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CASE NO. 23 of 1997
Present:
Shri S. C. Mahalik, Chairman
Shri A. R. Mohanty, Member
Shri D. K. Roy, Member
M/s. Grid Corporation of Orissa Ltd.,
Janpath, Bhubaneswar-751007. - Petitioner
Vrs.
1) M/s. Steel Authority of India Ltd.,
Rourkela Steel Plant, Rourkela. - Respondent No.1
2) M/s. Ferrochrme Plant,
Jajpur Road, Dist. Jajpur - Respondent No.2
3) M/s. Indian Aluminium Company Ltd.,
Hirakud. - Respondent No.3
For Petitioner:
Shri N.G. Nath, Chief Engineer(PP) Gridco.
For Affected Party:
Shri J.C. Patra, Ferro Chrome Plant
Shri B.N. Das, INDAL
Shri Rabindra Misra, INDAL
Shri A.K. Kar, INDAL
Date of argument: 09.04.1998
Date of Order : 15.05.1998
ORDER
This proceeding relates to an application filed by M/s Grid
Corporation of Ltd. (for short, GRIDCO) seeking approval of the Commission with regard to
separate special agreements entered with three corporate consumers namely, M/s Rourkela
Steel Plant (RSP), M/s Indian Aluminium Company Ltd. (INDAL) and M/s Ferro Chrome Plant
(Ferro Chrome).
2. The application was heard on 04.11.97 and on
09.04.98. In the meanwhile, the Commission had sought for clarification on a number of
points arising out of the application and replies were received from M/s
Gridco.
3. M/s Gridco was represented by Shri N. G. Nath,
Chief Engineer, (P&P), Shri B. P. Rekhani, General Manager, Shri T. S. Rama Rao, S.E.
(Comm.), Shri M. K. Sircar, E.E.(E), and Shri M. N. Mohapatra, E.E.(Comm.). While no one
appeared on behalf of M/s RSP, Rourkela, M/s INDAL was represented by Shri A. K. Kar,
General Works Manager and Shri Rajesh Mishra, Works Manager and Mr. B. N. Das whereas M/s
Ferro Chrome Plant was represented by Shri Jagadish Chandra Patra, Manager. The counters
and rejoinders filed by M/s Gridco were considered and the representatives were heard.
4. All the three industrial consumers have their own
Captive Power Plants. Major part of their requirement of power was met from their own
power stations. However, they have taken connection from OSEB/Gridco to meet the gap
between the demand and the capacity of their own CPP and to meet additional demand during
planned maintenance/breakdown of their generating units. Instead of standard agreement as
as distinctive cases calling for special agreements regarding
supply and tariff. M/s RSP is in the category of 'Heavy Industries' whereas M/s INDAL and
M/s Ferro Chrome are in the category of 'Power Intensive Industries' . The special
agreement with M/s INDAL was entered into on 20.03.95 effective from 01.08.94 till
31.07.95 for supply of maximum demand of 30,000 KVA and energy demand of 3 MU per month.
The agreement with M/s Ferro Chrome was entered on 12.11.96 effective from 16.11.96 for
one year. The contracted maximum demand is 7,000 KVA and energy demand is 9.07 lakh KWH
per month. The agreement with M/s RSP was entered on 14.01.97 effective for a period of
three years retrospectively from 16.09.96 for supply of maximum demand of 30,000 KVA and
energy demand of 5 MU per month at 33 kV & 95000 KVA with 15 MU per month at 132 kV.
While M/s RSP and M/s Ferro Chrome have only one connection each M/s INDAL has an
additional connection for emergency power supply. The conditions of supply and the tariff
prescribed in the special agreements are more or less similar in all the cases. Each of
the three consumers have taken connection for a given contracted demand.
6. The nature of special agreements as outlined by
Gridco is as under.
"Out of the three Special Agreements stated above, RSP falls in
the category of Heavy Industry, and M/s INDAL and M/s Ferro Chrome Plant fall in the
category of Power Intensive Industries. All of them have taken connections for a given
Contract Demand. Conditions of Minimum Load Factor has been relaxed in all the 3 cases and
minimum quantum of energy has been incorporated in the agreement which relates to Load
Factor of 0.15 to 0.2 approximately. In lieu of the above relaxation, Demand Charges are
applicable on the Contract Demand, or the actual demand, which ever is higher, on monthly
basis with settlement period of 30 minutes. In this case, the benefit of 80% of the
Contract Demand for billing purpose available to normal consumers is not available to
them. Other conditions are almost the same as applicable to the relevant category of
consumer"
7. The implication of above is that the three
industrial consumers covered under separate special agreements are to pay considerably
lower amount than the other consumers in the category of Heavy Industries and Power
Intensive Industries. Shorn of inessentials, Gridco's case is that each of these three
consumers owning Captive Power Plants cannot be brought under any of the classes specified
under Regulation 27 and hence there is justification for special agreement under authority
of Regulation 28 of OSEB (General Conditions of Supply) Regulations, 1995.
8. Before indicating the issues that emerge from the
case it is necessary to refer to relevant provisions of law.
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A licensee is entitled to charge tariff only as approved by the Commission under Chapter VIII of the OER Act, 1995.
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Any tariff implemented in the said Chapter shall not show undue preference to any
consumer of electricity but may differentiate according to the customer load factor or
power factor, the consumers total consumption of energy during any specified period or the
time for which supply is required.
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The licensee may classify the consumers into categories specified in Regulation 27 of
GCS Regulation for the purpose of fixing tariff and conditions of supply. In such cases
the licensee has to enter into an agreement in the format prescribed under Regulation 6.
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For reasons to be recorded and having regard to the nature of supply and purpose for
which supply is required, special tariff and conditions of supply may be fixed for
consumers not covered by the classification enumerated in Regulation 27. In such cases the
licensee may enter into special agreement with suitable modification in the standard
agreement form.
9. In this background of legal provisions, M/s.GRIDCO
has entered into special agreement with the aforesaid three corporate consumers on the
ground that these cases do not come under any of the clauses specified under Regulation 27
and has charged tariff on a different basis than the one provided in Commission's Tariff Order No.009 dt. 12.03.97. From the facts of the case the
issues that have emerged are as below:
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Whether the three industrial consumers could be covered under any of the classes
specified under Regulation 27?
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Whether having regard to the nature of supply and purpose for which the power is
required, there is justification for invoking provisions for Regulation 28 and for
entering into special agreements stipulating special tariff and conditions of supply in
these cases?
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Whether the tariff charged by GRIDCO as per the special agreement were in conformity
with the tariff prescribed by the OERC?
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Whether the special agreements submitted to the Commission are liable to be approved and
if so, from which dates?
10. Reasons stated by GRIDCO for the justification of
special agreement in case of INDAL and Ferro Chrome are that the use factor for these two
industries have fallen below 80% due to installation of Captive Power Plant. Definition of
P.I. industries as per GCS Regulation is "the industries where power is substantially
utilised as raw material electro-chemical and/or electro-metallurgical processes with a
contract demand of and above 2000 KVA having a monthly use factor of 80%". Gridco's
representative explained the use factor" as the ratio of average energy drawn (M.U.)
by the consumer from Gridco to the total energy (M.U.) consumed by the Industry. Since the
aforesaid ratio after captive installation has come down to less than 80%, these two do
not fall under 'Power Intensive Industries' and as such a special agreement is called for
as contemplated in Regulation 28 of GCS Regulation. According to Gridco the drawal of P.l.
industries from Gridco after installation of Captive Power Plant has become more demand
oriented than energy based as their energy component is quite low compared to their
demand. The salient departure of the special agreement from the approved tariff order is
the change of load factor for estimating minimum charges. Present approved tariff provide
40% load factor to be used for estimating minimum charges for P.l. and Heavy Industries
whereas the special agreement provides for charging at 20% while enhancing demand charges
to be levied at 100% of M.D. or C.D. whichever is higher instead of 80% used in the
approved tariff order keeping in mind the pattern of drawal of the consumer.
11. Further it is claimed that, by GRIDCO and its
predecessor OSEB have been guided by Govt. of Orissa Policy Resolution to grant incentives
to the industries having CPPs. In this connection, GRIDCO has quoted the Dept. of Energy
Resolution No.20396-E dt.09. 11.92 and the recommendation of the Sunderrajan Committee. In
order to combat power shortage and to attract private investment in power generation Govt.
of Orissa encouraged the industries state to put up their own CPPs. This has been made to
enable the industries to be self-reliant and to depend upon the State Electricity Board
only for emergency assistance, or operational power during plant breakdown or during
capital maintenance and for backup power. According to GRIDCO the backup power agreement
was entered into with M/s.lNDAL and subsequently w>9. In this background of legal provisions, M/s.GRIDCO
has entered into special agreement with the aforesaid three corporate consumers on the
ground that these cases do not come under any of the clauses specified under Regulation 27
and has charged tariff on a different basis than the one provided in Commission's Tariff Order No.009 dt. 12.03.97. From the facts of the case the
issues that have emerged are as below:
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Whether the three industrial consumers could be covered under any of the classes
specified under Regulation 27?
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Whether having regard to the nature of supply and purpose for which the power is
required, there is justification for invoking provisions for Regulation 28 and for
entering into special agreements stipulating special tariff and conditions of supply in
these cases?
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Whether the tariff charged by GRIDCO as per the special agreement were in conformity
with the tariff prescribed by the OERC?
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Whether the special agreements submitted to the Commission are liable to be approved and
if so, from which dates?
10. Reasons stated by GRIDCO for the justification of
special agreement in case of INDAL and Ferro Chrome are that the use factor for these two
industries have fallen below 80% due to installation of Captive Power Plant. Definition of
P.I. industries as per GCS Regulation is "the industries where power is substantially
utilised as raw material electro-chemical and/or electro-metallurgical processes with a
contract demand of and above 2000 KVA having a monthly use factor of 80%". Gridco's
representative explained the use factor" as the ratio of average energy drawn (M.U.)
by the consumer from Gridco to the total energy (M.U.) consumed by the Industry. Since the
aforesaid ratio after captive installation has come down to less than 80%, these two do
not fall under 'Power Intensive Industries' and as such a special agreement is called for
as contemplated in Regulation 28 of GCS Regulation. According to Gridco the drawal of P.l.
industries from Gridco after installation of Captive Power Plant has become more demand
oriented than energy based as their energy component is quite low compared to their
demand. The salient departure of the special agreement from the approved tariff order is
the change of load factor for estimating minimum charges. Present approved tariff provide
40% load factor to be used for estimating minimum charges for P.l. and Heavy Industries
whereas the special agreement provides for charging at 20% while enhancing demand charges
to be levied at 100% of M.D. or C.D. whichever is higher instead of 80% used in the
ith others only in pursuance of Govt.
Policy. This argument was elaborated by GRIDCO as below:
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The high demand component and the low energy component for these type of consumers
equipped with its own CPPs call for execution of special agreement as this is not covered
under tariff prescribed for different categories of consumers by OERC in Order No.009
dt. 12.03.97.
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In case of M/s.lNDAL the agreement was for supplementing backup power drawn from the
state grid in conjunction with its own CPPs as a result of which the energy requirement
for operational power is very much less and hence, M/s. lNDAL do not fit into appropriate
clause of consumers define in Regulation 27.
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There is no supply of power to such consumers at lower rate as the only relaxation for
these three industries were with regard to load factor.
12. Shri B. N. Das, authorised representative of M/s
INDAL augmented the arguments of M/s Gridco. He stated that Gridco derived a lot of
advantages and benefit from its commercial contract with the three industrial units having
the CPPs. Consequent on availability of surplus power from these CPPs the unit power cost
of electricity is reduced for Gridco. Further, the CPPs have helped Gridco to meet demand
of other consumers. It was argued that industries having CPPs requiring power during
maintenance/breakdown could not be fitted in any of the categories specified in the
Regulations 27 and therefore, they could not be final into any of the categories covered
in the tariff regulation. The tariff notifications dt.20.03.97 had prescribed rate for
emergency power supply to CPPs with regard to supplying - startup, essential, auxiliary
and survival power in the event of failure of CPPs. This rate could not be made applicable
for supply of operational power in case of maintenance low generation CPPs. Basically
argument was that tariff should be different for operational power for industries having
CPPs and for emergency power supply to CPPs. Mr. Das also referred to the average cost of
energy for backup and for emergency power supply and supported the justifications for
special agreements in pursuance of the Govt. policy for encouragement to the industries
for setting up CPPs.
13. The first issue to be decided is whether the three
corporate consumers fall in any of the categories specified under Regulations 27. M/s RSP
falls under the category of, Heavy Industries as its contract demand is 100 MVA at 132 kV.
Electricity is utilised substantially as a motive force and hence, it clearly falls within
the category of Heavy industries. Gridco has not given any reason as to how and why RSP
cannot be categorised as 'Heavy Industries'. RSP has neither recorded its presence nor has
responded in any manner to the notices given to it as an affected party. On the facts
before us, we do not find any reasons for treating RSP on a different footing than any
other 'Heavy Industries' and hence there is no justification for a special agreement under
Regulation 28.
Both M/s INDAL and M/s Ferro Chrome substantially use power as raw
material for their electric metallurgical process. The contract demand of M/s INDAL and
M/s Ferro Chrome Plant are 30 and 7 MV to be used for estimating minimum charges for P.l. and Heavy Industries
whereas the special agreement provides for charging at 20% while enhancing demand charges
to be levied at 100% of M.D. or C.D. whichever is higher instead of 80% used in the
A. Even the special agreements stipulate that the
demand charges and energy charges shall be payable at the rate applicable to Power
Intensive Industries category. Hence, it is clear that these two consumers fall under a
specified category under Regulation 27 and Gridco itself had no doubt about it. Hence,
there can be no justification for attracting the provisions Regulation 28. However, before
putting this at rest, it may be relevant to examine one aspect, namely, the
"Operational use factor" which has been laboured for too much and to find out
whether on this groundor supplementing backup power drawn from the
state grid in conjunction with its own CPPs as a result of which the energy requirement
for operational power is very much less and hence, M/s. lNDAL do not fit into appropriate
clause of consumers define in Regulation 27.
There is no supply of power to such consumers at lower rate as the only relaxation for
these three industries were with regard to load factor.
12. Shri B. N. Das, authorised representative of M/s
INDAL augmented the arguments of M/s Gridco. He stated that Gridco derived a lot of
advantages and benefit from its commercial contract with the three industrial units having
the CPPs. Consequent on availability of surplus power from these CPPs the unit power cost
of electricity is reduced for Gridco. Further, the CPPs have helped Gridco to meet demand
of other consumers. It was argued that industries having CPPs requiring power during
maintenance/breakdown could not be fitted in any of the categories specified in the
Regulations 27 and therefore, they could not be final into any of the categories covered
in the tariff regulation. The tariff notifications dt.20.03.97 had prescribed rate for
emergency power supply to CPPs with regard to supplying - startup, essential, auxiliary
and survival power in the event of failure of CPPs. This rate could not be made applicable
for supply of operational power in case of maintenance low generation CPPs. Basically
argument was that tariff should be different for operational power for industries having
CPPs and for emergency power supply to CPPs. Mr. Das also referred to the average cost of
energy for backup and for emergency power supply and supported the justifications for
special agreements in pursuance of the Govt. policy for encouragement to the industries
for setting up CPPs.
13. The first issue to be decided is whether the three
corporate consumers fall in any of the categories specified under Regulations 27. M/s RSP
falls under the category of, Heavy Industries as its contract demand is 100 MVA at 132 kV.
Electricity is utilised substantially as a motive force and hence, it clearly falls within
the category of Heavy industries. Gridco has not given any reason as to how and why RSP
cannot be categorised as 'Heavy Industries'. RSP has neither recorded its presence nor has
responded in any manner to the notices given to it as an affected party. On the facts
before us, we do not find any reasons for treating RSP on a different footing than any
other 'Heavy Industries' and hence there is no justification for a special agreement under
Regulation 28.
Both M/s INDAL and M/s Ferro Chrome substantially use power as raw
material for their electric metallurgical process. The contract demand of M/s INDAL and
M/s Ferro Chrome Plant are 30 and 7 MV to be used for estimating minimum charges for P.l. and Heavy Industries
whereas the special agreement provides for charging at 20% while enhancing demand charges
to be levied at 100% of M.D. or C.D. whichever is higher instead of 80% used in the
these two Power Intensive Industries defy classification und |