Before the Gujarat Electricity Regulatory Commission at Ahmedabad Petition No.256/2003 & 867/2006
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BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION AT AHMEDABAD PETITION NO.256/2003 & 867/2006 In the matter of: Levy of Parallel Operation Charges for the Captive Power Plants running in parallel of the grid of the Gujarat Energy Transmission Corporation Limited’s and Distribution Companies. Petitioner : Gujarat Energy Transmission Corporation Limited, Vadodara. Co-Petitioners: 1. Madhya Gujarat Vij Company Ltd., Vadodara. 2. Dakshin Gujarat Vij Company Ltd., Surat. 3. Uttar Gujarat Vij Company Ltd., Mehsana. 4. Paschim Gujarat Vij Company Ltd., Rajkot. V/s. Respondents: 1. M/s.Torrent Gujarat Bio Tech, Masar. 2. M/s.Petronet LNG Ltd., Dahej. 3. M/s.GACL, Dahej Vagra. 4. M/s.GSFC, Fertilizernagar, Vadodara. 5. M/s.Gujarat Glass Pvt.Ltd., Uchhad. 6. M/s.Solaris Bio-Chemical Ltd., Karakhadi. 7. M/s.ONGC (Kawas), Hazira, Surat. 8. M/s.Videocon International Ltd., Cahvaj. 9. M/s.Nilkanth Concast Pvt.Ltd., Vadala. 10. M/s.Dipak Nitrite Ltd., Nadesari. Baroda. Page 1 of 46 11. M/s.Alembic Chemicals, Baroda. 12. M/s.Hindalco, Dahej. 13. M/s.IPCL, Dahej-Gandhar. 14. M/s.Modern Petrofiles Ltd., Bamangam. 15. M/s.Narmada Cement Co.Ltd., Jafrabad. 16. M/s.IPCL, Jawaharnagar, Vaodadara. 17. M/s.Daman Ganga Paper Ltd., Ambethi, Vapi. 18. M/s. SAL Steel Ltd. Gandhidham, Kutch. 19. M/s.Mid India Engineer, Anjar, Kutch. 20. M/s.Reliance Industries Ltd., Motikahvadi, 21. M/s.Orient Obresive Ltd., Porbandar. 22. M/s.Nirma, Kalatalav, Bhavnagar. 23. M/s.L&T Ltd. Kovaya, Jafrabad, Amreli. 24. M/s.Arvind Mills Ltd., Naroda, Ahmedabad. 25. M/s.KRIBHCO, Hazira, Surat. 26. M/s.Reliance Industries Ltd., Hazira, Surat. 27. M/s.Swil Ltd., Jhagadia, Bharuch. 28. M/s.Gujarat Narmada Valley Fertilizer, Bharuch. 29. M/s.Saurashtra Cement Ltd., Ranavav. 30. M/s.Narmada Chematur & Petrochem., Bharuch. 31. M/s.Philps Carbon Ltd., Palej, Bharuch. 32. M/s.Arvind International, Santej, Ahmedabad. 33. M/s.Reliance Industries Ltd., Ahmedabad. 34. M/s.Shah Alloys Ltd., Santej, Kalol. 35. M/s.Essar Steel Ltd., Hazira, Surat. 36. M/s.ONGC;, Ankleshwar. 37. M/s.United Phosphorous Ltd., Jhagadia, Bharuch. Page 2 of 46 38. M/s.J.C.T.Electronics Ltd., Kandari. 39. M/s.GEDA, Kothara, Kutch. 40. M/s.Ultratech Cement Ltd., Kovaya 41. M/s.Welspun Ltd., Varamedi 42. M/s.Electrotherm Pvt.Ltd., Bhachau. 43. M/s.Central Pulp Mill Ltd. (JK Paper Mills), 44. M/s.Gujarat Fluorochemicals Ltd., Dahej. 45. M/s.Jindal Saw Ltd., Pragpar. 46. M/s.Bhander Power Ltd., Hazira. 47. M/s.DCM Shriram Ltd., Jhagadia. 48. M/s.Gallant Metal Ltd., Samkhiyali 49. M/s.Varasana Ispat Ltd., Varasana. 50. M/s.Shaifali Rolls Ltd., Tuna. 51. M/s.Essar Oil Ltd., Vadinar. 52. M/s.Ambuja Cement, Timbdi. AND PETITION NO.941/2008 In the matter of: Illegal collection of Parallel Operation Charges by Gujarat Energy Transmission Corporation Limited and to grant stay as per Section 94 (2) of Electricity Act, 2003. Petitioner : Consumer Education & Research Society, Ahmedabad V/s Respondents : 1) Gujarat Energy Transmission Corporation Ltd. 2) Paschim Gujarat Vij Company Ltd., Rajkot. Page 3 of 46 CORAM: Dr. P.K.Mishra, Chairman Shri Pravinbhai Patel, Member (T) Dr. M.K. Iyer, Member (F) JUDGMENT 1. The Gujarat Electricity Board (GEB) had on 08-09-2003, filed the petition No.256/2003, in the matter of levy of Parallel Operation Charges on the Captive Power Plants (CPPs) running in parallel with the GEB grid. The Commission, under its order dated 25th June, 2004 held that the petition was legally maintainable and that POC can be levied under the Central Act and the Gujarat Act. The Commission also directed the GEB to conduct studies to identify and quantify the support extended by the grid to the CPPs synchronized with it and to file findings of the study with the Commission. 2. Some of the respondents challenged the above order of the Commission through Special Leave Applications (SCAs) in the Hon’ble High Court of Gujarat. While the above SCAs were pending before the Hon’ble High Court, the Gujarat Electricity Transmission Co. (GETCO), an unbundled entity of the erstwhile GEB along with Distribution licensees, filed the petition No.867/2006, seeking determination of POC based on the study conducted by their consultant. 3. The Hon’ble High Court of Gujarat, while disposing of the above SCAs vide its order dated 21st October, 2008 quashed and set aside the order dated 25.6.2004 passed by the Commission in Petition No.256/2003 and directed the Commission to make deliberations in both the petitions, i.e. petition nos. 256/2003 and 867/2006, simultaneously and conjointly, as if, they are one petition and to afford an opportunity to the petitioners (of the SCA) to assail the legality, validity, propriety Page 4 of 46 and justifiability including entitlement to pray for fixation and levy of such grid support charge de novo. 4. In the meanwhile, Consumer Education Research Society (CERS) on behalf of some of the CPPs, had filed petition No.941/2008 dated 4th July 2008, praying, inter-alia, for a stay on collection of parallel operation charges. 5. Since the subject matter of all these petitions is related to Parallel Operation Charge, the Commission decided to hear all of them together. Brief facts of the case are as under : 6. The Commission under its order dated 31st August, 2000 had quashed and set aside the GEB’s commercial circular No. 706 relating to collection of parallel operation charges and also disallowed the erstwhile GEB to recover the POC in suo-motu case 24 of 2000. However, it was left open for GEB to approach the Commission with necessary application under section 29 of the ERC Act 1998. The GEB then filed a petition No. 256/03 on 8th September, 2003, in matter of levy of POC on Captive Power Generation Plants (CPGPs) operating in parallel with GEB’s grid with the following prayer : “The Hon’ble Commission may kindly approve a special levy of 50% of the Demand Charge (as specified in the tariff for HT Industrial Category form time to time on the Capacity (in terms of MVA) of the Captive Power Plant as a compensation for the network costs of GEB infrastructure in the Grid system” 7. After due process of hearing, the Commission, in its order dated 25th June 2004, ordered as under: Page 5 of 46 “The Commission holds that this petition (256/2003) filed by the GEB is legally maintainable. The Commission further holds that POC can be levied under the Central Act and Gujarat Act. The Commission is of the view that, the support extended by the grid, to the CPPs synchronized with it, has to be identified and quantified. GEB also has to furnish the estimate of cost being incurred by it for providing these services to the CPPs. GEB is accordingly directed to conduct the necessary study covering these aspects. GEB is further directed to file the findings of the study with the Commission. GEB is at liberty to file a fresh petition on parallel operation charges incorporating the findings of the study.” 8. In pursuance of the above order of the Commission, GETCO and unbundled distribution companies of GEB, filed a petition no. 867/2006, praying as under: “It is therefore respectfully prayed that this Hon’ble Commission may determine the charges of parallel operation and grid support provided by the petitioner and co- petitioners based on the installed capacity of the unit where the Captive Power Plant is installed and at a minimum of the amount equivalent to demand charges and fixed charges applicable to similarly based industrial consumers without Captive Power Plants getting supply form the distribution companies based on contracted demand and pass such further order or orders as may be considered just and proper in the circumstances of the case.” 9. Meanwhile, CERS on behalf of some of the CPPs had filed petition No. 941/2008 dated 4th July, 2008, praying the following: “(i) To pass an interim order putting stay on collection of parallel operation charges as per section 94(2) of the Electricity Act. Page 6 of 46 (ii) To direct the respondents not to issue notices demanding POC. (iii) To direct respondents not to disconnect power till the matter is resolved and order is passed by the Commission. (iv) To impose penalty of respondents no.1 and 2 as per section 142 of Electricity Act, 2003. (v) To pay adequate costs to petition for filing this petition.” 10. The major facts mentioned in the two petitions No. 256/2003 and 867/2006 for levy of POC are as under: The erstwhile GEB, in the petition No. 256/2003, submitted that as per Government of India and Government of Gujarat Power Policies, CPPs were set up by different industrial units to augment the power supply for their own use. They were also connected to the grid. The erstwhile GEB looking to the technicality of the grid connection in parallel as well as the services to be rendered on account of such connections decided to charge POC from the CPPs vide Notification No. 687 dated 21/12/1998. Subsequently the quantum of charges of POC was increased by issuing general Commercial Circular No. 706 dated 28.1.2007. As the above circulars were in the form of determination of tariff, the Commission took note of it through a suo-motu petition No. 24/2000 and quashed circular No. 706 and disallowed the erstwhile GEB to collect POC.