before the maharashtra electricity regulatory commission 58 42/order_91_of... · before the...
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Before the
MAHARASHTRA ELECTRICITY REGULATORY COMMISSION
World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai 400 005.
Tel. No. 022 22163964/65/69 – Fax 022 22163976
E-mail: [email protected]
Website: www.mercindia.org.in/www.merc.gov.in
Case No.91 of 2012
IN THE MATTER OF
Approval of Multi Year Tariff Business Plan of Maharashtra State Power
Generation Company Limited (MSPGCL) for the second Control Period from
FY 2013-14 to FY 2015-16
Shri V. P. Raja, Chairman
Shri Vijay L. Sonavane, Member
Date: 12 February, 2013
O R D E R
Upon directions from the Maharashtra Electricity Regulatory Commission
(Commission or MERC), the Maharashtra State Power Generation Company Limited
(MSPGCL or Mahagenco) submitted its application for approval of the Multi Year
Tariff (MYT) Business Plan for the second Control Period from FY 2013-14 to FY
2015-16, under affidavit on 31 August, 2012.
The Commission, considering the request made by MSPGCL in an earlier Petition in
Case No. 44 of 2011, invoked the proviso to Regulation 4.1 of Maharashtra
Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2011 [MERC
MYT Regulations], vide Order dated 23 August, 2011 and granted exemption to
MSPGCL from determination of tariff under MYT framework for a period of 2 years,
i.e., till 31 March, 2013. Further, pursuant to the First Amendment to the MERC
MYT Regulations, the Commission vide Order dated 21 June, 2012 (Case No. 6 of
2012), approved the Aggregate Revenue Requirement and Tariff of MSPGCL for FY
2011-12 and FY 2012-13.
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In view of the above, the Commission, in exercise of the powers vested in it under
Section 61 and Section 62 of the Electricity Act, 2003 (EA 2003) and all other powers
enabling it in this behalf, and after taking into consideration all the submissions made
by MSPGCL, issues raised during the Public Hearing, and all other relevant material,
approves the MYT Business Plan for MSPGCL for the second Control Period from
FY 2013-14 to FY 2015-16 as under.
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Table of Contents 1 BACKGROUND AND BRIEF HISTORY ......................................................... 10
1.1 Background ................................................................................................... 10
1.2 MERC MYT Regulations ............................................................................. 10
1.3 Petition for MYT Business Plan approval, Admission of the MYT Business
Plan Petition and Public Process .............................................................................. 11
1.4 Organisation of the Order ............................................................................. 12
2 OBJECTIONS RECEIVED, MSPGCL’S RESPONSE AND COMMISSION’S
RULING ...................................................................................................................... 13
2.1 Clarity Regarding Transfer Scheme of MSEB ............................................ 13
2.2 Legality of considering MSPGCL in regulated regime even after de-
licensing of generation business under the EA 2003 .............................................. 14
2.3 Non-Payment of dues by MSEDCL ............................................................. 16
2.4 Sale to third Party by MSPGCL ................................................................... 18
2.5 Deviation from the applicable norms ............................................................ 18
2.6 Compliance to CPRI norms .......................................................................... 20
2.7 Power Purchase Agreement .......................................................................... 20
2.8 Plant Load Factor and Availability Factor .................................................... 22
2.9 GCV of the Coal ........................................................................................... 23
2.10 MOU for Coal Procurement with CIL .......................................................... 24
2.11 Generation Tariff .......................................................................................... 24
2.12 Operation and Maintenance Expenses .......................................................... 27
2.13 Depreciation .................................................................................................. 27
2.14 Interest on Loan ............................................................................................ 28
2.15 Interest on Working Capital .......................................................................... 29
2.16 Income Tax ................................................................................................... 30
2.17 Consumer Awareness ................................................................................... 31
2.18 Capacity Addition Plan ................................................................................. 32
2.19 Non consideration of Bhandardara Hydro Power Station............................. 32
2.20 Increase in Electricity Tariff ......................................................................... 33
2.21 Unrealistic Anticipations .............................................................................. 33
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2.22 Non-maintenance of Website by MSPGCL .................................................. 34
2.23 Renovation and Modernisation ..................................................................... 34
2.24 Capital Cost of the new Generating Stations ................................................ 35
3 SALIENT FEATURES OF THE PETITION ...................................................... 36
3.1 Applicability of Business Plan Order from FY 2013-14 to FY 2015-16 ...... 36
3.2 Premise for the Business Plan Petition ......................................................... 36
3.3 Summary of the MYT Business Plan Petition .............................................. 37
4 BUSINESS PLAN COMPONENTS ................................................................... 39
4.1 Operating Capacity of MSPGCL .................................................................. 39
4.1.1 Thermal Generating Capacity ............................................................ 39
4.1.2 Hydro Generating Capacity ................................................................ 41
4.2 Trajectory of Performance Parameters ......................................................... 43
4.2.1 Availability ......................................................................................... 43
4.2.1.1 Thermal Generating Stations .................................................. 43
4.2.1.2 Hydro Generating Stations ..................................................... 57
4.2.2 PLF projections of Thermal Generating Stations for second Control
Period 64
4.2.3 Heat Rate (kcal/kWh) ......................................................................... 65
4.2.4 Auxiliary Consumption ...................................................................... 76
4.2.4.1 Thermal Generating Stations .................................................. 76
4.2.4.2 Hydro Generating Stations ..................................................... 83
4.2.5 Secondary Oil Consumption .............................................................. 86
4.2.6 Transit and Handling Losses .............................................................. 90
4.2.7 Design Energy .................................................................................... 91
4.3 Fuel procurement plan for Thermal Generating Stations ............................. 94
4.4 Capital Expenditure Plan ............................................................................ 100
4.4.1 Capital Investment Plans for upcoming Units (Project Capex) ....... 100
4.4.2 Capital Investment Plans for Large Scale Renovation &
Modernisation Programmes (R&M Capex) ....................................................... 100
4.4.3 Capital Investment Plans for small Capex (Other Capex) ............... 103
4.5 Financing plan ............................................................................................. 116
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4.5.1 Financing Plan for Renovation & Modernisation Schemes ............. 116
4.5.2 Financing Plan for Small Capex Schemes ....................................... 117
4.6 Human resource plan .................................................................................. 118
4.6.1 Recruitment ...................................................................................... 118
4.6.2 Training ............................................................................................ 118
4.6.3 Reward Policy .................................................................................. 120
4.6.4 Health and safety management ......................................................... 120
4.7 Environment policy ..................................................................................... 121
4.8 Corporate social responsibility ................................................................... 123
4.9 Risk mitigation plan .................................................................................... 125
4.9.1 Mitigation Measures – Immediate Horizon...................................... 125
4.9.2 Mitigation measures – Medium to Long Term ................................ 126
4.10 Challenges faced by MSPGCL in the operation of the Generating Stations
128
5 PROJECTIONS FOR THE SECOND CONTROL PERIOD ........................... 132
5.1 Fuel Related Expenses ................................................................................ 132
5.2 Operation and Maintenance Expenses ........................................................ 133
5.3 Depreciation ................................................................................................ 143
5.4 Interest on Long Term Loan Capital ........................................................... 146
5.5 Interest on Working Capital ........................................................................ 150
5.6 Income Tax ................................................................................................. 152
5.7 Return on Equity ......................................................................................... 154
5.8 Lease Rent ................................................................................................... 157
5.9 Non-Tariff Income ...................................................................................... 158
5.10 Aggregate Revenue Requirement ............................................................... 159
6 DIRECTIONS .................................................................................................... 163
6.1 Directions for filing MYT Petition for the second Control Period ............. 163
6.2 Other Directions .......................................................................................... 164
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List of Abbreviations
ABT Availability Based Tariff
AFC Annual Fixed Cost
AOH Annual Overhaul
APH Air Pre Heater
APM Administered Pricing Mechanism
ARR Aggregate Revenue Requirement
ATE/APTEL Appellate Tribunal for Electricity
A&G Administrative & General
BBD Broyer Boulet Direct firing
BEST Brihanmumbai Electric Supply & Transport
Undertaking
BPCL Bharat Petroleum Corporation Limited
CAD Command Area Development
CAPEX/Capex Capital Expenditure
CDPH Canal Drop Power House
CEA Central Electricity Authority
CHP Coal Handling Plant
CIL Coal India Limited
CMDC Chhattisgarh Mineral Development Corporation
COD Commercial Operation Date
COH Capital Overhaul
CPI Consumer Price Index
CPRI Central Power Research Institute
DCS Distributed Control System
DPR Detailed Project Report
DWP Drinking Water Project
EA 2003 Electricity Act, 2003
ECO Economiser
EOH Equivalent Operating Hours
ESP Electrostatic Precipitator
FGD Flue Gas Desulfurization
FO Furnace Oil
FOST Forum of Sectional Teams
FSA Fuel Supply Agreement
FY Financial Year
GAIL Gas Authority of India Limited
GCR Generation Control Room
GCV Gross Calorific Value
GFA Gross Fixed Assets
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GoM Government of Maharashtra
GoMWRD Government of Maharashtra- Water Resource
Department
GSECL Gujarat State Electricity Corporation Limited
GTPS Gas Turbine Power Station
HPCL Hindustan Petroleum Corporation Limited
HPS Hydro Power Station
HR Human Resource
ICB International Competitive Bidding
ID Induced Draft
IOCL Indian Oil Corporation Limited
IP Irrigation Project
IWC Interest on Working Capital
kcal kilo calories
kcal/kWh kilo calories per kilowatt hour
Kg Kilogram
kV kilo Volt
kW Kilo Watt
kWh kilowatt hour
KWDTA Krishna Water Dispute Tribunal Award
LC Letter of Credit
LDO Light Diesel Oil
LoA Letter of Assurance
LP Low Pressure
LSHS Low Sulphur Heavy Stock
LTSH Low Temperature Super Heater
m3 Cubic Meter
MAT Minimum Alternative Tax
MCL Mahanadi Coalfields Ltd.
MCM Million Cubic Meter
MDO Mine Development and Operator
MERC Maharashtra Electricity Regulatory Commission
Mkcal Million kilo calories
MMBTU Million Metric British Thermal Units
MMSCMD Million Metric Standard Cubic Metre per Day
MMT Million Metric Tonne
MoU Memorandum of Understanding
MPCB Maharashtra Pollution Control Board
MSEB Maharashtra State Electricity Board
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MSEDCL/
MAHADISCOM
Maharashtra State Electricity Distribution Co. Ltd.
MSETCL Maharashtra State Electricity Transmission Company
Ltd.
MSLDC/SLDC Maharashtra State Load Despatch Centre
MSPGCL Maharashtra State Power Generation Company Limited
MT Metric Tonnes
MTPA Million Tonne per Annum
MU Million Units
MW Mega Watt
MYT Multi Year Tariff
NAPAF Normative Annual Plant Availability Factor
NCDP New Coal Distribution Policy
NGO Non-Governmental Organisation
NTI Non Tariff Income
NTPC National Thermal Power Corporation
NVVN NTPC Vidyut Vyapar Nigam Ltd.
O&M Operations and Maintenance
ONGC Oil and Natural Gas Corporation Limited
PAFM Plant Availability Factor for the Month
PCQ Poor Coal Quality
PLF Plant Load Factor
PPA Power Purchase Agreement
PSS Pumped Storage Station
R&M Renovation & Modernisation
RIL Reliance Industries Ltd.
RInfra Reliance Infrastructure
RLNG Regassified Liquefied Natural Gas
RoE Return on Equity
RPO Renewable Purchase Obligation
R&M Repair & Maintenance
SCCL Singareni collieries Company Ltd.
SECL South Eastern Coalfields Limited
SFO Secondary Fuel Oil
SFOC Secondary Fuel Oil Consumption
SHP Small Hydro Power Plant
SHR Station Heat Rate
SPM Suspended Particulate Matter
SWOT Strengths, Weaknesses, Opportunities, and Threats
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TMC Thousand Million Cubic feet
TPC Tata Power Company
TPS Thermal Power Station
TVS Technical Validation Session
UPRVUNL Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd.
WCL Western Coalfields Ltd.
WPI Wholesale Price Index
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1 BACKGROUND AND BRIEF HISTORY
1.1 Background
A Petition has been filed by MSPGCL for approval of the MYT Business Plan for the
second Control Period from FY 2013-14 to FY 2015-16, under Section 61 to Section
64 of the EA 2003 and Regulation 7 of the MERC MYT Regulations.
MSPGCL is a Company formed under the Government of Maharashtra General
Resolution No. ELA-1003/P.K.8588/Bhag-2/Urja-5 dated 24 January, 2005 with
effect from 6 June, 2005 according to the provisions envisaged in Part XIII of the EA
2003. MSPGCL is a Company registered under the Companies Act, 1956.
The provisional Transfer Scheme was notified under Section 131(5) (g) of the EA
2003 on 6 June, 2005 to re-organize the erstwhile Maharashtra State Electricity Board
(MSEB) into the following four successor Companies:
MSEB Holding Company Ltd.
Maharashtra State Power Generation Company Ltd.(MSPGCL)
Maharashtra State Electricity Transmission Company Ltd. (MSETCL)
Maharashtra State Electricity Distribution Company Ltd. (MSEDCL)
1.2 MERC MYT Regulations
The Commission, in exercise of the powers conferred by the EA 2003, notified the
Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations,
2011, (hereinafter referred as the MERC MYT Regulations) on 4 February, 2011.
These Regulations are applicable for the second Control Period starting from FY
2011-12 to FY 2015-16. The said Regulations were amended vide notification dated
21 October, 2011 called Maharashtra Electricity Regulatory Commission (Multi Year
Tariff) (First Amendment) Regulations, 2011.
As per the said Amendment, the Commission has specified that for the Generating
Companies or Transmission Licensees or Distribution Licensees, which are exempted
for a particular period from the Multi Year Tariff framework, the approval of ARR
and Tariff for such exempted period shall be determined in accordance with MERC
Tariff Regulations, 2005.
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PETITION FOR MYT BUSINESS PLAN APPROVAL, ADMISSION OF THE
MYT BUSINESS PLAN PETITION AND PUBLIC PROCESS
Pursuant to notification of MERC MYT Regulations on 4 February, 2011 and MERC
MYT (First Amendment) Regulations 2011, the Commission directed MSPGCL to
submit their MYT Business Plan and MYT Petition for the second Control Period
from FY 2013-14 to FY 2015-16. MSPGCL submitted its MYT Business Plan
Petition for the second Control Period under affidavit on 31 August, 2012.
The Commission vide email dated 14 September, 2012 communicated the preliminary
data gaps identified in the MYT Business Plan to MSPGCL. A Technical Validation
Session (TVS) on the MYT Business Plan was held on 24 September, 2012. The list
of individuals, who participated in the TVS, is provided in Appendix-1. The
Commission directed MSPGCL to provide additional information and clarifications
on the issues raised during the TVS. MSPGCL responded with its replies to the data
gaps and additional clarifications vide its letters dated 17 October, 2012 and 1 November,
2012. MSPGCL also filed the revised MYT Business Plan Petition vide its affidavit dated
8 November, 2012 with the following main prayers:
“I. Admit the petition
II. Approve the Business Plan forecast for FY 2013-14 to FY 2015-16, as
detailed in the Business Plan (Annexure A) of this petition.
III. Approve the performance parameters for the Control Period as per the
rationale submitted in the Business Plan.
IV. Allow MSPGCL to annually update the Business Plan.
V. Condone any shortcomings/deficiencies in the petition and allow MSPGCL
to submit additional information/data at a later stage as may be required.
VI. Pass such further order(s) as it deems just, fit and proper in the facts and
circumstances of the case.”
The Commission admitted the Petition of MSPGCL on 9 November, 2012. In
accordance with Section 64 of the EA 2003, the Commission directed MSPGCL to
publish its MYT Business Plan Petition in the prescribed abridged form and manner,
to ensure adequate public participation. The Commission also directed MSPGCL to
reply expeditiously to all the suggestions and objections received from stakeholders
on its Petition. MSPGCL issued the public notice in newspapers inviting suggestions
and objections from stakeholders on its MYT Business Plan Petition. The public
notice was published in The Times of India, DNA (English) and Lokmat, Sakal
(Marathi) in all editions in Maharashtra state newspapers on 24th
November, 2012.
The copies of MSPGCL’s Business Plan Petition and its summary were made
available for inspection/purchase to members of the public at MSPGCL’s offices and
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on MSPGCL’s website (www.mahagenco.in). The copy of the public notice and an
executive summary of the Petition were also made available on the website of the
Commission (www.mercindia.org.in) in a downloadable format. The public notice
specified that the suggestions and objections, either in English or Marathi, may be
filed in the form of an affidavit along with proof of service on MSPGCL.
The Commission received written suggestions and objections on various issues. The
Public Hearing was held on 20 December, 2012 at 11.00 hours at Centrum Hall 1st
Floor, Centre No. 1, World Trade Centre, Cuffe Parade, Mumbai – 400005. The list
of individuals who participated in the Public hearing is provided in Appendix – 2.
The Commission has ensured that the due process as contemplated under the law to
ensure transparency and public participation was followed at every stage meticulously
and adequate opportunity was given to all persons concerned to file their say in the
matter.
1.3 Organisation of the Order
This Order is organised in the following six Sections:
Section 1 of the Order provides a brief history of the quasi-judicial regulatory
process undertaken by the Commission. For the sake of convenience, a list of
abbreviations with their expanded forms has been included.
Section 2 of the Order lists out the various suggestions and objections raised by
the objectors in writing as well as during the Public Hearing before the
Commission. Various suggestions and objections have been summarized,
followed by the response of MSPGCL and the rulings of the Commission on each
of the issues.
Section 3 of the Order summarises the salient features of the MYT Business Plan
Petition filed by MSPGCL.
Section 4 of the Order discusses the Business Plan components, key issues and
Commission’s Ruling on the same including trajectory for performance
parameters.
Section 5 of the Order details the views of the Commission on the projection of
ARR components as submitted by MSPGCL for the purpose of approval of
Business Plan.
Section 6 of the Order summarises the directives to MSPGCL.
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2 OBJECTIONS RECEIVED, MSPGCL’S RESPONSE
AND COMMISSION’S RULING
2.1 CLARITY REGARDING TRANSFER SCHEME OF MSEB
Shri N. Ponrathnam submitted that MSPGCL in the Business Plan Petition has
mentioned that consequent to power sector reforms in Maharashtra, the erstwhile
MSEB had been restructured into four successor Companies namely, MSEB Holding
Company Ltd., Maharashtra State Power Generation Company Ltd. (MSPGCL),
Maharashtra State Electricity Transmission Company Ltd. (MSETCL) and
Maharashtra State Electricity Distribution Company Ltd. (MSEDCL). Citing that
Section 131(2) of the EA 2003 provides only for creation of Companies for
discharging the functions of Generation, Transmission and Distribution of electricity,
he asked MSPGCL to submit the justification for creating MSEB Holding Company
Ltd. He also asked MSPGCL to submit the functions/activities of MSEB Holding
Company Ltd.
MSPGCL’s Response
MSPGCL submitted that pursuant to enactment of EA 2003, the Government of
Maharashtra unbundled the erstwhile Maharashtra State Electricity Board (MSEB)
into four Companies vide its G.R. No. ELA·1003/ P.K.8588/ Bhag-2/ Urja-5 dated 24
January, 2005. The provisional Transfer Scheme was notified under Section 131(5)
(g) of the EA 2003 on 6 June, 2005 to re-organize the MSEB.
MSPGCL submitted that the EA 2003 gives liberty to the State Government to notify
the Transfer Scheme and create such Company or Companies namely, Generation
Company or Transmission Licensee or Distribution Licensee, as the case may be.
Sections 131 (2) and 131 (5) of the EA 2003 states that:
“(2) Any property, interest in property, rights and liabilities vested in the State
Government under sub-section (1) shall be re-vested by the State Government
in a Government company or in a company or companies, in accordance with
the transfer scheme so published along with such other property, interest in
property, rights and liabilities of the State Government as may be stipulated in
such scheme, on such terms and conditions as may be agreed between the
State Government and such company or companies being State Transmission
Utility or generating company or transmission licensee or distribution
licensee, as the case may be..
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…
(5) A transfer scheme under this section may-
(a) provide for the formation of subsidiaries, joint venture companies or other
schemes of division, amalgamation, merger, reconstruction or arrangements
which shall promote the profitability and viability of the resulting entity,
ensure economic efficiency encourage competition and protect consumer
interests:”
MSPGCL, in its reply, also submitted the objects for which the MSEB Holding
Company has been established.
Commission’s Ruling
The Commission has noted the submissions of MSPGCL and is of the view that the
objection raised by the objector is not relevant for the present proceedings.
2.2 LEGALITY OF CONSIDERING MSPGCL IN REGULATED REGIME
EVEN AFTER DE-LICENSING OF GENERATION BUSINESS UNDER
THE EA 2003
Shri N. Ponrathnam submitted that no licence is required for generation business and
the EA 2003 mandates a generating company to operate on commercial principles. He
further submitted that a generating company can sell electricity at any rate in the open
market as per the demand, and generation is supposed to be driven by demand and
competition as per the EA 2003. Since, MSPGCL has a monopoly in the State of
Maharashtra, MSPGCL should clarify how it considers itself to be in a regulated
regime.
Advocate Anil N. Chavan submitted that the Generation, Transmission and
Distribution Companies were established in 2005 in Maharashtra under the EA 2003.
He submitted that as per the EA 2003, Generation has been kept out of the licence
regime, however, captive generation is freely permitted and hydro project is required
to get approval of State Government. He further submitted that there is a provision of
direct commercial relationship between a consumer and generating company in which
case, the price of power is not regulated and only transmission and wheeling charges
with surcharge are regulated. In view of the above, he requested to submit details,
such as declaration of responsibility, accountability, status, etc., of MSPGCL.
MSPGCL’s Response
MSPGCL submitted that it is correct that the generation business has been kept out of
the licence regime and captive generation is freely permitted as per the provisions of
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the EA 2003, and there is a provision of direct commercial relationship between a
consumer and a generating company. However, MSPGCL has entered into Power
Purchase Agreement with MSEDCL for sale of power from its generating stations. As
per the PPA, tariff for sale of such power shall be determined by the Commission.
Although the EA 2003 has de-licensed the generation function, however, Section 62
and Section 86 of the EA 2003 mandate that the Commission has the jurisdiction to
determine the tariff for sale of power from such de-licensed entities to the distribution
companies, as reproduced below:
“Section 62. (Determination of tariff): --- (1) The Appropriate Commission
shall determine the tariff in accordance with the provisions of this Act for –
(a) supply of electricity by a generating company to a distribution licensee:
…
(2) The Appropriate Commission may require a licensee or a generating
company to furnish separate details, as may be specified in respect of
generation, transmission and distribution for determination of tariff.”
“Section 86. (Functions of State Commission): --- (1) The State Commission
shall discharge the following functions, namely: -
(a) determine the tariff for generation, supply, transmission and wheeling of
electricity, wholesale, bulk or retail, as the case may be, within the State:
…
(b) regulate electricity purchase and procurement process of distribution
licensees including the price at which electricity shall be procured from the
generating companies or licensees or from other sources through agreements
for purchase of power for distribution and supply within the State;”
As regard the accountability, responsibility and status of MSPGCL, MSPGCL
submitted that it is a State-owned Generation Company and is formed under the
Government of Maharashtra General Resolution No. ELA·1003/P.K.8588 /Bhag·2
/Urja·5 dated 24 January, 2005 with effect from 6 June, 2005 according to the
provisions envisaged in Part XIII of the Electricity Act, 2003. MSPGCL submitted
that it is a Company registered under the Companies Act, 1956. MSPGCL further,
submitted that it is responsible for operation of generating stations as per the approved
norms and is currently operating in a cost-plus regime wherein the tariff of power
generated from MSPGCL stations is determined by the Commission.
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Commission’s Ruling
MSPGCL has entered into a Power Purchase Agreement (PPA) with MSEDCL for
sale of electricity from its generating stations to MSEDCL, which has been approved
by the Commission. Further, as extracted above, Section 62 and Section 86 of the
Electricity Act, 2003 empowers the Commission to determine the tariff for supply of
electricity by a generating company to a distribution licensee. In view of the above,
the tariff for supply of electricity by MSPGCL to MSEDCL for capacity tied up under
PPA is being regulated by the Commission.
2.3 NON-PAYMENT OF DUES BY MSEDCL
Shri N. Ponrathnam submitted that MSEDCL is the sole Distribution Licensee
enjoying monopoly in distribution in the major part of the State and is completely
dependent on MSPGCL for fulfilling its Universal Service Obligation. He submitted
that the tariff for MSEDCL and MSPGCL are approved, considering all the
expenditure incurred. Further, MSEDCL is also a State-owned Company and is not a
private Company, wherein there could be a fear of liquidation. He further submitted
that Section 56 of the Electricity Act, 2003 empowers MSPGCL to deal with
MSEDCL in case it fails to pay the amount agreed as per the Power Purchase
Agreement. In view of the above, he asked MSPGCL to submit the action taken by
MSPGCL in the context of non-payment by MSEDCL.
Advocate Anil N. Chavan submitted that MSPGCL has mentioned Rs. 4500 crore of
pending dues from MSEDCL and because of which MSPGCL has to take loan of Rs.
4500 crore to run its business. He submitted that MSPGCL in its Petition has
mentioned such dues from MSEDCL as a threat in its SWOT analysis, and as a
mitigation measure, MSPGCL may take recourse to third party sales, which might not
be in the interest of the consumers. Advocate Anil N. Chavan requested the
Commission to take appropriate steps for default of payment by MSEDCL.
MSPGCL’s Response
MSPGCL submitted the following extract of Section 56 of the EA 2003:
“Section 56. (Disconnection of supply in default of payment): -- (1) Where
any person neglects to pay any charge for electricity or any sum other than a
charge for electricity due from him to a licensee or the generating company in
respect of supply, transmission or distribution or wheeling of electricity to
him, the licensee or the generating company may, after giving not less than
fifteen clear days’ notice in writing, to such person and without prejudice to
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his rights to recover such charge or other sum by suit, cut off the supply of
electricity and for that purpose cut or disconnect any electric supply line or
other works being the property of such licensee or the generating company
through which electricity may have been supplied, transmitted, distributed or
wheeled and may discontinue the supply until such charge or other sum,
together with any expenses incurred by him in cutting off and reconnecting the
supply, are paid…”
MSPGCL, in view of the above, submitted that if the Letter of Credit (LC) is not
provided/renewed and in the event of non-payment of dues for two consecutive
months, MSPGCL is entitled to sell power to any open access customer or traders.
MSPGCL further submitted the relevant extract from the PPA between MSPGCL and
MSEDCL as under:
"If the MAHAVITARAN fails to make payments of consecutive two months
bills and also is unable to maintain the Payment Security Mechanism specified
in Article 10.1, for any reason whatsoever, the MAHAGENCO shall have the
right to sell such power to third party, after giving 15 days notice to the
MAHAVITARAN.
a. any consumer, subject to applicable law; and
b. any licensee or trader under the Electricity Act, 2003."
MSPGCL submitted that disconnection of supply to MSEDCL will only have a
cascading effect on consumers in the State in terms of prolonged load shedding.
MSPGCL submitted that though MSEDCL being the sole Distribution Licensee in the
major part of the State enjoys monopoly in distribution business, MSEDCL itself
being a regulated entity has its own set of issues with respect to timely submission of
Tariff Petition, receipt of Tariff Orders and cap on recovery of approved ARR from
the consumers. MSPGCL submitted that any issues faced by MSEDCL in recovery of
its expenses whether arising out of its compulsions under a regulated environment or
its own operational inefficiencies can have a cascading effect on the financial health
of MSPGCL. The resultant cash flow issues will only increase the short-term
borrowings of MSPGCL and worsen the risk perception of lenders. Such non-
desirable borrowings beyond the threshold level will further increase the precarious
financial health of the Company.
MSPGCL requested the Commission that in light of the serious nature of the issues,
the Commission should give consideration on this aspect especially appreciating the
fact that MSPGCL is driving an extensive programme to add new generation
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capacities in the State and requires extensive resources not only to run the current
stations but also to invest in the funding of the new Units. MSPGCL submitted that
failure to meet the necessary resource requirements may force MSPGCL to take such
adverse mitigation measures for its survival.
MSPGCL further submitted that the Commission may take a considerate view on the
submissions made by it.
Commission’s Ruling
The Commission has taken note of the submissions made by the Consumer and
MSPGCL as regards to non payment of dues by MSEDCL. The Commission is of the
view that as this is a commercial issue between MSGPCL and MSEDCL, this needs
to be resolved between the parties as per the provisions of Power Purchase
Agreement.
2.4 SALE TO THIRD PARTY BY MSPGCL
Shri. N. Ponrathnam submitted that MSPGCL is not restricted from third party sale, if
it is in the interest of MSPGCL. He submitted that the consumer/public interest is the
domain of the State Government and the Commission.
MSPGCL’s Response
MSPGCL submitted that its entire capacity is tied up under long-term PPA with
MSEDCL. As per the terms and conditions of the PPA and in the interest of
consumers in the State at large, MSPGCL is bound to supply power to MSEDCL at
first priority. Any surplus power beyond the requirement of MSEDCL can be sold to
third party without any restrictions.
Commission’s Ruling
As discussed in subsection 2.2 above, the Commission has regulated/determined the
Tariff of MSPGCL, for electricity supplied to MSEDCL. In case MSPGCL has any
surplus power available with it, the sale to any third party is at the sole discretion of
MSPGCL.
2.5 DEVIATION FROM THE APPLICABLE NORMS
Shri N. Ponrathnam submitted that it is the prime duty of the generating company to
take care of the entire requirement of men, material and services to run the plant at its
maximum capacity. He submitted that the unavailability of coal/gas neither comes
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under natural calamity nor force majeure. He submitted that the transit loss/loss in
calorific value/increase in moisture of coal are the responsibility of generating
company and MSPGCL can prevent such problems by taking due care, rather than
penalising the innocent consumers. He further submitted that MSPGCL is fully
responsible for the quantity and quality of the fuel required for generation for
achieving the normative parameters. There is no justification that can be accepted for
lower load factor/ lower availability factor when total MSPGCL tariff is approved by
the Commission.
MSPGCL’s Response
MSPGCL submitted that the major source of fuel for MSPGCL is domestic coal,
which is purchased from the various subsidiaries of Coal India Limited (CIL). There
are issues in procurement of coal, the transit loss, poor quality and quantity of coal,
delay in supply, etc. MSPGCL submitted that it is constrained in finding solutions to
these issues given the monopoly nature of coal supply in India and lack of a Regulator
for the Coal Industry as well as lack of alternatives of coal supply. MSPGCL
submitted that quality and quantity of coal is nation-wide issue and MSPGCL has no
control over it.
MSPGCL further submitted that the Central Electricity Authority (CEA) in its
monthly report on "Electricity Generation during the month of September 2012"
observed as under:
“Loss of generation due to various constraints and subsequently reasons for
low PLF during the period April-September'12 are represented in following
table:
S. No. Category
Energy Loss in the Month of April-
September'12 (BU)
Shortfall in Generation – reasons
1. Shortage of Coal 12.4
2. Wet/poor coal quality 2.5
… … …
5. Gas Shortage (up to Aug' 12) 9.17
…
Availability of Cool: During the current financial year 2012·13, the
anticipated gap between the requirement and availability of domestic coal was
estimated around 70 MT."
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MSPGCL submitted that it is exploring options to mitigate the impact of coal
shortages and quality issues by way of usage of imported coal and e-auctions for
domestic coal. MSPGCL submitted that there are constraints towards utilisation of
imported coal. MSPGCL submitted that as the imported coal usage is subject to
design GCV, loading and other constraints, the entire gap cannot be met through
usage of imported coal.
Commission’s Ruling
The Commission has dealt with the issue of Performance Parameters of MSPGCL’s
Generating Stations for the second Control Period in Section 4.2 of this Order.
2.6 COMPLIANCE TO CPRI NORMS
Shri N. Ponrathnam submitted that MSPGCL should adhere to all the norms based on
the recommendation made by CPRI. He submitted that MSPGCL should be
responsible for operating parameters such as auxiliary consumption and specific oil
consumption as per the set norms.
MSPGCL’s Response
MSPGCL submitted that it has given the detailed rationale for seeking deviation from
CPRI norms in its Petition. MSPGCL submitted that the implementation of CPRI
schemes is subject to availability of materials with vendors. MSPGCL submitted that
while the benefits of implementation of CPRI schemes will accrue to MSPGCL, same
will depend on timelines for implementation of schemes. MSPGCL hence, requested
the Commission to consider the above and take an appropriate view.
Commission’s Ruling
The Commission has dealt with the issue of Performance Parameters of MSPGCL’s
Generating Stations for the second Control Period in Sections 4.2 of this Order.
2.7 POWER PURCHASE AGREEMENT
Shri N. Ponrathnam submitted that Power Purchase Agreement (PPA) is a must to fix
the price of electricity and to ensure the availability of electricity in the time of
shortage. He submitted that PPA should be made compulsory and the terms and
conditions in the PPA should be in favour of the distribution companies, so that the
benefit can be passed on to the consumers. He submitted that the distribution
companies enter into agreements in favour of their sister concerns, i.e., the generating
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company and try to force the same to the consumers. He further submitted that the
PPA should separately specify the details for availing the fuel adjustment charges on
account of fuel price variations and determination of fuel adjustment charge levied
should be transparent to the public.
MSPGCL’s Response
MSPGCL submitted that the PPAs entered into between MSPGCL and MSEDCL are
already approved by the Commission after undertaking a due public process wherein
the comments of the public were considered. MSPGCL submitted that every
commercial activity of MSPGCL is under the scrutiny of the Commission.
As regard the Fuel Surcharge Adjustment, MSPGCL submitted that the same is under
the purview of MERC MYT Regulations, and Regulation 49.6 of MERC MYT
Regulations specifies:
“49.6 Adjustment of rate of energy charge (REC) [Fuel Surcharge
Adjustment] on account of variation in price or heat value of fuels
Any variation in Price and Gross Calorific Value of coal/lignite or gas or
liquid fuel vis-a-vis approved values shall be adjusted on month to month
basis on the basis of average Gross Calorific Value of coal/lignite or gas or
liquid fuel in stock, received and burnt and weighted average landed cost
incurred by the Generating Company for procurement of coal/lignite, oil, or
gas or liquid fuel, as the case may be for a power station. In its bills, the
Generating Company shall indicate rate of energy charges at base price of
primary and secondary fuel specified by the Commission and the Fuel
Surcharge to it separately. The Generating Company should submit the
computation to the Commission on six-monthly basis for post-facto approval
of Fuel Surcharge adjustment.”
MSPGCL, in view of the above, submitted that the claim of the Consumer
Representative is not correct, as the PPA is approved by the Commission after due
public process wherein the comments of public have been considered, and also the
Fuel Surcharge Adjustment is levied in a transparent manner as per the MERC MYT
Regulations.
Commission’s Ruling
The Commission agrees with the submissions of MSPGCL.
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2.8 PLANT LOAD FACTOR AND AVAILABILITY FACTOR
Shri N. Ponrathnam submitted that lower Plant Load Factor of MSPGCL’s generating
stations is a serious issue. As the Commission approves the capital expenditure for the
required infrastructure improvement, the same should also be reflected through
improved Plant Load Factor.
Shri. Rakshpal Abhrol submitted that MSPGCL should compare the performance of
its generating stations with that of Dahanu Thermal Station of Reliance Infrastructure
Limited, and Trombay Generating Station of TPC-G, which have been operating at
very high PLF and should make efforts to increase its generation so as to meet the
growing demand.
Shri. Pratap Hogade, Maharashtra Veej Grahak Sanghatana, submitted that out of the
total installed capacity of 7652 MW of MSPGCL as on 31 August, 2012, the average
Availability in the months of September, October and November in FY 2012-13 is
around 4400 MW, i.e., around 57% to 58%. He submitted that the PLF of Reliance
Dahanu had been 102% to 104% and that of TPC and other private generation
companies had been 85% to 90%. He further submitted that the national average of
PLF had been 73%. He submitted that per Unit cost had increased as a result of lower
PLF of MSPGCL.
MSPGCL’s Response
MSPGCL submitted that it is already implementing the schemes as recommended by
CPRI to improve the Plant Load Factor of the Generating Stations. MSPGCL further
submitted that wherever there is a deviation in implementing the schemes, the reasons
for the same have been explained in the Business Plan.
MSPGCL further submitted that the main problems faced by it are low Calorific
Value of received Coal, transit losses and lower supply of Coal. MSPGCL submitted
that the generation (MU) lost due to coal related problems during September 2012 to
November 2012 was in the range of 20% - 25%. MSPGCL submitted that the coal
related problems are being faced by the Utilities all over India and it had also been
highlighted by CEA that the PLF of coal based thermal generation was 68.27% during
April 2012 to September 2012.
Commission’s Ruling
As regards the lower PLF due to poor quality of coal, the Commission has been
reiterating that it is the responsibility of MSPGCL to arrange good quality coal for its
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power stations and the above view of the Commission has also been accepted by the
Hon’ble ATE in its Judgment dated 19 April, 2012, issued on the Review Petition No
9 of 2011 in Appeal No 199 of 2010, wherein the Hon’ble ATE has ruled as under:
“We do not accept that the quality of coal is totally beyond the control of the
appellant. If the quality of raw coal supplied by the coal companies is poor, the
appellant has to make arrangements for washing of coal and blending with
superior quality of coal.”
In view of the above, the Commission directs MSPGCL to take necessary and urgent
steps to arrange good quality of coal for its Stations. MSPGCL should further
prioritise the infrastructure development for its Stations, which should be reflected
through improved Plant Load Factor and Availability Factor during the second
Control Period.
2.9 GCV OF THE COAL
Advocate Anil N. Chavan submitted that MSPGCL should mention the GCV of the
domestic coal received or to be received from individual collieries, as well as MOU
with Coal India Ltd. or subsidiary of CIL in its Business Plan.
MSPGCL’s Response
MSPGCL submitted the GCV of domestic coal, which is expected to be received
during the second Control Period from the subsidiaries of Coal India Ltd, as shown in
the Table below:
Table 1: GCV of domestic coal expected to be received from subsidiaries of CIL as
submitted by MSPGCL
S No. Station/Unit GCV of Domestic Coal
(kcal/kg)
Source of domestic
Coal
1. Bhusawal 2800 WCL
2. Chandrapur 2871 WCL, SECL, MCL
3. Parli 3000 WCL, SECL, SCCL
4. Khaperkheda 2594 WCL, SECL, MCL
5. Koradi 3108 WCL, SECL, MCL
6. Nasik 3676 WCL, SECL
7. Paras- 3 3182 WCL, MCL
8. Paras- 4 3175 WCL, MCL
9. Parli-6 3000 WCL, SECL, SCCL
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S No. Station/Unit GCV of Domestic Coal
(kcal/kg)
Source of domestic
Coal
10. Parli-7 3000 WCL, SECL, SCCL
11. Khaperkheda- 5 2750 MCL
12. Bhusawal- 4&5 2600 MCL
13. Chandrapur - 8&9 3450 Machhakata
14. Parli- 8 3450 Machhakata
15. Koradi 8, 9 & 10 3450 Machhakata
Commission’s Ruling
The Commission has taken note of MSPGCL’s reply in this regard.
2.10 MOU FOR COAL PROCUREMENT WITH CIL
Advocate Anil N. Chavan submitted that MSPGCL in its Business Plan Petition has
mentioned that except Mahanadi Coalfields Ltd. for Parli, MSPGCL has not entered
into MOU with any other subsidiaries for the new Units. He asked MSPGCL to
submit the reason for not entering into MOUs with subsidiaries of CIL for procuring
coal for MSPGCL’s new and upcoming Units.
MSPGCL’s Response
MSPGCL replied that that it has already entered into MOUs with MCL for supply of
coal to Parli Unit 7, Paras Unit 4, Khaperkheda Unit 5, Bhusawal Unit 4 and Unit 5.
MSPGCL further submitted that signing of FSA (Fuel Supply Agreement) for the
above mentioned Units and MOU for the upcoming Units is under process.
Commission’s Ruling
The Commission has taken note of MSPGCL’s reply in this regard. The Commission
directs MSPGCL to expedite the process to ensure that the requisite quantity of fuel
supply is available for its upcoming as well as existing and new Units.
2.11 GENERATION TARIFF
Advocate Anil N. Chavan submitted that MSPGCL in its Business Plan Petition has
not mentioned the expected cost of selling electricity per Unit (Rs./kWh) during the
second Control Period. He asked MSPGCL to submit the expected cost per Unit (Rs.
/kWh) for each of its Generating Stations during the second Control Period.
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MSPGCL’s Response
MSPGCL submitted the estimated cost of generation of each generating station during
the second Control Period as shown in the Tables below:
Table 2: Fixed and Variable Charge for FY 2013-14 as submitted by MSPGCL
S. No. Station/Unit
Fixed
Charges
(Rs./kWh)
Energy
Charges
(Rs./kWh)
Total Cost
(Rs. /kWh)
1 Bhusawal 1.01 3.48 4.49
2 Chandrapur 0.73 2.67 3.40
3 Parli 0.93 3.97 4.90
4 Khaperkheda 0.98 2.81 3.79
5 Koradi 0.97 3.52 4.49
6 Nasik 0.91 3.55 4.46
7 Paras Unit 3 2.09 2.01 4.10
8 Paras Unit 4 2.17 3.15 4.18
9 Parli Unit 6 2.09 3.15 5.24
10 Parli Unit 7 2.25 3.07 5.32
11 Khaperkheda Unit 5 2.44 2.80 5.24
12 Bhusawal Unit 4 2.13 3.39 5.52
13 Bhusawal Unit 5 2.13 3.39 5.52
14 Chandrapur Unit 8 1.73 3.70 5.43
15 Chandrapur Unit 9 1.70 3.23 4.93
16 Parli Unit 8 2.69 2.07 4.76
17 Koradi Unit 8 1.96 3.09 5.05
Table 3: Fixed and Variable Charge for FY 2014-15 as submitted by MSPGCL
S. No. Station/Unit
Fixed
Charges
(Rs./unit)
Energy
Charges
(Rs./unit)
Total Cost
(Rs. /unit)
1 Bhusawal 1.09 3.68 4.77
2 Chandrapur 0.90 2.82 3.72
3 Parli 1.08 4.12 5.20
4 Khaperkheda 1.02 2.98 4.00
5 Koradi 1.29 3.82 5.12
6 Nasik 1.13 3.79 4.92
7 Paras Unit 3 1.93 2.13 4.06
8 Paras Unit 4 2.00 2.12 4.12
9 Parli Unit 6 2.08 3.34 5.42
10 Parli Unit 7 2.20 3.26 5.46
11 Khaperkheda Unit 5 2.40 2.96 5.36
12 Bhusawal Unit 4 2.16 3.57 5.73
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S. No. Station/Unit
Fixed
Charges
(Rs./unit)
Energy
Charges
(Rs./unit)
Total Cost
(Rs. /unit)
13 Bhusawal Unit 5 2.16 3.57 5.73
14 Chandrapur Unit 8 2.02 3.56 5.58
15 Chandrapur Unit 9 2.02 3.56 5.58
16 Parli Unit 8 2.40 2.91 5.31
17 Koradi Unit 8 2.00 4.01 6.01
18 Koradi Unit 9 1.99 3.89 5.88
19 Koradi Unit 10 2.00 4.12 6.12
Table 4: Fixed and Variable Charge for FY 2015-16 as submitted by MSPGCL
S. No. Station/Unit
Fixed
Charges
(Rs./unit)
Energy
Charges
(Rs./unit)
Total
Cost
(Rs.
/unit)
1 Bhusawal 1.65 4.08 5.73
2 Chandrapur 1.01 2.99 4.00
3 Parli 1.10 4.25 5.35
4 Khaperkheda 1.05 3.17 4.22
5 Koradi 1.24 3.87 5.07
6 Nasik 1.08 4.00 5.07
7 Paras Unit 3 1.91 2.26 4.17
8 Paras Unit 4 1.96 2.25 4.21
9 Parli Unit 6 2.17 3.54 5.71
10 Parli unit 7 2.20 3.46 5.66
11 Khaperkheda Unit 5 2.36 3.11 5.47
12 Bhusawal Unit 4 2.11 3.76 5.87
13 Bhusawal Unit 5 2.11 3.76 5.87
14 Chandrapur Unit 8 2.06 3.30 5.36
15 Chandrapur Unit 9 2.06 3.30 5.36
16 Parli Unit 8 2.55 3.08 5.63
17 Koradi Unit 8 2.19 3.81 6.00
18 Koradi Unit 9 2.19 3.81 6.00
19 Koradi Unit 10 2.20 4.06 6.26
Commission’s Ruling
The Commission has noted MSPGCL’s submission in this regard. However, the
Commission, in this Order, has not estimated the fixed charges and energy charges for
the second Control Period and the same shall be approved as a part of the Order on
Multi Year Tariff Petition for the second Control Period.
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2.12 OPERATION AND MAINTENANCE EXPENSES
Shri. B. M. Ghadhe asked MSPGCL to submit the percentage increase considered for
projecting the Operation and Maintenance Expenses for the second Control Period.
MSPGCL’s Response
MSPGCL submitted that it has considered the average of actual expenses for FY
2009-10, FY 2010-11 and FY 2011-12 for arriving at the O&M Expenses for FY
2010-11. MSPGCL submitted that while determining the O&M Expenses for FY
2010-11, the impact of one-time expenses and contributions towards the vintage Units
have been removed. MSPGCL submitted that the O&M Expenses so determined for
FY 2010-11 have been escalated at 8.31% (Commission approved escalation rate) for
FY 2011-12 and FY 2012-13. MSPGCL submitted that as per the MERC MYT
Regulations, the O&M Expenses for the subsequent years in the second Control
Period have to be escalated at 5.72% to arrive at permissible O&M Expenses for each
year in the second Control Period. MSPGCL submitted that considering that the
escalation factor will be subject to truing up, it has considered the escalation factor
approved for FY 2012-13, i.e., 8.31%.
Commission’s Ruling
The Commission has dealt with the issue of Operation and Maintenance Expenses for
the second Control Period for MSPGCL in Section 5.2 of this Order.
2.13 DEPRECIATION
Shri. B. M. Ghadhe asked MSPGCL to submit the percentage considered for arriving
at the Depreciation for the second Control Period.
MSPGCL’s Response
MSPGCL submitted that the percentage considered for arriving at the depreciation
figures for the second control period is as per the depreciation schedule given in
Annexure-1 of MERC MYT Regulations, 2011. For ease of reference, MSPGCL also
submitted the depreciation rates of various asset classes as specified in MERC MYT
Regulations, 2011, as shown in the Table below:
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Table 5: Asset class-wise rate of depreciation as submitted by MSPGCL
S. No. Asset Class Depreciation
(%)
1 Land & Rights -
2 Buildings 3.34%
3 Hydraulic Works 5.28%
4 Other & Civil Works 3.34%
5 Plant & Machinery 5.28%
6 Lines & Cable Network 5.28%
7 Vehicles 9.50%
8 Furniture & Fixtures 6.33%
9 Office equipments 6.33%
Commission’s Ruling
The rate of depreciation for different asset classes for the second Control Period shall
be considered as per the depreciation schedule specified in Annexure-1 of MERC
MYT Regulations.
2.14 INTEREST ON LOAN
Shri. B. M. Ghadhe asked MSPGCL to submit the rate of interest considered on long-
term loan capital during the second Control Period.
MSPGCL’s Response
MSPGCL submitted that the interest rate for the existing loans has been considered
based on the weighted average interest rate on existing loans and the interest rate for
the normative loans has been considered as 12% for the second Control Period.
Commission’s Ruling
It has been observed that MSPGCL has considered a 12% rate of interest for the
normative loans for the second Control Period. However, Regulation 33.5 of the
MERC MYT Regulations clearly specifies that the weighted average rate of interest
calculated on the basis of the actual loan portfolio at the beginning of each year
should be considered for computing the interest expenses for the second Control
Period. The relevant extract from the MERC MYT Regulations is reproduced below:
“33.5 The rate of interest shall be the weighted average rate of interest
calculated on the basis of the actual loan portfolio at the beginning of each
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year applicable to the Generating Company or the Transmission Licensee or
the Distribution Licensee:
Provided that if there is no actual loan for a particular year but normative
loan is still outstanding, the last available weighted average rate of interest
shall be considered:
Provided further that if the Generating Company or the Transmission
Licensee or the Distribution Licensee, as the case may be, does not have
actual loan, then the weighted average rate of interest of the Generating
Company or the Transmission Licensee or the Distribution Licensee as a
whole shall be considered.
33.6 The interest on loan shall be calculated on the normative average loan of
the year by applying the weighted average rate of interest.”
In view of the above, the Commission directs MSPGCL to submit the computation of
interest expenses strictly as per the above mentioned Regulations in its Multi Year
Tariff Petition for the second Control Period.
2.15 INTEREST ON WORKING CAPITAL
Shri. B. M. Ghadhe asked MSPGCL to submit the rate of interest considered for
computing the interest on working capital loan.
MSPGCL’s Response
MSPGCL submitted that as per Regulation 35.1 of MERC MYT Regulations, the rate
of interest on working capital should be equal to the State Bank Advance Rate
(SBAR) of State Bank of India as on date of application for determination of Tariff.
MSPGCL submitted that it has projected the interest rate on Working Capital as
14.75% for the second Control Period.
Commission’s Ruling
Regulation 35.1 (e) of MERC MYT Regulations, 2011 specifies that the interest on
working capital shall be computed at the rate equal to the State Bank Advance Rate
(SBAR) of State Bank of India as on the date on which the application for
determination of Tariff is filed. The relevant extract of the said Regulation is
reproduced below,
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“35 Interest on Working Capital
35.1
...
(e) Rate of interest on working capital shall be on normative basis and shall
be equal to the State Bank Advance Rate (SBAR) of State Bank of India as on
the date on which the application for determination of tariff is made.”
Accordingly, the interest on normative working capital shall be determined at the
normative rate interest in accordance with MERC MYT Regulations, 2011 in the
Multi Year Tariff Order of MSPGCL.
2.16 INCOME TAX
Shri. B. M. Ghadhe submitted that MSPGCL has considered the Income Tax for the
new Units and the upcoming Units during the second Control Period, however, since,
there would be no income generated from the new and the upcoming Units, Income
Tax should not be applicable for the new and the upcoming Units.
MSPGCL’s Response
MSPGCL submitted that Income Tax on New Units and Upcoming Units is
considered only after COD of such Units has been achieved. MSPGCL submitted that
it has considered the Income Tax considering the MAT Rate of 20.01% for the second
Control Period. MSPGCL further submitted that it may be appreciated that MSPGCL
has not formed any SPV for development of the new projects and overall, the
Company has been showing profits in its books of accounts and the income from
these projects will further increase the income tax liability of the Company. MSPGCL
submitted that as per the Income Tax rules, even if there is a loss as per the Income
tax calculations, MAT is applicable for a Company showing profits in its books of
accounts. Therefore, MAT (as per the prevailing rate) has been considered while
computing the Income Tax. MSPGCL further submitted that the income tax is subject
to truing - up by the Commission based on the actual tax paid by the Company for any
financial year.
Commission’s Ruling
The Commission has taken note of MSPGCL’s reply in this regard. The Commission
would consider the actual income tax paid by MSPGCL at the time of mid-term
performance review or at the time of final Truing up for the second Control Period by
the Commission. The income-tax considered by the Commission for the existing and
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the new Stations/Units for the years under consideration for the present MYT
Business Plan starting from FY 2013-14 to FY 2015-16 is covered in clause 5.6 of
this petition.
2.17 CONSUMER AWARENESS
Shri. N. Ponrathnam suggested that for better awareness and more public participation
during the hearings, the Public Notice should be sent along with the electricity bills.
He further submitted that for easy access, the Commission should also upload the full
Petition on its website.
MSPGCL’s Response
MSPGCL requested the Commission to take an appropriate view on the above
suggestions.
Commission’s Ruling
The due process for public participation has already been specified in the MERC
MYT Regulations, 2011, and the relevant extracts of the MERC MYT Regulations
have been reproduced below for reference:
“18 Determination of Tariff for Transmission, Distribution Wires Business
and Retail Supply Business
…
18.5 The applicant shall, within three (3) days of an intimation given to him in
accordance with Regulation 18.4, publish a notice, in at least two (2) English
and two (2) Marathi language daily newspapers widely circulated in the area
to which the application pertains, outlining the proposed tariff, and such other
matters as may be stipulated by the Commission, and inviting suggestions and
objections from the public:
Provided that the applicant shall make available a hard copy of the complete
application, to any interested party, at such locations and at such rates as may
be stipulated by the Commission:
Provided further that the applicant shall also put up on its internet website, in
downloadable spreadsheet format showing detailed computations, the
application made to the Commission along with all regulatory filings,
information, particulars and documents in the manner so stipulated by the
Commission:
Provided further that the web-link to the information mentioned in the second
proviso to Regulation 18.5 above shall be easily accessible, archived for
downloading and shall be prominently displayed on the applicant's internet
website:
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Provided also that the applicant may not provide or put up any such
information, particulars or documents, which are confidential in nature, with
the prior approval of the Commission.”
The Public Notification has been in accordance with the above Regulations. As
regards the uploading of the Petition on the Commission’s website, the Commission
uploads the Executive Summary and the Public Notice on its website upon admission
of the Petition.
2.18 CAPACITY ADDITION PLAN
Shri. N. Ponrathnam submitted that the capacity addition plan for the second Control
Period should have been made while considering the supply and demand of electricity
during the second Control Period. He further asked MSPGCL to justify the proposed
capacity addition of 4230 MW till the end of second Control Period.
MSPGCL’s Response
MSPGCL submitted that as Maharashtra is a power deficit State, the capacity addition
by MSPGCL would help in servicing the shortfall in the supply to meet the demand in
the State. MSPGCL submitted that supply and demand situation has been broadly
analysed while planning the capacity addition during the second Control Period.
MSPGCL submitted that the detailed demand-supply analysis can be done only by
MSEDCL and not by MSPGCL.
Commission’s Ruling
The Commission has taken note of MSPGCL’s submissions in this regard.
2.19 NON CONSIDERATION OF BHANDARDHARA HYDRO POWER
STATION
Shri. Rakshpal Abhrol submitted that MSPGCL has not included the Bhandardara
Hydro Power Station in its Business Plan Petition. He asked MSPGCL to submit the
justification for the same.
MSPGCL’s Response
MSPGCL submitted that Bhandardara Hydro Power Station is not owned and
operated by MSPGCL, hence, the same cannot be included in the Business Plan of
MSPGCL.
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Commission’s Ruling
The Commission agrees with MSPGCL that since, the Bhandardara Hydro Power
Station is neither owned nor operated by MSPGCL, the same cannot be included in
the Business Plan of MSPGCL.
2.20 INCREASE IN ELECTRICITY TARIFF
Shri Kamlakar Shenoy submitted that the cost of electricity before the inception of the
Commission was around Rs 1/ kWh and since, the inception of the Commission, the
price of electricity has increased by 5 to 6 times. He further stated that the Tariff
determination process involves lots of complex computations, which is very difficult
for a consumer to understand, and requested the Commission to adopt some simpler
mechanism to determine the electricity tariff.
MSPGCL’s Response
MSPGCL has not replied to the above objection/suggestion.
Commission’s Ruling
The Commission agrees that the tariff computation is a complex task. The
Commission has taken efforts over the years to ensure that the Public Notices and the
Tariff Petitions are self-explanatory, so that all consumers are able to understand the
tariff determination process and are able to contribute their suggestions on the same.
The generation of electricity involves various costs such as fuel cost, O&M
Expenditure, interest expenses, return on equity, depreciation, etc., which are directly
linked to the Tariff of electricity. Further, as regards the increase in electricity Tariff
in last few years, the Commission is of the view that such increase in generation
Tariff is on account of the major policy changes at the macroeconomic level, which
has resulted in the increased fuel price, which accounts for nearly 70% of the cost of
electricity generation.
2.21 UNREALISTIC ANTICIPATIONS
Shri. P P Karade submitted that MSPGCL in its earlier submissions had stated that it
will come up with a huge capacity addition in future, however, the actual capacity
addition achieved by MSPGCL is only 5000 MW to 6000 MW. He further submitted
that in FY 2007-08, MSPGCL submitted that the lower generation from Uran GTPS
is on account of lower quantum of gas allocation and it shall take necessary steps to
tackle the problem. He submitted that there has been no change in the situation since
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then and MSPGCL has not been keeping up its promises. He submitted that the
Business Plan submitted by MSPGCL should not project false or exaggerated
anticipations.
MSPGCL’s Response
MSPGCL’s Response
MSPGCL submitted that the Business Plan submitted for the second Control Period
has been prepared considering all the issues, present as well as expected in the future.
MSPGCL further submitted that though it has considered most of the anticipated
issues, there might be little variation in actual performance on account of the issues,
which might come up during the actual implementation of the projects. Further, as
regards the unavailability of gas, MSPGCL submitted that it is broader issue and it
has been taking all necessary efforts to tackle the situation.
Commission’s Ruling
The Commission has noted the response of MSPGCL.
2.22 NON-MAINTENANCE OF WEBSITE BY MSPGCL
Shri. Prakash Hogade from Maharashtra Veej Grahak Sangathana, submitted that
MSPGCL has not been maintaining its website properly. He submitted that MSPGCL
should keep its website updated so that the public can access the required information
for proper scrutinising of the matters.
MSPGCL’s Response
MSPGCL submitted that it has taken a serious note of the objection raised and shall
update its website at the earliest.
Commission’s Ruling
During the Public Hearing, the Commission directed MSPGCL to update its website
within 10 days from the date of Public Hearing.
2.23 RENOVATION AND MODERNISATION
Shri. Pratap Hogade, Maharashtra Veej Grahak Sanghatana, submitted that MSPGCL
has planned Renovation and Modernisation Expenses of around Rs. 5170.92 crore. He
submitted that the Commission should apply prudence check to these expenses and
Cost Benefit Analysis should be done for these expenses.
MSPGCL’s Response
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MSPGCL submitted that the Detailed Project Reports of Renovation and
Modernisation activities would be approved by the Commission prior to
implementation of those activities. MSPGCL submitted that Renovation and
Modernisation would increase the useful life of its old Generating Stations.
Commission’s Ruling
Prior approval of the Detailed Project Reports of Renovation and Modernisation
activities had been mandated by the Commission, which involves the analysis of the
cost benefit of the projects.
2.24 CAPITAL COST OF THE NEW GENERATING STATIONS
Shri. Pratap Hogade, Maharashtra Veej Grahak Sanghatana, submitted that MSPGCL
has projected huge capacity addition with an average per MW cost of Rs. 6.42 crore.
He submitted that the cost estimated by MSPGCL is higher than the cost of Rs. 4.5
crore to Rs. 5 crore per MW for the projects owned by the Private developers. He
submitted that proper guidelines should be provided on the Capital Cost for capacity
addition.
MSPGCL’s Response
MSPGCL submitted that the Capital Cost of a Generating Station depends on many
factors, which are specific to the location of the Station. MSPGCL submitted that the
Capital Cost per MW would be different for setting up a New Generating Station and
expansion of an existing Generating Station. MSPGCL submitted that the Capital
Cost of any new Station/Unit would be subject to prudence check by the Commission.
Commission’s Ruling
The Commission would approve the Capital Cost of the Project, based on prudence
check, once the project achieves COD and the audited capital cost is submitted to the
Commission.
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3 SALIENT FEATURES OF THE PETITION
3.1 Applicability of Business Plan Order from FY 2013-14 to FY 2015-16
The Commission, vide its Order dated 23 August, 2011 in Case No. 44 of 2011 on the
Petition filed by MSPGCL seeking deferment of implementation of MERC MYT
Regulations, invoked the proviso to Regulation 4.1 of MERC MYT Regulations and
granted exemption to MSPGCL from determination of Tariff under MERC MYT
Regulations for a period of 2 years, i.e., till 31 March, 2013.
Further, pursuant to the First Amendment to the MERC MYT Regulations, the
Commission, through its letter dated 4 November, 2011 also directed MSPGCL to
submit its Petition for approval of ARR for FY 2011-12 and FY 2012-13, as per the
MERC (Terms and Conditions of Tariff) Regulations, 2005 latest by 30 November,
2011. MSPGCL submitted its Petition on 10 December, 2011 and based on the
Commission’s inputs, submitted a revised Petition on February 27, 2012. The
Commission, vide its Order dated 21 June, 2012 in Case No. 6 of 2012, approved the
Aggregate Revenue Requirement and Tariff of MSPGCL for FY 2011-12 and FY
2012-13. Accordingly, MSPGCL filed its Petition for approval of the MYT Business
Plan for the second Control Period starting from FY 2013-14 to FY 2015-16.
The Commission after taking into consideration all the submissions made by
MSPGCL, objections and comments received from stakeholders, and after due
analysis, has approved the MYT Business Plan for MSPGCL for the period from FY
2013-14 to FY 2015-16.
3.2 Premise for the Business Plan Petition
MSPGCL submitted the revised MYT Business Plan Petition for the second Control
Period from FY 2013-14 to FY 2015-16 as per Regulation 7 of MERC MYT
Regulations on 8 November, 2012. The details regarding Business Plan components
as submitted by MSPGCL and the Commission’s rulings are elaborated in subsequent
sections of this Order. Regulation 7 of the aforesaid MERC MYT Regulations is
reproduced below for reference:
“ 7.1 The Generating Company, Transmission licensee and Distribution
Licensee shall file a Business Plan, for the Control Period of five (5) financial
years from April 1, 2011 to March 31, 2016, as directed by the Commission,
which shall comprise but not be limited to detailed category-wise sales and
demand projections, power procurement plan, capital investment plan,
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financing plan and physical targets, in accordance with guidelines and
formats, as stipulated by the Commission from time to time.
7.2 The capital investment plan shall show separately, ongoing projects that
will spill into the year under review and new projects (along with justification)
that will commence but may be completed within or beyond the tariff period.
The Commission shall consider and approve the capital investment plan for
which the Generating Company and Transmission Licensee or Distribution
Licensee may be required to provide relevant technical and commercial
details”
Further, MSPGCL also submitted the projections for the second Control Period as
required under the MERC MYT Regulations, which have been dealt in detail in
Section 4 and Section 5 of this Order.
3.3 Summary of the MYT Business Plan Petition
MSPGCL, in the present Petition, has submitted the following specific plans in its
MYT Business Plan for the second Control Period:
a) Outage Plan: MSPGCL has submitted a brief description of the annual planned
maintenance schedule and activities for all the Thermal Generating Stations and
Hydro Generating Stations.
b) Operational Performance Plan: MSPGCL has submitted the trajectory of
performance parameters for its Generating Stations/Units.
c) Fuel Procurement Plan: MSPGCL has submitted the fuel availability and
procurement plan for Thermal Generating Stations.
d) Challenges addressed by MSPGCL: MSPGCL has briefly described certain key
challenges that MSPGCL faces along with the proposed mitigation measures.
e) Capital Expenditure Plan: MSPGCL has submitted in detail the proposed
capital expenditure and capitalisation plan for the second Control Period broadly
under three heads, i.e., schemes approved by the Commission, schemes submitted
and yet to be approved by the Commission, and schemes yet to be submitted to
the Commission for approval.
f) Financing Plan: MSPGCL has submitted in brief, details regarding financing of
the capital expenditure for the second Control Period.
g) Human Resource Plan: MSPGCL has submitted its recruitment policy, training
and development plan for the second Control Period.
h) Environment Plan: MSPGCL has proposed to undertake various activities to
contribute towards a clean and green environment.
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i) Risk Mitigation Plan: MSPGCL has identified various risks and action plans to
mitigate the identified risks. MSPGCL has broadly classified these risks into two
categories; those which require immediate attention and those which can be
tackled over the medium to long term.
j) Community Relationship Strategy: MSPGCL has submitted various activities to
be taken up for the development of nearby communities.
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4 BUSINESS PLAN COMPONENTS
4.1 Operating Capacity of MSPGCL
4.1.1 Thermal Generating Capacity
MSPGCL submitted that it has an installed thermal generating capacity of 8777 MW
and on account of de-rating of some Units, and shutdown of old Units in FY 2010-11
and FY 2011-12, the net thermal operating capacity as on 31 August, 2012 is 7652
MW. The station-wise break-up of thermal operating capacity as submitted by
MSPGCL is shown in the Table below:
Table 4-1 Thermal Generating Capacity as submitted by MSPGCL
(MW)
S.
No. Station/Unit
Initial
Operating
Capacity
Derated
Capacity
(Vintage
+ PPA)
Capacity
withdrawn
in FY
2010-11
Capacity
withdrawn
in FY
2011-12
Remaining
Capacity
as on 31
August
2012
1 Bhusawal TPS 475.00 475.00 55.00 0.00 420.00
2 Chandrapur TPS 2,340.00 2,340.00 0.00 0.00 2,340.00
3 Khaperkheda
TPS 1,340.00 1,340.00 0.00 0.00 1,340.00
4 Koradi TPS 1,100.00 1,040.00 420.00 0.00 620.00
5 Nasik TPS 910.00 880.00 0.00 250.00 630.00
6 Paras TPS 62.50 55.00 55.00 0.00 0.00
7 Parli TPS 690.00 670.00 40.00 0.00 630.00
8 Uran GTPS 852.00 852.00 180.00 0.00 672.00
9 Paras TPS Unit
3 & Unit 4 500.00 500.00 0.00 0.00 500.00
10 Parli TPS Unit 6
& Unit 7 500.00 500.00 0.00 0.00 500.00
Total Thermal 8,777 8,652.00 750.00 250.00 7,652.00
MSPGCL submitted that the aforesaid net capacity shown in the above Table is
inclusive of Khaperkheda TPS Unit 5 (500 MW), which has been recently
commissioned on 16 April, 2012. MSPGCL also submitted that Bhusawal TPS Unit 4
and Unit 5 (500 MW each) are envisaged to be commissioned in FY 2012-13.
MSPGCL further submitted that in addition to the Bhusawal TPS Unit 4 and Unit 5, a
capacity of 3230 MW is also envisaged to be commissioned during the second
Control Period.
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MSPGCL, in its Petition, also submitted the likely dates of synchronisation and
commissioning of MSPGCL’s upcoming Units for the Second Control Period under
optimistic, realistic and pessimistic scenarios based on following assumptions:
The optimistic dates are on the basis of best efforts taken by MSPGCL and the
agencies to recoup the delay at present stage.
The realistic dates are considering the normal course of action, i.e., the scheduled
period required for completion of the project.
The pessimistic dates are considering the subsequent effect of current delay on
achievement of upcoming milestones. In case of future projects, dates of COD
and synchronisation are based on possible delay in land acquisition activities,
delay in statutory clearances, availability of adequate coal, etc.
The likely dates of synchronisation and commissioning of MSPGCL’s upcoming
projects under the optimistic, realistic and pessimistic scenarios till the end of second
Control Period as submitted by MSPGCL are shown in the Table below:
Table 4-2: Likely dates of synchronisation and commissioning of MSPGCL’s
upcoming Units as submitted by MSPGCL
Project Unit
Capa
city
of the
unit
Scheduled
date of
Completio
n
Synchronisation COD
Optimistic Realistic Pessimistic Optimistic Realistic Pessimistic
Bhusawal
TPS
Unit
4 500 22.08.2010 11.05.2011 15.11.2012 15.11.2012 15.11.2012
Bhusawal
TPS
Unit
5 500 22.12.2010 03.03.2012 30.11.2012 31.12.2012 31.01.2013
Chandrap
ur TPS
Unit
8 500 08.07.2012 09.06.2013 20.07.2013 20.07.2013 31.08.2013 30.11.2013 30.11.2013
Chandrap
ur TPS
Unit
9 500 08.10.2012 30.11.2013 15.01.2014 15.01.2014 28.02.2014 28.02.2014 28.02.2014
Parli TPS
Unit
8 250 19.01.2012 02.07.2013 02.07.2013 02.07.2013 20.08.2013 20.09.2013 20.09.2013
Koradi
TPS
Unit
8 660 21.12.2013 21.09.2013 21.09.2013 21.09.2013 21.12.2013 21.12.2013 21.12.2013
Koradi
TPS
Unit
9 660 22.06.2014 22.03.2014 22.03.2014 22.03.2014 22.06.2014 22.06.2014 22.06.2014
Koradi
TPS
Unit
10 660 21.12.2014 21.09.2014 21.09.2014 21.09.2014 21.12.2014 21.12.2014 21.12.2014
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4.1.2 Hydro Generating Capacity
MSPGCL submitted that the hydro-electric projects in the State of Maharashtra were
designed, erected and commissioned by GoMWRD (Water Resource Department of
Government of Maharashtra) and the projects were handed over on long-term lease to
MSPGCL (erstwhile MSEB) for Operation and Maintenance. MSPGCL submitted
that out of 28 hydro generating stations handed over by GoMWRD, Veer hydro
generating station of installed capacity 9 MW was handed back to GoMWRD on 1
June, 2010 and it is currently operating 27 hydro generating stations. Further,
MSPGCL, in its revised Petition, has also submitted the categorisation of hydro
generating stations depending upon the type of project, i.e., purely power projects,
pumped storage projects, irrigation projects or drinking water projects. The details of
categorisation of hydro projects as submitted by MSPGCL are shown in the Table
below:Table 4-3 Hydro Generating Capacity as submitted by MSPGCL
S.
No. Station
Operating Capacity
(MW) Unit Configuration
Purely Power Projects
1 Koyna I & II 600.00 4x70MW, 4x80MW
2 Koyna III 320.00 4x80MW
3 Koyna IV 1,000.00 4x250MW
4 Bhira T.R. 80.00 2x40MW
5 Tillari 60.00 1x60MW
Pumped Storage Projects
6 Ghatghar PSS 250.00 2x125MW
7 Paithan 12.00 1x12MW
8 Ujjani 12.00 1x12MW
Irrigation Projects
9 KDPH 36.00 2x18MW
10 Dudhganga 24.00 2x12MW
11 Eldari 22.50 3x7.5MW
12 Bhatghar 16.00 1x16MW
13 Warna 16.00 2x8MW
14 Pawna 10.00 1x10MW
15 Manikdoh 6.00 1x6MW
16 Surya 6.00 1x6MW
17 Dimbhe 5.00 1x5MW
18 Radhanagari 4.80 4x1.2MW
19 Kanher 4.00 1x4MW
20 Dhom 2.00 2x1MW
21 Teriwanmedhe 0.20 1x0.2MW
Drinking Water Projects
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S.
No. Station
Operating Capacity
(MW) Unit Configuration
22 Vaitarna 60.00 1x60MW
23 Bhatsa 15.00 1x15MW
24 Panshet 8.00 1x8MW
25 Varasgaon 8.00 1x8MW
26 Vaitarna D.T. 1.50 1x1.5MW
Total Hydro Capacity 2,579.00
The Commission observed that in its Order in Case No. 5 of 2012 dated 27 April,
2012, while approving the lease rent for the hydro generating stations owned by
GoMWRD and leased to MSPGCL, the Commission also approved the Lease Rent
for Surya RB hydro generating station, however, MSPGCL in its Business Plan has
not considered the Surya RB hydro generating station as a part of total hydro
generating capacity being operated by MSPGCL. The Commission asked MSPGCL
to submit an appropriate justification for not including Surya RB in the hydro
operating capacity in its MYT Business Plan Petition.
MSPGCL, in its reply, submitted that as per the practice of GoMWRD, Surya RB
(CDPH) was provisionally handed over to MSPGCL (erstwhile MSEB) on 15 May,
2002 by GoMWRD under the conditions that GoMWRD shall finish all the
incomplete works and also attend perennial problems of the Unit. GoMWRD, had
assured that all the problems shall be completed by them and the Unit remained under
GoMWRD.
MSPGCL, submitted that the issue of severe operational problems of Surya RB
(CDPH) was taken up by Director (Operations), MSPGCL with Secretary (CAD),
GoM through letter dated 10 November, 2005. Therein request was made not to
consider the lease rent of Surya RB (CDPH) since the Unit was not performing as per
design criterion. MSPGCL however, considering the assurance given by GoMWRD
for resolving the issues of pending work at the earliest, included Surya RB (CDPH) in
the petition for approval of lease rent for Hydel stations filed before the Commission.
MSPGCL submitted that, it has been highlighting the issues of non-performance of
Surya RB (CDPH) Unit through various correspondences and meetings with
GoMWRD. Despite GoMWRD assurance, Surya RB (1x0.75 MW) is still non-
functional. MSPGCL submitted that in view of the above it has not included Surya
RB in the installed Hydro Operating capacity.
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The Commission has gone though the submissions made by MSPGCL in this regard
and observes that MSPGCL has been paying the lease rent for Surya RB, though the
same has not been operational. Further, such lease rent for Surya RB has been passed
on to the Distribution Licensee resulting in undue burden on the end consumers. In
view of the above, MSPGCL is directed to submit a detailed note justifying its stand
to consider the lease rent payments for the Surya RB along with a note on its future
course of action on the above issue in its MYT Petition for the second Control Period.
The Commission on the basis of the same shall take a considered view in its MYT
Order for the second Control Period.
4.2 Trajectory of Performance Parameters
MSPGCL, in its MYT Business Plan Petition, has submitted the projections of
performance parameters for the second Control Period. As per Regulation 9.1 of
MERC MYT Regulations, 2011, the Commission shall stipulate the trajectory for
certain variables while approving the MYT Business Plan.
The projections of performance parameters submitted by MSPGCL, and the
Commission’s observations and ruling on each parameter has been elaborated in the
following sub-sections.
4.2.1 Availability
4.2.1.1 Thermal Generating Stations
MSPGCL, in the MYT Business Plan Petition, has submitted the projections of
Availability of Thermal Generating Stations for the second Control Period. MSPGCL,
in its revised Petition, has also submitted the Outage Plan for Thermal Generating
Stations. The summary of the Outage Plan and the projections of Availability for
thermal generating stations for the second Control Period as submitted by MSPGCL
are shown in the Tables below:
Table 4-4 Outage Plan of the Thermal Generating Stations for second Control Period
as submitted by MSPGCL
Station Unit
No. Capacity
FY 2013-14 FY 2014-15 FY 2015-16
Outage
Days
Outage
Days
Outage
Days
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Station Unit
No. Capacity
FY 2013-14 FY 2014-15 FY 2015-16
Outage
Days
Outage
Days
Outage
Days
Bhusawal 2 210 25 25 182
3 210 25 25 25
Chandrapur
1 210 25 25 180
2 210 25 25 25
3 210 45 25 25
4 210 25 45 25
5 500 25 25 25
6 500 60 25 25
7 500 25 25 25
Nasik
3 210 103 80 25
4 210 25 25 181
5 210 25 25 25
Khaperkheda
1 210 25 10 25
2 210 10 25 10
3 210 25 10 30
4 210 10 25 10
Koradi
5 200 25 25 -
6 210 25 242 -
7 210 25 - 25
Paras 3 250 45 25 25
4 250 25 25 45
Parli
3 210 25 25 120
4 210 25 25 25
5 210 25 25 25
6 250 35 25 25
7 250 25 35 25
Uran
5 108 0 90 0
6 108 0 0 90
7 108 90 0 0
8 108 90 0 0
A0 120 0 0 0
B0 120 35 0 0
Table 4-5 Availability of the Thermal Generating Stations for second Control Period
as submitted by MSPGCL
S.
No. Station/Unit
FY 2013-14 FY 2014-15 FY 2015-16
MYT
Regulations MSPGCL
MYT
Regulations MSPGCL
MYT
Regulations MSPGCL
1 Bhusawal TPS 80.00% 80.00% 80.00% 80.00% 80.00% 61.05%
2 Chandrapur TPS 80.00% 73.15% 80.00% 74.07% 80.00% 73.77%
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S.
No. Station/Unit
FY 2013-14 FY 2014-15 FY 2015-16
MYT
Regulations MSPGCL
MYT
Regulations MSPGCL
MYT
Regulations MSPGCL
3 Khaperkheda TPS 85.00% 80.59% 85.00% 81.00% 85.00% 81.59%
4 Koradi TPS 72.00% 66.36% 72.00% 51.62% 72.00% 70.53%
5 Nasik TPS 80.00% 80.00% 80.00% 69.00% 80.00% 80.00%
6 Parli TPS 80.00% 62.00% 80.00% 65.00% 80.00% 72.00%
7 Uran GTPS 85.00% 60.00% 85.00% 67.00% 85.00% 67.00%
8 Paras TPS Unit 3 85.00% 70.00% 85.00% 75.00% 85.00% 75.00%
9 Paras TPS Unit 4 85.00% 70.00% 85.00% 75.00% 85.00% 75.00%
10 Parli TPS Unit 6 85.00% 70.00% 85.00% 70.00% 85.00% 70.00%
11 Parli TPS Unit 7 85.00% 70.00% 85.00% 70.00% 85.00% 70.00%
12 Khaperkheda TPS
Unit 5 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%
As can be observed from the above Table, MSPGCL in many cases has projected
lower availability as compared to the normative Availability specified in the MERC
MYT Regulations. The Commission asked MSPGCL to submit the detailed reasons
for such deviation in the projected Availability as compared to the norms specified in
the MERC MYT Regulations. MSPGCL, in its reply, submitted the detailed reasons
for the deviations in the projections of Availability as compared to the Availability
norms specified in MERC MYT Regulations. The summary of reasons stated by
MSPGCL and the Commission’s ruling on the same has been elaborated below.
Bhusawal TPS
MSPGCL submitted that in FY 2015-16, Unit 2 of Bhusawal TPS is planned to
undergo Renovation & Modernisation (R&M) activity for 6 months and Unit 3 will be
subject to Annual Overhaul for 25 days, due to which the Availability of Bhusawal
TPS has been projected at 61.05% as compared to the normative availability of 80%.
Commission’s Ruling
As the Availability projections for Bhusawal TPS for FY 2013-14 and FY 2014-15
are in accordance with MERC MYT Regulations, 2011, the Commission has
approved the target Availability of 80% for Bhusawal TPS for FY 2013-14 and FY
2014-15. As regard the lower availability of Bhusawal TPS in FY 2015-16, MSPGCL
has submitted that such lower availability in on account of the outage of 25 days due
to Annual Overhaul of Unit 3 and outage of Unit 2 due to R&M activity. The
Commission is of the view that the outages due to the Annual overhaul cannot be
considered to provide relief in the Target Availability for a generating station, since
they have already been factored in while determining the normative Availability.
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Further, as regards the outage due to R&M activity, the Commission asked MSPGCL
to submit the status of approval for the R&M activity being planned for Unit 2 of
Bhusawal TPS. The Commission also asked MSPGCL to submit the details of
reduction in availability only on account of such R&M activity. MSPGCL, in its
reply, submitted that the DPR of the Renovation and Modernisation (R&M) Scheme
for Unit 2 of Bhusawal TPS planned in FY 2015-16 is yet to be submitted to the
Commission for approval. MSPGCL also submitted the projected Availability for FY
2015-16 after considering the removal of the capacity under outage/shutdown only on
account of the R&M activity in accordance with Regulation 44.1 (b) of MERC MYT
Regulations shall be 81.25%.
As submitted by MSPGCL, the detailed DPR of the scheme on account of which
MSPGCL has projected the lower Availability of Bhusawal TPS in FY 2015-16 is yet
to be submitted by MSPGCL. The Commission for the purpose of approval of MYT
Business Plan has approved the target availability of 80% for Bhusawal TPS for FY
2015-16 as specified in the MERC MYT Regulations. Further, as the projected
Availability for FY 2015-16 after considering the removal of the capacity under
outage/shutdown only on account of the R&M activity in accordance with Regulation
44.1 (b) of MERC MYT Regulations is higher than the target Availability of 80% as
specified in the MERC MYT Regulations, the Commission based on the approval
status and the actual impact on the Availability of the generating Station/Unit of such
R&M activity will review the normative target Availability for Bhusawal TPS for FY
2015-16 during the final Truing up of the second Control Period subject to prudence
check.
Chandrapur TPS
MSPGCL submitted that in FY 2013-14, decrease in Availability/PLF is due to
increase in Plant outage by 1.1% due to Unit 4 COH and Unit 5 DCS Upgradation.
MSPGCL submitted that in FY 2014-15, there is an increase in PLF due to decrease
in Plant outage by 0.7% due to Unit 6 DCS Upgradation. As regards FY 2015-16,
MSPGCL submitted that the decrease in PLF is due to increase in Plant outage by
1.4% due to Unit 1 R&M for 180 days.
MSPGCL also submitted that the projections of availability are based on realistic
scenario wherein the impact of quality of coal has been considered on loadability of
the Units. MSPGCL submitted that as compared to the actual performance of the
station in FY 2011-12, there is an increase of 8% in overall PLF of the station in the
projections.
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
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Commission’s Ruling
As regards the Plant outage due to DCS Upgradation and the R&M activity for
Chandrapur TPS, the Commission asked MSPGCL to submit the status of approval
for the activities resulting in the reduced Availability during the second Control
Period. MSPGCL, in its reply, submitted that the DCS Upgradation of Unit 5 and Unit
6 in FY 2013-14 and FY 2014-15, respectively, has already been approved by the
Commission vide letter MERC/CAPEX/20112012/01908 dated 3 November, 2011.
However, DPR of the Renovation and Modernisation (R&M) Scheme for Unit 1 is yet
to be submitted to the Commission for approval. MSPGCL also submitted the
projected Availability after considering the removal of the capacity under
outage/shutdown only on account of DCS up-gradation and R&M activity in
accordance with Regulation 44.1 (b) of MERC MYT Regulations, as shown in the
Table below:
Table 4-6: Projected Availability for Chandrapur TPS in accordance with Regulation
44.1 (b) of MERC MYT Regulations, 2011as submitted by MSPGCL
Particulars FY 2013-14 FY 2014-15 FY 2015-16
Revised Availability projections 75.81% 74.87% 77.18%
The Commission has gone through the submissions made by MSPGCL, and has
observed that the Availability projections even after considering the removal of
capacity in accordance with Regulation 44.1 (b) is lower than the Target Availability
of 80% as specified in the MERC MYT Regulations. However, the Commission for
the purpose of approval of MYT Business Plan has approved the target availability of
80% for Chandrapur TPS for FY 2013-14, FY 2014-15 and FY 2015-16 as specified
in the MERC MYT Regulations. Further, in accordance with Regulation 44.1 (b) of
MERC MYT Regulations, 2011 and based on the approval status and actual impact of
the outage due to DCS Upgradation and R&M scheme on the Availability of the
generating Station/Unit, the Commission will review the normative target availability
for Chandrapur TPS for FY 2013-14, FY 2014-15 and FY 2015-16 during the Mid-
term Performance Review or the final Truing up of the second Control Period subject
to prudence check.
Khaperkheda TPS
MSPGCL submitted that while the projections of Availability for Khaperkheda TPS
for the second Control Period are above 80%, they are lower in comparison to the
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
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norm of 85% as specified by MERC MYT Regulations. MSPGCL submitted that such
lower Availability projections during the second Control Period are on account of the
fact that Unit 1 and Unit 2 are designed for Coal GCV of 4400 kcal/kg, however, the
GCV of bunkered coal during FY 2010-11, FY 2011-12 and FY 2012-13 (till August)
was 3041 kcal/kg, 3196 kcal/kg and 3088 kcal/kg, respectively. Given this quality of
coal, it may not be realistically possible to achieve the normative availability of 85%.
Commission’s Ruling
The only reason cited by MSPGCL for lower projections of Availability during the
second Control Period is poor coal quality. As regards the consideration of poor
quality coal, the Commission has clearly stated in its Order in Case No. 6 of 2012
dated 21 June, 2012 as follows:
“3.2.5. Thus, poor coal quality has been the single most important reason
cited by MSPGCL for lower availability and PLF during FY 2010-11. As
regards the poor coal quality, Hon’ble ATE in its Judgment dated 19 April,
2012 in Review Petition No. 9 of 2011 in Appeal No. 199 of 2011, has opined
as follows:
“We do not accept that the quality of coal is totally beyond the control
of the appellant. If the quality of raw coal supplied by the coal
companies is poor, the appellant has to make arrangements for
washing of coal and blending with superior quality of coal”
3.2.6. As per the ATE Judgment, quality of coal is not totally beyond the
control of MSPGCL and MSPGCL can take other steps such as utilisation of
washed coal, imported coal, etc., to improve the performance of its stations
and MSPGCL has already taken some of these steps to a certain extent. In view
of this, the Commission has not considered the poor quality of coal as an
uncontrollable factor and has hence, not relaxed the availability and PLF norms
due to poor quality of coal.”
The Commission, therefore, in line with its previous approach has not considered any
relief in the Availability for Khaperkheda TPS and approved the target Availability of
85% for Khaperkheda TPS for the second Control Period as specified in the MERC
MYT Regulations.
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
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Koradi TPS
MSPGCL submitted that for FY 2013-14, the projection of Availability is based on
the Unit-wise planned outages, forced outages, present loadability constraints due to
poor coal quality, wet coal problems in monsoon season, and bag filter/ID fan
constraints in Units 5 and 6.
MSPGCL submitted that for FY 2014-15, the projection of availability has been made
based on the factors mentioned for FY 2013-14 along with planned outage of 8
months of Unit 6 for undertaking bag filter replacement. MSPGCL further submitted
that this outage needs to be examined as per Regulation 44.1(b) of MERC MYT
Regulations, which is reproduced below for reference:
“44.1
(b)
... Provided that the Commission may revise the norms of Availability for the
above mentioned Generating Stations in case of Renovation & Modernisation
undertaken for the Generating Station:
Provided further that if any of MSPGCL’s Generating Station is shut-down
due to implementation of Central Power Research Institute (CPRI)
recommendations, the Target Availability calculation for recovery of annual
fixed charges shall be computed after removing the Capacity under shut-down
for the actual period of shut-down subject to the prior approval of the
Commission for the improvement scheme along-with the approval of Capital
expenditure”
MSPGCL submitted that for FY 2015-16, the projection of Availability represents an
increase in PLF by around 14% from the actual PLF achieved in FY 2011-12 post
implementation of filter replacement.
Commission’s Ruling
As regard the Availability of Koradi TPS for FY 2013-14 and FY 2015-16, the
Commission has elaborated in the earlier paragraphs that the reasons of poor coal
quality and planned and forced outages cited by MSPGCL cannot be considered for
reduction in target Availability of the generating station. The Commission has hence,
approved the target Availability of 72% for Koradi for FY 2013-14 and FY 2015-16
as specified by MERC MYT Regulations.
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 50 of 168
As regards the Availability of Koradi TPS for FY 2014-15, the Commission asked
MSPGCL to submit the status of approval of the schemes under which, Unit 6 is
projected to undergo an outage for 8 months in FY 2014-15. The Commission also
asked MSPGCL to submit the computation of the target Availability for FY 2014-15
after considering the removal of the Capacity under shut-down in accordance with
Regulation 44.1 (b) of MERC MYT Regulations, 2011. MSPGCL, in its reply,
submitted that the outage of Unit-6 in FY 2014-15 is for Renovation and
Modernisation of the Unit. MSPGCL also submitted that the Commission has
accorded in-principle clearance for the Renovation and Modernisation scheme vide
letter MERC/CAPEX/2010-11/00364 dated 24 May, 2010.
MSPGCL also submitted the projected Availability of 66.57% for Koradi TPS for FY
2014-15 after considering removal of the Capacity under outage/shutdown in
accordance with Regulation 44.1 (b) of MERC MYT Regulations.
The Commission has gone through the submissions made by MSPGCL, and has noted
the projections of Availability for Koradi TPS for FY 2014-15 after considering the
removal of the Capacity under outage/shutdown. The Commission for the purpose of
approval of MYT Business Plan, has approved the target availability of 72% for
Koradi TPS for FY 2014-15 as specified in the MERC MYT Regulations, 2011.
Further, on the basis of the actual impact of the outage due to R&M scheme on the
Availability of the generating Station/Unit for FY 2014-15, the Commission will
review the normative target availability for Koradi TPS for FY 2014-15, during the
Mid-term Performance Review or the final Truing up of the second Control Period
subject to prudence check.
Nasik TPS
MSPGCL submitted that for FY 2014-15, projection of availability has been made
based on 6 months outage period for Renovation & Modernisation programme of Unit
3 from period June 2014 to November 2014. Further, MSPGCL submitted that this
outage needs to be examined as per Regulation 44.1(b) of MERC MYT Regulations.
Commission’s Ruling
As the Availability projections for Nasik TPS for FY 2013-14 and FY 2015-16 are in
accordance with MERC MYT Regulations, the Commission has approved the target
Availability of 80% for Nasik TPS for FY 2013-14 and FY 2015-16. As regards the
lower availability of Nasik TPS in FY 2014-15, MSPGCL has submitted that such
lower availability is on account of 6 months outage period for Renovation &
Modernisation programme of Unit 3 from June 2014 to November 2014. The
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Page 51 of 168
Commission asked MSPGCL to submit the status of approval of the Renovation &
Modernisation activity being planned for Unit 6 of Nasik TPS. The Commission also
asked MSPGCL to submit the details of projected availability for FY 2014-15 after
considering the removal of the capacity under shutdown in accordance with
Regulation 44.1 (b) of MERC MYT Regulations. MSPGCL, in its reply, submitted
that the Renovation & Modernisation scheme of Unit-3 has been approved by the
Commission vide letter MERC/CAPEX/20112012/07 dated 1 April, 2011. MSPGCL
also submitted the projected Availability of 82.24% for FY 2014-15 after considering
the removal of capacity under outage/shutdown in accordance with Regulation 44.1
(b) of MERC MYT Regulations.
The Commission has gone through the submissions made by MSPGCL, and has noted
the projections of Availability for Nasik TPS for FY 2014-15 after considering the
removal of the Capacity under outage/shutdown in accordance with Regulation 44.1
(b) of MERC MYT Regulations. MSPGCL during the discussions with the MERC
team submitted that the initial activities for R&M of Nasik TPS are yet to be started
and the R&M of Nasik TPS may not happen during the second Control Period. The
Commission for the purpose of approval of MYT Business Plan, has approved the
target availability of 80% for Nasik TPS for FY 2014-15 as specified in the MERC
MYT Regulations. Further, on the basis of the actual impact of the outage due to the
above mentioned R&M scheme on the Availability of the generating Station/Unit for
FY 2014-15, the Commission will review the normative target availability for Nasik
TPS for FY 2014-15, during the Mid-term Performance Review or the final Truing up
of the second Control Period subject to prudence check.
Parli TPS
MSPGCL submitted that the GCV of received coal is in the range of 3200 kcal/kg to
3400 kcal/kg, which is lower than the GCV of coal for which Unit 3, Unit 4 and Unit
5 are designed (i.e., 5000 kcal/kg, 4890 kcal/kg and 4445 kcal/kg, respectively).
MSPGCL submitted that due to this, an extra coal mill is required to run to get the
desired output. MSPGCL submitted that although the design ash content of the boilers
is 25%, the actual ash content is much higher than the design values, due to which the
boiler auxiliaries are loaded by 25%. MSPGCL also submitted that the problems of
maintenance have also increased and desired output is not being achieved. MSPGCL
further submitted that due to high sulphur content, the coal mills got damaged in FY
2007-08 and have not stabilised since then. MSPGCL submitted that during FY 2011-
12, the Availability and PLF of Parli TPS was 51.33%. MSPGCL also submitted that
by implementing the CPRI schemes and adopting the best O&M practices the
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 52 of 168
improvement in Availability factor is expected as submitted in the MYT Business
Plan Petition.
Commission’s Ruling
As may be observed, poor coal quality has been the most important reason cited by
MSPGCL for lower Availability for Parli Station during second Control Period. The
Commission, in the earlier paragraphs, has already elaborated that the reasons of poor
coal quality cannot be considered for reduction in target Availability of generating
station. Further, the reasons of maintenance problem and instability of the coal mills
cited by MSPGCL cannot be considered as uncontrollable factors and MSPGCL
should take appropriate measures, so that such problems do not affect operational
parameters of the Generating Station. In view of the above, the Commission has
approved the Target Availability of 80% as specified by MERC MYT Regulations for
Parli TPS for the second Control Period.
Uran GTPS
MSPGCL submitted that since the availability of APM Gas and KG D6 Gas have
been lower, the gas availability for Uran GTPS are lower and hence, the projections
of availability are lower. MSPGCL further submitted that if gas availability increases,
Availability and PLF would improve.
Commission’s Ruling
The Commission asked MSPGCL to submit the basis for arriving at the projected
Availability of 60% for FY 2013-14 and 67% for FY 2014-15 and FY 2015-16 along
with the supporting computations, if any. MSPGCL, in its reply, submitted that in the
current year, i.e., FY 2012-13, PLF is 64.81% up to November 2012 due to reduction
in gas supply. Downward trend in gas supply has been observed due to less
production in KG D-6 gas fields. MSPGCL further submitted that while discussing
the issue with GAIL/RIL personnel, it was informed that gas supply may reduce
further. Hence, the PLF for FY 2013-14 is assumed to be 60%. Further, from March
2014 onwards, slight improvement in gas supply has been considered, and hence,
Availability/PLF for FY 2014-15 and FY 2015-16 has been considered as 67%.
On this issue, MSPGCL had preferred Appeal No. 47 of 2012 before the ATE on the
Commission’s Order dated 30 December, 2011 in Case No. 107 of 2011. However,
MSPGCL in its rejoinder, had sought leave of the ATE to approach the Commission
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 53 of 168
with additional facts and figures. ATE granted leave to MSPGCL to approach the
Commission and the Commission may take a view on the issue taking into account
any additional facts and figures provided by the Appellant.
The Commission directs the Petitioner to submit the relevant facts and figures along
with the MYT Petition for the second Control Period for the Commission’s
consideration. However, in this Business Plan Order, the Commission has retained it
earlier stand on the issue and accordingly approves availability of 80% for the station.
Parli Unit 6
MSPGCL submitted that the actual Availability for last three years, i.e., FY 2010-11,
FY 2011-12 and FY 2012-13 (April to August) was 76.86%, 55.198% and 57.843%,
respectively, and the average Availability is 63.30%. MSPGCL submitted that the
major reason for lower Availability is coal shortage, poor coal quality, and CHP
problems due to single coal conveyor system. MSPGCL submitted that it is
considering to create redundancy in the CHP system and schemes are being evaluated
for the same. MSPGCL submitted that under the present circumstances, the
Availability on a realistic side has been projected at around 70%, which is better than
the actual performance in the previous years.
Commission’s Ruling
The Commission has observed that MSPGCL in its MYT Business Plan Petition has
submitted the same reasons for lower Availability as submitted in its Petition for the
Final True-up of FY 2010-11 in Case No. 6 of 2012. The Commission, in its Order
dated 21 June, 2012 in Case No. 6 of 2012 has clearly ruled as under:
“As regards Availability of the Paras Unit 3 and Parli Unit 6, the Commission
is of the view that since both the Units are new and have stabilized, they
should operate at full efficiency. Any defects in PCQ, CHP, AHP or Boiler
Tube Leakage, which have caused lower Availability or high number of forced
outages, would most likely be on account of deficiencies in quality control and
quality assurance effected during erection, testing and commissioning of these
Units. MSPGCL should have adequate clauses in the Contract with the
contractors so that the consumers are not affected due to inefficiencies and
negligence by the contracted agencies. Further, MSPGCL is responsible for
arranging the good quality of coal from the market.”
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 54 of 168
The Commission, therefore, in line with its previous approach has not considered any
relief in the Availability for Parli Unit 6 and has approved the target Availability of
85% for Parli Unit 6 for the second Control Period as specified under MERC MYT
Regulations.
Parli Unit 7
MSPGCL submitted that the actual Availability for the last three years, i.e., FY 2010-
11 (August to March), FY 2011-12, and FY 2012-13 (April to August) are 65.95%,
56.88%, and 41.695%, respectively, and the average is 54.84%. MSPGCL submitted
that the major reason for lower availability is coal shortage, poor coal quality, and
CHP problems due to single coal conveyor system. MSPGCL submitted that under
the present circumstances, the proposed availability is around 70%.
MSPGCL submitted that it is preparing the scheme to implement mechanism for
transportation of coal from old to new plant in emergencies and to replace existing
wobbler feeder, to improve unloading. MSPGCL submitted that this would help in
improving the availability of the Units.
Commission’s Ruling
The Commission is of the view that like Parli Unit 6, Parli Unit 7 is also a new Unit
and having been stabilized; it should operate at full efficiency. Any defects in CHP or
any other component of the Unit, resulting in lower Availability during the second
Control Period would most likely be on account of deficiencies in quality control and
quality assurance effected during erection, testing and commissioning of the Unit.
MSPGCL should have adequate clauses in the Contract with the contractors so that
the consumers are not affected due to inefficiencies and negligence by the contracted
agencies. Further, MSPGCL is responsible for arranging the good quality of coal from
the market.
The Commission, in view of the above, has not considered any relief in the
Availability for Parli Unit 7 and has approved the target Availability of 85% for Parli
Unit 7 for the second Control Period as specified by MERC MYT Regulations.
Paras Unit 3
MSPGCL submitted that for FY 2013-14, projections of availability have been made
considering planned outages of 9.59%, forced outages of 3.62% and loadability of
80.15% as per past years' performance. MSPGCL submitted that for FY 2014-15,
projection of availability has been made considering planned outages of 6.79%,
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 55 of 168
forced outages of 3.73% and loadability of 84.05% as per past years performance and
improvement in performance by reduction in loss due to controllable factors.
MSPGCL submitted that for FY 2015-16, projection of availability has been made
considering planned outages of 6.79%, forced outages of 3.73% and loadability of
84.05% as per past years performance and improvement in performance by reduction
in loss due to controllable factors.
MSPGCL further submitted that for the calculation of Availability factor, COH of 35
days in FY 2013-14, AOH of 25 days in FY 2014-15 and FY 2015-16 and 4% forced
outage in the period excluding planned outages has been considered.
Commission’s Ruling
The Commission is of the view that the reasons of Planned and Forced outages and
the Capital and Annual overhaul cannot be considered as uncontrollable factors as
MSPGCL is responsible for ensuring timely completion of the overhaul of its
Generating Units. Further, Paras Unit 3 being a new Unit and having been stabilized,
MSPGCL should ensure that it should operate at full efficiency.
The Commission in view of the above has not considered any relief in the Availability
for Paras Unit 3 and has approved the target Availability of 85% for Paras Unit 3 for
the second Control Period as specified in MERC MYT Regulations.
Paras Unit 4
MSPGCL submitted that for FY 2013-14, projection of Availability has been made
considering planned outages of 6.65%, forced outages of 3.72% and loadability of
78.59% as per past years' performance. MSPGCL submitted that for FY 2014-15,
projection of availability has been made considering planned outages of 6.76%,
forced outages of 3.73% and loadability of 84% as per past years' performance and
improvement in performance by reduction in loss due to controllable factors.
MSPGCL submitted that for FY 2015-16, projection of availability has been made
considering planned outages of 9.56%, forced outages of 3.62% and loadability of
86.13% as per past years' performance and improvement in performance by reduction
in loss due to controllable factors.
MSPGCL further submitted that for the calculation of Availability factor, COH of 35
days in FY 2013-14, AOH of 25 days in FY 2014-15 and FY 2015-16 and 4% forced
outage during the period excluding planned outages have been considered.
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
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Commission’s Ruling
As elaborated earlier, the Commission is of the view that Annual Overhaul and
Capital overhaul are planned outages and for the new unit, MSPGCL must plan well
ahead and complete the work in shortest possible time. The Commission has observed
that MSPGCL has considered a period of unit shutdown of 13 to 14 days due to
“Forced outage”. Even after considering ramping up periods after a forced outage, the
said period of forced outages during a year appears to be high for a new unit. The
Commission further observes that over and above these forced outages, MSPGCL has
considered loadability only to the tune of 80% to 86% for the said new unit. This is
unacceptable and as explained above loadability of 100% is expected from the said
new unit during the time that it is operational. Therefore even after accepting the
AOH, COH and forced outage periods as stipulated by MSPGCL, the availability
would be around 87% to 89%. Paras Unit 4 being a new Unit commissioned on
August 31, 2010 and having been stabilized, MSPGCL should ensure that the Unit
operates at full efficiency.
The Commission in view of the above has not considered any relief in the Availability
for Paras Unit 4 at this stage and has approved the target Availability of 85% for
Paras Unit 4 for the second Control Period as specified under MERC MYT
Regulations. However, the Commission will analyse the reasons in details for actual
lower availability at the time of mid-term performance review or at the time of final
Truing up for the second Control Period.
Khaperkheda Unit 5 and other new Units to be commissioned till the end of the
second Control Period.
As regards the performance parameters for Khaperkheda Unit 5 and other new Units
to be commissioned till the end of the second Control Period, MSPGCL in its MYT
Business Plan Petition submitted that it will make efforts to adhere to the normative
parameters as per the MERC MYT Regulations subject to influence from the external
factors.
Commission’s Ruling
The Commission, in view of the submissions made by MSPGCL, has approved the
target Availability of 85% for Khaperkheda Unit 5 and other new Units to be
commissioned during the second Control Period as specified under MERC MYT
Regulations. The summary of Availability of the thermal generating Stations/Units as
approved by the Commission is shown in the Table below:
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 57 of 168
Table 4-7 Summary of Availability of Thermal Generating Stations as approved by
the Commission for the second Control Period
S.
No. Station/Unit
FY 2013-14 FY 2014-15 FY 2015-16
MSPGCL Approved MSPGCL Approved MSPGCL Approved
1 Bhusawal TPS 80.00% 80.00% 80.00% 80.00% 61.05% 80.00%
2 Chandrapur TPS 73.15% 80.00% 74.07% 80.00% 73.77% 80.00%
3 Khaperkheda TPS 80.59% 85.00% 81.00% 85.00% 81.59% 85.00%
4 Koradi TPS 66.36% 72.00% 51.62% 72.00% 70.53% 72.00%
5 Nasik TPS 80.00% 80.00% 69.00% 80.00% 80.00% 80.00%
6 Parli TPS 62.00% 80.00% 65.00% 80.00% 72.00% 80.00%
7 Uran GTPS 60.00% 80.00% 67.00% 80.00% 67.00% 80.00%
8 Paras TPS Unit 3 70.00% 85.00% 75.00% 85.00% 75.00% 85.00%
9 Paras TPS Unit 4 70.00% 85.00% 75.00% 85.00% 75.00% 85.00%
10 Parli TPS Unit 6 70.00% 85.00% 70.00% 85.00% 70.00% 85.00%
11 Parli TPS Unit 7 70.00% 85.00% 70.00% 85.00% 70.00% 85.00%
12 Khaperkheda TPS
Unit 5 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%
13 Bhusawal TPS
Unit 4 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%
14 Bhusawal TPS
Unit 5 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%
15 Koradi TPS Unit
8 - - 85.00% 85.00% 85.00% 85.00%
16 Koradi TPS Unit
9 - - 85.00% 85.00% 85.00% 85.00%
17 Koradi TPS Unit
10 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%
18 Chandrapur TPS
Unit 8 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%
19 Chandrapur TPS
Unit 9 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%
20
Parli
Replacement Unit
8
85.00% 85.00% 85.00% 85.00% 85.00% 85.00%
4.2.1.2 Hydro Generating Stations
Regulation 47.1 of MERC MYT Regulations specifies the Normative Annual Plant
Availability Factor (NAPAF) index for the hydro generating stations. MSPGCL, in its
original Petition had not submitted the details and computation of NAPAF index for
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 58 of 168
its hydro generating stations. The Commission asked MSPGCL to submit the details
of the type of Hydro Generating Stations and corresponding NAPAF index for each
type of Hydro Generating Station as per Regulation 47.1 of MERC MYT Regulations.
MSPGCL, in its reply and its revised Business Plan Petition, submitted the
computation of NAPAF in accordance with Regulation 47.1 of MERC MYT
Regulations for its hydro generating Stations with installed capacity of more than 25
MW. The computation of NAPAF for the hydro generating stations as submitted by
MSPGCL is shown in the Table below:
Table 4-8: Computation of Normative Annual Plant Availability Factor (NAPAF) for
hydro generating stations as submitted by MSPGCL
Sr.
No.
Hydro
Station
Capacity
(MW)
Type of
Plant
Head at
FRL
(Mtr)
Head at
MDDL
(Mtr)
Head
variatio
n in %
Rated Head
as per design
(Mtr)
NAPAF
Multiplyi
ng factor
%
NAPAF
of HPS
Remarks
(Head at
MDDL/R
ated
head)x0.5
+0.52
90% x
MF
1 KOYNA - I 280
Storage
515 466 10 475 1.01 90*
2 KOYNA - II 320 10 491 0.99 90*
3 KOYNA - IV 1000 537 496 8 500 1.02 90
Head
variation is
8%
4 K.D.P.H. 36 76 32 74 59 0.79 71
5 KOYNA -III 320
ROR
with
Pondage
117 114 3 110 1.04 90
Head
variation is
less than
8%
6 VAITARNA 60 Pondage 288 284 1.3 283 1.02 90
Head
variation is
less than
8%
7 BHIRA TAIL
RACE 80
ROR
with
Pondage
52 48 9 48 1.01 90*
8 TILLARI 60 Pondage 639 632 1 625 1.03 90
Head
variation is
less than
8%
*NAPAF limited to 90%
MSPGCL further submitted that out of all the hydro generating Stations operated by
MSPGCL, only 3 Stations namely Koyna Stage I to IV (1920 MW), Bhira TR (80
MW) and Tillari HPS (60 MW) are purely Power Projects, while Ghatghar (250
MW), Ujjani (12 MW), Paithan (12 MW) are Pumped Storage Stations. MSPGCL
submitted that the remaining stations are either irrigation projects (IP) or drinking
water projects (DWP). MSPGCL further submitted that for these IP/DWP Hydro
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
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Stations, power generation is incidental benefit and is accrued only during water
discharge as per instructions of GoMWRD. MSPGCL submitted that the generation
from Irrigation and Drinking Water Projects is purely dependent on water release
programme of GoMWRD and hence, even if the machines are available, MSPGCL
may not be able to generate power from these stations. MSPGCL further submitted
that it faces the following issues for operating hydro generating stations under the
regulatory mechanism.
Small/Mini/Micro Hydro Stations
MSPGCL submitted that only few hydro generating stations are having capacity
more than 25 MW while all other stations are small/mini hydro stations as per
MERC (Terms and Conditions for determination of Renewable Energy Tariff)
Regulations, 2010. MSPGCL submitted that as per Regulation 11 of MERC
(Terms and Conditions for determination of Renewable Energy Tariff)
Regulations, 2010 the dispatch principles for small /mini /micro are as under:
“11. Dispatch principles for electricity generated from Renewable Energy
Sources:
11.1 All renewable energy power plants except for biomass power plants and
co-generation plants shall be treated as ‘MUST RUN’ power plants and shall
not be subjected to ‘merit order dispatch’ principles.
11.2 The biomass power generating station and co-generation projects shall be
subjected to scheduling and dispatch code as specified under the State Grid
Code (SGC) including amendments thereto”
MSPGCL further submitted that small hydro stations are treated as must run
power plants and are not scheduled on day ahead basis by SLDC, therefore, it is
not possible to obtain SLDC certification for Plant Availability Factor for these
stations.
MSPGCL also submitted that even if the machines are available for generation,
the actual generation is subject to availability of water and under such
circumstances, it is not possible to achieve NAPAF for most of these small hydro
stations. MSPGCL submitted if the above stated reasons are not considered and
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the recovery mechanism as per MERC MYT Regulations is implemented, it might
lead to under recovery of fixed cost. MSPGCL submitted that because of the
reasons stated above, it cannot submit NAPAF and projected PAFM for the hydro
generating stations with capacity lower than 25 MW.
MSPGCL further submitted that the recovery mechanism as per MERC MYT
Regulations should not be implemented for small/mini/micro hydro stations
and it should be allowed to recover the entire ARR of such stations as per the
current mechanism wherein the fixed charges are recovered over a twelve
month period in equal instalments. Hydro Generating Stations with
capacity more than 25 MW
MSPGCL submitted that it had tried to compile the information based on various
assumptions as per MERC MYT Regulations and computed the NAPAF for the
hydro generating stations with capacity more than 25 MW. MSPGCL further
submitted that it faces the following difficulties regarding the PAFM calculations
of different stations, which needs to be considered by the Commission.
a) Koyna Dam Foot HPS (36 MW) and Vaitarna HPS (60 MW): MSPGCL
submitted that Koyna Dam Foot HPS is an Irrigation Project and Vaitarna
HPS is a Drinking Water Project and hence, plant availability is purely
dependent upon water release programme of GoMWRD.
b) Bhira HPS (80 MW): MSPGCL submitted that though Bhira HPS is a power
project, it was designed for only 2 hours peaking power. MSPGCL submitted
that this fact had been specifically mentioned by Sri VVRK Rao (Ex-
Chairman CEA) in his Report to the Commission in Case No. 142 of 2011
(M/s Dodson Vs M/s MSEDCL), in the capacity as MERC appointed
Consultant in the matter. MSPGCL, in its Petition, also submitted the
following extract of the above mentioned Order.
“16. The qualifying criterion of 3 hours operation for the Declared Capacity
is in MERC regulations, which is the same as that adopted by CERC. The 3
hour prescription is based on the general experience of peaking hours of
Hydro Projects in operation. There could however be some exceptions to this
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
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criterion. One example is Bhira Tailrace HE Project in Maharashtra. As I
recall, this project was planned for two hour peaking and under MERC
regulations this station can never achieve normative capacity index which
requires 3 hour peaking operation. This is just to point out that the criterion
considered in the project planning cannot be ignored and are to be duly
considered whenever there is an exception to the general criterion.”
c) Koyna HPS:
a. MSPGCL submitted that for Koyna HPS, there is a constraint on total
water usage as per guidelines of Krishna Water Dispute Tribunal
Award (KWDTA). MSPGCL submitted that 67.5 TMC of water is
available in a water year (1 June to 31 May).
b. MSPGCL submitted that although Koyna Stage I, II, III and IV are
designed as peak load stations, the Units of Stage I and II are run on
minimum load even during Off Peak period as hot reserve as per the
operating strategy of SLDC (Kalwa). MSPGCL submitted that due to
this reason, it might happen that on a given day, Koyna HPS might not
run on rated capacity for 3 peaking hours but might be operated at full
capacity throughout the off peak hours and hence the PAFM for Koyna
will be less than NAPAF. MSPGCL submitted that this would result in
under recovery of half of approved fixed charges for that period
because of reasons beyond MSPGCL’s control.
Pumped Storage Projects
MSPGCL submitted that norms for Pumped Storage Stations have not been
specified in the MERC MYT Regulations. MSPGCL also submitted that in case of
Ghatghar PSS, currently a barter system is being adopted for energy exchange
between MSPGCL and MSEDCL. MSPGCL submitted that it does not bill any
energy charge to MSEDCL for energy sent out and MSEDCL does not bill any
energy charge for the pumping energy consumed. MSPGCL submitted that
MSEDCL only pays the approved AFC and would pay approved Lease Rent
along with water royalties subsequent to approval of Lease Rent Petition by the
Commission.
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MSPGCL submitted that recovery mechanism for 50% AFC based on PAFM/NAPAF
is not suitable for most of its hydro generating stations and requested the Commission
to review the same.
Commission’s Ruling
As regards the hydro generating stations with capacity less than 25 MW, the
Commission agrees that such hydro generating stations are treated as must run power
plants and are not scheduled on a day ahead basis by SLDC. The Commission is
consequently of the view that the Tariff determination process in accordance with
Regulation 50 of MERC MYT Regulations, 2011 cannot be applicable for such plants
and a considerate view needs to be taken for the same.
The Commission, in this Order, has therefore, not approved the NAPAF for the hydro
generating stations with capacity lower than 25 MW and the recovery of the Annual
Fixed Charges for such stations shall be considered as per the current mechanism
wherein the Annual Fixed Charges are recovered over a twelve-month period in equal
instalments.
As regards the hydro generating stations with capacity higher than 25 MW, the
Commission is of the view that the recovery mechanism specified in MERC MYT
Regulations should be applicable. However, for power projects catering to drinking
and irrigation purposes, i.e., Koyna Dam Foot HPS (36 MW) and Vaitarna HPS (60
MW), the Commission shall examine the actual data regarding water available for
generation purposes subject to submission of documentary evidence by MSPGCL
with regards to curtailment of water supply by GoMWRD. The Commission is of the
view that the recovery mechanism for such hydro generating stations should be in
accordance with Regulation 50 of MERC MYT Regulations. The Commission has
therefore, computed the NAPAF in accordance with Regulation 47.1 of MERC MYT
Regulations as shown in the Table below:
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Table 4-9 Normative Annual Plant Availability Factor (NAPAF) for hydro generating
stations as approved by the Commission
Sr.
No. Hydro Station
Capacity
(MW)
Type of
Plant
Head
at
FRL
(Mtr)
Head
at
MDDL
(Mtr)
Head
variation in
%
Rated
Head
as per
design
(Mtr)
NAPAF
Multiplying
factor
%
NAPAF
of HPS Remarks
(Head at
FRL-Head at
MDDL)/Head
at FRL
(Head at
MDDL/Rated
head)x0.5+0.52
90% x
MF
1 KOYNA - I 280
Storage
515 466 9.5% 475 1.01 90%*
2 KOYNA - II 320 9.5% 491 0.99 90%*
3 KOYNA - IV 1000 537 496 7.6% 500 1.02 90% Head variation
less than 8%
4 K.D.P.H. 36 76 32 57.9% 59 0.79 71%
5 KOYNA -III 320
ROR
with
Pondage
117 114 2.6% 110 1.04 90% Head variation
less than 8%
6 VAITARNA 60 Pondage 288 284 1.4% 283 1.02 90% Head variation
less than 8%
7 BHIRA TAIL
RACE 80
ROR
with
Pondage
52 48 7.7% 48 1.02 90% Head variation
less than 8%
8 TILLARI 60 Pondage 639 632 1.1% 625 1.03 90% Head variation
less than 8%
* Limited to 90%
As regards the Pumped Storage station with capacity more than 25 MW, i.e.,
Ghatghar PSS, it has been observed that so far, MSPGCL has not entered into any
Agreement with MSEDCL for the above mentioned Station. The Commission, in this
Order, has not approved the recovery mechanism for pumped storage stations with
capacity more than 25 MW. Further, the Commission in its Order dated 27 December,
2012 in Case No. 2 of 2012 also directed MSPGCL to file a separate Petition for the
approval of the agreement between MSPGCL and MSEDCL for supply of energy
generated during peak hours and energy used for pumping during off-peak hours from
Ghatghar PSS within one month from the date of the above-mentioned Order.
Accordingly, MSPGCL should file a separate Petition for approval of the Agreement
between MSPGCL and MSEDCL. The Commission shall take an appropriate view
upon the approval of the Agreement for Ghatghar PSS between MSPGCL and
MSEDCL. The Commission further directs MSPGCL to propose an appropriate
recovery mechanism for the Pumped storage stations with capacity more than 25 MW
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(i.e., Ghatghar PSS) in its MYT Petition for the second Control Period upon the
approval of Agreement for Ghatghar PSS between MSPGCL and MSEDCL.
4.2.2 PLF projections of Thermal Generating Stations for second Control
Period
MSPGCL, in the MYT Business Plan Petition, has submitted the projections of PLF
of Thermal Generating Stations for the second Control Period. The projections of PLF
submitted by MSPGCL for Thermal Generating Stations are shown in the table
below.
Table 4-10 PLF projections of Thermal Generating Stations for second Control Period
as submitted by MSPGCL
S.
No. Station/Unit
FY
2013-14
FY
2014-15
FY
2015-16
1 Bhusawal TPS 80.00% 80.00% 61.05%
2 Chandrapur TPS 73.15% 74.07% 73.77%
3 Khaperkheda TPS 80.59% 81.00% 81.59%
4 Koradi TPS 66.36% 51.62% 70.53%
5 Nasik TPS 80.00% 69.00% 80.00%
6 Parli TPS 62.00% 65.00% 72.00%
7 Uran GTPS 70.00% 70.00% 70.00%
8 Paras TPS Unit 3 70.00% 75.00% 75.00%
9 Paras TPS Unit 4 70.00% 75.00% 75.00%
10 Parli TPS Unit 6 70.00% 70.00% 70.00%
11 Parli TPS Unit 7 70.00% 70.00% 70.00%
MSPGCL further submitted that as regards the performance of Khaperkheda Unit 5
and other new Units to be commissioned till the end of the second Control Period,
MSPGCL will make efforts to adhere to the normative parameters as per the MERC
MYT Regulations subject to influence from external factors.
The Commission has noted the projections of PLF of Thermal Generating Stations for
the second Control Period. However, the Commission in this Order has not approved
the PLF for the second Control Period, and the same shall be approved as a part of the
Order on Multi Year Tariff Petition for the second Control Period.
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4.2.3 Heat Rate (kcal/kWh)
MSPGCL, in its MYT Business Plan Petition for the second Control Period, has
submitted the projections of Heat Rate for the Thermal Generating Stations.
MSPGCL submitted that the projections are based on CPRI Study, current issues
pertaining to quantity and quality of coal, proposed capital expenditure, issues
pertaining to wet coal during monsoon season and usage of imported coal, etc. The
projections of Heat Rate for existing and new thermal generating Stations/Units as
submitted by MSPGCL for the second Control Period are shown in the Table below:
Table 4-11 Projections of Heat Rate of Thermal Generating Stations for second Control Period as submitted by MSPGCL
(Kcal/kWh)
S.
No. Station/Unit
FY 2013-14 FY 2014-15 FY 2015-16
MYT
Regulations
CPRI
Report
Version 2
MSPGCL MYT
Regulations
CPRI
Report
Version 2
MSPGCL MYT
Regulations
CPRI
Report
Version 2
MSPGCL
1 Bhusawal TPS 2671 2764 2778 2677 2743 2780 2683 2739 2777
2 Chandrapur TPS 2539 2686 2686 2544 2680 2680 2549 2684 2684
3 Khaperkheda TPS 2424 2606 2612 2429 2607 2617 2433 2607 2625
4 Koradi TPS 2873 2835 2851 2881 2814 2861 2889 2761 2762
5 Nasik TPS 2664 2736 2825 2670 2719 2815 2677 2715 2785
6 Parli TPS 2679 2842 2949 2684 2841 2928 2690 2850 2917
7 Uran GTPS 2017 - 2045 2021 - 2045 2025 - 2030
8 Paras Unit 3 2450 - 2521 2450 - 2509 2450 - 2499
9 Paras Unit 4 2450 - 2501 2450 - 2494 2450 - 2490
10 Parli Unit 6 2450 - 2580 2450 - 2580 2450 - 2580
11 Parli Unit 7 2450 - 2580 2450 - 2580 2450 - 2580
As can be observed from the above Table, MSPGCL’s projections are in deviation
from the normative Heat Rate specified in the MERC MYT Regulations or as
recommended by CPRI in its Report Version 2. The Commission asked MSPGCL to
submit the detailed reasons for such deviation in the projected Heat Rate. MSPGCL,
in its reply, submitted the detailed reasoning for the deviations in the projections of
Heat Rate, and the summary of reasons stated by MSPGCL and the Commission’s
ruling on the same, are elaborated below.
Bhusawal TPS
MSPGCL submitted that for calculation of SHR for FY 2012-13, it has considered the
actual SHR of 2789 kcal/kWh for FY 2011-12 as the base and after replacement of
ECO and LTSH coil of Unit 2 and inter-stage sealing of Unit 2 turbine in August
2011, and replacement of LP heater tube nest for Unit 2, improvement in SHR of 12
kcal/kWh was considered. MSPGCL further submitted that although the schemes
suggested by CPRI have been planned in the respective year, the effect of schemes in
improvement in SHR has been considered after implementation of the scheme based
on time indicated by the suppliers.
Commission’s Ruling
The Commission has observed that the prime reason submitted by MSPGCL for
deviation in SHR from the recommendations in CPRI Report Version 2 is on account
of delay in implementation of the schemes recommended by CPRI. The Commission
is of the view that the judicious and timely implementation of the CPRI schemes is in
the control of MSPGCL and the same should materialise in a timely manner, and
hence, MSPGCL’s submission for deviation in Heat Rate are not tenable. Further, the
Commission, in its Order in Case No. 6 of 2012, had considered the recommendations
of CPRI for Bhusawal TPS for FY 2011-12 and FY 2012-13. Hence, in line with its
earlier approach, the Commission has approved Heat Rate of Bhusawal TPS for the
second Control Period as recommended in CPRI Report Version 2.
Chandrapur TPS
MSPGCL submitted that the projections of Heat Rate are in line with the
recommendations in CPRI report Version 2.
Commission’s Ruling
The Commission has approved the Heat Rate for MSPGL for the second Control
Period from FY 2013-14 to FY 2015-16 as recommended by CPRI Report Version-2.
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Page 68 of 168
Khaperkheda TPS
MSPGCL submitted that deviation in Heat Rate is due to difficulties and problem
faced in implementation of CPRI Recommendations. MSPGCL submitted that during
2nd
CPRI Energy Audit conducted in January 2012, difficulties and problems faced in
implementation of CPRI Recommendations were discussed in detail. MSPGCL
submitted that after giving due consideration to the difficulties and problem faced in
implementation of CPRI Recommendations, CPRI had revised the recommended
Heat Rate in CPRI Report Version 2.
MSPGCL submitted that the Heat Rate was 2658 kcal/kWh for FY 2010-11, 2606
kcal/kWh for FY 2011-12, and 2619 kcal/kWh for FY 2012-13 (till August).
MSPGCL submitted that with implementation of CPRI Recommendations, Capex
schemes and correction of 0.3% degradation, achievable Heat Rate has been given in
the Business Plan. MSPGCL submitted that the maximum deviation projected in
Business Plan as compared to Heat Rate recommended by CPRI is less than 1%.
MSPGCL submitted that the deviation is also on account of quality of coal.
Commission’s Ruling
As submitted by MSPGCL, CPRI in Version 2 of its report has given due
consideration to the difficulties and problems faced in the implementation of the
schemes for improvement in performance parameters, therefore, it may not be
appropriate to consider further increase in the Heat Rate as recommended by CPRI in
Version 2 of its report. The Commission has hence, approved the Heat Rate as
recommended in CPRI Report Version 2 for Khaperkheda TPS for the second Control
Period.
Koradi TPS
MSPGCL submitted that for FY 2013-14 and FY 2014-15, the primary concern is the
quality of coal, which leads to reduced loadability of the Units. MSPGCL submitted
that the specific issue pertains to bag filter replacement of Unit-6 in FY 2014-15.
MSPGCL submitted that for FY 2015-16, an improvement of around 100 kcal/kWh,
after the replacement of bag filters in Unit 6 under R&M could be observed.
MSPGCL submitted that the Heat Rate for FY 2015-16 has also been aligned to the
Heat Rate projections of CPRI in their Report.
MSPGCL further, submitted that apart from low loadability, degradation due to
ageing has been considered (0.34% degradation factor) per year over the previous
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
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year. MSPGCL submitted that CPRI has also considered the same degradation factor
while projecting the heat rate trajectories. MSPGCL submitted that there shall be an
improvement of around 108.73 kcal/kWh after the implementation of various schemes
in R&M of Unit-6 resulting in performance improvement in FY 2015-16. MSPGCL
also submitted the following computation for arriving at the projected Heat Rate for
the second Control Period.
Table 4-12: Computation for arriving at the projected Heat Rate for Koradi TPS for
the second Control Period as submitted by MSPGCL
Particulars FY 2013-14 FY 2014-15 FY 2015-16
Previous Year SHR (kcal/kWh) 2816 2851 2861
Degradation factor (%) 0.34% 0.34% 0.34%
Improvement due to R&M
(kcal/kWh) 108.73
Reduction in SHR due to poor coal
quality and other issues 25.4
SHR considered for the Financial
Year (kcal/kWh) 2851 2861 2762
Commission’s Ruling
From the above computation of the projected Heat Rate for the second Control
Period, it is observed that the higher Heat Rate projected for FY 2014-15 is on
account of the delay in implementation of the schemes recommended by CPRI.
Further, the other major reason mentioned by MSPGCL is the poor quality if coal.
The Commission has already discussed in detail that the coal quality issue and timely
implementation of the CPRI recommended schemes is in the control of MSPGCL and
cannot be considered as tenable for providing relief in the form of deviation in Heat
Rate from the Heat Rate as recommended by CPRI. The Commission has thus
approved the Heat Rate for second Control Period as per the recommendation of
CPRI in Version 2 of its Report.
Nasik TPS
MSPGCL submitted that in FY 2013-14, improvement measures proposed for Unit 4
are COH works including Insulation, Steam path audit, Condenser de-scaling and
high energy drains. MSPGCL submitted that in light of the above, against the actual
SHR of 2847 kcal/kWh in FY 2011-12, the heat rate has been projected to improve on
account of the aforementioned schemes. MSPGCL submitted that the prime reason
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for the deviation between CPRI study and projections is the current assessment made
by MSPGCL while actually undergoing implementation of the schemes.
MSPGCL submitted that in FY 2014-15, Stage-II improvement measures proposed
are Unit 3 R&M during June to November, 2014 resulting in improvement of 19.3
kcal/kWh, which has been considered from December, 2014 to March, 2015.
MSPGCL submitted that the projected Heat Rate of 2815 kcal/kWh is after
considering degradation as per CPRI.
MSPGCL submitted that an improvement in Heat Rate of 39.3 kcal/kWh has been
considered due to Unit 3 R&M. MSPGCL submitted that the projected Heat Rate of
2785 kcal/kWh is after considering degradation as per CPRI. MSPGCL submitted that
for FY 2015-16, proposed Heat Rate is different from that recommended by CPRI as
Unit 4 and Unit 5 R&M outage dates have been revised to January 2016 to June 2016
for Unit 5 and October 2016 to March 2017 for Unit 4, considering the supply lead
time and implementation of the schemes.
MSPGCL submitted that it might be observed that while the CPRI is considering the
reduction of 21 kcal/kWh from FY 2013-14 to FY 2015-16, MSPGCL has projected a
decrease of around 40 kcal/kWh over the same period. MSPGCL submitted that the
primary deviation is because the Heat Rate projection for FY 2013-14 has been made
on realistic basis based on coal related issues, and technical constraints that are yet to
be rectified through capital expenditure.
Further, on a specific query raised by the Commission, MSPGCL also submitted the
following computation for arriving at the projected Heat Rate for the second Control
Period.
Table 4-13: Computation for arriving at the projected Heat Rate for Nasik TPS for the
second Control Period as submitted by MSPGCL
Particulars FY 2013-
14
FY 2014-
15
FY 2015-
16
Previous Year SHR (kcal/kWh) 2846 2825 2815
Degradation factor (%) 0.33% 0.33% 0.33%
Improvement due to immediate
measures (kcal/kWh) 30
Improvement due to R&M
(kcal/kWh) 19 39
SHR considered for the Financial
Year (kcal/kWh) 2825 2815 2785
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Commission’s Ruling
From the above submission of MSPGCL, it has been observed that the prime reason
for the higher Heat Rate during the second Control Period is due to consideration of
the higher base while computing the projected Heat Rate for the second Control
Period. MSPGCL submitted that the higher Heat Rate for FY 2013-14 has been
projected on realistic basis based on coal related issues, and other technical
constraints. As detailed earlier, the Commission is of the view that coal related issues
cannot be considered for providing relief in the Heat Rate. Further, the Commission in
its Order dated 21 June, 2012 in Case No. 6 of 2012 has already approved the Heat
Rate of 2756.50 kcal/kWh for FY 2012-13 based on the recommendation of CPRI in
Version -2 of its report. The Commission has considered the same Heat Rate as the
base for projecting the Heat Rate for the second Control Period.
Further, the other reasons related to the delay in implementation of the schemes
recommended by CPRI and poor quality of coal envisaged during the second Control
Period cannot be considered tenable. In view of the above, the Commission for the
purpose of approval of MYT Business Plan has not considered any relief in the Heat
Rate for Nasik TPS for the second Control Period. The Commission has hence,
approved the Heat Rate for the Nasik TPS for the second Control Period as
recommended by CPRI in Version-2 of its report.
Parli TPS
MSPGCL submitted that after considering actual Heat Rate of FY 2011-12 (2989
kcal/kWh) and the implementation of CPRI schemes, the projected values have been
worked out. MSPGCL submitted that the primary reasons responsible for increase in
SHR are low quality and high ash content of received coal, coal mills which got
damaged in FY 2007-08 due to high sulphur content and have not stabilised since
then.
Commission’s Ruling
The Commission has observed that the prime reason submitted by MSPGCL for
deviation in SHR from the recommendations in CPRI Report Version 2 is the low
quality of received coal and coal mill problem. As stated earlier, MSPGCL’s
submissions in this regard are not tenable as these are controllable factors for
MSPGCL. Hence, for the purpose of approval of MYT Business Plan, the
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Commission has approved the Heat Rate values for Parli TPS for the second Control
Period as recommended in CPRI Report Version 2.
Uran GTPS
On a specific query raised by the Commission regarding the basis for arriving at the
higher Heat Rate projected for the second Control Period, MSPGCL submitted that
the deviation in Heat Rate for Uran GTPS is on account of lower gas availability, due
to which the Units are running on partial load and this leads to increase in Heat Rate.
Further, MSPGCL submitted that replacement of complete modified upgraded rotor
along with modified air intake system and boiler duct for Gas Turbine Unit-5 and
Unit-8 has been considered in FY 2013-14. After installation and commissioning of
this rotor, improvement in Heat Rate has been considered from 2045 kcal/kWh to
2030 kcal/kWh in FY 2015-16.
Commission’s Ruling
The Commission has specified the Heat Rate norms for the Uran GTPS in MERC
MYT Regulations. The Commission, as discussed earlier, has not considered the
reasons for lower availability of the gas during the second Control Period in this
Order and will consider the same upon submission of complete details by MSPGCL
in its Multi Year Tariff Petition. The Commission, for the purpose of approval of
MYT Business Plan for the second Control Period, has hence, approved the Heat Rate
for Uran GTPS as specified under MERC MYT Regulations.
Paras Unit 3 and Unit 4
MSPGCL submitted that the projected Heat Rate figures are based on average of Heat
Rate in FY 2010-11, FY 2011-12, actuals from April 2012 to July 2012 and
projections from August 2012 to March 2013. MSPGCL submitted that the Heat Rate
during monsoon is higher due to wet coal received from WCL that contains black
cotton soil. MSPGCL submitted that wet coal causes choke up problems leading to
loadability problems, flame instability, and tripping of Unit. MSPGCL submitted that
excess oil would be required to operate the Unit thereby increasing the overall Heat
Rate.
Commission’s Ruling
The Commission opines that actual higher Heat Rate in the preceding years cannot be
a reason for relaxing the norms. Further, Paras Unit 3 and Unit 4 being new Units,
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
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MSPGCL should be able to operate these Units at the normative Heat Rate as
specified in MERC MYT Regulations. The Commission has observed that the prime
reason submitted by MSPGCL for the deviation in Heat Rate is the low quality of
received coal. The Commission, in line with earlier approach, does not find merit in
MSPGCL’s submission for relaxing the norms of Heat Rate due to coal quality
problems. Hence, for the purpose of approval of MYT Business Plan, the Commission
has approved the Heat Rate of 2450 kcal/kWh as specified in MERC MYT
Regulations, 2011 for Paras Unit 3 and Unit 4 for the second Control Period.
Parli Unit 6 and Unit 7
MSPGCL submitted that the actual Heat Rate for Parli Unit 6 for FY 2010-11 , FY
2011-12, FY 2012-13 (April to August) are 2557 kcal/kWh, 2639 kcal/kWh, and 2689
kcal/kWh, respectively, and average for three years is 2628 kcal/kWh. MSPGCL
submitted that the projections have been made based on the above and considering the
improvement in Availability and PLF.
As regards Parli Unit 7, MSPGCL submitted that the actual Heat Rate for FY 2010-
11, FY 2011-12, and FY 2012-13 (April to August) are 2582 kcal/kWh, 2640
kcal/kWh, and 2717 kcal/kWh, respectively, and average for three years is 2647
kcal/kWh, which has been considered for projecting the Heat Rate for the second
Control Period.
Commission’s Ruling
As discussed earlier, the actual higher Heat Rate in the preceding years cannot be
considered for relaxing the norms for the Heat Rate for the second Control Period.
Further, Parli Unit 6 and Unit 7 being new Units, MSPGCL should be able to operate
these Units at the normative Heat Rate specified in MERC MYT Regulations. Hence,
for the purpose of approval of MYT Business Plan, the Commission has approved the
Heat Rate of 2450 kcal/kWh for Parli Unit 6 and Parli Unit 7 for the second Control
Period.
Khaperkheda Unit 5 and other new Units to be commissioned till the end of the
second Control Period
As regards the performance parameters for Khaperkheda Unit 5 and other new Units
to be commissioned during the second Control Period, MSPGCL in its MYT Business
Plan Petition submitted that it will make efforts to adhere to the normative parameters
as per the MERC MYT Regulations subject to influence from the external factors.
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Commission’s Ruling
The Commission has taken note of MSPGCL’s submission and approves the heat rate
in accordance with the provisions of MERC MYT Regulations.
As regards the new Units which are proposed to be commissioned after the
effectiveness of MERC MYT Regulations, 2011, the Commission has approved the
Heat Rate for such generating Units in accordance with Regulation 44.3 of MERC
MYT Regulations, 2011, As regards the same, the Commission asked MSPGCL to
submit the following set of design parameters for the Units envisaged to be
commissioned during the second Control Period:
i. Pressure Rating (kg/cm2),
ii. Super Heat Temperature/Re-Heat Temperature (0C)
iii. Maximum Turbine Cycle Heat Rate (kcal/kWh), and
iv. Minimum Boiler Efficiency
MSPGCL in its reply submitted the details for the Units envisaged to be
commissioned during the second Control Period as shown in the Table below:
Table 4-14: Design Parameters for the upcoming Units envisaged to be commissioned
during the second Control Period as submitted by MSPGCL
Project Steam Parameters Guaranteed
Parameters
Superheater
outlet
Pressure
Superheater
outlet
Temperature
Reheat
outlet
Temperature
Turbine
Heat rate
Boiler
Efficiency
kg/cm2 Deg C Deg C kcal/kWh %
Parli Unit 8
(250 MW)
151 540.00 540.00 1936.30 85.15
Chandrapur
Unit 8 & 9
(500 MW)
178 540.00 540.00 1944.50 87.64
Koradi
Unit 8, 9 &
10 (660 MW)
257.00 568.00 596.00 1850.00 87.00
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MSPGCL also submitted the computation of the normative Heat Rate for the above
mentioned Units to be commissioned during the second Control Period in accordance
with Regulation 44.3 of MERC MYT Regulations, as shown in the Table below:
Table 4-15: Computation of the normative Heat Rate for the upcoming Units during
the second Control Period as submitted by MSPGCL
Project Guaranteed Parameters Design Heat
Rate
(kcal/kWh)
Station Heat
Rate
(kcal/kWh)
Turbine Heat
Rate (kcal/kWh)
Boiler
Efficiency (%)
(1) (2) (3) (4)=(2)/(3) (5)=1.065x(4)
Parli Unit 8
(250 MW) 1936.30 85.15 2273.99 2421.80
Chandrapur
Unit 8 & 9
(500 MW)
1944.50 87.64 2218.74 2362.95
Koradi
Unit 8, 9 & 10
(660 MW)
1850.00 87.00 2126.44 2264.66
The Commission has gone through the above computations submitted by MSPGCL.
The Commission, on the basis of the details submitted, has computed the normative
Heat Rate for the above mentioned Units and has verified that the computation
submitted by MSPGCL is in order and therefore, the Commission has approved the
normative Heat Rate for the Units envisaged to be commissioned during the second
Control Period as submitted by MSPGCL.
The summary of Heat Rate of Thermal Generating Stations for the second Control
Period as approved by the Commission is as shown in the table below:
Table 4-16 Summary of Heat Rate of Thermal Generating Stations for second Control
Period approved by the Commission
(Kcal/kWh)
S.
No. Station/Unit
FY 2013-14 FY 2014-15 FY 2015-16
MSPGCL Approved MSPGCL Approved MSPGCL Approved
1 Bhusawal TPS 2778.00 2764.36 2780.00 2743.21 2777.00 2739.46
2 Chandrapur TPS 2686.00 2686.42 2680.00 2679.52 2684.00 2683.63
3 Khaperkheda TPS 2612.00 2605.64 2617.00 2607.24 2625.00 2606.70
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S.
No. Station/Unit
FY 2013-14 FY 2014-15 FY 2015-16
MSPGCL Approved MSPGCL Approved MSPGCL Approved
4 Koradi TPS 2851.00 2835.14 2861.00 2813.53 2762.00 2760.72
5 Nasik TPS 2825.00 2735.84 2815.00 2718.58 2785.00 2715.26
6 Parli TPS 2949.00 2842.25 2928.00 2841.30 2917.00 2850.35
7 Uran GTPS 2045.00 2017.00 2045.00 2021.00 2030.00 2025.00
8 Paras TPS Unit 3 2521.00 2450.00 2509.00 2450.00 2499.00 2450.00
9 Paras TPS Unit 4 2501.00 2450.00 2494.00 2450.00 2490.00 2450.00
10 Parli TPS Unit 6 2580.00 2450.00 2580.00 2450.00 2580.00 2450.00
11 Parli TPS Unit 7 2580.00 2450.00 2580.00 2450.00 2580.00 2450.00
12 Khaperkheda Unit 5 2425.00 2425.00 2425.00 2425.00 2425.00 2425.00
13 Bhusawal Unit 4 2425.00 2425.00 2425.00 2425.00 2425.00 2425.00
14 Bhusawal Unit 5 2425.00 2425.00 2425.00 2425.00 2425.00 2425.00
15 Koradi Unit 8 - - 2264.66 2264.66 2264.66 2264.66
16 Koradi Unit 9 - - 2264.66 2264.66 2264.66 2264.66
17 Koradi Unit 10 2264.66 2264.66 2264.66 2264.66 2264.66 2264.66
18 Chandrapur Unit 8 2362.95 2362.95 2362.95 2362.95 2362.95 2362.95
19 Chandrapur Unit 9 2362.95 2362.95 2362.95 2362.95 2362.95 2362.95
20 Parli Replacement
Unit 8 2421.80 2421.80 2421.80 2421.80 2421.80 2421.80
4.2.4 Auxiliary Consumption
4.2.4.1 Thermal Generating Stations
MSPGCL, in the MYT Business Plan Petition for the second Control Period, has
submitted the projections of Auxiliary Consumption for the existing Thermal
Generating Stations. MSPGCL submitted that the projections are based on CPRI
Study, current issues pertaining to quantity and quality of coal, proposed capital
expenditure, issues pertaining to wet coal during monsoon season and usage of
imported coal, etc. The projections of Auxiliary Consumption for the existing and
new thermal generating Stations/Units as submitted by MSPGCL for the second
Control Period are shown in the Table below:
Table 4-17 Auxiliary Consumption of Thermal Generating Stations for second Control Period as submitted by MSPGCL
S.
No. Station/Unit
FY 2013-14 FY 2014-15 FY 2015-16
MYT
Regulations
CPRI
Report
Version 2
MSPGCL MYT
Regulations
CPRI
Report
Version 2
MSPGCL MYT
Regulations
CPRI
Report
Version 2
MSPGCL
1 Bhusawal TPS 9.47% 10.79% 10.79% 9.00% 10.75% 10.75% 8.80% 9.94% 10.75%
2 Chandrapur TPS 8.18% 8.84% 9.09% 8.18% 8.75% 9.09% 8.18% 8.71% 9.00%
3 Khaperkheda TPS 8.63% 9.74% 9.74% 8.50% 9.71% 9.71% 8.50% 9.70% 9.70%
4 Koradi TPS 10.21% 10.81% 11.96% 10.00% 10.51% 12.03% 9.80% 9.91% 11.20%
5 Nasik TPS 8.50% 13.35% 13.35% 8.50% 13.48% 13.48% 8.50% 13.41% 13.41%
6 Parli TPS 9.12% 14.02% 14.02% 8.50% 14.21% 14.21% 8.50% 14.57% 14.57%
7 Uran GTPS 3.00% - 3.00% 3.00% - 3.00% 3.00% - 3.00%
8 Paras Unit 3 8.50% - 10.00% 8.50% - 10.00% 8.50% - 10.00%
9 Paras Unit 4 8.50% - 10.00% 8.50% - 10.00% 8.50% - 10.00%
10 Parli Unit 6 8.50% - 10.50% 8.50% - 10.50% 8.50% - 10.50%
11 Parli Unit 7 8.50% - 10.50% 8.50% - 10.50% 8.50% - 10.50%
As can be observed from the above Table, MSPGCL’s projections are in deviation
from the normative Auxiliary Consumption specified in the MERC MYT Regulations
or as recommended by CPRI in its Report Version 2. The Commission asked
MSPGCL to submit the detailed reasons for such deviation in the projected Auxiliary
Consumption. MSPGCL, in its reply, submitted the detailed reasoning for the
deviations in the projections of Auxiliary Consumption and the summary of reasons
stated by MSPGCL and the Commission’s ruling on the same are elaborated below.
Bhusawal TPS
MSPGCL submitted that the projections for FY 2013-14 and FY 2014-15 are based
on the CPRI recommendations that have been adopted by the Commission for
determination of tariff. MSPGCL submitted that the deviation in FY 2015-16 is due to
the outages for undertaking the Renovation & Modernisation. MSPGCL submitted
that as the PLF of the plant is low, the auxiliary consumption in percentage terms is
higher.
Commission’s Ruling
The Commission has observed that MSPGCL’s projections of Auxiliary Consumption
for FY 2013-14 and FY 2014-15 are in line with the recommendations in CPRI
Report Version 2. Hence, the Commission has approved MSPGCL’s projections of
Auxiliary Consumption for Bhusawal TPS for FY 2013-14 and FY 2014-15.
As regards the auxiliary consumption for FY 2015-6, the Commission has specified
the mechanism for sharing of gains/losses on account of controllable factors in the
MERC MYT Regulations. When the actual generation of a Generator is on higher
side, the Auxiliary Consumption in percentage terms will be lower and the Generator
would receive performance incentive. When the actual generation of a Generator is on
the lower side, the Auxiliary Consumption in percentage terms will be higher and the
Generator should be accordingly penalised. Therefore, for maintaining the sanctity of
the mechanism of sharing of gains/losses on account of controllable factors, the claim
of MSPGCL for revising the Auxiliary Consumption is not admissible. Hence, the
Commission has approved the Auxiliary Consumption of 9.94% for Bhusawal TPS
for FY 2015-16 as recommended in CPRI Report Version 2.
Chandrapur TPS
MSPGCL submitted that CPRI recommendations in Version 2 Report are based on
80% Availability, and the projections in the Business Plan are based on projected PLF
for the second Control Period. MSPGCL submitted that with the implementation of
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the schemes, the PLF of the station would improve and subsequently the auxiliary
consumption will get reduced. MSPGCL submitted that the Auxiliary Consumption
during the second Control Period will reduce by around 7%in comparison to the
actual Auxiliary Consumption in FY 2011-12.
Commission’s Ruling
As discussed earlier, the Commission does not find merit in revising the Auxiliary
Consumption vis-a-vis CPRI recommendations on account of lower/higher PLF. The
Commission has thus, approved the Auxiliary Consumption of Chandrapur TPS for
second Control Period as recommended in CPRI in Version 2 report.
Khaperkheda TPS
MSPGCL submitted that the projections are in line with the CPRI recommendations
in Version 2 of their Report.
Commission’s Ruling
The Commission has observed that the MSPGCL’s projections are in line with the
recommendations in CPRI Report Version 2. Hence, the Commission has approved
the Auxiliary Consumption for Khaperkheda TPS for the second Control Period as
recommended by CPRI in Version 2 of its Report.
Koradi TPS
MSPGCL submitted that for FY 2013-14, the norm of Auxiliary Consumption
specified under MERC MYT Regulations is based on normative PLF. MSPGCL
submitted that as the projected PLF is lower than the normative value, the projection
of auxiliary consumption is higher than the normative value.
MSPGCL submitted that for FY 2014-15, the projection of Auxiliary Consumption is
based on projected Availability. MSPGCL submitted that the projection of Auxiliary
Consumption is higher on account of planned outages and due to the planned outages;
there would be a significant reduction in PLF.
MSPGCL submitted that for FY 2015-16, the projection of Auxiliary Consumption is
based on projected Availability. MSPGCL submitted that after improvement of PLF
of Unit 6 after R&M, the auxiliary consumption has been projected to reduce.
Commission’s Ruling
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As discussed earlier, the Commission does not find merit in revising the Auxiliary
Consumption from that recommended by CPRI because of lower PLF or on account
of the higher planned outages during the second Control Period. Hence, the
Commission has approved the Auxiliary Consumption for Koradi TPS for the second
Control Period as recommended in CPRI Report Version 2.
Nasik TPS
MSPGCL submitted that the projections are in line with the recommendations in
CPRI Report Version 2.
Commission’s Ruling
The Commission has observed that the MSPGCL’s projections are in line with the
recommendations in CPRI Report Version 2. Hence, the Commission has approved
the Auxiliary Consumption for Nasik TPS for the second Control Period as
recommended by CPRI in Version 2 of its Report.
Parli TPS
MSPGCL submitted that the projections are in line with the recommendations in
CPRI Report Version 2.
Commission’s Ruling
The Commission has observed that the MSPGCL’s projections are in line with the
recommendations in CPRI Report Version 2. Hence, the Commission has approved
the Auxiliary Consumption for Parli TPS for the second Control Period as
recommended by CPRI in Version 2 of its Report.
Uran GTPS
MSPGCL submitted that the projections are in line with the norms specified under
MERC MYT Regulations.
Commission’s Ruling
The Commission has observed that MSPGCL’s projections of Auxiliary Consumption
for Uran GTPS are in line with the norms specified under MERC MYT Regulations.
Hence, the Commission has approved the Auxiliary Consumption for Uran GTPS for
the second Control Period as specified under MERC MYT Regulations.
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Paras Unit 3 and Unit 4
MSPGCL submitted that the projections of Auxiliary Consumption for the second
Control Period are based on the average value of actual Auxiliary Consumption
during FY 2010-11, FY 2011-12, FY 2012-13 (April to July) and projected value for
remaining period of FY 2012-13 (August to March). MSPGCL submitted that the
following factors are contributing to higher auxiliary consumption.
a) Use of Ozonization plant consuming about 0.14 to 0.17% of gross energy
generation.
b) Power requirement to operate newly added Balapur Barrage.
c) Higher AHP Auxiliary Consumption due to higher quantity of coal required
and higher ash content in the received coal.
d) BBD type Ball and tube coal mill consuming @1.14 to 1.43% of gross energy
generation.
Commission’s Ruling
As regards the coal quality related problem, the Commission in line with its earlier
approach, does not find MSPGCL’s submission for relaxation of the norms because of
the inferior coal quality, as tenable. As regards the other reasons submitted by
MSPGCL, the Commission asked MSPGCL to submit if the above stated auxiliaries
have been in operations prior to the second Control Period or are proposed to be
operational from the second Control Period. MSPGCL, in its reply, submitted that all
the above mentioned auxiliaries have been operational prior to the second Control
Period.
In view of the submission made by MSPGCL, the Commission is of the view that
there should be no change in the Auxiliary Consumption requirement during the
second Control Period as compared to the Auxiliary Consumption for FY 2012-13.
The Commission, in its Order dated 21 June, 2012 in Case No. 6 of 2012 has
approved the Auxiliary Consumption for Paras Unit 3 and Unit 4 in accordance with
then applicable MERC Tariff Regulations, 2005. Hence, the Commission has
approved the Auxiliary Consumption for Paras Unit 3 and Paras Unit 4 for the second
Control Period as 8.50% as specified under MERC MYT Regulations applicable for
the second Control Period.
Parli Unit 6 and Unit 7
MSPGCL submitted that the projections of Auxiliary Consumption during second
Control Period have been made on the basis of the actual Auxiliary Consumption in
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FY 2010-11 , FY 2011-12, and FY 2012-13 (April to August). MSPGCL further
submitted that based on the expectation that Availability would be higher than that in
the last three years and reduction in partial loading on Units due to availability of
coal, auxiliary consumption of the Units is proposed to be 10.50%.
Commission’s Ruling
The Commission is of the view that actual higher Auxiliary Consumption in the
preceding year cannot be considered for relaxing the norms for the second Control
Period. Further, MSPGCL’s submission that higher Auxiliary Consumption is due to
lower Availability is also not tenable because of the reasons explained in the earlier
paragraphs.
Further, Parli Unit 6 and Parli Unit 7 being new Units, MSPGCL should be able to
operate these Units at normative Auxiliary Consumption. Hence, the Commission has
approved the Auxiliary Consumption of 8.50% for Parli Unit 6 and Parli Unit 7 for
the second Control Period as specified under MERC MYT Regulations.
Khaperkheda Unit 5 and other new Units to be commissioned till the end of the
second Control Period
As regards the performance parameters for Khaperkheda Unit 5 and other new Units
to be commissioned till the end of the second Control Period, MSPGCL in its MYT
Business Plan Petition, submitted that it will make efforts to adhere to the normative
parameters specified under the MERC MYT Regulations subject to influence from
external factors.
Commission’s Ruling
The Commission has taken note of MSPGCL’s submission. The Commission, for the
purpose of approval of MYT Business Plan, in accordance with Regulation 44.5 of
MERC MYT Regulations, has approved the Auxiliary Consumption of 6.00% for
Khaperkheda TPS Unit 5 and other generating Units of 500 MW size proposed to be
commissioned during the second Control Period considering MSPGCL’s submission
that these Units have natural draft cooling tower. For Parli Replacement Unit 8, the
Commission has approved the Auxiliary Consumption of 8.50% for the second
Control Period considering MSPGCL’s submission that this Unit has natural draft
cooling tower.
The summary of Auxiliary Consumption of Thermal Generating Stations for the
second Control Period approved by the Commission is shown in the Table below.
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Table 4-18 Summary of Auxiliary Consumption of Thermal Generating Stations for
second Control Period approved by the Commission
S.
No. Station/Unit
FY 2013-14 FY 2014-15 FY 2015-16
MSPGCL Approved MSPGCL Approved MSPGCL Approved
1 Bhusawal TPS 10.79% 10.79% 10.75% 10.75% 10.75% 9.94%
2 Chandrapur TPS 9.09% 8.84% 9.09% 8.75% 9.00% 8.71%
3 Khaperkheda TPS 9.74% 9.74% 9.71% 9.71% 9.70% 9.70%
4 Koradi TPS 11.96% 10.81% 12.03% 10.51% 11.20% 9.91%
5 Nasik TPS 13.35% 13.35% 13.48% 13.48% 13.41% 13.41%
6 Parli TPS 14.02% 14.02% 14.21% 14.21% 14.57% 14.57%
7 Uran GTPS 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
8 Paras Unit 3 10.00% 8.50% 10.00% 8.50% 10.00% 8.50%
9 Paras Unit 4 10.00% 8.50% 10.00% 8.50% 10.00% 8.50%
10 Parli Unit 6 10.50% 8.50% 10.50% 8.50% 10.50% 8.50%
11 Parli Unit 7 10.50% 8.50% 10.50% 8.50% 10.50% 8.50%
12 Khaperkheda Unit
5 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%
13 Bhusawal Unit 4 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%
14 Bhusawal Unit 5 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%
15 Koradi Unit 8 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%
16 Koradi Unit 9 - - 6.00% 6.00% 6.00% 6.00%
17 Koradi Unit 10 - - 6.00% 6.00% 6.00% 6.00%
18 Chandrapur Unit 8 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%
19 Chandrapur Unit 9 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%
20 Parli Replacement
Unit 8 8.50% 8.50% 8.50% 8.50% 8.50% 8.50%
4.2.4.2 Hydro Generating Stations
MSPGCL, in its Original Petition filed on 31 August, 2012, had not submitted the
projections of Auxiliary Consumption for the Hydro Generating Stations. The
Commission asked MSPGCL to submit the details of type of each Hydro Generating
Station and the projections of Auxiliary Consumption for Hydro generating stations in
accordance with Regulation 47.2 of MERC MYT Regulations.
MSPGCL submitted the details of the type of Hydro Generating Stations along with
the corresponding Auxiliary Consumption in accordance with Regulation 47.2 of
MERC MYT Regulations, 2011. The Normative Auxiliary Consumption for Hydro
Generating Stations as submitted by MSPGCL for the second Control Period is shown
in the Table below.
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Table 4-19 Auxiliary Consumption of Hydro Generating Stations for second Control
Period as submitted by MSPGCL
S No. Station
Power Station
Location
Excitation
System Type
Norm proposed by
MSPGCL
Purely Power Projects
1 Koyna I & II Under Ground Static Semipole 1.20%
2 Koyna III Under Ground Rotary 0.90%
3 Koyna IV Under Ground Static Semipole 1.20%
4 Bhira T.R. Surface Rotary 0.70%
5 Tillari Under Ground Static 1.20%
Pumped Storage Projects
6 Ghatghar PSS Under Ground Static NA
7 Paithan Surface Static Thyrister NA
8 Ujjani Surface Static NA
Irrigation Projects
9 KDPH Surface Rotary 0.70%
10 Dudhganga Surface Static 1.00%
11 Yeldari Surface Rotary 0.70%
12 Bhatghar Surface Rotary 0.70%
13 Warna Surface Static 1.00%
14 Pawna Surface Static 1.00%
15 Manikdoh Surface Static 1.00%
16 Surya Surface Static 1.00%
17 Dimbhe Surface Static 1.00%
18 Radhanagari Surface Rotary 0.70%
19 Kanher Surface Static 1.00%
20 Dhom Surface Static 1.00%
21 Teriwanmedhe Surface Static 1.00%
Drinking Water Projects
22 Vaitarna Under Ground Rotary 0.90%
23 Bhatsa Surface Static Thyrister 1.00%
24 Panshet Surface Static 1.00%
25 Varasgaon Surface Static Thyrister 1.00%
26 Vaitarna D.T. Surface Rotary 1.00% *Excluding Transformation losses of 0.5%
Commission’s Ruling
As may be observed from the above Table, MSPGCL has submitted that the Auxiliary
Consumption norm is not applicable for the Pumped Storage Stations. The
Commission is of the view, that the Pumped Storage Stations operated by MSPGCL
also comes under the capacity regulated by the Commission, and there must be some
Auxiliary Consumption norm applicable for these Stations. The MERC MYT
Regulations does not specify the Auxiliary Consumption norm specifically for the
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Page 85 of 168
Pumped Storage Stations, but the Auxiliary Consumption norm for normal Hydro
Stations has been specified by the MERC MYT Regulations. Further, the Commission
in its Order dated 9 February, 2009 in Case No. 94 of 2007 had discussed the issue for
approving the norms for the Pumped Storage Stations. The Commission in the said
Order was of the view that it will not be proper to specify uniform norms of operation
for all the pumped storage stations and the norms for the any Pumped Storage Station,
needs to be approved on case to case basis. As regard the same, MSPGCL is directed
to propose the Auxiliary Consumption norms along with an appropriate justification
and supporting details for pumped storage stations in its MYT Petition for the second
Control Period. The Commission upon submission of the details shall approve the
Auxiliary Consumption norm for the Pumped Storage Stations in its Order on MYT
Petition for the second Control Period.
As regard the other Hydro Stations, based on the details of the type of Hydro
Generating Stations as submitted by MSPGCL, and in accordance with Regulation
47.2 of MERC MYT Regulations has approved the Auxiliary Consumption for Hydro
Generating Station for the second Control Period, as shown in the Table below:
Table 4-20: Auxiliary Consumption of Hydro Generating Stations for second Control
Period as approved by the Commission
S No. Station MSPGCL Approved
Purely Power Projects
1 Koyna I & II 1.20% 1.20%
2 Koyna III 0.90% 0.90%
3 Koyna IV 1.20% 1.20%
4 Bhira T.R. 0.70% 0.70%
5 Tillari 1.20% 1.20%
Pumped Storage Projects
6 Ghatghar PSS NA ---
7 Paithan NA ---
8 Ujjani NA ---
Irrigation Projects
9 KDPH 0.70% 0.70%
10 Dudhganga 1.00% 1.00%
11 Yeldari 0.70% 0.70%
12 Bhatghar 0.70% 0.70%
13 Warna 1.00% 1.00%
14 Pawna 1.00% 1.00%
15 Manikdoh 1.00% 1.00%
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S No. Station MSPGCL Approved
16 Surya 1.00% 1.00%
17 Dimbhe 1.00% 1.00%
18 Radhanagari 0.70% 0.70%
19 Kanher 1.00% 1.00%
20 Dhom 1.00% 1.00%
21 Teriwanmedhe 1.00% 1.00%
Drinking Water Projects
22 Vaitarna 0.90% 0.90%
23 Bhatsa 1.00% 1.00%
24 Panshet 1.00% 1.00%
25 Varasgaon 1.00% 1.00%
26 Vaitarna D.T. 1.00% 1.00%
Further, in addition to the above norms, the Commission has also approved the
Transformation Losses of 0.50% as specified under Regulation 47.3 of MERC MYT
Regulations.
4.2.5 Secondary Oil Consumption
MSPGCL, in the MYT Business Plan Petition for the second Control Period, has
submitted the projections of Secondary Oil Consumption for the existing Coal based
Generating Stations. MSPGCL submitted that the projections are based on CPRI
Study, current issues pertaining to quantity and quality of coal, proposed capital
expenditure, issues pertaining to wet coal during monsoon season and usage of
imported coal, etc. The projections of Secondary Oil Consumption for existing and
new thermal generating Stations/Units as submitted by MSPGCL for the second
Control Period are shown in the Table below:
Table 4-21 Secondary Oil Consumption of Coal based Generating Stations for second Control Period as submitted by MSPGCL
(ml/kWh)
S.
No. Station/Unit
FY 2013-14 FY 2014-15 FY 2015-16
MYT
Regulations
CPRI Old
Report MSPGCL
MYT
Regulations
CPRI Old
Report MSPGCL
MYT
Regulations
CPRI Old
Report MSPGCL
1 Bhusawal TPS 2.00 2.00 3.50 2.00 2.00 3.50 2.00 2.00 2.50
2 Chandrapur TPS 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
3 Khaperkheda TPS 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
4 Koradi TPS 2.00 2.81 3.88 2.00 2.81 4.10 2.00 2.81 3.77
5 Nasik TPS 2.00 3.00 3.83 2.00 3.00 3.33 2.00 3.00 3.33
6 Parli TPS 2.00 2.00 3.00 2.00 2.00 2.50 2.00 2.00 2.00
7 Paras Unit 3 1.00 - 3.11 1.00 - 3.06 1.00 - 2.81
8 Paras Unit 4 1.00 - 3.28 1.00 - 3.03 1.00 - 2.53
9 Parli Unit 6 1.00 - 4.00 1.00 - 4.00 1.00 - 4.00
10 Parli Unit 7 1.00 - 4.00 1.00 - 4.00 1.00 - 4.00
As can be observed from the above Table, MSPGCL’s projections are in deviation
from normative Secondary Oil Consumption specified under the MERC MYT
Regulations or as recommended by CPRI in its Old Report. The Commission asked
MSPGCL to submit the detailed reasons for such deviation in the projected Secondary
Oil Consumption as compared to the norms specified or the CPRI recommendations.
MSPGCL, in its reply, cited the following coal related reasons for the existing
generating stations for deviation from the normative parameters:
a) Wet coal
b) Flame instability due to wet coal/choking
As regards the new Units, i.e., Paras Unit 3 and Unit 4 and Parli Unit 6 and Unit 7,
MSPGCL submitted that SFO consumption is on higher side due to single stream
CHP, which impact the oil support requirement. MSPGCL also submitted that it has
considered the actual SFO consumption in the previous years for projecting the SFO
consumption for the second Control Period.
Commission’s Ruling
As regards the existing generating stations, the Commission has already elaborated on
the coal quality issues in the preceding Sections. The Commission, in the previous
Orders has been approving the SFO consumption for existing Stations based on the
CPRI recommendations. Further, as the reasons cited by MSPGCL for not achieving
the normative SFO consumption, i.e., wet or poor quality of coal, are not tenable, the
Commission for approving the SFO consumption for the existing generating stations
for the second Control Period has considered the recommendations of the CPRI old
Report.
As regards the CHP problem in new Units, i.e., Paras Unit 3 and Unit 4 and Parli Unit
6 and Unit 7, the Commission in its previous Orders has elaborated that such
problems would most likely be on account of deficiencies in quality control and
quality assurance effected during erection, testing and commissioning of these Units.
In view of the above, the Commission has approved the SFO consumption for Paras
Unit 3 and Unit 4 and Parli Unit 6 and Unit 7 as specified under MERC MYT
Regulations.
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Khaperkheda Unit 5 and other new Units to be commissioned during the second
Control Period
As regards the performance Parameters for Khaperkheda Unit 5 and other new Units
to be commissioned during the second Control Period, MSPGCL in its MYT Business
Plan Petition submitted that it will make efforts to adhere to the normative parameters
as per the MERC MYT Regulations, 2011 subject to influence from the external
factors.
Commission’s Ruling
The Commission has taken note of MSPGCL’s submission. The Commission for the
purpose of approval of Business Plan has approved the SFO Consumption of 1
ml/kWh for Khaperkheda Unit 5 and other new Units to be commissioned during the
second Control Period as specified under MERC MYT Regulations.
The summary of SFO Consumption of Coal based Generating Stations for the second
Control Period approved by the Commission is shown in the table below.
Table 4-22 Summary of Secondary Oil Consumption of Coal based Generating
Stations for second Control Period approved by the Commission
(ml/kWh)
S.
No. Station/Unit
FY 2013-14 FY 2014-15 FY 2015-16
MSPGCL Approved MSPGCL Approved MSPGCL Approved
1 Bhusawal TPS 3.50 2.00 3.50 2.00 2.50 2.00
2 Chandrapur TPS 2.00 2.00 2.00 2.00 2.00 2.00
3 Khaperkheda TPS 2.00 2.00 2.00 2.00 2.00 2.00
4 Koradi TPS 3.88 2.81 4.10 2.81 3.77 2.81
5 Nasik TPS 3.83 3.00 3.33 3.00 3.33 3.00
6 Parli TPS 3.00 2.00 2.50 2.00 2.00 2.00
7 Paras TPS Unit 3 3.11 1.00 3.06 1.00 2.81 1.00
8 Paras TPS Unit 4 3.28 1.00 3.03 1.00 2.53 1.00
9 Parli TPS Unit 6 4.00 1.00 4.00 1.00 4.00 1.00
10 Parli TPS Unit 7 4.00 1.00 4.00 1.00 4.00 1.00
11 Khaperkheda TPS
Unit 5 1.00 1.00 1.00 1.00 1.00 1.00
12 Bhusawal Unit 4 1.00 1.00 1.00 1.00 1.00 1.00
13 Bhusawal Unit 5 1.00 1.00 1.00 1.00 1.00 1.00
14 Koradi Unit 8 1.00 1.00 1.00 1.00 1.00 1.00
15 Koradi Unit 9 - - 1.00 1.00 1.00 1.00
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S.
No. Station/Unit
FY 2013-14 FY 2014-15 FY 2015-16
MSPGCL Approved MSPGCL Approved MSPGCL Approved
16 Koradi Unit 10 - - 1.00 1.00 1.00 1.00
17 Chandrapur Unit 8 1.00 1.00 1.00 1.00 1.00 1.00
18 Chandrapur Unit 9 1.00 1.00 1.00 1.00 1.00 1.00
19 Parli Replacement
Unit 8 1.00 1.00 1.00 1.00 1.00 1.00
4.2.6 Transit and Handling Losses
Regulation 44.6 of MERC MYT Regulations specifies the Transit and Handling
Losses for Coal based Generating Stations as a percentage of quantity of coal for both
Pit head Generating Stations and Non-pit head Generating Stations. The aforesaid
Regulation is reproduced below for reference.
“44.6 Transit and handling Losses
Transit and handling losses for coal based Generating Stations, as a
percentage of quantity of coal dispatched by the coal supply company during
the month shall be as given below:
(a) Pit head Generating Stations - 0.2%
(b) Non-pit head Generating Stations - 0.8%
The above norms shall be applicable for all types of coal, i.e., domestic coal,
washed coal and imported coal:
Provided that for procurement of coal on delivery basis, no transit and
handling loss shall be allowed.”
MSPGCL, in the MYT Business Plan Petition for the second Control Period,
submitted that the Transit and Fuel Handling Losses may be considered at normative
level of 0.8% for Coal based Generating Stations. MSPGCL submitted that in case of
any deviation in the transit losses, it would apprise the Commission regarding the
reasons for the same. MSPGCL requested the Commission to apply prudence to the
submission of MSPGCL during the truing-up exercise and allow such transit losses as
deemed appropriate.
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Commission’s Ruling
In view of the submissions made by MSPGCL regarding the Transit and Handling
Losses of Coal based Generating Stations for the second Control Period, the
Commission has approved the Transit and Handling Losses of Coal based Generating
Stations of MSPGCL for the second Control Period at 0.8% as specified in MERC
MYT Regulations.
4.2.7 Design Energy
Regulation 50 of MERC MYT Regulations specifies the methodology for recovery of
fixed charges of Hydro Generating Stations by allowing recovery of the Annual Fixed
Costs to the extent of 50% based on the availability of the hydro station, while the
balance is allowed to be recovered through the Energy Charges. For the determination
of Energy Charges, it is imperative to determine the Design Energy of Hydro
Generating Stations.
The Commission asked MSPGCL to submit the Design Energy Computations along
with the water inflow/discharge data for the last 20 years for its Hydro Generating
Stations in accordance with the provisions of MERC MYT Regulations. MSPGCL, in
its reply, submitted the Design Energy as per the DPR for its hydro generating
Stations with installed capacity of more than 25 MW.
MSPGCL further submitted that as per the definition, Design Energy is the quantum
of energy that can be generated in a 90 per cent dependable year with 95 per cent
installed capacity of the Generating Station. MSPGCL submitted that however, as per
the document received from GoMWRD, the Design Energy has been considered at
90% dependable year only in the case of Power projects, and in case of
irrigation/drinking water projects, the Design Energy envisaged in DPR is based on
70% dependable year.
MSPGCL also submitted the information regarding the Inflow/discharge data along
with the gross water rate for the purely hydro power projects for last 20 years.
MSPGCL further submitted that the Design Energy based on this data may differ
from the Design Energy envisaged in the DPR for these stations.
Further, in the context of the NAPAF for the Hydro Generating Stations, citing
various reasons as discussed earlier, MSPGCL submitted that the recovery
mechanism for 50% of AFC based on Design Energy may not be feasible for its hydro
stations. MSPGCL submitted that it is important to appreciate that MSPGCL is
merely the operator of these hydro assets that are owned by the GoMWRD. Further,
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 92 of 168
the water input is also controlled by the GoMWRD. MSPGCL submitted that on its
part, MSPGCL ensures that the machines are available to the extent of normative
parameters. Therefore, in no case should MSPGCL be penalized under such
regulatory mechanisms, which are beyond the control of the Utility.
The Design Energy as submitted by MSPGCL for the Hydro projects with installed
capacity more than 25 MW as envisaged in the concerned project DPR is as shown in
the Table below:
Table 4-23 Design Energy of Hydro Generating Stations with installed capacity more
than 25 MW for second Control Period as submitted by MSPGCL
(MU)
S.
No. Station/Unit
MSPGCL (Submission in
revised Petition)
1 Koyna I, II 788.00
2 Koyna III 550.00
3 Koyna IV 1,730.00
4 K.D.P.H. 90.00
5 Vaitarna 144.00
6 Bhira T.R. 70.00
7 Tillari 131.00
Total Hydro 3,503.00
Commission’s Ruling
As discussed earlier, the hydro generating stations with capacity lower than 25 MW
are defined as small/mini/micro hydro stations as per the MERC (Terms and
Conditions for determination of Renewable Energy Tariff) Regulations, 2010. Hence,
the tariff determination process in accordance with Regulation 50 of MERC MYT
Regulations will not apply for such plants and therefore, a considerate view needs to
be taken for the same.
The Commission has therefore, not approved the Design Energy for the hydro
generating stations with capacity less than or equal to 25 MW in this Order, and the
recovery of the AFC for such stations shall be considered as per the current
mechanism wherein the fixed charges are recovered over a twelve month period in
equal instalments.
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As regards the hydro generating stations with capacity higher than 25 MW, as stated
earlier, the Commission is of the view that the recovery mechanism for such hydro
generating stations should be in accordance with the Regulation 50 of MERC MYT
Regulations. However, for power projects catering to drinking and irrigation purposes
i.e., Koyna Dam Foot HPS (36 MW) and Vaitarna HPS (60 MW), the
Commission shall examine the actual data with regards to water available for
generation purposes subject to submission of documentary evidence by MSPGCL
with regards to curtailment of water supply by GoMWRD
MSPGCL submitted the Design Energy for its Hydro Generating Stations as per the
Project DPR as submitted below:
Table 4-24: Design Energy for Hydro Generating Stations as submitted by MSPGCL
Particular Unit Tillari Vaitarna Bhira
Koyna
Stage I
& II
Koyna
Stage
III
Koyna
Stage IV KDPH
MSPGCL's
submission of
Design Energy
MU 131.00 144.00 70.00 788.00 550.00 1730.00 90.00
Since, the Design Energy submitted by MSPGCL is as per the Project DPR, the
Commission has approved the Design Energy for the Hydro Generating Stations of
capacity higher than 25 MW as submitted by MSPGCL. However, the Commission
shall look into the Design Energy in detail in the MYT Petition for the second Control
Period.
Table 4-25: Design Energy for the Hydro Generating Stations with installed capacity
higher than 25 MW as approved by the Commission for the second Control Period
S. No. Station/Unit Approved
1 Koyna I, II 788.00
2 Koyna III 550.00
3 Koyna IV 1,730.00
4 K.D.P.H. 90.00
5 Vaitarna 144.00
6 Bhira T.R. 70.00
7 Tillari 131.00
Total Hydro 3,503.00
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4.3 FUEL PROCUREMENT PLAN FOR THERMAL GENERATING
STATIONS
MSPGCL, in the MYT Business Plan Petition, submitted that the thermal generating
capacity comprises of 7 Coal based Generating Stations and 1 Gas based Generating
Station. MSPGCL submitted that for FY 2012-13, the requirement of domestic coal
and imported coal is envisaged at around 43.31 MMT and 7.032 MMT, respectively,
to perform at normative parameters. MSPGCL submitted that Fuel Supply
Agreements (FSAs) with the Coal Companies have been signed based on the
requirement of domestic coal, and the quantity of coal that would be supplied, along
with other commercial terms and conditions are covered in the FSA.
MSPGCL further submitted that the New Coal Distribution Policy (NCDP) 2007 had
introduced the concept of Letter of Assurance (LoA) and it provided for assured
supply of coal to Developers upon meeting certain milestones within the stipulated
time. MSPGCL submitted that on achieving the milestones under the LoA, it will be
mandatory for the LoA holders to enter into FSAs with the Coal Companies for long-
term supply of coal.
MSPGCL submitted that notwithstanding the Policy of the Government of India and
even after the fulfilment of the specified milestones provided under the respective
LoA for Parli Unit 7 (250 MW), Paras Unit 4 (250 MW) and Khaperkheda Unit 5
(500 MW), till date only the MOU has been signed with MCL. MSPGCL submitted
that the said MOU is a one page document ensuring an annual quantity of coal to be
supplied without making any provision with regard to monthly quantity, quality,
mode of procurement, joint sampling, etc., as provided under FSAs. MSPGCL further
submitted that for the aforesaid Units, no FSA has been signed so far. As regards
Bhusawal Unit 4 and Unit 5, MSPGCL submitted that not even MOUs have been
signed with the subsidiaries of CIL.
MSPGCL submitted that they had preferred an appeal before the Competition
Commission in this regard against the abuse of dominant position by the subsidiaries
of CIL so that FSAs could be signed for the remaining Units and the terms of FSAs
could be enforced on the Coal Companies.
MSPGCL submitted that the coal requirement for future projects would be met from
the Machhakata-Mahanadi coal blocks in Angul District, Talcher Coal Field, Orissa,
Chenipada-I and Chenipada-II coal blocks and Bhivkund coal block.
Further, the Commission asked MSPGCL to submit the detailed fuel procurement
plan for the second Control Period in the prescribed format. MSPGCL, in its reply
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
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and the revised Petition, submitted the fuel procurement plan for its thermal
Generating Stations, as shown in the Table below:
Table 4-26 Domestic Coal procurement Plan for the second Control Period as
submitted by MSPGCL
S.
No. Station/Unit Particulars FY 2013-14 FY 2014-15 FY 2015-16
1 Bhusawal
TPS
Quantity Required (MT) 17,13,600 17,13,600 17,13,600
Tied up Quantity (MT) 28,00,000 28,00,000 28,00,000
Source WCL WCL WCL
2 Chandrapur
TPS
Quantity Required (MT) 1,05,70,000 1,05,70,000 1,05,70,000
Tied up Quantity (MT) 1,28,00,000 1,28,00,000 1,28,00,000
Source WCL, SECL,
MCL
WCL, SECL,
MCL
WCL, SECL,
MCL
3 Khaperkheda
TPS
Quantity Required (MT) 41,20,000 41,20,000 41,20,000
Tied up Quantity (MT) 50,00,000 50,00,000 50,00,000
Source WCL, SECL,
MCL
WCL, SECL,
MCL
WCL, SECL,
MCL
4 Koradi TPS
Quantity Required (MT) 36,76,451 36,76,451 36,76,451
Tied up Quantity (MT) 53,00,000 53,00,000 53,00,000
Source WCL, SECL,
MCL
WCL, SECL,
MCL
WCL, SECL,
MCL
5 Nasik TPS
Quantity Required (MT) 37,60,000 37,60,000 37,60,000
Tied up Quantity (MT) 47,00,000 47,00,000 47,00,000
Source WCL, SECL WCL, SECL WCL, SECL
6 Parli TPS
Quantity Required (MT) 22,92,842 22,92,842 22,92,842
Tied up Quantity (MT) 30,40,000 30,40,000 30,40,000
Source WCL, MCL,
SCCL
WCL, MCL,
SCCL
WCL, MCL,
SCCL
7 Parli TPS
Units 6 & 7
Quantity Required (MT) 19,60,984 19,60,984 19,60,984
Tied up Quantity (MT) 26,00,000 26,00,000 26,00,000
Source WCL, MCL,
SCCL
WCL, MCL,
SCCL
WCL, MCL,
SCCL
8 Paras TPS
Units 3 & 4
Quantity Required (MT) 24,03,200 24,03,200 24,03,200
Tied up Quantity (MT) 30,04,000 30,04,000 30,04,000
Source WCL, MCL WCL, MCL WCL, MCL
9 Khaperkheda
TPS Unit 5
Quantity Required (MT) 18,49,600 18,49,600 18,49,600
Tied up Quantity (MT) 23,12,000 23,12,000 23,12,000
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S.
No. Station/Unit Particulars FY 2013-14 FY 2014-15 FY 2015-16
Source MCL MCL MCL
10
Bhusawal
TPS Units 4
& 5
Quantity Required (MT) 36,99,520 36,99,200 36,99,200
Tied up Quantity (MT) 46,24,400 46,24,000 46,24,000
Source MCL MCL MCL
11 Chandrapur
TPS Unit 8
Quantity Required (MT) 1,60,000 8,00,000 12,00,000
Tied up Quantity (MT) 2,00,000 10,00,000 15,00,000
Source Machhakata Machhakata Machhakata
12 Chandrapur
TPS Unit 9
Quantity Required (MT) 80,000 8,00,000 12,00,000
Tied up Quantity (MT) 1,00,000 10,00,000 15,00,000
Source Machhakata Machhakata Machhakata
13 Parli TPS
Unit 8
Quantity Required (MT) 6,95,000 8,00,000 8,00,000
Tied up Quantity (MT) 10,00,000 10,00,000 10,00,000
Source WCL Machhakata Machhakata
14 Koradi TPS
Unit 8
Quantity Required (MT) 7,20,000 8,00,000 16,00,000
Tied up Quantity (MT) 9,00,000 10,00,000 20,00,000
Source Machhakata Machhakata Machhakata
15 Koradi TPS
Unit 9
Quantity Required (MT) - 8,00,000 16,00,000
Tied up Quantity (MT) - 10,00,000 20,00,000
Source - Machhakata Machhakata
16 Koradi TPS
Unit 10
Quantity Required (MT) - 1,60,000 11,20,000
Tied up Quantity (MT) - 2,00,000 14,00,000
Source - Machhakata Machhakata
Machhakata-Mahanadi coal blocks
MSPGCL submitted that Machhakata-Mahanadi coal blocks have been allotted jointly
in favour of MSPGCL and Gujarat State Electricity Corporation Limited (GSECL)
under Government Dispensation Route vide letter no. 13016/13/2005-CA-I dated 06
February 2006. MSPGCL submitted that a Joint Venture Company by the name
Mahaguj Collieries Limited has been established by MSPGCL and GSECL with share
ratio of 60:40. MSPGCL submitted the brief description of the captive coal mines as
follows:
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Phase I (Machhakata Coal Block)
MSPGCL submitted that the annual coal production from Machhakata Coal Block is
expected to be 50 MTPA. MSPGCL submitted that the Mine Developer and Operator
contract had been awarded to M/s. Adani Enterprises Limited through International
Competitive Bidding (ICB) route. MSPGCL submitted that the coal from Machhakata
Coal Block would be supplied to their seven generation Units. MSPGCL submitted
that the delivery of coal could be expected to commence from October 2013
depending upon the land acquisition and other related issues.
Phase II (Mahanadi Coal Block)
MSPGCL submitted that the annual target coal production from Mahanadi Coal Block
is expected to be 30 MTPA. MSPGCL submitted that the tender for selection of Mine
Developer and Operator is in process and the delivery of coal could be expected from
February 2017. MSPGCL submitted that the coal from Mahanadi coal block would
be supplied to their seven generation Units.
Chendipada-I and Chendipada-II Coal Blocks
MSPGCL submitted that the coal block was jointly allotted to UPRVUNL, CMDC
and MSPGCL on 25 July, 2007. MSPGCL submitted that the expected production of
40 MTPA would be shared among UPRVUNL, CMDC and MSPGCL in the ratio of
50%, 31.47% and 18.53%, respectively. MSPGCL submitted that M/s. Adani
Enterprises Limited had been appointed the MDO through ICB route. MSPGCL
submitted that the coal production is scheduled from February, 2015 and it would
supply coal to 2 x 660 plants at Dhondaicha, District Dhule.
Bhivkund Coal Block
MSPGCL submitted that the Bhivkund coal block was allotted to MSPGCL by MoC
on 17 July, 2008. MSPGCL submitted that the bids had been invited by
MAHADISCOM for MDO and to put up the Power Plant based on this Coal.
MSPGCL submitted that Order is yet to be placed by MAHADISCOM.
MSPGCL also submitted the details of Imported Coal requirement during the second
Control Period, as shown in the Table below:
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Table 4-27 Requirement of Imported Coal for second Control Period as submitted by
MSPGCL
(MT)
S.
No. Station/Unit FY 2013-14 FY 2014-15 FY 2015-16
1 Bhusawal TPS 5,61,286 5,50,619 5,48,758
2 Chandrapur TPS 22,89,561 22,72,742 22,83,955
3 Khaperkheda TPS 9,39,382 9,40,452 9,40,452
6 Parli TPS 10,10,027 10,09,116 10,17,309
7 Parli TPS Units 6 & 7 5,39,238 5,39,238 5,39,238
9 Khaperkheda TPS Unit 5 7,17,437 7,17,437 7,17,437
10 Bhusawal TPS Units 4 & 5 17,11,052 17,11,224 17,11,224
11 Chandrapur TPS Unit 8 5,00,907 12,85,253 10,00,717
12 Chandrapur TPS Unit 9 1,00,583 12,85,253 10,00,717
13 Parli TPS Unit 8 - 3,67,686 3,67,686
14 Koradi TPS Unit 8 1,58,440 18,78,637 13,09,565
15 Koradi TPS Unit 9 - 13,28,741 13,09,565
16 Koradi TPS Unit 10 - 5,56,791 16,51,008
As regards the source of procurement of the imported coal during the second Control
Period, MSPGCL submitted that the same shall be procured by inviting the annual
contracts during the second Control Period.
MSPGCL also submitted the Gas procurement plan for the second Control Period as
shown in the Table below:
Table 4-28 Procurement of Gas for second Control Period as submitted by MSPGCL
S.
No. Station Particulars
FY
2013-14
FY
2014-15
FY
2015-16
1 Uran GTPS
APM Gas
Quantity Required
(mmscmd) 840 705 725
Tied up Quantity
(mmscmd) 1278 1278 963
Source GAIL GAIL GAIL
RIL Gas
Quantity Required
(mmscmd) 438 363 373
Tied up Quantity
(mmscmd) 438 24
Source RIL RIL
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MSPGCL further submitted that APM gas capacity of 3.5 mmscmd/day has been
contracted till 31 December, 2015 and RIL gas capacity of 1.2 mmscmd/day has been
contracted till 20 April, 2014. MSPGCL submitted that the gas requirement has been
projected for 90% availability, however, the actual gas availability is only 60% to
70%.
In view of the above, the Commission asked MSPGCL to submit the steps being
taken up by it to renew such contracts to ensure adequate Gas availability for Uran
GTPS during the second Control Period. The Commission further asked MSPGCL to
submit measures that it would adopt to procure the shortfall in availability of required
quantity of Gas.
MSPGCL, in its reply, submitted that it is in the process of procuring pooled price
RLNG from Govt. Companies like BPCL/ IOCL/ GAIL. MSPGCL submitted that it
will also seek to procure RLNG through spot market as an alternate option. MSPGCL
further submitted that considering the current market trends, Spot RLNG is available
at a price of $18 per MMBTU. This would lead to a variable cost of around Rs.
6.5/kWh to Rs. 7/kWh. MSPGCL submitted that considering the higher energy
charges, it requests the Commission to give an appropriate direction and MSPGCL
would procure Spot RLNG accordingly.
The Commission has considered the submissions of MSPGCL in this regard. Fuel,
being the most important input for power generation, the Commission is of the view
that focused attention should be given to the same so that the generation is not
hampered due to unavailability of fuel during the second Control Period. MSPGCL
should take all the necessary actions on priority basis to tie up the remaining un-tied
fuel capacity for the second Control Period. Further, keeping consumer’s interest in
mind, the Commission is of the view that MSPGCL should make concerted efforts to
procure pooled price RLNG from Govt. Companies like BPCL/ IOCL/ GAIL or other
cheaper sources of Gas supply.
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4.4 CAPITAL EXPENDITURE PLAN
4.4.1 Capital Investment Plans for upcoming Units (Project Capex)
MSPGCL submitted that capacity expansion schemes of 1000 MW had been planned
to be operational in FY 2012-13 and 3230 MW had been planned to be operational
during the second Control Period. MSPGCL submitted that the total fund requirement
for the proposed capacity expansion schemes of 4230 MW is estimated to be around
Rs. 25,704.12 crore. The investment plan of the capacity expansion schemes
envisaged to be operational in FY 2012-13 and during the second Control Period as
submitted by MSPGCL is shown in the Table below.
Table 4-29 Capital Expenditure for Capacity Expansion Schemes
S.
No. Unit(s)
Capacity
(MW)
Capital Expenditure (Rs. crore) Total
(Rs. Crore) Till FY
2011-12
FY
2012-13
FY
2013-14
FY
2014-15
FY
2015-16
1
Bhusawal
Unit 4 and
Unit 5
1,000 5,534.81 645.05 285.02 - - 6,464.88
2
Koradi Unit
8, Unit 9 and
Unit 10
1,980 1,977.87 2,296.26 4,500.52 2,750.31 355.04 11,880.00
3
Chandrapur
Unit 8 and
Unit 9
1,000 2,726.99 1,048.00 1,250.00 475.00 - 5,500.00
4 Parli Unit 8 250 978.61 437.58 328.19 114.87 - 1,859.24
Total 4,230 25,704.12
4.4.2 Capital Investment Plans for Large Scale Renovation & Modernisation
Programmes (R&M Capex)
MSPGCL submitted that it had identified certain units of the power stations for
undertaking large scale Renovation and Modernisation and Life Extension
programmes. MSPGCL submitted that for some Units like Koradi Unit 6 and Nasik
Unit 3, the study of finalisation of scope of Renovation and Modernisation has been
undertaken and the World Bank has agreed to fund the envisaged capital expenditure
and for other identified Units, it would arrange funds for undertaking the study for
determination of feasibility of undertaking Renovation and Modernisation together
with finalisation of scope of such initiative. MSPGCL submitted that tenders would
be floated and EPC contractors will be appointed for actual implementation of the
programme.
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 101 of 168
MSPGCL submitted that in case of other stations like Chandrapur, Parli and
Bhusawal, the feasibility report of Consultants for the Renovation and Modernisation
schemes are yet to be finalized. MSPGCL submitted that the cost estimates and the
perceived benefit in performance parameters due to implementation of Renovation
and Modernisation scheme had been estimated based on the assessment done in
Koradi and Nasik TPS.
The Capital Investment Plan for the Renovation and Modernisation Schemes as
submitted by MSPGCL are shown in the Tables below:
Table 4-30 Capital Expenditure and Capitalisation of R&M Schemes for Koradi TPS
for second Control Period as submitted by MSPGCL
Koradi TPS
Particulars
Capital Expenditure
(Rs. crore)
Capitalisation
(Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already approved
by the Commission 190.87 143.15 4.82 - - 486.00
DPR Schemes to be submitted to
the Commission 102.00 700.00 100.00 - - -
Total 292.87 843.15 104.82 - - 486.00
Table 4-31 Capital Expenditure and Capitalisation of R&M Schemes for Bhusawal
TPS for second Control Period as submitted by MSPGCL
Bhusawal TPS
Particulars
Capital Expenditure
(Rs. crore)
Capitalisation
(Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already approved
by the Commission - - - - - -
DPR Schemes to be submitted to
the Commission 100.00 200.00 150.00 - - 450.00
Total 100.00 200.00 150.00 - - 450.00
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 102 of 168
Table 4-32 Capital Expenditure and Capitalisation of R&M Schemes for Nasik TPS
for second Control Period as submitted by MSPGCL
Nasik TPS
Particulars
Capital Expenditure
(Rs. crore)
Capitalisation
(Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already approved
by the Commission 121.00 48.00 192.31 - - 481.46
DPR Schemes to be submitted to
the Commission 81.00 400.00 450.00 - - -
Total 202.00 448.00 642.31 - - 481.46
Table 4-33 Capital Expenditure and Capitalisation of R&M Schemes for Parli TPS for
second Control Period as submitted by MSPGCL
Parli TPS
Particulars
Capital Expenditure
(Rs. crore)
Capitalisation
(Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already approved
by the Commission - - - - - -
DPR Schemes to be submitted to
the Commission - 50.00 350.00 - - -
Total - 50.00 350.00 - -
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 103 of 168
Table 4-34 Capital Expenditure and Capitalisation of R&M Schemes for Chandrapur
TPS for second Control Period as submitted by MSPGCL
Chandrapur TPS
Particulars
Capital Expenditure
(Rs. Crore)
Capitalisation
(Rs. Crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already approved
by the Commission - - - - - -
DPR Schemes to be submitted to
the Commission 100.00 350.00 400.00 - - 500.00
Total 100.00 350.00 400.00 - - 500.00
The summary of the total Capital Expenditure and Capitalisation of Renovation and
Modernisation Schemes for the second Control Period as submitted by MSPGCL is
shown in the Table below:
Table 4-35 Summary of Capital Expenditure and Capitalisation of R&M Schemes for
second Control Period as submitted by MSPGCL
Particulars
Capital Expenditure
(Rs. crore)
Capitalisation
(Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already
approved by the Commission 311.87 191.15 197.13 - - 967.46
DPR Schemes submitted but
yet to be approved by the
Commission
383.00 1,700.00 1,450.00 - - 950.00
Total 694.87 1,891.15 1,647.13 - - 1,917.46
4.4.3 Capital Investment Plans for small Capex (Other Capex)
MSPGCL submitted that CPRI has given recommendations for all existing coal based
stations for improving the levels of all the key performance parameters. The summary
of suggestions given by CPRI as submitted by MSPGCL is as follows:
Process re-engineering measures to be adopted by MSPGCL in the immediate
and near future with focus on processes and procedures.
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 104 of 168
Important parameters, which affect the input costs like coal, oil, water need to
be measured and not estimated.
Both receipt and consumption need to be separately monitored and reconciled
through computerized system in respect of coal, fuel oil, water flows through
the plant.
Elimination of human intervention in the measurement and recording systems
of coal, fuel oil and water resources, which affect the station input costs.
Implementation of a fuel monitoring system.
Coal losses to be separately accounted for as weight loss and not be included
in the estimation of heat rate.
Responsibility and accountability for coal quantity and GCV to be divided
between Fuel cell, Coal Handling Plant and Operations.
Avoiding procurement of standalone measuring equipment that cannot be
connected to a central server for database collection purposes.
MSPGCL submitted that the CPRI recommendations have been first clustered into 14
function-wise projects for ease of monitoring and initialisation. MSPGCL submitted
the overall function-wise classification of recommendations as under:
Measures to monitor coal consumption
Measures to monitor water consumption
Monitoring of Coal Quality
Measures to monitor Oil consumption
Improvement in monitoring of Heat Rate and Auxiliary Consumption
Improvement in Condition Monitoring System
Measures to improve purchase and Procurement procedure
Measures to improve Maintenance Procedures
Improvement in ABT and GCR
Improvement in Operation Procedures
Improvement in HR Training and Quality Circle
Upgradation and Technology interventions in the System
Improvement of Heat Rate and Auxiliary Consumption
Improvement in Work Place area.
MSPGCL submitted that all the capital expenditure proposed during the second
Control Period is not aimed to improve the performance of the stations, and some of
the expenditure is also proposed for improvement in process measurements, better
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 105 of 168
decision making, operational sustenance and statutory compliances. MSPGCL
submitted that apart from the CPRI recommendations for Thermal projects, it has also
identified certain other schemes for thermal and Hydel power stations for improving
their performance over the short-term, long-term and medium-term.
MSPGCL submitted that it will submit the DPR for the schemes for in-principle
approval of the Commission. MSPGCL further submitted that the capitalisation
schedule is based on the expected timeline for approval of schemes, lead time for
supply of equipment and implementation of the schemes, which is subject to change
on a real time basis. The capital investment plan for the small Capex (Other Capex)
for Thermal and Hydro Generating Stations as submitted by MSPGCL are shown in
the Tables below.
Table 4-36 Capital Expenditure and Capitalisation of Other Capex Schemes for
Bhusawal TPS for second Control Period as submitted by MSPGCL
Bhusawal TPS
Particulars
Capital Expenditure
(Rs. crore)
Capitalisation
(Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already approved by
the Commission 21.55 12.57 0.00 21.55 12.57 0.00
DPR Schemes submitted but yet to
be approved by the Commission 19.91 9.79 3.74 19.91 9.79 3.74
DPR Schemes to be submitted for
Commission’s approval 53.18 72.31 19.68 53.18 72.31 19.68
Non-DPR Schemes 0.00 0.00 0.00 0.00 0.00 0.00
Total 94.64 94.67 23.42 94.64 94.67 23.42
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 106 of 168
Table 4-37 Capital Expenditure and Capitalisation of Other Capex Schemes for
Chandrapur TPS for second Control Period as submitted by MSPGCL
Particulars
Capital Expenditure
(Rs. crore)
Capitalisation
(Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already
approved by the
Commission
209.77 104.85 102.81 180.14 173.85 102.81
DPR Schemes submitted
but yet to be approved by
the Commission
43.28 0.00 0.00 50.16 0.00 0.00
DPR Schemes to be
submitted for
Commission’s approval
426.98 404.76 292.99 432.35 508.25 314.59
Non-DPR Schemes 42.30 32.08 49.83 61.23 32.33 49.83
Total 722.34 541.69 445.64 723.89 714.42 467.24
Table 4-38 Capital Expenditure and Capitalisation of Other Capex Schemes for
Khaperkheda TPS for second Control Period as submitted by MSPGCL
Khaperkheda TPS
Particulars
Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already
approved by the
Commission
8.17 0.00 0.00 39.69 0.00 0.00
DPR Schemes submitted but
yet to be approved by the
Commission
0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes to be
submitted for Commission’s
approval
133.11 50.89 83.93 128.07 51.69 52.88
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 107 of 168
Khaperkheda TPS
Particulars
Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
Non-DPR Schemes 5.95 2.60 1.75 9.44 2.60 1.75
Total 147.23 53.49 85.68 177.20 54.29 54.63
Table 4-39 Capital Expenditure and Capitalisation of Other Capex Schemes for
Koradi TPS for second Control Period as submitted by MSPGCL
Koradi TPS
Particulars
Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already
approved by the Commission 0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes submitted but
yet to be approved by the
Commission
16.44 6.19 3.00 16.44 6.19 3.00
DPR Schemes to be
submitted for Commission’s
approval
58.91 41.80 58.94 58.91 41.80 58.94
Non-DPR Schemes 14.64 3.38 5.80 14.64 3.38 5.80
Total 89.99 51.37 67.74 89.99 51.37 67.74
Table 4-40 Capital Expenditure and Capitalisation of Other Capex Schemes for Nasik
TPS for second Control Period as submitted by MSPGCL
Nasik TPS
Particulars
Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already
approved by the
Commission
58.70 15.39 13.78 55.28 19.69 17.88
DPR Schemes submitted
but yet to be approved by 0.00 0.00 0.00 0.00 0.00 0.00
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 108 of 168
Nasik TPS
Particulars
Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
the Commission
DPR Schemes to be
submitted for
Commission’s approval
127.19 91.79 25.40 151.28 94.16 26.05
Non-DPR Schemes 1.05 0.00 0.00 1.05 0.00 0.00
Total 186.94 107.18 39.18 207.60 113.85 43.93
Table 4-41 Capital Expenditure and Capitalisation of Other Capex Schemes for Parli
TPS for second Control Period as submitted by MSPGCL
Parli TPS
Particulars
Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already
approved by the Commission 25.60 22.22 14.47 25.60 22.22 14.47
DPR Schemes submitted but
yet to be approved by the
Commission
0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes to be
submitted for Commission’s
approval
101.29 153.92 39.72 101.29 153.92 39.72
Non-DPR Schemes 5.16 3.05 3.19 5.16 3.05 3.19
Total 132.06 179.19 57.39 132.06 179.19 57.39
Table 4-42 Capital Expenditure and Capitalisation of Other Capex Schemes for Uran
GTPS for second Control Period as submitted by MSPGCL
Uran GTPS
Particulars
Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already
approved by the Commission 0.00 0.00 0.00 0.00 0.00 0.00
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 109 of 168
Uran GTPS
Particulars
Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes submitted but
yet to be approved by the
Commission
0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes to be
submitted for Commission’s
approval
355.51 826.34 29.64 44.74 1195.79 244.60
Non-DPR Schemes 0.00 0.00 0.00 0.00 0.00 0.00
Total 355.51 826.34 29.64 44.74 1195.79 244.60
Table 4-43 Capital Expenditure and Capitalisation of Other Capex Schemes for Paras
Unit 3 for second Control Period as submitted by MSPGCL
Paras Unit 3
Particulars
Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already
approved by the Commission 0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes submitted but
yet to be approved by the
Commission
0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes to be
submitted for Commission’s
approval
17.69 7.25 1.15 20.32 7.75 1.15
Non-DPR Schemes 0.00 0.00 0.00 0.00 0.00 0.00
Total 17.69 7.25 1.15 20.32 7.75 1.15
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 110 of 168
Table 4-44 Capital Expenditure and Capitalisation of Other Capex Schemes for Paras
Unit 4 for second Control Period as submitted by MSPGCL
Paras Unit 4
Particulars
Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already
approved by the Commission 0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes submitted but
yet to be approved by the
Commission
0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes to be
submitted for Commission’s
approval
10.98 1.09 0.48 10.98 1.09 0.48
Non-DPR Schemes 0.00 0.00 0.00 0.00 0.00 0.00
Total 10.98 1.09 0.48 10.98 1.09 0.48
Table 4-45 Capital Expenditure and Capitalisation of Other Capex Schemes for Parli
Unit 6 for second Control Period as submitted by MSPGCL
Parli Unit 6
Particulars
Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already
approved by the Commission 0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes submitted but
yet to be approved by the
Commission
0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes to be
submitted for Commission’s
approval
2.33 80.67 108.85 7.80 77.70 106.35
Non-DPR Schemes 0.00 0.00 0.00 0.00 0.00 0.00
Total 2.33 80.67 108.85 7.80 77.70 106.35
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 111 of 168
Table 4-46 Capital Expenditure and Capitalisation of Other Capex Schemes for Parli
Unit 7 for second Control Period as submitted by MSPGCL
Parli Unit 7
Particulars
Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already
approved by the Commission 0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes submitted but
yet to be approved by the
Commission
0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes to be
submitted for Commission’s
approval
0.00 25.62 16.40 0.00 25.62 16.40
Non-DPR Schemes 0.00 0.00 0.00 0.00 0.00 0.00
Total 0.00 25.62 16.40 0.00 25.62 16.40
Table 4-47 Capital Expenditure and Capitalisation of Other Capex Schemes for
Koyna Hydro Generating Station for second Control Period as submitted by
MSPGCL
Koyna Hydro
Particulars
Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)
FY
2013-14
FY 2014-
15
FY 2015-
16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already
approved by the Commission 0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes submitted but
yet to be approved by the
Commission
0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes to be
submitted for Commission’s
approval
18.95 11.96 20.29 18.95 11.96 20.29
Non-DPR Schemes 1.79 1.48 2.05 1.79 1.48 2.05
Total 20.74 13.44 22.34 20.74 13.44 22.34
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 112 of 168
Table 4-48 Capital Expenditure and Capitalisation of Other Capex Schemes for Nasik
Hydro Generating Station for second Control Period as submitted by MSPGCL
Nasik Hydro
Particulars
Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)
FY
2013-14
FY 2014-
15
FY 2015-
16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already
approved by the Commission 0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes submitted but
yet to be approved by the
Commission
0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes to be
submitted for Commission’s
approval
0.00 0.00 0.00 0.00 0.00 0.00
Non-DPR Schemes 2.85 1.95 2.02 2.85 1.95 2.02
Total 2.85 1.95 2.02 2.85 1.95 2.02
Table 4-49 Capital Expenditure and Capitalisation of Other Capex Schemes for Pune
Hydro Generating Station for second Control Period as submitted by MSPGCL
Pune Hydro
Particulars
Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)
FY
2013-14
FY 2014-
15
FY 2015-
16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already
approved by the Commission 0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes submitted but
yet to be approved by the
Commission
0.00 0.00 0.00 0.00 0.00 0.00
DPR Schemes to be
submitted for Commission’s
approval
0.00 0.00 0.00 0.00 0.00 0.00
Non-DPR Schemes 9.10 3.19 0.63 9.10 3.19 0.63
Other (specify details)
Total 9.10 3.19 0.63 9.10 3.19 0.63
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 113 of 168
Table 4-50 Summary of Capital Expenditure and Capitalisation of Other Capex for
existing and new Stations/Units for second Control Period as submitted by MSPGCL
Particulars
Capital Expenditure
(Rs. crore)
Capitalisation
(Rs. crore)
FY
2013-14
FY
2014-15
FY
2015-16
FY
2013-14
FY
2014-15
FY
2015-16
DPR Schemes already
approved by the Commission 323.80 155.03 131.06 322.27 228.33 135.16
DPR Schemes submitted but
yet to be approved by the
Commission
79.62 15.98 6.74 86.50 15.98 6.74
DPR Schemes to be
submitted for Commission’s
approval
1,306.12 1,768.39 697.47 1,028.16 2,242.03 901.13
Non-DPR Schemes 82.84 47.73 65.27 105.27 47.98 65.27
Total 1,792.39 1,987.13 900.55 1,542.20 2,534.31 1,108.31
Commission’s Ruling
As regards MSPGCL’s capital investment plan for the new capacity addition till the
end of the second Control Period, the Commission is of the view that the capital cost
for such plants cannot be approved though this Order and the same shall be approved
through separate Orders on Petitions for capital cost determination for each
Generating Unit separately. The Commission has therefore, in this Order, not
approved the Capital Cost of Khaperkheda Unit 5, Bhusawal Unit 4 and Unit 5,
Koradi Unit 8, Unit 9 and Unit 10, Chandrapur Unit 8 and Unit 9, and Parli Unit 8.
As regards the capital investment plan for the Renovation & Modernisation schemes
and other small capital expenditure, the Commission has verified the projected
Capital Investment Plan vis-a-vis the in-principle approved schemes and has
estimated capital cost for the purpose of MYT Business Plan projections. The
regulatory provisions under MERC MYT Regulations in relation to capital
expenditure have been considered for approval of the capital investment plan.
Accordingly, it is clarified that the detailed scrutiny, review and approval of the
capital cost subject to prudence check would be undertaken separately.
As regards the capitalisation of DPR schemes for the other capex submitted by
MSPGCL for FY 2013-14 to FY 2015-16, the Commission has considered only those
schemes, which have already been granted in-principle approval by the Commission.
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 114 of 168
As regard the capitalisation of the Renovation & Modernisation schemes for Koradi
and Nasik TPS, the DPR for these Renovation & Modernisation schemes have already
been approved by the Commission. However, in the meeting held on 15 January,
2013 with the internal team of the Commission at the Commission’s office submitted
that Renovation & Modernisation activities for Nasik TPS are yet to be kicked off and
are expected to start only after successful completion of Renovation & Modernisation
of Koradi Unit 6. MSPGCL submitted that the Renovation & Modernisation of Nasik
TPS is not expected to get completed during the second Control Period. Hence, the
Commission has approved the capitalisation on account of Renovation &
Modernisation activity of Koradi TPS, which is expected to get completed during the
second Control Period.
Further, the Commission’s rationale for approving the capitalisation for the second
Control Period from FY 2013-14 to FY 2015-16 in this Order is discussed below:
Regarding DPR schemes (above Rs. 10 crore each): 100% capitalization
approved for all DPR schemes for which in-principle approval is available.
Regarding Non DPR schemes (Schemes less than Rs. 10 Crore): Where there
are DPR schemes capitalized in the said financial year, upto 20% cost of
capitalized DPR schemes has been considered towards capitalization of Non
DPR schemes.
Where there has been no capitalization of any DPR scheme in the said
financial year, 50% cost of capitalized non-DPR scheme has been considered
by the Commission.
Accordingly, for the purpose of MYT Business Plan approval, the Commission has
approved the following year-wise capitalisation for small capex and the Renovation &
Modernisation schemes for the Generating Stations of MSPGCL for the period from
FY 2013-14 to FY 2015-16 as shown in the Tables below. MSPGCL is required to
complete the schemes as per the Plan, and submit the completion report with cost
benefit analysis before actual capitalisation in respective financial years.
Table 4-51: Capitalisation of Existing and New Units for small capex as approved by
the Commission for the second Control Period (Rs. crore)
Station/Unit Particulars FY 2013-14 FY 2014-15 FY 2015-16
Bhusawal
DPR 44.47 12.77 3.74
Non-DPR 8.89 2.55 0.75
Total 53.36 15.32 4.49
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Station/Unit Particulars FY 2013-14 FY 2014-15 FY 2015-16
Chandrapur
DPR 155.55 90.33 0.00
Non-DPR 31.11 18.07 52.80
Total 186.66 108.40 52.80
Parli
DPR 32.97 22.22 14.47
Non-DPR 6.59 4.44 2.89
Total 39.56 26.66 17.36
Khaperkheda
DPR 39.70 0.00 0.00
Non-DPR 7.94 17.60 10.27
Total 47.64 17.60 10.27
Nasik
DPR 37.16 10.15 5.02
Non-DPR 7.43 2.03 1.00
Total 44.59 12.18 6.02
Koradi
DPR 18.31 15.88 0.00
Non-DPR 3.66 3.18 8.87
Total 21.97 19.06 8.87
Uran
DPR 23.31 0.00 0.00
Non-DPR 4.66 12.64 8.30
Total 27.97 12.64 8.30
Hydro
DPR 0.00 0.00 0.00
Non-DPR 16.40 9.30 3.94
Total 16.40 9.30 3.94
Paras Unit 3
DPR 0.00 0.00 0.00
Non-DPR 8.85 3.63 0.57
Total 8.85 3.63 0.57
Paras Unit 4
DPR 0.00 0.00 0.00
Non-DPR 5.49 0.54 0.24
Total 5.49 0.54 0.24
Parli Unit 6
DPR 0.00 0.00 0.00
Non-DPR 3.90 9.85 18.17
Total 3.90 9.85 18.17
Parli Unit 7
DPR 0.00 0.00 0.00
Non-DPR 0.00 12.81 8.20
Total 0.00 12.81 8.20
Total
DPR 351.47 151.35 23.23
Non-DPR 104.93 96.64 116.01
Total 456.40 247.99 139.24
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Table 4-52: Capitalisation of Existing and New Units for R&M Scheme for Koradi as
approved by the Commission for the second Control Period (Rs. crore)
Station/Unit FY 2013-14 FY 2014-15 FY 2015-16
Koradi R&M Scheme 0.00 0.00 486.00
4.5 FINANCING PLAN
4.5.1 Financing Plan for Renovation & Modernisation Schemes
MSPGCL submitted the Financing Plan for Renovation & Modernisation Schemes in
its MYT Business Plan Petition. MSPGCL submitted that for the projects in which no
funding has been currently arranged from multilateral agencies, the funding is
proposed to be arranged from FIs/Banks in India with a debt equity ratio of 80: 20.
MSPGCL submitted that as the projects are yet to take off, it is envisaged that the
benefits of such programmes would most likely be made available in the third Control
Period.
MSPGCL also submitted the total debt and equity requirement for the Renovation &
Modernisation schemes during and beyond the second Control Period as shown in the
Table below.
Table 4-53 Debt and Equity requirement for R&M Schemes during and beyond the
second Control Period as submitted by MSPGCL
Station Equity
(Rs. crore)
Debt
(Rs. crore)
Nasik TPS 322.86 1290.60
Koradi TPS 330.00 1116.00
Bhusawal TPS 90.29 361.17
Parli TPS 120.00 480.00
Chandrapur TPS 200.00 800.00
Total 1063.15 4047.77
MSPGCL submitted that the loan has been tied up for Renovation & Modernisation of
Unit 3 of Nasik TPS from KFW, Germany and for the Renovation & Modernisation
Project for Koradi TPS (Indian coal fired generation rehabilitation project) for Unit 6,
loan has been tied up with IBRD at applicable LIBOR Rate with tenure of 24 years
and moratorium period of 6 years.
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4.5.2 Financing Plan for Small Capex Schemes
MSPGCL, in its MYT Business Plan, did not submit the detailed Financing Plan for
Small Capex schemes. The Commission asked MSPGCL to submit details of
initiatives being taken by MSPGCL to tie-up the funds for the capital expenditure
planned for the second Control Period. The Commission also asked MSPGCL to
submit the detailed Financing Plan for the second Control Period, clearly mentioning
the planned source-wise funding for each station/Unit to meet its debt requirements.
MSPGCL, in its reply, submitted that it is not prudent to tie up the entire loan
requirement for other capex for the second Control Period at this point of time as the
actual capital expenditure would change with the progress of time and also the interest
rates on these loans keep changing from year to year. MSPGCL submitted that
therefore it has considered normative loans for capitalization in the second Control
Period. MSPGCL further submitted that the normative loans have been assumed to be
financed at weighted average rate of interest of actual loans.
MSPGCL further submitted that it will ensure availability of funds in a timely manner
either from Financial Institutions/Banks or from internal accruals for the funding
requirements of the second Control Period.
The Commission has gone through the submissions of MSPGCL in this regard.
Considering the significant capital expenditure requirements proposed by MSPGCL
in its MYT Business Plan Petition for the second Control Period from FY 2013-14 to
FY 2015-16 and as the second Control Period is about to start, the Commission is of
the view that MSPGCL should be able to tie up the firm funding arrangements for
supporting the capital expenditure envisaged for the second Control Period. MSPGCL
should make concerted efforts in this regard to ensure timely and adequate availability
of the funds for the capital expenditure for the second Control Period.
MSPGCL is further directed to submit a detailed Note on the financing plan, covering
the sources of finance, initiatives being taken up by MSPGCL to tie-up the funds for
project execution, and funding from internal accruals, if any, to fund Capital
Expenditure requirements during the second Control Period in its Multi Year Tariff
Petition for the second Control Period.
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4.6 HUMAN RESOURCE PLAN
4.6.1 Recruitment
MSPGCL submitted that the future manpower requirements for expansion projects
envisaged to be completed during the second Control Period shall be recruited at least
one year prior to completion of projects and commencement of operations. MSPGCL
also submitted that there would be average induction of around 500 new engineers for
the next 5 years considering the large number of retiring employees during this
period. The future manpower requirement as submitted by MSPGCL is shown in the
Table below.
Table 4-54 Manpower requirement as submitted by MSPGCL
S.
No. Station/Unit
Year wise requirement
FY
2011-12
FY
2012-13
FY
2013-14
FY
2014-15
FY
2015-16
1 Chandrapur TPS
Units 8 & 9 200 250 250 - -
2 Parli TPS Unit 8 100 100 - - -
3 Koradi TPS Units 8, 9
& 10 - 500 500 - -
4 Bhusawal TPS Unit 6 - - - 250 250
5 Bhusawal TPS Units
4 & 5 170 176 185 190 190
Total 470 1026 935 440 440
4.6.2 Training
MSPGCL submitted that engineers and technicians are given induction training at the
time of joining the organisation at the central training centres at Koradi and Nasik.
MSPGCL also submitted that it endeavours to conduct refresher training at periodic
intervals.
MSPGCL submitted that it is undertaking the following measures for imparting
training to its employees:
Technical Employees: Undertake assessment of level of proficiency of
technical employees through scientific evaluation and thereafter impart
systematic sectional Training of these technical employees.
Management Positions: Identify employees who are in strategic management
positions and impart training to enhance their management capabilities. The
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management staff also needs to be trained in the marketing concepts and
theories to enable them to become overall well developed managers capable of
handling higher positions.
Support Staff: Apart from the Technical staff of Engineers, there is an
immediate need for capacity building of staff in support services like welfare,
security, stores, general administration, Accounts and Human Resources
management.
MSPGCL also submitted the various measures taken to ensure the performance of
manpower as follows:
Constitution of “Training Advisory Committee” comprising of five members,
which will address issues for streamlining the Training & development
activities.
Apart from the Training Centres at Nasik and Koradi, Training Sub Centres
(TSCs) at 9 Major Power Plants namely Khaperkheda, Chandrapur, Koradi,
Paras, Bhusawal, Nasik, Parli, Hydro and Uran have been established.
FOSTs (Forum of Sectional Teams) have been formed in all Sections of all
MSPGCL Power Plants/Offices with at least two Functional Experts,
Approved training faculties and self-motivated training coordinators in each
section. Inter-power station Functional FOSTs are formed to ensure
standardization of best practices and for identifying performance gaps to
ensure planned progress in every functional area across MSPGCL.
MSPGCL submitted that it has identified stages for structural transformation
of MSPGCL into a Learning Organization and they include the following:
o Formation of Project Teams
o Promoting Inter Functional FOSTs Video Conferencing
o Web Based Training Need Assessment Survey utilities on Sectional
Web page.
o E-learning and Virtual Class rooms arrangements
o Performance Excellence Programs through FOSTs/ Quality Circles
o Six monthly TNA and Routine Performance Planning exercise
o Blended training approach through CBT packages/ Simulators
o Proper establishment of Training Sub centres and Main training
Centres and separate CGM (Training) office.
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o Establishing standard deputation Norms
o Self-Learning Concepts and On-Line Examinations
4.6.3 Reward Policy
MSPGCL, in the MYT Business Plan Petition, submitted that an incentive mechanism
scheme for its employees at various levels would be formulated in order to motivate
them towards better performance and bring about improvement in various
performance parameters.
The Commission asked MSPGCL to clarify the formulation of reward policy
proposed by MSPGCL. MSPGCL replied that the reward policy, covering all
employees of the company engaged in power stations and projects, would be linked to
the plant performance. MSPGCL submitted that the likely relational criteria of plant
performance include the following:
Coal based Thermal Generating Stations – SFOC, SHR, Availability
Gas based Thermal Generating Stations – SHR
Hydro Generating Stations – Availability
Project implementation timelines
4.6.4 Health and safety management
MSPGCL submitted that the following steps have been taken to identify and assess all
types of occupational health and safety risks and reduce the significant risk to reduce
the occurrence of accidents:
All the power stations are equipped with dispensaries with qualified doctors
and have all primary facilities;
All the major locations in power stations are equipped with primary aid boxes
and provision of round the clock ambulance is made in the power stations
All the employees are issued Health Register that are maintained for history of
their health
All employees are issued with personal protective safety equipments and
Safety officers are posted at all power stations to take care of safe working
practices
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Efforts are made to create awareness of occupation health and safety in all
employees, contractors and contract labourers and training them adequately
for safe working practices
MSPGCL observes Safety Week from 4th – 10th March wherein awareness of
safety is done through conduct of plays, safety slogan writing competition,
posters making, essay writing, etc., to demonstrate and highlight the
importance of Safety
MSPGCL submitted that in relation to ensuring safety of Project site, an
officer of Executive Engineer level is nominated to ensure that safety aspects
at project site are adhered to. Where the labourers do not have protective gear,
MSPGCL submitted that it provides for these gear. MSPGCL submitted that it
also takes Group Insurance for contract labourers on the Project site.
The Commission has noted the submissions of MSPGCL in this regard.
4.7 ENVIRONMENT POLICY
MSPGCL submitted that it is committed to the safety of the environment and has
received certification under ISO:14001, which is a standard for environmental
systems. MSPGCL submitted that it has received certification for its major power
stations at Chandrapur, Koradi, Khaperkheda, Nasik, Parli, Uran and Koyna Power
stations under the ISO: 14001.
MSPGCL submitted that it has initiated installation of Solar Photovoltaic Power
Plants through National Solar Mission as per the guidelines of Ministry of New and
Renewable Energy and achieved 5 MW installed capacity in 11th
Five Year Plan and
is likely to achieve another 750 MW installed capacity by the end of 12th
Five Year
Plan.
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MSPGCL also submitted the brief details of the solar photovoltaic plants as shown in
the Table below:
Table 4-55 Details of MSPGCL’s Solar Photovoltaic Power Plants as submitted
by MSPGCL
S.
No. Project
Capacity
(MW)
COD
Actual (A)/Anticipated PPA Status
1 1 MW Solar PV
Chandrapur 1 09.04.2010 (A) executed with MSEDCL
2 2 MW Solar crystalline PV
Chandrapur
2 18.10.2011 (A) executed with NVVN
3 2 MW Solar Thin film PV
Chandrapur 2 12.02.2012 (A) executed with NVVN
4 25MW Solar Photovoltaic
Project, Sakri 25 March 2013
executed with BEST (10
MW) & MSEDCL (15
MW)
5
125 MW Solar
Photovoltaic Project at
Shivajinagar,tq. Sakri,Dist.
Dhule
125 March 2013 executed with MSEDCL
6
Solar Photovoltaic
Project, Kaudgaon, Dist.
Osmanabad
75
250
March 2014
March 2017 Not yet executed
7
Solar Photovoltaic Project
at Gangakhed, Dist.
Parbhani
100 March 2015 Not yet executed
8
Mangladevi-Pimpri –
Nawbpur – (I&II) –
Malkhed Tq. Ner, Dist.
Yeotmal
100 March 2016 Not yet executed
9 Lohara MIDC, Dist.
Yeotmal 75 March 2016 Not yet executed
MSPGCL submitted that state-of-the-art pollution control system devices have been
installed to control air pollution, which include:
o Well designed Electrostatic Precipitators for controlling the stack emission
o Ammonia Flue Gas Injection systems
o Low NOx Burner and ambient air quality monitoring to have better control
over SPM, SO2 and NOx
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o Ash Dykes and Ash Handling System
o Upgradation and retrofitting of Pollution Control Systems
o Dust suppression and Dust extraction system
MSPGCL submitted that the following measures have been adopted to conserve water
and avoidance of contamination of soil and water bodies in the power station
adjoining areas:
o Ash water recycling system used to help reduce use of fresh water required
for disposal of ash
o Effluent treatment plant
o Sewage water recycling plant set for treatment of domestic sewage from the
power station and its residential township.
o Conservation of water by reduction of water for main plant and ash disposal
areas through recycling and reuse of water.
MSPGCL submitted that all the power stations have entered into agreement with the
Maharashtra Pollution Control Board (MPCB) nominated agencies for disposal of
hazardous waste from the plants. MSPGCL also submitted that the effluents generated
are recycled through Effluent Treatment Plant, Sewage Treatment plant and Ash bund
recovery pump and again used in the power station for achieving zero discharge.
MSPGCL further submitted that a formal ash utilisation programme was launched in
1999 to ensure maximum usage of ash produced. MSPGCL submitted that it has
entered into long-term contracts with cement companies for ash lifting. MSPGCL also
submitted that afforestation is undertaken in areas around the Project site and
abandoned ash pond sites are being reclaimed and afforestation being carried out on
these sites.
The Commission has noted the submissions of MSPGCL in this regard.
4.8 CORPORATE SOCIAL RESPONSIBILITY
MSPGCL submitted that the Company’s focus is to help enrich the quality of life of
the people who live and work in operational territory and power plants vicinity as
enshrined in the Mission statement of MSPGCL and preserve ecological balance and
heritage through a strong environment conscience.
MSPGCL submitted that as a constructive partner in the communities in which it
operates, MSPGCL will be taking concrete action to realize its social responsibility
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objectives, thereby building value for its stakeholders. MSPGCL submitted that it
respects human rights, values its employees and will invest in innovative technologies
and solutions for sustainable energy flow and economic growth.
MSPGCL submitted that besides focusing primarily on the welfare of economically
and socially deprived sections of society, it also aims at developing techno-
economically viable and environment-friendly output for the benefit of society,
ensuring the highest standards of safety and environment protection in its operations.
MSPGCL submitted that it has a concerted social responsibility programme to partner
communities in health, family welfare, education, environment protection, providing
potable water, sanitation, and empowerment of women and other marginalized groups
such as:
Initiatives for Education
o Safety, Energy Conservation awareness training programs is conducted
all over the state to educate people on importance of energy
conservation etc.
o Educating and encouraging farmers for utilization of fly Ash for
Agricultural use.
o Educating farmers as well as small entrepreneurs for Ash Brick
manufacturing business and other similar small scale business.
o Running Computer awareness programs in the villages near power
stations.
o Distribution of books, uniform, school bags to needy students along
with active NGO participation.
Social Initiatives: MSPGCL submitted that as part of social obligation, it has
undertaken a number of initiatives for the betterment of the people around the
power plant as well for Project affected persons such as
o Making infrastructure facilities like approach road, water facilities,
cremation ground and other civil works for benefit of residents near the
power stations.
o Providing water facilities to nearby villages
o Motivating economically weaker / backward class lady groups for
Entrepreneurship, viz., Mahila Bachat Gat.
o Providing infrastructure facilities for, School, Computer centres, Bank,
City Bus, Post Office, Telephone, domestic Gas Cylinder, ATM,
Library, Play Grounds, Gardens etc.
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o Local community will be encouraged to participate in Social as well as
Cultural programs of Colony.
Health related measures
o MSPGCL submitted that it arranges medical, health check-up camps
for nearby villages surrounding the power station.
o MSPGCL submitted that it arranges Blood donation camps for needy
patients.
o MSPGCL submitted that De-addiction camps run in the company
premises/ centres are made available to nearby villages
The Commission has noted the submissions of MSPGCL in this regard.
4.9 RISK MITIGATION PLAN
MSPGCL submitted that the risk mitigation measures can be segregated into two
main categories, i.e., those which require immediate attention and those which can be
tackled over the medium to long term.
4.9.1 Mitigation Measures – Immediate Horizon
Old Machines:
MSPGCL submitted that its thermal generating stations are comparatively old based
on outdated technologies and hence, difficulty is experienced in meeting the
performance parameters set by the Commission. MSPGCL submitted that it has
already started incorporating CPRI’s recommendations for its generating stations to
the extent financially and technically feasible to improve the performance of the
generating stations. MSPGCL also submitted that it is undertaking Renovation &
Modernisation work for 5 power stations in order to improve the operational
parameters and life expectancy of the generating stations. MSPGCL submitted that
the focus is mainly on improving Plant Load Factor, Availability Factor, Heat Rate,
Secondary Oil Consumption, Specific coal consumption and Auxiliary energy
consumption.
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HR Issues:
MSPGCL submitted that the major human resource related issues are:
Availability of required manpower: MSPGCL submitted that in order to
overcome the issue of manpower due to shortage and ageing profile of its
employees, it is envisaging the recruitment of manpower required for
expansion projects at least one year prior to completion of projects and
commencement of operations.
Employee attrition: MSPGCL submitted that it is bound by the constraints of
being a government Utility with respect to salary issues, and ways are being
devised to work around this issue by offering employees other incentives such
as implementation of a reward policy based on generating station performance
as well as individual performance.
4.9.2 Mitigation measures – Medium to Long Term
Increasing the Competitiveness of MSPGCL:
MSPGCL submitted that increased competition is due to opening of electricity market
through Open Access and operational issues of MSPGCL such as old age of
machineries and it would address the risk in the following ways:
Improving the operational efficiencies of existing plants through intensive
Renovation & Modernisation and process improvement activities
Ensuring that the new Units remain in close conformance to the normative
parameters through proactive maintenance of Units
Use of imported coal to mix with low quality domestic coal to ensure
maximum operational efficiency.
Timely Mine development:
MSPGCL submitted that to ensure fuel security, it has entered into a Joint Venture
with Gujarat State Electricity Co. Ltd. for captive mining of coal blocks at
Machhakata and also a Joint Venture with Uttar Pradesh Rajya Vidyut Utpadan
Nigam Ltd. (UPRVUNL) and Chhattisgarh Mineral Development Corporation
(CMDC) to share the output of Coal to be generated from Chendipada I and
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Chendipada II coal blocks. MSPGCL submitted that it will endeavour to ensure
timely development of these mines with state-of-the-art technology to enhance the
productivity and exploitable quantity of coal.
The Commission asked MSPGCL to submit the phase-wise expected date of
commissioning and expected phase-wise production of each mine under realistic
scenario. MSPGCL, in its reply, submitted that during the period of FY 2013-14 to
FY 2015-16 the delivery of coal is expected only from Machhakata and Chendipada
Coal Blocks. MSPGCL submitted the production details for Machhakata and
Chendipada Coal Block as shown in the Table below:
Table 4-56: Expected date of commissioning and phase-wise production from
Machhakata Coal Block as submitted by MSPGCL
Expected date of commissioning: August 2014
Expected phase wise production for this MYT period
Financial Year 2013-14 2014-15 2015-16
Production (MMT) 0 1.2 4.2
Production in case 1 year delay (MMT) 0 0 1.2
Table 4-57: Expected date of commissioning and phase-wise production from
Chendipada Coal Block as submitted by MSPGCL
Expected date of commissioning: February 2015
Expected phase wise production for this MYT period
Financial Year 2013-14 2014-15 2015-16
Production (MMT) 0 2.5 7.0
Production in case 1 year delay (MMT) 0 0 2.5
The Commission further asked MSPGCL to submit its Contingency plan for
procuring coal if there is any delay in the commissioning of the mine thereby
affecting the quantum of coal supply from the mine to the allocated stations.
MSPGCL, in reply, submitted that in case of delay in coal production, the short fall in
coal quantity will be met through tapered linkage from Ministry of Coal and through
additional import of coal. MSPGCL also submitted that as per the coal production
schedule of Machhakata coal block, MSPGCL needs tapered coal linkage for
Chandrapur (2x500 MW) and Koradi (3 x 660 MW) projects. MSPGCL submitted
that it has applied to Ministry of Coal for grant of tapered linkage for these upcoming
projects. MSPGCL also submitted that as per communications with CEA, it is
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understood that the application for tapered linkage is under consideration for
recommendation to Ministry of Coal to sanction the tapered linkage.
Alternate Sources of Fuel:
MSPGCL submitted that it will endeavour to identify alternate sources of fuel supply,
rather than depending upon Coal India Limited for all its requirements. MSPGCL
submitted that it would ensure that envisaged quantum of imported coal is arranged in
time to maintain the generation plan and this has already been set into motion with the
joint allocation of the coal blocks. MSPGCL submitted that it is also making
endeavours for acquiring more domestic coal mines to meet its future coal
requirement. MSPGCL submitted that Cost plus mine allocation from WCL is also an
important step, and in this regard, it would also pursue means such as e-auction to get
additional quantum of coal as and when available. MSPGCL also submitted that it
will participate in e-auction opportunities as and when available in order to get
additional quantum of coal.
The Commission has taken a note of the risk mitigation plan submitted by MSPGCL.
It has been observed that the most important concern during the second Control
Period would be availability of the required quantity of fuel. Though as per the
submissions of MSPGCL it seems that it is taking various measures to ensure the fuel
availability during the second Control Period, the availability of adequate quantity of
fuel during the second Control Period is still doubtful. The Commission is of the view
that in addition to other risk mitigation measures, MSPGCL should give focused
attention to the fuel availability so that the generation is not hampered due to
unavailability of fuel during the second Control Period. MSPGCL should take all the
necessary actions on priority basis to tie up the remaining un-tied fuel capacity for the
second Control Period.
4.10 CHALLENGES FACED BY MSPGCL IN THE OPERATION OF THE
GENERATING STATIONS
MSPGCL submitted that the following challenges are experienced during the
operation of the Thermal Generating Stations
Most of the Units have outlived their Useful Life
Quantum of coal received is less than required quantity
Units had been designed for coal with higher GCV and due to the lower GCV
of received coal, additional quantity of 20-50% of coal is required to be
handled.
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Quality of coal received from various mines is not uniform and the SHR of the
Stations largely vary wherein coal from WCL and MCL is being used.
Impact of monsoon on coal quality
MSPGCL submitted that rainfall aggravates the issues associated with poor quality of
coal. MSPGCL submitted that CPRI had acknowledged this issue and had factored in
the impact of rainfall in FY 2010-11 on case to case basis. MSPGCL submitted that
around 50% of received coal quantity is from WCL mines. MSPGCL submitted that
WCL mines are open cast mines and the black cotton soil was getting loaded with the
coal. MSPGCL submitted that this black cotton soil becomes highly sticky and muddy
during monsoon season and wet coal leads to choking of bunkers, flame instability,
trippings, bunker level maintenance, and loadability constraints, resulting in excess oil
consumption for operational stabilization. MSPGCL submitted that heavy rainfall
would lead to higher secondary oil consumption and would result in higher SHR.
MSPGCL submitted that these issues would likely prevail and their impact needs to
be considered in the Regulations.
Restricted usage of Imported Coal
MSPGCL submitted that the usage of imported coal is a function of design
constraints, availability of space and infrastructure support in the power stations.
MSPGCL submitted that CEA had recommended restrictions in usage of imported
coal in the Indian context. MSPGCL submitted that blending of coal would face
technical constraints and need to be carefully monitored. MSPGCL submitted that the
technical efficiency improvement by the usage of imported coal for blending with
domestic coal would depend on season of the year and compatibility of imported coal
with domestic coal. MSPGCL submitted that they had filed an appeal before Hon’ble
ATE (Appeal 47 of 2012) to direct them or the Commission to appoint CPRI for
undertaking detailed study on the possible level of blending and measures to improve
the performance of MSPGCL’s generating stations. MSPGCL submitted that the
outcome of the appeal would have an impact on the normative assessment of
performance of the power stations.
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Non-consideration of practical constraints under regulated regime
MSPGCL submitted that in the regulated regime, they are only entitled to ROE and
with a small equity base, it would imply that any operational deviation could
adversely affect the financial condition of the Company. MSPGCL submitted that
they had been facing a precarious financial condition on account of delays in truing
up and disallowances of incurred expenditure by the Commission. MSPGCL
submitted that this has led to heavy borrowings for the working capital requirement of
the Company. MSPGCL submitted that disallowances of expenses by the
Commission would have an impact on the profitability of the Company and the
Company does not have any other mechanism to recover these costs given the
regulated nature of the business.
Quantity and Quality of Fuel
MSPGCL submitted that the major source of fuel is domestic coal, which is
purchased from the various subsidiaries of CIL. MSPGCL submitted that there are
issues in procurement terms of coal, the transit loss, poor quantity and quality of coal,
delay in supply, etc. MSPGCL submitted that they are constrained in finding solutions
to these issues due to the monopoly nature of coal supply in India and lack of
regulator in Coal Industry as well as lack of alternatives of supply.
MSPGCL submitted that the quality of coal is a major cause of concern. MSPGCL
submitted that domestic coal is being supplied from WCL, MCL, SECL, SCCL and
the quality of coal from these sources had been steadily declining in the recent past.
MSPGCL submitted that bad quality of coal had led to an increase in purchase of
imported coal. MSPGCL submitted that the imported coal is much costlier and would
impact all stakeholders including the consumers.
MSPGCL submitted that domestic coal is the major fuel for generating stations and
there had been a shortage of coal in the recent times. MSPGCL submitted that
Railways constitute the major system of coal transportation in India and coal is the
largest single commodity transported by the Railways. MSPGCL submitted that the
transportation of coal is dependent on the availability of rakes, freight corridors,
freight rates, etc. MSPGCL submitted that the Railways being a monopoly in India, it
is at times difficult to ensure timeliness of supply, reduction in transit loss, etc.
MSPGCL submitted that these issues would hamper the overall efficiency of the
power stations.
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 131 of 168
Non payment of dues by MSEDCL
MSPGCL submitted that an important aspect, which poses a pertinent threat is the
non-payment of dues by MSEDCL. MSPGCL submitted that the genesis of this threat
lies in the underlying fact that they are currently operating with a single consumer
model. MSPGCL submitted that the financial health of the Company is a function of
their capability to recover the receivables from MSEDCL in time.
MSPGCL submitted that MSEDCL itself being a regulated entity has its own set of
issues with respect to timely submission of Tariff Petition, receipt of Tariff Orders
and cap on recovery of approved ARR from the consumers. MSPGCL submitted that
any issues faced by MSEDCL in recovery of its expenses whether arising out of its
compulsions under a regulated environment or its own operational inefficiencies
could have a cascading effect on their financial health.
MSPGCL submitted that the resultant cash flow issues would only increase the short-
term borrowings of MSPGCL and would increase the risk perception of lenders. Such
non-desirable borrowings beyond the threshold level would likely get disallowed
under the Regulations, and could worsen the precarious financial health of the
Company. MSPGCL submitted that the outstanding amount to be recovered from
MSEDCL is around Rs. 4,500 crore.
The Commission has noted the submissions regarding the challenges being faced by
MSPGCL in the operation of the Generating Stations/Units. The Commission is of the
view that most of the challenges faced by MSPGCL are common for any generating
Company. Better management of various resources, and sound SWOT analysis would
help in overcoming most the challenges. MSPGCL may look at adopting best
practices of the better performing Utilities that may be NTPC or other private
generating Companies for overcoming the mentioned challenges. Further, as regard
the non payment of dues of around Rs. 4500 by MSDECL, the Commission has
already discussed the matter in Section 2 of this Order.
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 132 of 168
5 PROJECTIONS FOR THE SECOND CONTROL
PERIOD
MSPGCL, in its Petition, has given details of its Operational Plan along with
projected expenses for FY 2013-14 to FY 2015-16 under various heads, viz., O&M
expenses, Depreciation, interest on loans, etc.
The Commission is of the view that the Petition for approval of ARR of the
Generating Utility would be considered once it is filed after the MYT Business Plan
Order is issued. Therefore, excepting according approval to the ARR, this Chapter
analyses the projections of some of the components of ARR based on the projected
capital expenditure, O&M expenses, etc., so that consumers get an idea of the impact
of the Plans proposed by MSPGCL. Hence, for completeness of this Order, the
Commission has captured the ARR as projected by MSPGCL in this Chapter.
MSPGCL, in its revised MYT Business Plan Petition, has submitted the projections of
components of ARR for each year of the second Control Period (FY 2013-14 to FY
2015-16). The projections of ARR components as submitted by MSPGCL along with
the Commission's views on the same have been discussed in subsequent paragraphs.
5.1 FUEL RELATED EXPENSES
MSPGCL submitted that the projections of fuel related expenses are based on
operating parameters that would improve due to anticipated capital expenditure.
MSPGCL submitted that for the purpose of fuel cost projection, the fuel base price
had been considered as approved by the Commission in its Order dated 21 June, 2012
in Case No. 6 of 2012 for FY 2012-13. MSPGCL submitted that the escalation rates
considered for the projection of fuel related expenses are 7.07% for Domestic Coal as
prescribed by CERC, 4.05% for Gas, 5% for imported Coal, and 4% for FO and LDO.
The projections of fuel related expenses for the second Control Period as submitted by
MSPGCL are shown in the Table below.
Table 5-1 Projections of Fuel related expenses for second Control Period as submitted
by MSPGCL (Rs. crore)
S.
No. Station/Unit FY 2013-14 FY 2014-15 FY 2015-16
Existing Units
1 Bhusawal TPS 914.89 966.76 820.95
2 Chandrapur TPS 3,640.29 3,886.06 4,127.88
3 Parli TPS 1,168.09 1,267.23 1,414.77
4 Khaperkheda TPS 1,505.51 1,606.00 1,721.43
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 133 of 168
S.
No. Station/Unit FY 2013-14 FY 2014-15 FY 2015-16
5 Koradi TPS 1,115.66 942.67 1,332.86
6 Nashik TPS 1,356.43 1,247.76 1,532.19
7 Uran GTPS 894.55 1,039.25 1,112.20
Total 10,595.41 10,955.72 12,062.28
New Units
8 Paras Unit 3 276.97 315.14 335.33
9 Paras Unit 4 276.65 314.00 333.24
10 Parli Unit 6 433.29 459.09 487.64
11 Parli Unit 7 422.05 447.56 475.84
12 Khaperkheda Unit 5 981.64 1,034.55 1,092.63
Total 2,390.60 2,570.34 2,724.68
Upcoming Units
13 Bhusawal Unit 4 1,186.30 1,249.75 1,319.60
14 Bhusawal Unit 5 1,186.30 1,249.75 1,319.60
15 Chandrapur Unit 8 429.68 1,244.46 1,157.28
16 Chandrapur Unit 9 96.03 1,244.46 1,157.28
17 Parli replacement Unit 8 185.76 494.94 526.03
18 Koradi Unit 8 391.08 1,851.66 1,766.15
19 Koradi Unit 9 - 1,393.96 1,766.15
20 Koradi Unit 10 - 521.04 1,879.09
Total 3,475.15 9,250.00 10,891.16
Total Fuel Expenses 16,461.16 22,776.06 25,678.12
Commission’s Ruling
The Commission has noted MSPGCL’s submission in this regard. However, the
Commission in this Order has not undertaken the detailed scrutiny of the fuel related
expenses for the second Control Period. The same shall be scrutinized and approved as a
part of the Order on MYT Petition for the second Control Period.
5.2 OPERATION AND MAINTENANCE EXPENSES
MSPGCL, in its original MYT Business Plan Petition, had not submitted the
projections of Operation and Maintenance expenses for the second Control Period.
The Commission asked MSPGCL to submit the projections of Operation and
Maintenance expenses for each year of the second Control Period in accordance with
Regulations 45, 46 and 48 of the MERC MYT Regulations. The relevant extracts of
the aforesaid Regulations are reproduced below for reference.
“45 Operation and maintenance expenses
45.1 Existing Generating Stations
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 134 of 168
a) The Operation and Maintenance expenses including insurance shall be
derived on the basis of the average of the actual Operation and Maintenance
expenses for the three (3) years ending March 31, 2010, based on the audited
financial statements , excluding abnormal Operation and Maintenance
expenses, if any, subject to prudence check by the Commission.
b) The average of such operation and maintenance expenses shall be
considered as operation and maintenance expenses for the financial year
ended March 31, 2009 and shall be escalated based on the escalation factor
as approved by the Commission for the respective years to arrive at operation
and maintenance expenses for the base year commencing April 1, 2011.
c) The O&M expenses for each subsequent year shall be determined by
escalating the base expenses determined above for FY 2010-11, at the
escalation factor 5.72% to arrive at permissible O&M expenses for each year
of the Control Period.
Provided that in case, an existing Generating Station has been in operation
for less than three (3) years as at on the date of effectiveness of these
Regulations, the O&M Expenses shall be as specified at Regulation 46 for
New Generating Stations”
“46 New Generating Stations:
a) For Coal based Generating Stations:
Particulars 200/210/250 MW
Sets
500 MW and above
Sets
FY 2011-12 14.81 13.32
FY 2012-13 15.66 14.08
FY 2013-14 16.55 14.89
FY 2014-15 17.50 15.74
FY 2015-16 18.50 16.64
Note:
For the Generating Stations having combination of 200/210/250 MW sets and
500 MW and above sets, the weighted average value for operation and
maintenance expenses shall be adopted.”
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 135 of 168
“48 Operation and Maintenance Expenses for Hydro Generating Stations
48.1 For Existing Stations:
(1) The normative O&M expenses for the second Control Period shall
be derived on the basis of the average of the actual O&M expenses for
the three (3) years ending March 31, 2010, based on the audited
financial statements, excluding abnormal O&M expenses, if any,
subject to prudence check by the Commission.
(2) The average of such O&M expenses shall be considered as the
expenses for the financial year ended March 31, 2009, which shall be
escalated based on the escalation factor as approved by the
Commission for the respective years to arrive at O&M expenses for the
base year commencing April 1, 2011.
(3) The O&M expenses for each subsequent year shall be determined
by escalating the base expenses determined above for FY 2010-11, at
the escalation factor of 5.72% to arrive at permissible O&M expenses
for each year of the Control Period.
48.1 For Existing Stations:
(1) O&M expenses for first year of operation shall be specified as 2%
of the original project cost (excluding cost of rehabilitation and
resettlement works) for the first year of operation.
(2) The O&M expenses for each subsequent year shall be determined
by escalating the base expenses determined above, at the escalation
factor of 5.72%.”
MSPGCL, in its replies and in the revised MYT Business Plan Petition, submitted the
projections of O&M expenses for the second Control Period. MSPGCL submitted that
for the purpose of working out O&M expenses for second Control Period, the actual
expenses for FY 2009-10, FY 2010-11 and FY 2011-12 have been considered.
MSPGCL submitted that the actual O&M expenses for the aforesaid years have been
considered, unlike the principles specified in the MERC MYT Regulations, as the
second Control Period would commence from FY 2013-14. MSPGCL submitted that
the advantage of considering the same is that the impact of Pay Revision has got
factored in the actual expenses.
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 136 of 168
MSPGCL submitted that for the removal of impact of contribution of O&M expenses
of vintage Units, it has calculated the factor (Rs. Lakh/MW) for the entire year for
each of the three years by dividing the actual expenses as per accounts with the total
operating MW during the year. MSPGCL submitted that this factor (Rs. Lakh/MW)
was multiplied with the operational MW (Units still operating under PPA) to work out
the normalized O&M expense for such capacity.
MSPGCL submitted that it has reduced the following one-time expenses as approved
by the Commission in Case No 6 of 2012 from the FY 2010-11 actual O&M
Expenses to work out the average:
i. De-Capitalisation of Gratuity and leave encashment cost of Rs. 22 crore
ii. Consideration of Credit/reduction in liabilities of PF planned Assets of Rs.
17.86 crore
iii. Increased R&M Expenditure of Rs. 33.44 crore at Chandrapur due to water
crisis.
MSPGCL submitted that these normalized O&M expenses were then averaged out to
work out the expense for FY 2010-11. MSPGCL submitted that as per Regulation
45.1 (b) the MERC MYT Regulations, the O&M expense for the subsequent year in
the Control Period was to be escalated at 5.72% to arrive at permissible O&M
Expense for each year of the Control Period. MSPGCL submitted that considering
that this escalation factor would be subject to truing up, it has considered the
escalation rate of 8.31% for FY 2012-13 as approved by the Commission in its Order
dated 21 June, 2012 in Case No. 6 of 2012.
MSPGCL submitted that the O&M expenses for the new Stations have been estimated
in the following manner:
i. As Parli Unit 6 achieved COD 3 years prior to effectiveness of MERC MYT
Regulations, O&M Expenses have been projected as specified for existing
Unit.
ii. Although the Commission has specified the O&M norms for new Units in
MERC MYT Regulations, the norms have not factored in the impact of Pay
Revision. MSPGCL submitted that the current norms in MERC MYT
Regulations are based on escalation factors applied on the base norms, i.e., Rs
10.81 lakhs/MW specified for FY 2005-06 in the MERC Tariff Regulations,
2005. MSPGCL submitted that in order to factor in the impact of pay revision
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 137 of 168
in O&M norms for new Units, it has considered the base O&M Expense for
FY 2005-06 specified in MERC Tariff Regulations, 2005 and applied the
approved escalation rates.
iii. MSPGCL submitted that it has considered the MERC Tariff Regulations, 2005
to incorporate the impact of Pay revision that has taken place in FY 2008-09
in the O&M Expenses norm. MSPGCL submitted that the Pay Revision in FY
2008-09 had an impact of Rs. 95 crore on the employee expenses. MSPGCL
submitted that this impact was approximately 21% of the actual employee
expense for FY 2007-08. MSPGCL submitted that it has escalated the
Employee Expenses for FY 2007-08 by 21% to capture the impact of Pay
Revision as approved by the Commission in Case No. 6 of 2012.
MSPGCL further submitted that as of now it has not taken into consideration the
impact of Pay Revision due with effect from 1 April, 2013 while projecting the O&M
expenses. MSPGCL requested the Commission to take into consideration the impact
of this Pay Revision on actual basis at the time of truing up.
The Commission has analysed the above submissions of MSPGCL for considering the
base year as FY 2009-10, FY 2010-11 and FY 2011-12 while computing the O&M
Expenses for the second Control Period. The Commission asked MSPGCL to also
submit the projections of O&M expenses for the second Control Period strictly as per
the Regulations 45, 46 and 48 of MERC MYT Regulations.
MSPGCL, in its reply, submitted that it had projected the Operation & Maintenance
expenses for the second Control Period based on the actual average Operation and
Maintenance expenses for FY 2009-10, FY 2010-11 and FY 2011-12. MSPGCL
reiterated the advantages of considering the proposed years that in all the three years
i.e., from FY 2009-10 to FY 2011-12, the impact of pay revision is already getting
factored in the actual expenses. MSPGCL further submitted that it had computed the
per MW O&M expenses for FY 2009-10 to FY 2011-12 and multiplied it with the
remaining capacity of the Units under the PPA to remove the impact of vintage Units
before averaging. The Average O&M Base expense for FY 2010-11 thus obtained
have been further escalated with the approved escalation rate (@ 8.31%) to obtain the
O&M expenses for the second Control Period.
The projections of O&M Expenses considering the base years as FY 2009-10, FY
2010-11 and FY 2011-12 as submitted by MSPGCL are shown in the Table below:
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 138 of 168
Table 5-2: O&M Expenses for second Control considering base years from FY 2009-
10 to FY 2011-12 as submitted by MSPGCL (Rs. Crore)
Stations FY 2013-14 FY 2014-15 FY 2015-16
Bhusawal 146.08 158.22 171.37
Chandrapur 428.42 464.02 502.58
Khaperkheda 178.31 193.13 209.18
Koradi 187.95 203.57 220.48
Nashik 168.02 181.98 197.10
Paras 0.00 0.00 0.00
Parli - Existing 140.65 152.34 165.00
Uran GTPS 51.73 56.03 60.69
Hydro (including
Ghatghar) 123.41 133.66 144.77
Total Existing 1424.57 1542.96 1671.18
MSPGCL, in its reply, also submitted the projections of O&M Expenses as per the
Regulation 45.1 (a) of MERC MYT Regulation, i.e., considering the base years from
FY 2007-08 to FY 2009-10. MSPGCL submitted that it has recomputed the O&M
expense with the following changes:
a) O&M expenses have been recomputed based on the average of actual O&M
expense for FY 2007-08 to FY 2009-10. However, as actual O&M expenses
for FY 2008-09 and FY 2009-10 had a component of pay revision in it,
MSPGCL has additionally considered pay revision in FY 2007-08 and
allocated it to all stations on the basis of O&M expenses before averaging the
O&M expense for FY 07-08 to FY 09-10.
b) Escalation factor of 5.72% has been considered for projecting the O&M
expense for the second Control Period.
Table 5-3: O&M Expenses for second Control considering base years from FY 2007-
08 to FY 2009-10 as submitted by MSPGCL
Stations FY 2013-14 FY 2014-15 FY 2015-16
Bhusawal 124.95 132.10 139.65
Chandrapur 402.34 425.35 449.68
Khaperkheda 151.27 159.92 169.07
Koradi 147.51 155.95 164.87
Nashik 161.30 170.53 180.28
Paras 0.00 0.00 0.00
Parli - Existing 146.65 155.04 163.91
Uran GTPS 71.25 75.32 79.63
Hydro (including 106.23 112.31 118.73
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 139 of 168
Stations FY 2013-14 FY 2014-15 FY 2015-16
Ghatghar)
Total Existing 1311.50 1386.52 1465.83
MSPGCL, in its reply, also requested the Commission to consider the O&M expenses
as per MSPGCL’s methodology for the second Control Period. MSPGCL also
submitted that there is wide variation between the O&M Expenses computed as per
MERC MYT Regulations and the O&M Expense as approved by MERC in previous
orders as shown below:
Table 5-4: Comparison of O&M Expenses based on the above mentioned
methodologies for previous years as submitted by MSPGCL (Rs. crore)
O&M Expense for the PPA Unit FY 2011-12 FY 2012-13
MSPGCL’s submission in the Business Plan (based on
averaging of FY 2009-10 to FY 2011-12 O&M Expense) 1214.36 1315.27
As per MYT Regulations 2011 (based on averaging of FY
2007-08 to FY 2009-10 O&M Expense) 1145.36 1240.54
Approved by Commission in Case 6 of 2012 (includes O&M
expense of Nashik vintage Unit operation for 91 days in FY
12)
1220.09 1301.02
Actual O&M Expense (includes O&M expense of Nashik
vintage unit operation for 91 days in FY 12) 1433.45
MSPGCL further, submitted that such kind of deviation is not observed in case of
other Utilities like TPC and RInfra where the O&M expense as per MERC MYT
Regulations and O&M expenses as per previous Orders are in sync. Hence, MSPGCL
requested the Commission to consider the O&M expenses as submitted in the
Business Plan for approving the ARR projections for the second Control Period.
The Commission has gone through the above submissions of MSPGCL and observed
that the major reasons for proposing the deviation in the methodology for computing
the O&M Expenses for existing Stations for the second Control Period is on account
of inclusion of the impact of the Pay Revision and removal of the vintage Units from
the generating capacity of MSPGCL. The Commission is of the view that the above
mentioned issues can be incorporated without deviating from the basic methodology
for computing the O&M Expenses as per Regulation 45.1 (a) and 48.1 (1) of MERC
MYT Regulations, i.e., considering the average of the actual Operation and
Maintenance expenses for existing Stations for FY 2007-08, FY 2008-09 and FY
2009-10.
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 140 of 168
In view of the above, the Commission, in accordance with Regulation 45.1 and 48.1
of MERC MYT Regulations has computed the O&M Expenses for the existing
Stations on the basis of the average of the actual allowable O&M Expenses for the three
years from FY 2007-08 to FY 2009-10, excluding abnormal O&M Expenses to arrive at
O&M Expenses for FY 2008-09. The same has been escalated at escalation rates as
approved by the Commission for the respective years in the respective Tariff Orders, to
arrive at the O&M Expenses for FY 2012-13. The Commission has considered the
approved escalation rate of 5.48% and 7.02% for FY 2009-10 and FY 2010-11,
respectively. For FY 2011-12 and FY 2012-13, the Commission has considered the
approved escalation rate as 8.31%. The summary of escalation rates as considered the
Commission to arrive at the O&M Expenses for FY 2012-13 is shown in the Table below:
Table 5-5: Escalation rates considered by the Commission
Year Escalation Rate
FY 2009-10 5.48%
FY 2010-11 7.02%
FY 2011-12 8.31%
FY 2012-13 8.31%
The O&M expenses for each subsequent year under consideration for the present MYT
Business Plan starting from FY 2013-14 to FY 2015-16 have been determined by
escalating the expenses derived for FY 2012-13, at an escalation rate of 5.72% to arrive at
permissible O&M expenses for each year of the second Control Period, in accordance
with the provisions of MERC MYT Regulations.
Further, the Commission has also considered the following while computing the
O&M Expense for the second Control Period:
a) Impact of Pay Revision has been considered in addition to the O&M Expenses
as computed by above methodology.
b) The O&M Expenses for the Vintage Units have been reduced in proportion to
the capacity taken out of the PPA.
The detailed computation undertaken by the Commission for the O&M Expenses for
the existing generating Stations is shown in the Table below:
Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 141 of 168
Table 5-6: O&M Expenses for the existing generating Stations as computed by the Commission
Stations
FY
2007-
08 (Rs.
Crore)
FY
2008-
09 (Rs.
Crore)
FY 2009-
10 (Rs.
Crore)
Average
O&M
Expenses
for total
capacity
(Rs. Crore)
Total
Capacity
(MW)
Non
Vintage
Capacity
(MW)
Average
O&M
Expenses
for Non
Vintage
(Rs.
Crore)
Pay
Revisio
n (total
Capaci
ty) (Rs.
Crore)
Pay
Revision
(Non-
Vintage
Capacity)
(Rs.
Crore)
Excluding Pay revision Including Pay revision
FY 2013-
14 (Rs.
Crore)
FY 2014-
15 (Rs.
Crore)
FY
2015-16
(Rs.
Crore)
FY
2013-14
(Rs.
Crore)
FY
2014-
15 (Rs.
Crore)
FY
2015-
16 (Rs.
Crore)
a b c
d=(a+b+c)/
3 E F g=d* f / e h i=h* f /e
j=g
*(1+5.48%
)(1+7.02%)
((1+8.31%)
^2)(1+5.72
%)
k=j*(1+5.
72%)
l=k*(1+
5.72%) m=j+i n=k+i o=l+i
Bhusawal 80.03 99.19 97.18 92.13 475 420 81.46 7.86 6.948 114.05 120.57 127.47 121.00 127.52 134.42
Chandrapur 230.37 290.65 271.32 264.11 2340 2340 264.11 22.46 22.456 369.77 390.92 413.28 392.22 413.37 435.73
Parli 105.95 99.31 95.11 100.12 670 630 94.15 10.93 10.279 131.81 139.35 147.32 142.09 149.63 157.60
Paras 24.18 15.86 25.22 21.75 55 - - 1.98 - - - - - - -
Khaperkheda 95.91 100.11 98.23 98.08 840 840 98.08 9.57 9.567 137.32 145.17 153.48 146.89 154.74 163.05
Nasik 144.94 137.37 159.52 147.28 880 630 105.44 12.31 8.813 147.62 156.06 164.99 156.43 164.87 173.80
Koradi 146.34 162.93 172.30 160.52 1040 620 95.70 15.92 9.493 133.98 141.64 149.74 143.47 151.14 159.24
Uran 80.12 51.36 45.31 58.93 852 672 46.48 4.37 3.447 65.07 68.80 72.73 68.52 72.24 76.18
Hydro 59.81 53.91 64.45 59.39 - - 59.39 5.15 5.155 83.15 87.91 92.93 88.30 93.06 98.09
Total 967.65 1010.68 1028.64 1002.32 7152.00 6152.00 844.81 90.55 76.16 1182.76 1250.41 1321.94 1258.92 1326.57 1398.10
As regards Paras Unit 3 and Parli Unit 6, which achieved COD on 31 March, 2008 and 31
October, 2007, respectively, i.e., more than 3 years prior to effectiveness of MERC MYT
Regulations, the O&M Expenses have to be computed in accordance with Regulation
45.1(c) of MERC MYT Regulations as defined for existing Unit/Station and therefore
should also be computed based on the average of actual O&M Expenses for FY 2007-08,
FY 2008-09 and FY 2009-10. However, as the above-mentioned Units did not operate for
entire FY 2007-08, the actual O&M Expenses for these Units cannot be considered for FY
2007-08. Hence, in case of Paras Unit 3 and Parli Unit 6, the base years have been
considered from FY 2008-09 to FY 2010-11.
The detailed computation of O&M Expenses for Paras Unit 3 and Parli Unit 6 by the
Commission for the second Control Period is shown in the Table below:
Table 5-7: O&M Expenses for Paras Unit 3 and Parli Unit 6 as computed by the
Commission
Stations
FY
2008-09
(Rs.
Crore)
FY
2009-10
(Rs.
Crore)
FY
2010-11
(Rs.
Crore)
Average
O&M
Expenses
(Rs. Crore)
Excluding Pay Revision Including Pay Revision
FY
2013-14
(Rs.
Crore)
FY
2014-15
(Rs.
Crore)
FY
2015-16
(Rs.
Crore)
FY
2013-14
(Rs.
Crore)
FY
2014-15
(Rs.
Crore)
FY
2015-16
(Rs.
Crore)
a b c
d=(a+b+c)/
3
e=d*(1+
7.02%)((
1+8.31%
)^2)(1+5
.72%)
f=e*(1+
5.72%)
g=f*(1+
5.72%)
h=e+2.2
75
i=f+2.27
5
i=g+2.2
75
Paras Unit 3 16.87 27.02 46.63 30.17 40.05 42.34 44.76 42.32 44.61 47.03
Parli Unit 6 28.07 37.58 38.24 34.63 45.96 48.59 51.37 48.24 50.87 53.65
Further, Regulation 46 of MERC MYT Regulations has clearly specified a separate norm
(Rs. lakh per MW) for the O&M Expenses of new Units. The Commission, for the purpose
of approval of the Business Plan, has therefore, approved the O&M Expenses for the new
Units and the upcoming Units in accordance with Regulation 46 of MERC MYT
Regulations.
Table 5-8: O&M Expenses norm for new Units as specified in MERC MYT Regulations
(Rs. lakh/MW)
Particulars 200/210/250 MW
Sets
500 MW and above
Sets
FY 2013-14 16.55 14.89
FY 2014-15 17.50 15.74
FY 2015-16 18.50 16.64
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 143 of 168
The summary of Operation and Maintenance expenses for the second Control Period as
submitted by MSPGCL and as computed by the Commission is shown in the Table below:
Table 5-9 Summary of Operation & Maintenance expenses for second Control Period for
existing and new Units as submitted by MSPGCL and as computed by the Commission
(Rs. crore)
S.
No. Station/Unit
FY 2013-14 FY 2014-15 FY 2015-16
MSPGCL
Approve
d
MSPGCL
Approved
MSPGCL
Approved
Base
Year
(FY 09-10
to FY 11-
12)
Base
Year
(FY 07-08
to FY 09-
10)
Base
Year
(FY 09-10
to FY 11-
12)
Base
Year
(FY 07-08
to FY 09-
10)
Base
Year
(FY 09-10
to FY 11-
12)
Base
Year
(FY 07-08
to FY 09-
10)
Existing
Stations
1 Bhusawal
TPS 146.08 124.95 121.00 158.22 132.10 127.52 171.37 139.65 134.42
2 Chandrapur
TPS 428.42 402.34 392.22 464.02 425.35 413.37 502.58 449.68 435.73
3 Parli TPS 140.65 151.27 142.09 152.34 159.92 149.63 165.00 169.07 157.60
4 Khaperkheda
TPS 178.31 147.51 146.89 193.13 155.95 154.74 209.18 164.87 163.05
5 Nashik TPS 168.02 146.65 156.43 181.98 155.04 164.87 197.10 163.91 173.80
6 Koradi TPS 187.95 161.30 143.47 203.57 170.53 151.14 220.48 180.28 159.24
7 Uran GTPS 51.73 71.25 68.52 56.03 75.32 72.24 60.69 79.63 76.18
8 Hydro 123.41 106.23 88.30 133.66 112.31 93.06 144.77 118.73 98.09
Total 1424.57 1311.50 1258.92 1542.96 1386.52 1326.57 1671.18 1465.83 1398.10
New Units
9 Paras Unit 3 47.75 - 42.32 51.72 - 44.61 56.01 - 47.03
10 Parli Unit 6 49.25 - 48.24 53.34 - 50.87 57.77 - 53.65
11 Paras Unit 4 47.75 - 41.38 51.72 - 43.75 56.01 - 46.25
12 Parli Unit 7 47.75 - 41.38 51.72 - 43.75 56.01 - 46.25
13 Khaperkheda
Unit 5 85.90 - 74.45 93.04 - 78.70 100.77 - 83.20
Total 278.39 - 247.77 301.53 - 261.68 326.58 - 276.38
5.3 DEPRECIATION
MSPGCL submitted that the provisions of MERC MYT Regulations with respect to
depreciation state that the rates notified under the said Regulations shall apply to assets for
depreciation up to 70% of original cost and thereafter, the remaining depreciable value of
the assets as on 31st March of the year shall be spread over the balance useful life of the
asset.
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 144 of 168
MSPGCL submitted that it has considered the balance useful life of such assets, which has
been depreciated up to 70% of the original cost as 10 years (equal to loan repayment
period) for the purpose of depreciation calculations. MSPGCL submitted that in accordance
with the existing practice, depreciation has been computed both on opening balance as well
as half of asset additions done during the year.
MSPGCL further submitted that for the projection purposes in the Business Plan, it has
considered the entire capitalisation during the second Control Period in the “Plant and
Machinery” head. However, at the time of submitting the MYT Petition, it would work out
the depreciation based on the asset-class wise capitalisation.
The projections of depreciation based on the above as submitted by MSPGCL are shown in
the Table below:
Table 5-10: Summary of Depreciation for second Control Period as submitted by MSPGCL
(Rs. crore)
S.
No. Station/Unit FY 2013-14 FY 2014-15 FY 2015-16
Existing Stations
1 Bhusawal TPS 20.39 25.39 40.39
2 Chandrapur TPS 55.84 203.92 235.12
3 Parli TPS 14.50 49.57 55.82
4 Khaperkheda TPS 49.52 57.00 63.13
5 Koradi TPS 7.00 13.85 54.66
6 Nashik TPS 31.15 39.60 43.77
7 Uran GTPS 22.78 114.52 152.55
8 Hydro 3.61 5.91 12.16
Total 204.79 509.78 657.59
New Units
9 Paras Unit 3 74.66 75.40 75.64
10 Paras Unit 4 70.35 70.57 70.61
11 Parli Unit 6 73.61 75.83 80.69
12 Parli Unit 7 66.77 67.45 68.56
13 Khaperkheda Unit 5 192.43 195.65 195.65
Total 477.82 484.90 491.15
Upcoming Units
14 Bhusawal Unit 4 163.36 170.67 170.67
15 Bhusawal Unit 5 163.36 170.67 170.67
16 Chandrapur Unit 8 43.07 146.34 154.47
17 Chandrapur Unit 9 11.03 146.34 154.47
18 Parli replacement Unit 8 43.89 90.81 98.17
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
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S.
No. Station/Unit FY 2013-14 FY 2014-15 FY 2015-16
19 Koradi Unit 8 52.25 190.73 212.67
20 Koradi Unit 9 0.00 147.88 212.67
21 Koradi Unit 10 0.00 52.25 212.67
Total 476.97 1,115.69 1,386.46
Total Depreciation 1,159.57 2,110.37 2,535.19
Commission’s Ruling
As regards the existing Stations and new Units, the Commission has gone through the
projections of depreciation for the second Control as submitted by MSPGCL. It has been
observed that MSPGCL in its MYT Business Plan has not proposed any reduction in GFA
on account of the asset retirement/replacement during the second Control Period in
accordance with Regulation 31.2 (a) of the MERC MYT Regulations, 2011. As regards the
same, MSPGCL is directed to submit the details of the asset retirement/replacement
envisaged during the second Control Period in its MYT Petition. MSPGCL is further
directed to consider the original cost of retired assets for working out the depreciation in
accordance with the provisions of the MERC MYT Regulations in its MYT Petition.
Further, as MSPGCL has also not provided the asset class-wise capitalization during the
second Control Period, the Commission has not taken up the detailed scrutiny of the
computations submitted as per the provisions of MERC MYT Regulations and the same
shall be scrutinized and approved as a part of the Order on MYT Petition for the second
Control Period. The Commission has however, for indicative purposes, estimated the
depreciation based on the closing GFA for FY 2012-13 as approved in the Commission’s
Order dated 8 February, 2013 on the Review Petition filed by MSPGCL in Case No. 77 of
2012, and the capitalization approved for each year of the second Control Period from FY
2013-14 to FY 2015-16 under this Business Plan Order.
Regulation 31.2 (b) of MERC MYT Regulations, 2011 specifies that once the assets are
depreciated to the extent of 70%, remaining depreciable value shall be spread over the
balance useful life of the assets. MSPGCL submitted that while computing the deprecation
it has considered the balance useful life of 10 years which is equivalent to the loan
repayment period. However, as it is expected that the loan repayment period for the assets
depreciated up to 70% would already be over and hence it may not be appropriate to
consider the the balance useful life of 10 years for computing the deprecation.
The Commission in this Order for estimating the depreciation for the second Control
Period has considered the balance useful life of such asset which has been depreciated up to
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 146 of 168
70% of the original cost as 10 years as submitted by MSPGCL. However, as mentioned
above, the loan repayment period for the assets depreciated up to 70% would already be
over. In view of this, the Commission directs MSPGCL to submit the revised computation
of depreciation in its MYT Petition for the second Control Period.
Further, as discussed earlier, the Commission in this Order has not approved the capital
cost of the upcoming Units to be commissioned during the second Control Period, and the
Commission has therefore, not estimated the depreciation for Khaperkheda Unit 5,
Bhusawal Unit 4 and Unit 5, Koradi Unit 8, Unit 9 and Unit 10, Chandrapur Unit 8 and
Unit 9, and Parli Unit 8 in this Order.
The depreciation for the existing and new Stations/Units for the second Control Period as
submitted by MSPGCL and as estimated by the Commission is summarised in the Table
below:
Table 5-11: Depreciation for existing and new Stations/Units as submitted by MSPGCL
and as estimated by the Commission (Rs. crore)
Station/Unit
FY 2013-14
FY 2014-15
FY 2015-16
MSPGCL Commission MSPGCL Commission MSPGCL Commission
Bhusawal 20.39 24.53 25.39 26.20 40.39 26.61
Chandrapur 55.84 127.53 203.92 138.79 235.12 77.95
Parli 14.50 11.88 49.57 13.71 55.82 15.08
Khaperkheda 49.52 44.53 57.00 40.02 63.13 37.98
Nasik 31.15 17.88 39.60 17.85 43.77 17.43
Koradi 7.00 20.41 13.85 19.90 54.66 47.48
Uran 22.78 13.90 114.52 18.49 152.55 9.63
Hydro 3.61 9.10 5.91 9.77 12.16 10.12
Total Existing 204.79 269.75 509.78 284.74 657.59 242.28
Paras Unit 3 74.66 72.85 75.40 73.07 75.64 73.17
Paras Unit 4 70.35 70.10 70.57 70.25 70.61 70.27
Parli Unit 7 66.77 66.89 67.45 67.23 68.56 67.79
Parli Unit 6 73.61 79.24 75.83 79.58 80.69 80.28
Total New 285.38 289.09 289.25 290.13 295.49 291.50
5.4 INTEREST ON LONG TERM LOAN CAPITAL
MSPGCL, in its MYT Business Plan, submitted that the proposed capitalisation (excluding
capitalisation of Renovation & Modernisation schemes) is projected to be funded though
debt and equity in the ratio of 70:30. As regards the capitalisation for Renovation &
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 147 of 168
Modernisation schemes and the upcoming Units till the end of second Control Period, the
funding is projected to be in the debt: equity ratio of 80:20.
MSPGCL submitted that for repayment purposes, it had considered the repayment of loans
in accordance with Regulation 33.3 of MERC MYT Regulations. MSPGCL submitted that
it has considered the amount of repayment equal to the amount of depreciation on the fixed
assets to which such loan relates.
MSPGCL submitted that it has considered the interest rate of 12% for normative loans in
the second Control Period. MSPGCL submitted that for the existing loan, interest has been
computed on the actual weighted average rate of interest calculated on the actual loan
portfolio.
MSPGCL, in the formats, also submitted the computation of the interest on loan for the
existing and new Stations/Units for the second Control Period. The Commission observed
that in the computations MSPGCL, instead of considering the debt: equity ratio of 80:20
for the Renovation & Modernisation capitalisation, MSPGCL has considered a debt: equity
ratio of 70:30. The Commission asked MSPGCL to clarify whether the proposed debt:
equity ratio for the R&M capitalisation is 80:20 or 70:30 and accordingly submit the
revised computation of the interest expenses for the second Control Period.
MSPGCL, in its reply, clarified that the projected capitalization for Renovation &
Modernisation schemes is planned to be funded with a debt equity ratio of 80:20. MSPGCL
submitted that it has inadvertently clubbed the Renovation & Modernisation capitalisation
along with other capitalisation while computing the interest and ROE, therefore, it
erroneously considered the debt equity funding of 70:30 for R&M capitalisation. Further,
as the DPR for Renovation & Modernisation of only Bhusawal and Koradi TPS have been
approved by the Commission, MSPGCL in its reply submitted the revised computation of
the interest expenses only for Bhusawal and Koradi TPS. The summary of Interest on Long
Term Loans for the second Control Period as submitted by MSPGCL is shown in the Table
below:
Table 5-12 Summary of Interest on Long Term Loans for the second Control Period as
submitted by MSPGCL
(Rs. crore)
Sr no. Station/Unit FY 2013-14 FY 2014-15 FY 2015-16
Existing Stations
1 Bhusawal TPS 8.98 14.31 36.92
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 148 of 168
Sr no. Station/Unit FY 2013-14 FY 2014-15 FY 2015-16
2 Chandrapur TPS 70.81 117.34 141.23
3 Parli TPS 17.72 27.12 30.8
4 Khaperkheda TPS 9.51 12.85 10.22
5 Koradi TPS 13.8 18.63 42.95
6 Nashik TPS 16.93 26.45 28.12
7 Uran GTPS 7.3 51.92 96.84
8 Hydro 8.63 10.33 11.32
Total 153.68 278.95 398.4
New Units
9 Paras Unit 3 53.43 46.38 38.51
10 Paras Unit 4 94.58 87.32 79.81
11 Parli Unit 6 41.86 37.93 37.11
12 Parli Unit 7 80.78 74.48 68.93
13 Khaperkheda Unit 5 263.2 246.74 225.44
Total 533.84 492.84 449.81
Upcoming Units
14 Bhusawal Unit 4 269.63 262.6 241.27
15 Bhusawal Unit 5 269.63 262.6 241.27
16 Chandrapur Unit 8 59.86 266.56 263.17
17 Chandrapur Unit 9 15.34 266.56 263.17
18 Parli replacement Unit
8 116.47 160.82 162.95
19 Koradi Unit 8 89.49 326.64 382.54
20 Koradi Unit 9 0 253.26 382.54
21 Koradi Unit 10 0 89.49 382.54
Total 820.41 1,888.55 2,319.45
Total Interest
expenses 1,507.93 2,660.34 3,167.66
Commission’s Ruling
The Commission has gone through the submissions of MSPGCL and has reworked the
opening loan balance for FY 2013-14 based on the closing loan for FY 2012-13 as
approved by the Commission in its Order dated 08__ February, 2013 in Case No. 77 of
2012. Further, the Commission has considered the debt amount for each year of the second
Control Period from FY 2013-14 to FY 2015-16 based on the capitalisation approved under
this Business Plan for the respective years. The Commission has considered the debt:
equity ratio for small capex and the Renovation & Modernisation capitalisation as 70:30
and 80:20, respectively.
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 149 of 168
As regards the interest rate, Regulation 33.5 and 33.6 of MERC MYT Regulations specifies
as follows:
“33.5 The rate of interest shall be the weighted average rate of interest calculated
on the basis of the actual loan portfolio at the beginning of each year applicable to
the Generating Company or the Transmission Licensee or the Distribution Licensee
Provided that if there is no actual loan for a particular year but normative loan is
still outstanding, the last available weighted average rate of interest shall be
considered:
Provided further that if the Generating Company or the Transmission Licensee or
the Distribution Licensee, as the case may be, does not have actual loan, then the
weighted average rate of interest of the Generating Company or the Transmission
Licensee or the Distribution Licensee as a whole shall be considered.
33.6 The interest on loan shall be calculated on the normative average loan of the
year by applying the weighted average rate of interest.”
The Commission, in accordance with the above Regulation, has considered the rate of
interest for the existing as well as for the normative loans as the weighted average rate of
interest calculated on the actual loan portfolio as submitted by MSPGCL.
Further, as the details of the proposed retirement/replacement during the second Control
Period have not been submitted by MSPGCL, the Commission, at this point of time, in the
absence of the relevant details, has not considered the reduction in the loan amount on
account of the asset replacement/ retirement. The Commission shall consider the impact of
such asset replacement/retirement in its Order on MYT Petition upon submission of the
relevant details by MSPGCL.
As regards the loan repayments, the same have been considered equal to the depreciation
for the respective years in accordance with Regulation 33.3 of the MERC MYT
Regulations, 2011.
Further, as discussed earlier, the Commission in this Order has not approved the capital cost
of the upcoming Units to be commissioned during the second Control Period and hence,
the Commission has not estimated the interest expenses for Khaperkheda Unit 5, Bhusawal
Unit 4 and Unit 5, Koradi Unit 8, Unit 9 and Unit 10, Chandrapur Unit 8 and Unit 9, and
Parli Unit 8 in this Order.
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 150 of 168
The interest expenses on long-term loans for existing and new Stations/Units, as computed
by the Commission for the years under consideration for the present MYT Business Plan
starting from FY 2013-14, in view of the capitalisation considered, is summarised in the
Tables below:
Table 5-13: Interest Expenses for existing and new Stations/Units as submitted by
MSPGCL and as estimated by the Commission for second Control Period (Rs. crore)
S
no. Station/Unit
FY 2013-14 FY 2014-15 FY 2015-16
MSPGCL Commission MSPGCL Commission MSPGCL Commission
Existing
Stations
1 Bhusawal TPS 8.98 14.21 14.31 14.60 36.92 12.89
2 Chandrapur TPS 70.81 28.24 117.34 26.88 141.23 23.04
3 Parli TPS 17.72 15.78 27.12 17.32 30.8 18.03
4 Khaperkheda
TPS 9.51 7.44 12.85 5.18 10.22 1.72
5 Koradi TPS 13.8 10.53 18.63 10.23 42.95 30.67
6 Nashik TPS 16.93 16.75 26.45 17.65 28.12 17.01
7 Uran GTPS 7.3 6.95 51.92 6.81 96.84 6.28
8 Hydro 8.63 4.74 10.33 4.73 11.32 4.34
Total 153.68 104.64 278.95 103.40 398.4 113.99
New Units
9 Paras Unit 3 53.43 50.52 46.38 43.01 38.51 35.22
10 Paras Unit 4 94.58 94.60 87.32 87.11 79.81 79.62
11 Parli Unit 6 41.86 49.83 37.93 42.60 37.11 35.12
12 Parli Unit 7 80.78 80.97 74.48 74.09 68.93 67.65
Total 270.65 275.92 246.11 246.80 224.36 217.61
5.5 INTEREST ON WORKING CAPITAL
MSPGCL submitted that it has computed the Interest on Working Capital in accordance
with Regulation 35.1 of MERC MYT Regulations. MSPGCL has computed the interest on
working Capital at State Bank Advanced Rate, which has been submitted as 14.75%. The
Interest on Working Capital, so computed, for the second Control Period is as shown in the
Table below:
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 151 of 168
Table 5-14 Summary of Interest on Working Capital for the second Control Period as
submitted by MSPGCL
(Rs. crore)
Sr no. Station/Unit FY 2013-14 FY 2014-15 FY 2015-16
Existing Stations
1 Bhusawal TPS 72.97 67.72 58.49
2 Chandrapur TPS 293.92 282.20 289.93
3 Parli TPS 90.61 87.34 93.44
4 Khaperkheda TPS 128.92 119.66 121.80
5 Koradi TPS 88.82 68.07 90.60
6 Nashik TPS 106.09 87.66 101.27
7 Uran GTPS 72.79 77.69 87.00
8 Hydro 21.98 19.60 19.37
Total 876.11 809.94 861.90
New Units
9 Paras Unit 3 34.89 32.54 32.12
10 Paras Unit 4 34.97 32.49 31.98
11 Parli Unit 6 44.63 40.36 40.80
12 Parli Unit 7 44.67 40.19 40.08
13 Khaperkheda Unit 5 111.33 100.00 98.22
Total 270.49 245.59 243.21
Upcoming Units
14 Bhusawal Unit 4 118.36 107.78 106.30
15 Bhusawal Unit 5 118.36 107.78 106.30
16 Chandrapur Unit 8 38.58 103.87 95.79
17 Chandrapur Unit 9 8.94 103.87 95.79
18
Parli replacement Unit
8 24.69 47.66 48.82
19 Koradi Unit 8 38.64 149.49 141.55
20 Koradi Unit 9 111.91 141.55
21 Koradi Unit 10 41.21 147.94
Total 347.56 773.55 884.04
Total Interest on
working Capital 1,494.15 1,829.08 1,989.15
The Commission has noted the submissions of MSPGCL in this regard, however, as the
Commission has not approved the Generation and the fuel cost for the second Control
Period in this Order, the Commission has not estimated the interest on working capital
requirement in this Order. The same shall be scrutinized and approved as a part of Order on
MYT Petition for the second Control Period.
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Page 152 of 168
5.6 INCOME TAX
Regulation 34 of MERC MYT Regulations, 2011 has specified the provisions regarding the
Tax on Income, as reproduced below:
“34.1 The Commission, in its MYT Order, shall provisionally approve Income Tax
payable for each year of the Control Period, if any, based on the actual income tax
paid on permissible return as allowed by the Commission relating to the electricity
business regulated by the Commission, as per latest Audited Accounts available for
the applicant, subject to prudence check:
Provided that no Income Tax shall be considered on the amount of efficiency gains
and incentive earned by the Generating Companies, Transmission Licensees and
Distribution Licensees.
Provided further that the Generating Company, Transmission Licensee and
Distribution Licensee shall bill the Income Tax under a separate head called
"Income Tax Reimbursement" in their respective bills.
34.2 Variation between Income Tax actually paid and approved, if any, on the
income stream of the regulated business of Generating Companies, Transmission
Licensees and Distribution Licensees shall be reimbursed to/recovered from the
Generating Companies, Transmission Licensees and Distribution Licensees, based
on the documentary evidence submitted at the time of Mid-term Performance
Review and MYT Order of third Control Period, subject to prudence check.
34.3 Under-recovery or over-recovery of any amount from the beneficiaries or the
consumers on account of such income tax having been passed on to them shall be
on the basis of income-tax assessment under the Income-Tax Act, 1961, as certified
by the statutory auditors. The Generating Company, or the Transmission Licensee
or Distribution Licensee, as the case may be, may include this variation in its Mid-
term Performance Review Petition and MYT Petition of third Control Period:
Provided that tax on any income stream from other than the business regulated by
the Commission shall not constitute a pass through component in tariff and tax on
such other income shall be borne by the Generating Company or Transmission
Licensee or the Distribution Licensee, as the case may be.”
MSPGCL, in its MYT Business Plan, has submitted that it has considered the MAT Rate of
20.01% for computing the Income Tax for the second Control Period. The summary of
Income Tax as submitted by MSPGCL for the second Control Period is shown in the Table
below:
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 153 of 168
Table 5-15 Summary of Income Tax for the second Control Period as submitted by
MSPGCL
(Rs. crore)
S.
No. Station/Unit FY 2013-14 FY 2014-15 FY 2015-16
Existing Stations
1 Bhusawal TPS 3.53 4.41 5.29
2 Chandrapur TPS 27.22 33.96 40.61
3 Parli TPS 4.63 5.85 7.52
4 Khaperkheda TPS 28.54 30.19 30.70
5 Koradi TPS 3.97 4.81 5.28
6 Nashik TPS 6.49 8.42 9.48
7 Uran GTPS 8.73 9.14 20.27
8 Hydro 0.25 0.55 0.73
Total 83.35 97.34 119.88
New Units
9 Paras Unit 3 13.56 13.75 13.83
10 Paras Unit 4 9.17 9.27 9.28
11 Parli Unit 6 13.55 13.62 14.35
12 Parli Unit 7 11.37 11.37 11.61
13 Khaperkheda Unit 5 33.34 34.48 34.48
Total 81.00 82.50 83.54
Upcoming Units
14 Bhusawal Unit 4 18.33 20.05 20.05
15 Bhusawal Unit 5 18.33 20.05 20.05
16 Chandrapur Unit 8 5.06 16.24 18.15
17 Chandrapur Unit 9 1.30 16.24 18.15
18 Parli replacement Unit 8 5.16 9.80 11.53
19 Koradi Unit 8 6.14 22.41 23.84
20 Koradi Unit 9 0.00 17.37 23.84
21 Koradi Unit 10 0.00 6.14 23.84
Total 54.32 128.30 159.44
Total Income Tax 218.67 308.14 362.86
Commission’s Ruling
In accordance with Regulation 34.1 of MERC MYT Regulations, the income tax for FY
2013-14 to FY 2015-16 will have to be considered at the same level as approved by the
Commission for existing and new Stations/Units for FY 2010-11 in its Order dated 21
June, 2012 in Case No. 6 of 2012, since that is the latest year for which audited accounts
have been provided and prudence check has been undertaken by the Commission. Further,
the true up based on actual income tax paid by MSPGCL shall be considered at the time of
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 154 of 168
mid-term performance review or at the time of final Truing up for the second Control
Period by the Commission. The income-tax considered by the Commission for the existing
and the new Stations/Units for the years under consideration for the present MYT Business
Plan starting from FY 2013-14 to FY 2015-16 is as shown in the Tables below:
Table 5-16: Income Tax as considered by the Commission for existing and new
Stations/Units for second Control Period (Rs. Crore)
Station/Unit FY 2013-14 FY 2014-15 FY 2015-16
Existing Stations 171.45 171.45 171.45
Paras Unit 3 0 0 0
Paras Unit 4 0 0 0
Parli Unit 6 0 0 0
Parli Unit 7 0 0 0
5.7 RETURN ON EQUITY
MSPGCL, in its MYT Business Plan, submitted that the proposed capitalisation (excluding
capitalisation for Renovation & Modernisation) is projected to be funded though debt and
equity in the ratio of 70:30. As regard the capitalisation for Renovation & Modernisation
schemes and the upcoming Units till the end of second Control Period, the funding is
projected to be in the debt: equity ratio of 80:20.
MSPGCL, in the formats, also submitted the computation of the Return on Equity for the
existing and new Stations/Units for the second Control Period. MSPGCL submitted that in
accordance with MERC MYT Regulations, it has computed the Return on Equity at
15.50% per annum on opening equity for the year.
As stated earlier, the Commission asked MSPGCL to clarify whether the proposed debt:
equity ratio for the Renovation & Modernisation capitalisation is 80:20 or 70:30 and
submit the revised computation of the Return on Equity for the second Control Period.
MSPGCL clarified that the projected capitalization for R&M schemes is planned to be
funded through a debt equity ratio of 80:20, and also submitted the revised computations of
Return on Equity for Bhusawal and Koradi TPS. The summary of Return on Equity for the
second Control Period as submitted by MSPGCL is shown in the Table below:
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
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Table 5-17: Summary of Return on Equity for the second Control Period as submitted by
MSPGCL (Rs. Crore)
Sr no. Station/Unit FY 2013-14 FY 2014-15 FY 2015-16
Existing Stations
1 Bhusawal TPS 17.63 22.04 26.44
2 Chandrapur TPS 136.04 169.70 202.93
3 Parli TPS 23.12 29.26 37.59
4 Khaperkheda TPS 142.64 150.89 153.42
5 Koradi TPS 19.84 24.02 26.41
6 Nashik TPS 32.41 42.06 47.36
7 Uran GTPS 43.62 45.70 101.30
8 Hydro 1.24 2.76 3.63
Total 416.57 486.46 599.09
New Units
9 Paras Unit 3 67.79 68.73 69.09
10 Paras Unit 4 45.81 46.32 6.37
11 Parli Unit 6 67.73 68.09 71.70
12 Parli Unit 7 56.83 56.83 58.02
13 Khaperkheda Unit 5 66.63 72.31 172.31
Total 404.78 412.28 417.49
Upcoming Units
14 Bhusawal Unit 4 91.62 100.21 100.21
15 Bhusawal Unit 5 91.62 100.21 100.21
16 Chandrapur Unit 8 25.29 81.14 90.69
17 Chandrapur Unit 9 6.48 81.14 90.69
18 Parli replacement Unit
8 25.77 48.99 57.64
19 Koradi Unit 8 30.68 11.98 119.13
20 Koradi Unit 9 86.82 119.13
21 Koradi Unit 10 30.68 119.13
Total 271.45 41.17 796.82
Total Return on
Equity 1,092.80 1,539.91 1,813.40
The Commission has gone through the submissions of MSPGCL and has reworked the
opening equity for FY 2013-14 based on the closing equity for FY 2012-13 as approved by
the Commission in its Order dated 08 February, 2013 in Case No. 77 of 2012. Further, the
Commission has considered the equity addition for each year of the second Control Period
from FY 2013-14 to FY 2015-16 based on the capitalisation approved under this Business
Plan for the respective years. The Commission has considered the debt: equity ratio for
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
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small capex and the Renovation & Modernisation capitalisation as 70:30 and 80:20,
respectively.
The Commission has computed the Return on Equity by considering the rate of return on
equity as 15.5% on the opening equity of the year, in accordance with the MERC MYT
Regulations.
As discussed earlier, MSPGCL has not submitted the details of the asset
replacement/retirement during the second Control Period, and the Commission, in the
absence of the relevant details, has not considered the reduction in equity capital or the loan
amount on account of the asset replacement/retirement. MSPGCL is directed to consider
the original cost of retired assets for working out the Return on Equity in accordance with
the provisions of the MERC MYT Regulations in its MYT Petition.The Commission shall
consider the impact of such asset replacement/retirement in its Order on MYT Petition
upon submission of the relevant details by MSPGCL.
Further, as discussed earlier the Commission in this Order has not approved the capital cost
of the upcoming Units to be commissioned during the second Control Period and hence,
the Commission has not estimated the Return on Equity for Khaperkheda Unit 5, Bhusawal
Unit 4 and Unit 5, Koradi Unit 8, Unit 9 and Unit 10, Chandrapur Unit 8 and Unit 9, and
Parli Unit 8 in this Order.
The summary of Return on Equity as submitted by MSPGCL and as estimated by the
Commission for the existing and the new Stations/Units for the second Control Period
under the present MYT Business Plan Order starting from FY 2013-14 is shown in the
Table below:
Table 5-18: Return on Equity for existing and new Stations/Units as submitted by
MSPGCL and as estimated by the Commission for second Control Period (Rs. crore)
S
no. Station/Unit
FY 2013-14 FY 2014-15 FY 2015-16
MSPGCL Commission MSPGCL Commission MSPGCL Commission
Existing
Stations
1 Bhusawal TPS 17.66 22.45 22.06 24.93 26.46 25.64
2 Chandrapur TPS 136.04 125.65 169.70 134.33 202.92 139.37
3 Parli TPS 19.77 23.12 23.65 29.26 25.49 23.12
4
Khaperkheda
TPS 142.64 143.09 150.88 145.31 153.41 146.13
5 Koradi TPS 19.84 19.47 24.02 20.49 26.41 21.38
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
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S
no. Station/Unit
FY 2013-14 FY 2014-15 FY 2015-16
MSPGCL Commission MSPGCL Commission MSPGCL Commission
6 Nashik TPS 32.41 34.68 42.06 36.76 47.36 37.32
7 Uran GTPS 43.62 43.54 45.70 44.84 101.30 45.43
8 Hydro 1.24 0.13 2.76 0.90 3.63 1.33
Total 413.22 412.14 480.83 436.82 586.97 439.72
New Units
9 Paras Unit 3 67.79 66.35 68.73 66.77 69.09 66.93
10 Paras Unit 4 45.81 45.94 46.32 46.20 46.37 46.22
11 Parli Unit 6 67.73 72.78 68.09 72.96 71.70 73.41
12 Parli Unit 7 56.83 56.96 56.83 56.96 58.02 57.55
Total 238.15 242.03 239.97 242.88 245.19 244.12
5.8 LEASE RENT
MSPGCL submitted that it has considered the Lease Rent for Hydro Generating Stations
owned by GoMWRD and operated by MSPGCL as per the Commission’s Order dated 27
April, 2012 in Case No. 5 of 2012. The Commission has therefore, for the purpose of
approval of MYT Business Plan, considered the Lease Rental for the Hydro Generating
Stations (excluding Ghatghar PSS) as approved by the Commission in its Order dated 27
April, 2012 in Case No. 5 of 2012, as shown in the table below.
Table 5-19 Lease Rental for Hydro Generating Stations (excluding Ghatghar PSS) second
Control Period as considered by the Commission
(Rs. crore)
Particular FY 2013-14 FY 2014-15 FY 2015-16
Lease Rental (excluding
Ghatghar PSS) 326.26 321.55 318.35
Further, the Commission has also approved the Lease Rent for Ghatghar PSS owned by
GoMWRD and operated by MSPGCL in its Order dated 27 December, 2012 in Case No. 2
of 2012. However, as discussed earlier MSPGCL has so far, not entered into any
Agreement with MSEDCL for Ghatghar PSS, and the Commission has therefore, not
considered the Lease Rental for Ghatghar PSS while estimating the total Lease Rent for
Hydro Stations to be paid by MSEDCL to MSPGCL. The Commission shall take an
appropriate view in this regard upon the approval of Agreement between MSPGCL and
MSEDCL for Ghatghar PSS.
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5.9 NON-TARIFF INCOME
MSPGCL has submitted that it has projected the Non-Tariff income for the second Control
Period by escalating the Non-Tariff income as approved by the Commission for FY 2012-
13. MSPGCL, in its Business Plan, has not projected Non-Tariff income from the
upcoming Units and has stated that the same would be projected at the time of MYT
filing/true-up. The projections of Non-Tariff income for existing and new Units as
submitted by MSPGCL is shown in the Table below:
Table 5-20 Summary of Non-Tariff Income for second Control Period as submitted by
MSPGCL
(Rs. crore)
S.
No. Station/Unit FY 2013-14 FY 2014-15 FY 2015-16
Existing Units
1 Bhusawal TPS 5.66 5.89 6.12
2 Chandrapur TPS 21.17 22.01 22.90
3 Parli TPS 16.69 17.36 18.06
4 Khaperkheda TPS 14.31 14.89 15.48
5 Koradi TPS 13.49 14.03 14.59
6 Nashik TPS 13.17 13.70 14.25
7 Uran GTPS 2.06 2.14 2.23
8 Hydro 1.06 1.10 1.14
Total 87.61 91.12 94.76
New Units
9 Paras Unit 3 2.71 2.82 2.93
10 Paras Unit 4 2.71 2.82 2.93
11 Parli Unit 6 4.10 4.27 4.44
12 Parli Unit 7 0.59 0.62 0.64
13 Khaperkheda Unit 5 0.00 0.00 0.00
Total 10.11 10.52 10.94
Total Non-Tariff Income 97.73 101.63 105.70
The Commission has noted MSPGCL’s submission in this regard and observed that
MSPGCL in its Business Plan has not submitted the full details of its forecast of non-tariff
income to the Commission, under the various heads to be considered for non- tariff income
as per Regulation 43.1 of MERC MYT Regulations, as extracted below:
“43.1
…
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The indicative list of various heads to be considered for non tariff income shall be
as under:
a) Income from rent of land or buildings;
b) Income from sale of scrap;
c) Income from statutory investments;
d) Income from sale of Ash/rejected coal;
e) Interest on delayed or deferred payment on bills;
f) Interest on advances to suppliers/contractors;
g) Rental from staff quarters;
h) Rental from contractors;
i) Income from hire charges from contactors and others;
j) Income from advertisements, etc.;
k) Any other non tariff income”
The Commission, in this Order, has therefore, not estimated the non-tariff income for the
second Control Period. The same shall be approved as a part of MYT Order, upon the
submission of full details of forecast on non tariff income under the list of various heads as
stipulated in Regulation 43.1 of MERC MYT Regulations.
5.10 AGGREGATE REVENUE REQUIREMENT
MSPGCL, in its MYT Business Plan, submitted the projections of Aggregate Revenue
Requirement (ARR) for the second Control Period under the realistic, optimistic and
pessimistic scenarios. The basic assumptions for the above scenarios as submitted by
MSPGCL are as under:
Optimistic scenario: MSPGCL submitted that this scenario is based on the assumption
that the stations would be able to achieve all normative parameters despite the technical
constraints, quality and quantity of fuel and impact during monsoon season with assumed
usage of imported coal. Further, MSPGCL submitted that it has outstanding working
capital loan of approximately Rs 4500 Crore. The same is largely on account of non-
payment of dues by MSEDCL. In the Optimistic scenario, it has assumed that apart from
paying the receivables due in the current year, MSEDCL will also pay against the arrears.
Such payment of past dues will help MSPGCL in repaying the outstanding working capital
loans. The scenario is prepared considering a payment of 5 % over and above the ARR for
a given year in the Control Period.
Pessimistic Scenario: MSPGCL submitted that this scenario is based on the assumption
that the stations would face the worst technical constraints, quality and quantity issues of
coal and wet coal related issues and hence, the worst performance during the last three
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
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years is assumed. In pessimistic scenario, it is assumed that MSEDCL will pay only 95 %
against the current year allowed receivables.
Realistic scenario: MSPGCL submitted that this scenario is based on anticipated capital
expenditure, which is envisaged to provide progressive improvement in the parameters.
The same shall be supplemented by the usage of imported coal, which will help in
minimizing the impact of poor quality of coal. In realistic scenario, it is assumed that
MSEDCL will pay the amount pertaining only to the prevalent year.
Based on the above assumptions, MSPGCL submitted the projections of Aggregate
Revenue Requirement under the optimistic, pessimistic and realistic scenarios as shown in
the Tables below:
Table 5-21: Projections of Aggregate Revenue Requirement for Exiting Stations for second
Control Period as submitted by MSPGCL (Rs. crore)
Particulars Realistic Scenario Optimistic Scenario Pessimistic Scenario
2013-14 2014-15 2015-16 2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
Fuel Related
Expenses 10595.41 10955.72 12062.28 11090.75 11846.02 12622.12 10655.06 11392.32 12136.54
Operation &
Maintenance
Expenses
1424.57 1542.96 1671.18 1424.57 1542.96 1671.18 1424.57 1542.96 1671.18
Depreciation 204.79 509.78 657.59 204.79 509.78 657.59 204.79 509.78 657.59
Interest on
Long-term
Loan Capital
153.68 278.95 398.40 153.68 278.95 398.40 153.68 278.95 398.40
Interest on
Working
Capital
876.11 809.94 861.90 843.19 707.88 639.16 922.88 963.65 1111.04
Income Tax 83.35 97.34 119.88 83.35 97.34 119.88 83.35 97.34 119.88
Return on
Equity
Capital
413.22 480.83 586.97 413.22 480.83 586.97 413.22 480.83 586.97
Lease rental 326.26 321.55 318.35 326.26 321.55 318.35 326.26 321.55 318.35
Aggregate
Revenue
Requirement
14077.39 14997.07 16676.54 14539.81 15785.30 17013.65 14183.82 15587.37 16999.94
Non Tariff
Income 87.61 91.12 94.76 87.61 91.12 94.76 87.61 91.12 94.76
Aggregate
Revenue
Requirement
13989.78 14905.95 16581.78 14452.20 15694.19 16918.89 14096.21 15496.25 16905.18
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Table 5-22: Projections of Aggregate Revenue Requirement for New Units (Paras Unit 3 &
4, Parli Unit 6 & 7 and Khaperkheda Unit 5 for second Control Period as submitted by
MSPGCL (Rs. crore)
Particulars Realistic Scenario Optimistic Scenario Pessimistic Scenario
2013-14 2014-15 2015-16 2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
Fuel Related
Expenses 2390.60 2570.34 2724.68 2539.43 2695.54 2868.33 2335.35 2471.42 2621.82
Operation &
Maintenance
Expenses
278.39 301.53 326.58 278.39 301.53 326.58 278.39 301.53 326.58
Depreciation 477.82 484.90 491.15 477.82 484.90 491.15 477.82 484.90 491.15
Interest on Long-
term Loan Capital 533.84 492.84 449.81 533.84 492.84 449.81 533.84 492.84 449.81
Interest on
Working Capital 270.49 245.59 243.21 260.05 207.49 179.76 279.56 276.14 304.37
Income Tax 81.00 82.50 83.54 81.00 82.50 83.54 81.00 82.50 83.54
Return on Equity
Capital 404.78 412.28 417.49 404.78 412.28 417.49 404.78 412.28 417.49
Aggregate
Revenue
Requirement
4436.92 4589.97 4736.46 4575.32 4677.08 4816.66 4390.73 4521.60 4694.77
Non Tariff Income 10.11 10.52 10.94 10.11 10.52 10.94 10.11 10.52 10.94
Aggregate
Revenue
Requirement
Bulk Supply
Tariff
4426.80 4579.45 4725.52 4565.20 4666.56 4805.73 4380.62 4511.08 4683.83
Table 5-23: Projections of Aggregate Revenue Requirement for Upcoming Units (for
second Control Period as submitted by MSPGCL (Rs. crore)
Particulars Realistic Scenario Optimistic Scenario Pessimistic Scenario
2013-14 2014-15 2015-16 2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
Fuel Related
Expenses
3,475.15
9,250.00
10,891.16
3,475.15
9,250.00
10,891.16
3,475.15
9,250.00
10,891.16
Operation &
Maintenance
Expenses
263.75
675.54
858.13
263.75
675.54
858.13
263.75
675.54
858.13
Depreciation
476.97
1,115.69
1,386.46
476.97
1,115.69
1,386.46
476.97
1,115.69
1,386.46
Interest on
Long-term
Loan Capital
820.41
1,888.55
2,319.45
820.41
1,888.55
2,319.45
820.41
1,888.55
2,319.45
Interest on
Working
Capital
347.56
773.55
884.04
321.87
634.13
632.00
364.42
891.47
1,133.98
Income Tax
54.32
128.30
159.44
54.32
128.30
159.44
54.32
128.30
159.44
Return on
Equity
Capital
271.45
641.17
796.82
271.45
641.17
796.82
271.45
641.17
796.82
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
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Particulars Realistic Scenario Optimistic Scenario Pessimistic Scenario
2013-14 2014-15 2015-16 2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
Aggregate
Revenue
Requirement
5,709.60
14,472.79
17,295.50
5,683.92
14,333.37
17,043.46
5,726.47
14,590.71
17,545.44
Aggregate
Revenue
Requirement
Bulk Supply
Tariff
5,709.60
14,472.79
17,295.50
5,683.92
14,333.37
17,043.46
5,726.47
14,590.71
17,545.44
The Commission has noted MSPGCL’s submission in this regard. Further, as detailed
above, the Commission has analysed only some of the ARR components. The Commission,
in this Order has not estimated the Aggregate Revenue Requirement for MSPGCL and the
same shall be estimated and approved upon thorough examination in its Order on MYT
Petition for the second Control Period.
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6 DIRECTIONS
6.1 Directions for filing MYT Petition for the second Control Period
Through this Order on Business Plan petition, MSPGCL is hereby directed to comply with
the following directives while filing the MYT Petition for the second Control Period:
a) MSPGCL, while submitting the MYT Petition, shall submit the description of
assets proposed to be retired along with original cost of such assets to be retired
over the second Control Period, as well as corresponding equity and debt
component to be retired.
b) As detailed in Section 2.14 of this Order, MSPGCL is directed to submit the
computation of interest expenses for the second Control Period as per the
Regulation 33.5 and 33.6 of the MERC MYT Regulations, 2011 in its MYT
Petition for the second Control Period.
c) As detailed in Section 4.1.2 of this Order, MSPGCL is directed to submit a detailed
note justifying its stand to consider the lease rent payments for the Surya RB and
submit a note on its future course of action on the discussed issue in its MYT
Petition for the second Control Period.
d) As detailed in Section 4.2.1 of this Order, MSPGCL is directed to propose an
appropriate recovery mechanism for the Pumped storage stations with capacity
more than 25 MW (i.e., Ghatghar PSS) in its MYT Petition for the second Control
Period upon the approval of agreement for Ghatghar PSS between MSPGCL and
MSEDCL.
e) As detailed in Section 4.2.1.1 of this Order in the matter of approval of Availability
for Uran GTPS, MSPGCL is directed to submit the relevant facts and figures along
with the MYT Petition for the second Control Period for the Commission’s
consideration.
f) As detailed in Section 4.2.4.2 of this Order MSPGCL is directed to propose the
Auxiliary Consumption norms along with an appropriate justification and
supporting details for pumped storage stations in its MYT Petition for the second
Control Period
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g) As detailed in Section 4.5.2 of this Order, MSPGCL is directed to submit a detailed
note on the financing plan, covering the sources of finance, initiatives being taken
up by MSPGCL to tie-up the funds for project execution, funding from internal
accruals, if any, to fund Capital Expenditure requirements during second Control
Period in its MYT Petition for the second Control Period.
h) As detailed in Section 5.3 of this Order, MSPGCL is directed to submit the details
of the asset retirement/replacement envisaged during the second Control Period in
its MYT Petition. MSPGCL is further directed to consider the original cost of
retired assets for working out the depreciation in accordance with the provisions of
the MERC MYT Regulations, 2011 in its MYT Petition.
i) As detailed in Section 5.3 of this Order, MSPGCL is directed to submit the revised
computation of the depreciation in its MYT Petition for the second Control Period.
j) As detailed in Section 5.7 of this Order, MSPGCL is directed to consider the
original cost of retired assets for working out the Return on Equity in accordance
with the provisions of the MERC MYT Regulations in its MYT Petition.
6.2 OTHER DIRECTIONS
a) As outlined in Section 2.8 of this Order, MSPGCL is directed to take concerted
steps to arrange good quality of coal for its Power Stations. MSPGCL should
further prioritize the infrastructure development for its Power Stations, which
should be reflected through improved Plant Load Factor and Availability Factor
during the second Control Period.
b) As outlined in Section 2.10 of this Order, MSPGCL is directed to expedite the
process to ensure that the requisite quantity of fuel supply is available for its
upcoming as well as existing and new Units.
c) MSPGCL shall submit its truing petition for the FY 2011-12 and APR FY 2012-
2013 as per MERC Tariff Regulations, 2005, as a separate section, in its MYT
Petition for FY 2013-14 to FY 2015-16.
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Page 165 of 168
As regards MSPGCL’s prayer to permit MSPGCL to annually update the Business Plan,
the Commission is of the view that the whole purpose of the MYT Business Plan is to
inculcate the discipline of long-term planning, and if the Business Plan is allowed to be
modified/updated every year, then the very purpose of approving the Business Plan for the
entire Control Period will be defeated. Further, the MERC MYT Regulations do not permit
such modification/revision/updating of the Business Plan on an annual basis.
This approved MYT Business Plan of MSPGCL shall form the basis for filing the MYT
Petition for the second Control Period. MSPGCL shall submit the MYT Petition within 60
days from the date of issuance of this Business Plan Order.
With the above, MSPGCL’s Petition in Case No. 91 of 2012 stands disposed of.
Sd/- Sd/-
(Vijay L. Sonavane) (V. P. Raja)
Member Chairman
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 166 of 168
APPENDIX-1
List of people attended Technical Validation Session held on 24.09.2012 at 11:00 Hrs
In the Matter of petition of MSPGCL for approval of Business Plan FY 2013-2014 to
FY 2015-2016
Venue: Maharashtra Electricity Regulatory Commission Centre no -1, WTC, Cuffe
Parade, Mumbai-400005
Sr.no Name of Person Name of Institution
1 R.K GOEL MSPGCL
2 V.P.RATHOD MSPGCL
3 S.V.BEDEKAR MSPGCL
4 S.A.NIKALJE MSPGCL
5 A.A.BAPAT MSPGCL
6 J.K. SRINIVASAN MSPGCL
7 RAMANDEEP SINGH CONSULTANT MSPGCL
8 D.S.DHAKATE MSPGCL
9 A.A.HARNE MSPGCL
10 L.N.MARGADE MSPGCL
11 A.G.KHONDE MSPGCL
12 SWATI KEDIA CONSULTANT MSPGCL
13 R.R. KULKARNI MSPGCL
14 A.D PIMPLE MSPGCL
15 M.G.WAGHMODE DIRECTOR(OPN) MSPGCL
16 S.B.WAGHMARE C.E. WORKS MSPGCL
17 B.O.BAGADE DY.CE,MSPGCL
18 P.K. KOTECHA EE,MSPGCL
19 SACHIN KAVITAKE AE, MSPGCL
20 ASHOK PENDSE CONS. REP. -TBIA
21 C.S.THOTWE DIR(P) ,MSPGCL
22 S S KURADE DY EE MSPGCL
23 SANJIV SINGH ABPS INFRA
24 RAMAN GULATI ABPS INFRA
25 U.K. DHAMANKAR MSPGCL
26 V.W.DESHPANDE MSPGCL
27 AASHISH SHARMA MD. MSPGCL
28 V.S.PATIL ED. MSPGCL
29 K.V.BHAGWAT EE.MSPGCL
30 ARVIND PARATE MSPGCL
31 ARVIND PARATE MSPGCL
32 NARAYAN BIPANE MSPGCL
33 BHARAT JADHAV MSPGCL
34 S.TIRLOK KUMAR CONSULTANT MSPGCL
35 S.K. LABADE MSPGCL
36 B.C.DUBEY MSPGCL
37 V.K. WADMAR MSPGCL
38 A.J.SOMVANSHI MSPGCL
39 V.M.JAIDEV MSPGCL
Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16
Page 167 of 168
APPENDIX-2
List of people attended Public Hearing Session held on 20.12.2012 at 11:00 Hrs In the
Matter of petition of MSPGCL for approval of Business Plan FY 2013-2014 to FY
2015-2016
Venue Centrum Hall 1st Floor, Centre no -1, WTC, Cuffe Parade, Mumbai-400005
Sr.no Name of Person Name of Institution
1 J.K. SRINIVASAN MSPGCL
2 A.A.HARNE MSPGCL
3 V.P.RATHOD MSPGCL
4 S.TIRLOK KUMAR CONSULTANT MSPGCL
5 G.S.PURANIK MSPGCL
6 RAMANDEEP SINGH CONSULTANT MSPGCL
7 D.A.BHAWRE MSPGCL
8 U.K. DHAMANKAR MSPGCL
9 V.S. KOMPALI MSPGCL
10 A.G.KHONDE MSPGCL
11 L.N.MARGADE MSPGCL
12 A.D PIMPLE MSPGCL
13 R.G.SUBHEDAR MSPGCL
14 R.R. KULKARNI MSPGCL
15 G.D.PATIL MSPGCL
16 S.K. LABADE MSPGCL
17 A.A.BAPAT MSPGCL
18 S.A.NIKALJE MSPGCL
19 B.H.GUJRATHI SLDC
20 P.P. KARHADE URJA PRABODHAN
21 S.M.MADAN MSPGCL
22 S.REGO MSPGCL
23 DESHPANDE MSPGCL
24 S.B.WAGHMARE C.E. WORKS MSPGCL
25 MAHESH APHALE MSPGCL
26 SURESH GEHANI ABPS INFRA
27 RAMAN GULATI ABPS INFRA
28 SANJIV SINGH ABPS INFRA
29 CHIRAG GANDHI R RAMAKRISHNA & ASSOC.
30 VIRAL SONI R RAMAKRISHNA & ASSOC.
31 KAMLKAR SHENOY AAM ADAMI PARTY
32 ASHISH CHOUBEY AAM ADAMI PARTY
33 R.K.SINGH AAM ADAMI PARTY
34 MAHESH DOSHI AAM ADAMI PARTY
35 BALKRISHNA SHETTY AAM ADAMI PARTY
36 P.N.ALUSKAR AAM ADAMI PARTY
37 ALKA HARKE AAM ADAMI PARTY
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