before the maharashtra electricity regulatory commission ... 58 42/order-122 of...

Order in Case No. 122 of 2014 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.

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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


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


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


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


TABLE 4-34: TOTAL AMOUNT APPROVED BY THE COMMISSION ON FINAL TRUE UP FOR FY 2012-

13 (RS. CRORE) .................................................................................................................................... 93


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


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


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


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.


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

http://www.mahagenco.in/


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.

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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


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.


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


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.


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


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.



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.



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


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.


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.



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.



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.



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.



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


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.




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.




the Order.


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.


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


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.




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.


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.


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.



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.




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.



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.


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


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.


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.


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


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.


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.


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


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:


“"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


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


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.


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


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


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.


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


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.


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.



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.


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%


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


4.2.2 Auxiliary Consumption


4.2.2.1 The Commission, in its Order dated 21 June, 2012 in Case No. 6 of 2012 and


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


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%


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%


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


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


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


(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)




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


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


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


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


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)




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.


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.


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



(16 April, 2012 to 12 Oct, 2012) 15.32 15.32 15.32


(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




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.


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


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%



(16 Apr, 2012 to 12 Oct, 2012) 0.80% 1.30% 1.30%


(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


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


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 - -


- -

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


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:


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


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


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



(16 Apr, 2012 to 12 Oct, 2012) 193.89 193.89


(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




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


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.


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


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


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


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.


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:


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


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


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




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


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


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.


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


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


(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


14 Total 1564.29 1651.52 1586.48


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)




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


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


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




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.


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


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


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.


4.5.4 Return on Equity(RoE)




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


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.


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


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


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


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.


4.5.7 Interest on Working Capital




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


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


14 Total 580.69 562.67 617.21


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


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.


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


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


4.5.9 Prior period items


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


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


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


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


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


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


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


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

………………………


(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


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:


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


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.


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


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


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


4.6 Expenses towards assets not owned by the Company

4.6.1 Payments made to NHAI and TIDC


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.


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.



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


4.7 Carrying cost on provisional fixed cost of Khaperkheda Unit # 5


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.


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


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


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.


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


Sl.


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


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.”


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


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.


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.


4.10 Carrying cost on revenue gap approved for previous years


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.


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


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


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


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)


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.


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.


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


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


4.12.1.1 The total amount allowed by the Commission in this Order is as shown in the

Table given below:


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.


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.


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


xix. 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.

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


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


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

before the maharashtra electricity regulatory commission ... 58 42/order-122 of...

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