Petition No.14 of 2004
Date of hearing: 24.10.2005
Date of Order:25.11.2005
In the original petition filed before the Commission it was prayed that the petitioner may be granted permission for wheeling of power to the extent of 1 MW from captive power plant of the petitioner to its sister concern without levying of wheeling charges. The petitioner also prayed for exemption from the levy of parallel operation charges, advance consumption deposit and electricity duty etc. The petition was admitted vide Order dt. October 25, 2004 and notices were issued to the respondents. PEDA filed reply in favour of the petitioner stating that the project may be considered as per NRSE Policy, 2001. PSEB in its reply stated that the petition may be dismissed. The petitioner filed rejoinder and submissions taken in the petition were reiterated.
Arguments were heard on July 4, 2005 and order was reserved. The petitioner sent a letter dated July 26, 2005 in which it was submitted that the petitioner be covered under NRSE Policy in terms of the decision rendered in the case of M/s Chandigarh Distillaries and that the petitioner may be permitted to export power to PSEB. Vide order dated August 12, 2005 the Commission ordered that the petitioner may file proper amended petition in this regard.
The petitioner filed the amended petition on August 18, 2005 with the prayer that the Commission may grant permission for export of 1.5 MW power generated by the petitioner company to PSEB at the rates as specified in NRSE Policy. The petitioner interalia prayed that banking should be allowed for a period of one year and that the petitioner may be exempted from levy of electricity duty, parallel operation charges and advance consumption deposit.
PSEB filed reply to the amended petition on September 16, 2005. Regarding banking of power, PSEB submitted that it is committed to accept banking in the event of default in payment to be made by PSEB against the export of power and that this facility may be extended only in the event of default by PSEB. It was further stated that the exemption from the payment of electricity duty falls within the purview of the Government and that parallel operation charges, ACD and permission fee are charged on the basis of regulations of the Board which have been approved by the Commission in various Tariff Orders.
Arguments in respect of the amended petition have been heard. The representatives of the parties agreed that all the terms and conditions provided in the PPAs signed by PSEB with other Developers for NRSE Projects are acceptable to them.
NRSE Policy was formulated by the Government of Punjab for development and promotion of New and Renewable Sources of Energy based technology and energy conservation measures. The policy was issued by the Government of Punjab on July 24, 2001. Under this policy, incentives are offered to the investors for setting up of power projects based on New and Renewable Sources of Energy. The Government issued notification dated October 28, 2002 under Section 39 of the Electricity Regulatory Commissions Act, 1998 directing the Commission to comply with NRSE Policy issued by the Government on July 24, 2001. Provision analogous to that of Section 39 of the Electricity Regulatory Commissions Act, 1998 also appears in Section 108 of the Electricity Act, 2003.
On February 18, 2003, the Commission received another reference from the Government conveying the following decisions. These decisions were to be applicable to all projects set up under NRSE Policy 2001 through PEDA. It was also stated therein that these decisions of the Government be considered by the Commission for tariff fixation. "
The Commission may permit PSEB to buy power from the Developers at the rates provided in the NRSE Policy of State Government, circulated vide notification dated July 24, 2001 and PSEB may be allowed to pass on full cost of the power so purchased in the ARR and load it to the consumers.
Since the transmission lines/works required to be laid for evacuating this power to the nearest PSEB Grid Sub Station could not be included in the ARR (being capital expenditure), this cost should be borne by the Developers (except for PPAs already signed with PEDA).
All other terms & conditions/incentives for the Private projects developed through PEDA shall be same as envisaged in the NRSE Policy – 2001 of the State Government.
In the changed scenario in which per unit cost of generation is to be determined by the State Regulatory Commission, for future projects the NRSE Policy circulated by the State Government needs to be reviewed/recast for which Secretary, Science & Technology, shall bring suitable proposal for consideration of CMM.
As per the policy guidelines of the State Government the developers may be allowed to install suitable metering at their generating end to record the generation made for sale to PSEB and billing done on the basis of readings recorded by the meter installed at the generator end. The power available for sale to PSEB to be included in the ARR shall be units so generated and recorded minus 5% transmission losses.”
The matter was considered by the Commission and it was decided that the letter of February 18, 2003 from the Government may be treated as an amendment of the earlier directive sent by the Government to the Commission. The decision of the Commission is contained in the Order dated April 8, 2003 passed in Petition Nos.6 to 13, 14, 15, 17 and 24 of 2002.
Another letter dated January 6, 2004 was received from the Government in which it was stated that review/recast of NRSE Policy-2001, was under consideration and decision was to be taken shortly.
On August 12, 2004, the Commission received another reference from the Principal Secretary to Government of Punjab, Department of Science & Technology conveying the following decision of the Government with regard to review and recast of NRSE Policy.
“The present NRSE Policy-2001 notified vide No.10/85/2000-STE(3)/1476 dated July 24, 2001 will continue for providing financial & fiscal incentives to the eligible producers. However, the cost of transmission lines shall be borne by the private developers. The full cost of purchase of electricity from these projects may be allowed to be passed in the Annual Revenue Requirement to PSEB and loaded to the consumers”.
In another petition a clarification was sought by the Commission from the Principal Secretary to Government of Punjab, Department of Science & Technology vide letter dated August 30, 2005 with regard to escalations to be allowed to the developers i.e. as to whether escalations in respect of new NRSE Projects are allowable upto the year 2006-07 or only upto the year 2005-06. The Principal Secretary to Government of Punjab, Department of Science & Technology clarified vide letter dated August 30, 2005 that annual escalation in respect of the new NRSE projects shall be payable @ 3% upto 2006-07 in line with NRSE Policy, 2001.
Once the project is covered under NRSE Policy, it is entitled to all incentives as contained in NRSE Policy 2001 of the Government subject to amendment carried out by the Government in its letter dated February 18, 2003 as already approved by the Commission. As per sub-para (v) of the Govt. letter dated February 18, 2003, the Government has stipulated that the developers may be allowed to install suitable metering at their generating end to record the generation made for sale to PSEB and billing be done on the basis of readings recorded by the meter installed at the generator end. Further, the power available for sale to PSEB to be included in the ARR shall be units so generated and recorded, less 5% on account of transmission losses. The Commission is of the view that it is not appropriate to lay down a definite figure of transmission losses to be passed on to the consumers. The consumers should be required to bear only the actual transmission ! losses. For a particular year, actual transmission losses may be above or below the figure of 5%. The Commission accordingly holds that actual transmission losses would be allowed at the time of truing up for the relevant year. However till figures of actual losses are available transmission losses shall be assessed as 5%. The Commission considers that by this modification the interests of the consumers will be safeguarded and none of the parties in this petition stands to lose.
The Commission accordingly decides that P.P.A. in this case be executed as per NRSE Policy 2001 and as per the PPAs already signed by PSEB with the developers under NRSE Policy in accordance with the direction of the Government as per its letter dated 28th October, 2002 as amended vide their reference dated February 18, 2003 except that the clause pertaining to 5% losses be amended to state that each year transmission losses shall be allowed to PSEB initially @ 5% subject to adjustment in true up based on actuals. The PPA shall have twenty years term. The rates applicable will be as applicable to the new projects under NRSE policy i.e. at Rs.3.01 per unit for the base year 2001-02. Five escalations shall be allowed @ 3% per annum upto the year 2006-07. Thereafter, there shall be no further escalation and the tariff for sale of energy as applicable for 2006-07 shall remain in force for the remaining term of PPA. PEDA and PSEB shall also ensure t! hat during the period PPA is valid, the petitioner will produce power using only non conventional energy sources. Also, in order to protect the interests of PSEB and the consumers in general, the Government and PSEB must adopt suitable safeguards to ensure that the developers continue to supply power at the prescribed rates during the entire period of agreement under NRSE Policy for which suitable provisions shall be incorporated in the PPA.