Power Purchase from Central Power Stations


Central Generating Stations: Orissa has been allocated shares in all the NTPC stations located in the eastern region as well as from the Chukha Hydro Electric Project of Bhutan. The entitlement from these stations is based on the basis of share allocation made by the CEA from time to time as mentioned below. The energy accounting from these stations is done on a monthly basis as per the global account prepared by the Eastern Regional Electricity Board. On the basis of this global accounting, GRIDCO has submitted a statement of energy drawal for the period April 2001 to January 2002. Since there is a mismatch between the state's requirement and generation availability in the State, it becomes necessary to draw some amount of energy in addition to meeting the peak load of the State with support from these central generating stations. Demand in excess of the state's requirement for the purpose of export is also met by drawing power from these stations. For the FY 2001-02, the Commission while approving the power drawal from these stations has limited the purchase to the power actually drawn during the months of April 2001 to January 2002. However, for the FY 2002-03 the assessment of energy procurement from the Central Generating Stations has been drawn on the basis of least cost combination of power procurement. A station-wise analysis of power procurement from the Central Generating Stations is given below.


Chukha: Orissa has got a 17.4% share in installed capacity of 350 MW Chukha Hydro Power Station in Bhutan from where power is received through the Eastern Regional network by the process of displacement which works out to 30 MW average on daily basis. In the BST application of 2001-02 in para 2.3.5, GRIDCO proposes to procure 126.33 MU as against generation projection of 230.35 MU. In its latest submission on 30.3.2002, GRIDCO has stated that during the period of April 2001 to Feb. 2002, GRIDCO has drawn 141.55 MU from this power station and proposed to draw 1.55 MU during March 2001-02, the total being 143.10 MU. As these figures are actually drawn upto Feb., 2002, the Commission approves a drawal of 143.10 MU.


In the ARR application of 2002-03 in para 2.36, GRIDCO proposes to draw only 150.23 MU as against an energy availability of 262 MU (average 30 MW) projected in the Load Generation Balance Report (LGBR) issued by EREB for 2002-03. Since this cost of the power is cheaper in comparison to other thermal stations the Commission directs that GRIDCO must utilize this power to the best extent but looking at the previous levels of drawal, the Commission approves a figure of 230 MU for the FY 2002-03 as full drawal may not be possible due to high hydro availability of the state during the monsoon period.


Talcher Super Thermal Power Station (Kaniha): This generating station with an installed capacity of 1000 MW (2 X 500) is owned and operated by the National Thermal Power Station. Orissa has an allocated share of 26.2% in this generating station which works out to 262 MW. During 2000-01, GRIDCO had drawn 988.46 MU and for the FY 2001-02 GRIDCO proposes a drawl of 728.93 MU in its BST filing (para 2.4). During the period of April 2001 to February 2002 as submitted by GRIDCO on 30.3.2002, there has been a total drawl of 390.62 MU and GRIDCO proposes to draw 438.75 MU upto March, 2002. Applying principle of least cost procurement of power and requirement of GRIDCO, the Commission approves 433.41 MU for 2001-02.


For the FY 2002-03, GRIDCO proposes to draw only 696.91 MU from this station. Based on the least cost combination of power procurement the Commission approves a purchase of 1443.06 MU as Commission desires a higher level of drawal of power from this station rather than other costly STPS.


Farakka Super Thermal Power Station (West Bengal): This is another generating station owned and operated by National Thermal Power Corporation with an installed capacity of 1600 MW (3x200+2x500). Orissa has an allocated share of 14.69% i.e. 235 MW in this generating station. During 2000-01, GRIDCO had drawn 780.25 MU and the proposed drawal for the year 2001-02 is 501.10 MU. GRIDCO has drawn 198.50 MU upto February, 2002 as per its submission dated 30.3.2002 and has proposed nil drawal for March, 2002. The Commission approves a drawal of 198.50 MU limiting the drawal upto February 2002.


However, for the year 2002-03, GRIDCO has projected a drawal of 596.43 MU. The average cost per unit of the power station being higher than that of TSTPS and after applying the principle of least cost power procurement and requirement of GRIDCO, the Commission approves a drawal of 291.60 MU.


Kahalgaon Super Thermal Power Station (Bihar): Installed capacity of this generating station is 840 MW (4x250). Orissa has an allocated share of 16.07% i.e. 135 MW. During FY 2000-01, GRIDCO has drawn 297.45 MU. GRIDCO proposes to draw 170.43 MU during 2001-02 but the actual drawl upto February 2002 is 40.54 MU as submitted by GRIDCO on 30.3.2002. Nil drawal has been proposed for March. As such, Commission approves 40.54 MU.


For the FY 2002-03, GRIDCO has not proposed any drawl from this station and by applying the least cost combination of power procurement, it is felt that there is no need for drawal from this station.


The total share allocation for EREB including 30 MW of Chukha comes to 679 MW corresponding to 4100 MU approximately. Once ABT comes into operation in Eastern Region, GRIDCO would be required to pay a fixed cost of Rs.344 Crore for the capacity of share allocation unless the entire power of 4100 MU is utilised. GRIDCO will normally have to pay the fixed charges irrespective of drawal from the central power stations. Therefore, it is necessary that GRIDCO should take adequate and firm steps to export power to bring down the cost of power purchase.


Captive Power Plants (CPPs) : In 2000-01, GRIDCO has drawn 366.58 MU. In the BST application FY 2001-02, GRIDCO has proposed a drawal of only 59.44 MU from the CPPs within the state though GRIDCO has already procured 405.49 MU for the month of February, 2002. The power purchase cost from the Captive Power Plants is cheaper as compared to other thermal stations for which the licensee was advised to maximize drawal from the CPPs for the FY 2001-02. As per GRIDCO's submission on 30.3.2002, there has been a drawal of around 75 MU per month from the CPPs frrom December 2001 onwards. After taking into consideration the drawal upto February 2002, the estimated drawal from the CPPs may be around 476.22 MU by end of March 2002. Accordingly, the Commission approves a drawal of 476.22 MU for the year 2001-02.


GRIDCO in its RR application for 2002-03 has stated that it shall procure 635 MU considering the generation plan of CPPs and SLDC report of SLDC. The record of drawal for the previous years shows that more than 900 MU have been drawn in some of the years from these plants for which the Commission directs GRIDCO to take adequate and effective steps to draw at least 900 MU for FY 2002-03.


A summary of GRIDCO's proposal for purchase of power generating station wise and the Commission's approved quantum of purchase is given in Table : 19.

Table : 19
Quantum of Power Purchase
(Figures in MU)

Source of purchase

GRIDCO’s Proposal

Commission’s Approval







(Hirakud, Balimela, Upper Kolab & Rengali)






























Total Orissa

























Total EREB





Total GRIDCO purchase






GRIDCO in its BST application of 2001-02 and ARR filing 2002-03 had excluded the power requirement for export outside the state and sale to CPPs inside the state.


Power Procurement Cost


OHPC: GRIDCO in para 2.5.1 of its BST application has submitted that the pooled tariff calculated by OHPC for old stations namely Balimela, Upper Kolab, Rengali and Hirakud is 72 paise/unit (ED-13) including electricity duty on auxiliary consumption.


In para 2.5.1 of the ARR application for FY 2002-03 GRIDCO has stated that OHPC has furnished a tariff application for FY 2002-03 @ 72.11 paise/unit inclusive of electricity duty on auxiliary consumption.


The OERC vide its order dated 9.7.2001 in case No.15 of 2000 while disposing of the Draft PPA of GRIDCO and OHPC directed that “GRIDCO and OHPC should recast their interim PPA for the year 1998-99, 1999-00 and 2000-01 in the light of the observations made and send copies of the PPA with tariff calculation distinctly for each year to the Commission for vetting”.


In the said order OHPC was advised to move CEA within a period of three months to review the design energy of each of the hydro projects expeditiously for its incorporation in future assessment. GRIDCO should submit station wise PPA in respect of these stations based on a two-part tariff linking it to the performance with provision of penalty and incentive for the generators to be effective from 01.04.2001. If design energy cannot be established with approval of CEA within that period, the PPA be submitted on the basis of design energy as established in this order.”


The treatment of various elements like depreciation and interest on bonds due to revaluation of assets of OHPC has been dealt in para 6.4 to para 6.5.6.


The Commission in its letter No. Dir(T)/151/2001 dated 07.04.2001 had intimated the Director (Operation), OHPC that the Hydro PPA between OHPC and GRIDCO for 2001-02 would be considered after finalization of the norms of Hydro PPA by the Commission. The determination of design energy in respect of these stations by the CEA have not made much headway as intimated by OHPC. The Director (Operation), OHPC in his letter No.2953 dt.13.3.2002 has intimated OERC that in pursuance to the OERC’s order for reestablishment of design energy afresh by the CEA, no response has been received in spite of protracted correspondence by OHPC. OHPC now requests OERC for appointment of an independent expert consultancy organization for reassessment of the design energy for the old hydro stations of OHPC.


The tariff calculation in respect of these stations have been done by OHPC and submitted by GRIDCO for the purpose of tariff determination taking the design energy as approved in the order of the Commission dt.15.7.2000. Pending a decision of the reassessment of the energy and pending finalization of two-part tariff the Commission would like to approve appropriate tariff for the purpose of determination of revenue requirement for the years 2001-02 and 2002-03.


The rate of 72 paise/unit calculated for the year 2001-02 has been duly checked by the Commission. The Commission in para 26.10 in Case No.15 of 2000 had ordered calculation of O&M escalation charges linking to the wholesale price index and consumer price index which works out to 2.5% in place of annual escalation of 8% as was provided in the interim PPA. With this stipulation the tariff per unit works out to 68.69 paise for the FY 2001-02 at a total cost of Rs.252.56 Crore and 69.23 paise for the FY 2002-03 at a total cost of Rs.254.55 Crore for drawal of energy equal to the design energy/firm energy of OHPC.


It is already explained in para 6.2.24 that the approved rate of OHPC power which was around 49 paise/unit in 2000-01 is likely go up to about 72 paise/unit (Proposed by GRIDCO) w.e.f. 01.04.2001 due to the impact of bonds issued as adjustment against revaluation. It calls for finding out ways for reduction of this cost of power in the overall interest of state’s power sector.


In accordance with the policies explained earlier in para 6.4 to para 6.5.6 the following parameters are adopted by the commission, which are to be incorporated while entering into the PPA between OHPC and GRIDCO for a reduced tariff for OHPC.

  1. Depreciation allowed upto loan repayment

  2. ROE calculated at 12% on OHPC’s own investment

  3. Impact of Government loan due to revaluation not considered as a pass through in tariff (temporary deferment)

  4. The expenditure on different maintenance heads for the year 2000-01 were (i) Dam maintenance: Rs.7.00 Crore (ii) O&M: Rs.43.00 Crore (iii) Superannuation fund: Rs.5.73 Crore.

    • Dam maintenance to be calculated considering an escalation of 20% for the first year and subsequently escalated @2.5% per annum i.e. linked to WPI & CPI.

    • O&M escalation is taken at the an escalation rate of @2.5% per annum, i.e. linked to WPI & CPI.

    • Expenditure on superannuation is kept constant.


With the application of the aforesaid correctives, the total operating cost for the year 2001-02 in respect of old OHPC stations computed with reference to 24.99 paise/unit on an average comes to Rs.82.75 Crore whereas the total cost for 2002-03 becomes Rs.90.93 Crore at the rate of 24.73 paise/unit. This is based upon design energy of OHPC stations.


Upper Indravati Hydro Electric Project


GRIDCO in para 2.5.2 of its BST application for FY 2001-02 and in para 2.5.2 ARR application of 2002-03 has proposed a rate of 117.3 paise/unit including ED for drawal of power from UIHEP. The detailed calculation of 117.3 paise/unit has been furnished in form TRT-11 of ARR 2002-03 by GRIDCO.


The PPA between OHPC and GRIDCO for UIHEP was taken up by OERC in case No.17 of 1999 and subsequently, reviewed in case No.23 of 2000 in which the Commission observed that the estimated cost of Rs.1195.42 Crore to be considered for determining the tariff of UIHEP may be treated as provisional.


While passing the review order the Commission had observed that the “Actual capital cost incurred on completion of the project for the purpose of determination of tariff should be got approved by the CEA as per Section 43-A(2) of the Supply Act, 1948. If CEA refuses to do so then it can be determined by a group of Independent Experts in consultation with CEA.”


The calculation submitted by GRIDCO for the year 2001-02 was examined and found that the rate of 117.30 paise/unit needs slight modification due to reworking of working capital. Accordingly, the tariff works out to 117.19 paise/unit with a total cost including ED of Rs.227.63 Crore on the basis of single part tariff.


Similarly, on examination the tariff for the year 2002-03 calculated by GRIDCO @117.30 paise/unit works out to 117.43 paise/unit with a total cost including ED of Rs.228.09 Crore on the basis of single part tariff.


In accordance with the principles explained earlier in para 6.4 to para 6.5.6 the following parameters are adopted by the Commission, which are to be included while entering into the amended PPA between OHPC and GRIDCO for the purpose of determination of tariff for UIHEP.

  1. Depreciation allowed upto annual loan repayment

  2. On Government equity of Rs.298 Crore, ROE calculated at 12% as against 16% in the PPA.

  3. Interest on Government loan of Rs.576.57 Crore and repayment of loan are to be kept in abeyance till the power sector is brought to balance.

  4. Only interest on PFC loan with Guarantee Commission is considered for tariff calculation

  5. O&M escalation @ 2.5% per year assumed for 2002-03 as per WPI & CPI estimate.

  6. The expenditure on different maintenance heads for the year 2000-01 were as follows.

    1. Dam maintenance cost : Rs.3 Crore

    2. O&M expenses : Rs.17.84 Crore

    3. Superannuation fund : Rs.2.87 Crore


For the year 2001-02, procurement of power from Indravati has been 956.63 MU in excess of design energy (1942.38 MU).


Keeping in view para 26(xx) of Commission’s case No. 17 of 1999 (PPA on Indravati) the calculation of secondary energy has been done on the basis of Government of India notification dated 30.3.92 as amended on 8th June, 1998.


With the application of above correctives, the rate per unit for 2001-02 for primary energy comes to 65.40 paise. For a drawal of 2909.01 MU due to excess generation over the design energy the average rate comes to 44.90 paise. Based on this rate the total cost comes to Rs.130.62 Crore. With 2002-03, the rate per unit is 63.82 paise and total cost comes to Rs.123.96 Crore.




GRIDCO in its proposal in December, 2001 has submitted that APGenco has presented bill dtd.01.6.2001 for FY 01 for Rs.2.479 Crore towards share of working expenses payable by Orissa for its 30% share of 190.51 MU. Further, bill dtd.01.6.2001 for 61.15 MU is payable at 8 paise/unit. The average rate is taken as 11 paise/unit. The Commission had raised a query on why the rate of Machhkund had risen to 11 paise/unit. In a reply to Commission’s query, GRIDCO has said that as per supplementary agreement dated 15.12.1978 between Government of Orissa and Government of AP, Orissa has to pay O&M charges for the energy drawal from Machhkund upto 30% and beyond 30% and upto 50% @ 8 paise/unit with this principle, the cost of Machhkund power comes to 11 paise/unit. The hike in the cost of Machhkund power is due to increase in O&M expenditure mainly due to increase in establishment charges consequent to pay revision by APSEB during 1998-99 and also due to increase in forced outage of units causing increase in R&M cost.


As the increase is based on supplementary agreement, Commission approves the rate of 11 paise/unit for Machhkund. For 2001-02, therefore, the procurement cost is Rs.3.51 Crore and for 2002-03 it is Rs.3.47 Crore.


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