CENTRAL ELECTRICITY REGULATORY COMMISSION

NEW DELHI

Coram:

1. Shri Ashok Basu, Chairman

2. Shri K.N. Sinha, Member

Petition No. 24/2003

In the matter of

Treatment of actual generation over the declared capacity by generator

under the ABT regime.

And in the matter of

Neyveli Lignite Corporation Ltd .. Petitioner

Vs

1. Southern Regional Electricity Board,

2. Southern Regional Load Despatch Centre
3. Tamil Nadu Electricity Board
4. Transmission Corporation of Andhra Pradesh
5. Karnataka Power Transmission Corporation Ltd
6. Kerala State Electricity Board
7. Pondicherry Electricity Department
8. National Thermal Power Corporation … Respondents

Petition No.43/2003
In the matter of

Removing difficulties in implementation of ABT order

And in the matter

National Thermal Power Corporation Ltd …..Petitioner
Vs
1. Central Electricity Authority
2. Power Grid Corporation of India Ltd.,
3. Transmission Corp. of Andhra Pradesh Ltd
4. Grid Corporation of Orissa Ltd
5. Damodar Valley Corporation
6. Bihar State Electricity Board
7. Jharkand State Electricity Board
8. West Bengal State Electricity Board
9. Rajasthan Rajya Vidyut Prasaran Nigam Ltd
10. Delhi Transco Ltd

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11. Uttar Pradesh Power Corporation Ltd.
12. Uttaranchal Power Corporation Ltd
13. Punjab state Electricity Board
14. Madhya Pradesh State Electricity Board
15. Chattisgarh State Electricity Board
16. Haryana Vidyut Prasaran Nigam Ltd
17. Maharashtra State Electricity Board
18. National Hydroelectric Power Corporation Ltd
19. Neyveli Lignite Corporation Ltd.
20. Karnataka Power Trans. Corp. Ltd
21. Tamil Nadu Electricity Board
22. Assam State Electricity Board
23. Gujarat Electricity Board,
24. Himachal Pradesh State Electricity Board
25. Power Development Department, J&K
26. Power Department, Chandigarh
27. Kerala State Electricity Board
28. Electricity Department, Govt. of Pondicherry
29. Dept. of Power, Govt. of Sikkim, Gangtok
30. Electricity Department, Govt. of Goa
31. Electricity Department, Admn of Daman & Diu
32. Electricity Department, Admn of Dadra Nagar Haveli
33. Western Regional Electricity Board
34. Southern Regional Electricity Board
35. Eastern Regional Electricity Board
36. Northern Regional Electricity Board
37. North Eastern Regional Electricity Board …. Respondents

The following were present:

1. Shri K. Srinivasa Rao, SE, SREB

2. Shri M.K. Adhikary, EE (Comm.), ASEB
3. Shri B.S. Chandrasekar, KPTCL
4. Dr. S.C.Bhattacharyya, WBSEB
5. Shri P.C. Saha, WBSEB
6. Shri Prashant Kaul, CE, NHPC
7. Shri Rajeev Hustu, NHPC
8. Shri A.K. Srivastava, DM (M), NHPC
9. Shri T.K. Srivastava, EE, UPPCL
10. Shri Jayant Varma, AE, UPPCL
11. Shri K. Sekar, GM, NLC
12. Shri R. Suresh, DGM, NLC
13. Shri D.P. Chirania, CE(Comml.), RVPNL
14. Shri K.K. Mittal, XEN (ISP), RVPNL
15. Shri M.P. Aggarwal, DGM (Comml.), DTL
16. Shri Pankaj Kumar Singh, Advocate, NEEPCO
17. Shri A. Velayutham, WREB

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18. Er. V.A. Kumar, UPPCL
19. Shri K.K. Gar, GM(Comml.), NTPC
20. Shri R. Day, NTPC
21. Shri M.S. Chawla, AGM, NTPC
22. Shri S.S. Mendiratta, NTPC
23. Shri M.K.V. Rama Rao, NTPC
24. Shri M.D. Roy, NEEPCO
25. Shri D. Khandelwal, MPSEB
26. Shri Akhtar Hussain, NEEPCO
27. Shri V. Venkanna, NEEPCO
28. Shri V.K. Gupta, PSEB
29. Shri R.S. Sharma, NTPC
30. Shri S.N. Goel, NTPC
31. Shri K. Gopalakrishnan, KSEB
32. Shri R. Balachandran, KSEB
33. Shri M. Saxena, NTPC
34. Shri M.K. Mitra, CEA
35. Shri Ranjana Gupta, NTPC
36. Shri V.K. Agarwal, NRLDC
37. Shri P.K. Agrawal, NRLDC
38. Shri S.R. Narasimhan, NRLDC
39. Shri S.K. Samui, NTPC
40. Shri S.K. Johar, NTPC
41. Shri T.R. Sohal, NTPC
42. Shri A. Dua, NTPC
43. Shri S. K. Aggarwal, NTPC
44. Shri C.K. Sahajeevani, HVPN
45. Shri D.K. Salpeku, NTPC
46. Shri E. Surendra, NTPC
47. Shri K.V. Balakrishnan, Advocate, NTPC
48. Shri M.G. Ramachandran, NTPC
49. Shri H.H. Sharma, ASEB
50. Shri R.K. Arora, HVPN
51. Shri R.G. Yadav, PGCIL
52. Shri V. Mittal, PGCIL
53. Shri C.K. Mandol, NTPC
54. Shri D.D. Chopra, Advocate, UPPCL
55. Shri S.K. Sharma, NTPC

ORDER
(DATE OF HEARING: 22.10.2003)

The Commission had notified the terms and conditions for determination of

tariff on 26.3.2001 under CERC (Terms & Conditions of Tariff) Regulations, 2001.

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These regulations are applicable for the period from 1.4.2001 to 31.3.2004.

Chapter 2 of these regulations relates to thermal power generating stations.

2. Clause 2.18 of these regulations, on the question of demonstration of

declared capability by the generating company provides that the generating

company may be required to demonstrate the declared capability of its generating

station as and when asked by the Regional Load Despatch Centre of the region in

which the generating station is situated. In the event of generator failing to

demonstrate the declared capability, the capacity charges due to the generator

shall be reduced as a measure of penalty. The quantum of penalty for the first

mis-declaration for any duration/block in a day shall be the charges corresponding

to two days’ fixed charges. For the second mis-declaration, the penalty prescribed

is equivalent to fixed charges for four days and for subsequent mis-declaration the

penalty shall be in the geometrical progression as per the order of the

Commission. Note below Clause 2.18 further provides that in case it is observed

that the declaration of its capability by the generator is on lower side and the

actual generation is more than the declared capability, UI charges due to the

generator on account of such extra generation shall be reduced to zero and

amount shall be credited towards UI account of beneficiaries in the ratio of their

capacity share in the station.

3. The petitions have been filed by Neyveli Lignite Corporation (NLC) and

National Thermal Power Corporation Ltd. (NTPC) for relaxation of the provisions

of note below Clause 2.18. In view of the commonality of the issues raised in

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these two petitions, these were heard together and are being disposed of through

this composite order.

4. It is stated by NTPC that in view of the provisions of note below Clause

2.18, the generator is denied UI charges when it helps the grid and increases

generation above its declared capability during low frequency. It is stated that due

to inherent factors like variation in quality of coal, coal flow, control system

deviation, etc., it is not possible to maintain constant generation as scheduled.

NTPC has demonstrated through the data annexed to the petition that its

scheduled generation was constant. However, there were variations in actual

generation, attributable to operating conditions and were beyond its control. It has

been submitted that such variations should be treated as normal and should not

be categorised as “mis-declaration” or “game” to deny UI charges to the

generator. It is further stated that to avoid any negative UI, that is, UI charges

payable by the generator in case generation falls below the schedule, generators

have to maintain actual generation higher than the scheduled generation. It is

argued that in view of the note below Clause 2.18, neither energy charges nor UI

charges are admissible to the generator for generation above schedule, which is

more of the nature of penalty. According to NTPC, due to inherent design margin

and/or favourable operating conditions, the machines are capable of delivering

higher output than the rated capacity, at least for short periods. In view of NTPC, it

is in the interest of grid to exploit this extra capability and there should not be any

restrictive provision to prohibit generators from generating higher than the

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declared capability during low frequency conditions. NTPC has, therefore, prayed

that the note below Clause 2.18 should be substituted as under:

”In case it is observed that the declaration of its capability by the generator
is on lower side and the actual generation is more than 102% of DC, then
UI charges due to the generator on account of generation up to 102% of
DC shall be paid and UI charges for generation beyond 102% of DC shall
be reduced to zero and the amount shall be credited towards UI account of
beneficiaries in the ratio of their capacity share in the station. “

5. The prayer made by NTPC in substance means that the generator should

be entitled to UI charges for generation up to 102% of the declared capability.

6. NLC in its petition has also pointed out the practical difficulties in

application of note below Clause 2.18 and has prayed the Commission to issue

necessary orders to treat the normal variations of load above declared capability

as UI receivable by the generator. In other words, the prayer of NLC is that there

should be no upper limit for generation.

7. We heard the representatives of NTPC and NLC in support of their

respective applications. The representatives of the respondents present at the

hearing were also heard.

8. We do not propose to go into the merits of the rival contentions since we

propose to dispose of these petitions on a short technical ground. As we have

noticed above, the terms and conditions of tariff notified on 26.3.2001 are

applicable for a period up to 31.3.2004. The period of validity of these regulations

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is almost over since only about one month is left. Therefore, it may not be

desirable to make any changes or amendments in the provisions of the

notification at this stage. The Commission has already circulated draft regulations

on terms and conditions of tariff to be applicable from 1.4.2004. The issue raised

on behalf of NTPC and NLC will be addressed while finalising the terms and

conditions for the period from 1.4.2004 and onwards. We may point out that

hearing on the draft terms and conditions of tariff is fixed for 9th and 10th March

2004. The central power generating utilities, SEBs, etc. may respond to the issue

and final view will be taken after due deliberations.

9. NTPC in its petition has raised an additional issue. It has prayed for a

permission to NTPC and/or its wholly owned subsidiary company, NTPC Vidyut

Vyapar Nigam Ltd (NVVNL) to trade in power not requisitioned by the

beneficiaries, at a rate agreed with other buyers. NTPC has also suggested the

methodology for sharing of charges on account of sale of unrequisitioned power to

other utilities.

10. The prayer made does not directly flow out of the substantive issue raised

in the petition and thus the petition is an instance of misjoinder of causes of

action. Accordingly, we direct that NPTC may, if so advised, file a separate

petition duly supported by necessary details. However, before parting with this

case, we make certain observations in brief. In accordance with Section 10 of the

Act, a generating company may supply electricity to any licensee and may,

subject to regulations made under sub-section (2) of Section 42, supply electricity

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to any consumer. It has been separately held by the Commission that NVVNL is

not a deemed licensee and in order to undertake trading in electricity, NVVNL is

required to obtain a licence for trading.

11. With the above observations, Petition No. 24/2003 and 43/2003 stand

disposed of.

Sd/- Sd/-
(K.N. SINHA) (ASHOK BASU)
MEMBER CHAIRMAN

New Delhi dated the 5th March, 2004