PUNJAB STATE ELECTRICITY REGULATORY COMMISSION
SCO 220-221 SECTOR-34-A CHANDIGARH

Petition No.11 of 2008
Date of hearing: 22.7.2008
Date of Order : 14-08-08

In the matter of:


Petition for approval of deviations from the “Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees”, issued by the Ministry of Power, Govt. of India, under Section 63 of the Electricity Act, 2003 – Rajpura Thermal Power Project.
            And
In the matter of: Nabha Power Limited, PSEB Building, The Mall, Patiala.

Present:
Sh. Jai Singh Gill, Chairman
Smt. Baljit Bains, Member

For Petitioner:
Shri Anurag Agarwal, CMD

ORDER

      Nabha Power Limited (NPL) has filed this petition for approval of deviations under clause 5.16 of the ‘Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by the Distribution Licensees’ (Guidelines issued by the Ministry of Power, Govt. of India through Notification No.23/11/2004-R&R Vol.II dated 19.1.2005) including subsequent amendments. In the prayer, the petitioner seeks Commission’s approval for modification in the standard Request for Proposal (RFP) document by adding an incentive formula for early commissioning of the project, detailed in para 1.5 of the petition and allowing merchant sale of 10 % of Declared Capacity as stated in para 1.8 of the petition, with necessary changes in the respective clauses in RFP and PPA.


  • The petitioner has informed that the RFP documents for the project were issued in line with the standard bidding documents and the Commission’s Order dated 9.1.2008 in Petition No.58 of 2007. The petitioner has further informed that as per standard bidding documents, the bidder shall have to commence supply in not less than 48 months from the signing of the agreement. Moreover, as the State is short of power and PSEB is forced to effect purchases at very high rates, it is in the interests of all stake holders that the plant is commissioned at the earliest. Accordingly, the petitioner wishes to incorporate in the RFP documents, an incentive clause whereby the bidder completing the first unit of Rajpura Thermal Power Plant within 42 months will be entitled to the proposed incentive with the same applying to succeeding units scheduled to be commissioned with a gap of 4 months each. The petitioner has further informed that the market rates of power are very high, currently prevailing at more than Rs.7.50/unit for certain periods of time, and owing to the maximum rate for UI being enhanced to Rs.10/unit, the rate of power purchase from the market has witnessed a sharp increase and this trend is likely to continue in future.

  • The Commission, in its Order dated 22.4.08 in petition no.7 of 2008 filed by Talwandi Sabo Power Limited, had allowed the inclusion of the incentive formula on similar grounds. The Commission, therefore, accepts the prayer of the petitioner and allows the inclusion of an incentive clause in the RFP document, as proposed by the petitioner. Accordingly, the deviation on this account is accepted under clause 2.6 of the standard RFP document and clause 5.16 of the ‘Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees’, issued by the Ministry of Power, Government of India.

  • The petitioner has prayed that 10% of the Declared Capacity be allowed for merchant sale which will give additional benefits to the developer resulting in lower tariff for the PSEB. It has also been further urged that by allowing the proposed merchant sale outside the State, the developer may be able to avail the benefits of mega power status and in turn be induced to share the concessions available by further reducing the quoted tariff.

  • The Commission notes that at the time of filing this petition, pre-qualification of intending bidders had been finalized and RFP documents issued to the bidders on 9.6.2008 which are due for submission by 7.11.2008. In this context, the Commission is of the considered view that allowing merchant sale of 10% of Declared Capacity at this point of time will amount to a radical change in the bidding process which is likely to affect the fairness of the process as a whole. Accordingly, the Commission is not inclined to allow merchant sale of a portion of the Declared Capacity at this stage of the bidding. The Commission would, at the same time, observe that the proposed adoption of the incentive formula is a relatively minor change with little effect on the bidding process and the incentive limited only to a short duration. This petition is disposed of accordingly.


    Sd/-Sd/-
    Baljit BainsJai Singh Gill
    MemberChairman



    Place: Chandigarh
    Date: 06-08-2008