Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION World Trade Centre, Centre No.1, 13 th Floor, Cuffe Parade, Mumbai 400005. Tel. 022 22163964/65/69 Fax 22163976 Email: mercindia@merc.gov.in Website: www.merc.gov.in/www.mercindia.org.in CASE No. 139 of 2016 In the matter of Petition of Ultra Tech Cement Ltd. regarding non-compliance of Distribution Open Access Regulations, 2016 and incorrect monthly billing methodology followed by Maharashtra State Electricity Distribution Co. Ltd. Coram Shri. Azeez M. Khan, Member Shri. Deepak Lad, Member M/s. Ultra Tech Cement Ltd. Petitioner V/s Maharashtra State Electricity Distribution Co. Ltd. Respondent Appearance: For the Petitioner For the Respondent Authorised Consumer Representative : Shri T. N. Agrawal (Rep) Shri Satish S. Shah (Rep) : Smt. Deepa Chawan (Counsel) Shri A. W. Mahajan (Rep) : Dr. Ashok Pendse, TBIA ORDER Date: 11 August, 2017 M/s. Ultra Tech Cement Ltd (UTCL) (Unit: Hotgi Cement Works), Hotgi, District Solapur, has filed a Petition on 25 October, 2016, citing Regulation 4.1 of the MERC (Distribution MERC Order in Case No. 139 of 2016 Page 1
Open Access) Regulations ( DOA Regulations ), 2016 seeking action against Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) for non-compliance of the Regulations and incorrect monthly billing methodology in the absence of approved procedure. 2. UTCL s prayers are as follows:- 1. The MSEDCL may be directed to issue Open access procedure in line with Dist. Open access Regulations-2016. Till the procedure is issued, the respondent may be directed to remove billing error by adopting correct practice of set off open access power i.e. first conventional OA power and then RE power. 2. We also appeal to take action against the respondent under section 142, 146 and 149 of EA-2003 for violation of section 4.1 of DOA Reg-2016 issued by Commission. The respondent failed to issue detailed procedure for open access within 60 days from the date of publication of regulations. 3. Allow us to make further submission, if any after admitting this petition and at the time of hearing. 4. Award costs of these proceedings against the Respondent and pay to the Petitioner. 5. Pass such other order(s) as the Hon ble Commission may deem fit in the interest of justice in the facts of the present case. 3. The Petition states as follows: (1) As per Regulation 4.1 of the DOA Regulations, 2016, the Distribution Licensee is required to provide the information requirements, procedure, etc. in downloadable format on its internet website within 60 days. However MSEDCL has not uploaded any approved procedure for Distribution Open Access (OA) after issue of the Regulations. (2) Regulation 20 of the DOA Regulations, 2016 provides for banking of Renewable Energy (RE) Generation; and for the surplus energy from non-firm RE Generating Stations, after set-off, to be banked with the Distribution Licensee. (3) UTCL is a Medium Term Open Access (MTOA) user and wheeling power from its Group Captive Power Plant (CPP) Unit M/s Ultra Tech Cement Ltd. (Unit: Awarpur Cement Works), Dist. Chandrapur, Maharashtra (Intra-State from July, 2013). Its power consumption from captive generation is as per the following Table along with Renewable Purchase Obligation (RPO): MERC Order in Case No. 139 of 2016 Page 2
Financial Year Captive Consumption (KWh) Non-Solar obligation Solar obligation RE Consumption (KWh) REC Purchased (Nos.) 2013-14 2,85,94,324 8.5% 0.5% 0 2401 2014-15 4,71,96,142 8.5% 0.5% 0 4214 2015-16 6,72,56,649 8.5% 0.5% 0 6088 (4) UTCL has met the above RPOs and compliance reports have been submitted to Maharashtra Energy Development Agency (MEDA) from time to time. (5) After notification of DOA Regulations, 2016 which includes provision for RE banking, UTCL decided to procure RE power to meet its RPO. Accordingly it had signed a Power Purchase Agreement (PPA) with M/s ICC Reality (India) Pvt. Ltd. to supply Wind Power (Non-Solar), of 60 lakh units through OA with generation capacity of 4 MW. After considering Capacity Utilization Factor (CUF) and Loss factor, UTCL can meet its annual requirement of Non-Solar RPO at 10% as per RPO targets for FY 2016-17. UTCL had also signed a PPA with M/s Parekh Medisales Pvt. Ltd. to supply Solar power of 0.50 lakh units through OA with capacity of 0.6 MW, considering CUF and loss factor, to meet 1% Solar RPO as per the Commission s RPO Regulations, 2016. (6) UTCL had applied to MSEDCL for OA permission for purchase of Wind Power from M/s ICC Reality (India) Pvt. Ltd. and received approval for Short Term Open Access (STOA) for the month of June, 2016. (7) UTCL had started consuming RE Power (on-firm) from 1 June, 2016 along with CPP scheduled power (firm power) as per its production plan. It received the OA bill for June, 2016 on 19 July 2016 and observed that the CPP scheduled power was considered as over-injected by 7,36,583 units. After examining the detailed billing calculation method, it observed that the credit mechanism of Generation Units was changed by MSEDCL, as below: Over-injected Units = Total consumption (Minus) RE Generation (Non-Firm) (Minus) Captive Generation (Scheduled power) (8) UTCL wrote to Chief Engineer (CE) (Commercial), MSEDCL for correction in the credit mechanism of generation units: first the scheduled CPP (conventional) power should be credited, and thereafter the non-scheduled RE power (infirm power). The full amount of the electricity bill was paid under protest to avoid unpleasant action from MSEDCL. However, UTCL has still not received any reply from CE MERC Order in Case No. 139 of 2016 Page 3
(Commercial). UTCL had also filed an online complaint on MSEDCL s website on 7th August, 2016, but not received any response. (9) MSEDCL revised the Generation Credit mechanism without issuing any Circular or OA operating procedure, and hence UTCL was not aware about the revised credit mechanism which had resulted in a large financial impact due to the increase in over-injected units. Rs. 29 lakh was the additional financial impact for June, 2016. (10) From July, 2016 onwards UTCL also commenced OA for Solar-based RE power as per MSEDCL s NOC. The bill of July, 2016 also repeated the same mistake, which resulted in-over-injection as shown in the bill of 6,05,465 units. The additional financial impact on UTCL was Rs. 26.27 lakh. (11) MSEDCL failed to take any corrective action on UTCL s letter dated 25 July, 2016 but continued to make the same error in the bill of August, 2016 by showing overinjection of 4,71,657 units. (12) MSEDCL has still not issued its standard operating procedure and monthly billing methodology after notification of the DOA Regulations, 2016. Tata Power Co. Ltd. (TPC-D) and Reliance Infrastructure Ltd. (RInfra-D) have their procedure in place in which the scheduled power (firm) is credited first and non-scheduled power is adjusted thereafter. The procedure issued by the other two Distribution Licensees is in consonance with the DOA Regulations, 2016 so as to enable banking of RE power. By adopting a different procedure, MSEDCL has eliminated the scope for banking of RE power. (13) The new procedure was to be made effective from the date of implementation of the DOA Regulations, 2016 i.e. from 1 April, 2016 so as to get the billing error corrected. The procedure must also specify the sequence to set off different types of OA power, the first priority being given to conventional power and thereafter to nonconventional power. This would allow for banking of RE power. 4. In its Reply dated 15 February, 2017, MSEDCL stated as follows: (1) The detailed procedure regarding application for OA has been uploaded on MSEDCL s web portal as stipulated under the DOA Regulations, 2016. (2) Vide emails dated 2 June and 6 September, 2016 and letter dated 8 September, 2016, MSEDCL had explained its difficulties in finalizing the procedure within the specified time limit and requested the Commission for extension of time for uploading it. MERC Order in Case No. 139 of 2016 Page 4
(3) Under the earlier DOA Regulations, 2014, installation of SEM was mandatory for RE OA, and the credit of energy was to be given on 15 minute time block basis. Further, OA through multiple Generators was allowed only to the extent of fulfillment of RPO. The energy injected through different Generators (i.e. conventional as well as infirm RE) had to be credited only in 15 minutes time block (4) The banking provision was reintroduced in the DOA Regulations, 2016, and OA through multiple Generators is permitted without any restriction. The OA consumers are entitled to source power from multiple Generators, i.e. a) Generating Plant or Stations, including Captive Generating Power Plants, b) Trading Licensees, c) Power Exchanges, d) Other Distribution Licensees, e) Any other sources, simultaneously. (5) The methodology for crediting such energy has to be same for all sources, i.e. on the basis of 15 minute time block. The billing methodology with banking facility adopted by MSEDCL is as follows: a) 15 min. time slot-wise energy accounting, check for surplus RE units. Suppose the Surplus RE units are (S1): b) While billing, convert the surplus units into Time of Day (TOD) time slots (S2 = S1 as per ToD slot); convert the unadjusted consumption also (C2= C1 as per ToD slot). c) Surplus RE units to be set off against corresponding consumption in TOD time slot, check for surplus RE units, i.e. S3 = S2 - C2. d) C and D slot RE surplus units to be set off against consumption in A and B time slots, check for surplus RE units (S4 = AS3 +BS3 CS3-DS3). e) These surplus units, i.e. S4, are banked units. f) Deduct 2 % units as banking charges. g) Remaining units to be kept aside and carried forward for set off in next month, as may be applicable. h) Adjustment of carried forward banked units not to be given in the months of April, May, October and November. i) The unutilized banked energy (upto 10% of total generation ) due to underdrawal at the end of the financial year shall be procured at the 'Pooled Cost of MERC Order in Case No. 139 of 2016 Page 5
Power Purchase' (APPC) for that year and shall not be accounted for the RPO target of MSEDCL. (6) The banking facility to RE OA is provided as per the Regulations, i.e. ToD slot-wise, and while giving adjustment of energy to the OA consumer sourcing power from multiple generators/ sources, the costliest power is adjusted first. (7) The priority of adjustment of units credited under OA is being given in such a way that the costliest power is credited first. Accordingly, the type of generation and code with sequence of generation credit to be given in OA billing are as follows:- Sr.No. Type Generation of Code Cost of generation / Tariff given to Generator. (Rs/kwh) Sequence of generation credit to be given i Bio mass NC3 7.49-7.11 1 ii Solar NC5 6.54-6.04 2 iii Bagasse NC4 6.49-6.38 3 iv Wind NC1 5.56-3.82 4 v Small Hydro NC2 4.75-4.08 5 vi Conventional CG1 > 4.0 6 (8) If the OA consumer wishes to source power from multiple generators of the same type, then at the time of application, the consumer shall submit its Generator preference as to which order offsets will take place. (9) The RE Generating Plants are must run Plants and energy generated from such Generators shall be credited first. If the firm power is adjusted first and then the RE power, the impact will be as below. a. Due to the over-injected power, there is a possibility of surplus power in the grid and backing down of the thermal generation which is already contracted for long-term by MSEDCL. This will require payment of the fixed charges to the Thermal Generators, which will be an additional and unnecessary financial burden on MSEDCL, which will be passed on to its other consumers. b. The financial loss incurred due to banked units considering the actual banked units for April to December, 2016 and the highest backing down variable cost in December, 2016 is shown below: MERC Order in Case No. 139 of 2016 Page 6
Particulars Units April to December, 2016 Total Contract Demand MW 712 Open Access Contract Demand MW 609 Open Access Units Mus 888 Offset Banked Units Mus 126 Unutilized Banked Units Mus 52 A) If purchased @ APPC rate i.e. Rs. 3.79 Rs.Crs 19.71 B) If purchased @highest cost of backdown @ RS. 3.52 Rs.Crs 18.30 C) Loss due to Highest cost of backdown (A-B) Rs.Crs 1.40 D) Offset Units purchased @ Avg cost of supply i.e. Rs.6.36 Rs.Crs 80.14 E) CSS recovered on offset units@ 0.3725 Rs.Crs 46.36 Net Loss(C+D-E) Rs.Crs 35.18 (10) There is a possibility of gaming by consumers availing OA though multiple generators as they may utilize the thermal power only and the un-utilized RE power will be treated as over-injected and will be banked. (11) In the Rajasthan Electricity Regulatory Commission (RERC) (Terms and Conditions for Open Access) Regulations, 2016 notified on 3 January 2016, the RE power is credited first while doing the adjustments in case of an OA consumer sourcing power from multiple generators. 5. At the hearing on 16 February, 2017, UTCL and MSEDCL re-iterated their respective submissions. The Commission asked MSEDCL about the procedure it followed from 2005 to 2014 for the credit adjustment of billing for the banking of RE power when OA was availed. The Commission also enquired as to the basis for adjusting the unscheduled RE power first, and for asking consumers to give their Generator preference in case of sourcing of power from multiple Generators. MSEDCL stated that it would file a fresh Reply in the matter. Dr. Ashok Pendse, on behalf of Thane-Belapur Industries Association (TBIA), an Authorised Consumer Representative, asked that MSEDCL clarify whether this is the only such case or whether there are many more, up to November, 2016. The Commission directed MSEDCL to submit its detailed reply on the issues raised during the hearing, and UTCL may file its Rejoinder thereafter. MERC Order in Case No. 139 of 2016 Page 7
6. In its additional submission dated 11 April, 2017, MSEDCL stated that: (1) At the hearing held on 16 February 2017, the Commission raised the following queries and has asked MSEDCL: (i) How adjustment / billing of RE was done under the DOA, 2005 Regulations? (ii) How banking was provided under the DOA, 2005 Regulations? (iii) How many similar cases are there from April to November, 2016? (iv) After scheduling of power, which power, i.e. firm or infirm would be given priority for adjustment? (2) The adjustment of RE units /billing was carried out on ToD basis. For conventional / firm power OA, the billing was on 15 minute slot basis. No multiple generators were allowed as per DOA Regulations, 2005 and various subsequent orders of the Commission ruled the same. However, the Appellate Tribunal for Electricity (ATE) permitted OA through multiple generators at a later stage. When the ATE passed its Order, the DOA Regulations, 2005 had been superseded by DOA Regulations, 2014 and hence the billing in respect of multiple Generators did not happen in practice. (3) The DOA Regulations, 2005 were silent on banking. Several Petitions were filed before the Commission to decide on the issue of banking. The Commission, vide Order dated 7 April, 2014 in Case No. 92 of 2012, directed that the existing banking mechanism as stipulated in the Wind Power Tariff Order, 2003 shall be continued. MSEDCL implemented this same till notification of the DOA Regulations, 2014. (4) Till notification of the DOA Regulations, 2016, OA was not permitted to multiple Generators (except to the extent of meeting RPO as per the DOA Regulations, 2014). As such, accounting of power from different sources was never a subject under consideration. (5) The Commission introduced the concept of sourcing power from multiple Generators without any restrictions for the first time under the DOA Regulations, 2016. Now, an OA consumer can source power from conventional as well as from non-conventional RE sources. The Commission also reintroduced the banking provision with levy of 2% banking charges in the DOA Regulations, 2016. The banking facility is provided on TOD time slot basis for the full year, but the banked units cannot be used / drawn in April, May, October, and November. The units banked in peak TOD time slots can be used only in off-peak time slots. The unadjusted units limited to 10% of actual total generation at the end of financial year are to be purchased by Distribution Licensee at APPC, but without RPO benefit. (6) The above conditions notified by the Commission are being implemented in true MERC Order in Case No. 139 of 2016 Page 8
spirit by MSEDCL. However, in case of multiple Generators, the units from RE sources are adjusted first, and the units from conventional sources thereafter. (7) The Order dated 17 May, 2007 in Case No 42 of 2006 regarding introduction of Availability-Based Tariff (ABT) regime at the State level in Maharashtra and other related issues ( ABT Order ) sets out the concept of Merit Order Dispatch (MOD) and ruled that, for the purpose of the MOD Stack, the must run Generating Stations and constrained Generating Stations such as Hydro Stations linked to irrigation shall be ranked highest in the MOD Stack. (8) On the same principles as laid down in the ABT regime, the units injected by the infirm RE generators are offset first, and subsequently the units injected by conventional sources are credited on 15 min. time block basis. (9) There are 22 similar cases from April to November, 2016. (10) The banking facility to RE OA is provided as per the DOA Regulations, 2016, i.e. ToD slot wise. The RE Generation Plants are must run plants and energy generated from them shall be credited first. (11) Reliance Infrastructure Ltd. (Distribution) (RInfra-D) has adopted a similar procedure by giving priority to infirm RE power over conventional power. 7. In its Rejoinder dated 5 May, 2017, UTCL stated that: (1) UTCL s claim is for the period from June, 2016 onwards, and hence the current DOA Regulations, 2016 are applicable. TPC-D and R Infra-D have adopted the following procedure to set off OA from multiple sources as below: i. Energy accounting and settlement shall be carried out on 15 minutes time block basis for firm power OA consumers, and ToD-wise for non-firm power OA consumers; ii. From the energy / demand recorded in the consumer meter, scheduled OA entitlement is first adjusted to arrive at the energy/ demand consumption from Tata Power Co. Ltd. (Distribution) (TPC-D). iii. The credit of OA energy, supply energy under the contracted demand and imbalance charges shall be as per the Regulations. (2) However, MSEDCL adopted a different procedure which is contrary to the DOA Regulations, 2016. In its submission. MSEDCL has referred to the Regulations of the RERC but these are not applicable to Maharashtra. MERC Order in Case No. 139 of 2016 Page 9
(3) In its submission, MSEDCL has stated that, as per the ABT Order, ABT pertains to must run Generating Stations such as Hydro Stations linked to irrigation. The wind power generation in above Order is not covered in must run Stations. By giving set off first to non-firm power, MSEDCL has completely eliminated the scope of banking of wind power. UTCL has drawn wind power only to meet its RPO. iv. (4) The procedure under the DOA Regulations, 2016 uploaded by MSEDCL on its internet website does not mention the energy set-off procedure. Commission s Analysis and Ruling 8. The fact that UTCL, a consumer of MSEDCL, sources its power under MTOA from its conventional Group CPP at Chandrapur and also under STOA from RE Generating Plants for meeting its Solar and Non-Solar RPO is of particular significance to this Case. 9. The DOA Regulations, 2016 provide for OA for power from multiple generating sources, and also for banking. 10. All Distribution Licensees were required by the DOA Regulations, 2016 to publish their comprehensive procedure for availing OA within 6 months. MSEDCL has done so after considerable delay. However, its notified procedure still does not cover the billing methodology for adjustment of energy sourced from multiple Generators. 11. The Commission notes that MSEDCL published its procedure after the present Petition was filed. While MSEDCL took cognizance of many other issues in its procedure, it ought to have also addressed issues with large commercial implications such as billing methodology, adjustment of energy in case of multiple sources, etc. 12. The DOA Regulations, 2016 provide only for banking of RE and not conventional power. Moreover, in this Case, the consumer is a captive consumer. The basis for establishing a CPP is primarily for own use. That being the case, the captive supply needs to be adjusted first from the total consumption of the captive consumer and the rest of the sources thereafter. Besides, the captive power in this case is schedulable, being firm conventional power, while the RE power is non-firm and must run. Hence, if this conventional power is not adjusted first, it may lapse since it cannot be banked. 13. In view of these basic considerations, MSEDCL is directed to correct the billing methodology in the true spirit of the DOA Regulations, 2016 as discussed at para. 12 MERC Order in Case No. 139 of 2016 Page 10
above so as to remove the ambiguity regarding the adjustment of units, incorporate it in its OA procedure and host it on its website within a month. 14. MSEDCL shall also correct the bills of all such OA consumers accordingly within two months and report the action taken to the Commission. The Petition of M/s Ultra Tech Cement Ltd. in Case No. 139 of 2016 stands disposed of accordingly. Sd/- (Deepak Lad) Member Sd/- (Azeez M. Khan) Member MERC Order in Case No. 139 of 2016 Page 11