Before the
MAHARASHTRA ELECTRICITY REGULATORY
COMMISSION
13th
floor, Centre No.1, World Trade Centre, Cuffe Parade, Mumbai 400 005.
Tel. 22163964 /
22163965, Fax No. 22163976
E-mail mercindia@mercindia.com
Website: www.mercindia.com
CASE No. 39 of 2002
In the matter of
Petition filed by M/s Balaji
Electro Smelters Ltd., Yavatmal
In respect of withdrawal /
termination of wheeling of NTPC Power
from 15% unallocated quota to export oriented Ferro Alloy Industries
Shri P. Subrahmanyam, Chairman
Shri Jayant Deo, Member
Dr Pramod Deo, Member
O R D E R
Dated: March 24, 2003
M/s Balaji Electro Smelters Ltd. (BESL), Yavatmal have submitted
an application dated 7th
December 2002 challenging the withdrawal by the Maharashtra State Electricity
Board (MSEB) of NTPC power from the 15% unallocated quota to their unit with
the following prayers:
a)
To direct MSEB to withdraw the notice
dated 23rd July 2002 for discontinuation
of NTPC power.
b)
To restrain MSEB from reviewing the
policy of the Ministry of Power in respect of wheeling of NTPC power to export
oriented Ferro Alloys Industries, and to restrain them from charging tariff
different from the NTPC tariff for the power consumed by the Petitioner.
c)
To restrain MSEB from giving effect to
their decision till the Petition is decided by the Commission.
d)
To direct MSEB to release wheeling of
additional allocated 0.95 MW NTPC power to the Petitioner.
2. The matter was heard for admission on 3rd
February 2003. Shri Raghunath Kaparthi, Managing Director of BESL, stated that
theirs is a small scale Ferro Alloy unit whose main raw material is power and
which is situated in a backward region.
He submitted that, after considering representations for providing power
to exporting ferro alloy producers at internationally competitive rates and
after wide consultation, Ministry of Power (MoP), Government of India asked the
State Electricity Boards to wheel power out of NTPC's 15% unallocated quota to
such units on certain conditions.
Accordingly, BESL applied to MoP in 1996 for allocation of NTPC power
for 18 hours off peak. Government of
Maharashtra (GoM) had concurred to the supply of 2.6 MW on 26.11.1998, and MSEB
agreed to wheel the NTPC power and release it from 12.1.1999. BESL were also
given NOC for an additional quota of 0.95 MW by GoM out of the unallocated NTPC
power on 9.3.2000.
3. Shri Kaparthi submitted that, inspite of
the above, MSEB issued notice to BESL shortly thereafter to the effect that
wheeling of NTPC power to the unit would cease from 1st May
2000. BESL petitioned the Commission,
and the Commission issued an Order for continuation of NTPC power supply and
further release of 0.95 MW of NTPC power through wheeling. He stated that MSEB had then filed an
application on 24.09.2001 regarding allocation of NTPC power to exporting units
before the Commission, on which another Order was passed on 11.4.2002. The Commission had carefully considered
various issues related to this matter before passing its two Orders.
4. Shri Kaparthi submitted that, around
three months after the Commission's last order, MSEB had issued BESL a notice
dated 23.7.2002 to the effect that “while granting permission to give NTPC
power tariff facility to Ferro Alloy Industries, the Government of India vide
their letter No. L/R/93-45/C.T dated 6.4.1994 has stipulated that this
arrangement would be subject to a six monthly review and this arrangement is
also subject to availability of surplus power with the central power company
and the region in which State is located is surplus in power. MSEB has reviewed the position of supply of
NTPC power and has concluded that it is not feasible for MSEB to continue the NTPC
power. This letter may please be treated
as six months notice for discontinuation of NTPC power. … will be billed
as per tariff in force from January 2003 onwards.” Moreover, allotted NTPC power supply to
BESL had been discontinued before the expiry of the six month notice period.
5. Before approaching the Commission again
with the present petition in December 2002, BESL had sought a copy of the GoI
letter referred to in MSEB's notice, which was received by them in October, and
had also approached GoI. Shri Kaparthi
submitted that the Commission had taken note of the GoI letter before passing
the second Order, and had decided against discontinuing the existing
dispensation taking its contents into consideration. Therefore, MSEB's notice is illegal. MSEB have not appealed against the Commission’s Orders, which are
now binding on them.
6. Shri Kaparthi submitted that Ministry of
Power (MoP) has been monitoring BESL's compliance, and quarterly returns with
supporting documents are being submitted regularly. In accordance with the Commission’s directives, BESL are also
submitting quarterly returns to MSEB regularly. MoP, in their communications to MSEB, have also mentioned that
BESL's exports for the period ending September 2001 are higher than the NTPC
power consumed by them, and that BESL are exporting more than 90% instead of
the required minimum of 75%. He
submitted that there is, therefore, no deviation from the conditions on the
basis of which MSEB could withdraw the existing dispensation.
7. Shri Kaparthi submitted that the supply of
NTPC power to ferro alloy industries, including BESL, is a national policy
formulated by the MoP, and MSEB is not authorised to review or modify it. Since MSEB have done so unilaterally and
without consulting GoM or GoI, the notice issued by them is illegal and
arbitrary. In fact, review of the
policy has been separately initiated by GoI, who have recently sent a draft to
GoM. GoM have in turn sent the draft to
MSEB for comments. Neither MoP nor GoM
have concluded the review of the existing policy of allocation of NTPC power to
ferro alloy units and, therefore, the policy continues to be valid and in
force. The unilateral decision taken by
MSEB amounts to encroachment on the authority and jurisdiction of GoI.
8. Shri Kaparthi submitted that, in their
response, MSEB have stated that they are entitled to levy wheeling charges and
electricity duty on NTPC's supply.
However, at the time of framing of the policy by GoI, it had been stated
that “keeping in view of the recommendations of Ministry of Commerce and
also the fact that the Ministry of Steel considers the high power tariffs to be
a factor affecting the export of Ferro alloys, the MoP is considering a
proposal to supply power at break even rates to the export oriented Ferro alloy
units as an export promotion method”.
Shri Kaparthi submitted that, inspite of this, BESL are being charged
more than double the break even tariff, which should be 100 paise/kWh as
considered by the MoP, inclusive of all wheeling charges, duties, etc.
Moreover, taking into consideration the difficulties in competing in the
international market, the MoP, with the concurrence of GoM, had agreed to
release 24 hours power to M/s Universal Ferro Allied Chemicals Limited, as
against 18 hours to BESL. He pointed
out that the power tariff for ferro alloy units in other States is much lower
than in Maharashtra. In Orissa,
concessional power is given even without export obligations. He submitted that no such support to this
industry is being given by GoM, and urged the Commission to consider supply of
24 hours NTPC power to them.
9. Shri Kaparthi drew attention to some
aspects of the Availability Based Tariff (ABT) under which BESL obtains power
from NTPC’s unallocated quota. After
receiving complaints about shortfalls in the allocated quota from the Central
sector to various States and grid indiscipline, CERC introduced the ABT system
after wide consultation to enforce grid discipline and ensure equitable
distribution of the tariff burden and supply of power from the Central Sector
to the States. He cited the tariff
dispensation for thermal power stations of NTPC from CERC's Order dated
4.1.2000.
“Allocation of total capacity of Central sector station is made by
Government of India from time to time, which also has an unallocated
portion. Allocation of unallocated
portion shall be made by the GoI from time to time for total unallocated
capacity. The total capacity share of
any beneficiary would be sum of its capacity share plus allocation out of the
unallocated portion”.
Thus, both
unallocated and allocated portions are distributed as per the ABT system. Ferro alloy industries are provided power
from the unallocated portion. Under the
ABT system, the beneficiary States are to submit their demand schedule for 96
time blocks in a day. Thereafter, after
taking into account the availability from Central power stations, power is to
be supplied as per the eligible share of the States in accordance with their
demand schedule. MSEB's requirement
would be less during the off peak hours, and they may not claim their full
share at other times also in order to avail of incentives. In this background, and taking into account
MSEB’s reply to the Petitioner, MSEB should file a petition before the CERC in
order to sort out problems of shortfall, if any, from the Central power
stations, and to modify the ABT system if desired. In fact, BESL came to know that MSEB had overdrawn power and paid
penalties, and BESL were receiving supplementary bills on account of such
penalties. On the other hand, MSEB did
not pass on any share on account of the incentives they received. Shri Kaparthi urged the Commission to look
into this and issue directives to refund supplementary bills drawn on account
of penalties for overdrawal of power by MSEB.
10. Shri Kaparthi challenged MSEB’s contention
that they are incurring large revenue losses by supplying power to units such
as BESL. He pointed out that BESL are
located close to the generating station and adjacent to the MIDC sub-station,
and there is a separate line in form of 33 KV express feeder from the
sub-station to their unit. One meter
has been installed in BESL's premises, and the other is located in the MIDC
sub-station. Thus, a foolproof system
is in place. BESL had requested MSEB to furnish data on T&D losses, without
response. In fact, MSEB is gaining by
supplying power to the unit. Shri
Kaparthi concluded by pointing out, that by giving notice of discontinuance of
NTPC power supply, MSEB are also violating the provisions of the Commission’s
Tariff Order in-as-much as it amounts to a change in the tariff.
11. Ms Deepa Chawan, Counsel for MSEB, stated
that MSEB are entitled to certain charges for supplying power. She stated that GoI had formulated a scheme
for ferro alloy units to draw power from NTPC, and communicated it to the
States. One of the guidelines of the
scheme is that there should be a capacity of 7.5 MW. In the BESL case itself, this requirement has been done away with by GoI. In the case of M/s. Universal Ferro & Allied Chemicals, 24
hours supply was granted, but only 18 hours to BESL. Thus, the guidelines are not uniformly applied and there are
disparities in the treatment of similar electricity consumers. GoI had directed the discontinuation of
power to Universal Ferro because they had defaulted on export obligations.
12. Counsel for MSEB submitted that the scheme
itself provides for review after six months.
The issue is of who is to take up such a review. BESL claims that the relevant authority is
GoI, but nothing is forthcoming from them.
The question is whether the supply of NTPC power to the ferro alloy
units is to be maintained even in the case of shortfall. Counsel rejected BESL's claim that penalty
has been charged, citing the bills produced by BESL itself. In fact, MSEB pays penalty to NTPC for
overdrawal. She stated that there is no
fixed allocation from the unallocated quota which MSEB is receiving from the
NTPC. She submitted that there is a
need for drawing up a proper scheme for the purpose which covers all the issues
in detail, and is clear and transparent.
13. Counsel further drew the Commission’s
attention to the parawise reply submitted by MSEB, and argued that this is
basically a contractual matter between MSEB and NTPC. She submitted that, owing to the practical difficulties cited in
the reply, and in exercise of their right under the contractual arrangement to
review the situation, MSEB decided to issue the impugned notice. Moreover, MSEB have not disconnected power
to the unit, as alleged by the Petitioner, but only the NTPC supply, and have
started billing in accordance with the MERC Tariff Order dated 10th
January 2002. Counsel further clarified
that, subject to finalisation of the current petition, the Petitioner can make
payment at the NTPC rate though the billing has been done at the MERC rates.
14. In response to a query regarding MSEB’s
unilateral decision to review an arrangement which was based on sovereign
policy directives, Counsel for MSEB submitted that the matter had earlier been
taken up with both GoI and GoM.
However, in the absence of any response from either, or an institutional
mechanism to settle the issues, and keeping in mind the financial loss to MSEB,
a decision was taken to review the scheme prospectively.
15. The Commission expressed reservations about
its jurisdiction to entertain such a petition since it concerned a national
policy announced by the Ministry of Power, Government of India. Counsel for MSEB submitted that, under
Section 29 of the ERC Act, the Commission is fully empowered to entertain such
matters. The Commission suggested that
MSEB should file a petition before the CERC to sort out the issues of shortfall
in the NTPC share, modifications in the ABT system, etc.
16. The Commission, upon perusal of written
submissions and oral arguments of both the contesting parties, hereby directs:
i)
MSEB to maintain the status quo ante in the
matter till the emergence of clear directions in the matter of the MoP policy
review, since the Petitioner has met his obligations for availing of such
power.
ii)
MSEB to rectify the bills already issued to
the applicant in line with direction (i) above and give necessary credit to
correctly reflect the outstanding and avoid billing disputes arising out of the
same.
iii)
That the right of MSEB to argue its case for
review of the present scheme / policy before the Commission covering all the
legal points is upheld without prejudice.
| Sd/- | Sd/- | Sd/- | |
| (Jayant Deo) | (Dr Pramod Deo) | (P. Subrahmanyam) |
|
| Member | Member | Chairman, MERC |
|
| (A.M. Khan) | |||
| Secretary, MERC | |||
| Bombay, March 24, 2003 | |||
|
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