RAKESH NATH - (1.) This appeal has been preferred by Tata Power Trading Company Ltd. against the order dated 12.09.2010 passed by the Maharashtra Electricity Regulatory Commission ("State Commission") regarding true -up for the FY 2008 -09, Annual Performance Review for the FY 2009 -10 and determination of Aggregate Revenue Requirement (ARR) and tariff for the FY 2010 -11 for the distribution business of Tata Power Company Ltd., allegedly affecting the contractual rights of the appellant under the Power Purchase Agreement that it had executed with Tata Power Company.
(2.) THE State Commission is the first respondent. Tata Power Company Ltd. is the second respondent.
(3.) THE brief facts of the case are as under: 3.1 The appellant is an inter -state trading licensee and is a wholly owned subsidiary of the respondent No.2. 3.2 The respondent no.2 is engaged in the business of distribution of electricity in the city of Mumbai. It is also involved in the generation of electricity and owns generating stations. However, the respondent no.2 has segregated and ring -fenced its distribution and generation businesses for the purpose of operation. Hereinafter, the expression " Tata Power - Distribution" will be used for the distribution business of the respondent no.2 and "Tata Power - Generation" will be used for referring to the generation business of the respondent no.2. 3.3 Tata Power - Generation has a generation capacity of 2027 MW in and around Mumbai. Out of this, Tata Power - Generation has entered into long term PPAs for supply of 1000 MW with BEST undertaking, a distribution licensee operating in the city of Mumbai and 527 MW with Tata Power - Distribution. Additionally, Tata Power - Generation has committed to sell about 500 MW power to the appellant through two separate PPAs as under: (i) PPA dated 21.12.2007 for sale of 92 MW (net capacity) plus any additional power available from Tata Power - Generation's recently commissioned unit no.8. (ii) PPA dated 12.01.2010 for sale of 400 MW capacity. 3.4 On 12.01.2010, the appellant also entered into a PPA with Tata Power - Distribution for sale of upto 160 MW power on round the clock basis with effect from 01.04.2010 as per the projections to be communicated by the latter on quarterly basis at least 90 days before the start of the period to meet the growing demand in its licensed area of supply. No approval for the PPA was obtained by Tata Power - Distribution from the State Commission as it was a short term PPA for a period of one year. 3.5 Tata Power - Distribution filed a petition being no.98 of 2009 before the State Commission for true -up for the FY 2008 -09, Annual Performance Review for the FY 2009 -10 and determination of ARR and tariff for the FY 2010 -11 in which it submitted its projections of power purchase of 527 MW for Tata Power - Generation and 160 MW from the appellant for the FY 2010 -11. 3.6 The State Commission passed the impugned order on 12.09.2010 in which it decided to consider the procurement of additional 160 MW required by Tata Power - Distribution during the FY 2010 -11 as directly contracted from Tata Power - Generation instead of being supplied by the appellant. 3.7 Aggrieved by the above finding of the State Commission in its order dated 12.09.2010, the appellant has filed this appeal. Ld. Counsel for the appellant has submitted the following: 4.1 The State Commission has wrongly and arbitrarily altered the contractual rights and entitlements of the appellant under its validly executed PPA with Tata Power - Distribution without any notice to the appellant and without giving any reason in the impugned order for such a decision. 4.2 As per the provisions of the 2003 Act, transaction between a trading licensee and a generating company are outside any regulatory superintendence. It is well settled by the judgment of Hon'ble Supreme Court in the case of Tata Power Company Ltd Vs Maharashtra Electricity Regulatory Commission and Ors. reported as 2009 ELR (SC) 0246 that a generating company has the choice of counter -party buyer and has freedom from tariff regulation when it supplies to a trader or directly to a consumer. Therefore, the legality of PPA executed between TPC -G and the appellant can not be called into question. 4.3 Tata Power - Distribution has entered into the PPA for short term purchase with the appellant according to the Tariff Regulations. 4.4 The price offered by the appellant including its trading margin of 7 paise/unit is comparable to the competitive short term power prices as estimated by the State Commission for short -term power purchase for the FY 2010 -11. 4.5 Power generated by Tata Power - Generation is not low - cost power, therefore, Tata Power - Distribution would have run the market risk and could be subjected to market volatility in case it procured power directly from Tata Power - Generation as against the PPA with the appellant where it had the right to refusal without any penalty. 4.6 Thus the PPA between the appellant and Tata Power - Distribution was both legal and beneficial to Tata Power - Distribution and its consumers. ;