Decided on January 03,2012

Tamil Nadu Newsprint And Papers Appellant


RAKESH NATH - (1.)THIS appeal has been filed by Tamil Nadu Newsprint and Papers Limited against the order dated 20.04.2011 passed by the Tamil Nadu Electricity Regulatory Commission ("State Commission") regarding tariff for supply of power from the captive power plant of the appellant to Tamil Nadu Electricity Board ("Electricity Board").
(2.)THE appellant is in the business of manufacture of newsprint and printing and writing papers using bagasse as primary raw material. It also operates a fossil fuel based captive power plant for captive consumption as well as for supplying surplus Page 2 of 26 power to the Electricity Board. The Electricity Board and the State Commission are the first and the second respondents respectively.
The brief facts of the case are as under:

3.1 The State Government issued a policy on captive power generation vide its Order No.48 dated 22.04.1998 including the tariff applicable for the supply to the Electricity Board. 3.2 The Electricity Board in the year 2001 approved the proposal of the appellant to install a 24.62 MW captive co-generation plant at its paper plant and to export its surplus power to the Electricity Board including the tariff for supply of its surplus power. 3.3 Based on the above approval, the appellant entered into an agreement with the Electricity Board on 17.10.2001 for supply of surplus power for a period of five years. The tariff agreed under the agreement was Rs.2.25 per kwh during the FY 2001-02, to be escalated by 5% every year over the tariff for the previous year. The rate agreed between the appellant and the first respondent were lower than that decided by the State Government under its captive power policy. The purchase price for the FY 2005-06 was Rs.2.73 per kwh and with mutual consent the same rate was adopted for the FY 2006-07. The agreement expired on 16.10.2006. 3.4 On 15.05.2006 the State Commission issued its Order No.4 deciding the tariff applicable to captive and co-generation plants. 3.5 In October, 2006, the appellant approached the first respondent for renewal of the agreement. The first respondent instead of renewing the agreement in terms of the order 4 dated 15.05.2006 of the State Commission, by its order dated 27.10.2006 approved the renewal of the agreement from 17.10.2006 for the period of three years at the prevailing rate of Rs.2.73 per unit, without any escalation. 3.6 Subsequently, the respondent no.1 by its order dated 10.04.2008 refixed the purchase rate for energy supplied by the appellant at Rs.3.01 per Page 5 of 26 kwh for the period 17.10.2006 to 31.03.2008 and thereafter to follow the guidelines proposed by the State Commission. 3.7 Finally, the appellant and the first respondent entered into an agreement for sale of surplus power from the appellant's captive power plant on 06.03.2009 for a period of three years from 17.10.2006 extendable for further period based on the mutual agreement between the parties. According to the agreement, the rate for power purchase was linked to the frequency in accordance with the Central Commission's UI rates subject to floor rate of Rs.2.10 per kwh and the ceiling rate of Rs.3.45 per kwh. The rate for infirm power was 90% of the applicable rate for firm power. 3.8 The appellant raised a supplementary bill for the period 17.10.2006 to 31.03.2008 for the difference in tariff and raised a bill @ Rs.3.01 per kwh from April, 2008 onwards on the first respondent. However, the first respondent did not agree the enhancement of tariff at Rs.3.01 per kwh. 3.9 The first respondent in September, 2009 filed a petition before the State Commission seeking for fixing purchase price for the power supplied by the appellant for three year period with effect from 17.10.2006. 3.10 The State Commission passed the impugned order dated 20.04.2011 holding that the tariff for the period 17.10.2006 to 15.09.2009 would be Page 7 of 26 Rs.2.73 per kwh and for the period from 15.09.2009 in accordance with the Order No.4 dated 15.05.2006 of the State Commission. 3.11 Aggrieved by the above order dated 20.04.2011 of the State Commission, the appellant has filed this appeal.

(3.)THE appellant has submitted as under:
4.1 The State Commission has erroneously fixed the tariff at Rs.2.73 per kwh for the period 17.10.2006 to 15.09.2009 without considering the State Government's Policy for captive power generation. 4.2 The State Commission should have considered that the annual escalation of 5% in tariff was allowed to the appellant upto 16.10.2006. 4.3 The order is also discriminatory as in a similar case the State Commission had allowed the benefit of 5% escalation in tariff in accordance with the Government Policy. 4.4 The respondent no.1 had always represented to the appellant that it would be entitled to purchase price of Rs.3.01 per kwh. The respondent no.1 had already used the power from the appellant and is now estopped from holding out otherwise after a lapse of more than two years. Page 9 of 26 4.5 The State Commission failed to notice that the period of October 2006 to October 2009 took place during the transition period of the State Commission's orders on tariff fixation for various categories.


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