- (1.) Three Generators (Adani Power Maharashtra Ltd., Indiabulls Power Ltd. and JSW Energy Ltd.), which had tied up power under the Case 1 route as per the "Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees" issued by Ministry of Power, Government of India (hereinafter referred to as "Competitive Bidding Guidelines") with Maharashtra State Electricity Distribution Company Limited (hereinafter referred to as "MSEDCL"), had approached the Commission for compensation/adjustment in Tariff due to shortage of domestic coal availability, increase of price of imported coal, etc. in Case No. 154, 189 and 118 of 2013. Considering the common issues involved in the matters, the Commission had heard the cases jointly and approved a framework for compensatory fuel charge in Order dated 15 July, 2014. The Commission had directed the three Petitioners in those cases to approach the Commission with detailed justification of their hardships to claim the compensatory fuel charge under the approved framework. Accordingly, Adani Power Maharashtra Limited (hereinafter referred to as "APML" or "Petitioner"), filed the present Petition inter -alia seeking adjustment in Tariff under four separate Purchase Agreements (hereinafter referred to as the "PPAs") executed between MSEDCL and APML on account of shortfall in supply of domestic coal.
(2.) The Petitioner has made the following prayers in the present Petition: (a) "Approve the Operational Methodology proposed for calculation of incremental energy charge as adjustment in tariff for the power supplied by using imported coal/e - auction coal/open market coal/MoU coal purchased on account of shortfall in domestic coal supply from the quantity assured under NCDP,2007 (i) for Unit 1 for 660 MW and Unit 2 for 520 MW for which linkage has been granted, from the date of commencement of power supply under the PPAs dated 31.03.2010, 09.08.2010 and 16.02.2013 and 08.09.2008 respectively; and (ii) for Unit 4 and 5 for 1320 MW covered under identified 4660 MW as per CCEA decision dated 21.06.2013 from the date of commencement of power supply under the PPAs dated 31.03.2010, 09.08.2010 and 16.02.2013 the respective PPAs. (b) direct the Respondent to pay the revised tariff for the actual cost of generation for the power supplied in terms of (a) above;"
(3.) In its Petition, APML submitted as under: APML, a subsidiary of Adani Power Limited (hereinafter referred to as "APL") is a 3.1. generating company and has established a 3,300 MW (5 units of 660 MW) thermal generating station comprising of five units at Tiroda, Maharashtra (hereinafter referred to as "Tiroda TPS"). APML has signed four PPAs for supply of 1320 MW, 1200 MW, 125 MW and 440 MW of power with MSEDCL on a long -term basis as summarised below: Table 1: PPAs between APML and MSEDCL Contracted Capacity (in Date of PPA with MSEDCL Levelised Tariff (Rs./kWh) MW) 8 September, 2008 1320 2.64 31 March, 2010 1200 3.28 9 August, 2010 125 3.28 16 February, 2013 440 3.28 Total 3085 3.2. APML submitted that the reason for filing the present Petition has arisen due to the decisions taken by Cabinet Committee on Economic Affairs (hereinafter referred to as "CCEA") on 21 June, 2013 and the subsequent amendment to New Coal Distribution Policy, 2007 (hereinafter referred to as "NCDP, 2007") by Ministry of Coal (hereinafter referred to as "MoC") dated 26 July, 2013 resulting in: Supply of lesser quantity of coal than what has been assured in the NCDP, 2007 in respect of power projects having Letter of Assurance (hereinafter referred to as Letter of Assurance (LoA)/ Fuel Supply Agreement (FSA); and Restricting execution of FSA only to power projects identified under 78,000 MW capacity, thereby not providing any FSA for 4660 MW capacity which has resulted in supply of coal to projects identified under 4660 MW on best effort basis and at a price higher than the linkage coal. 3.3. The status of coal supply for the five units is as follows: Table 2: Coal linkage status Installed Capacity with Linkage Coal Remark Unit No. Capacity Domestic Coal Quantity(MTP (MW) Linkage (MW) A) Remark Covered under list of identified 78000 Unit -1 660 660 MW capacity as per 4.91 CCEA decision dated 21 June, 2013 Unit -2 660 520 Unit 3 660 - Covered under Unit -4 660 660 identified 4460 MW capacity as per - CCEA decision 660 660 Unit -5 dated 21 June, 2013 3.4. APML submitted that Units 1, 2, 3 and 4 are already commissioned and supplying power to MSEDCL. Unit No. 5 is likely to be commissioned shortly. Therefore, all the Units of the Tiroda TPS would be commissioned prior to 31 March, 2015. 3.5. The first PPA between APML and MSEDCL was executed on 8 September, 2008 for supply of 1320 MW power from Units 2 and 3 of the Tiroda TPS, of which 800 MW was to be based on the allocated Lohara Coal Blocks. The balance contracted capacity was envisaged to be generated using coal supplies from CIL and its subsidiaries. Western Coalfields Limited (hereinafter referred to as "WCL") and South East Coalfields Ltd. (hereinafter referred to as "SECL") issued two Letter of Assurances (hereinafter referred to as "LOAs") dated 1 June, 2009 and 6 June, 2009. APML entered into the Fuel Supply Agreement (hereinafter referred to as "FSA") dated 28 December, 2012 with SECL for supply of fuel for 1180 MW (660 MW for Unit 1 and 520 MW for Unit 2). 3.6. The Petitioner has synchronised Unit 2 and declared commercial operations from 30 March, 2013. Meanwhile, during the month of March, 2013, CIL and its subsidiaries have also commenced coal supply under the FSA dated 28 December, 2012. However, due to shortage in the quantity and quality of domestic coal supply by CIL or its subsidiaries under the FSA against those assured under NCDP, 2007, APML has been forced to procure coal from alternate sources either by e -auction and/or by importing coal. APML submitted that it therefore seeks adjustment of the Tariff applicable for the contracted capacity of 520 MW under the PPA dated 8 September, 2008. Coverage of PPAs dated 31 March, 2010, 9 August, 2010 and 16 February, 2013 for Capacity of 660 MW from Unit 1 under identified 78000 MW and Capacity of 1320 MW from Unit 4 and 5 for which application of linkage is pending 3.7. APML participated in the bidding process conducted by MSEDCL in 2009 and offered 1200 MW from Unit 1, 4 and 5 by submitting its bid dated 7 August, 2009. APML submitted that the bid submitted was completely based on the domestic coal and in this regard it would be pertinent to note that at the time of submission of Bid, it had stated the following: Captive coal mines, i.e., Lohara Coal Blocks were allocated for 800 MW; LoAs for 1180 MW, i.e., LoA dated 6 June, 2009 issued by SECL for supply of 2.557 Million MT of "F" grade coal and LoA dated 1 June, 2009 issued by WCL for supply of 2.185 Million MT of "E" grade coal; and For the balance quantity, APML had already applied for grant of long -term linkage vide its application dated 9 June, 2009 to get supply of coal in terms of NCDP, 2007. 3.8. Therefore, based on the LoAs received and the application made for long -term linkage, the Petitioner submitted its bid for supply of 1200 MW to MSEDCL. Even MSEDCL has considered the project on domestic linkage and approved the quoted Tariff using escalation rates applicable to domestic/linkage coal supplies. 3.9. Subsequently, the PPA dated 31 March, 2010 was executed between APML and MSEDCL. APML submitted that Article 1.1 of the PPA clearly defines fuel to be domestic coal. Further, in view of the power deficit situation in the State of Maharashtra, the Petitioner offered additional 125 MW and 440 MW of power to Respondent to be supplied on the same terms and conditions of the PPA for 1200 MW signed with MSEDCL at a levelised Tariff of Rs. 3.28/kWh and upon MSEDCL agreeing to take the said additional power, two PPAs dated 9 August, 2010 and 16 February, 2013 were executed for 125 MW and 440 MW respectively. 3.10. APML submitted that through the present Petition, it seeks adjustment to the Tariff applicable for the contracted capacity of 660 MW of Unit 1 covered under the PPA dated 31 March, 2010 and 1320 MW of Unit 4 and 5 covered under the PPA executed between MSEDCL and APML for which application for linkage is pending. 3.11. APML submitted that the Amendment to NCDP, 2007 is a Change in Law under the PPAs. However, the Commission is not delving into the said issue in the present proceedings and hence is not reproducing the arguments of APML in this Order. 3.12. APML submitted that the assurance given under NCDP, 2007 to supply 100% quantity of coal as per normative requirement is to enable the Power Utilities/IPPs to generate electricity up to normative PLF of 85%. This objective of NCDP, 2007 can be achieved only when supply of coal of appropriate heat value to achieve normative PLF was made available by the coal companies. The guidelines framed by MOP, which is being followed by MOC/CIL to determine the coal quantity for the LOA, was based on this principle. Under NCDP, 2007, GoI is bound to provide both grade and quantity as assured under NCDP, 2007 for both the categories, i.e., i) 660 MW Unit 1 and 520 MW of Unit 2 covered under identified 78000 MW and; ii) 660 MW each for Unit 4 and Unit 5 covered under 4660 MW. 3.13. APML submitted that the Commission in the Order dated 15 July, 2014 in Case No. 189 of 2013 has also observed that CIL was required to provide and supply 100% of the normative requirement of coal in accordance with the NCDP, 2007 at the time of bidding. APML stated that even then, under the LOA/FSA issued, the coal supply is only up to 90% of the normative requirement that also on the best effort basis. Hence, the generator has to tie up for imported coal for the remaining 10%. APML stated that CERC has also been considering GCV on 'as received' basis which takes care of quality aspect of the coal received. CERC in its Order dated 21 February, 2014 in Case No. 155/MP/2012 has allowed for complete pass -through of shortfall. APML also referred to the Commission's Order dated 5 May, 2014 in Case No. 63 of 2014, which had allowed the actual GCV for domestic coal. 3.14. Quoting the CCEA decision, APML submitted that it is clear that assurance made under NCDP, 2007 has not been adhered to. Non -grant of linkage to 4660 MW recognised under the CCEA decision is in violation of NCDP, 2007 and is an event of "Change in Law". APML submitted that it should be compensated for the shortfall of coal supply to the extent of 100% of the normative requirement. APML submitted that Units 4 and 5 have been included in the list of projects of total capacity of 4660 MW by CCEA with a recommendation to coal companies for supply of coal under MOU/FSA. Unit 4 is already commissioned whereas Unit 5 is likely to be commissioned very shortly. Till the coal supply commences from CIL/its subsidiaries, APML is dependent on imported/e - auction/open market coal/MOU coal for the generation of power. APML submitted that it would be liable for compensation by MSEDCL for the entire fuel cost incurred over and above the Energy Charge under the PPAs. 3.15. APML submitted that at the time of bid and execution of PPA, it had envisaged that the entire coal required for generating and supplying power under the PPAs would be available through coal linkage in terms of existing legal regime relating to distribution of coal for power generation as notified by MoC. 3.16. APML submitted that in order to offset the shortfall in coal caused due to the failure of ClL to supply the agreed quantity and grade of domestic coal, it will now be required to purchase coal from other sources such as e -auction, import of coal, open market and MoU coal which will result in increase in the cost of generation. 3.17. With regard to logistic costs (i.e., ocean freight, port charges, inland transportation and transaction charges), APML pointed out that in view of change in source of the fuel, there has been substantial increase in the logistic costs. APML submitted that disallowance of 40% of the logistic costs would result in impact of around Rs. 0.46 per kWh. APML added that it is not in any position to bear such impact. APML submitted that it is not possible to get any refund from coal suppliers including CIL on account of addition logistic costs. APML has already been put under severe financial stress due to substantial increase in actual capacity charges as compared to capacity charges quoted in the bids and entire RoE has been wiped out. Any such direction of the Commission to disallow even a small portion of landed cost would result in default in debt servicing and lender opting to take over the project. In view of above, APML requested that the entire logistic cost may be allowed. 3.18. APML proposed separate mechanisms and principles for the two categories identified under CCEA decision dated 21 June, 2013 for pass through of the additional cost incurred. However, based on the directions, APML has re -submitted the computations based on the framework as per Order dated 15 July, 2014. Therefore, the mechanism proposed by APML in the Petition is not represented. 3.19. APML submitted that owing to substantial increase in fuel cost, there are severe cash flow issues and if it continues, it may result in financial institutions foreclosing the loans and would also affect the continuity of operations and supply of power to MSEDCL. It is therefore necessary that APML be granted compensatory charges in the interim during the pendency of the present Petition. APML also pointed that Tiroda TPS has its entire capacity tied up with MSEDCL. The total investment in the project is around Rs. 18,000 Crore. Owing to shortfall in coal availability from CIL and its subsidiaries, APML would incur loss of around Rs. 1000 Crores for supply of power under the PPAs considering materialisation of linkage coal between 65% and 85%. This would erode the net worth within 2 -3 years and lead to shutdown of the Tiroda TPS which is not in the interest of any of the Stakeholder. It will also adversely impact the investment climate in the State. 3.20. APML submitted that as it is not getting the assured coal supply under NCDP, 2007, since the date of commencement of supply of power to the Respondent under the respective PPAs, therefore, the Petitioner is entitled to get the adjustment in Tariff from the date of commencement of supply of power to the Respondent for the shortfall under the respective PPAs. ;