BEFORE the HARYANA ELECTRICITY REGULATORY COMMISSION at PANCHKULA Case No. HERC/PRO-46 of 2019 Date of Hearing : 08.07.2020
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BEFORE THE HARYANA ELECTRICITY REGULATORY COMMISSION AT PANCHKULA Case No. HERC/PRO-46 of 2019 Date of Hearing : 08.07.2020 Date of Order : 07.09.2020 In the Matter of Petition under Section 62 of the Electricity Act, 2003 for determination of tariff of 1.2 MW Biogas-based power plant. Petitioner M/s. MOR Bio Energy Private Limited. Respondents 1. Haryana Power Purchase Centre, Panchkula (HPPC) 2. Haryana Renewable Energy Development Agency (HAREDA) Present On behalf of the Petitioner through Vidyo App 1. Shri Raj Kumar, Director Present on behalf of the Respondents through Vidyo App 1. Smt. Sonia Madan, Advocate, HPPC. 2. Shri Vikas Kadiyan, Xen/HPPC 3. Shri R.S. Poonia, Project officer HAREDA Quorum Shri D.S. Dhesi, Chairman Shri Pravindra Singh Chauhan Member Shri Naresh Sardana Member ORDER Brief Background of the case 1. M/s. MOR Bio Energy Private Limited has filed the petition seeking project specific determination of tariff for sale of power from its 1.2 MW Biogas based Power plant in Morkhi village of Safidon Tehsil of Jind district of Haryana, under section 62 of Electricity Act, 2003, as directed by the Commission in its Order dated 30.04.2019 (HERC/PRO-20 of 2019). 2. The Petitioner has submitted as under:- a) That the Petitioner is setting up a 1.2 MW grid connected biogas-based Power Plant at a cost of about Rs. 1612.33 lakhs in Morkhi village of Safidon Tehsil of Jind district of Haryana. b) That the Petitioner intends to use the daily available Poultry litters of 185 tons to recycle it for generation of power using biogas-based generators to minimize the pollution in the surrounding area and accordingly submitted its proposal to HAREDA for its approval. HAREDA granted its approval vide its letter no. HAREDA/BG/3430-32 dated 17.10.2018 and it was advised to sign a MOU with HAREDA for development of the project. The MOU was signed with HAREDA on 30.10.2018 and also submitted its performance security to the HAREDA. 1 | P a g e c) That after taking approval of HAREDA on project DPR, the Petitioner applied to the HPPC for concluding PPA with the petitioner. HPPC signed draft PPA with the petitioner on 22.05.2019 and filed a petition with the Commission for its approval vide Case No. HERC/PRO-20 of 2019. d) That the Commission approved the proposed source vide its order dated 30.04.2019 (HERC/PRO-20 of 2019) and further directed that Tariff shall be decided on the separate petition to be filed by the Respondents under section 62 of the Electricity Act, 2003. The tariff petition shall include DPR approved by HAREDA and all other relevant documents to arrive at the reasonable capital cost and all other tariff components. HPPC was further directed by the Commission to recast the draft PPA submitted with its petition No. HERC/ PRO-20 of 2019, on the basis of the amendment approved in the order dated 03.04.2019 (case no. HERC /PRO-44 of 2018) and further directed to ensure that the terms of the PPA are strictly as per the provisions contained in the Haryana Electricity Regulatory Commission (Terms and Conditions for determination of Tariff from Renewable Energy Sources, Renewable Purchase Obligation and Renewable Energy Certificate) Regulations, 2017. e) That Regulation clause no 7.2 of HERC Regulation No. HERC/40/2018 dated 24/07/2018 (Terms & Conditions for determinations of Tariff for Renewable Energy Sources, Renewable Energy Purchase obligations and Renewable Energy Certificate) Regulation 2017 (hereinafter referred to as HERC RE Regulations, 2017), provides for procedure for determination of project specific tariff for Biogas based Power Projects. f) That HERC in its RE Regulation 2017 has laid down following parameters for determination of tariff for RE Power Plants:- i) Capital Cost: It shall include all capital work including plant and machinery, initial spares, civil work, erection and commissioning, financing and interest during construction, and evacuation infrastructure up to inter-connection point. Provided that for project specific tariff determination, the generating company shall submit the break-up of capital cost items along with its petition. ii) Debt Equity Ratio: The debt equity ratio shall be 70: 30. iii) Loan and Finance Charges: For the purpose of determination of tariff, loan tenure of 13 years shall be considered. iv) Depreciation: The depreciation rate for the first 13 years of the Tariff Period shall be 5.38% per annum and the remaining depreciation shall be spread over the remaining useful life of the project from 14th year onwards. v) Return on Equity: 14% per annum calculated on normative Equity Capital. 2 | P a g e vi) MAT/Corporate Tax applicable shall be considered as pass through. Provided that the applicable MAT / Corporate Tax shall be separately invoiced as per the actual paid at the rate as declared by the Income Tax Department. The Generator shall raise the bill for reimbursement of MAT/ Corporate Tax applicable on Return on Equity in 12 equal instalments which shall be payable by the beneficiaries. vii) Interest on Working Capital: The Working Capital requirement in respect of biomass power projects (Rankine Cycle Technology), Biomass Gasifier / Bio gas based projects and bagasse / non-fossil fuel based co-generation projects shall be computed as under:- a) Fuel costs for four months at normative PLF; b) Operation & Maintenance expense for one month; c) Receivables equivalent to 2 (Two) months of fixed and variable charges for sale of electricity calculated on the normative PLF; d) Maintenance spare @ 15% of operation and maintenance expenses. viii) Interest on Working Capital: For the purpose of tariff determination, it shall be computed at the average Marginal Cost of funds-based lending rate (MCLR) (one-year tenor) of SBI prevailing during the last available six months plus an appropriate margin not exceeding 200 basis points i.e. 2%. ix) Operation and Maintenance Expenses: (1) ‘Operation and Maintenance or O&M expenses shall comprise repair and maintenance (R&M), establishment including employee expenses, and administrative and general expenses. Normative O&M expenses allowed during first year of the Control Period under these Regulations shall be escalated at the rate of 5.72% per annum over the Tariff Period. x) Technology specific parameters for Biogas based Power Project: The Commission in its RE Regulation 2017 has further specified following parameters for determination of project specific tariff in case of Biogas Based Power generation plants: - a) A technology for generation of power using a mixture of different gases produced by the breakdown of organic matter (anaerobic digestion with anaerobic organisms in the absence of oxygen / fermentation of biodegradable materials) i.e. produced from raw materials such as agricultural waste, manure, poultry droppings, cow dung, municipal waste, plant material, sewage, green waste or food waste. The projects shall qualify as biogas-based power project provided it is using new plant and machinery and having a grid connected system that and uses 100% biogas fired engine with MNRE approved technology. b) The useful life, for the purpose of these Regulations, for biogas- based projects, shall be 20 years. c) The normative Capital Cost, after accounting for capital subsidy, for the entire control period beginning the FY 2017-18 shall be Rs. 8.86 Crore / MW unless reviewed earlier by the Commission. 3 | P a g e d) The threshold Plant Load Factor (PLF), including stabilization period, shall be 90%. e) The Auxiliary Energy Consumption (AUXe), for the purpose of determination of levelized generic tariff under these Regulations, shall be 12%. f) The Normative Fuel consumption shall be 3.0 Kg/kWh of substrate mix. g) The Normative Operation and Maintenance (O&M) expenses shall be Rs. 0.53 Crore/MW for the base year i.e. the FY 2017-18, the same shall be subject to an escalation factor @ 5.72% per annum form second year onwards for determining levelized tariff for the entire useful life of the project. h) The base year (FY 2017-18) fuel cost (Feed Stock Price) shall be Rs. 1229 / MT and the same shall be escalated @ 5% per annum for the purpose of arriving at levelized tariff for the entire useful life of the project. Provided the cost recovery from digester effluent shall be set off against the Fuel Cost (feed stock price) while determining generic levelized tariff. i) That the plant cost, equity and loan details as per DPR approved by HAREDA is as under:- 1. Project Capacity 1.20 MW 2. Technology route Biogas based power generation utilizing available poultry litters 3. Total Plant Cost Rs.1415 lacs 4. Promoter’s Equity ( 30%) Rs.424.50 lacs 5. Bank Loan ( 70%) Rs.990.50 lacs Break up of plant capital cost:- 1. Land and Land Development Rs.30.00 lacs 2. Plant & Machineries including biogas digesters, automatic fuel Rs.1345.00 lacs mixers, automatic fuel feeders, biogas generators, power evacuations equipment, switch yard, HT/VCB Panel, HT transformer, Energy meters, transmission lines, related civil works 3. Contingencies Rs. 25.00 lacs 4. Preliminary expanses ( Statutory fees, PBG etc.) Rs.15.00 lacs 5. Total Plant Cost Rs.1415.00 lacs Working capital and its breakup:- 1. Total working capital required Rs.197.33 lacs 2. Promoters Contribution ( 30%) Rs.59.20 lacs 3. Bank Loan ( 70%) Rs.138.13 lacs Total Project Cost including working capital cost:- 1. Total Investment on Plant Capital Rs.1415.00 lacs 2. Total working Capital requirement Rs. 197.33 lacs 3. Total Project Cost Rs.1612.33 lacs Project DSCR, IRR, Annual Electricity generation and yearly Revenue flow:- 1.