CASE NO. 6 of 1997

Shri A. R. Mohanty, Member
Shri D. K. Roy, Member

In the matter of application of M/s. Indian Oil Corporation Limited, Scope Complex core - 2, 7, Institutional Area, Lodhi Road, New Delhi - 110003 for setting up a Captive Power Plant.

M/s Indian Oil Corporation Limited - Petitioner

For the Petitioner:
Shri V.N.Deshmukh, Senior Project Manager
Shri P.S. Deb, Chief Project Manager.
Shri J. Rath, Deputy General Manager.

For the affected party:
Shri B.P. Rekhani, S.E. (Commerce)
Shri R.K. Mohanty, E.E. (Commerce)

1. A petition was filed by M/s. Indian Oil Corporation Limited (IOCL) 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 Captive Power Plant.

2. M/s. IOCL intend to set up a joint venture grass root oil refinery plant in Orissa. The location has been fixed at Paradeep. They have sought permission for installation of Integrated Gasification Combined Cycle (IGCC) Captive Power Plant (CPP) to cater to the power demand of the oil refinery main plant. In the refinery process after extraction of products petroleum coke is generated as a residual low grade product having sulphur content. The same is planned to be used in the fuel for the CPP. The oil refinery process requires large quantum of steam and power. To meet this requirement, Integrated Gasification Combined Cycle power plant is proposed to be installed within the refinery complex. It uses petroleum coke as the feed stock of the gasification equipment and gasification plant produces 'Syngas' by gasifying petroleum coke, combined with high pressure steam and oxygen from oxygen Plant, the mixture reacting at high temperature to produce "Syngas". The gas turbines are to combust "Syngas" as primary fuel with fuel oil as back up, while steam turbines are to utilise steam made by heat recovered from Combustion Turbine exhaust gases in waste heat recovery steam generator. The CPP proposed by the applicant consists of 3X40 MW Gas Turbine and 2X16 MW Steam Turbine. The applicant have stated in their counter dtd. 20.05.97 that their total power requirement for the refinery plant is about 95 MW. The CPP is comprised of 3X40 MW Gas Turbine Generators (GTG) with 3X40 Ton Per Hour (TPH) Heat Recovery Steam Generators (HRSG) and 2X16,MW Steam Turbo Generators (STG). In normal operation 2X40 MW GTG with 2X40 TPH HRSG and 2X16 MW STG will be running. One Gas Turbine and one Heat Recover Steam Generators shall act as stand by. The applicant has stated that the above stand by capacity will be able to take care of maintenance requirements as well as statutory inspection of the captive power equipments as the oil refinery will be required to run for approx. three years at a stretch. The primary consideration for the CPP is the reliable supply at all the time to the oil refinery.

3. The project cost of Integrated Gasification Combined Cycle Captive Power Plant has been established to be Rs.935.2 crores. The cost of power works out to Rs.6.15 crores/MW. The applicant has indicated that the levelised cost of power works out to Rs.2.51/kwh. The generation cost of Rs.2.51/unit is based on petroleum coke produced within the refinery, which is priced at Rs. 360/ton for calculation purpose. But the cost of coke can be considered even lower as it has a poor market because of high sulphur and metal content. The variable cost works out to be Re.0.08/kwh and after considering the credit earned for sulphur and steam produced, the variable cost works out to (-)Re.0.06/kwh.

4. The above application was decided to be disposed through a proceeding and a case No. 6 of 1997 was assigned for the purpose. Notice was served on applicant, M/s. IOCL and on M/s. Grid Corporation of Orissa Ltd. (GRIDCO), the affected party for hearing on 08.04.97.

5. M/s. IOCL, the applicant was represented by Sri Sanjay Das Gupta, Chief Project Manager, Project Department, New Delhi and Sri V. N. Deshmukh, Sr. Project Manager, Indian Oil Corporation, New Delhi. M/s. GRIDCO, the affected party represented by Sri B.P. Rekhani, S.E. (Commerce) and Sri N.G. Nath, S.E. (PP-I), Gridco. Heard the representatives of M/s. IOCL and M/s. GRIDCO. The counter filed by Gridco on 05.04.97 was supplied to the applicant.

6. During the hearing M/s. IOCL submitted a revised proposal scaling down the capacity of installation to 3X40 MW GTW and 2X16 MW STG. M/s. IOCL agreed that the proposal will be treated as a fresh application before the Commission as filed on 08.04.1997. It was ordered that M/s. IOCL would make a comprehensive submission to the Commission on (a) system study to evaluate the fault level, (b) commitment to pay, for cost of upgradation of system to higher fault level of Gridco, (c) prevention of injection of power into grid from captive Power Plant. (d) cost of generation of electricity from captive Power Plant and(e) justification for the capacity of the C.P.P. with reference to the requirement of Captive Power. M/s. IOCL was required to submit the information and all clarification by 6^th of June, 1997.

7. In response to the above order of the Commission M/s. IOCL submitted their comprehensive report on 2nd May, 1997. Next date of hearing was fixed on 26.05.97.

8. M/s. IOCL, the applicant was represented by Shri V.N. Deshmukh, Senior project manager, Shri P.S. Deb, Chief Project Manager, Shri J. Rath, Deputy Genera Managar. M/s GRIDCO the affected party was represented by Shri B.P. Rekhani, S.E. (Commerce) and Shri R.K. Mohanty. E.E. (Commerce). During the hearing the representative of M/s. IOCL explained their submission to the Commission replying to the matters raised in the order dated 08.04.97. M/s. GRIDCO in their counter dt. 05.04.97 desired the applicant to furnish the cost of CPP, cost per unit of power generated, variable cost per unit, details of proposed connection of the CPP with the Grid system, total requirement of power and justification for the proposed capacity of CPP. We have gone through the reply of M/s. IOCL to each one of the issues raised by M/s. Gridco and have heard the views of both sides.

9. M/s. Gridco once again raised the issue of rise in fault level in Gridco's 132 KV transmission system as the CPP was proposed to run parallel with Grid system at 132 KV voltage. M/s. IOCL has indicated that CPP will be connected to the Grid system through interconnecting transformer approx. 16 MVA capacity. Moreover, there will be generating transformer in line with the generator. Such transformers would limit the fault MVA feed to Grid system due to interconnection. They agreed to bear additional expenses for the equipments arising out of such increase in fault MVA. It was agreed by M/s. IOCL that it would make a system study and convince Gridco to allay its apprehension about the increase in fault MVA and also undertake to meet any financial liability for upgradation of the equipments of Gridco on this account.

10. M/s. GRIDCO had objected to the injection of surplus power by the CPP into Grid system and to permit the CPP to run in parallel with the Gridco system. Representative of M/s IOCL stated during the hearing that their CPP in their existing oil refinery plant are operating in parallel with the Grid system elsewhere in India at Barauni, Haladia, Mathura, Digboi and in Gujrat. They also assured to adopt adequate measures by incorporating reverse power relays and directional over current relays in the line. It was explained that these relays could be set as low as 0.5 MW. Therefore, to avoid injection of power into the grid system due to load loss or any other abnormalities, CPP will get quickly isolated from Gridco system. Gridco in their additional counter submitted on 26th May, 1997, have further mentioned that the flow of power from CPP to Gridco should be limited to the quantum approved by Gridco system. The flow of VAR in the system shall have to be regulated as per the direction of the authorised representative of Gridco. The applicant has explained to reasonable satisfaction that the capacity of the CPP matches the load requirement of their own plant for reliability of supply. We hold that the proposed CPP to be installed by the applicant is totally dedicated to their load and would not cause large surplus power flow into Gridco system. But the applicant shall always conform to the operational requirements of Gridco in the larger interest of the Grid stability Incidentally the proposed CPP would be an operator in the system and shall follow the Grid Code talking care of other operational aspects of the Grid.

11. M/s. GRIDCO in their additional counter mentioned that they will not pay any cost for any inadvertent flow of energy/power from CPP. To avoid claims and counter claims on this issue we would order that Gridco is not obliged to pay for any inadvertent flow of power from CPP unless a commercial agreement to the mutual satisfaction of both was executed and filed before us.

12. M/s. GRIDCO has claimed that Gridco should not be held liable for any kind of loss whatsoever caused directly or indirectly due to parallel operation of the CPP with the Gridco system We admit the objection of the Gridco. The applicant shall not be entitled to raise any claim due to loss of generation or damage to equipments of the CPP arising out of system abnormalities beyond the control of Gridco.

13. M/s. GRIDCO sought information on the electrical equipments, physical lay out of the sub-station scheme of interconnection with Gridco system, protection system, safety arrangements and measures to prevent flow of surplus power from the CPP M/s GRIDCO sought the direction of the Commission to make it obligatory for the CPP to get the approval of Gridco on above schemes. Representatives of M/s IOCL during the hearing mentioned that the detailed engineering of the plant will be worked out after the PIB gives their consent for the oil refinery plant at Paradeep. We order that the engineering details of the CPP must be furnished to Gridco for their comments and objections made by Gridco should be met by the petitioner before ordering the equipments.

14. Subject to above said directions and observations, the Commission has no objection to grant consent to the petitioner for setting up a CPP consisting of 3X40 MW Gas Turbine Generator and 2X16 MW Steam Turbine Generator. But before the final consent is granted in writing, we order that the case is referred to CEA for consultation in accordance with provisions of sub-section (2-A) of Section 44 of the Electricity (Supply) Act, 1948.

15. Pronounced this day the 6th June, 1997 in the open Court copy to be given to the petitioner, to M/s Grid Corporation of Orissa Limited and to the Government of Orissa, Deptt. of Energy.

-Sd/
(A.R.MOHANTY)
(MEMBER)

-Sd/
(D.K.ROY)
(MEMBER)

08.04.97 M/s. Indian Oil Corporation Limited, the applicant is represented by Sri Sanjay Das Gupta, Chief Project Manager, Project Department, New Delhi and Sri V.N. Deshmukh, Sr. Project Manager, Indian Oil Corporation, New Delhi. Gridco the affected party represented by Sri B. P. Rekhani, S. E. (Commerce) and Sri N. G. Nath, S. E. (PP-I), Gridco. Heard the representatives of M/s. IOC and M/s. GRIDCO. The counter filed by Gridco on 05.04.97 was supplied to the applicant.

During the hearing M/s. IOC submitted a revised proposal scaling down the capacity of installation to 3X40 MW GT and 2X16 MW STG. M/s. IOC agreed that the proposal will be treated as a fresh application before the Commission as filed on 08.04.1997. It was ordered that M/s. IOC shall make a comprehensive submission to the Commission on (a) system study to evaluate the fault level and commitment to pay for cost for upgradation of system to higher fault level of Gridco, (b) prevention of injection of power into grid from Captive Power Plant, (c) cost of generation of electricity from Captive Power Plant and (d) establish the bare necessity of the size of C.P.P. with reference to their refinery plant load. M/s. IOC is required to submit the information and all clarification by 6th of June. 1997.

Next date of hearing will be notified to the applicant.

(A.R.MOHANTY)
MEMBER

(D.K.ROY)
MEMBER

Order No.002 dated 15th May, 1997

15.05.97 Next date of hearing fixed on 26.05.97. Notice be served to both the applicant and the affected party.

(A.R.MOHANTY)
MEMBER

(D.K.ROY)
MEMBER

Order No.003 dated 26th May, 1997

26.05.97 M/s. Indian Oil Corporation Limited (IOCL), the applicant represented by Shri V.N. Deshmukh, Senior Project Manager, Shri P.S. Deb, Chief Project Manager, Shri J. Rath, Deputy General Manager. M/s. GRIDCO, the affected party represented by Shri B.P. Rekhani, S.E. (Commerce), Shri R.K. Mohanty, E.E. (commerce).

M/s. GRIDCO submitted their additional counter dtd. 26.05.97 and was taken into record. M/s. GRIDCO in their counter desired the applicant to furnish the cost of CPP, cost per unit power generated, variable cost per unit. details of proposed connection of the CPP with the Grid system, total requirement of power and justification for the proposed capacity of CPP. During the hearing the representative of M/s. IOCL explained their submission to the Commission replying to the matters raised in the order dated 08.04.97 and in the matter of counter filed by Gridco.

Hearing in the matter is concluded and judgment is reserved.

(A.R.MOHANTY)
MEMBER

(D.K.ROY)
MEMBER

Order No.004 dated 6th June, 1997

06.06.97 M/s. IOCL, the applicant is absent. M/s. GRIDCO, the opposite party is represented by Sri B.P. Rekhani, S.E. (Commerce). Order delivered in separate sheets. Copies of the order be given to the applicant, M/s. GRIDCO and Govt. of Orissa, Deptt. of Energy.

(A.R.MOHANTY)
MEMBER

(D. K. ROY)
MEMBER

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