by MSPGCL.
4.5.10 Reduction in AFC on account of non-achievement of target Availability
MSPGCL’s submission
4.5.10.1 MSPGCL, during the Public Hearing, submitted that in accordance with the
MERC (Terms and Conditions of Tariff) Regulations, 2005, recovery of full
fixed charges is linked to achievement of target Availability, and pro-rata
reduction shall be carried out on account of non-achievement of target
Availability. MSPGCL submitted that the reduction in AFC on account of
non-achievement of Target Availability for FY 2012-13 is Rs. 547 Crore.
4.5.10.2 As the actual Availability for some of the stations is lower than the
target Availability approved by the Commission for recovery of full
fixed charges, for such stations, the Commission approves the recovery
of full fixed charges on pro-rata basis.
4.5.10.3 Computation of Annual Fixed Cost disallowance for FY 2012-13,is given in
Table below:
Table 4-23: AFC disallowed on true up for FY 2012-13 (Rs. Crore)
Sl.
No. Station/Unit
AFC after
true up
Actual
Availability
Normative
Availability
Approved
AFC
AFC
Reduction
1 Bhusawal 205.18 57.84% 80.00% 148.34 56.83
2 Chandrapur 842.73 70.97% 80.00% 747.64 95.09
3 Khaperkheda 505.40 75.61% 80.00% 477.66 27.73
4 Koradi 273.45 48.42% 73.94% 179.08 94.37
5 Nasik 317.81 83.45% 78.58% 317.81 0.00
6 Parli 289.47 44.32% 44.32% 289.47 0.00
7 Uran 159.87 63.86% 63.86% 159.87 0.00
8 Paras Unit # 3 314.96 74.36% 80.00% 292.75 22.21
9 Paras Unit # 4 313.72 66.51% 80.00% 260.81 52.91
10 Parli Unit # 6 346.15 43.38% 43.38% 346.15 0.00
11 Parli Unit # 7 296.89 42.80% 42.80% 296.89 0.00
12 Khaperkheda
Unit # 5
Stabilisation 306.37 35.78% 35.78% 306.37 0.00
Order in Case No. 122 of 2014 Page 74 of 98
Sl.
No. Station/Unit
AFC after
true up
Actual
Availability
Normative
Availability
Approved
AFC
AFC
Reduction
Period
Post
Stabilisation
Period
289.35 73.65% 80.00% 266.36 22.98
Total 4461.33 4089.21 372.13
4.5.10.4 The Commission approves the disallowance in AFC on account of lower
Availability to the tune of Rs. 372.13 Crore on true up for FY 2012-13.
4.5.11 Revenue side true up
Commission’s Analysis
4.5.11.1 The actual revenue as per the audited accounts for FY 2012-13 is Rs.
16643.05 Crore. Out of the same, the revenue pertaining to the true up for
FY 2012-13 is Rs. 15396.02 Crore, which is exclusive of the revenue from
Bhusawal Unit # 4, solar projects and Head Office. The summary of revenue
for true up for FY 2012-13 submitted by MSPGCL is as shown in the Table
given below:
Table 4-24: Summary of revenue for true up of FY 2012-13
Sl. No. Particulars Amount (Rs. Crore)
1 Revenue from sale of power 15396.02
2 Less: Other adjustments due to other
Orders and provisioning
True up for FY 2010-11 (Case No. 6 of
2012)
522.48
Provisional true up for FY 2011-12
(Case No. 6 of 2012)
424.53
Revised true up for FY 2010-11 (Case
No. 77 of 2012)
143.12
Total 1090.13
3 Revenue for true up of FY 2012-13 14305.89
4.5.11.2 The Commission approves the actual revenue of Rs. 14305.89 Crore for
true up for FY 2012-13, as submitted by MSPGCL.
4.5.12 Non-Tariff income
Commission’s Analysis
4.5.12.1 MSPGCL has submitted the actual non-tariff income of Rs. 94.87 Crore for
FY 2012-13. The Commission, after scrutiny of the audited accounts for FY
Order in Case No. 122 of 2014 Page 75 of 98
2012-13 and the revenue reconciliation submitted by MSPGCL, finds the
submission of MSPGCL in order.
4.5.12.2 The Commission approves the actual non-tariff income of Rs. 94.87
Crore on true up for FY 2012-13 as submitted by MSPGCL.
4.5.13 Revenue from Surcharge
Commission’s Analysis
4.5.13.1 MSPGCL, in its Petition, submitted the reconciliation of the actual revenue
as per the audited accounts for FY 2012-13 among its stations. The
Commission observed that MSPGCL had booked the revenue from
surcharge amounting to Rs. 567.01 Crore under Head Office. Regarding the
revenue from surcharge, the Statutory Auditor in the audited accounts for FY
2012-13 had opined as under:
“Basis for Qualified Opinion
………………………
(iv) The Company, in terms of Power Purchase Agreement with the
Maharashtra State Electricity Distribution Company Limited (MSEDCL) has
accounted for the invoices raised for Surcharge being interest on delayed
payment amounting to Rs. 567,01,23,000 under the head „Revenue from sale
of power‟. MSEDCL has not accepted these invoices. MSEDCL has not
accepted similar Surcharge invoices amounting to Rs. 214,40,38,037 raised in
the earlier years. In addition to the above, the Company is in the process of
reconciling various invoices for the year and earlier years with MSEDCL
amounting to a net difference of Rs. (48,97,06,188).
Pending acceptance of such billing by MSEDCL and account reconciliation,
we are unable to comment on the realisability of such income and the impact
(a) on the profit of the Company for the year, (b) on the value of Trade
Receivables (c) on the value of unbilled revenue and (d) on the Reserves
and surplus. The impact of the same has been ascertained.”
4.5.13.2 The PPA executed between MSEDCL and MSPGCL stipulates as under:
“9.3 Rebate for prompt payment and late payment surcharge
………………………
Order in Case No. 122 of 2014 Page 76 of 98
(b) In case the payment of bills is delayed by MAHAVITARAN beyond due
date of payment of the bill, a late payment surcharge at the rate of
1.25% (one and quarter percent) per month calculated for number of
days for which payment delayed shall be levied by
MAHAGENCO……….”
4.5.13.3 In accordance with the contractual obligations of the PPA, MSPGCL is
entitled to late payment surcharge on delayed payments. It shall be the
responsibility of MSPGCL to enforce the conditions of its PPA with
MSEDCL.The Commission is of the view that revenue from surcharge
qualifies to be treated as revenue. However, in light of the observation of the
Statutory Auditor and the on-going reconciliation of invoices between
MSPGCL and MSEDCL, the Commission in this Order, has not considered
the revenue from surcharge in the revenue side true up for FY 2012-13.
MSPGCL is directed to apprise the Commission on the final outcome of the
said reconciliation, in its Petition for mid-term review of the second Control
Period for FY 2013-14 to FY 2015-16. The Commission, after scrutiny of the
information submitted by MSPGCL, shall take a view regarding the
treatment of revenue from surcharge for previous years till FY 2012-13 in
the mid-term review of the second Control Period for FY 2013-14 to FY
2015-16 for MSPGCL.
4.5.14 Final true up for FY 2012-13
MSPGCL’s submission
4.5.14.1 The final true up for FY 2012-13 as submitted by MSPGCL is shown in the
Table given below:
Table 4-25: True up for FY 2012-13 as submitted by MSPGCL (Rs. Crore)
Particulars Amount
Expenses side summary 16048.81
Less: Amount paid to TIDC and NHAI 285.58
Net expenses side summary (A) 15763.23
Revenue side summary (B) 14305.89
Net revenue gap (B-A) 1457.35
4.5.14.2 The final true up for FY 2012-13 submitted by MSPGCL, after sharing of
gains and losses in accordance with MERC Tariff Regulations, 2005 is as
shown in the Table below:
Order in Case No. 122 of 2014 Page 77 of 98
Table 4-26: Summary of true up for FY 2012-13 as submitted by MSPGCL
(Rs. Crore)
Particulars
Approved in
Tariff Order
(A)
As per
Tariff
Norms
for FY
2012-13
(B)
Actual as per
Audited
Accounts/
Tariff Norms
for 2012-13
(C)
Deviation
(B-C)
Efficiency
Gain and
loss
Net
Entitlement
Fuel Cost 11446.39 10073.06 10285.73 -212.68 -70.89 10143.95
Other Variable Cost 303.33 400.42 400.42 - - 400.42
Lease Rentals 458.88 458.88 458.88
458.88
Approved in Case 6
of 2012 331.22 331.22 331.22
Ghatghar PSS (Case 2
of 2012) 120.29 120.29 120.29
Under Recovery for
2009-10,2010-
11,2011-12 (Case 5
of 2012)
7.37 7.37 7.37
O & M Expenses 1559.85 1559.85 1645.46 -65.56 -21.85 1601.76
Impact of Pay
Revision Amount (as
per the principles laid
in Case 54 of 2013)
20.05
Ghatghar PSS 4.46 14.68 6.06 8.62 2.87 11.81
Depreciation
including AAD 723.84 817.89 817.89
817.89
Interest & Finance
Charges on Long
Term Loans
680.94 671.36 671.36
671.36
Interest on working
capital 580.70 573.70 547.61 26.09 8.70 565.00
Income tax 131.34 234.69 234.69
234.69
Return on Equity 656.51 662.91 662.91
662.91
Other Expenses 7.68 134.02 134.02
134.02
Prior period expenses - -20.39 -20.39
-20.39
Total Expense 16553.93 15601.12 15844.64
15682.29
Order in Case No. 122 of 2014 Page 78 of 98
Particulars
Approved in
Tariff Order
(A)
As per
Tariff
Norms
for FY
2012-13
(B)
Actual as per
Audited
Accounts/
Tariff Norms
for 2012-13
(C)
Deviation
(B-C)
Efficiency
Gain and
loss
Net
Entitlement
Less NTI (MSPGCL) 130.06 94.87 94.87
94.87
ARR (Actual/
Normative) 16423.87 15506.25 15749.78
15587.42
Net ARR
15587.42
Audited Revenue
from SoP as per
Accounts
15396.02
Less: Other
Adjustments due to
other Orders and
provisioning
1090.13
Revenue for truing
up 14,305.89
Revenue gap on true
up 1281.54
4.5.14.3 Further, in the Public Hearing, MSPGCL submitted that the reduction in
AFC due to lower Availability would be Rs. 547 Crore. Accordingly, the net
revenue gap for FY 2012-13, as submitted by MSPGCL, works out to Rs.
734.54 Crore.
Commission’s Analysis
4.5.14.4 The Commission, in accordance with the provisions of MERC Tariff
Regulations, 2005, has allowed the expenses for FY 2012-13 based on the
performance parameters approved in this Order and has carried out the
sharing of gains and losses under the following heads:
Sharing of losses in fuel expenses
Sharing of losses in O&M expenses
Sharing of gains towards IWC
Sharing of notional revenue loss due to higher auxiliary consumption.
4.5.14.5 The Commission has considered the actual revenue as submitted by
MSPGCL for true up for FY 2012-13. Further, the net revenue loss for
Order in Case No. 122 of 2014 Page 79 of 98
MSPGCL on account of variation in auxiliary consumption has been
considered and 1/3rd
of such revenue loss has been passed on to the
Distribution Licensee.
4.5.14.6 In accordance with the Tariff Regulations, the Commission has shared 1/3rd
of the gains and losses on account of the controllable factors with the
Distribution Licensee, viz., MSEDCL, while 2/3rd
of the gains are allowed to
be retained by MSPGCL and 2/3rd
of the losses are to be borne by MSPGCL.
4.5.14.7 The summary of true up for FY 2012-13 approved by the Commission after
sharing of gains and losses is as shown in the Table given below:
Table 4-27: Summary of true up approved by the Commission for FY 2012-
13 (Rs. Crore)
S.
No. Particulars
Audited/
Normative Actuals Trued-up Deviation
Efficiency
gain & (Loss)
Net
Entitlement
1 Fuel related expenses 10685.49 10685.49 10619.05 -66.44 -22.15 10641.20
2 Lease Rentals & Other
Variable Charges for Hydro 459.54 459.54 459.54 459.54
3 Operation & Maintenance
Expenses 1560.37 1625.41 1560.37 -65.04 -21.68 1582.05
Impact of Pay Revision 20.05 20.05 20.05 20.05
Ghatghar PSS 6.06 6.06 6.06 6.06
4 Depreciation, including
AAD 818.28 818.28 818.28
5 Interest on long-term loans 671.15 671.15 671.15
6 Interest on Working Capital 617.21 547.61 617.21 69.63 23.21 594.03
7 Other Expenses (Misc
Debits) 134.02 134.02 73.69 73.69
8 Income Tax 234.69 234.69 234.69 234.69
9 Prior period -20.39 -20.39 -20.39 -20.39
10 Total Revenue
Expenditure 15186.47 15060.46 15080.84
11 Return on Equity Capital 662.81 662.81 662.81
12 Aggregate Revenue
Requirement 15849.28 15722.51 15743.14
13 Total Revenue 14400.76 14423.41 14423.41
14 Revenue from Sale of Power 15396.02 15396.02 15396.02 15396.03
15 Non Tariff Income 94.87 94.87 94.87 94.87
16
Add: Revenue Loss due to
higher auxiliary
consumption
0.00 0.00 33.99 33.99 11.33 22.66
17
Less: Other adjustments due
to other Orders and
provisioning
1090.13 1090.13 1090.13 1090.15
18 Gap/(surplus) 1319.73
19 Reduction in AFC 372.13
20 Gap/(surplus) after
adjusting for AFC 947.61
Order in Case No. 122 of 2014 Page 80 of 98
4.5.14.8 After sharing of gains and losses in accordance with the Regulation 18
and Regulation 19 of the MERC Tariff Regulations, 2005, the
Commission approves the net revenue gap of Rs. 947.61 Crore on final
true up for FY 2012-13.
4.6 Expenses towards assets not owned by the Company
4.6.1 Payments made to NHAI and TIDC
MSPGCL’s submission
4.6.1.1 MSPGCL submitted that for laying rail corridor for Bhusawal TPS, Road
Over Bridge (ROB) was required to be constructed on National Highway 6,
km 397/700 near Fulgaon village. The construction required way leave
facility involving NH land for providing safe passage to MSPGCL traffic.
An Agreement had been executed with NHAI on 28 April, 2012 for
construction of ROB on advance payment deposit basis. Payment of Rs.
124.52 Crore has been paid to NHAI on 31 May, 2012. The ROB shall be
owned and operated by NHAI.
4.6.1.2 MSPGCL submitted that Bhusawal TPS (including Unit # 4 and Unit # 5)
requires around 46.09 mm3 of water and supply of 22.33 mm
3 of water had
been arranged from Sudgaon Bandhara through Hatnur Reservoir on Tapi
River. The balance requirement could not be met through Hatnur reservoir,
as it had been marked for irrigation purposes and could not supply water to
Bhusawal TPS. Therefore, balance requirement was met by completing
lifting arrangement at Ozerkheda dam of the Varangaon, Talwel Parisar
Sinchan Yojna. MoU had been signed with GoMWRD and TIDC on27
August, 2008 for construction of the dam and associated infrastructure,
which shall not be owned by the company. As on 31 March, 2013, amount of
Rs. 98.67 Crore had been paid to TIDC in accordance with the MoU. The
balance amount of Rs. 18.33 Crore would be paid as and when a demand is
raised by TIDC.
4.6.1.3 MSPGCL submitted that the above payments had been funded by a loan
from Rural Electrification Corporation (REC). The actual interest expense
paid against the same till 31 March, 2013, is Rs. 62.38Crore.
Order in Case No. 122 of 2014 Page 81 of 98
4.6.1.4 MSPGCL submitted that the payments had been considered as part of the
project cost of Bhusawal Unit # 4 and Unit # 5. However, at the time of
finalization of accounts for FY 2012-13, the statutory auditor, in compliance
to AS-10, made the observation that MSPGCL had made contributions on
assets not owned by the company for sourcing the water requirements and
construction of ROB for Bhusawal power station. MSPGCL submitted that
since the assets were not owned by the company, the statutory auditor had
identified such expenses as revenue expenses, and it had accordingly passed
the entries in the audited accounts for FY 2012-13.MSPGCL submitted that
the Expert Advisory Committee of Institute of Chartered Accountants of
India in a similar matter had opined as under:
“17. On the basis of the above, the Committee is of the following opinion on
the issues raised in paragraph 7 above:
(i) No, the existing accounting treatment followed by the company of
capitalising the expenditure, which, as per the querist, is essentially required
for construction of power plants or making it available for its intended use,
as „capital expenditure on assets not owned by the company and amortising
the same over a period of four years, is not in order.
(ii) (a) The capital expenditure on strengthening of power transmission
system not owned by the company should be expensed by way of charge to
the profit and loss account for the period in which these are incurred.
(b) „Capital expenditure on assets not owned by the company‟ appearing in
the schedule of fixed assets at its written down value, being an error should
be rectified and disclosed as a „prior period item‟ as per the requirements of
AS 5 in the financial statements of the period in which such rectification is
carried out as discussed in paragraph 15 above.”
4.6.1.5 The total amount paid against the assets not owned by the Company is Rs.
285.58 Crore. MSPGCL submitted that this amount has been claimed in the
final true up for FY 2012-13 as the existing Units would also be benefited
from the same. MSPGCL, in reply to the Commission‟s query, submitted the
copies of agreement/MoU executed with NHAI and TIDC. MSPGCL also
submitted that no revenue had been recovered from the contractors or any
other source from the ROB.
Order in Case No. 122 of 2014 Page 82 of 98
Commission’s Analysis
4.6.1.6 The Commission has observed that the payments made to NHAI and TIDC
have been booked as revenue expenses in the audited accounts for FY 2012-
13. The Commission understands that the Expert Advisory Committee of the
Institute of Chartered Accountants of India, in their opinion published in
January, 2011, had opined that the capital expenditure on assets not owned
by the Company need to be booked as revenue expenses in the corresponding
year. The Commission finds that these expenses have been booked in the
audited accounts for FY 2012-13 in accordance with the laid out principles.
However, the benefit out of the assets created from such payments shall be to
the Bhusawal TPS (including Unit # 4 and Unit # 5) as a whole. The present
Petition pertains to the final true up for existing old Units of Bhusawal TPS
only. MSPGCL has filed a Petition for approval of capital cost and tariff for
Bhusawal Unit # 4 and Unit # 5.
4.6.1.7 As regards for expenses of NHAI and TIDC, the Commission considers it
prudent to share expenses among the existing and new Units on account of
the inherent benefit to the Station as a whole. Hence, the Commission, after
scrutiny of the material placed on record, has approved the revenue expenses
incurred towards payments made to TIDC and NHAI in the proportion of the
installed capacity.
4.6.1.8 The Commission approves the amount of Rs. 84.47 Crore towards the
expenses of NHAI and TIDC for the existing Stations. The amount
allocated for Bhusawal Unit # 4 and Unit # 5 shall be considered while
approving the Tariff for Bhusawal Unit # 4 and Unit # 5.
4.6.1.9 Details of sharing of expenses towards TIDC and NHAI, is as shown in the
Table given below:
Table 4-28: Expenses towards payment made to TIDC and NHAI
Sl.
No. Station/Unit
Installed
Capacity (MW)
Expenses towards payment
made to TIDC and NHAI
(Rs. Crore)
1 Bhusawal TPS
(existing) 420 84.47
2 Bhusawal Unit # 4 and
Unit # 5 1000 201.11
3 Total 1420 285.58
Order in Case No. 122 of 2014 Page 83 of 98
4.7 Carrying cost on provisional fixed cost of Khaperkheda Unit # 5
MSPGCL’s submission
4.7.1.1 The Commission, in its Order dated 21 June, 2012 in Case No. 6 of 2012
(MSPGCL truing up for FY 2010-11 and tariff determination for FY 2011-
12 and FY 2012-13) had approved the provisional Energy Charge for
Khaperkheda Unit # 5 and the provisional AFC in its Order dated 8
February, 2013 in Case No. 77 of 2012, both from COD till the
determination of final tariff.
4.7.1.2 MSPGCL submitted that, pursuant to the Commission‟s Order in Case No.
77 of 2012, bills had been raised on MSEDCL but the provisional AFC
remained unrecovered till the Commission‟s Order dated 5 September, 2013
in Case No. 95 of 2013 as the recovery mechanism for MSEDCL to recover
the amount from consumers was not specified till then. MSPGCL requested
the Commission to allow the carrying cost on that amount from COD of
Khaperkheda Unit # 5 till the date of issuance of the Order in Case No. 95 of
2013.
Commission’s Analysis
4.7.1.3 Khaperkheda Unit # 5 was commissioned on 16 April, 2012. MSPGCL has
thus sought carrying cost on the provisional AFC amount from 16 April,
2012 to 5 September, 2013. In light of the principles laid down by ATE in its
Judgment dated 2 January, 2013 on Review Petition No. 13 of 2012 in
Appeal No. 203 of 2010, the Commission allows the carrying cost on the
provisional AFC approved for Khaperkheda Unit # 5 for a specific period, as
discussed below.
4.7.1.4 For allowing the carrying cost as above, the Commission has considered the
period from 16 April, 2012 to 5 September, 2013 in three phases, viz.:
a) 16 April, 2012 (COD) to 20 June, 2012 (one day prior to Order in Case
No. 6 of 2012)
b) 21 June, 2012 (date of Order in Case No. 6 of 2012) to 7 February,
2013 (one day prior to Order in Case No. 77 of 2012)
c) 8 February, 2013 (date of Order in Case No. 77 of 2012) to 4
September, 2013 (one day prior to Order in Case No. 95 of 2013).
4.7.1.5 The Commission admitted MSPGCL‟s Petition in Case No. 6 of 2012 on 5
March, 2012, in which MSPGCL had also sought approval for provisional
tariff and AFC,including for Khaperkheda Unit # 5. The generating company
has to file the Petition for approval of provisional AFC well before the
Order in Case No. 122 of 2014 Page 84 of 98
anticipated date of COD. As the Petition was filed late, the Commission does
not consider it justified to allow the carrying cost for the first period, i.e.,
from the COD of Khaperkheda Unit # 5 to 20 June, 2012 (one day prior to
the Order in Case No. 6 of 2012).
4.7.1.6 Further, since MSPGCL did not submit the details of capital cost necessary
to enable it to determine the provisional AFC along with its Petition in Case
No. 6 of 2012, the Commission did not approve the provisional AFC for
Khaperkheda Unit #5 in that Order but only the variable charges.
Subsequently, the Commission approved the provisional AFC vide Order
dated February 8, 2013 in Case No. 77 of 2012 (on a review Petition filed by
MSPGCL against the Order in Case No. 6 of 2012). Hence, the Commission
has approved the carrying cost on the provisional AFC for Khaperkheda Unit
# 5 for the second period, i.e., from 21 June, 2012 (date of Order in Case No.
6 of 2012) to 7 February, 2013 (one day prior to Order in Case No. 77 of
2012).
4.7.1.7 As regards carrying cost on the provisional AFC for the third
periodmentioned above,sought by MSPGCL on account of non-payment by
MSEDCL, the Commission notes that the sale of power by MSPGCL to
MSEDCL is governed by the approved PPA.The PPA doest not provide that
payments shall be made to MSPGCL by MSEDCL only if such expenses are
allowed for recovery in MSEDCL's Tariff Order. Hence, there cannot be any
linkage between payment by MSEDCL to MSPGCL and recovery of such
costs by MSEDCLfrom its consumers.
4.7.1.8 Vide its Order in Case No. 32 of 2013, the Commission has already ruled
that recovery by MSEDCL from its consumers requires the tariff of
MSEDCL to be re-determined after following due procedure, and also
directed MSEDCL to pay MSPGCL all due amounts.
4.7.1.9 Under the PPA,MSPGCL is entitled to claim delayed payment surcharge
from MSEDCL. Hence, if the carrying cost sought by MSPGCL is allowed
to be recovered from MSEDCL, it would amount to levying such surcharge
twice on MSEDCL for the same incidence of delayed payment, which is not
permissible. MSEDCL cannot be asked to pay delayed payment charges in
two different forms for the same default in payment.
4.7.1.10 The non-receipt of receivables by the generating company will have an
impact on its working capital requirement and the interest thereon. The
actual interest on working capital for MSPGCL for FY 2012-13 is Rs. 547.61
Order in Case No. 122 of 2014 Page 85 of 98
Crore, as against the normative interest of Rs. 617.21 Crore as per the MERC
Tariff Regulations, 2005. Thus, the actual interest on working capital is
lower than the normative interest, even though payments have been delayed
by MSEDCL.
4.7.1.11 The contention that MSEDCL payments have been delayed in the absence of
arecovery mechanism in MSEDCL's Tariff Order, has no merit for the
following reasons:
- Central Generating Sector Companies (NTPC, NHPC, etc.) also raise
bills based on approvals of the Central Electricity Regulatory
Commission (CERC), which are paid by MSEDCL without waiting for
them to be passed through in their Tariff.
- Vide Order dated 16 August, 2012 in Case No. 19 of 2012, the
Commission approved the Tariff for MSEDCL for FY 2012-13.
Thereafter, the Commission, vide letter dated 20 September, 2012,
approved Rs. 424.53 Crore to be recovered by MSPGCL from
MSEDCL in eight installments, on account of provisional truing up for
FY 2011-12.
- Thus, the Commission‟s approval to MSPGCL for the above amount
was accorded after the issue of Tariff Order for MSEDCL for FY
2012-13. The amount has been recovered by MSPGCL according to its
letter dated 5 March, 2014 to the Commission:
“Based on the submission by MSPGCL, Hon‟ble Commission
approved provisional true up of Rs. 424.53 Crs. for FY 11-12 and
allowed MSPGCL to recover the amount in eight equal installments
during the period Aug. 2012 to March 2013. MSPGCL has recovered
the same as per these directives.”(emphasis added)
4.7.1.12 In thelight of the foregoing,the Commission has approved the carrying cost
on the provisional AFC for Khaperkheda Unit #5 as under:
Table 4-29: Carrying cost on provisional AFC of Khaperkheda Unit # 5
approved by the Commission
Sl.
No. Particulars Units Value
1 COD of Khaperkheda Unit # 5 Date 16 April, 2012
2 Number of days of operation in FY 2012-13 Days 350
3
Provisional AFC for Khaperkheda Unit # 5
approved by the Commission in Case No. 77 of
2012
Rs. Crore 547.68
Order in Case No. 122 of 2014 Page 86 of 98
Sl.
No. Particulars Units Value
4 Issue of Commission's Order in Case No. 6 of
2012 (Tariff Order for FY 2012-13) Date 21June, 2012
5
Issue of Commission's Order in Case No. 77 of
2012 (Review Order on Commission‟s Order in
Case No. 6 of 2012)
Date 8February, 2013
6 No. of days between the issue of two Orders Days 232
7 AFC corresponding to the period between the
issue of two Orders Rs. Crore 363.03
8 Interest rate % 14.75%
9 Carrying cost for 232 days Rs. Crore 34.04
4.7.1.13 The Commission approves the carrying cost of Rs. 34.04 Crore on the
provisional AFC for Khaperkheda Unit # 5 for the period from 21 June,
2012 to 7 February, 2013, i.e., the period between the Order in Case No.
6 of 2012 and the Order in Case No. 77 of 2012.
4.8 Carrying cost on lease rent for Ghatghar PSS for FY 2012-13
Commission’s Analysis
4.8.1.1 The Commission, vide its Order dated 27 December, 2012 in Case No. 2 of
2012, had approved the lease rent for Ghatghar PSS. MSPGCL submitted
that it had raised the bill for lease rent for Ghatghar PSS as approved by the
Commission for FY 2012-13. However, it had not been recovered from
MSEDCL. MSPGCL requested the Commission to allow carrying cost of Rs.
38.22 Crore on the lease rent for Ghatghar PSS for FY 2012-13 from FY
2012-13 to FY 2014-15.
4.8.1.2 The Commission observes that this is a case of non-payment by MSEDCL.
The Commission, in its Order dated 27 December, 2012 in Case No. 2 of
2012 had directed as under with regard to lease rent of Ghatghar PSS:
“51. The Commission also directs MSPGCL to file a separate Petition for the
approvalof the agreement between MSPGCL and MSEDCL for supply of
energy generatedduring peak hours and energy used for pumping during off-
peak hours within onemonth from the date of this Order.”
Order in Case No. 122 of 2014 Page 87 of 98
4.8.1.3 Taking cognizance of the absence of formal arrangement for sale of power
from Ghatghar PSS, the Commission has given ample opportunity to
MSPGCL, but it has not complied with this directive.
4.8.1.4 In the absence of PPA and Tariff for Ghatghar PSS, MSEDCL and MSPGCL
have entered into a MoU on 06 July, 2012 for purchase of power from
Ghatghar PSS.The Commission has not approved the MoU entered into
between MSPGCL and MSEDCL. As MSPGCL has agreed to a provision in
the MOU to the effect that payment will be made only after the Commission
approves the MoU, the Commission does not find any merit in MSPGCL‟s
claim of carrying cost on lease rent for Ghatghar PSS for FY 2012-13.
4.8.1.5 The Commission disallows the carrying cost on lease rent for Ghatghar
PSS in the absence of approved PPA between MSPGCL and MSEDCL
for this Station.
4.9 Revision of O&M expenses for Ghatghar PSS
MSPGCL’s submission
4.9.1.1 MSPGCL submitted that the MERC Tariff Regulations, 2005 specifies the
O&M expenses for a new hydro generating station as 1.50% of the approved
original project cost for the year of commissioning and escalated thereafter.
The Commission has trued up the actual O&M expenses for Ghatghar PSS
for FY 2009-10 to FY 2011-12 in the truing up for the respective years.
MSPGCL requested the Commission to revise the O&M expenses for
Ghatghar PSS in accordance with the MERC Tariff Regulations, 2005 and
provide for truing up of the same. MSPGCL requested the Commission to
allow the additional amount of Rs. 22.15 Crore along with the carrying cost
of Rs. 10.01 Crore on account of the same.
Commission’s Analysis
4.9.1.2 MSPGCL had already raised its concern regarding the same in its Petition in
Case No. 103 of 2014. In light of the findings of the Commission in its Order
dated 11 November, 2014 in Case No. 103 of 2014,the Commission does not
find any merit in revisiting this issue.
Order in Case No. 122 of 2014 Page 88 of 98
4.10 Carrying cost on revenue gap approved for previous years
MSPGCL’s submission
4.10.1.1 MSPGCL has claimed the carrying cost on the revenue gap/surplus approved
by the Commission in the true up for previous years from FY 2005-06 to FY
2011-12 from the corresponding year to the date of issue of true up Order for
the corresponding year. MSPGCL submitted that the carrying cost has been
claimed in accordance with the principles laid down by ATE in its Judgment
dated 3 January, 2013 in Review Petition No. 13 of 2012 in Appeal No. 203
of 2010. MSPGCL has claimed the carrying cost of Rs. 449.80 Crore on this
account.
Commission’s Analysis
4.10.1.2 The Commission observes that MSPGCL has claimed the carrying cost on
the approved revenue gap for previous years. MSPGCL has not claimed the
carrying cost in most of the Petitions filed for true up of previous years till
FY 2011-12. The ATE had laid down the principles regarding the carrying
cost on legitimate expenses in its various Judgments,some of which date
back to the year 2007 also. The Commission also acknowledges that the
Judgment of ATE dated 2 January, 2013 in Review Petition No. 13 of 2012
in Appeal No. 203 of 2010 provides greater clarity regarding the carrying
cost on revenue gap on account of truing up.
4.10.1.3 The Commission is of the view that when the tariff and true up Orders issued
by the Commission for the previous years have attained finality, it would not
be proper to re-open such Orders in the absence of justified and reasonable
cause, as it would have repercussions on all the regulated entities in the
State.
4.10.1.4 Further, the Supreme Court of India in the case of Binani Zinc Ltd v/s KSEB
and others (2009) 11 SCC 244 ruled as under:
“It is now a well-settled principle of law that the rule of law inter alia
postulates that all laws would be prospective subject of course to enactment
of an express provision or intendment to the contrary.”
4.10.1.5 The Commission rules that principles laid down by the ATE in its Judgment
dated 2 January, 2013 in Review Petition No. 13 of 2012 in Appeal No. 203
of 2010 could only be applicable prospectively from the date of the
Order in Case No. 122 of 2014 Page 89 of 98
Judgment in main Appeal No. 203 of 2010, i.e., 13 September, 2012.
Accordingly, the Commission has approved the carrying cost on the amounts
pertaining to the true up for FY 2012-13 in this Order.
4.11 Carrying cost on amounts allowed
Carrying cost on the revenue gap for FY 2012-13
MSPGCL’s submission
4.11.1.1 MSPGCL has claimed the carrying cost on the net revenue gap before
sharing of gains and losses considering the interest rate of SBI PLR for the
respective years as shown in the Table given below:
Table 4-30: Carrying cost on revenue gap for FY 2012-13 as submitted by
MSPGCL (Rs. Crore)
Particulars FY 2012-13 FY 2013-14 FY 2014-15 Total
Interest rate 14.75% 14.45% 14.45%
Opening balance 0.00 1564.83 1790.94
Revenue gap for the year 1457.35 0.00 0.00
Carrying cost 107.48 226.12 129.40 462.99
Closing balance 1564.83 1790.94 1920.34
Commission’s Analysis
4.11.1.2 ATE, in its Judgment dated 2 January, 2013 in Review Petition No. 13 of
2012 in Appeal No. 203 of 2010, and has laid down the principles of
allowing carrying cost as below:
“15………..
“11.5. The utility is entitled to carrying cost on its claim of legitimate
expenditure if the expenditure is:
i) accepted but recovery is deferred e.g. interest on regulatory assets,
ii) claim not approved within a reasonable time, and
iii) disallowed by the State Commission but subsequently allowed by
the Superior authority.
iv) Revenue gap as a result of allowance of legitimate expenditure in
the true up.
11.6. The State Commission shall decide the claim of the appellant on
the above principles”(emphasis added)
Order in Case No. 122 of 2014 Page 90 of 98
4.11.1.3 The audited annual accounts for FY 2012-13 for MSPGCL were finalised on
12 September, 2013. MSPGCL was required to submit the Petition for final
true up for FY 2012-13 by 30 November, 2013. Had the Petition been filed
on time, the Commission‟s Order on approval of final true up for FY 2012-
13 would have been issued by 31 March, 2014 and the resultant revenue
gap/surplus could have been adjusted in the ARR for FY 2014-15 as part of
MYT Order issued on 3 March, 2014. The present Petition for approval of
final true up for FY 2012-13 was filed on 11 June, 2014. The Commission
admitted the Petition on 13 October, 2014 after submission of information by
MSPGCL to the satisfaction of the Commission. On the issue of carrying
cost applicability on account of delay in filing of the Petition, ATE in its
Judgment dated 4 December, 2014 in Appeal No. 45 of 2014 ruled as under:
“10. The issue regarding disallowance of revenue gap for delay in filing of
the tariff petition is covered by this Tribunal‟s judgments dated
19.9.2007 in Appeal No. 70 of 2007, dated 18.12.2008 in Appeal No.
209 of 2006 and in a recent judgment dated 30.5.2014 in Appeal Nos.
147, 148 and 150 of 2013 in the matter of Torrent Power Ltd. Vs.
Gujarat Electricity Regulatory Commission where it was decided that
the distribution licensee is entitled to claim the revenue gap but the
carrying cost for the period of delay in filing of the petition should not
be allowed………………”
4.11.1.4 In accordance with the principles laid down by ATE, the Commission has
not allowed the carrying cost on account of delay in filing the Petition for
final true up for FY 2012-13. Even, in case MSPGCL would have filed
Truing up Petition for FY 2012-13 on time, the recovery of gap during FY
2012-13 would have been in FY 2014-15 only from commencement of the
year, and hence, the Commission has allowed the carrying cost on the
approved revenue gap for FY 2012-13 for FY 2013-14. The Commission has
not allowed the carrying cost from 1 April, 2014 to commencement of
recovery of true up amount in FY 2014-15 as this delay is on account of
delay in submission of True up Petition by MSPGCL. MSPGCL, during the
hearing, also submitted that the carrying cost on account of delay in filing of
Petition may not be allowed. Further, as the recovery of the same has been
allowed in six instalments, the Commission has allowed the carrying cost on
the balance amount carried forward during each month.
Order in Case No. 122 of 2014 Page 91 of 98
4.11.1.5 To estimate the carrying cost for the revenue gap, the Commission has
considered the interest rate for working capital approved for each of the
years. For computation of carrying cost, the Commission has considered the
revenue gap to be applicable from the end of the year of the occurrence of
revenue gap.
4.11.1.6 The carrying cost on the approved revenue gap for FY 2012-13 is as shown
in the Table given below:
Table 4-31: Carrying cost on approved revenue gap for FY 2012-13
approved by the Commission
Sl.
No. Particulars Units Value
1 Revenue gap approved on final true up
for FY 2012-13 Rs. Crore 947.61
2 Interest rate % 14.45%
3 Carrying cost for FY 2013-14 Rs. Crore 136.93
4 Total revenue gap including carrying
cost for FY 2013-14 Rs. Crore 1084.54
4.11.1.7 The total principal amount allowed by the Commission for recovery in six
instalments is as shown in the Table below:
Table 4-32: Total principal amount allowed by the Commission for
recovery (Rs. Crore)
S.
No. Particulars Amount
1 True up amount for FY 2012-13
including carrying cost for FY 2013-14 1084.54
2 Expenses towards assets not owned by
the Company 84.47
3 Carrying cost on provisional AFC for
Khaperkheda Unit # 5 34.04
4 Variation in O&M expenses for
Ghatghar PSS trued up for FY 2011-12 0.76
5 Total amount 1203.80
4.11.1.8 ATE in its Judgment dated 27 October, 2014 in Appeal No. 212 of 2013
ruled as under:
“22. We find that carrying cost has been allowed by the StateCommission
upto the end of 2012-13. If the payment on thepast dues had to be
Order in Case No. 122 of 2014 Page 92 of 98
made in lump sum, at the beginning ofFY 2013-14, no carrying cost
would have been necessary tobe provided for the FY 2013-14. We find
that the Appellanthad prayed for lump sum payment of Rs. 279.39
croreswithin one month of issue of MYT order and the balancepayment
in 9 equal instalments. However, in this case thepayment has been
ordered to be made by the DistributionCompanies in ten equal
instalments from June 2013 toMarch 2014 and the request of the
Appellant for lump sumpayment of Rs. 279.39 crores was rejected.
23. We find that the amount which was required to be recoveredby the
Appellant in the FY 2011 -12 is now allowed to berecovered in FY
2013-14. Following the principles laid downby this Tribunal regarding
carrying cost, we feel that thecarrying cost has to be allowed to the
Appellant for theperiod April 2013 to March 2014. Accordingly,
decided.”
4.11.1.9 Thus, in accordance with the principles laid down by ATE, the Commission
has allowed the carrying cost on the amount carried forward every month as
shown the Table below:
Table 4-33: Carrying cost on the principal amount allowed by the Commission
for recovery (Rs. Crore)
Instalment Recovery
allowed
Cumulative
recovery
Balance
amount Interest rate
Interest on
balance amount
carried forward
1 200.63 200.63 1003.16 14.45% 12.08
2 200.63 401.27 802.53 14.45% 9.66
3 200.63 601.90 601.90 14.45% 7.25
4 200.63 802.53 401.27 14.45% 4.83
5 200.63 1003.16 200.63 14.45% 2.42
6 200.63 1203.80 0.00 14.45% 0.00
Total 1203.80 36.24
4.11.1.10 The Commission allows MSPGCL to recover the carrying cost on the
amount carried forward along with the monthly instalment as approved by
the Commission.
4.12 Total amount allowed in this Order
Commission’s Analysis
4.12.1.1 The total amount allowed by the Commission in this Order is as shown in the
Table given below:
Order in Case No. 122 of 2014 Page 93 of 98
Table 4-34: Total amount approved by the Commission on final true up for
FY 2012-13 (Rs. Crore)
S.
No. Particulars
Claimed by
MSPGCL
Approved by the
Commission
1 True up for FY 2012-13 1281.54* 947.61
2 Expenses on assets not owned by the
Company 285.58 84.47
3 Carrying cost on provisional AFC for
Khaperkheda Unit # 5 74.89 34.04
4 Carrying cost on lease rent for
Ghatghar PSS 38.22 0.00
5 Revised true up of O&M expenses for
Ghatghar PSS 32.16 0.00
6 Carrying cost on revenue gap of
previous years 449.80 0.00
7 Variation in O&M expenses for
Ghatghar PSS trued up for FY 2011-12 0.00 0.76
8 Total amount excluding Carrying
Cost 2162.19 1066.87
Carrying cost
9 Carrying cost on true up for FY 2012-
13 462.99
173.17 10 Carrying cost on amount in S. No. 2
during recovery period 0.00
11 Carrying cost on amount in S. No. 3
during recovery period 0.00
12 Total 2625.18 1240.04
*As per the submissions of MSPGCL in the Public Hearing, the net revenue gap for FY 2012-13 after sharing of
gains and losses and considering reduction in AFC on account of variation in availability in accordance with
MERC (Terms and Conditions of Tariff) Regulations, 2005 works out Rs. 734.54 Crore.
4.12.1.2 The Commission approves the total amount of Rs. 1240.04
Croretowards final true up for FY 2012-13 including carrying cost,to be
recovered in six instalments. As the variation in cost of power purchase
of MSEDCL is ultimately to be passed on to consumers, the Commission
hereby allows MSEDCL to recover/adjust the amount allowed in this
Order in accordance with the provisions of the MERC (Multi Year
Tariff) Regulations, 2011 as amended from time to time.
Order in Case No. 122 of 2014 Page 94 of 98
5 RULINGS OF THE COMMISSION
i. The Commission approves the actual Availability for Parli TPS (including
Unit # 6 and Unit # 7) for allowing the fixed cost recovery, as the water
shortage situation was beyond MSPGCL's control.
ii. The Commission approves the actual performance parameters for Parli
TPS (including Unit # 6 and Unit # 7) in the true up of fuel cost for FY
2012-13.
iii. The Commission, considering the gas shortage, approves the actual
Availability of Uran GTPS for allowing the fixed cost recovery for FY
2012-13.
iv. The Commission approves the actual performance parameters for
Khaperkheda Unit # 5 during the stabilisation period while carrying out
the truing up for FY 2012-13. For the post stabilisation period, the
Commission has approved the normative performance parameters as
specified in MERC (Terms and Conditions of Tariff) Regulations, 2005
while carrying out true up for FY 2012-13.
v. The Commission approves the total variable charges of Rs. 10619.71
Crore on true up for FY 2012-13.
vi. The Commission approves the capitalisation of Rs. 197.30 Crore on true
up for FY 2012-13 as claimed by MSPGCL.
vii. The Commission approves the normative O&M expenses of Rs. 1586.48
Crore on true up for FY 2012-13 in accordance with the approach
adopted in previous Orders.
viii. The Commission approves the depreciation including Advance Against
Depreciation of Rs. 818.28 Crore on true up for FY 2012-13 in accordance
with the Regulation 34.4 of the MERC Tariff Regulations, 2005.
ix. The Commission approves the interest and finance charges of Rs. 671.15
Crore on true up for FY 2012-13 as against Rs 671.36 Crore claimed by
MSPGCL.
Order in Case No. 122 of 2014 Page 95 of 98
x. The Commission approves the Return on Equity of Rs. 662.81 Crore on
true up for FY 2012-13 considering the opening equity for FY 2012-13.
xi. The Commission approves the actual taxes paid by MSPGCL to the tune
of Rs. 234.69 Crore on true up for FY 2012-13.
xii. The Commission approves the lease rent for hydro power stations of Rs.
458.88 Crore on true up for FY 2012-13 in accordance with the
Commission’s Orders on approval of Lease Rent for hydro power
stations.
xiii. The Commission approves the normative interest on working capital of
Rs. 617.21 Crore in accordance with the Regulation 34.5 of MERC Tariff
Regulations, 2005.
xiv. The Commission directs MSPGCL to submit its inventory management
principles and measures adopted to curtail the losses on obsolescence of
stores. The Commission also directs MSPGCL to submit the detailed list
of obsolete items on which such loss is generally incurred.
xv. As the actual Availability for some of the stations is lower than the target
Availability approved by the Commission for recovery of full fixed
charges, for such stations, the Commission approves the recovery of full
fixed charges on pro-rata basis.
xvi. The Commission approves the actual revenue of Rs. 14305.89 Crore for
true up for FY 2012-13, as submitted by MSPGCL.
xvii. The Commission approves the actual non-tariff income of Rs. 94.87 Crore
on true up for FY 2012-13 as submitted by MSPGCL.
xviii. After sharing of gains and losses in accordance with the Regulation 18
and Regulation 19 of the MERC Tariff Regulations, 2005, the
Commission approves the net revenue gap of Rs. 947.61 Crore on final
true up for FY 2012-13.
xix. The Commission approves the amount of Rs. 84.47 Crore towards the
expenses of NHAI and TIDC for the existing Stations. The amount
Order in Case No. 122 of 2014 Page 96 of 98
allocated for Bhusawal Unit # 4 and Unit # 5 shall be considered while
approving the Tariff for Bhusawal Unit # 4 and Unit # 5.
xx. The Commission approves the carrying cost of Rs. 34.04 Crore on the
provisional AFC for Khaperkheda Unit # 5 for the period from 21 June,
2012 to 7 February, 2013, i.e., the period between the Order in Case No. 6
of 2012 and the Order in Case No. 77 of 2012.
xxi. The Commission disallows the carrying cost on lease rent for Ghatghar
PSS in the absence of approved PPA between MSPGCL and MSEDCL
for this Station.
xxii. The Commission approves the total amount of Rs. 1240.04 Crore towards
final true up for FY 2012-13 including carrying cost, to be recovered in
six instalments. As the variation in cost of power purchase of MSEDCL is
ultimately to be passed on to consumers, the Commission hereby allows
MSEDCL to recover/adjust the amount allowed in this Order in
accordance with the provisions of the MERC (Multi Year Tariff)
Regulations, 2011 as amended from time to time.
The Maharashtra State Power Generation Co. Ltd.‟s Petition in Case No. 122 of 2014
stands disposed of accordingly.
Sd/- Sd/- Sd/-
(Deepak Lad)
Member
(Azeez M. Khan)
Member
(Chandra Iyengar)
Chairperson
(Ashwani Kumar)
Secretary
Order in Case No. 122 of 2014 Page 97 of 98
Appendix 1
List of persons who attended the TVS on 22 July, 2014 at 12.30 hrs
S. No. Name of Person Name of the
Company/Institution
1. Asheesh Sharma MD, MSPGCL
2. S.A.Nikalaje MSPGCL
3. Namala K M Choudhary ABPS, Consultant MERC
4. Suresh Gehani ABPS, Consultant MERC
5. A.R.Nandanwar MSPGCL
6. J. A. Khandale MSPGCL
7. J.K.Shrinivasan MSPGCL
8. V.R.Rothod MSPGCL
9. S.K.labde MSPGCL
10. Ramandeep Singh Consultant, MSPGCL
11. S.Trilok Kumar Consultant, MSPGCL
12. A.A.Bapat MSPGCL
13. A.D.Pimple MSPGCL
14. R.L.Varpe MSPGCL
Order in Case No. 122 of 2014 Page 98 of 98
Appendix 2
List of Persons attended Public Hearing in Case No.122 of 2014 on 9.12.2014
Sr.no Name of Person Name of Institution
1 Shri J.K Srinivasan Director Finance,MSPGCL
2 Shri Pratap Hogade Maharashtra Veej Grahak Sanghtana
3 Shri Pravin Chitre Tata Motors
4 Shri Ajit Apte Transparent Energy Systems Pvt. Ltd
5 Shri Parmod Mujumdhar Transparent Energy Systems Pvt. Ltd
6 Shri Vikrant Patil
Kolhapur Jilha Sahkari Pani Purotha Sanstheche
Sahakari Sangh
7 Shri R.G Tambe Sahyadri SSK Ltd.
8 Shri George John Individual
9 Shri S.M Madan Individual
10 Shri S.K. Labde Individual
11 Shri D.C. Patil Individual
12 Shri Trilok Kumar Deloitte
13 Ms.Swati Kedre Deloitte
14 Shri Ramandeep Singh Deloitte
15 Shri E.S. Moze MSPGCL
16 Shri Manoj Badve Tata Motors
17 Shri V.B Dharurkar Bharat Forge Ltd
18 Shri P.R. Dandekar Kalyani Carpenter
19 Shri S.B Waghmare MSPGCL
20 Shri Mahesh Aphale MSPGCL
21 Shri U.K.Dhamankar MSPGCL
22 Shri Anil Bapart MSPGCL
23 Shri R.R Kulkarni MSPGCL
24 Shri T.P. Raibole MSPGCL
25 Shri R.T. Wagh MSPGCL
26 Shri S.A. Nikalje MSPGCL
27 Shri N.J. Padalkar MSPGCL
28 Shri A.D. Pimple MSPGCL
29 Shri R.T.Aga MSPGCL
30 Shri Shekar Gundara MSPGCL
31 Shri Shishir Shete MSPGCL
32 Shri V.P Ratod MSPGCL
33 Shri Sule Bapu Individual
34 Shri Suresh Gehani ABPS