Petition No 10 of 2004
(on remand by Appellate Tribunal)

Date of Hearing : 5.2.2008
Date of Order : 25.03.2008

M/s Malwa Industries Limited, Machhiwara filed Petition No. 10 of 2004 before the Commission for transfer of surplus power from its Captive Power Plant (CPP) to its sister concern with the following averments :-

1. The petitioner is installing 6 MW CPP run on biomass at its premises at Machhiwara.
2. The petitioner has a cluster connection of 66 KV for 3 units, one belonging to the petitioner and the other two being of its sister concern, M/s Malwa Cotton Spinning Mills.
3. The petitioner will initially consume not less than 65% of the net electricity generated by the said CPP and proposes to use 100% of it after expansion of its capacity. Till then the surplus electricity is proposed to be transferred to its sister concern.
4. The petitioner will use its existing dedicated power distribution system within the premises and no infrastructure from the PSEB will be required.
5. The existing PSEB connection will be retained but with reduced connected load.
6. Power from the D.G. set installed at the premises will either in conjunction with supply from the PSEB connection or otherwise be used during regular maintenance of CPP, in the event of power breakdown or for auxiliary supply.
7. The petitioner and its sister concern qualifies the test of ownership and consumption of aggregate electricity generated in CPP as envisaged in Rule 3 of the Electricity Rules, 2005.

The Commission in its order of 10th January, 2007 dismissed the petition mainly on the following grounds :-

1. As per Section 12 of the Electricity Act, 2003 (Act) transfer of electricity from CPP of the petitioner to its sister concern cannot be allowed without license, even while using its own dedicated transmission lines.
2. M/s Malwa Cotton does not comply with the test of ownership and consumption as laid down in Rule 3 of the Electricity Rules, 2005 with regard to electricity generated by CPP set up by Malwa Industries because a company holding a part of the equity in another company owning a CPP cannot be considered as a captive user and owner of the CPP as envisaged under Rule 3(1)(a).

          M/s Malwa Industries Limited filed Appeal No. 32 of 2007 before the Appellate Tribunal against the Order dated January 10, 2007 passed by the Commission in Petition No. 10 of 2004. The Appellate Tribunal in its order dated December 6, 2007 allowed the appeal, set aside the order of the Commission and directed the Commission to decide the petition afresh in the light of its observations.

          In view of the order dated December 6, 2007 passed by the Appellate Tribunal this petition was ordered to be taken up for hearing on February 5, 2008. The petitioner filed submissions on January 31, 2008 in which it is mainly contended that no open access is required by the petitioner and that no charges are payable by it on this account as no transmission system/lines or distribution system of the PSEB is required for transmission/supply of electricity by the owners of the CPP.

          Arguments have been heard. The petitioner has reiterated the submissions filed on January 31, 2008 while PSEB has contended that charges as per Open Access Regulations will be payable in this case.

          The Hon’ble Appellate Tribunal has, in its order referred to above, observed that criteria of ownership as laid down in Rule 3(1)(a) read with explanation (1)(c) in relation to the CPP will mean the equity share capital with voting rights of captive users. The other criteria is laid down in Rule 3(1)(a)(ii) and is based on consumption of not less than fifty one percent of electricity generated in a CPP. The Power Plant owned by M/s Malwa Industries Ltd. satisfies both criteria of ownership and consumption and hence qualifies as a CPP. The Appellate Tribunal has further observed that two divisions of M/s Malwa Cotton Spinning Mills Limited are connected with the works of Punjab State Electricity Board and fall within the definition of consumer. Therefore, under Section 9(1) of the Act, surplus power from the CPP can be supplied by M/s Malwa Industries Limited to its sister concern, M/s Malwa Cotton Spinning Mills Limited without license but subject to Regulations framed under sub section 2 of Section 42 of the Act. The Appellate Tribunal has, also stipulated that PSEB shall have control over the dedicated transmission line set up by the petitioner for supply of power to its sister concern and that PSEB could make its own arrangement for switching and metering that may be necessary for keeping check on the supply of electricity to its sister concern.

          In the light of the decision and observations of the Appellate Tribunal discussed above, the Commission allows the prayer of the petitioner to supply surplus power from its CPP to its sister concern M/s Malwa Cotton Spinning Mills Limited without license but subject to Regulations framed under sub section 2 of Section 42 of the Act and also directs the PSEB to facilitate such supply of surplus power in accordance with the Regulations mentioned above.

sd/-	sd/-	sd/-
(Satpal Singh Pall)	(Baljit Bains)	(Jai Singh Gill)
Member	Member	Chairman



Chandigarh
Dated: 25.03.2008