before the maharashtra electricity … 58 42/order-124 of 2017-06092017.pdf · rattanindia power...

MERC Order – Case No. 124 of 2017 of 25

Before the

MAHARASHTRA ELECTRICITY REGULATORY COMMISSION

World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai 400005

Tel. 022 22163964/65/69 Fax 22163976

Email: [email protected]

Website: www.mercindia.org.in/www.merc.gov.in

Case No. 124 of 2017

In the matter of

Petition of RattanIndia Power Ltd. for consent from Maharashtra State Electricity

Distribution Co. Ltd. to participate in the tariff-based bidding process for procurement

of 400 MW for 8 months from November, 2017 under the Case 4 Guidelines regarding

flexibility in utilization of coal in IPP Generating Stations

Coram

Shri. Anand B. Kulkarni, Chairperson

Shri. Azeez M. Khan, Member

Shri. Deepak Lad, Member

RattanIndia Power Ltd.

V/s

Petitioner

Maharashtra State Electricity Distribution Co. Ltd. Respondent No. 1

Maharashtra State Power Generation Co. Ltd.

Respondent No. 2

Appearance

For Petitioner: Shri. Naresh Thacker (Adv.)

For Respondent 1: Shri.Satish Chavan (Rep.)

For Respondent 2: Shri. S.B. Soni (Rep.)

ORDER

Dated: 6 September, 2017

RattanIndia Power Ltd. (RPL), World Mark Tower B, 5th

floor, Aerocity, Indira Gandhi

International Airport, New Delhi, has filed a Petition on 24.8.2017 regarding its request for

consent from Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) to participate in

the bidding process instituted by Maharashtra State Power Generation Co. Ltd. (MSPGCL)

http://www.mercindia.org.in/www.merc.gov.in


for procuring 400 MW power for 8 months from 01.11.2017 to 30.06.2018 in terms of the

Ministry of Power (MoP), Government of India (GoI) Policy on flexibility in utilization of

coal and measures for reducing cost of power generation dated 10.06.2016 and 20.02.2017

(‘MoP Guidelines’).

2. The prayers of RPL are as follows:-

(a) “Direct MSEDCL to permit RattanIndia to participate in the bidding process

initiated by MSPGCL for procurement of 400 MW power on short-term basis;

(b) Direct Mahagenco to extend the bid submission till such time the instant Petition is

decided;

(c) Alternately, allow RattanIndia to participate in the bidding process without

prejudice to the rights and contentions of the parties and subject to outcome of

the present Petition;…”

3. The Petition states as follows:

3.1. RPL owns and operates a 1350 MW (5 x 270 MW) coal-fired Power Plant located at

Nandgaonpeth, Amravati District, Maharashtra. The Project comprises 5 x 270 MW

Generating Units, all of which are commissioned.

3.2. RPL and MSEDCL have executed two Power Purchase Agreements (PPAs) pursuant to

a Case-1 competitive bidding process for supply of 1200 MW aggregate power to

MSEDCL at a levelised tariff of Rs.3.260/kWh for 25 years in terms of:

(a) PPA dated 22.04.2010 for 450 MW; and

(b) PPA dated 05.06.2010 for 750 MW.

Subsequently, the PPAs were amended by two separate addendums dated 01.02.2012.

3.3. RPL requested MSEDCL to grant consent so that RPL could participate in the bidding

process for part of the unutilized capacity of upto 250 MW for a period of 8 months,

from its Project. RPL’s participation in the bidding process will be beneficial not only

to MSEDCL but also to consumers in Maharashtra.

3.4. On 28.12.2010, the Commission, vide its Order in Case No. 22 of 2010, adopted the

levelised tariff of Rs.3.260/kWh under the PPAs, in accordance with the provisions of

the Electricity Act (EA), 2003 and the GoI’s Competitive Bidding Guidelines.


3.5. On 10.06.2016, the MoP introduced a Policy for flexible utilization of coal allocated to

specific Thermal Power Stations (TPS) in a State, in order to achieve overall reduction

in cost of power generation and for optimal utilization of coal. Vide Notification dated

20.02.2017, the MoP provided the ‘Methodology for use of coal by State in Private

Generating Stations (IPPs)’ laying down the Guidelines for flexibility in utilization of

domestic coal and other measures for reducing the cost of power generation.

3.6. On 04.08.2017, MSPGCL (the Nodal Agency appointed by Government of

Maharashtra to conduct the bidding process in terms of the MoP Guidelines), issued a

Request for Proposal (RfP) inviting bids from Independent Power Producers (IPPs) for

supply of upto 400 MW power on short-term basis for 8 months (from 01.11.2017 to

30.06.2018). The relevant provisions of the RfP are as follows:

“Bid Summary:

Document Description RFP document for procurement of 400 MW

electricity from operational power generating

stations for a period from 1st November 2017

to 30th June 2018 under Case -4 envisaged for

allowing flexibility of utilization of coal.

……

Contract Period 8 months

Total Capacity of the Bid 400 MW at State Transmission Periphery

Method of procurement Bidding

Maximum Capacity to Bid 400 MW

Minimum Capacity to Bid 100 MW with additional capacity being

multiple of 1 MW

……

Last Date & Time for

Submission of Response to

RFP (Online)

01st September 2017; 16:00 hrs.

Techno-Commercial Bid

Opening

04th

September 2017; 12:00 hrs.

Financial Bid Opening and

Reverse e-auction

19th

September 2017; 14:00 hrs.

1.1.1 Background

1.1.11 The selected Bidder (the “Supplier”) shall be responsible

for supply of power from the Power Station, under and in

accordance with the provisions of a short-term agreement for

procurement of power (the “Agreement for Procurement of

Power” or the “PPA”) to be entered into between the Supplier

and MSPGCL and MSEDCL in the form provided by MSPGCL as

part of the Bidding Documents pursuant hereto.


1.1.14 Bidders may bid for the capacity specified in Clause 1.1.8,

or a part thereof, not being less than 50% (fifty per cent) of such

capacity or 100 (one hundred) MW, whichever is lower. The

remaining capacity, if any, may be procured from other Bidders in

line with the bid evaluation criteria and the e-bidding process as

specified in the guidelines.

2.2 Eligibility of Bidders

2.2.1 For determining the eligibility of Bidders for their

qualification hereunder, the following shall apply:

a) The Bidder should be a corporate entity.

b) Bidder must be an IPP Generating Company and shall

own a coal based Thermal Power Generating Station

which has achieved commercial operation at the time of

Bidding. The Bidder should own a minimum of 26% of the

Equity in the said coal based thermal power generating

station.

c) The available operating capacity of the Thermal Plant

must be equal to or more than the required quantum of

power as requisite by the MSPGCL. The available

operating capacity shall be either:

Capacity (MW) with no firm Power Purchase Agreements;

or

Unutilized capacity (with the consent of original

Beneficiaries) for which PPA exists.

d) The Installed Capacity of the operating Units from which

power is proposed to be generated, shall be equal to or more

than 200 MW…

2.2.3 The Bidders shall enclose with its Application, to be

submitted as per the format at Annexure 4, complete with its

Annexes, the following:

…iii. In case of unutilized capacity of the generating

station offered in the bid, the consent of the original

beneficiaries or the No Objection Certificate (NOC) for

providing such capacity to MSPGCL.”

]

3.7. For the Contract Year FY 2016-2017, only 16% power was scheduled by MSEDCL

and no power was scheduled for 239 days despite 100% Plant Availability. During FY

2017-2018, the Plant has been under shut-down from 09.06.2017 to 08.08.2017, when 2

Units were supposed to be scheduled against the full Plant Availability, and then 2


more Units were taken on bar progressively. Currently, the Plant has once again been

given Zero Schedule for all 5 Units without any notice as to when these Units will be

re-scheduled. RPL’s repeated requests (during discussions with MSEDCL) to give a

tentative scheduling plan in advance remains unaddressed by it.

3.8. Since the entire capacity of the Project was unutilized, on 21.08.2017 RPL wrote to

MSEDCL seeking its consent/ No Objection (in terms of Clause 2.2.3 (iii) of the RFP)

for participating in the bidding process for the unutilized capacity of 250 MW (against

the net capacity of 1200 MW) from the Project. In that letter, RPL highlighted the

benefits of grant of no objection, including:

(a) MSEDCL will be able to mitigate the additional financial impact on account of

Capacity Charges for unscheduled power through a possible reduction in the overall

cost of generation.

(b) The cost of power arrived at pursuant to the bidding process could be lower than the

tariff MSEDCL would pay to RPL if power was being scheduled under the PPA.

3.9. Since the last date for submission of Bids is 01.09.2017 (Friday), RPL requested

MSEDCL to grant its consent by 22.08.2017. Since MSEDCL has not responded to this

request, RPL has been constrained to approach the Commission seeking urgent relief.

In the absence of MSEDCL’s consent, RPL cannot participate in the bid, in terms of

Clause 2.2.1(c) of the RfP.

3.10. MSEDCL’s failure to grant consent is arbitrary, mala fide and contrary to the mandate

of the EA, 2003 and the GoI Policy. Withholding consent for capacity which MSEDCL

is not scheduling / utilizing is also mala fide and aimed at causing grave loss to RPL as

well as consumers in Maharashtra.

3.11. RPL has also challenged MSEDCL’s arbitrary action of preventing third party sales, in

accordance with the express provisions of the PPAs, in Case No.19 of 2017. The Case

has been heard and is reserved for orders.

3.12. Constant Zero Scheduling and the Plant being under shut-down for extended periods

has put RPL under severe financial distress. Moreover, RPL is unable to service its debt

obligations, including timely payments towards other fixed costs such as Operation and

Maintenance (O&M) expenses. As was intimated to the Commission during other

proceedings, this scenario may render the Project being declared a non-performing

asset, which would not be in either party’s interest.


3.13. In the light of the foregoing and in order to alleviate its precarious financial condition,

RPL is desirous of participating in the bidding process initiated by MSPGCL.

3.14. RPL had requested MSEDCL (being the original Beneficiary of the PPAs) to grant its

consent to participate in the bidding process for a capacity of only 250 MW from its

Project (1350 MW). However, despite being aware that consent to RPL’s participation

in the bidding process would be beneficial to MSEDCL as well as to consumers,

MSEDCL has failed to respond to RPL’s proposal.

3.15. At present, against a Plant Availability of 100%, there has been no dispatch for the past

2 months. Till date, during the current Contract Year 2017-18, the Plant’s Plant Load

Factor (PLF) has been only 29% as against 100% Availability. Admittedly, MSEDCL

is incurring Fixed/ Capacity Charges on account of the Generating Station being

Available as per the provisions of PPA, but without procuring any power.

3.16. By permitting RPL to participate in the bidding process, MSEDCL will be able to

mitigate the additional financial impact on account of Capacity Charges for

unscheduled power through a possible reduction in the overall cost of generation. This

will also enable partial capacity of the Plant to operate on a continuous basis and will

assist in easing the financial stress on the Plant and RPL itself.

3.17. It is also legitimately expected that the cost of power arrived at pursuant to the

MSPGCL bidding process could be lower than the tariff MSEDCL would pay to RPL if

power is being scheduled under the PPAs. For example, if power is procured by

MSEDCL under its existing PPAs from the Project, MSEDCL would pay the current

Merit Order Despatch (MOD) Variable Charge of Rs 3.08/kWh (including normative

charge for approved Change in Law components), apart from the disputed Change in

Law and other claims as and when approved by the Commission.

3.18. Assuming that RPL would quote a ceiling tariff of Rs.2.80/kWh as capped under the

RfP, it will result in a saving of Rs.0.28/kWh for 8 months for the 250 MW offered

under the bid, which amounts to Rs.41 crore. With every reduction of Rs.0.10/kWh

from the ceiling tariff, savings to MSEDCL would be Rs. 15 crore. Evidently,

permitting RPL to take part in the bidding process will also enable MSEDCL to procure

power at a cheaper tariff, which will be in the ultimate interest of its consumers.

3.19. During the hearing in Case No.19 of 2017 (regarding third party sales under the PPAs),

MSEDCL had expressed concern regarding RPL selling power to its own consumers in

Maharashtra through Open Access, resulting in loss of business to MSEDCL. Without

prejudice to RPL’s rights in law, under the PPAs and the submissions made in Case


No.19 of 2017, it is submitted that this concern of MSEDCL would be addressed in the

present facts of the case if RPL is permitted to participate in the bid floated by

MSPGCL. In terms of the RfP (Clause 1.1.11), power will be procured by MSEDCL

through a Tripartite Agreement between RPL, MSEDCL and MSPGCL.

3.20. The Central Power Research Institute (CPRI), MoP, which is the apex body for

undertaking testing and certification of power equipment, has recently tested the Plant

capacity (per Unit) at 283.5 MW, on the basis of which the Net Capacity available from

each Unit is 258 MW. Therefore, the total Net Available Capacity from all 5 Units of

the Plant is 1290 MW. Hence, there is a capacity of 90 MW which does not have any

PPA.

3.21. RPL has sought permission from MSEDCL for participation in the bid only for 250

MW, which means that out of the total Net Available Capacity of 1290 MW from the

Plant, 1040 MW will always be available for MSEDCL as and when required. This

1040 MW is in any case more than the normative capacity that RPL is supposed to

make available to MSEDCL under the PPAs (i.e., more than 85% of 1200 MW, which

is 1020 MW).

3.22. RPL has also given an undertaking to MSEDCL that RPL shall comply with the terms

of the PPAs as well as the applicable law in relation to recall of power in the event

MSEDCL requires the unutilized capacity (250 MW). RPL has also undertaken to make

available the remaining capacity of 160 MW, in case required by MSEDCL.

3.23. RPL’s participation in the tender floated by MSPGCL will not cause any prejudice to

MSEDCL. Moreover, all parties (i.e., MSEDCL, the consumers and RPL) will benefit

from the proposal. Even with Zero Scheduling, MSEDCL has to pay Capacity Charges

to RPL which are over and above the amount paid by it to procure power from other

Generating Stations. This amount cumulatively would be greater than the amount that

would be paid by MSEDCL if power is scheduled from RPL’s Project under the

proposed bid. Thus, RPL’s participation in the tender process will be beneficial to

MSEDCL and its consumers.

3.24. The EA, 2003 provides for taking measures conducive to development of the electricity

industry and protection of the interests of consumers and supply of electricity to all

areas, as per its objectives. Permitting RPL to participate in the bidding process will be

in consumer interest, while ensuring that available capacity is not bottled up.


3.25. Since the last date for Bid submission is 01.09.2017, time if of the essence. Necessary

directions may be issued to MSEDCL to ensure that the Project is put to optimum use.

MSPGCL may be directed to extend the bid submission date till this Petition is decided.

4. In its written submission dated 29.8.2017, Prayas Energy Group (‘Prayas’), an

Authorised Consumer Representative, has stated as follows:

4.1. The matter is listed for hearing on 30.8.2017. Given the short notice period, Prayas is

not able to attend the hearing in person, but is making the following preliminary

submissions.

4.2. RPL is a Generating Company that has contracted 1200 MW of its capacity under long-

term PPAs with MSEDCL, and it is this tied-up capacity that RPL wants to utilize in

the bid process floated by MSPGCL. There is not enough clarity regarding the process

and the manner and whether an entity like RPL should be allowed to participate in a

Case-4 bidding process, and even the Case 4 process itself and its implications for

MSEDCL and its consumers are not clear. Some questions that need to be answered

include the following:

a. What principles and guidelines should govern such an arrangement in which a

Generator with a firm PPA wants to sell its generation to an entity other than the

Procurer with whom the PPA has been signed?

b. What would be the liabilities, entitlements and responsibilities of the Generator

and the Procurer (in this case, MSEDCL) during the period when the Generator is

supplying power to a third party, and what kind of contractual arrangement would

be needed to enforce such liabilities, entitlements and responsibilities?

c. If a Generator that has a long-term PPA with MSEDCL but is not scheduled

participates in a similar Case 4 process floated by a Generating Company from a

different State, should such participation be allowed; if so, what should be

MSEDCL’s liability in terms of fixed cost payment?

d. Are there enough contractual safeguards to ensure that the third-party Generator

identified by MSPGCL does not come back to the Commission to seek revision in

the variable cost on account of coal quality and quantity related issues?

e. Can the third-party Generator identified by MSPGCL claim fuel cost adjustment

during the period of supply?


f. Will the entire saving arising from procurement of power at lower variable cost by

MSPGCL be passed on to MSEDCL consumers or is there any profit sharing? If

there is profit sharing, what is its basis as, when costs go up on account of fuel

price variation, the entire burden is passed on to the consumers?

g. What kind of contractual precedence would such an arrangement pose and what

precautions are necessary to avoid any precedent which may not be in the interest

of the consumers or the sector in the long run?

4.3. These questions indicate the range of issues that needs to be thoroughly thought

through before any decision is taken in this regard. In any case, no decision should be

taken in a hurried manner simply because of a deadline mentioned in the bid documents

floated by MSPGCL. The issues listed above also highlight the fact that this is a serious

matter and, given the surplus power in the State, there is a likelihood of more such

Petitions being filed before the Commission. Hence, the present Petition should be used

as an opportunity to thoroughly deliberate on the various aspects of such an

arrangement and all the issues that are likely to emerge out of it. In this regard, it is

important to understand MSEDCL’s and MSPGCL’s take. Without understanding the

position of these key stake-holders, it is not possible to make any meaningful

submission on these issues.

4.4. Therefore, the Commission may

a. Direct MSEDCL and MSPGCL to submit their detailed Replies on affidavit

clarifying their respective positions on this issue at large as well as the specific

queries raised;

b. Allow all parties, including the Consumer Representatives, adequate time and

opportunity to comment on the replies filed by MSEDCL and MSPGCL;

c. Direct MSPGCL to either extend the bid deadline or put the bidding process on

hold till there is enough clarity regarding the above issues as well as any other

issues that may emerge out of further deliberations in this regard;

d. Accept this preliminary submission on record and allow Prayas to make further

submissions, if any.

5. At the hearing held on 30.8.2017,

5.1 RPL stated that


a. RPL has long term PPAs of1200 MW (450 MW +750 MW) with MSEDCL. GoI

has come up with a scheme for flexibility in utilization of domestic coal and other

measures for reducing the cost power generation, known as “Case-4 Flexibility in

utilization of coal in IPP Stations”. In pursuance of this scheme, MSPGCL floated a

tender on dated 4.8.2017. As per Clause 2.2.1 (c) of the RfP, the eligibility

conditions for the bidder are that the available operating capacity shall be either:

(a) Capacity (MW) with no firm PPA ; or

(b) Unutilized capacity (with the consent of the original Beneficiaries) for which

PPA exists.

b. As per Article 4.5.2 (b) of the PPAs, RPL shall be permitted to sell power, being a

part of the Contracted Capacity, to third parties if there is a part of Available

Capacity corresponding to the Contracted Capacity which has not been dispatched

by the Procurer. As MSEDCL has given a Zero Schedule for its Plant, RPL has

approached MSEDCL for consent for 250 MW capacity which is unutilized by

MSEDCL. There is Zero Schedule from 9 June, 2017 till date.

c. The MSPGCL tender stipulates a ceiling tariff of Rs. 2.80/kWh and the period for

supply is 8 months starting from November, 2017 to June, 2018. As RPL intends to

bid, it approached MSEDCL on 21.8.2017 for its consent to bid for 250 MW of

power. However, MSEDCL has not provided its consent nor has it replied to RPL’s

letter. RPL has therefore filed this Petition.

d. As regards non-supply of power by RPL in May and June, 2017, the Plant was not

being dispatched and was under Zero Schedule. Had sufficient time been provided

to RPL, it would have arranged for the coal and supplied the power to MSEDCL.

5.2 MSEDCL stated that

a. On 21.08.17 at 17.07 hrs., MSEDCL received an e-mail from RPL seeking that

consent be issued by 22.8.2017 to enable it to participate in MSPGCL’s tender

under Case 4. Immediately thereafter, on 23.8.2017, RPL filed a Petition before the

Commission without waiting for any response from MSEDCL.

b. As per Article 14.2 of the PPAs, there is a separate mechanism for Amicable

Settlement and Dispute Resolution between the parties but, without resorting to

this provision, RPL has approached the Commission.

c. The demand for power has increased by 13% in January, 2017 as compared to last

year. In April, May and June of 2017, MSEDCL has been paying the Capacity

Charges for the contracted power, but RPL failed to supply the power when it was

requisitioned by MSEDCL, citing non-availability of coal. To the query of the


Commission regarding whether RPL provided power from alternative sources, as

envisaged in the PPAs, from April to June, 2017, MSEDCL replied that RPL had

not done so, and that MSEDCL has filed a separate Petition before the Commission

for penal action against RPL for non-supply of power.

d. Supply of power under the tender is from 1.11.2017 to 30.6.2018. MSEDCL

normally experiences a surge in demand in the months of October and November

on account of agricultural pumping load for the Rabi crop, and also in the summer

months of March to June.

e. In the event that RPL wins the bid, MSEDCL will lose its Contracted Capacity to

the extent of 250 MW. Therefore, MSEDCL is not willing to provide consent to

RPL.

5.3 MSPGCL stated that the bid date has been extended to 8.9.2017 considering that it had

to reply to the queries of the prospective bidders on the Bid Documents.

5.4 The Commission directed MSEDCL to file its written submission by 31.8.2017

evening, and RPL to file its Rejoinder, if any, on 1.9.2017.

6. In its Reply dated 31.8.2017, MSEDCL broadly reiterated the arguments made during

the hearing. MSEDCL also stated as follows:

6.1 Generating Units in Maharashtra are facing a shortage of coal. As per the norms, Power

Plants should ideally have 14 days’ coal stock. However, many of the Generating

Stations like Emco Warora (200 MW), Chandrapur Units 3-7 (1920 MW),

Khaparkheda Units 1-4 (840 MW) etc., have alarmingly low levels of coal stocks in

August, 2017. In fact, the coal stocks are lower than in April, 2017. The shortfall in

coal supply is expected to continue for the next few months. In this context, in spite of

lower demand, i.e. in the range of 12500-14500 MW, 3 units of RPL are on bar mostly

due to the shortfall in coal supply.

6.2 MSEDCL has entered into PPAs with RPL for the entire capacity of the 5 Generating

Units of RPL’s Power Plant. Under Article 4.5.1 of the PPAs, the entire aggregate

Contracted Capacity shall be for the exclusive benefit of the Procurer (MSEDCL). The

right vested in MSEDCL cannot in any manner be affected by RPL being allowed to

divert any part or whole of the Contracted Capacity to third parties.

6.3 In consideration of its exclusive right to the Contracted Capacity, MSEDCL has agreed

to and is liable to pay deemed fixed charges irrespective or not whether it avails the

power by issuing dispatch instructions. In this regard, Schedule 4 of the PPA dealing

with Capacity Charges provides for the payment on the cumulative Availability of


power declared by RPL. RPL is, therefore, fully protected with regard to its

fixed/Capacity Charges irrespective of whether MSEDCL gives dispatch instructions or

not. There is no adverse financial implication on RPL, and its contentions of financial

viability are misplaced and erroneous. MSEDCL makes provision for the Capacity

Charges payment irrespective of actual drawal (as per the Availability-Based Tariff

(ABT) Mechanism). The choice to schedule or not to schedule the Available Capacity

from time to time is entirely dependent on the power demand scenario, and the

scheduling of the power from the Generating Station is determined as per the Merit

Order Dispatch principles approved by the Commission. Hence, there is no reason for

MSEDCL to forego all the above rights and allow RPL to sell power elsewhere on a

firm basis.

6.4 Article 4.6.1 of the PPAs provides for the Seller to supply power from alternative

sources of supply during the Operation Period, but only if it is unable to provide supply

to the Procurer up to the aggregate Contracted Capacity from the Generating Station.

Further, Article 4.6.2 permits the Seller to supply such power for a maximum

continuous duration of 6 months and non-continuous duration of 12 months. This

provision of the PPAs is basically to facilitate the Seller to fulfill its contractual

obligation during the entire contractual period of 25 years only in case of unforeseen

exigency situations.

6.5 RPL has only now mentioned vide its letter dated 28.08.2017 that CPRI has tested the

Plant capacity at 283.5 MW and that the Net Available Capacity from each Unit is 258

MW. Therefore, the Net Available Capacity from all the 5 units of the Plant is 1290

MW, according to which there is 90 MW surplus capacity. The disclosure of such

excess capacity at this time is with the intention to participate in MSPGCL’s bid. In all

the previous stages like RfP, RfQ and PPA for procurement of competitively bid power,

RPL had disclosed 1200 MW as the saleable quantum from the 5 Units of the Plant. The

Fuel Supply Agreement (FSA) tie-up was also done on the basis of 1200 MW of power

supply. Most importantly, the tariff determination process by the Commission for the 5

Units (270 MW x 5) has been approved on the basis of 1200 MW of power supply only.

All this supports the premise that RPL has recently disclosed the enhanced Plant

capacity with the sole aim of participating in the bid.

6.6 On the PPAs for 1200 MW signed with MSEDCL, Ministry of Coal had allocated

linkage coal from South-Eastern Coalfields Ltd. (SECL) for the full quantum. If RPL is

selected in this Case-4 tender of MSPGCL, it may lead RPL to lift less coal than the

FSA minimum off-take quantum and this may attract the consequent penalty. As per

Article 10.1 of the PPAs, such penalty may be passed on to MSEDCL.

6.7 In view of the above reasons, MSEDCL cannot give a No-Objection Certificate to RPL

to participate in the bidding process being conducted by MSPGCL.


6.8 Most of Prayas’ submissions relate to the implementation methodology and the

contractual issues which may arise if permission is given to RPL. However, since

MSEDCL is not providing its consent to RPL for participation in the bid, at this

juncture MSEDCL is not making any submission in this regard. It may provide a

detailed submission separately, if required.

7. In its Reply dated 31 August, 2017, MSPGCL has stated that RPL has not questioned

the processes and the guidelines for the bidding procedures. Prayas has questioned

these, which is outside the purview of this Petition given that MSPGCL has followed

the Case 4 MoP Guidelines. MSPGCL’s paragraph-wise responses to the queries of

Prayas are as follows:

a. Principles and guidelines which should govern such an arrangement in which a

Generator with a firm PPA wants to sell its generation to an entity other than the

Procurer under the PPA:

Response:

The MoP Guidelines allow IPPs who have a firm PPA but have unutilized capacity

to participate in the bid only after providing consent from the Beneficiary. Clause

4.1.1(b) of the MoP Guidelines reads as follows:

“The available operating capacity of the Thermal Plant must be equal to or

more than the required quantum of power as requisite by the Buyer. The

available operating capacity shall be either:

(i) Capacity (MW) with no firm Power Purchase Agreements; or

(ii) Unutilized capacity (with the consent of original Beneficiaries) for which

PPA exists.”

The terms and conditions in the Bid Documents have been framed accordingly. In

this case, RPL would be selling its power to MSPGCL instead of to MSEDCL with

whom it has a PPA, provided that MSEDCL provides its consent.

b. Liabilities, entitlements and responsibilities of the Generator and the Procurer when

the Generator is supplying power to a third party, and contractual agreement needed

to enforce them:

Response:

As per the MoP guidelines, it is entirely the discretion of MSEDCL to provide

consent to RPL for participating in the bidding process under Case 4. All the IPPs

participating in the bidding process are bound to adhere to the terms and conditions

of the Tripartite Agreement to be signed thereafter.

c. Whether a Generator with a long-term PPA with MSEDCL but is not scheduled can

be allowed to participate in a similar Case 4 process floated by a Generating


Company from a different State, and what MSEDCL’s liability in terms of fixed

cost payment would be:

Response:

A Generator that has a long-term PPA with MSEDCL but is not scheduled can

participate in a similar Case 4 process floated by a Generating Company from

another State provided that MSEDCL gives its consent. However, the terms and

conditions of the Bid Documents are the prerogative of the respective States’

Utilities. Also, the treatment of the fixed charges of the Generator would be in line

with the PPA between MSEDCL and the concerned IPPs.

d. Adequacy of contractual safeguards to ensure that the Generator selected by

MSPGCL does not revert to the Commission for revision in the variable cost on

account of coal quantity and quality issues:

Response:

The revision in variable cost for the IPP is not allowed under this arrangement.

However, as per Clause 10.3 of the draft Tripartite Agreement, the variation in coal

quality should be adjusted through debit/credit notes whereas the variation in coal

quantity is to be reconciled quarterly as per Clause 8.2.

e. Admissibility of claim of Generator for fuel cost adjustment during the period of

supply:

Response:

As per Clause 13.1.1 and 13.1.3 of the draft Tripartite Agreement, any variation in

the coal price will be borne by MSPGCL and will be passed on through the Fuel

Adjustment Charge (FAC) to MSEDCL:

“13.1.1 If as a result of Change in Law, restricted to Clause 13.1.3, there is a

variation in costs, the supplier may so notify MSPGCL and MSEDCL, and

such revision in cost will be borne by MSPGCL and pass on under FAC

mechanism to MSEDCL whereby there will not be any revision in the tariff as

quoted in the bid and agreed in this agreement. Upon notice by the Supplier,

the Parties shall meet, as soon as reasonably practicable but no later than 10

(Ten) days from the date of notice, and either agree on amendments to this

Agreement or on any other mutually agreed arrangement.

13.1.3 Change in Law shall include and limited to any change in cost of coal,

duties and taxes on coal made applicable for supply of power by the seller and

will be adjusted in the bid rate to be computed by MSPGCL for scheduling of

power under MoD principle only. Any variation in cost due to Change in Law

will be borne by MSPGCL and will be transfer to MSEDCL under FAC

mechanism.”

f. Whether saving from procurement of power at lower variable cost by MSPGCL

will be passed on to MSEDCL consumers or there is any profit sharing; and the

basis for such profit sharing since, when costs increase on account of fuel price

variation, the entire burden is passed on to the consumers:


Response:

The entire saving from procurement of power at lower variable cost by MSPGCL

should be passed on to the consumers under the Aggregate Revenue Requirement

(ARR) mechanism. That is the objective of the MoP Guidelines.

g. Contractual precedence such arrangement may set and precautions necessary to

avoid any precedent which may not be in the interest of the consumers or the sector:

Response:

The contractual arrangement is between MSPGCL, MSEDCL and the IPP to whom

the coal provided by MSPGCL can be utilized in the optimal manner. In the long

run also, this arrangement is expected to be beneficial for the consumers in terms of

cost of power purchase.

8. RPL’s Rejoinder dated 1.9.2017 is as summarized below:

8.1. MSEDCL’s right to the contracted aggregate capacity is in terms of and subject to

Article 4.5.1 of the PPAs. RPL is permitted to supply unavailed power to third parties.

It can supply power from alternative sources to MSEDCL in accordance with Article

4.6.

8.2. The following Table depicts the net capacity (ex-bus after accounting for auxiliary

consumption) that RPL’s Amravati TPS can supply:

Particulars Existing As Certified

by CPRI

Unit Capacity 270 MW 283.5 MW

Auxiliary Consumption (9% as per MERC norms) 24.3 MW 25.5 MW

Net Capacity available ~ 245 MW ~ 258 MW

Net Capacity available from the Power Plant (5 Units) (A) 1225 MW 1290 MW

PPAs with MSEDCL (B) 1200 MW 1200 MW

Untied capacity available (A-B) 25 MW 90 MW

Normative Availability which RPL has to maintain as per

the PPAs (85% of 1200 MW - Contracted Capacity as per

the PPAs)

1020 MW 1020 MW


Particulars Existing As Certified

by CPRI

Capacity that will be available from 4 Units assuming

MSEDCL permits RPL to participate in the bid process

from 1 Unit, i.e. upto 250 MW

980 MW 1032 MW

Shortfall in available capacity to meet Normative

Availability as per PPA, in case RPL is unable to supply

power from alternative source.

40 MW NIL

8.3. In the light of the foregoing, the following is noteworthy:

a) RPL has requested NOC from MSEDCL for participating in the tender process only

upto 250 MW, which can be supplied by running one of the 5 Units of the Power Plant.

b) RPL shall still be able to meet its contractual obligation to meet normative Availability

of 85% of 1200 MW (i.e., 1020 MW) power supply as per the PPAs.

c) Further, RPL has already submitted that it shall comply with the PPA provisions

pertaining to recall of unavailed capacity as well as procure power from alternative

sources, in case MSEDCL requires the entire 1200 MW, during the contract period

under the tender floated by MSPGCL. Therefore, MSEDCL’s interests are protected in

addition to receiving cheaper power and mitigating the Capacity Charge liability, which

is in consumer interest.

8.4. MSEDCL’s scheduling of the Amravati TPS since April, 2016 is as under:

Month PLF (%) Maximum no. of

Units Running

Average MW

Dispatched

April-16 50.19 4 607

May-16 42.05 5 508

June-16 51.31 4 624

July-16 0.36 0 4

August-16 0.00 0 0

September-16 8.23 3 101

October-16 5.80 2 71

November-16 23.35 4 283

December-16 0.00 0 0


Month PLF (%) Maximum no. of

Units Running

Average MW

Dispatched

January-17 0.00 0 0

February-17 0.00 0 0

March-17 (Note 1) 9.64 5 120

April-17 (Note 1) 56.84 5 698

May-17 (Note 1) 47.12 3 572

June-17 (Note 1) 11.80 3 142

July-17 0.00 0 0

Note 1: From 28.03.2017 till 08.06.2017, the entire 1200 MW was scheduled, though

the dispatch was less due to shortage of coal.

Further, Schedule was given for 2 Units on 08.08.2017 and for another 2 Units on

11.08.2017. All Units were given shut-down instructions on 20.08.2017. Thereafter, on

23.08.2017, 2 Units were again given dispatch schedule and then 1 more Unit on

27.08.2017. As on 01.09.2017, only 3 Units are given schedule by MSEDCL.

8.5. RPL’s repeated requests (during various discussions with MSEDCL) to give a tentative

scheduling plan in advance remain unaddressed by MSEDCL.

8.6. RPL is in severe financial distress and is unable to service its debt obligations, including

fixed costs and expenses due to: (i) constant Zero Scheduling by MSEDCL; (ii) Plant

shut-down for extended periods of time, and (iii) frequent start-ups and shut-downs at

short intervals. If the situation persists, it may render the Project being declared as a

non-performing asset.

8.7. RPL is entitled to sell the Available Capacity not scheduled by MSEDCL under Article

4.5.3 the PPAs. Further, RPL has a capacity of 90 MW which is not tied up under any

PPA.

8.8. Therefore, RPL has sought permission from MSEDCL for participation in the bid

(being a condition of the tender) only for 250 MW based on the following:

a) The normative capacity as per the PPAs that RPL is supposed to make available to

MSEDCL is 85% of 1200 MW, i.e., 1020 MW.

b) Total Net Available Capacity = 258 MW per Unit (i.e. 1032 MW from 4 Units).

c) Therefore, 1032 MW will always be available for MSEDCL as and when required, as

per the normative Availability requirement.


d) RPL shall make suitable arrangements for the remaining capacity of 160 MW (i.e. the

difference between the Contracted Capacity of 1200 MW and Available Capacity of

1040 MW in the event of receipt of 100% schedule through:

(i) Power purchase from the Exchange.

(ii) Execution of bilateral power supply agreement with any Generator in the

country.

e) Failure of RPL to source power through an alternative source will lead to non-

entitlement of RPL to claim Capacity Charge for such capacity which has not been

sourced and supplied to MSEDCL.

8.9. In the light of the above, MSEDCL ought not to be permitted to arbitrarily withhold

grant of consent to RPL for participating in the bidding process for a capacity upto 250

MW from the Project.

8.10. The State’s actions must not be arbitrary, but must be based on some rational and

relevant principle which is non-discriminatory: it must not be guided by any extraneous

or irrelevant considerations:

“The whole conception of unfettered discretion is inappropriate to a public

authority, which possesses powers solely in order that it may use them for the

public good.” (Administrative Law, 9th Edn. H.W.R. Wade and C.F. Forsyth)

8.11. In the event that RPL wins the bid, MSEDCL will be able to mitigate the additional

financial impact leading to possible reduction in the overall cost of generation, which

will ultimately be passed on to the consumer.

8.12. The cost of power arrived at pursuant to the bidding process could be lower than the

tariff MSEDCL would pay to RPL if power was being scheduled under the PPA, which

will be in the ultimate interest of its consumers. Even at the ceiling tariff of

Rs.2.80/kWh (as per the RfP), it will result in a saving of Rs.0.28/kWh (since the

Variable Cost of RPL under the PPAs is 3.08 kWh) for 8 months for this 250 MW,

which amounts to approx. Rs. 41 crore. Further, with every reduction of Rs.0.10/kWh

from the ceiling tariff, savings to MSEDCL would be approximately Rs.15 crore.

8.13. Since RPL has subsisting PPAs for 25 years, this will also enable partial capacity of the

Plant to operate on a continuous basis, thereby ensuring that available capacity is not

bottled up. Considering the financial stress which the Plant is facing, it would not only

be beneficial but also prudent to help/ assist RPL to recover from part of this stress.

8.14. On 10.06.2016, the MoP introduced a policy for flexible and optimal utilization of coal

in order to achieve overall reduction in cost of power generation. On 20.02.2017, it

notified the ‘Methodology for use of coal by State in Private Generating Stations

(IPPs)’, thereby laying down Guidelines for flexibility in utilization of domestic coal

and other measures for reducing the cost of power generation.


8.15. Section 86 (4) of the EA, 2003 provides that, in the discharge of its functions, the

Commission shall be guided by the National Electricity Policy, National Electricity

Plan and the Tariff Policy published under Section 3.

8.16. RPL had filed Case No.19 of 2017 against MSEDCL seeking a declaration for sale of

unavailed capacity to third parties in terms of Article 4.5.3 of the PPAs. In the course of

that proceeding,

(a) MSEDCL admitted that instances like the present case are covered under Article

4.5.3 of the PPAs. MSEDCL has contended that only if it intimates RPL in advance

that it shall not be availing the capacity in full or part can RPL sell such surplus

capacity.

(b) MSEDCL stated that it may allow RPL to sell surplus capacity to a third party,

under Article 4.5.3 of the PPAs, only when it is of the opinion that such sale shall be

at a price higher than the variable charges, which would benefit MSEDCL.

(c) MSEDCL will be well within its right to refuse sale of surplus power to third parties

if there is no financial benefit accruing to it in the form of reduction of deemed

fixed charges.

That matter is reserved for orders. MSEDCL’s submissions are based on conjectures

and surmises with the sole intention of arbitrarily denying RPL an opportunity to bid

towards optimum utilization of coal by otherwise supplying available unscheduled

power.

8.17. RPL has undertaken to ensure that power is supplied to MSEDCL as per the provisions

of the PPAs as and when required. As such, the reasons for refusal of NOC as put forth

by MSEDCL lack merit.

8.18. MSEDCL is admittedly the Beneficiary of the power being procured under the bid

floated by MSPGCL and, therefore, MSEDCL will in fact be able to procure cheaper

power under the capped mechanism through MSPGCL which will ultimately benefit

the consumers. Assuming that MSEDCL requires the entire 1200 MW from RPL under

the PPAs, admittedly a part of that power being supplied at a lower rate will benefit

MSEDCL financially.

8.19. The CPRI Report dated 28.08.2017 has been received by RPL only in August, 2017 and

as such it was not possible for RPL to know or disclose its outcome to MSEDCL. The

attached report of CPRI clearly mentions that the study was carried out between 4-13.4.

2017 when the testing was done, which proves the bonafide intentions of RPL.


8.20. In any event, the availability of surplus power with RPL cannot be a ground for

MSEDCL to deny the NOC, which would otherwise enable RPL to optimally utilize the

available power.

8.21. The apprehension of MSEDCL that, allowing RPL to participate in MSPGCL’s tender

would not enable RPL to lift coal as per the FSA, thereby leading to levy of penalty is

baseless and unrelated. Coal lifting under the FSA is directly linked to the dispatch

schedule received from MSEDCL under the PPAs. Hence, as long as RPL receives a

dispatch schedule from MSEDCL, it will enable RPL to lift coal under the FSA which

may not result in short lifting of coal under the FSA and penalty may not be levied.

Therefore, this ground for refusal to grant NOC is not sustainable.

8.22. The contentions of Prayas relate to anomalies connected with the Case-4 bidding

process and as such are not the subject matter of these proceedings. The nature of

reliefs sought by RPL is limited in scope and does not merit any such inquiry into the

Case-4 bidding procedure.

8.23. The power of the Regulator under Section 86(1) (b) of the EA, 2003 is of wide import

and, in terms of Section 94(2), the Commission has the powers to pass interim orders in

any proceeding.

8.24. The Commission is empowered under Section 60 to issue such directions as it considers

appropriate to MSEDCL if it abuses its position or acts in a manner likely to have an

adverse effect on competition in the electricity industry.

Commission’s Analysis and Ruling

9. The background and facts of the present matter are as set out below.

9.1. MSPGCL has issued a RfP for Case 4 tariff-based bids by IPPs in accordance with

the MoP Guidelines dated 20.2.2017, issued under Section 63 of the EA, 2003,

relating to ‘flexibility in utilization of domestic coal and other measures for

reducing the cost of power generation’. As per the Guidelines, MSPGCL (as the

State Nodal Agency and State Govt. Generation Utility) can divert a part of its

coal allocation and take equivalent power from IPP Generating Stations selected

through an e-bidding process on the designated web portal. The guiding principle

is that the landed cost of power from the selected IPP Generating Station should

be lower than the variable cost of generation of the MSPGCL Generating Station

whose power is to be replaced by the generation from the IPP using the coal

diverted from MSPGCL. The landed cost of power is inclusive of transmission

charges and losses. The source, quantity and quality of coal, the quantum of power


and period for which it is required, and the delivery point has to be indicated.

After the bidding process is completed, a Tripartite Agreement is to be signed

between the selected IPP bidder, MSPGCL and MSEDCL.

9.2. MSPGCL has issued a RfP accordingly for supply of 400 MW power for 8 months

from November, 2017 to June, 2017, and set a ceiling single-part tariff rate of Rs.

2.80/ kWh against which reverse e-bidding is to be conducted. The details of the

coal to be diverted have also been provided, along with the draft Tripartite

Agreement. MSPGCL stated at the hearing and confirmed in its subsequent Reply

that it has extended the last date for submission of bids from 1.9.2017 to 8.9.2017

after clarifications were sought by prospective bidders following a pre-bid

conference.

9.3. RPL is contracted to supply the entire capacity of 1200 MW of power from the 5

Generating Units of its Amravati TPS to MSEDCL under two PPAs entered into

under Section 63 of the EA, 2003. The MoP Guidelines expressly stipulate that, if

the quantum of power offered is already contracted with MSEDCL (in this case),

the IPP shall submit MSEDCL’s consent along with its bid. Accordingly, the RfP

also contains that condition and the draft Tripartite Agreement records such

consent.

9.4. In view of this bid condition, RPL applied for permission to MSEDCL, and

approached the Commission immediately thereafter to direct MSEDCL to give

consent. On 30.9.2017, MSEDCL intimated RPL that it would not give consent. At

the hearing and in its Reply dated 31.8.2017 to the Petition, MSEDCL has set out

the reasons for declining permission, and they have been summarized earlier in

this Order.

10. The relevant provisions of the PPAs between MSEDCL and RPL read as follows:

“Right to Contracted Capacity and Scheduled Energy

4.5.1 Subject to provisions of this Agreement, the entire Aggregate

Contracted Capacity shall be for the exclusive benefit of the Procurer and

the Procurer shall have the exclusive right to purchase the entire Aggregate

Contracted Capacity from the Seller. The Seller shall not grant to any third

party or allow any third party to obtain any entitlement to the Contracted

Capacity and/or Scheduled Energy…

4.5.2 …b) Further notwithstanding Article 4.5.1, the Seller shall be

permitted to sell power, being a part of the Contracted Capacity to third

parties, if:


i) there is a part of Available Capacity corresponding to the Contracted

Capacity which has not been Dispatched by the Procurer, ordinarily entitled

to receive such part…

4.5.3 If the Procurer does not avail of power up to the Available Capacity

provided by the Seller corresponding to the Contracted Capacity, the Seller

shall be entitled to sell such Available Capacity not scheduled by the

Procurer, to any person without losing the right to receive the Capacity

Charges from the Procurer for such unavailed Available Capacity…

4.5.5 Upon the Procurer intimating to the Seller of its intention and

willingness to avail of the part or whole of the Available Capacity

corresponding to the Contracted Capacity not availed of and therefore sold

to the third party, the Seller shall, notwithstanding anything contained in the

arrangement between the Seller and any third party, commence supply of

such capacity to the Procurer from the later of two (2) hours from receipt of

notice in this regard from the Procurer or the time for commencement of

supply specified in such notice…

Alternative Source of Power Supply

4.6.1 During the Operating Period, if the Seller is unable to provide supply

of power to the Procurer up to the Aggregate Contracted Capacity from the

Power Station except due to a Force Majeure Event or due to a Procurer

Event of Default, the Seller is free to supply power up to the Aggregate

Contracted Capacity from an alternative generation source to meet its

obligations under this Agreement. Such power shall be supplied to the

Procurer at the same Tariff as per the terms of this Agreement and subject

to provisions of Article 4.6.2…

4.6.2 The Seller shall be permitted to supply power to the Procurer from any

alternative source for a maximum continuous duration of six (6) Months or

a maximum non continuous period of twelve (12) months during the

Operating Period…

Scheduling and Dispatch

…5.4.2 The Seller further agrees that the Availability entitlement of the

Procurer for dispatch over any Settlement Period cannot be offered to any

third party other than for conditions under Article 4.5.3. If the Seller will

fully offers the power meant for dispatch to the Procurer to any third party

without complying with the conditions specified in Article 4.5.3, the Seller

agrees to and acknowledges the Procurer’s right to instruct the RLDC /

SLDC, as the case may be, not to schedule such power to any third party,

after due approval from the Appropriate Commission.”

11. The MoP Guidelines and the RfP (quoted at para. 3.6 above) issued by MSPGCL

require the consent of the PPA Beneficiary (in this case, MSEDCL) as a pre-


condition for the IPP bidder to offer any power from out of the Contracted

Capacity. The Guidelines and RfP do not spell out the considerations on which

MSEDCL may or may not give such consent, meaning thereby that it is entirely at

its discretion. However, being a regulated entity, MSEDCL cannot exercise its

discretion in an arbitrary manner: it must be based on relevant considerations

including, in particular, the possible impact on its consumers, and the provisions

of the PPAs quoted above must be read conjointly with the nature of the

arrangement for which MSPGCL has called for bids.

12. In this context, the Commission notes MSEDCL’s submission that demand for

power increased by 13% in January, 2017 as compared to last year. In April, May

and June, 2017, demand increased further substantially, and on several occasions

the entire Contracted Capacity of various Generators, including RPL, that was

required was not available or not provided for various reasons and MSEDCL had

to meet some of the gap by resorting to short-term procurement through the

Power Exchanges and bilateral contracts. On some occasions, it even had to resort

to load-shedding. The Commission notes this has been discussed in the

Commission’s recent Daily Order dated 3.8.2017 in Case No. 88 of 2017.

Moreover, out of the 8 months of the period of supply envisaged by MSPGCL, the

power demand surges in November on account of agricultural pumping load for

the Rabi crop, and in the summer months from March to June. MSEDCL has also

pointed out that Generating Units in Maharashtra are facing a shortage of coal,

and that their coal stocks are generally well below prudent norms and less than

last year. This is likely to be the case for the next several months also. At present, 3

Units of RPL are on bar mainly due to the shortfall in coal supply.

13. Articles 4.5.2 and 4.5.3 of the PPAs provide for sale by RPL, to third parties, of the

contracted power available but not scheduled by MSEDCL. Article 4.5.5 provides

that, notwithstanding any such sale arrangement or even otherwise, RPL is bound

to supply MSEDCL that power, if required, within 2 hours or other time

stipulated by it, whichever is later. If RPL is unable to do so from its own

generation, Article 4.6.1 allows it do so from an alternative generation source at

the same tariff. Thus, in the normal course and if the PPAs are considered in

isolation, it could be argued that these provisions safeguard the interest of

MSEDCL (and its consumers) when the power that was earlier not scheduled is

required by it. However, Article 4.6.1 relates to any eventuality in the Plant or in

relation to the other provisions of the PPA, except for Force Majeure events. In

the present case, the eventuality arises from the tying up of that quantum of power

through the Case 4 bidding process and the Tripartite Agreement to which

MSEDCL itself is a party, and thus diluting the injunction on RPL in Article 4.5.1

not to grant any entitlement to a third party. The ultimate effect of the

arrangement proposed is that the quantum offered by RPL reduces the contracted

power available to MSEDCL should it be required to meet increased demand,


including from MSPGCL since the coal of MSPGCL’s Units has also been

diverted to that extent.

14. As mentioned at para. 3.22 above, RPL has stated that it has given an undertaking

to MSEDCL that it shall recall the power in the event that MSEDCL requires the

unutilized capacity of 250 MW proposed to be offered to MSPGCL. However, the

Commission notes that the draft Tripartite Agreement is silent on the issue of

recall of such power.

15. Whether there will be a greater or lesser tariff benefit to consumers with the

proposed arrangement, or any tariff benefit at all, will depend on the actual

demand and supply situation during the 8-month period of the Tripartite

Agreement and the position of the successful IPP bidder in the MOD stack vis a

vis other Generators. As against this, in the Commission’s view, the apprehensions

of MSEDCL regarding expected increases in demand and shortfalls in coal supply

and stocks which may affect its ability to supply its consumers and may also

increase its power procurement costs outweigh the possibility of tariff benefits.

16. Considering the foregoing, it would be imprudent and injudicious for the

Commission to direct MSEDCL to provide its consent to RPL. The Commission is

of the view that MSEDCL has duly considered the relevant aspects while denying

such consent.

17. While RPL’s intention may be to improve its own position in the MOD stack to the

extent of the 250 MW it proposes to offer in its bid, it can have no grievance if

consent is denied since MSEDCL is obliged under the PPAs to pay it the Capacity

Charges (which RPL had itself quoted in the competitive bidding process leading

to the PPAs) for the entire Contracted Capacity. These Charges are payable even

if MSEDCL does not schedule some or all of that capacity. This has, in fact, been

the case at various times when the power demand was less and was met entirely by

Generators with lower Variable Charges than RPL and which are, therefore,

better placed in the MOD stack.

18. The concept of 85% Availability over a Contract Year is essentially to take care of

routine maintenance of the Plant and any outages. In such circumstances, it is not

understood how RPL will be able to meet 85% of the Contracted Capacity, i.e.,

1020 MW, throughout the year, while simultaneously offering 250 MW in the Case

4 bidding for a substantial part of the year.

19. During the recent Technical Validation Session in Case No. 59 of 2017, to a query

of the Commission, MSPGCL replied that it had not been served with any notice

for penalty from its coal suppliers for failure to off-take the stipulated minimum

quantity as the coal supply itself was short. This raises the question of how, in the


event that it is required to schedule its entire Contracted Capacity to MSEDCL,

MSPGCL would be able to supply coal to the IPP which would substitute the

power from some of its Units.

20. In view of the above, the Commission is not inclined to provide relief to RPL to the

extent of requiring MSEDCL to grant the consent sought.

The Petition of M/s RattanIndia Power Ltd. in Case No.124 of 2017 stands disposed of

accordingly.

Sd/- Sd/- Sd/-

(Deepak Lad) (Azeez M. Khan) (Anand B. Kulkarni)

Member Member Chairperson