- (1.) The Maharashtra State Power Generation Company Limited (MSPGCL) has filed a Petition dated 27 March, 2014 under Section 61 of the Electricity Act (EA), 2003 and Regulation 100 of the MERC (Multi Year Tariff) Regulations, 2011 seeking approval for economic shut down of five generating Units so as to optimize resources and to achieve economy in the operation of its coal -based Plants.
(2.) MSPGCL's prayers are as follows: " a) Admit this petition. b) Consider the difficulties submitted in this petition and allow MSPGCL to close the specified units till sufficient coal is available. c) To exclude the closed down units for the purpose of calculation of normative performance parameters. d) Allow MSPGCL to recover Idle Capacity Charge from MSEDCL towards the minimum expenses on the closed down 5 no of unit e) Condone any shortcomings deficiencies in the petition and allow MSPGCL to submit additional information / data at later stage as may be required. "
(3.) In its Petition, MSPGCL has submitted that 3.1 MSPGCL sources most of its coal requirement (approximately 90%) from Coal India Ltd (CIL) and its subsidiaries (WCL, SECL, SCCL and MCL). The realization of linkage coal from them has been consistently declining in the past few years as shown in Table 1: Table 1: Coal requirement vs. actual coal realization Operational Domestic Actual Domestic Coal Coal -based Coal Year Coal realization shortage Capacity in Linkage ( MMT) (%) (MW) (MMT) 2010 -11 6730 37.982 32.255 15.08 2011 -12 6480 39.508 29.580 25.13 2012 -13 7480 41.964 30.055 28.38 2013 -14 upto 7980 40.831 27.391 32.92 Feb'14 3.2 For an operating capacity of 6730 MW in the Financial Year (FY) 2010 -11, the actual coal realization was 32.555 MMT whereas, for the operating capacity of 7980 MW in FY 2013 -14, the actual realization was only 27.391 MMT. Thus, while the operating capacity has increased by 19%, actual coal realization has decreased by 17.84% between FY 2010 -11 and FY 2013 -14. MSPGCL is facing a 33% shortfall in coal supply. This has led to decrease in Plant Availability of the existing Units. 3.3 The shortfall in coal supply is further aggravated by the deteriorating quality of coal supplied. The Gross Calorific Value (GCV) of received coal is much lower than agreed in the Fuel Supply Agreements (FSAs), as shown in Table 2: Table 2: Shortfall in heat content due to lower GCV coal Required Heat Quanti Heat Operational Contract Actual Content ty Content to Coal -based ed GCV Received from Shortfall Year Receiv achieve Capacity in in FSA GCV Received (%) ed normative (MW) (kcal/kg) (kcal/kg) Coal in (MMT) PLF in (Mkcal) (Mkcal) 2010 -11 6730 4396 3750 32.255 120956250 130482355 7.30% 2011 -12 6480 4396 3615 29.58 106931700 121436506 11.94% 2012 -13 7480 4193 3232 30.052 97128064 137681282 29.45% 2013 -14 till (Feb 7980 4193 2987 27.391 81816917 132860389 38.42% Rs.14) 3.4 In FY 2010 -11, the total heat value required to achieve normative Plant Load Factor (PLF) was 130.48 trillion kilocalories (Tkcal), as against which the actual received heat value was 120.95 Tkcal. Thus there was a shortfall of 7.3 % in heat value. Similarly, in FY 13 -14 (till Feb'14), the heat value received was 81.81 Tkcal against the required 132.86 Tkcal, i.e. a shortfall of 38.42%. The main reasons are short supply and grade slippage of domestic coal, resulting in non - achievement of the normative PLF. 3.5 During the proceedings of its Multi -Year Tariff (MYT) Petition for the second Control Period FY 2013 -14 to 2015 -16 in Case No. 54 of 2013, MSPGCL had submitted that, in view of the findings of the Competition Commission of India (CCI) in its Order dated 9 December, 2013 that CIL and its subsidiaries were abusing their dominant position at the cost of MSPGCL and other power producers, the quality of coal delivered by CIL and its subsidiaries is expected to improve. However, from the current trends, MSPGCL now estimates that the actual improvement in GCV of received coal and the realization is likely to be only gradual. 3.6 The reduced quantity and quality of coal has resulted in lower heat realization. Thus there is a drop in PLF of the Units, and effective capacity has reduced from 7980 MW to 5000­5500 MW. The coal shortage and poor quality have other impacts on these Units by way of frequent Boiler Tube leakages, forced outages, increase in consumption of secondary oil, increase in Repairs and Maintenance expenditure, etc. 3.7 Due to persistent coal supply shortages, MSPGCL is not in a position to create a buffer stock prior to the monsoon season, which is essential to obviate the problems of wet coal and consequent adverse effect on Plant Availability and loadability of generating Units during the rains. Wet coal supply during the rainy period adds to MSPGCL's problems and lowers the availability factor further. Because oil support becomes inevitable for Boiler Plant stability, secondary oil consumption increases far above normative levels. 3.8 For the current operating capacity of 7980 MW, the heat requirement for achieving the normative Station Heat Rate (SHR) is approximately 148 Tkcal, while the expected heat value from the linkage coal is only 112 Tkcal. In order to achieve the target generation and improve the performance of the Units, the gap of 36 Tkcal in heat content would have to be bridged. 3.9 To address the gap of 36 Tkcal in heat value, MSPGCL proposes two options: (a) Option 1: Procurement of additional coal from the open market, i.e. imported coal or domestic E -Auction coal: The quantity of imported coal required for meeting the shortfall in heat value of the linkage coal for all 29 Units is estimated to be 8.65 MMT p.a. The estimated Tariff with such a significantly enhanced quantity of imported coal will be Rs.3.55/ kWh, which is higher by Rs.0.35/kWh than the Tariff approved for FY 2014 -15. Considering the resultant Tariff burden to consumers and also MPGCL's own precarious cash flow position, the option of procuring a much higher quantity of imported coal seems uneconomic and impracticable. The Central Electricity Authority (CEA) has assigned a coal import target for FY 2014 -15 of only 3 MMT. In the light of the above, this option would not result in economic operation of MPGCL's generating capacity. (b) Option 2: Economic shut down of some less efficient Units of 210 MW temporarily till adequate coal is available, and to utilize the coal allotted for such Units to more efficient Units. 3.10 MSPGCL had identified the following 5 Units with relatively lower efficiency for economic shut down: Table 3: Units selected for economic shut down Capacity S. No. Unit (MW) 1 Bhusawal Unit 2 210 2 Koradi Unit 5 200 3 Koradi Unit 6 210 4 Chandrapur Unit 1 210 5 Parli Unit 3 210 Total 1040 3.11 With this option, the resources available to existing Units would be reallocated such that maximum coal is allotted to better performing Units and the relatively under -performing units are kept under economic shut down temporarily till coal supply improves. The coal becoming available from economic shut down of these 5 Units would be utilized to improve supply to the remaining Units, and optimum generation could then be achieved by them. MSPGCL plans to close these 5 Units at the earliest so that the coal that would become available could be utilized to raise the annual PLF and also improve the coal stock of the remaining Units so as to be better prepared for the monsoon period. Till the coal supply improves sufficiently, the reallocated coal would be utilized to maintain the improved performance of the remaining Units. 3.12 After the economic shut down of these 5 Units, the SHR for the remaining Units as respective Stations would be relatively better and the variable charge for them Stations would be lower. The Units proposed for economic shut down will be temporarily out of service and be preserved for the future. Consequently there would be no Repairs and Maintenance expenses or Return on Equity. 3.13 MSPGCL would, however, recover the employee costs and finance charges towards the loans drawn for these Units, i.e., interest charges and loan servicing expenses, which are the essential components of Fixed Charges and constitute the 'Idle Capacity Charges'. The tentative estimation of Idle Capacity Charges computed on a pro -rata basis for the 5 Units is as follows: Table 4: Idle Capacity Charges (Rs. Crore) Interest on Employee Station Depreciation Total Loan Cost Bhusawal Unit 2 3.80 3.41 47.27 54.47 Chandrapur Unit 1 1.43 3.57 25.39 30.39 Parli Unit 3 3.45 4.69 31.68 39.83 Koradi Unit 5, 0.58 7.55 81.64 89.78 Koradi Unit 6 Total 9.26 19.22 185.99 214.48 3.14 MSPGCL has submitted the likely cost of Generation in four alternative scenarios as follows: Scenario 1: - Tariff as approved by the Commission for FY 2014 -15 in the MYT Order for the second Control Period (Case No. 54 of 2013). Scenario 2: - Likely Tariff considering all the 29 Units in service, with the actual linkage coal realization and AFC disallowance due to lower Availability. Scenario 3: - Likely Tariff considering all the 29 Units in service, with the actual linkage coal realization and use of imported coal to achieve the normative Availability. Scenario 4: - Likely Tariff considering the economic shut down of proposed Units and AFC disallowance due to lower Availability and Idle Capacity Charges. 3.15 The likely Tariff scenarios are as shown in Table 5: Table 5: Tariff scenarios Particulars\Scenario 1 2 3 4 Gross Generation (MU) 56952.26 43,361.58 56,952.26 43,744.63 Net Generation (MU) 51657.07 39,305.02 51,657.07 39,765.84 Variable Cost (Rs. Cr.) 11373.13 8,702.23 13,179.25 8,682.51 Fixed Cost (Rs. Cr.) 5168.82 3,890.60 5,168.82 4,309.06 Total Cost (Rs. Cr.) 16541.95 12,592.82 18,348.07 12,991.57 Variable Charge (Rs./kWh) 2.20 2.21 2.55 2.18 Fixed Charge (Rs./kWh) 1.00 0.99 1.00 1.09 Total Tariff (Rs./kWh) 3.20 3.20 3.55 3.27 3.16 Considering the foregoing, MSPGCL has requested the Commission to allow it to withdraw the selected 5 Units from service, and to recover the Idle Capacity Charges from the Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) in respect of those Units. ;