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2016 (11) TMI 1698 - AT - Indian LawsDisallowance of fuel cost for the period FY 2014-15 and FY 2015-16 - Whether the Appellant is entitled to claim the fuel costs incurred by it due to delay in execution of Fuel Supply Agreement (FSA) with Coal India Limited (CIL) and its subsidiaries for reasons not attributable to the Appellant in its tariff to Respondent No.2 with whom there is a valid duly approved Power Purchase Agreement in accordance with the applicable Tariff Regulations of State Commission? - HELD THAT - This issue is answered in favour of the Appellant for allowing cost of coal for Unit-I limiting to the extent of what has been allowed/is being allowed by the State Commission for the corresponding period for the supply under FSA arrangement for the generation from Unit-II of the Appellant to Respondent No.2. Approval of Auxiliary Energy Consumption of 9.05% for FY 2014-15 in paragraphs 2.5.9 to 2.5.19 of the Impugned Order as against 9.61% as proposed by the Appellant - HELD THAT - Considering the actual Auxiliary Energy Consumption as 9.61% the availability for the year works out to be 85.40% which is more than the Target Availability and consequently the Appellant is entitled for recovery of entire Annual Fixed Charges for FY 2014-15. The consequent computation of Availability in paragraph 2.3 of the Impugned Order of 84.83% as against 85.40% as proposed by the Appellant - HELD THAT - The compensation as per IEGC amendments are described under Sub Regulation 6.3 B. Further as per Notification dated 6.4.2016 the IEGC fourth amendment Regulations shall come into force with effect from date of publication in Official Gazette except subregulation 6.3B which shall come into force on such date as the Commission may appoint by notification in the Official Gazette - Hence these Amendments related to APC have not come into effect. Hence the State Commission cannot allow such increase in Auxiliary Power Consumption due to part load compensation due to backing down instructions by SLDC. Consequent to this there can be no change in the availability of the Power Station for the period FY 2014-15. This issue is decided against the Appellant. Approval of Gross Station Heat Rate of 2401 kcal/kwh as against 2457 kcal/kwh for FY 2014-15 as proposed by the Appellant - HELD THAT - In view of the fact that the Appellant s Generating Station was in the 1st and 2nd year of operations after its Commercial Date and the Appellant had produced sufficient material before Respondent No.1 for exercise of such powers is decided against the Appellant. Consideration of actual Interest on Working Capital (IWC) of Rs. 33.43 Crore for computing efficiency gain on the purported basis - HELD THAT - Once having recognized that there is a requirement of funds to manage operations in business it cannot be implied that the same has been met through operational efficiency as has been held by the State Commission in the Impugned Order. Interest on Working Capital - HELD THAT - The State Commission had sought the month-wise cash flow statement from VIPLG to substantiate that the internal accruals were utilised to meet the working capital requirement. However in the present matter the Interest on Working Capital as per audited accounts was Rs. 33 Crore. Therefore the State Commission considered Rs. 33 Crore as the actual Interest on Working Capital. Computation of Income Tax as proposed by the Appellant instead of restatement of the same based on the Impugned Order for the period F.Y. 2014-15 onwards - HELD THAT - The State Commission has allowed the Income Tax for FY 2015-16 in accordance with the Regulation 34.1 of the MYT Regulations 2011. The State Commission has considered the Income Tax for FY 2015-16 in the Impugned Order on provisional basis - Further the Regulation 34.2 of the MYT Regulation provides for the the reimbursement of difference between the actual and approved Income Tax at the time of final True up. Therefore the provisionally approved Income Tax for FY 2015-16 and the subsequent 3rd Control Period shall be subject to final truing up. Hence we are in agreement with the decision of the State Commission in this issue - the issue is decided against the Appellant. Disallowance of Ash Utilization and Disposal Expenses and the findings - HELD THAT - The State Commission has not allowed the Ash disposal expenses on the ground of inappropriate design. The Ash disposal area is even not in accordance with the CEA guidelines. Therefore the Appellant was held fully responsible for this lapse and the impact of such disposal difficulties was not allowed to be passed on to the Beneficiaries - the impact of any such lapse in planning/ design of the Ash Utilization facilities should not be passed on to the Beneficiaries. Hence this issue is decided against the Appellant. Disallowance of Additional O M expenses towards RO Plant - HELD THAT - The State Commission in its Impugned Order has detailed out the issue related to additional O M expenses for RO Plant as well as normative O M expenses allowed in the Impugned Order - We have perused the findings of the State Commission and do not find any infirmity. Jurisdiction of the State Commission to order refund of the excess amount - HELD THAT - As in the case of FY 2014-15 the State Commission directed the Appellant to refund the Revenue Surplus of FY 2015-16 determined as Rs. 405.89 crore upon provisional truing up to Rlnfra-D in 6 monthly instalments. Whether Respondent No.1 has the power authority or jurisdiction to pass an order of refund as has been done in the present case? - HELD THAT - The Tariff can be determined by the State Commission with either upward revision resulting in increase in charges payable by the Consumer or have the downward revision with reduction in charges payable. Hence we decide this issue against the Appellant. Appeal allowed in part.
Issues Involved:
1. Disallowance of fuel cost for FY 2014-15 and FY 2015-16. 2. Approval of Auxiliary Energy Consumption and computation of Availability for FY 2014-15. 3. Approval of Gross Station Heat Rate for FY 2014-15. 4. Consideration of actual Interest on Working Capital for FY 2014-15. 5. Computation of Income Tax for FY 2015-16. 6. Disallowance of Ash Utilization and Disposal Expenses for FY 2015-16. 7. Disallowance of Additional O&M expenses towards RO Plant. 8. Jurisdiction of the State Commission to order refund of the excess amount. Detailed Analysis: Issue No. 1: Disallowance of fuel cost for FY 2014-15 and FY 2015-16 The Appellant argued that the fuel costs incurred due to delays in executing the Fuel Supply Agreement (FSA) with Coal India Limited (CIL) and its subsidiaries should be recoverable. The State Commission disallowed these costs, considering that the procurement of fuel was done at higher rates than those considered while approving the Power Purchase Agreement (PPA). The Commission had approved the PPA assuming 100% domestic coal supply, and any deviation from this was not justified. The Tribunal found that the Appellant made efforts to secure FSA and was forced to use alternative sources for coal. The Tribunal directed the State Commission to allow the cost of coal for Unit-I to the extent of what was allowed for Unit-II during the period from COD till the FSA for Unit-I is executed. Issue No. 2: Approval of Auxiliary Energy Consumption and computation of Availability for FY 2014-15 The Appellant sought approval for higher Auxiliary Energy Consumption of 9.61% due to backing down instructions and initial teething problems. The State Commission approved 9.05%, treating the difference as efficiency loss. The Tribunal noted that the Indian Electricity Grid Code (IEGC) amendments regarding part load compensation on Auxiliary Power Consumption had not come into effect. Therefore, the Tribunal upheld the State Commission's decision, maintaining the Auxiliary Energy Consumption at 9.05% and Availability at 84.83%. Issue No. 3: Approval of Gross Station Heat Rate for FY 2014-15 The Appellant proposed a Gross Station Heat Rate (SHR) of 2457 kcal/kWh, citing initial teething problems and part load operations. The State Commission approved 2401 kcal/kWh based on the Tariff Regulations. The Tribunal upheld the State Commission's decision, noting that the IEGC amendments regarding part load compensation on SHR had not come into effect. Issue No. 4: Consideration of actual Interest on Working Capital for FY 2014-15 The Appellant claimed that internal accruals used for working capital carry a cost and should be compensated. The State Commission considered the actual Interest on Working Capital (IWC) as Rs. 33 crore, as reflected in the audited accounts. The Tribunal upheld the State Commission's decision, finding no merit in the Appellant's contention. Issue No. 5: Computation of Income Tax for FY 2015-16 The Appellant argued that the State Commission should have allowed Income Tax as proposed by the Appellant, irrespective of disallowances such as fuel cost. The State Commission provisionally approved Income Tax based on actual Income Tax paid for FY 2014-15, subject to final truing up. The Tribunal upheld the State Commission's decision, noting that the Income Tax for FY 2015-16 would be subject to final truing up as per the MYT Regulations. Issue No. 6: Disallowance of Ash Utilization and Disposal Expenses for FY 2015-16 The Appellant sought expenses for ash disposal, which were disallowed by the State Commission due to inappropriate design of the ash pond. The Tribunal upheld the State Commission's decision, agreeing that the impact of such disposal difficulties should not be passed on to the beneficiaries. Issue No. 7: Disallowance of Additional O&M expenses towards RO Plant The Appellant argued for additional O&M expenses for the RO Plant, which were disallowed by the State Commission. The Tribunal upheld the State Commission's decision, noting that the actual O&M expenses were substantially lower than the normative, and there was no need to separately allow the O&M expenses for the RO Plant. Issue No. 8: Jurisdiction of the State Commission to order refund of the excess amount The Appellant contended that the State Commission had no jurisdiction to direct a refund from a generator to a distribution company. The Tribunal found that the State Commission had the jurisdiction to determine the Generation Tariff and direct refunds based on the true-up exercise. The Tribunal upheld the State Commission's decision, noting that the quantum of refund would have to be reworked in light of the Tribunal's decisions on other issues. Order: The Tribunal partly allowed the appeal, modifying the Impugned Order dated 20.06.2016 passed by the State Commission to the extent decided above. No order as to costs.
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