CASE NO. 20 of 1997

In the matter of application by M/s. Utkal Alumina International Limited having their Regd. Office at 1, Middleton Street, Calcutta - 700 071.

M/s. Utkal Alumina International Limited - Petitioner

For the Petitioner:
Shri B.K. Pattnaik General Manager (Coordinator).

For the affected party:
Shri B.M.M. Rao, Chief Engineer (Com.), GRIDCO.
Shri B.P. Rekhani, General Manager (RAU), GRIDCO.

A petition was filed by M/s. Utkal Alumina International Limited (WAIL) seeking consent under Section 44 of the Electricity Supply Act, 1948 (hereinafter referred to as Supply Act) read with sub-section (3) of Section 21 of Orissa Electricity Reform Act, 1995 (for short the Act) for setting up a coal based Co-generation Power Plant of 80 MW (2X30 MW + lX20 MW) for their Alumina Project in Rayagada District of Orissa.

2. M/s. Utkal Alumina International Ltd., a joint venture of M/s. Indian Aluminium Company Limited (INDAL), Tata Industries (Tata) and Hydro Aluminium Norway (Hydro) are intending to set up a 100% export oriented alumina plant of 1 million tpa capacity with a provision of expansion upto 2 million tpa. The source of bauxite will be the deposit located at Baphlimali in Kashipur block of district Rayagada in Orissa. The proposed alumina plant requires steam both in low pressure in the range of 4.6 atmosphere and high pressure in the range of 8.9 atmosphere and it requires electrical power to the tune of 30 MW average and 38 MW peak. The plant will use coal from Talcher/Ib Valley coal fields. The annual coal requirements is estimated to be around 0.63 million tonnes. The coal will be brought by railway wagons to the plant site. In their project report, unsatisfactory power position existing in the State at present and its bleak prospect in future has been brought out as an impediment in meeting the requirement of reliable power supply to their alumina plant since any unscheduled failure would lead to several hours of lost production. The Project Report has been examined by the Central Electricity Authority (CEA) and they have indicated no objection to the proposal for setting up a coal based Co-generation Power Plant of 80 MW capacity. In their report, CEA has commented on the power position of the State as below:

3. The above application was decided to be disposed of through a proceeding and a Case No. 20 of 1997 was assigned for the purpose. Notice was served on M/s. WAIL, the applicant and on M/s. GRIDCO the affected party, for personal hearing on 04.10.97. Counter was filed by GRIDCO on 27.09.97 with a copy to the petitioner. M/s. UAIL submitted their rejoinder on the date of hearing on 03.10.97 in reply to the counter submitted by Gridco and a copy of the same was handed over to Gridco's representative present during the hearing.

4. M/s. Gridco in their counter have indicated that M/s. UAIL has not furnished their cost of generation in the application submitted to the Hon'ble Commission and therefore, it was not possible to examine the economics of the CPP vis-a-vis the power supply from Gridco and they have prayed that M/s. UAIL may be directed to furnish their cost of generation. Further, Gridco have also indicated that M/s. UAIL in their application have stated that the CPP is to run in isolation i.e. in stand alone mode and may require emergency power supply from Gridco for start up purpose. Hence the proposed CPP is not to run in parallel with Gridco's system nor any power flow is likely to take place from the proposed CPP into the Gridco's system. It was prayed that the Hon'ble Commission may put suitable conditions in the above lines. Further they have prayed that the petitioner may be directed to furnish the scheme, of inter-connection with Gridco's system giving details of protection, safety arrangements and measures to prevent parallel operation of the 2 systems for approval of Gridco.

5. M/s. UAIL in their rejoinder have indicated that they have furnished appropriate cost data on the basis on which CEA has given techno-economic clearance and have advised Gridco (erstwhile OSEB) to issue the consent under Section 44 of Indian Electricity (Supply) Act, 1948. In the same rejoinder, M/s. UAIL have stated that the CPP shall operate in synchronism with Gridco system. In case of unforeseen eventuality of outage of the power plant/short fall in inhouse generation/start up power of the Captive Power Plant, power shall be drawn from Grid to the tune of 15 MW. The Captive Power Plant have the capability of generating additional 50 MU in a year beyond its own requirement. The same will be supplied to Gridco in case of their willingness to accept. Otherwise in plant generation will be controlled to meet its own load and the tie line will be floating. In case of any system disturbance on the grid feeder, the grid will be isolated and Power Plant shall operate in island mode.

6. CEA in their letter No. 2/600/95/72/96-PAC/10645-55 dtd. 14.11.96 have indicated that the Chief Engineer (Commerce), OSEB had sought consent from CEA under Section 44 (2) (a) of Indian Electricity (Supply) Act, 1948. Commission have received the DPR of the applicant on 31.05.97 stating clearly the cost of process steam, cost of steam used for power on a schematic heat Enthalpy flow chart. The applicant in their letter dtd. 30.05.97 enclosing the DPR to the Commission has stated that the DPR has been submitted earlier to Gridco/CEA. CEA has also examined this aspect of cost of generation for power and have indicated to be Rs.0.75 per kwh. Statement has been made in the counter by Gridco that M/s. UAIL have not furnished their cost of generation in the application submitted to the Commission but Gridco (OSEB) had earlier recommended the proposal to CEA on the basis of which CEA has given clearance. In the light of the materials at hand with the Commission, the cost of Captive generation @ Rs.0.75/unit is lower than the Gridco's tariff rate applicable to Industries. Since, the rejoinder submitted by the applicant M/s. UAIL categorically confirms parallel operation of their CPP with Gridco system, Commission hereby directs that the applicant shall furnish to Gridco the detailed scheme of inter-connection of the CPP with the protection, safety arrangements. The applicant shall proceed with the procurement of such equipments only after getting vetted from Gridco as the over all grid stability has to be ensured before deciding the specification of the equipments for parallel operation. It is ordered that the applicant shall install reverse power relay or directional over current relay with preset value to prevent power flow from the CPP into the Gridco's system. In case of inadvertent power flow into the Gridco system arising out of parallel operation of the CPP, Gridco shall not pay for such inadvertent power flow as they shall be considered to be operational lapses on the part of the CPP owner. As has been pointed out by the petitioner in their rejoinder on 04.10.97 that an additional 50 million unit in a year would be available beyond their requirement, Gridco has the option to purchase at mutually agreed price failing which the CPP has to back down their generation to limit their generation with their load requirements. Under no circumstances, the CPP owner shall be allowed to sell any surplus power to any other third party other than the licensee or Gridco. Gridco shall not be responsible for any loss or damage to the CPP equipments due to grid disturbances as the onus is on the CPP owner to take counter measures for the inherent risks associated with the parallel operation before making their plant synchronised with the Gridco system. The applicant shall also comply to the instruction of the State load despatch centre on operational matters and shall also comply to the Grid Code as the applicant would be an operator in the inter-connected system of the whole grid. After careful consideration and taking into account the operational advantage, we hold that the parallel operation of the proposed CPP with Gridco system shall be at 132 kV voltage level. The applicant shall conduct a system study on load flow, stability and fault study taking their generation into consideration with the Grid to evaluate the fault level for deciding the specification of the switchgear equipments etc. and such study report shall be furnished to Gridco for their consent. Consequential investment on account of Gridco's system upgradation arising out of parallel operation of the Captive Plant shall be borne by the applicant.

7. In consideration of above, permission is hereby granted to the petitioner under Section 44 (1) of the Indian Electricity (Supply) Act, 1948 read with sub-section (3) of Section 21 of the Orissa Electricity Reform Act, 1995 for installation of a coal based Co-generation Power Plant of 80 MW capacity. Since, CEA in their letter No. 2/600/95/72/96-PAC/ 10645-55 dtd. 14.11.96 conveyed their No Objection to the proposal of setting up a coal based Go-generation Power Plant of 80 MW capacity in Rayagada district by M/s. UAIL, there is no need to further consult the CEA as required under Section 44 (2) (a) of the Indian Electricity (Supply) Act, 1948 on this proposal.

8. Copy to be given to the petitioner, to M/s. Grid Corporation of Orissa Limited, to Department of Energy, Govt. of Orissa and to Industries Department, Govt. of Orissa.

Sd/-
(D.K. ROY)
MEMBER

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