Before the Gujarat Electricity Regulatory Commission

BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION

GANDHINAGAR

Petition No 1712 of 2018

In the matter of: Petition under the provision of Electricity Act, 2003 read with GERC (Terms and Conditions of Intra- State Open Access) Regulations, 2011 and in the matter of seeking refund of amount of transmission wheeling charges paid by the Petitioner company Under Protest and in the matter of decision/ order dated 10.05.2017 passed by the Respondent authority rejecting the request/application of refund of amount paid towards Exit Option Charge for Wind Mill No. ADO-36 made by the Petitioner company.

Petitioner: Gokul Refoils and Solvent, Gokul House, 43, Shreemali Co-Operative Housing Soc. Ltd., Opp. Shikhar Building, Navrangpura, Ahmedabad.

Co-Petitioner: Gokul Agri International Ltd, State Highway No. 41, Near Sujanpur Patia, Sidhpur, District: Patan, Pin Code – 384151

Represented by: Learned Advocate Shri Satyan Thakkar and Shri Nisarg Rawal

V/s.

Respondent: Gujarat Energy Transmission Corporation Ltd. Sardar Patel Vidyut Bhavan, Race Course, Vadodara- 390 007.

Represented by: Learned Sernior Advocate Shri M. G. Ramchandran with Advocate Ms. Ranjitha Ramchandran and Ms. Venu Birappa

CORAM:

Shri Anand Kumar, Chairman Shri P. J. Thakkar, Member

Date: 09/03/2020

ORDER

1 1 The present petition has been filed by M/s Gokul Refoils & Solvent Limited and M/s Gokul Agri International Limited seeking following prayer: “The Commission may be pleased to quash and set aside the impugned decision/order dated 10.05.2017 passed by the Additional Engineer (R&C), Gujarat Energy Transmission Corporation Limited and further be pleased to direct the Gujarat Energy Transmission Corporation Limited i.e. the opponent to refund the amount of Rs. 60,76,707/- paid by the Petitioner company “under protest” towards Exit Option Charges / Transmission Wheeling Charges for Wind Mill No. ADO36 to the Petitioner/opponent company.”

2 Facts narrated in the Petition are as follows:

2.1 Petitioner No.1, M/s Gokul Refoils & Solvent Limited, is a company registered under the Companies Act, 1956 and is one of the leading FMCG companies of the Country, dealing with edible oils.

2.2 Petitioner No. 2, M/s Gokul Agri International Limited, a company registered under the Companies Act, 2013 (100% subsidiary of M/s Gokul Refoils & Solvent Limited) and M/s Gokul Agro Resources Limited, also a company registered under the Companies Act, 2013 are resultant demerged companies of Gokul Refoils and Solvent Limited, Gandhidham Unit.

2.3 Petitioner No. 1 being desirous of generating energy through Wind Farms and with a view to conserve/control the costs of production, had set up Wind Mill Farms at following locations:

(i) Two Wind Mills at Village: Moti Sindholi, Tal: Abadasa, Dist. Kutch (Wind Mill Nos.V05 & V06)

(ii) Two Wind Mills at Village: Kadoli (Wind Mill Nos. M16 and M17)

(iii) Two Wind Mills at Village: Ratanpar, Tal. and Dist. Porbandar (Wind Mill Nos. ADO- 33 and ADO-36)

2.4 The Petitioner No.2 had for the said purpose, also entered into and executed Wheeling Agreements dated 11.7.2012 with GETCO and an agreement dated

2 26.7.2012 with Paschim Gujarat Vij Company Limited (PGVCL) for wheeling of the energy generated at Wind Farm ADO-33 and ADO-36, Village : Rajpar, Dist. Porbandar to its captive Manufacturing unit at 89, Meghpar Borich, Galpadar Road, Nr. Sharma Resort, Taluka: Anjar, Dist. Kutchh- 370 110.

2.5 Under the said Agreements, wheeling of energy from Wind Turbines to the desired location within the State was to be allowed upon payment of transmission charges and losses otherwise applicable to the normal Open Access Regulation. Clause 3.3 which is related to wheeling of energy, specifically provided that ‘the Company will be eligible to wheel the energy, with DISCOM for the respective month from the date of signing of this Agreement and injection into the GETCO Grid System as per this Agreement and the Agreement with GETCO shall transmit the energy to the boundary of DISCOM. The energy so wheeled (net of Wheeling/Transmission loss/ charge) shall be set of against monthly consumption of the Company’s recipient unit located in the DISCOM as per Clause 7 of the Agreement.

2.6 A similar Agreement with the identical terms and conditions was executed between the Petitioner and PGVCL on 26.7.2012.

2.7 Subsequent thereto, for the purpose of efficient management of the Petitioner No. 1 company and its units in a decentralized manner and with a view to achieving geographical operational efficiency, the management of the Petitioner No.1 proposed to separate each business undertaking based on the location of the undertaking into separate companies. Therefore, with a view to effect such reorganization, a Scheme of Arrangement in the nature of demerger and transfer of undertaking was proposed by the Petitioners in the Hon’ble Gujarat High Court by way of Company Petition No. 36 of 2015, 37 of 2015 and 38 of 2015 for the purpose to get sanction to a scheme of arrangement in the nature of de-merger and transfer of Gandhidham Undertaking of Gokul Refoils & Solvent Limited to Gokul Agro Resources Limited and consequential to restructure of Share Capital of Gokul Refoils and Solvent Limited, which was proposed under Section 391 to 394 read with Section 78 and 100 to 103 of the Companies Act, 1956 and subsequent transfer of respective Wind Mill Units as follows:

3 (a) Demerger and transfer of Gandhidham Undertaking (Gandhidham Wind Mill Undertaking from the Petitioner No.1 Company to Gokul Agro Resources Limited)

(b) Transfer of Sidhpur Undertaking (Sidhpur Undertaking and Sidhpur Wind Mill Undertaking) of the Petitioner Company No. 1 to Gujarat Agri International Limited i.e. the Petitioner No. 2 to the present petition.

2.8 Pursuant to the said sanction of Scheme of Arrangement in nature of De-merger and Transfer of Undertaking, vide letter dated 10.9.2015, the Petitioner Company requested the Opponent GETCO to change the Wind Mill Agreements as follows:

Wind Wind Mill Sub-station New Wind Mill Agreement with Wheeling to Mill Location demerged (Resulting Company) Consumer No. V05 Village: Moti Vanku Gokul Agro Resources Limited, Consumer No. Sindholi, Phase I, Survey No. 76/1, 80, 89 & 91, 31511 at Tal. Abdasa, Ta. Abdasa Galpadar Road, Nr Sharma Megpar Dist. Kutch Dist. Kutch Resorts, Meghpar, Borichi, Ta. Borichi, Ta. Anjan, Dist. Kutch 370 110. Anjar M16 Village: Vanku- Gokul Agro Resources Limited, Consumer No. Kadoli, Phase II Survey No. 76/1, 80, 89 & 91, 31511 at Ta. Abdasa Ta. Abdasa, Galpadar Road, Nr Sharma Megpar Dist. Kutch Dist. Kutch Resorts, Meghpar, Borichi, Ta. Borichi, Ta. Anjan, Dist. Kutch 370 110. Anjar ADO- Village: Adodar Gokul Agro Resources Limited, Consumer No. 33 Ratanpar, (Tukda) Survey No. 76/1, 80, 89 & 91, 31511 at Tal: Ta. Galpadar Road, Nr Sharma Megpar Porbandar Porbandar Resorts, Meghpar, Borichi, Ta. Borichi, Ta. Anjan, Dist. Kutch 370 110. Anjar V-06 Village: Moti Vanku Gokul Agri International Consumer Sindholi Phase I, Limited, State Highway No. 41, 29241 at Ta. Abdasa, Ta. Abdasa, Nr. Sujanpur Patia, Sidhpur Dist. Kutch Dist. Kutch Sidhpur- 384 151 M17 Village: Moti Vanku Gokul Agri International Consumer Sindholi Phase I, Limited, State Highway No. 41, 29241 at Ta. Abdasa, Ta. Abdasa, Nr. Sujanpur Patia, Sidhpur Dist. Kutch Dist. Kutch Sidhpur- 384 151 ADO- Village: Adodar Gokul Agri International Consumer 36 Ratanpar (Tukda) Limited, State Highway No. 41, 29241 at Ta. Ta. Nr. Sujanpur Patia, Sidhpur Porbandar Porbandar Sidhpur- 384 151

2.9 On the receipt of the said letter/application dated 10.9.2015., GETCO demanded various documents for the purpose of modification of the Wheeling Agreements and 4 along with the said letter, also demanded an amount of Rs. 50,000/- per application as registration charges for the change in Wheeling Agreements in the names of new Companies.

2.10 Vide letter dated 18.1.2016, another application was made by the Petitioner to GETCO enclosing a Demand Draft of Rs. 50,000/- per application and also enclosing the documents as demanded by GETCO. It is also relevant to note that pursuant to the request made by Gokul Agro Resources Limited to PGVCL, it approved the merger of two consumer connection Nos. 31368 and 31511 into a single merger connection in Consumer No. 31511 at Anjar. Thereafter, vide letter dated 27.1.2016, the Petitioner brought to the notice of GETCO that the amount of registration charges being Rs. 50,000/- per application has already been paid and also enclosed all the documents that were demanded by GETCO and hence, request was made soliciting GETCO’s co-operation for the change of name and percentage allocation of Wind mill generation and Consumer No. 31511 as required by PGVCL for giving credit of the units generated through Wind Mill, in the electricity bill for January, 2016 in respect of Consumer No. 31511.

2.11 Subsequently vide letter dated 21.3.2016 addressed to the GETCO, the Petitioner No. 1 highlighted the aforesaid facts as well as the Order of Hon’ble Gujarat High Court and in respect of demand made by GETCO for payment of Rs. 67,09,065/- (initially vide first letter GETCO demanded Rs. 1,41,29,693/- from the Petitioner, however, the said amount was subsequently reduced to Rs. 67,09,065/-) for the two Wind Mills at Ratanpur, Porbandar for the Wind Location Nos. ADO-33 and ADO-36 being the purported Transmission Wheeling Charges for remaining 8 years, it was submitted that the transfer of Wind Mill and other assets of the Company consisting of movable and immovable properties, is as per the Order of the Hon’ble High Court of Gujarat in the matter of de-merger of an existing company and that such transfer is by operation of law. A request was therefore, made for considering the application for transfer of ADO-36 at Porbander for Wheeling location to Sidhpur in the name of Gokul Agri International Limited, Sidhpur without demand of the said additional charges.

5 2.12 Upon receipt of said letter dated 21.3.2016, GETCO vide its letter dated 16.4.2016 clarified that the GETCO has no issue with regard to the transfer of Wind generating unit and the change of name in Wheeling Agreement namely substitution of name of Company in which the generating unit now vests as per the Scheme sanctioned by the Hon’ble Gujarat High Court. However, the issue of change in location in the point of drawal is a different matter. The Wheeling Agreement provides for a specific injection point and drawal point. If the location of special point is to be changed, the procedure as applicable under the relevant Regulation is to be followed. The change in ownership is not relevant in this case. Even if the ownership remained the same, any change in location would be under the relevant Regulation and Policies.

2.13 Immediately upon receipt of the said letter, the Petitioner conveyed its disagreement to the stand of GETCO vide letter dated 27.4.2016 and clarified that the Petitioner is not required to pay charges of change in Wheeling location in the name of the wholly owned subsidiary Company i.e. Gokul Agri International Limited under the GERC (Terms and Conditions of Intra-State Open Access) Regulations, 2011.

2.14 Vide letter dated 24.8.2016, GETCO conveyed that the Agreement for Wind Mill Nos. V05 and V06 as well as an agreement for Wind Mill No. M-16 and M-17 will be amended to the new name as per the Hon’ble High Court’s Order. However, so far as remaining two wind mills are concerned, the amendment in the agreement of Wind Mill No. ADO-33 and ADO-36 which were commissioned on 9.8.2012 would be done as per the provisions of Open Access Regulation, however, in the same allocation mentioned in the original agreement name change be executed but allocation would be possible only upon the payment of Exit Option Charges.

2.15 Petitioner No.1 vide its detailed letter dated 29.6.2016 informed GETCO that in order to achieve geographical operational efficiency and alignment of business, three companies namely Gokul Refoils & Solvent Limited, Gokul Agri International Limited and Gokul Agro Resources Limited had filed a Composite Scheme in the Hon’ble Gujarat High Court for obtaining the sanction for arrangement in the nature of De-merger and Transfer of Gandhidham Undertaking of the Petitioner to Gokul 6 Agro Resources Limited of Gokul Refoils & Solvent Limited for the Gandhidham Wind Mill Undertaking from GRSL to GARL, all the Sidhpur Wind Mill Undertaking from GRSL to GAIL and for remaining Undertaking to be retained by the Petitioner No.1 company and therefore, a request was once again made to transfer the Undertaking in conformity with the directions of the Hon’ble Gujarat High Court and also conveying explicitly that “ in this matter, we hereby give over consent to pay the said charges under protest and we request you to please issue the invoice for WTG No. ADO-36 towards Exit Option Charges as early as possible”.

2.16 Upon receipt of the said letters dated 29.9.2016 and 25.10.2016, GETCO demanded an amount of Rs. 1,41,29,693/- as the amount payable by the Petitioner against the Exit Option as per the provisions of Open Access Regulations and further conveyed that only upon the receipt of the above amount, further process for signing of the Agreement for other two machines ADO-33 and ADO-36 would be taken up.

2.17 Since the demand now jacked up vide letter dated 7.11.2016 was grossly exorbitant and unreasonable and hence, vide letter dated 22.11.2016, the Petitioner gave a detailed computation of the said Exit Option Charges if at all payable and called upon GETCO to give clarification, if any.

2.18 Upon the said application made by the Petitioner, GETCO finally concluded that the amount of Rs. 54,69,036/- was payable by the Petitioner for ADO-36 (after deducting TDS amount of Rs. 6,07,671/-) towards Exit Option as per the Open Access Regulations and which amount was paid by the Petitioner vide letter dated 24.1.2017. The Petitioner specifically highlighted that the said payment is being made ‘under protest’ and further requested for execution of the amendment to the Transmission Agreement for Wind Mill Transfer in compliance with the Order passed by the Hon’ble High Court.

2.19 Thereafter, the amendment to the Transmission Agreement for Wind Mill No. V06 and M17 was executed with the De-merged Company i.e. Gokul Agri International Limited on 3.2.2017 and the amendment to the Transmission Agreement for Wind Mill No. ADO-36 was executed on 3.2.2017, whereas the amendment to Transmission Agreement for Wind Mill ADO-33 was executed on 3.2.2017, which is 7 almost after 1.5 years of submission of the application with Hon’ble High Court Order.

2.20 Since the amount of Rs. 60,76,707/- as demanded and forcibly collected from the Petitioner by GETCO was ex-facie unreasonable and it was paid ‘under protest’, the Petitioner vide its letters dated 11.4.2017 and 28.4.2017 specifically brought to the notice of GETCO that the de-merger and transfer of Wind Mill No. ADO 36 to M/s Gokul Agri International Limited was in pursuance to and in compliance of the Order dated 12.6.2015 of the Hon’ble High Court of Gujarat and that Regulation 42, which was relied upon by GETCO for making payment compensation of unutilized capacity, is not applicable to the facts of the present case, since the connection remained the same and there is only a change of wheeling location, that said Regulation 42 does not deal with the situation of change of wheeling location and that there is no unutilized or non-utilization of energy achieved. Hence, the request was made to GETCO to refund the amount of Rs. 60,76,707/- on the ground that the same was wrongly charged though no such charge was payable under the law, also the change of name of Sidhpur Undertaking from GRSL to GAIL by way of operation of law.

2.21 The Respondent vide letter/order dated 10.5.2017 rejected the Petitioner’s request for refund of the amount paid towards Exit Option Charges for Wind Mill No. ADO- 36 on the ground that the original Wheeling Agreement dated 11.7.2012 specifically stipulated the location of wheeling option at the location and that as per Regulation 42 of the GERC Open Access Regulations which provides for right option of relinquishment, the relinquishment charges are payable in case of under utilisation or un-utilisation of Open Access capacity in Intra-State Transmission system.

2.22 Being aggrieved by and dissatisfied with the impugned Order dated 10.5.2017 passed by the Respondent, the Petitioners seek to challenge the same on following amongst other grounds that may be urged at the time of hearing of present application, the grounds set out hereunder being without prejudice to one another:

(a) the impugned action and/or decision of the Respondent of refusing the refund of the amount of wheeling charges paid “Under Protest” by the Petitioner is 8 ex-facie illegal, unreasonable, oppressive, without authority of law and the same deserves to be set aside and further, the Respondent may be directed to refund the amount paid under Exit Option by the Petitioner under protest,

(b) the impugned decision of the Respondent authority by which the request made by the Petitioner company for refund of the amount paid “Under Protest” under Exit Option Charges was refused, is ex-facie without authority of law and does not in any manner whatsoever, refer to the basis on which the Respondent authority has refused the refund of the amount of Exit Option Charges paid by the Petitioner company. Further, said impugned decision is clearly vitiated by sheer non-application of mind and without any reasons thereto and therefore, the same deserves to be quashed and set aside.

(c) It is the case of the Petitioner company before the Respondent Authority that in the year 2015, the Hon’ble High Court has passed the Order dated 12.6.2015 by which the Hon’ble Gujarat High Court has approved the Scheme of De- merger of the Petitioner company i.e. Gokul Refoils & Solvent Limited (Demerged Company) by way of operation of law into its two companies namely (i) Gokul Agri International Limited (GAIL) and (ii) Gokul Agro Resources Limited (GARL). The Respondent authority has completely ignored and failed to consider the case of the Petitioner hat the Petitioner company i.e. de-merged company changed as per operational of Law has made an application for change in Wind Mill Agreements in view of and pursuant to the Order of De-merger passed by the Hon’ble Gujarat High Court. Thus, the Petitioner company has not made any breach of the contract nor has violated any provisions of GERC (Terms and Conditions of Intra-State Open Access) Regulations, 2011 and therefore, the action of the Respondent Company of imposing transmission wheeling charges to an extent of Rs. 60,76,707/- and of refusing to refund the same, is unreasonable, harsh and contrary to the provisions of GERC Regulations.

(d) the Respondent authority has transferred four Wind Mills being V-05, V-06 and M16 and M17 which are commissioned in the year 2006 situated at Village : Moti Sindholi, Tal: Abdasa, Dist. Kutch and Village : Kadoli, Tal- Abdasa, Dist. Kutch respectively and Wind Mill location No. ADO-33 situated at Village: Ratanpar, Tal and Dist. Porbandar, in the name of resulting company, in view of the order passed by the Hon’ble Gujarat High Court, without imposing any transmission and/or wheeling charges from the Petitioner company. However, the Respondent Company has demanded transmission and wheeling charges for Wind Mill location No. ADO-36 for an amount of Rs.67,09,065/- from the Petitioner company, despite the fact that the Petitioner company has not breached any of the conditions of the contract nor has abandoned the contract with the Respondent Company. Although the Petitioner company made an application for change in wheeling location in

9 terms and compliance to the directions given by the Hon’ble Gujarat High Court, the Petitioner company could not have been saddled with such charges when the company has not acted de-hors the terms of the contract.

(e) the Respondent company has ignored the fact that the Petitioner company has not terminated any of the wheeling agreements entered into and executed with the Respondent company. However, the Petitioner company requested the Respondent authority to change/modify/amend the wheeling agreement without disturbing the wheeling efficiency and capacity in view of the directions given by the Hon’ble Gujarat High Court. Thus, the Petitioner has only requested to change the wheeling location of the energy generated at the respective wind farms without affecting its continuity. The Respondent company, therefore, has wrongly considered an application for change in wheeling location for making change in the Wheeling Agreement as a termination of existing wheeling contract. Thus, the demand and retention of the transmission wheeling charges from the Petitioner company is ex-facie illegal and an abuse of the power by the Respondent company and a case of levy and retention of charges not authorized by law.

(f) the procedure for Long-Term Access is provided in Regulation 13 and as per the said regulation, the Petitioner company is required to sign an agreement for long-term access with the State Transmission Utility. The said long term access agreement also contains the date of commencement of long-term access, the point of drawal from the grid and the details of dedicated transmission line, if required. Further, the proviso to Regulation 13(1)(a) provides for preferring new application in case of change of location. The Respondent is not authorized and permitted to recover any transmission wheeling charges and therefore imposition and retention of such charges by the Respondent authority is itself without authority of law. Hence, the said charges deserved to be refunded to the Petitioner and the decision taken by the Respondent authority may be set aside.

(g) Upon bare reading of Regulation 42 of the GERC Open Access Regulations, 2011, it is evident that the same does not enable the Respondent Authority to impose and recover any transmission wheeling charges from the Petitioner company since in the present case, the Petitioner company has not discontinued and/or unutilized a transmission capacity for any period. However, the Petitioner has only made an application for change in wheeling location without affecting the continuity and has not in any manner showed intention for non-user of the wheeling facility. The Petitioner, however, continues to use the wheeling facility for similar capacity as it was using earlier. Thus, there remains no question for the stranded transmission capacity for the period. Thus, the provisions of Regulation 42 as invoked by the Respondent would not apply in case of the Petitioner company and

10 therefore, the demand of transmission wheeling charges itself was bad, illegal and unlawful and thus the Petitioner is entitled to seek a refund when the said charges are paid under protest.

(h) Regulation 42(b) under which the charges were imposed upon the Petitioner company, cannot be made applicable in the facts of the present case, because of the fact that pursuant to the order of demerger passed by the Hon’ble Gujarat High Court, there is no change in in customer’s/consumers and no change in physical location but merely wheeling is to be drawn by the new corporate entity which came into existence pursuant to the Hon’ble Gujarat High Court Order by way of operational of Law. Thus, in totality the case of the Petitioner does not fall within the ambit of Regulation 42 of the GERC Open Access Regulations, 2011. Therefore, the question of collecting transmission wheeling charges would not apply when none of the provisions of the Regulations as well as the terms of contract gets violated.

(i) In view of the Order passed by the Gujarat High Court by which the scheme of demerger under the provisions of Section 391 and 394 of the Companies Act, 1956 came to finalized and because of that the consumer remained the same but what has effected is the corporate identity of the consumer in another undertaking, which continues the relationship of consumer and distributor with the Respondent authority, without affecting the load carrying capacity and/or there remains any stranded transmission capacity. Thus, in aforementioned scenario, no charges could have been collected by the Respondent authority and the Petitioner company is entitled to seek refund of the charges paid under protest.

(j) Regulation 42 only gives power upon the authority to levy 66% of the estimated charges from the consumer for the stranded transmission capacity. In the present case, it is not even case of the Respondent that the Petitioner company has under-utilized or non-utilized open access capacity. Thus, the imposition of such charges itself is bad and contrary to the provisions of the regulation itself.

(k) Even otherwise, the Petitioner has acted in accordance with the order of demerger passed by the Hon’ble Gujarat High Court by way of operation of Law and when the Respondent authority has not to suffered any loss nor required to set up any new infrastructure to meet with the proposal made by the Petitioner company, then the Petitioner company cannot be made liable to pay such huge amount which is compensatory in nature. Thus, the amount of charges paid by the Petitioner company under protest may be directed to be refunded to the Petitioner.

11 (l) the company has entered into the wheeling agreement with DISCOM and GETCO on 11.7.2012 and 26.7.2012 and therefore the GERC ( Terms and Conditions of Intra-State Open Access) Regulations, 2011 would apply for both the agreements. However, the Respondent has demanded the Wheeling Transmission Charges under (Exit Option) defined in Notification No. 13 of 2005 i.e. GERC (Open Access in Intra-State Transmission and Distribution) Regulations, 2005. However, the said demand under the erstwhile Regulations is completely contrary to the Notification No. 3 of 2011, which does not authorize nor gives any power to the Respondent to demand and recover Exist Option Charges. Thus, in view of the aforesaid , the demand of transmission and wheeling charges under Exit Option itself is illegal and contrary to the Regulations of the Respondent authority.

(m) In any case, without prejudice to what is submitted herein above, the impugned decision by which the Respondent authority has rejected the application of refund of an amount of transmission wheeling charges which was paid under protest is ex-facie erroneous and deserves to be quashed and set aside and the Respondent authority may kindly be directed to refund the said amount to the Petitioner.

3 Respondent Gujarat Energy Transmission Corporation Limited (GETCO) vide its reply/affidavit dated 17.05.2018 submitted as follows:

3.1 The Petitioner No. 1 had set up six wind farms in the State of Gujarat. The Petitioner entered into three separate wheeling agreements with GETCO for wheeling of power from Wind farms to the consumption sites of the Petitioner as under:

a. Wheeling Agreement dated 4.10.2006 for transmission of power from Windmill No. V05 and V06 at Village: Motisindholi, Tal. Abdasa, Dist. Kutch to Consumer No. 29241 at Sidhpur. b. Wheeling Agreement dated 19.3.2007 for transmission of power from Windmill No. M16 and M17 at Village Kadoli, Tal. Abdasa, Dist. Kutch to consumer No. 31368 at Meghpar Borichi, Tal. Anjar. c. Wheeling Agreement dated 11.7.2012 for transmission of power from Windmill No. ADO-33 and ADO-36 at Village Ratanpar, Tal. Porbandar to Consumer No. 31511 at Meghpar Borichi, Tal. Anjar.

12 3.2 As per the submission of the Petitioner as a part of restructuring and reorganization Scheme, the Petitioner on its own taken a commercial decision to de-merge the Petitioner company into two separate entity, namely: a. Gokul Agro Resources Limited, the Petition No. 2- wheeling power from the Windmills of V05, M16 and ADO-33. b. Gokul Agri International Limited- wheeling power from Windmills of V06, M17 and ADO-36.

3.3 In pursuance to the above transfer, the Petitioner sought for the following modification in the wheeling arrangement: a. Wheeling of power from Wind farm V06, M17 and ADO-36 to Consumer No. 29241 at Sidhpur i.e. Gokul Agri International Limited, b. Wheeling of power from Windfarm V05, M16 and ADO-33 to Consumer No. 31511 Meghpar i.e. Gokul Agro Resources Limited.

3.4 The above modification in the existing wheeling arrangement involved change in the drawl points and material change in open access as under:

Sr. No. Wind Mill Existing location of New location of Date of No. Drawal Point Drawal Point Commissioning 1 V05 29241 31511 18.7.2006 2 V06 29241 29241 7.9.2006 3 M16 31368 31511 22.12.2006 4 M17 31368 29241 22.12.2006 5 AD033 31511 31511 9.8.2012 6 AD036 31511 29241 10.8.2012

a. Change in location of drawal point of Windfarm No. V05: From Consumer No. 29241 at Sidhipur and for Windfarm No. M16 from Consumer No. 31368 at Meghpar to Consumer No. 31511 at Meghpar: and b. Change in location of drawal point for Windfarm No. M17 from Consumer No. 31368 at Meghpar and AD036 from Consumer No. 31511 at Meghpar to Consumer No. 29241 at Sidhipur.

3.5 The Wheeling Agreements with the Petitioners have been entered into under the provisions of GERC Order No.1 of 2010 i.e. for Determination of Tariff for procurement of power by Distribution License from Wind Energy Generators and Other Commercial Issues. Clause 6.1 of the aforesaid Order provided for applicable 13 Transmission and Wheeling Charges. The transmission charges were claimed considering the GERC (Terms and Conditions of Intra-State Open Access) Regulations, 2011. The relevant provisions dealing with application procedure and grant of Open Access are Regulations 11 and 13.

3.6 Regulation 13(2) provides that in cases where there is any material change in location of the Petitioner or change by more than 10 percent in the quantum of power to be interchanged using the intra-State transmission system, a fresh application shall be made, which shall be considered in accordance with these Regulations.

3.7 The application form for grant of open access under the Open Access Regulations as approved by the Commission prescribes, inter alia, the specific point of injection from wind mill and point of drawal of wheeled wind power at consumer locations. Therefore, the Open Access granted to the Petitioner is specific to the point of injection and point of drawal. In accordance with the above Regulations, the wheeling agreements with the Petitioner also provided for location of wind turbine generator and the point of drawal at recipient unit.

3.8 The Open Access is for a particular transmission segment i.e. from a specified point of injection to a specified point of injection to a specified point of drawal.

3.9 The letter dated 17.7.2012 provides that for any change in location, the same has to in terms of exit option under Open Access Regulations i.e. the open access would have to be relinquished and applied fresh.

3.10 The agreement dated 11.7.2012 provides for pre-termination at Clause 6, which reads that the agreement will be subjected to pre-matured Termination by GETCO giving a written notice. The notice period for this purpose will be one month from the date of issue of the notice. Nonpayment of the Transmission Charges/Reactive energy Charges/ O & M charges shall construe to termination of agreement by GETCO. In case party wants to prematurely terminate the Transmission Agreement, the party shall give a three months’ Notice to GETCO stating the reason for termination and after consent of GETCO the party shall pay the charges of

14 compensation to GETCO as mentioned in the Exit Option in the Long-Term Open Access regulation of GERC.

3.11 Further, Regulation 42 of the Open Access Regulations, provided for Under- utilization or Non-Utilization of Open Access capacity in Intra-State Transmission system.

3.12 In view of the above, since the Petitioner was seeking a change in the point of drawal for Wind Farms No. V05, M16, M17 and ADO36, it has to surrender/relinquish the open access granted with regard to the said wind farms under the three wheeling agreements and apply afresh for the open access for the changed locations. There is no other provision for change in location in a wheeling agreement without surrendering existing open access rights in case of change in either injection point or drawal point.

3.13 Since the Wind farms No. V05, M16 and M17 fall under Wind Power Policy, 2002 wherein no transmission charges are payable, the relinquishment charges as per Regulation 42 of Open Access would be nil. Therefore, GETCO did not seek any charges in respect of the above wind farms.

3.14 However, for Windfarm No. ADO-36, the relinquishment charges as per Regulation 42 are payable. GETCO has estimated the relinquishment charges in accordance with the Open Access Regulations, which is Rs.60,76,707/- and the same had been paid by the Petitioner.

3.15 The Petitioners is seeking to mislead the Commission in regard to the applicability of transmission charges and relinquishment charges. It is submitted that GETCO has recovered the relinquishment charges/exit option charges on estimation basis as per Regulation 42 and transmission charges are contended by the Petitioner.

3.16 The Petitioners have not disputed the applicability and computation of the relinquishment charges but seeking exemption in view of the order of the Hon’ble High Court of Gujarat approving the demerger arrangement. The applicability of relinquishment charges and surrendering of long-term open access rights due to

15 change in point of drawal etc. need to be dealt in accordance with the provisions of the relevant Regulations and contractual agreements between the parties. The scheme of arrangement of demerger shall not have overriding effect on the provisions of the Regulations and the same would continue to apply and the scheme of de-merger would not change the position.

3.17 The issue of change in location of point of drawal has no relevance to change in ownership. Even if the ownership remained the same, any change in location would be dealt as per the provisions of relevant Regulations/Policies.

3.18 The issue of change in the point of injection/point of drawal in the wheeling agreement and the applicability of relinquishment charges in terms of Open Access Regulations of the Commission is already decided by the Commission in the Order in Petition No. 1282 of 2013 dated 11.7.2013 in the matter of M/s Kaizen Switchgear Products vs. Madhya Gujarat Vij Company Limited and Gujarat Energy Transmission Corporation Limited. In the said petition, the similar issues were involved namely change in point of drawal subsequent to the execution of wheeling agreement and applicability of relinquishment charges thereof akin to the issue involved in the present petition. In the aforesaid Order, the Commission recorded/observed that when there is change in the point of drawal for wheeling of power irrespective of whether the same is due to change in name of company or otherwise, the existing open access rights is to be surrendered by payment of relinquishment charges in terms of Regulation 42 of the Open Access Regulations.

3.19 The referred Order of the Hon’ble High Court approved the Scheme of de-merger and transfer of undertaking. However, the said Order did not deal with the terms of wheeling agreement. There is no provision in the Order for allowing changes in the existing wheeling agreements independent of the Regulations, Policies and contractual provisions.

3.20 The amount of exit option has neither been forcibly collected from the Petitioner nor is it unreasonable but the amount is recovered as per the Open Access Regulations. There is a change in location of the drawal point and there is no provision in the Wheeling Agreement or Open Access Regulations to change the

16 location within the existing arrangements and with no financial implication. The existing wheeling agreements are for a specific injection point and a specific drawal point. Any change in location would involve surrender of the earlier arrangement based on the old location and grant of a fresh arrangement with the new location.

3.21 The de-merger of the Petitioner No. 1 was at the instance and option of the Petitioner No.1. In any case, the issue is not the change in company due to de-merger but rather the change in drawal location. Irrespective of whether there is a change in name or not, change in location would require the procedure to be followed and payment of the transmission charges. The Order of Hon’ble High Court does not require the change in the terms and conditions of the agreements entered into by the Petitioners.

3.22 The reasons for not charging the relinquishment charges/exit option charges in respect of the wind mills being V05, V06, M16, M17 is not the Order of Hon’ble High Court but that the wheeling of power from such wind mills was not subjected to payment of transmission charges under Wind Power Policy. Since the transmission charges were nil, the relinquishment charges were nil.

3.23 Admittedly, the point of drawal from the grid is required for long term access agreement. When there is a change in location, a fresh application for open access is to be made. It cannot be the case that while applying for open access, a change in location would require a fresh application, but change in location after open access is granted would not require a fresh open access. The Regulation 13 does not in any way provide that GETCO is not entitled to recover relinquishment charges.

3.24 Earlier the Open Access was granted for a specific injection point to a specific drawal point. If the location is changed, then the existing open access cannot be continued and therefore the Open Access is to be surrendered. Regulation 42 provides for relinquishment charges to be paid in case of surrender of the Open Access prior to 12 years period. The letter dated 17.7.2012 with Wheeling Agreement at para 6 provides that for any change in location, the same has to in terms of exit option under Open Access Regulations. The exit option is under

17 Regulation 42 of Open Access Regulations. The Petitioners cannot now claim that the change in location does not mean exit of existing open access.

3.25 The relinquishment charges/exit option charges are payable in accordance with Regulation 42of the Open Access Regulations, 2011 and GETCO has calculated the amount in accordance with the same. It is denied that GETCO has demanded the relinquishment charges as per 2005 Regulations. The relinquishment charges are payable when the Open Access customers seeks to exit or surrender the open access and therefore the charges are sometimes called exit option charges. These charges are calculated on the estimated transmission charges.

3.26 It is also submitted that the relinquishment charges are recovered only for the wind mill no. AD036 in view of the change in drawal point from existing location of 31511 to new location of 29241.

4 The Petitioners in its rejoinder dated 04.09.2018 submitted that-

4.1 Impugned action and/or decision of refusal of refund of amount of exit option charges paid ‘under protest’ is ex-facie without authority of law and clearly appears to be unreasonable and vitiated by non-application of mind, is a non-speaking and non-reasoned order and hence, the said impugned decision dated 10.5.2017 deserves to be quashed and set aside.

4.2 Further, while refusing the refund to the Petitioner company, the Respondent has completely ignored and failed to consider the fact that the Petitioner No. 2 came into existence by virtue of operation of law, in view of the Order of demerger passed by the Hon’ble Gujarat High Court and it was only pursuant thereto that an application for change in wheeling location in Windmill Agreement was made to the Respondent. Hence, the Petitioner has not made any breach of the terms of contract nor has violated any of the provisions of the GERC (Terms and Conditions of Intra- State Open Access) Regulations, 2011. The Respondent has wrongfully interpreted the provisions of the Regulations to the disadvantage of the Petitioner and has arbitrarily imposed and collected ‘exit option charges’ de-hors the provisions of Regulations and ignoring the fact that the Petitioner has never discontinued and/or

18 left the transmission capacity unutilized and/or underutilized nor the request for change in location made pursuant to the order passed by the Gujarat High Court nor in any way has affected the continuity or usage of wheeling facility. Thus, the Respondent has wrongfully applied and invoked the provisions of Regulation 42 in case of the Petitioner and therefore, the demand of transmission wheeling charges to an extent of Rs. 60,76,707/- is ex-facie bad, illegal and unlawful and hence the Petitioner is entitled to seek refund of the said charges paid under protest.

4.3 The submission of the Respondent that the Petitioner has not challenged the imposition of such charges by GETCO and rather challenged the decision of refusing the refund of charges recovered as per the provisions of wheeling agreement and provision of GERC Open Access Regulations is denied. This is highly misconceived and contrary to what has been averred by the Petitioner vide several letters addressed to the Respondent, wherein it has been categorically conveyed to the Respondent that the Petitioner was not required to pay any charges for change in wheeling location of windmill in the name of wholly owned subsidiary company i.e. Petitioner No.2. When the Petitioner made an application for change in Wheeling Agreement in terms of the Order of demerger passed by the Hon’ble High Court and therefore, no such charges could have been imposed. Despite what has been stated above, the Petitioner has made payment of such exit option charges ‘under protest’ and thereby, has never accepted any such charges which are illegally imposed and recovered by the Respondent. Thus, merely because the Petitioner has paid the charges ‘under protest’, the same would not ipso-facto regularize the levy of charges illegally recovered by the Respondent.

4.4 The Petitioner deny the say of the Respondent in the reply that the Petitioner on its own had taken a commercial decision to de-merge the Petitioner into two separate entities. For the purpose of efficient management of the Petitioner No.1 and its units in decentralized fashion to achieve geographical operational efficiency, the management of the Petitioner No.1 proposed to create separate companies and for that purpose a scheme of arrangement in nature of demerger of undertakings was proposed before the Hon’ble Gujarat High Court and it was only after considering the overall pros and cons as well as the ultimate outcome of the scheme, the Hon’ble Gujarat High Court had finally sanctioned the scheme of arrangement in nature of

19 De-merger and Transfer of Undertaking and consequential restructure of capital structure of the companies.

4.5 The terms and conditions of agreement provides for applicability of Long Term Open Access Regulations of GERC only in case if a party wants to terminate the Transmission Agreement. Even the notes to the letter dated 17.7.2012 also provides that any change in percentage allocation and/or change in location in the agreement shall be allowed as per Exit Option of Open Access Regulations. For the agreement dated 11.7.2012, the provisions of the GERC (Terms and Conditions of Intra-State Open Access) Regulations, 2011 would apply in case of the Petitioner and the provisions of the said Regulations do not provide for and/or permit the Respondent to raise demand for wheeling charges under the Exit Option as defined in the Notification No. 13 of 2005 i.e. GERC (Open Access in Intra-State Transmission and Distribution) Regulations, 2005. Thus, the stand of the Respondent that the Regulation provides for imposition and recovery of such transmission and wheeling charges is ex-facie unreasonable, baseless and states in the face of the provisions of the GERC (Terms and Conditions of Intra-State Open Access) Regulations, 2011 which is applicable in the case of the Petitioner. In view of the aforesaid, when the demand of the transmission and wheeling charges under the Exit Option itself is illegal and contrary to the Regulations, then in such circumstances said amount of transmission charges unlawfully and illegally collected from the Petitioner may be refunded to the Petitioner and the prayer made in the petition may be allowed by the Commission.

4.6 The Respondent has sought to contend that there is no provision for change in location without surrendering the existing open access rights and further the stand of the Respondent by making distinction between the transmission charges and relinquishment charges erroneously collected by the Respondent under the camouflage of Regulation 42 under the head relinquishment/exit option charge, is not at all tenable and hence denied.

4.7 It is also not correct that the Petitioner has not challenged the imposition of such exit option charge. Looking to the trail of correspondence and letters exchanged between the Petitioner and the Respondent and considering the averments made

20 in the Petition, it is categorically averred that the Respondent has collected the charges in question without authority and illegally. Thus, merely, because the Petitioner has deposited such amount ‘under protest’ the same would not entitle the Respondent to aver that the Petitioner has accepted the imposition of such charges.

4.8 The provisions of GERC (Terms and Conditions of Intra-State Open Access) Regulations, 2011 applicable in the case of the Petitioner, does not authorize and/or permit the Respondent to impose/levy charges under the Exit option. Therefore, when the Petitioner i.e. de-merged company came into existence as per operation of law and thereafter made an application for change in windmill agreement in view of and pursuant to the order passed by the Hon’ble Gujarat High Court and more particularly when the Petitioner has not committed any breach of contract nor has violated any provision of Open Access Regulations, 2011 then the Respondent was not justified in demanding such charges from the Petitioner. The Respondent has not suffered any loss nor been left with any stranded capacity because of request for change in wheeling location made by the Petitioner nor such application for change in wheeling location has resulted in under-utilization or non-utilization of open access capacity of the Petitioner.

4.9 The judgment relied upon by the Respondent would not apply in facts and circumstances of the present case.

5 The Respondent GETCO in its reply to rejoinder reiterated and submitted that-

5.1 The open access is for a particular transmission segment i.e. from a specified point of injection to a specified point of drawal and a change in location results in the relinquishment of the old open access and application of new open access. This has already been recognized by the Hon’ble Appellate Tribunal.

5.2 The de-merger of the Petitioner company is not relevant for the above. The issue is not a change in name of company or even change in the party enjoying open access. The issue is of change in location of drawal points.

21 5.3 The de-merger and transfer was approved by the Hon’ble High Court vide Order dated 30.06.2015; however the initiation of such transfer was at instance and option of the Petitioner. There was no compulsion under law for the Petitioner to transfer undertaking/ wind mills.

5.4 Since the Petitioner was seeking a change in the point of drawal for Wind Farms No. V05, M16, M17 and AD036, it was required to surrender/ relinquish the open access granted with regard to the said wind farms under the three wheeling agreements and apply a fresh for the open access. There is no other provision for change in location in a wheeling agreement.

5.5 The recovery of the exit option charges/ relinquishment charges/ surrender charges are consistent with the Open Access Regulations notified by the Commission and the agreements entered into between the parties as well as decision of the Hon’ble Tribunal.

5.6 The existence of Petitioner No.2 is not relevant for the present issue. The relinquishment of the earlier open access and consequent exit option charges are not due to any change in ownership but due to change in drawal point.

5.7 Issue raised is that there cannot be any imposition of charges because of the Order of Hon’ble High Court. The arrangement as per the Order of the Hon’ble High Court is not an involuntary transfer by operation of law but rather a voluntary action by the Petitioners.

5.8 It is submitted that the wheeling agreements have been executed between parties and are a matter of record.

5.9 There cannot be any doubt that the charges of compensation for pre-mature termination or exit option would refer to the relinquishment of capacity as per the Open Access Regulations.

5.10 The Petitioner cannot seek a change in drawal location free of cost.

22 6 The. matter was earlier listed for hearings on 09.08.2018, 07.09.2018, 18.06.2019, 08.08.2019, 10.09.2019, 24.09.2019 and 19.10.2019. During the hearing on 19.10.2019, the Petitioners and Respondent completed their arguments and made their submissions in the matter and parties were directed to file their written submissions, if any and the matter was reserved for Order. Thereafter, the matter was relisted on 19.02.2020 for mentioning/ directions on account of change in quorum, during which the counsel for the Petitioners and the Respondent submitted that they have already made their submissions and completed their arguments earlier and no further submissions are required to be made by them in the matter and the Commission may decide the matter based on the submissions already made and the record of present Petition.

7 The Petitioners in its final written submissions stated that:

7.1 The Petitioner company entered into wheeling agreements in the year 2012 and therefore the GERC- Open Access Regulations 2011 only would apply for both the agreements.

7.2 The Respondent authority has demanded the wheeling transmission charges under exit option defined in Notification no. 13 of 2005. The said demand under the erstwhile Regulation of 2005 is therefore completely contrary to the Notification No. 3 of 2011.

7.3 The Respondent authority has completely ignored and failed to consider the case of the Petitioner that the said change had occasioned by operation of law.

7.4 In present case, the Petitioner has not discontinued and/or unutilized a transmission capacity for any period. The Petitioner has only made an application for change in wheeling location without affecting continuity. No case arises for ‘stranded transmission capacity’ in the present case.

23 7.5 In case of Kaizen Switchgear, the said company had sought to draw power to an entirely new unit, whereas in present case the drawal of power was in existence at both the places prior to the amended in wheeling agreement.

7.6 In absence of detailed calculation of stranded capacity, no compensation is payable. The reliance is placed on Lanco Kondapalli Power Limited v/s Power Grid Corporation of India Limited and Others reported in 2014 SCC Online CERC 67 (Paragraph 26 to 30)

7.7 The entire setup was previously managed by one single body and for functioning comfort the bodies have been bifurcated with one single body GUVNL being the parent body. Location of drawing of power from one place to a different location within State causes no loss to the GETCO.

8 The Respondent GETCO in its written submissions dated 19.11.2019 reiterated and submitted that:

8.1 The Petitioner on its own and as a commercial decision sought to de-merge the company into two undertakings. Initiation of transfer was at the instance and option of the Petitioner. There was no compulsion under law for the Petitioner to transfer the undertaking/ wind mills.

8.2 Under the new arrangement, the Petitioner requested change in drawal points for the wheeling of power generated by wind mills. This change in drawal of power location would result in relinquishment of earlier open access and requirement of new open access.

8.3 The open access is for a specific transmission segment i.e. from a specified point of injection to a specified point of drawal. The open access is not from any point in the State to any other point interchangeable from time to time.

24 8.4 It is submitted that seeking a change in drawal location in effect amount to termination of the earlier wheeling arrangement which is for a specific injection point and/ or a specific drawal point. The Petitioner cannot seek a change in drawal location within the same arrangement. It is reiterated that the action of GETCO is in accordance with the Open Access Regulations and Wheeling Agreement.

8.5 It is submitted that above principle that the Open Access in the State of Gujarat is for point to point open access and that any change in location would be considered as relinquishment of the open access has been settled by the Hon’ble Appellate Tribunal in Gujarat Energy Transmission Corporation Limited v. Gujarat Electricity Regulatory Commission and others dated 31.03.2010 in Appeal No. 104 of 2009. The Hon’ble Tribunal has held that change of locations at the point of drawal would amount to relinquishment of the existing Open Access given to the customer and, therefore, the open access customer has to file a fresh application seeking for the Open Access for the new location. It was also held that the open access granted is for specific points and not for the entire transmission system.

8.6 Relying on the above decision of the Hon’ble Tribunal, the Hon’ble Commission has in Kaizen Switchgear Products v. Madhya Gujarat Vij Company Limited and Another in Petition No. 1282 of 2013 dated 11.07.2013 held that any change in drawal location is a relinquishment and the compensation is payable under Open Access Regulations 2011.

8.7 It is submitted that the Petitioner has raised a contention that the Agreement refers to the exit option which is not provided for in the Open Access Regulations 2011 and therefore no amount is payable. It is submitted that the Clause 6 of the Agreement deals with pre-termination which is the same as relinquishment of open access. There can be no doubt that the reference would be to Regulation 42 of the Open Access Regulations, 2011. Any agreement has to be given a contextual and reasonable interpretation. The terms of the agreement cannot be rendered redundant and otiose by such hyper technical interpretation.

25 8.8 It is also submitted that- even otherwise, assuming but not admitting that the contract does not provide for the relinquishment charges, the Open Access Regulations are still applicable to the Petitioner and the Petitioner cannot avoid or evade the specific provisions of the Open Access Regulations 2011 on the basis that there is no reference to the same in the contract.

8.9 The reason for not charging the relinquishment charges/exit option charges in respect of the wind mills being V05, V06, M16, M17 is not the Order of the Hon’ble High Court but that the wheeling of power from such wind mills was not subjected to payment of transmission charges under Wind Power Policy. Since the transmission charges were nil, the relinquishment charges were nil. However, for Wind Farm No. ADO – 36, the relinquishment charges as per Regulation 42 would be required to be determined. The relinquishment charges have been determined by GETCO in accordance with the Open Access Regulations as Rs.60,76,707. There is no dispute on the computation as such by both the parties.

8.10 The Petitioner during the hearing has for the first time raised the issue that there is no stranded capacity and therefore the relinquishment charges would not apply. Such new grounds being raised without any pleading to that effect cannot be considered. In the Petition filed by the Petitioner, there was no dispute on the computation/calculation of relinquishment charges but only that the transmission charges were not applicable for change in location and due to the Order of the Hon’ble High Court.

8.11 The reliance by the Petitioner on the decision of the Central Commission in case of Lanco Kondapalli in Petition No. 63/MP/2013 dated 21.02.2014 is not correct. In case of Central Commission, the open access is considered at regional level which provides for Point of Connection charges based on various factors as against the transmission being point to point open access granted in case of intra-state lines. Further in the case of Lanco, the inter-state transmission system is involved which is state to state or region to region transmission as against to the intra-state transmission system which is the point to point.

26 8.12 The Scheme or arrangement proposed by the Petitioners and approved by the Hon’ble High Court shall not alter the terms and conditions of the Wheeling Agreement already entered into by the Petitioner with GETCO. There is no provision in the Order for allowing changes in the existing wheeling agreements independent of the Regulations, Policies and contractual provisions.

9 We have carefully considered the contentions of both the Petitioner and the Respondent. The contention of the Petitioner that the provisions of section 42(1) (b) of the Open Access Regulations do not apply in case of change of wheeling location, is required to be examined in the context of GERC (Terms and Conditions of Intra-State Open Access) Regulations, 2011, particularly Regulation 42(1) and Regulation 46(3). GERC (Terms and Conditions of Intra-State Open Access) Regulations, 2011, Regulation 42(1) reads as under:

“42. Under–Utilisation or Non-Utilisation of open access capacity in intra- State transmission system (1) Long-term access: A long-term customer may relinquish the long-term access rights fully or partly before the expiry of the full term of long-term access, by making payment of compensation for stranded capacity as follows: - (a) Long-term customer who has availed access rights for at least 12 years (i) Notice of one (1) year – If such a customer submits an application to the State Transmission Utility at least 1 (one) year prior to the date from which such customer desires to relinquish the access rights, there shall be no charges. (ii) Notice of less than one (1) year – If such a customer submits an application to the State Transmission Utility at any time less than a period of 1 (one) year prior to the date from which such customer desires to relinquish the access rights, such customer shall pay an amount equal to 66% of the transmission charges for the stranded transmission capacity for the period falling short of a notice period of one (1) year. (b) Long-term customer who has not availed access rights for at least 12 (twelve) years – such customer shall pay an amount equal to 66% of the estimated transmission charges (net present value) for the stranded transmission capacity for the period falling short of 12 (twelve) years of access rights: Provided that such a customer shall submit an application to the State Transmission Utility at least 1 (one) year prior to the date from which such customer desires to relinquish the access rights: Provided further that in case a customer submits an application for relinquishment of long- term access rights at any time at a notice period of less than one year, then such customer shall pay an amount equal to 66% of the estimated transmission charges (net present value) for the period falling short of a notice period of one (1) year, in addition to 66% of the estimated transmission charges (net present value) for the stranded transmission capacity for the period falling short of 12 (twelve) years of access rights.

27 (c) The discount rate that shall be applicable for computing the net present value as referred to in sub-clause (a) and (b) of clause (1) above shall be the discount rate to be used for bid evaluation in the Central Commission’s Notification issued from time to time in accordance with the Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by distribution Licensees issued by the Ministry of Power. (d) The compensation paid by the long-term customer for the stranded transmission capacity shall be used for reducing transmission charges payable by other long-term customers and medium-term customers in the year in which such compensation payment is due in the ratio of transmission charges payable for that year by such long- term customers and medium-term customers.”

9.1 GERC (Terms and Conditions of Intra-State Open Access) Regulations, 2011, Regulation 46(3) reads as under: “….(3) Open access customers to the intra-State transmission system and the distribution system in the State on the date of coming into force of these regulations under an existing agreement/contract shall be entitled to continue to avail such access to the transmission and distribution system on the same terms and conditions, as stipulated under such existing agreement/contract. Such persons are eligible to avail long-term access or medium-term open access under these regulations on expiry of such existing agreement/contract. Such persons, shall have to apply to come under the long-term access or medium-term open access category at least thirty days prior to the expiry of such existing agreement/contract.”

9.2 A careful reading of Regulation 42(1) (b) clearly indicates that the long-term customer who has not availed access rights for at least 12 years is required to pay an amount equal to 66% of the estimated transmission charges for the stranded transmission capacity for the period falling short of 12 years of access rights. Further the Regulation 42(1) also clearly indicates that the long-term customer desiring to relinquish his long-term access rights fully or partly before the expiry of the full term of long-term access should make compensation for stranded capacity.

9.3 The present case is relating to change of location of the Petitioner from Meghpar, Ta- Anjar to Sidhpur and Petitioner wants the transfer/shifting of the open access wheeling agreement to the new location. This is not permissible in view of the agreement which is with reference to injunction point and the drawal point and has been specified in the recital of the agreement. The recital of the agreement has clearly specified the injection point as the Petitioner’s wind power project at village Ratanpar, Dist- Porbandar and drawal point is specified as the Meghpar (Borichi), Ta- Anjar. The Open Access in this case has been granted for a period of 25 years which is long-term access in terms of the provisions of the GERC (Terms and 28 Conditions of Intra-State Open Access) Regulations, 2011. As such any change of location of drawal point would require surrendering of the existing open access and seeking new open access at the new location. This is further strengthened by APTEL judgements in Appeal No. 97 of 2008 in the case of Gujarat Alkalies & Chemicals Ltd. and in Appeal No. 104 of 2009 in the case of Oil and Natural Gas Corporation Ltd.

The relevant paragraphs of the judgement in Appeal no. 97 of 2008 are stated as under:

“….11. Vide order dated March 29, 2008, the Commission has disposed of the petition No. 930 of 2007 filed by the appellant approving the reduction of open access demand but holding that the respondent No. 2 was not liable to pay any compensation to the appellant for the relinquishment of the transmission open access capacity because the letter of grant of open access to the respondent No. 2 did not specify any such compensation payable by the respondent No. 2. The Commission has further held that the provisions of the statutory and binding Open Access Regulations providing for compensation payable for the relinquishment of the transmission capacity do not apply to the respondent No. 2. ………………………….

14. Admittedly respondent No. 2 is a user of the transmission network on the date of coming into force of the Gujarat Electricity Regulatory Commission (open access intra state transmission and distribution) Regulations, 2005. Open access user has been defined as “any one permitted to receive supply of electricity from a person other than distribution licensee of his area of supply, and the expression includes a generating company and a licensee, who has availed of or intends to avail of open access. As per Section 3 of these Regulations, these shall apply to open access for use of intra-state transmission system and/or the distribution systems of licensees in the state, including when such system is used in conjunction with inter-state transmission system unless explicitly stated to be applicable only for a specific category of licensee.

15. Respondent No. 2 has been an existing user of the transmission system belonging to the appellant GETC and therefore, the Open Access Regulations shall fully apply to both GETC as well as the respondent No. 2 GACL. The Regulations in clause 11 titled ‘Exit Option’ specified as under: - A long-term open access user shall not relinquish or transfer his rights and obligations specified in the Bulk Power Transmission/Distribution Capacity Agreement, without prior approval of the Commission. The relinquishment or transfer of rights and obligations by a long-term open access user shall be subject to payment of compensation, as may be determined by the Commission.

16. We do not find any force in the arguments of the Commission that the respondent No. 2 was not liable to pay any compensation to the appellant for the relinquishment of the transmission open access capacity because the letter of grant of open access to the

29 respondent No. 2 did not specify any such compensation payable by the respondent No. 2 and that the provisions of the statutory and binding Open the Access Regulations providing for compensation payable for the relinquishment of the transmission capacity do not apply to the respondent No. 2.

17. The Open Access Regulations do not distinguish between the existing and the prospective users except that the existing user need not follow the procedure for long- term Open Access as given in Clause 9 of the Regulations. The proviso to Clause 4 (II) of the Regulations stipulates that the existing beneficiaries of an intra state transmission and distribution system owned or operated by the State Transmission Utility and distribution licensee respectively shall be deemed to be the long term open access users of the particular system; the application fee schedule according to Regulation 9(iii) shall not apply for them. Therefore, the plea of the Commission that the policies of the Government of Gujarat vide which the permission was granted to the respondent does not specify the charges leviable for the exit option on the CPP whenever CPP reduces wheeling or stops wheeling to its recipient units is of no consequence.

18.Once the regulations in force are applicable to the existing beneficiaries, only these regulations shall be of relevance and the Commission cannot be guided by any policy directions before coming into effect of the regulation. If the intention of the Commission was to make an exception in case of the existing beneficiaries who were granted open access prior to the regulations, the regulations would have made specific exceptions in such cases………… ………………………………… 20. The Regulations clearly provide for exit option subject to payment of compensation, as may be determined by the Commission. The appellant and the respondent GSEL had mutually agreed for compensation of Rs. 2.5 crores which has not been contested by the Commission though the Commission has ruled that the compensation is not payable.”

The relevant paragraphs of the judgement in Appeal no. 104 of 2009 are stated as under: “21. The Open Access Regulation deals with the terms and conditions to be satisfied by the Open Access customer such as ONGC (R-2) who seek open access of the transmission in the State of Gujarat for seeking open access for the Appellant.

22. The regulations relevant for the above purpose are Regulation 9 and Regulation 11. Regulation 9 deals with the procedure adopted by the long-term Open Access user and Regulation 11 deals with the exit option to such long-term Open Access user. Regulation 9 reads as under:

“9. Procedure for long-Term Open Access User (i) An application for long-term access shall be submitted to the concerned nodal agency. (ii) The application shall contain the details, such as capacity needed, point(s) of injection, point(s) of drawl, duration of availing open access, peak load, average load and such other additional information that may be specified by the nodal agency.

30 Provided that the nodal agency shall issue necessary guidelines, procedure and application forms within 30 days from the date of notification of these Regulations.

23. Under this Regulation, when an application has been filed for long-term Open Access, the consumer shall specifically mention about the details such as capacity needed, points of injection, points of drawl, etc.

24. Regulation 11 reads as follows: “11. Exit Option (i) A long-term Open Access user shall not relinquish or transfer his rights and obligations specified in the Bulk Power Transmission/Distribution Capacity Agreement, without prior approval of the Commission. (ii) The relinquishment or transfer of rights and obligations by a long-term Open Access user shall be subject to payment of compensation, as may be determined by the Commission”

25. This Regulation provides for the conditions to the effect that Open Access user shall not relinquish or transfer its rights specified in the agreement without the approval of the Commission and such relinquishment shall be subject to the payment of compensation.

26. In the present case the ONGC(R-2) actually wanted a change in the transmission lines. In respect of the 6 locations as mentioned above, the Open Excess permission was taken by ONGC(R-2) from the Gujarat Electricity Board by the letter dated 27.11.2000. Now ONGC(R-2) has sought modification of the above existing permission granted to them for Open Access by reducing the capacity in each of the said lines and adding 6 more locations for which Open Access was sought.

27. The question for consideration is as to whether such a change of location and reduction in Open Access capacity in the existing lines is a relinquishment of the existing Open Access permission given to ONGC(R2) within the meaning of Regulation 11. It is the specific stand of the Appellant both before the Commission as well as before the Tribunal that the Open Access has been granted to ONGC(R-2) by the letter dated 27.11.2000 for a specific line and now ONGC(R-2) has sought modification to the lines including reduction in the capacity of the existing Open Access lines and adding such reduced capacity for all other lines and this would amount to relinquishment of the rights under the Bulk Power transmission.

28. On the other hand, the stand of the ONGC(R-2) that so long as the total capacity for the Open Access that was granted, is retained, the mere change in the points of delivery within the Gujarat system would not amount to relinquishment as no part of the capacity has been reduced.

29. Accepting the stand of the ONGC(R-2), the State Commission has held that the Open Access is to the transmission system of the Appellant as a whole and not to the transmission line alone. Therefore, if there is a change in the points of delivery without there being a change in the total capacity, there is no relinquishment………

32. There has to be a purpose as to why Regulation 9 contemplates that the applicant in the application shall specify the point of injection and point of drawl. This is not an empty formality. The entire process deciding to grant Open Access is based on the point of injection and point of drawl. Even before the Electricity Act 2003, the open access to the transmission lines and distribution line were provided in the point of injection and point of drawl. This would be clear from the approval letter dated 27.11.2000 which was granted by the Board only in respect of 6 transmission lines on which wheeling was allowed. This approval granted to ONGC(R-2) was on 6 specific lines with the point of injection, points of drawl and the capacity for which open access is sought.

33. As pointed out by the Learned Counsel for the Appellant it is a well-accepted practice in the electricity industry that open access is restricted to specified transmission lines with specific injection and drawl points. Thus, there is no vested right to open access over the entire transmission system of the licensee.

34. Since the open access customer has no right whatsoever to shift point of drawl under the Regulations, the request for substitution of the new points of drawl would amount to surrendering capacity of the open access between the two specified points and seeking open access for the different point to point transmission…….

36. The above Open Access Regulation defines the criteria for being classified as long- term Open Access user and short-term Open Access user, the rights, privileges, benefits, etc. applicable to each of the above user. As per clause 24 of the Regulations all the existing users are deemed to be a long-term Open Access user. Therefore, the ONGC(R-2) was an existing user on the date when the Regulation came into force and accordingly it was to be treated as a long-term Open Access user.

37. In terms of the Captive Power Policy earlier announced by the Government of Gujarat, the permission for wheeling of 1.9 MVA surplus CPP from the ONGC(R-2) at Ankleshwar Asset to their own unit was granted. Subsequent to the above approval, erstwhile Gujarat Electricity Board accorded approval for wheeling to the specified six locations for a period of 10 years through their letter dated 27.11.2000. The arrangement for transmission wheeling of electricity as per the undertaking given by the ONGC(R-2) from the CPP of ONGC(R-2) located at Ankleshwar to the six identified places of consumption by the ONGC(R-2). The undertaking given by the ONGC(R-2) clearly means at clause no. 8 that the permission granted shall not be transferable.

38. Thus, the open access which the ONGC(R-2) is entitled to claim from the period from 01.04.2006 to the above six identified places and not to any other place. Any change or rationalization of the above open access including any addition or deletion of the locations can be only with the prior direction of the State Commission in accordance with the open access regulations.

39. Therefore, the order impugned does not satisfy the requirements as provided in the Open Access Regulations framed by the State Commission. Under those

32 circumstances, we come to the conclusion that the change of locations at the point of drawl and the reduction in Open Access capacity in the existing lines would amount to relinquishment of the existing Open Access given to the ONGC(R-2) between the meaning of Regulation 11 and, therefore, the ONGC(R-2) has to file a fresh application seeking for the Open Access for the new locations. As far as the compensation is concerned, it is for the State Commission to decide as to whether the compensation is compulsory, and if it is decided so, quantum of the same taking into consideration the various circumstances.”

9.4 The above judgements of Hon’ble Tribunal clearly indicate that open access customer cannot shift the point of drawl under the GERC (Open Access in Intra-state Transmission and Distribution) Regulations, 2005 or resort to substitution of new point of drawal. This would imply that the Petitioner has to surrender the existing open access and seek open access afresh for a different point-to-point transmission. The aforesaid Regulations has been repealed by the GERC (Terms and Conditions of Intra-State Open Access) Regulations, 2011. The regulation 42 (1) (b) of the aforesaid regulations as stated in para 8 above stipulates that an open access customer may relinquish the quantity of open access before the expiry of full term of long-term access after paying the compensation for relinquishment as stipulated in the regulation. Hence, the Petitioner has to surrender his existing open access and seek new open access for the different location even under the earlier Open Access Regulation of the Commission and under the present Regulations. The contention of the Petitioner that the Commission has power under section 46(3) to allow such change without attracting other clauses of the open access regulation is an incorrect interpretation. Regulation 46(3) clearly indicates that the open access customer shall be entitled and can continue to avail open access to the existing transmission and distribution system on the same terms and conditions as stipulated under such existing agreement/contract. This does not in any way give right to the existing open access customer to change the location of point of drawal.

9.5 In view of the above we decide that the Regulation 42(1) (b) of the GERC (Terms and Conditions of Open Access) Regulations, 2011 is applicable in the present case and if the Petitioner wants to change the location of drawal of power, he is required to apply afresh for open access for his new location and also pay compensation for relinquishment as provided in the GERC (Terms and Conditions of Intra-State Open Access) Regulations, 2011.

10 We order accordingly.

11 With this order the matter stands disposed of.

Sd/- Sd/- (P. J. THAKKAR) (ANAND KUMAR) MEMBER CHAIRMAN

Place: Gandhinagar Date: 09/03/2020