MAHARASHTRA AIRPORT DEVELOPMENT COMPANY Vs. ABHIJEET MADC NAGPUR ENERGY PVT. LTD
LAWS(ET)-2015-1-11
CENTRAL ELECTRICITY REGULATORY COMMISSION
Decided on January 20,2015

Maharashtra Airport Development Company Appellant
VERSUS
Abhijeet Madc Nagpur Energy Pvt. Ltd Respondents

JUDGEMENT

- (1.) Maharashtra Airport Development Company (MADC) has submitted a Petition dated 31 July, 2014, as Deemed Distribution Licensee for the Multimodal International Hub Airport at Nagpur (MIHAN) Special Economic Zone (SEZ) area, for approval of short term power procurement and Tariff under the Guidelines dated 15 May, 2012 of the Ministry of Power (MoP) and related dispensations.
(2.) MADC's substantive prayers, as revised through submissions dated 5 and 7 November, 2014, are as follows: " ... ii) Approve the plan for short term procurement of power in its capacity as a distribution licensee as per the 'Guidelines for short term (i.e. for a period less than or equal to one year) procurement of power by Distribution Licensees through Tariff based bidding process' dated 15.05.2012 issued by the Ministry of Power; iii) Allow the deviation sought as per Clause no. 7 of the 'Guidelines for short term (i.e. for a period less than or equal to one year) procurement of power by Distribution Licensees through Tariff based bidding process'; (iv) Allow MADC to charge consumers in the MIHAN SEZ area, the tariff equivalent to actual cost of power Purchase, T&D charges wherever applicable, O&M charges and any other admissible charge(s) as per the law in force, till such time the ARR is filed by MADC and Tariff is determined by this Hon'ble Commission." v) Issue necessary directions to Respondent AMNEPL to allow MADC to use the 'interconnection facilities' created by AMNEPL for the purposes of supply of power to the consumers in the MIHAN SEZ area... (ix) to allow MADC to procure power through power exchange(s)."
(3.) In its Petition, MADC has submitted as follows: 3.1. MADC was constituted in 2002 by the Government of Maharashtra (GoM) as the nodal agency for the planning and implementation of MIHAN along with a Multi Product SEZ. 3.2. Respondent No. 1, Abhijeet MADC Nagpur Energy Pvt. Ltd. (AMNEPL) is a Special Purpose Vehicle formed with 26% and 74% equity contribution from MADC and the Abhijeet Group, respectively. Respondent No. 2, the Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) is a Distribution Licensee in the entire State of Maharashtra, except for Mumbai City and its suburbs (excluding Mulund and Bhandup). Respondent No. 3, the Maharashtra State Electricity Transmission Co. Ltd. (MSETCL) is a Transmission Licensee operating and owning most of Maharashtra's transmission system. Respondent No. 4, the Maharashtra State Load Despatch Center (MSLDC) is the nerve center for operation, planning, monitoring and control of the power system. 3.3. Following an international competitive bidding process, a Concession Agreement dated 7 November, 2007 has been signed between MADC and AMNEPL for developing and operating a coal -based power plant for supplying power to the MIHAN Area. Under the Concession Agreement, AMNEPL would erect the power plant along with interconnection facilities, while MADC would set up the distribution network and hand it over to AMNEPL for operation and maintenance. Power would be supplied directly by AMNEPL to the consumers. Such direct power supply was to be governed by bilateral agreements to be signed between AMNEPL and consumers. All ancillary works, including, billing, metering, etc. were to be done by AMNEPL. 3.4. Thereafter, several meetings were held regarding the implementation of the Concession Agreement. Vide letter dated 4 June, 2010, MADC intimated AMNEPL regarding decisions arrived at during the meeting held on 15 May, 2010, and the Concession Agreement stood amended accordingly. 3.5. Vide Government of India (GoI) notification dated 3 March, 2010, Section 14 of the Electricity Act (EA), 2003 was amended to provide Deemed Distribution Licensee status to SEZ Developers. The Commission, vide Order dated 3 August, 2012 on a Petition of MADC in Case No.16 of 2011, declared MADC to be the Deemed Distribution Licensee for the notified SEZ area of MIHAN, and initiated the preparation of draft Specific Conditions of Licence Regulations for MADC. 3.6. MADC filed a Petition in Case No. 65 of 2012 for adoption of Tariff under S. 63 of the EA, 2003, but in an amended Petition on 18 December, 2012 submitted that it had proceeded on a wrong legal basis. It stated that, in fact, the contract of sale and purchase of electricity is between AMNEPL and the consumers directly and not with MADC. Sale of electricity by a generating company to consumers is governed by bilateral agreements, including in regard to the price. Such price is not regulated by the Commission. The understanding between MADC and AMNEPL as per the Concession Agreement was to keep the tariff out of the regulatory purview and to provide consumers with electricity at a reference tariff of Rs. 2.97/Unit. Thereafter it was subject to the escalation formula specified in Schedule 5 of the Agreement. Vide Order dated 5 December, 2012 in Case No. 65 of 2012, the Commission allowed MADC to withdraw its Petition. 3.7. AMNEPL filed an appeal before the Appellate Tribunal for Electricity (ATE) contending that the Commission had not considered its submissions. It also questioned the stand of MADC for supply of power in absence of an approved tariff. The ATE dismissed the Appeal as non -maintainable, with liberty to AMNEPL to approach the Commission. 3.8. AMNEPL filed a Petition in Case No. 23 of 2013 asking the Commission to determine the tariff afresh under Section 62 of EA, 2003. Vide Order dated 23 August, 2013, the Commission rejected it as non - maintainable, and observing that the case did not fall under either S. 62 or 63 which are the only enabling provisions under which the Commission can approve or adopt the tariff for supply of power by a generating company to a Distribution Licensee. 3.9. The Units of the power plant set up by AMNEPL started achieving Commercial Operation Date (COD) since January, 2011, and power supply commenced in January, 2013 to MIHAN SEZ consumers. Thereafter, various issues cropped up between MADC and AMNEPL. AMNEPL issued a 'Notice of Default' dated 23 October, 2013 and 'Notice of Intent to Terminate' dated 24 October, 2013 to MADC, and these were replied to. On 5 November, 2013, AMNEPL shut down the power plant without prior intimation to MADC. It was only on 22 November, 2013 that AMNEPL divulged that it had done so and had started supplying to the MIHAN SEZ consumers through DG sets, which were envisaged as backup units as per the Concession Agreement. 3.10. On 3 December, 2013, the MERC (Specific Conditions of Distribution Licence applicable to MADC for MIHAN SEZ) Regulations, 2013 were notified. The Regulations note MADC to be the Distribution Licensee from 29 May, 2007 onwards. 3.11. While supply was being made through DG sets, there were frequent complaints of tripping and shut downs, and several industries were aggrieved as their applications for new connections were kept pending by AMNEPL. The grievances intensified when AMNEPL failed to ensure uninterrupted power supply and there were shutdowns every day of about 12 hours or more. Certain consumers, especially continuous processing units, were forced to apply to MSEDCL (being the parallel Distribution Licensee in the MIHAN area) for supply of power. 3.12. MADC approached the Commission in Case No. 62 of 2014 for securing the power supply and, as the ground situation deteriorated, filed an addendum praying that MSEDCL be directed to supply electricity to those consumers who approach it. The Commission initially passed an enabling Order on 11 April, 2014. Shortly thereafter, AMNEPL stopped supplying power even through DG sets. During the proceedings, AMNEPL expressed its inability to supply uninterrupted power to consumers in MIHAN SEZ. In its final Order dated 6 May, 2014, the Commission directed that MSEDCL supply power to those who applied to it; others should continue to get power as in the past; MSEDCL may use the transmission/distribution networks of MADC and AMNEPL as an interim arrangement, upon payment of appropriate charges; and technical details of management of transmission, distribution and associated systems shall be settled between MADC, AMNEPL, MSEDCL and MSETCL. 3.13. Being a Deemed Distribution Licensee, MADC is obliged to serve the power demands of the consumers of the MIHAN SEZ area. In correspondence with the Government and MADC, the consumers have demanded that MADC supply power to them. Consumers have also approached the Commission as well as the Bombay High Court, Nagpur Bench. The Concession Agreement envisaged that AMNEPL would supply directly to the consumers and undertake all other related functions. There was no occasion for MADC to establish a consumer grievance redressal mechanism since there was no consumer to whom MADC was actually supplying power. Thus, MADC was not functioning as a full -fledged Distribution Licensee till date. However, keeping in view the plight of consumers in the MIHAN SEZ area, MADC now proposes to undertake short term power procurement for supplying power to them. 3.14. As per the MoP 'Guidelines for Short Term (i.e. for a period less than or equal to one year) Procurement of Power by Distribution Licensees through Tariff based Bidding Process', prior approval of such short term power procurement plan is necessary. In accordance with the Guidelines, MADC proposes to initiate the process of short term procurement for the period from 1.09.2014 to 30.11.2014 as under: Quantum (MW) Block Duration Firm basis 1 -24 00.00 hrs. to 06.00 hrs 3.25 MW 25 -68 06.00 hrs. to 17.00 6.5 MW 69 -80 17.00 hrs. to 20.00 hrs 5.0 MW 81 -96 20.00 hrs. to 24.00 hrs 3.25 MW 3.15. MADC's tender documents are mostly in line with the Guidelines. Clause 7 of the Guidelines provides for any deviations with the prior approval of the Commission. MADC proposes the following deviation in the draft tender documents: Guidelines Tender Document Clause 4.1 - Between 33kV bus and 220/33kV sub ................. For inter -State Station of AMNEPL at MIHAN SEZ. transmission of power, State/regional periphery of the seller to be taken as Delivery Point. For intra - State transmission of power, interconnection point of seller with State Transmission Utility to be taken as Delivery Point. The deviation is proposed because the MADC distribution network in MIHAN SEZ is not directly connected to the State Transmission Utility (STU). It is connected to Maharashtra State Electricity Transmission Co. Ltd. (MSETCL)'s network through the AMNEPL switchyard and transmission network. By selecting this delivery point, AMNEPL need not disconnect its plant generators/station transformers connected to 220kV bus. Only the 33kV side of DG sets has to be disconnected. 3.16. MADC and MSEDCL are parallel Distribution Licensees in the MIHAN SEZ area. As per the proviso to Section 62(1) (d) of the EA, 2003, in case of distribution of electricity in the same area by two or more Licensees, the Commission may, for promoting competition among them, fix only a ceiling tariff for retail sale of electricity. Through its Petition, MADC seeks approval for charging MIHAN SEZ consumers the tariff applicable for the respective category of consumers in the MSEDCL area of supply as the 'maximum ceiling tariff' till such time as its Aggregate Revenue Requirement (ARR) and tariff are determined by the Commission; and to approve the appropriate tariff schedule as is applicable in the MSEDCL area of supply. 3.17. For this purpose, MADC has intimated AMNEPL, vide letter dated 15 July, 2014, that it shall be using AMNEPL's transmission network. Pursuant to AMNEPL's Board meeting held on 26 July, 2014, AMNEPL has been obstructing the use of its transmission lines for supplying power to consumers in the MIHAN SEZ area. AMNEPL has refused such permission on the pretext of AMNEPL's Appeal No. 173 of 2014 before the ATE challenging the Commission's Order dated 6 May, 2014. Further, on 26 July, 2014, AMNEPL has issued a termination letter demanding payment of total debt due and 150% of the equity as compensation. The letter states that, until this amount is paid to AMNEPL, it would hold the facility on behalf of MADC. The validity of the termination letter is disputed and MADC is taking due steps in this regard. 3.18. AMNEPL's denial of use of the transmission lines amounts to abuse of dominant position by the generating company as it is well aware that, without the use of its transmission system, no power can flow to the MIHAN SEZ area. Hence interference by the Commission is warranted under S. 23 and 60 of the EA, 2003. ;


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