before the maharashtra electricity regulatory commissionmercindia.org.in/pdf/order 58 42/order-186...

Order Case No. 186 of 2014 of 19

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

CASE No. 186 of 2014

In the matter of

Petition of Global Energy Pvt. Ltd. regarding grant of Open Access/ NOC, banking

facility and adjustment of GenerationCredit Notes,wrongful levy of Cross-Subsidy

Surcharge and related matters

Coram

Shri Azeez M. Khan, Member

Shri Deepak Lad, Member

M/s Global Energy Pvt. Ltd. ....Petitioner

V/s

Tata Power Company Ltd. (Distribution) …Respondent

Appearance

For Petitioner: Shri Matru Gupta, Advocate

For the Respondent: Smt. Deepa Chawan, Counsel

Consumer Representative: ShriAshok Pendse (TBIA)

ORDER

Date:16 November, 2016

1. M/s. Global Energy Pvt.Ltd. (GEPL), 104, 10th

Floor, Maker Chambers VI,Nariman

Point, Mumbai has filed a Petition on 20 October, 2014 under Sections 42, 57, 60,

86(1) (f), 86(1) (e), 86(k), 142, 146 & 149 of the Electricity Act (EA), 2003 seeking

directions to Tata Power Co. Ltd. (Distribution) (TPC-D) forgrant of Open Access/

No-Objection Certificate (NOC) for adjustment of Wind Energy Generation Credit

Notes (GCNs) in the monthly bills of the end–consumers and related matters.

2. GEPL‟s prayers are as follows: -

mailto:[email protected]

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


(a) “To declare and hold that the Respondent had to grant banking facility to the

wind generated power from 1st April to 31

st March for the financial years as

impugned herein;

(b) direct the Respondent that it had to grant NOC/ Open Access to Petitioner/

Wind Energy Generator from 1st April to 31st March of a financial year;

(c) direct that 25% cross subsidy surcharge is applicable to consumers availing

wind power from the Petitioner, in line with the order dated 09.09.2011

passed in Case No. 43 of 2010;

(d) direct the Respondent to compensate GEPLfor an amount of Rs. 6, 68, 97,

751/-, along with interest at the rate of 18% per annum, on account of losses

suffered due to sale of power on power exchange by the Petitioner;

(e) direct the Respondent to refund an amount of Rs. 12,42,563/- on account of

wrongful imposition of cross subsidy surcharge, along with interest at the

rate of 18% per annum;

(f) direct the Respondent to either grant Credit Notes for the unadjusted 7.59

lakh units of wind power towards adjustment in the monthly bills of the

consumers, or compensate GEPLfor an amount of Rs. 40,95, 685/-, along

with interest, in the event of lapsing of the said units;.

(g) declare and hold that the Respondent has abused its dominant position on

account of the following:

(i) by causing a delay/ denial of NOC/ Open Access to the Petitioner/

Wind Energy Generators, as mentioned in the present petition, in the light of

the reliance placed by the Respondent for regulating wind energy upon a

draft MERC (Distribution Open Access) Regulations 2011, as mentioned in

the letter dated 25.07.2012 (Annexure - P/5); and

(ii) by causing a delay/ denial of NOC/ Open Access to the Petitioner/

Wind Energy Generators, as mentioned in the present petition, contrary to

the various orders as detailed in the present petition.

(h) direct the Respondent to pay a compensation to the Petitioner, as may be

determined by this Hon’ble Commission, in terms of Sections 57 read with 60

of the Electricity Act, 2003;

(i) issue appropriate order or directions under Sections 142/ 146/ 149 against

the Respondents, and its officials, by imposing penalties for non-compliance

of various orders mentioned in the present petition;

(j) Pass any other order which this Hon’ble Commission deems fit and proper in

the interest of justice and good conscience.”

3. The facts as stated in the Petition and the subsequent submission of GEPL dated 29

January, 2015are summarized below:


(a) GEPL is a Trader of electricity. It has contracted with 5 consumers, situated in the

Distribution Licence area of TPC-D, for selling 23.05 MW power from Wind

Energy Generatorsthrough Open Access (OA) in FY 2012-13, as follows:

Sr.

No.

Consumer Date of

Open

Access

Application

Period of

Open

Access

applied for

Period for

which Open

Access was

granted

Period for which

Open Access

was not granted

Total

Unadjusted

Units

(kWh)

duringthe

period for

which Open

Access was

not granted

1 Asian

Hotels

26 June,

2012

April 2012

to March

2013

July 2012 to

March 2013

April to June

2012

40,92,659

2 TCL

(Andheri)

9 October,

2012

April2012

to March

2013

November

2012 to March

2013

April to Oct

2012

63,42,933

3 TCL

(BKC)

9 October,

2012

April 2012

to March

2013

November

2012 to March

2013

April to Oct

2012

90,45,166

4 Indian

Hotels Ltd

22

November,

2012

April 2012

to March

2013

December

2012 to March

2013

April to Nov

2012

41,97,664

5 Mandke

Foundation

19 October,

2012

October

2012 to

March 2013

November

2012 to March

2013

October 2012 3,24,112

Total 2,40,02,534

(24 MU’s)

The Wind Energy Generators supplying power to these OA consumers are situated

in the area of the Maharashtra State Electricity Distribution Co. Ltd (MSEDCL) and

connected on 132/33kV Sub-stations.

(b) On behalf of these 5 consumers, GEPL made applications to TPC-D for grant of OA

permission along with NOC from MSEDCL for the period from 1 April, 2012 to 31

March, 2013.

(c) In response to the application of GEPL, TPC-D on 25 July, 2012 replied that:

i) There is a need for a separate tripartite agreement.

ii) Where Renewable Energy (RE) Generators are claiming Renewable Energy

Certificate (REC) even though a RE source involved, the power is to be

treated as conventional energy and, as a result, there would be no banking

of energy.

iii) The Contract Demand of the consumer would be reduced as per norms for

conventional electricity.


iv) The energy injected would be subjected to daily scheduling on 15-minute

time block on a day-ahead basis.

v) Any deviation from the schedule would invite treatment as per the draft

MERC (Distribution Open Access) Regulations (DOA Regulations‟), 2011.

(d) These conditions laid by TPC-D are against the statutory/ regulatory framework. The

stand of TPC-D for treating the wind energy as equivalent to conventional energy is

completely against the provisions of the EA, 2003, especially Sections 62(3) read

with 86(1)(e).

(e) Banking of electricity is a benefit extended to the power generated from a Wind

Energy Generator since the wind power cannot be scheduled on a real-time basis.

Also, the stand of TPC-D that, once a Wind Energy Generator claims RECs, the

energy becomes equivalent to conventional energy, is wrong, and also contrary to

the Commission‟s Order dated 9 September, 2011 specifying 25% Cross-Subsidy

Surcharge (CSS) on consumers availing power from RE sources under OA.

(f) GEPL wrote to TPC-D on 14 August, 2012 stating as below:

i) The tripartite agreement nowhere makes it mandatory that a Power

Purchase Agreement (PPA) has to be provided by the consumer seeking

OA.The consumer had already furnished a letter of intent (LoI) which was

sufficient to outline the agreement of the parties to schedule power;

ii) Power generated from Wind Energy Generators who avail RECs cannot be

treated and scheduled as conventional energy; and

iii) The Commission in its Order dated 1 December, 2011 in Case No. 57 of

2011 had stated that, once RECs are availed, the energy of a Wind Energy

Generator loses its green attributes only with respect to the fact that

procurement of such power by the Distribution Licensees shall not be

considered for fulfillment of the Renewable Purchase Obligation (RPO)

norms.

(g) On 23 October, 2012, TPC-D issued the first GCNs in favor of Asian Hotels for the

month of July, 2012.

(h) On 26 November, 2012,GEPL wrote to TPC-D asking it to declare the expected RE

generation to the Maharashtra State Load Despatch Centre (MSLDC) in Megawatt

(MW) terms for adjustment of the respective consumer bills to ensure that all wind

generation could be credited to the consumers.

(i) On 29 November 2012,GEPL wrote to TPC-D with respect to the GCNs issued by

TPC-D dated 27 October, 2012, highlighting the problems faced in the energy

adjustment/ credit process of Asian Hotels.


(j) As is evident from the above letter, the stand of TPC-D in the GCNs dated 27

October, 2012 was wrong, illegal and arbitrary, since the generation of power was

from RE sources which were eligible for a levy of only 25% of the applicable CSS,

as per the Commission‟s Order dated 9 September, 2011.TPC-Dhad levied 100%

CSS. Thus, instead of levying Rs. 0.065 per unit, TPC-D levied 26 paise per unit.

(k) On 19 January, 2013, GEPL wrote to TPC-D seeking revision in the dates of grant of

OAto 1 April, 2012 instead of the dates cited by TPC-D. Vide letter dated 18

February, 2013, GEPL sought confirmation that energy generation from 1 April,

2012 would be credited to the consumers in the TPC-D area.

(l) On 19 February, 2013, TPC-Dreplied to GEPL‟s letter of 19 January, 2013, and

stated as follows:

“As discussed earlier, we have granted distribution Open Access

from followingdates in case of transactions routed through you:

Consumer Name Date of

Application

Date of grant

of Open

Access

Asian Hotels

Ltd.

26June, 2012 1 July, 2012

TCS, Andheri 9 October,

2012

1November,

2012

Tata

Communication

s, Bandra

9October,

2012

1November,

2012

Mandke

Foundation

19October,

2012

1 November,

2012

Taj Lands End 22 November,

2012

1December,

2012

Global Energy during the conference call on 28th

January 2013 had

suggested the utilization of the energy generated from the wind

projects prior to grant of Open Access. We wish to reiterate (as done

in the conference call dated 28th

January, 2013) that we are not in a

position to give retrospective credit of the energy generated before

the date of grant of Open Access else the significance of Open Access

permission would be defeated.

The energy generated prior to the grant of Open Access has not been

utilized/ claimed by Tata Power-D in the energy settlement by SLDC.

Also, the energy generated from the sources mentioned in the above

application cannot be considered to be banked with Tata Power as

the same is not claimed by Tata Power in its energy settlement. Hence

you may like to utilizesuch energy generated elsewhere.”

(m) Thus, TPC-D refused to adjust the energy under banking principles, though banking

of wind-generated electricity is permitted. With these actions, TPC-D circumvented


the whole concept of banking of electricity and also created roadblocks so as to

destroy the OA market in the RE sector.

(n) On 25 February, 2013, MSLDC responded stating that it would credit the energy

generated for the periodApril-December, 2012 in favour of TPC-D on receipt of 15

minute data based on the GCN from MSEDCL and subsequent finalization of the

Final Balancing and Settlement Mechanism (FBSM) bill for the respective months.

(o) On 27 February, 2013, GEPL wrote to TPC-D stating that the energy generated for

the period April-December 2012 will be credited in favour of TPC-D.

(p) After the above certification from MSLDC, there was no impediment left for TPC-D

to not credit energy to the consumers in its distribution area.

(q) On 28 February, 2013, TPC-D wrote to GEPL refusing to acknowledge that any

energy is lying with it as banked energy even after the certification of banked

energy.

(r) On March 22, 2013, GEPL wrote to MSEDCL seeking cancellation of GCNs issued

in favour of TPC-D, and further sought fresh GCNs for sale of banked energy

outside the area of MSEDCL. This was required since GEPL had an obligation to

make payments to the Generators by selling/ adjusting the GCNs.

(s) On 10 April, 2013, MSEDCL wrote to GEPL advising that it had issued OA

permission to the Generators to sell the wind energy to consumers in TPC-D‟s area

and that the GCNs are issued by MSEDCL with Time of Day (ToD)data, and only

ToD-wise data is required to be given for the credit of energy to consumers.

MSEDCL advised that 15 minute data is not required for adjustment/ credit of

energy, and that GEPL will have to follow up with TPC-D to adjust the energy

accordingly.

(t) On 20 May, 2013, GEPL wrote to MSEDCL and submitted the details of the GCNs

which remained unadjusted with TPC-D, seeking their cancellation and permission

to sell the energy on the Power Exchanges.

(u) On 14 October, 2013, MSEDCL wrote to GEPL advising its reconciliation of

1,81,42,672 units of energy permitted for trading, and to prepare and submit a zone-

wise plan. The authorization for sale on Exchanges was not received from

twoGenerators, and hence their energy data was not included.

(v) On 15 October, 2013, GEPL wrote to MSEDCL asking for scheduling 1,81,42,672

units. On 30 October, 2013, MSEDCL replied to GEPL permitting the sale of that

quantum of units from 1 November to 17 November 17, 2013.

(w) On 19 December, 2013, GEPL sought extension of the permission to sell the units as

these had not been sold due to various reasons, including lower prices on the


Exchanges.Accordingly, MSEDCL permitted the sale of these units from 23

December, 2013 to 8 January, 2014.

(x) In view of the above, GEPL has suffered a loss of Rs. 7,22,35,999 as a result of the

arbitrary and illegal action of TPC-D in not adhering to the principles of banking in

Maharashtra.

4. In its Reply and submissionsdated2 December, 2014 and 29 December, 2015,TPC-D

has stated asbelow:-

a) GEPL is seeking relief which is in favour of or beneficial to either Generating

Companies who have injected electricity in the MSEDCL distribution system,

or to the OA consumers who are situated in the TPC-D area of supply.

b) Merely based on a presumption of loss due to its arrangements with the

Generating Companies and/or the OA consumers, GEPL cannot be a person

aggrieved, who has suffered legal injury, on account of the action of TPC-D.

Therefore, no claim as sought to be raised by GEPL against TPC-D in the

Petition is sustainable.

c) The present Petition has been filed by GEPL under Sections 42, 86(1) (f), 86(1)

(e), 86(1) (k), 57, and 60 read with Sections 142 and 146 of the EA, 2003.

Section 86(1) (f) vests powers on the State Commission to adjudicate disputes

between Generators and Licensees,It provides for the adjudicatory function of

the State Commission, which can be invoked when there is an inter-se dispute

between (a) Licensees (b) between a Generating Company and a Licensee or

(c) betweenGenerating Companies.

d) GEPL has no contractual relationship with TPC-D and has no basis of seeking

damages for the alleged losses suffered by it. The loss claimed to be suffered

by GEPL is due to its own business decisions. There is no justification for

seeking losses from TPC-D as there is no direct dispute between GEPL and

TPC-D.

e) GEPL has also not put any document on record to demonstrate that there is any

dispute between the Generating Companies and TPC-D.

f) A dispute, if any, with respect to delay in granting OA or wrongly imposing

100% CSS is a dispute between the Distribution Licensee and the consumer

which ought to be adjudicated before the Consumer Grievance Redressal

Forum (CGRF) in terms of Section 42 (5) to 42 (8) of EA, 2003 read with

Regulation 18 of the DOA Regulations, 2005, and not under Section 86(1) (f)

of EA, 2003. Hence, the Petition filed by GEPL is not maintainable and should

be dismissed on this ground alone.


g) The factual details with respect to the applications made by each of the

consumers are as under:-

S.No. Consumer Date of

receipt of

application

Period for which

Open Access granted

No. of days

within which

Open Access

became

effective

1 Asian Hotels

(West) Limited

26.06.2012 01.07.2012to

31.03.2013

4 days

2 TCL (Andheri 09.10.2012 01.11.2012 to

31.03.2013

22 Days

3 TCL (BKC) 09.10.2012 01.11.2012 to

31.03.2013

22 Days

4 Mandke

Foundation

(Andheri West)

19.10.2012 01.11.2012 to

31.03.2013

12 Days

5 Indian Hotels Ltd. 22.11.2012 01.12.2012 to

31.03.2013

8 Days

h) As is evident from the above, TPC-D had granted OA, which became effective

within 30 days, i.e. the time prescribed under the DOA Regulations, 2005,

from the receipt of applications seeking OA from the consumers. Thus, there is

no delay in allowing OA by TPC-D.

i) The EA, 2003 and the Rules and Regulations do not contemplate allowing OA

even before an application seeking OA is made by a consumer. The submission

of GEPL is untenable, and accepting it would make the entire process of

seeking OA otiose. On the basis of the above, it is submitted that TPC-D, in

accordance with the provisions of Section 42 of EA, 2003 and the DOA

Regulations, granted OA to the consumers post the applications filed by them

and within the time frame prescribed in the Regulations.

j) As regards GEPL‟s submission that TPC-D has rendered the concept of

banking infructuous by not allowing OA from the beginning of the financial

year, GEPL has misconstrued the concept of banking of electricity. It has

wrongly assumed that banking is to be provided by TPC-D even before an

OAconsumer is identified. Banking of electricity is to be provided by a

Distribution Licensee in whose area of supply the OA consumer is situated.

k) The Commission in itsOrder dated 13 March, 2006 in Case No. 40 of 2005 has

established the fact that (i) for banking of energy, the consumer ought to be

identified, and (ii) the energy can only be banked with the Distribution

Licensee within whose area the consumer is situated. In other words, energy

cannot be banked with an unidentified consumer. The Commission in its Wind


Energy Order dated 24 November, 2003 in Case Nos. 17(30, (4) and (5) of

2002has set out the framework governing banking of electricity.

l) It is evident from the Wind Energy Orderdated 24 November, 2003 that:-

i) Banking facility can be granted by a Distribution Licensee to its

existing OA consumers or when the OA consumers are identified. It

is the submission of GEPL that TPC-D should have provided the

banking of electricity from the beginning of the financial year,

irrespective of the date on which the applications seeking OAwere

made by its consumers That submission is contrary to the scope and

intent of the framework of banking of electricity provided by the

Commission in its Wind Energy Order dated 24 November, 2003 in

Case Nos. 17 (3), (4) and (5) of 2002. TPC-Dcould not have provided

the banking facility at the beginning of the financial year, i.e. from a

date before the application seeking OA is made by the consumers.

Consequently, energy credit, if any is to be provided only for the

period after the consumers were identified, and cannot be provided

from the beginning of the financial year. The Generating Company is

also required to inject electricity only after the consumer is identified.

ii) With regard to the submission of GEPL seeking counting of the

electricity injected by the Generating Company in the system of

MSEDCL, TPC-D is not required to provide any credit for the units

generated prior to the grant of OA.

m) TPC-D has to plan its power procurement based on its consumer mix.

However, if it is forced to give credit for energy without it being banked with

TPC-D and without its prior knowledge as sought by GEPL,it would have an

adverse impact on power procurement.Such retrospective banking of energy

would result in excess power procurement by TPC-D than is actually required

for that particular period and may lead to higher power purchase cost, which in

turn will have an impact on the tariff of the consumers. Further, this practice of

retrospective banking may lead to grid indiscipline, with Generators generating

power without identifying consumers relying on retrospective banking.

n) Once aREGenerator avails the benefits and registers for RECs, the REC

component thereafter has to be separated from the environmental attributes.

The energy component has to be treated as conventional energy. Therefore, all

attributes and all benefits qua this energy have to be in line with those provided

for conventional energy. From a conjoint reading of the Commission‟s Order in

Case Nos. 43 of 2010 and57 of 2012, it is evident that no concessional CSS is

to be provided to OA consumers availing power from RE sources, when the

supplier has availed REC. In view of the above, TPC-D has rightly imposed

100 % of the applicable CSS to the consumers of the GEPL.


o) TPC-D also rejects the following allegations made by GEPL:-

i) TPC-D has abused its dominant position.

ii) It has violated the directions of the Commission.

iii) It has not adjusted over 7.59 lakh units.

p) MSLDC carries out settlementbased on the GCNs submitted by TPC-D to it,

which are submitted by OA consumers to TPC-D. Therefore, these GCNs have

not been settled in full and are pending for finalization of FBSM solely because

the OA consumer and, in turn, GEPL have not submitted the 15 minute data.

As and when (at the time of finalization of FBSM) the energy corresponding to

these consumers is credited to the TPC-D account, it would be passed on to the

consumers.

q) No dispute has been raised by either the Generating Companies injecting

electricity in MSEDCL‟s distribution system, or by the OA consumers.

r) Vide Order dated 19 August, 2014 in Case No. 148 of 2014, the Commission

had dismissed GEPL‟sPetition raising a dispute with regard to the alleged

illegal conduct of TPC-D of charging a mutually agreed tariff for partial OA on

the ground of locus standi.

5. In its Rejoinder dated29 January, 2015and additional submission dated 30

November, 2015, GEPL stated as below:

a) TPC-D has raised the issue of locus-standi of GEPL to initiate the present

proceedings. The locus of GEPLis on account of the following:

(i) The nature of prayers as a result of the grievance of GEPL

(ii) The jurisdiction to file the Petition.

b) Prayers (a) to (d) and (f) to (h) directly affect GEPL. The prayer (e) is

necessary since refunding of the CSS, which was wrongfully imposed by TPC-

D, will act as a boost for consumers in the TPC-D area to seek avenues for

cheap sources of power throughOA.

c) At present, the market is being manipulated by the TPC-Dso as make the

option of availing OA financially unviable, which is directly affecting the

competition in the market as well as the business of GEPL. This is the “legal

injury” which is being suffered by GEPL. The legal right of GEPL to carry on

the activity of trading in electricity through the use of the provisions of non-

discriminatory OA (Section 42) has been affected. This negative influence on

the said rights provides the cause of action to GEPL for preferring the present

Petition.


d) GEPL has produced documents and data evidencing the actions ofTPC-D in

not fully implementing the principle of banking of electricity for RE, as well as

charging CSS in complete violation of the Commission‟s Order dated 9

September, 2011 of specifying 25% of CSS on consumers availing power from

wind energy sources under OA. All this is being done by TPC-D with the sole

aim of preventing consumers in its area from availing power from third-party

sources. This is abuse of its dominant position, which attracts Section 60 of the

EA, 2003. Hence, on the count of abuse of dominant position, GEPL has a

locus-standi.

e) Due to the arbitrary act of TPC-D of non-granting of banking facility from 1

April to 31 March of the financial year, GEPLwas forced to sell its power on

the Power Exchange at a much lower price than the contracted price, thereby

suffering a loss of Rs. 6,68,97,751/-.

f) Moreover, charging of wrong CSS of 100% instead of 25% has led to a loss to

the tune of Rs 12,42,563/- which is entirely on account ofTPC-D. Moreover,

around 7.59 lakhunits of energy are still pending to be adjusted by TPC-D,

which amounts to a sum of Rs. 40,95,685/-.

g) TPC-D has contended that it has granted OA which became effective within 30

days from the date of receipt of applications. However, the DOA Regulations,

2005, which were prevalent during the transactions intended by GEPL, only

require processing of applications within a period of 30 days, but that does not

mean that OAcan only be prospective. TPC-D is trying to mis-interpret the

Regulations so as to make it appear that the time period for “processing” of an

OA application is akin to grant of “prospective” permission for OA.

h) For providing banking of electricity, it is imperative that OA be

“retrospective”. TPC-D is seeking to rely upon Regulations 4.2.1 and 4.2.3 of

the DOA Regulations, 2005 so as to interpret that OA can be granted only

when TPC-D and the intended consumer take necessary steps for termination

of the supply agreement, which means “prospective” grant of OA (Regulation

4.2.1); and OA can be granted only after the date of termination of the

agreement, which means “prospective” grant of OA (Regulation 4.2.3).

i) TPC-D has given a flawed interpretation stating that, for banking of electricity,

a consumer need to be identified first. That interpretation attempts to

completely nullify the benefit of banking extended to Wind Energy Generators.

Banking of electricity does not require a pre-identified consumer, as per the

Commission‟s Wind Energy Order dated 24 November, 2003.

j) TPC-D cannot treat wind energy at par with conventional energy and levying

100% CSS, which is illegal and an example of abuse of dominant position.


k) In its Order dated 9 September,2011 in Case No. 43 of 2010, the Commission

determined 25% CSS on consumers availing power from wind energy sources,

as compared to the CSS applicable to conventional energy sources. However,

TPC-D has sought to impose 100% CSS based on the flawed argument that,

once RE/ Wind Energy Generators avail REC, the power becomes brown, and

hence has to be treated as conventional power. That is an erroneous

interpretation since 25% CSS was imposed so as to give benefit/ promotion to

the wind energy developers.

l) TPC-D has failed to appreciate that availing of REC is only a benefit extended

to a Wind Energy Generator. Such availing of REC cannot change the nature of

the wind energy generated. The energy will continue to be infirm/ intermittent

in nature. The distinction between brown and green power, after a Generator

avails REC, was made solely to prevent a Wind/ REGenerator from availing a

double benefit in terms of RECs and preferential tariff.

m) However, TPC-D has chosen to treat wind power as conventional on account

of the availing of REC, which has been solely done as to make OA transactions

financially unviable and to force the consumers in TPC-D‟s area not to take

power from a RE source.

n) The stand of TPC-D in imposing 100% CSS instead of 25% as envisaged for

RE is contrary to the Commission‟s Order in Case No. 92 of 2012 dated 7

April, 2014.

o) TPC-D has not adjusted over 7.59 lakh units pending for adjustment. TPC-D is

required to submit 15-minute data to MSLDC for finalization of FBSM, but

has not complied. In its letter dated 25 February, 2013, MSLDC had stated that

it would credit the energy generated in FY 2012-13 to GEPL, but TPC-D chose

not to carry out the procedure under FBSM. TPC-D‟s submission regarding

such adjustment is based on a wrong premise, as will be seen from its letter 20

March, 2014 to GEPL.

p) As such, any actions of TPC-D of imposing such arbitrary conditions for

granting NOC/ OApermission or charging 100% CSS from RE consumers is a

strictly regulatory issue wherein the rights of not only consumers are affected,

but also of Trading Licensees such as GEPL who play a major in enabling

consumers to take OA.

q) TPC-D cannot be allowed to get away from being (i) penalized for violating its

Licence conditions by violating the Orders of the Commission and the

provisions of the EA, 2003, in terms of Section 57 (2) of the EA, 2003; and (ii)

being directed to grant compensation to GEPLfor abusing its dominant

position.


r) GEPL has been created to undertake trading in electricity under Section 42(2)

of the EA, 2003. Hence, it has been granted a legal right to undertake business

through OA, which legal right has been hampered by the actions of TPC-D.

GEPL is completely entitled in the present case to seek relief as prayed for.

6. At the hearings held on 4 December, 2014, and13 October, 2015, the Commission

allowed adjournments at the request of GEPL.

7. At the hearing on 3 November, 2015, the parties were informed that, consequent to

the Chairperson of the Commission having demitted office, this Case would be heard

and decided by a Bench consisting of the remaining two Members. The Advocates

of the parties consented to further hearing of the matter being in continuance of the

earlier proceedings.GEPL reiterated its written submissions, including with regard to

the delay in granting OA, banking, wrongful levy of CSS, breach of the

Commission‟s Orders and abuse of its dominant position by TPC-D. TPC-D also

reiterated its submissions, including with regard to banking of energy, the locus

standi of GEPL, the timely grant of OA, andthat it had not breached the

Commission‟s Order. The Commission directed GEPL to submit the following

within 4 weeks:

i) The authority under which it is making claims on behalf of the

Generators and the consumers.

ii) The actual damages/losses sustained by it.

TPC-D was given two weeks to make further submissions after receipt of GEPL‟s

submission.

8. In its submission dated 5 January, 2016, GEPL stated as follows:

a. The non-grant of NOC/ OA from 1st April, i.e. the start of the financial year,

directly affects the functioning of GEPL, which is a Trading Licensee under

Section 14 of the EA, 2003, as such non-grant is qua the transaction of GEPL

with the consumers. The action of TPC-DL in not granting such NOC is a

violation of the Wind Energy Order dated 24.11.2003 in Case Nos. 17, 3, 4 and 5

of 2002. That Order laid down the protocol for banking of wind energy, and how

the Distribution Licensees have to implement it.

b. Levying of 100% CSS by TPC-D on the consumers of wind energy has resulted

in a direct loss to GEPL as no consumer was willing to take power from Wind

Energy Generators under OAas it had become more expensive because of levy of

100% CSS by TPC-D. The Petitioner, as a Trader, is in the business of

contracting with willing consumers for cheaper wind power. However, the levy of

100% CSS increasesthe transaction cost, which is against the Commission‟s

Order dated 9 September, 2011 in Case No. 43 of 2010. Under that Order, CSS

wasleviableat 25% in case of consumers who purchased power from Wind

Energy Generators under OA.


c. TPC-D has relied on Judgments of the ATE and Supreme Court.In Judgment

cited, the issue related to an individual grievance of a “consumer”, while in the

present case the issue relates to GEPL who is a Licensee as per Section 14. GEPL

has a „separate and individual‟ grievance and cause of action for filing the present

Petition.

d. TPC-D is mis-interpreting the Banking protocol envisaged in theWind Energy

Order dated 24 November, 2003 in Case Nos. 17, 3, 4 and 5 of 2002 by

construing that retrospective NOC is not possible for wind energy. In thatOrder,

the Commission has created a protocol and legal framework for retrospective

grant of NOC pertaining to banked wind energy. Banking facility is applicable

qua wind energy, which can be availed directly by a consumer or through a

Trading Licensee. There is no distinction that the Banking facility is not for

Trading Licensees dealing with wind energy, and this is nowhere stated in the

Wind Order.

e. TPC-D cannot levy 100% CSS on consumers who avail wind energy, which

increases the transaction cost of OAand thusdirectly affects the functioning of

GEPLas a Trader. Any availing of RECs cannot change the nature of the wind

energy generated. That energy continues to be infirm/ intermittent in nature. A

Wind Energy Generator opting for RECs does not result in a change of the

“source” of energy as renewable.

f. TPC-D‟s argument of treating wind energy as brown component while REC is the

green component is erroneous as TPC-D, by such argument, is attempting to

distinguish the product of a Generating Station, which is the power generated,

while the benefit of levy of 25% CSS is on the “source” i.e. the Wind Energy

Generator.

Commission’s Analysis and Rulings

Maintainability of Petition

9. As regards the preliminary issue of maintainability of this Petition raised by

TPC-D, the Commission notes the following facts. GEPL is a Trading Licensee

under the EA, 2003. As such, it contracted with 5 consumers of TPC-D to sell a

total of 23.05 MW power from Wind Energy Generators throughOAfor all or

part of FY 2012-13. Accordingly,the consumers applied for OA to TPC-D along

with NOCs from MSEDCL (in whose area the Generators were situated).The

consumers’ applications to TPC-D as well as the NOCs given by MSEDCL to

the Generators cite GEPL as the Trader in respect of this power, and GEPL

has stated that it had submitted those applications to TPC-D. It is also clear (as

will be seen, for instance, from para. 3(l) above) that TPC-D had been engaging

with GEPL on the issues raised by it with regard to the impacts on the

consumers to whom it was supplying power and the Generators from whom it

was sourced. In its submission dated 2 December, 2014, TPC-D has alsostated

that the 5 consumers hadsubmitted Letters of Intent (LoI) to purchase power

from GEPL.


10. Section 42 of the EA, 2003 stipulates that

“42....(3)Where any person, whose premises are situated within the area

of supply of a distribution licensee, (not being a local authority engaged

in the business of distribution of electricity before the appointed date)

requires a supply of electricity from a generating company or any licensee

other than such distribution licensee, such person may, by notice, require

the distribution licensee for wheeling such electricity in accordance with

regulations made by the State Commission and the duties of the

distribution licensee with respect to such supply shall be of a common

carrier providing non-discriminatory open access.”

Thus, a consumer can seek OA to source power through a Trading Licensee

(GEPL in this case).Further, as has been brought out by GEPL in these

proceedings, the actions of TPC-D to grant or deny OAand the rate of the

associated charges it levies (CSS in this case) directly affect GEPL as a supplier.

11. In view of the above,the Commission finds no merit in TPC-D’s challenge to the

locus standi of GEPL to file the present Petition, and to its maintainability on

that ground. However, in future it may be appropriate to implead the

concerned consumers and/or Generators as well.

Banking of energy prior to grant of OA

12. The Wind Energy Generators supplying power to the OA consumers through

GEPL are situated in the area of MSEDCL and connected on 132/33kV Sub-

stations. Hence, NOCs for OAwere obtained from MSEDCL in respect of the

Generators for the period from 1 April, 2012 to 31 March, 2013, as relevant.

Thereafter,OA applications were made to TPC-D by the consumers in its area

as shown below:

Sr.

No.

Consumer OA

Applicati

on Date

Period of

OAappliedfor

Period for

which OA was

granted

Date of grant

of Open Access

1 Asian

Hotels

26 June,

2012

April 2012 to

March 2013

July 2012 to

March 2013

1 July, 2012

2 TCL

(Andheri)

9

October,

2012

April2012 to

March 2013

November

2012 to March

2013

1 November,

2012

3 TCL (BKC) 9

October,

2012

April 2012 to

March 2013

November

2012 to March

2013

1 November,

2012

4 Indian

Hotels Ltd.

22

Novembe

r, 2012

April 2012 to

March 2013

December

2012 to March

2013

1 November,

2012

5 Mandke

Foundation

19

October,

2012

October 2012 to

March 2013

November

2012 to March

2013

1 December,

2012


It will be seen that the applications for OA were made by the consumers only in

June, October and November, 2012 (i.e. well after 1 April, 2012); that TPC-D

disposed of them within the stipulated time of 30 days; and that OA was

granted with effect from the first day of the month following their

receipt.GEPL is aggrieved that, although OA had been sought from 1 April,

2012 (except for Mandke Foundation, which sought it from 1 October) to the

end of FY 2012-13, TPC-D granted OA only prospectively from the month

following their receipt, and denied banking of the energy from the prior dates.

13. Banking of wind energy was approved by the Commission in its Wind Energy

Order dated November 24, 2003 in Case Nos. 17(3), 3, 4 and 5 of 2002 inter alia

as follows:

“1.6.10.Banking of energy delivered to the grid for self-use and or sale to

third party shall be allowed any time of the day and night subject to the

condition that surplus energy (energy delivered into the grid but not

consumed) at the end of the financial year shall not be carried over to the

next year.

Surplus energy at the end of the year, limited to 10% of the net energy

delivered by the developer to the grid during the year shall be purchased by

the Utility at the lowest TOD slab rate for HT energy tariff applicable on

the 31st March of the financial year in which the power was generated…”

In the event of unforeseen and force majeure conditions, surplus energy at

the end of the year in excess of the 10% limit specified above shall be

purchased by the Utility at a rate equivalent to the weighted average fuel

cost for the year as determined by the Commission in the Tariff Order. The

payment of surplus energy shall be made to the developer/owner and not to

consumer in case of third party sale.”

14. A plain reading of the Wind Energy Order quoted above does not support the

contention that a consumer can approach a Distribution Licensee at any time of

its choosing for OA to be effective from an earlier date, or that the Distribution

Licensee is required to compensate it or the Generator for that prior period. In

its Order in Case No. 40 of 2005, the Commission had stated that

“TPC, as supply licensee, should provide banking facility and should

purchase excess energy…for wind power projects…”

which implies that the consumer has to have been duly identified. The

Commission made this explicitin its Order dated 13 August, 2013 in Case No. 16

of 2013, as follows:

“The Petitioner has also prayed that “ii) The Respondent be directed to

pay, the petitioner, the price of units generated and injected into the

distribution network of the Respondent during the period from 01-04-2012

to 31-03-2013.” In this regard, the Commission opines that any injection,

without valid contract and/or complying with scheduling requirements as

per prevalent procedures for scheduling and dispatch, would not in


principle be in the interest of disciplinedoperations of the grid which is of

paramount concern from the perspective of reliable and safe operations of

the Grid. Accordingly, the Section 32(2) [of the EA, 2003] mandates the

SLDC to be responsible for optimal scheduling and dispatch of electricity

within State, in accordance with the Contracts entered into with the

licensees or generating companies operating in that State. Hence, the

prayer for compensating for units generated and injected into the grid is

rejected.”

15. The DOA Regulations, 2005, which were applicable in FY 2012-13, specified as

follows:

“4.2 Application by a consumer -

4.2.1 Where a consumer of the Distribution Licensee, who is eligible

under Regulation 3.1, applies for open access to the distribution system

so as to obtain supply from a Generating Company or a Licensee other

than such Distribution Licensee, the consumer and the Distribution

Licensee shall take necessary steps for termination of agreement for

supply of electricity and discontinuance of supply to such consumer, in

accordance with the procedure and within the time limits specified in the

Electricity Supply Code.

4.2.2 Where a consumer of the Distribution Licensee, who is eligible

under Regulation 3.1, applies for open access to the distribution system

so as to obtain a part of his total requirement for supply from a

Generating Company or Licensee other than such Distribution Licensee,

the Distribution Licensee shall reduce the contract demand/ sanctioned

load of such consumer, to the extent of capacity applied for under open

access, in accordance with the procedure for reduction in contract

demand/ sanctioned load specified in the Electricity Supply Code and

within the time limits specified in the Standards of Performance

Regulations.

4.2.3 Where the grant of open access does not entail extension of

distribution mains or commissioning of new sub-station, the Distribution

Licensee shall permit wheeling of electricity over the distribution system

to such consumer from the date of termination of the agreement in

accordance with Regulation 4.2.1 above or from the date of reduction in

contract demand/ sanctioned load in accordance with Regulation 4.2.2

above, as the case may be.”

16. From the foregoing, it is clear that the OA consumer has to be duly identified;

and that, provided that the grant of OA applied for has not been unduly

delayed or wrongfully denied, it would have prospective and notretrospective

effect. In the present case, the consumer applications were made to TPC-D in

June, October and November, 2012, and OA was granted within the stipulated

time. Hence, the OAand corresponding banking dispensation cannot be

claimedwith retrospective effect from 1 April (or, in the case of Mandke

Foundation which applied on 19 October, from 1 October, 2012).


Levy of 100 % instead of 25% CSS

17. TPC-D has levied 100% CSS on the OAconsumers, who are all admittedly

sourcing wind energy. Case No. 43 of 2010 dealt with the re-determination of

CSS and various issues relating to OA. At para. 41(j) of its Order dated 9

September, 2011, the Commission stipulated that OA consumers sourcing RE

would pay CSS to the extent of 25% (instead of the earlier full exemption) of

the CSS applicable to OA consumers obtaining power from other sources. That

stipulation is unqualified and unconditional.

18. Case No. 57 of 2011 dealt with various issues raised on the RPO Regulations,

2010. In its Order dated 1 December, 2011, the Commission held that, to the

extent that RECs have been committed for such power by a RE Generator, the

RE power purchased by Obligated Entities would not count towards fulfilment

of their RPO targets:

“15.4…The Commission is of the view that the RE Generators opting for

the capacity under REC Mechanism, can sell the electricity component and

environment attribute separately. However, the electricity component is

devoid of environmental attribute so it is basically equivalent to

'conventional' electricity. As such, for the capacity committed under 'REC

Mechanism', the Obligated Entities cannot claim for the electricity

component as “Green Energy” purchased from Traders or directly from

RE Generators or from other distribution licensees, for their RPO

compliance.”

19. From a plain reading of the above stipulations and their contexts, it ought to be

clear that these two Orders deal with quite separate issues and that there is no

nexus between them. CSS is payable by OA consumers, and the Commission

had ruled in Case No. 43 of 2010 that OA consumers sourcing RE power would

pay CSS at 25% of the rate otherwise applicable. That is in no way connected to

whether or not the RE Generator from whom the power is being sourced by the

OA consumer has separately availed of the REC mechanism or not. The REC

mechanism devised by the Central Electricity Regulatory Commission is

relevant only to the RPO dispensation of this Commission, inasmuch as the

Obligated Entities can take recourse to procurement of RE power and/or

purchase RECs for fulfilment of their RPO targets. That being the case,

considering procurement of RE power from Generators to the extent of the

capacity committed by them under the REC mechanism would amount to

double-accounting of the same power by an Obligated Entity against its RPO

and normally paid for at the preferential generic tariff determined by the

Commission. Hence, and only for the purpose of accounting against the RPO,

the Commission clarified that RE power committed by a Generator under the

REC mechanism would not count towards meeting the RPO of an Obligated

Entity.

20. In view of the foregoing, the Commission directs TPC-D to refund (with

applicable interest) to the 5 OA consumers in this Case, as well as to any other


such OA consumers to the extent that they have sourced RE power, the amount

of the difference between the 100% CSS charged and the 25% applicable,

irrespective of whether or not the concerned RE Generators have availed the

REC mechanism for all or part of their generation. (It may be noted, however,

that in its Multi-Year Tariff Order for TPC-D dated 21 October, 2016 in Case

No. 47 of 2016, the Commission has removed the distinction between the CSS

payable by OA consumers sourcing RE power and the CSS payable by other

OA consumers, with effect from 1 April, 2017.)

The Petition of Global Energy Pvt. Ltd in Case No. 186 of 2014 stands

disposed of accordingly

Sd/- Sd/-

(Deepak Lad) (Azeez M. Khan)

Member Member

before the maharashtra electricity regulatory commissionmercindia.org.in/pdf/order 58 42/order-186...

Documents