Transmission Corpn., A.P. Ltd. vs M/S. Rain Calcining Ltd. .

2. After independence, the electricity generation, distribution and transmission, and other related activities were undertaken by the Andhra Pradesh State Electricity Board (APSEB). After the amendment in 1991 in Electricity (Supply) Act, 1948 (Act of 1948), when liberalization was made in the electricity sector, then APSEB entered into agreements with Private Generators.

5. The APERC granted License No.1/2000 to APTRANSCO on 31.1.2000, to deal with transmission and bulk supply of electricity. License No.2/2000 was given to APDISCOMS for carrying out distribution function in terms of Section 15 of the Reforms Act, 1998. The licenses granted were subject to the terms and conditions, which required the Licensees to file ARR Proposals to be submitted every year before 31st December, based on the expected revenue calculation and tariffs. Subsequently, four DISCOMS were created on 31.3.2000, which were enjoined with the function of the distribution of electricity. The transmission of electricity is carried out over long distances at extra-high voltage levels from generating stations to urban load centres, while the distribution of electricity is carried out at below 33 KV, 11 KV level. 5

7. The APTRANSCO filed Aggregate Revenue Requirement (ARR) for the year 2001-2002, before the Commission set up under the Reforms Act, 1998. On 30.12.2000, each of the Distribution Companies (DISCOMs), along with APTRANSCO, filed their respective joint ARR applications. On 17.1.2001, the APTRANSCO filed Tariff Proposal for the year 2001-02, for its transmission and bulk supply business and jointly with each DISCOM proposal for distribution and rental supply business. The Tariff Proposal also contained a proposal for levy of wheeling charges on persons using the electricity system of licensee in the State. The APTRANSCO proposed a wheeling charge of Rs.1 per Kwh for energy it transmitted through its network. On 24.3.2001, the Commission decided to consider the issue relating to determination of wheeling charges and directed APTRANSCO to file necessary applications and information in this regard. On 24.3.2002, the Commission determined that the wheeling charges for the year 2002-2003 effective from 1.4.2002 would be Paise 50 per Kwh for energy it transmitted through its network. Besides, wheeling charges of 28.4 percent of energy input by the project developer into the licensee’s grid being the system loss was also to be 6 factored. The order of the Commission was questioned before the High Court and the High Court by the impugned judgment and order dated 18.4.2003, allowed the appeal, setting aside the order dated 24.3.2002 of the Commission. Hence, the APTRANSCO and APERC are in appeals.

11. The incentive/concessional wheeling charges allowed in Government Orders mentioned above were to be reviewed by the State Government in the year 2000, but by the time the APERC was constituted, which was vested with the function of tariff determination in terms of Section 26 of the Reforms Act, 1998.

12. In the second batch of appeals, the question involves as to grid support charges, which are levied on the HT consumers, who have rated Contracted Maximum Demand (CMD) and Captive Power Plant (CPP) capacity to meet their demands. When private Generators came into existence, these consumers derated CMD from the APTRANSCO network and obtained the remaining demand from private Generators (these 8 Generators are respondents in wheeling charges batches). After such deration, the service of grid support became a component for which APTRANSCO was required to be compensated as CPPs running in parallel obtains benefits to keep the system and grid up and running, it is important to invest and maintain the system periodically and the grid support cannot be given free to a nexus of third party private Generators and HT consumer. The significant benefit which a CPP gets is in case of outage of CPP generator power is drawn from the grid, and in case of tripping, the entire load is transferred on to the grid. Such disturbance is catered by way of grid support and equipment installed by the APTRANSCO/DISCOM and involves investment through public exchequer.

13. The grid support charges are not governed by any Government Order or Incentive Scheme of the Government prior to Reforms Act, 1998, or after that. The grid code is the basis for the levy of the grid support charges, which came to be approved by APERC on 26.5.2001. By way of levy of grid support charges, there is no restriction whatsoever on the installation of additional CPPs. The additional CPPs put an additional load on the grid, and corresponding charges are paid towards grid support. There is no embargo for setting up additional new CPPs. In case of expansion of industry, additional duty for additional units have to be paid as additional CPPs tantamount to additional burden on 9 grid and which further obtains additional service from the grid, thus grid support charge is levied after taking into account all sorts of supply agreements from DISCOMs/Third Party Generators. The grid acts as a cushion/big buffer when the generation from CPP is idled due to sudden outage in the load, thereby mitigating the forced tripping of the CPP, and this support is known as grid support and CPPs running in parallel are known as running with Parallel Grid Support.

14. The Commission vide order dated 8.2.2002, held that grid support charges would be payable at the rate of 50 percent of prevailing demand charges on the differential of CPP capacity and CMD. The agreement entered into by the State Electricity Board provided in clauses 9 and 10 that the Board could have fixed the grid support charges unilaterally as agreed by these HT consumers. However, when the Reforms Act, 1998 came into existence, APTRANSCO in the interest of consumers applied to the Commission, and after hearing the objections, the Commission has passed the order on 8.2.2002. The High Court has set aside the order passed by the Commission. Hence, the appeals have been preferred by the APTRANSCO and APERC.

18. The Government Order MS No.116 dated 5.8.1995, dealt with fixation of wheeling charges. The permission was granted by the said Government Order to set up a mini-power plant. Clause 4 provided that the pricing arrangement is subject to fixation of tariff by the Regulatory Commission ultimately. Clause 5 provided that any duties or taxes that may be imposed by the Government or by the State Electricity Board, shall automatically apply to the Scheme. As per clause 8, the Scheme shall operate within the framework of the Electricity (Supply) Act, 1948, and the Rules made thereunder. The said Government Order dated 5.8.1995 was amended vide Government Order MS No.152 dated 29.11.1995. Para 4 of the Government Order dated 29.11.1995 provided that wheeling charges may be collected from the developers in kind and 12 as a percentage of the energy delivered at the interconnection point. The proposed rates of wheeling charges were also specified.

19. The Government Order MS No.93 dated 18.11.1997, dealt with wheeling charges for non-conventional energy sources. The Government allowed uniform incentives to all projects based on the renewal source of energy viz. Wind, Biomass, Co-generation, Municipal Waste, and Mini Hydel.

(2) These Regulations shall come into force from the date of their publication in the Official Gazette.

2. Trading Margin.—The licensee shall not charge the trading margin exceeding four (4.0) paise/kWh on the electricity traded, including all charges, except the charges for scheduled energy, open access, and transmission losses.

and

(vi) Such other information as the Commission may direct from time to time.

(5) The Commission may, from time to time, issue guidelines for filing statement of revenue calculations and tariff proposals, and unless waived by the Commission, the licensee shall follow such guidelines issued by the Commission.

(11) The tariffs so published under clause (10) above shall become the notified tariffs applicable in the area of supply and shall take effect only after such number of days as the Commission may direct, which shall not be less than seven days, from the date of first publication of the tariffs.

Calculation of Wheeling Charges for 2002-03:

IN RE: INCENTIVES TO NON-CONVENTIONAL ENERGY

66. The Government Order dated 18.11.1997, encourages renewable energy/non-conventional energy sources. The Government decided to provide specific incentives, thus:

67. The Government issued another GO MS No.112 dated 22.12.1998, making precise clarification that the benefits shall be available only to the power projects where fuel used is from non-conventional energy sources, which are of the nature of renewable sources of energy. The Scheme shall be watched for three years. After that, the State Electricity Board shall come up with suitable proposals for the continuance of incentives in the present form or modified form.

72. Thus, we find that the order of APTEL based on the Doctrine of Promissory Estoppel for continuing the benefit of Government Orders dated 18.11.1997 and 22.12.1998, cannot be said to be in accordance with the law. The order of APTEL is liable to be set-aside, and that passed by the APERC has to be restored.

73. Resultantly, we have to allow the appeals. The judgment and order passed by the High Court relating to wheeling charges and grid support charges and that passed by the APTEL regarding continuance of 57 incentive as per G.O. MS dated 18.11.1997 and 22.12.1998, are set aside. The appeals are allowed, and the orders passed by APERC are restored. No costs.