Surendra Kumar, J. (Member (J)) - (1.) THIS is an Appeal under Section 111 of the Electricity Act, 2003 against the order dated 08.08.2013, passed by the Gujarat Electricity Regulatory Commission (hereinafter referred to as 'State Commission') in Order No. 4 of 2013 in the matter of determination of tariff for procurement of power by the distribution licensees and others from biomass based power projects and bagasse based co -generation projects filed by the appellants whereby the State Commission has determined the generic tariff applicable for the generation and supply of electricity by biomass based power projects and bagasse based co -generation projects to be commissioned in the State of Gujarat on or after 01.08.2013 for the control period commencing from 01.08.2013.
(2.) BY the impugned order dated 08.08.2013, the State Commission has determined the generic tariff applicable for the biomass based generators and bagasee based co -generation projects applicable for the control period from 1.8.2013. In the impugned order, the State Commission has imposed the obligation of construction of the evacuation facilities on the licensees, namely, GETCO/DISCOM (transmission or distribution licensee). The State Commission has further held that the start up power/stand by power required by the biomass based generators shall only be charged at the energy charges applicable to HT consumers without any payment of fixed/demand charges. According to the appellants, the State Commission has wrongly decided generic tariff without providing for the same as a capped tariff and subject to such capping there should be truing up the prudent capital cost actually incurred or reasonably expected to be incurred and also on other financial and technical parameters to avoid such projects getting returns in excess of the reasonable return. The appellants are aggrieved of certain aspects of the order dated 08.08.2003 namely: - - "a) with regard to extent of the obligations and responsibilities that can be imposed on the appellants -transmission licensee and the distribution licensee for development of the evacuation facilities from the project site to the existing sub station of the licensee; b) with regard to the retail tariff chargeable from the biomass generators for consumption of electricity drawn from the State grid for purposes such as start up/standby etc. without the obligation to maintain contract demand and pay minimum/demand charges. c) with regard to the terms and conditions of generic tariff set by the State Commission not being treated as capped tariff and within the capped tariff the actual capital cost and other financial parameters to be subjected to prudence check for reasonable cost and reasonable return; and"
(3.) THE relevant facts of the case are as under: - - "4.1. that the appellant No. 1 is the Transmission Company which undertakes intra state transmission of electricity in the State of Gujarat and also discharges the statutory functions of the State Transmission Utility for the State of Gujarat. Appellant Nos. 2 -5 are the distribution licensees in the State of Gujarat and have been vested with the functions of distribution and retail supply of electricity in the State of Gujarat in their respective areas of supply. Appellant No. 6 is the bulk purchaser of electricity for bulk supply to the distribution companies. 4.2. that the respondent No. 1 is the State Commission which determines the tariff as applicable for the sale of electricity by generating companies to the distribution licensees in the State of Gujarat exercising powers and discharging functions under the provisions of the Electricity Act, 2003. 4.3. that the respondent Nos. 2 -9 are the entities which are either developers or agencies or association interested in the development of generation and supply of electricity from biomass based power projects and bagasse based co -generation projects, who had participated in the proceedings before the State Commission. The respondent Nos. 10 and 11 had also participated in the proceedings before the State Commission. 4.4. that prior to the impugned order dated 8.8.2013, the State Commission passed the orders dated 17.5.2010, 31.5.2010 and 7.2.2011 providing for the terms and conditions including tariff for the generation and supply of electricity by the biomass and bagasse based generators to be established in the State of Gujarat during the control period till 31.7.2013. In the earlier orders dated 17.5.2010 & 31.05.2010 (in respect of tariff for biomass based power project & bagasse based co -generation power project respectively) the State Commission had stipulated that the responsibility to provide the evacuation facilities from the generating station and up to the sub -station of the transmission or distribution licensee shall be that of the generators. The developers were also required to take a contract demand for start up and stand by power from the distribution licensees and pay the applicable charges as in the case of others. The State Commission had duly considered the cost of the evacuation facilities as a part of the capital cost of the generation project. In addition to the above, the State Commission had also specified a security deposit to be furnished by the power developers of Rs. 5 lacs per MW to secure the appellants to recover the loss caused on account of a non -serious developer causing the licensee to keep its system ready, in the event the generator does not establish the generating station in time. 4.5. That in terms of the discussion paper circulated on or about 24.6.2013 for the determination of tariff for biomass based generators and bagasse based co -generation projects in the State of Gujarat for the new control period commencing from 1.8.2013, the State Commission proposed for the first time the obligation of construction of the evacuation facilities for the generating projects on the appellants. The evacuation facilities of a generator from the generating station up to the nearest sub -station of a licensee is to be generally a dedicated transmission line and duty of the generator to establish as per sections 9 and 10 of the Electricity Act, 2003. The above obligations placed on the appellants would also result in the general consumers of the State burdened of servicing the cost of the evacuation facilities when in many cases, the project developers would be supplying electricity to third parties and also taking confessional benefits for wheeling and transmission, which would place additional burden on the licensees. 4.6. that while shifting the obligation of construction of the evacuation facilities on the licensee, the State Commission has, however, retained the same provision with regard to security deposit as per the earlier order. In the circumstances, the licensee having the obligation of establishing the evacuation facilities would not have adequate security from the generator in case the generator does not establish the generating station thereby causing loss to the licensees. 4.7. that the State Commission has wrongly held that the start -up power or standby power required by the biomass based generators shall only be at the energy charges applicable to HT consumers without any payment of fixed/demand charges and the same has been provided by the State Commission without any condition that the same would be applicable only during the period when the generating station is in operation and requires start -up power/stand -by power. By virtue of such stipulation, only energy charges would be leviable for the period even when the generating station is not in operation and the drawl of electricity is made by the generating company for the other purposes. 4.8. that the impugned order of the State Commission is erroneous because the obligation of laying down the evacuation line for evacuation of electricity from the generating station up to the existing sub -station of appellant licensees, as per the scheme, objective and provisions of Sections 9, 10, and 86(1)(e) of the Electricity Act, 2003, is clearly on the generating station. The generating company has been given the duty to establish the dedicated transmission lines specially for the reason that a transmission or a distribution licensee cannot be expected to reach each and every individual generator, especially considering the fact that the licensees are required to plan the transmission and/or distribution system in the state as a whole and to cater to the maintenance of the system as a whole. The obligation of the appellant licensees to develop, operate and maintain such radial lines will result in a situation of various other systems being developed being affected and even the execution of the radial lines not being commensurate with the commissioning schedule of the generating station. Further, the placing of obligation on the appellant licensees would lead to unproductive investments at the cost of the general public. Firstly, there is no restriction of the location of the generating station in the State of Gujarat. 4.9. that the State Commission has, in the impugned order, merely observed that the evacuation line is not is not very long, without specifying the maximum distance of such lines, even assuming it to be established by the licensees. Secondly while the appellants are required to develop the line, the generating station may not come or even if it comes may not operate. The quantum of exposure of the licensees is substantially higher. 4.10. that similarly restricting the charges to be paid by the generators to the distribution licensee for supply of electricity for start -up/standby power drawl at the generating stations only to energy charges and also without any restriction on the quantum of such drawl, is without any rationale. The distribution licensees cannot be expected to tie up and keep electricity on stand by without any commitment on behalf of the generators to draw electricity. In such cases the generator would then be in a position to draw as much electricity and at any point of time, whereas the appellants distribution licensees would be required to keep electricity ready for supply to the generators. 4.11. that further the State Commission ought to have directed the generic tariff determined by it on assumptions in regard to capital cost and other parameters to be a capped tariff and subjected such capped tariff to appropriate prudent check to be undertaken based on actual capital cost incurred and other actual financial parameters so as to limit the actual tariff to servicing reasonable actual cost and reasonable return. The project developer cannot be allowed to get higher tariff resulting in more than the reasonable return envisaged.";