ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION
Sri Surinder Pal, Member
Sri. R. Radha Kishen, Member
O.P. (SR) No.41 of 2006
1. Transmission Corporation of Andhra Pradesh
2. Andhra Pradesh Power Co-Ordination Committee
3. Andhra Pradesh Central Power Distribution Company
Ltd.
4. Andhra Pradesh Southern Power
Distribution Company Ltd.
5. Andhra Pradesh Northern Power Distribution Company Ltd.
6. Andhra Pradesh Eastern Power
Distribution Company Ltd. … Petitioners
and
1.
Andhra Pradesh Generation Corporation Ltd
2.
Lanco Kondapalli Power Pvt. Ltd, Kondapalli
4.
Spectrum Powrer Generation Ltd
5.
GVK Industries Ltd
6.
Reliance Energy Ltd
7.
Srivathsa Power Projects Ltd … Respondents
This petition coming on for hearing
on 29.07.2006 in the presence of Sri P. Shiva Rao, Advocate, for the
petitioners, and having stood over for consideration to this day, the
Commission delivered the following:
This petition is filed under Sub-sections (1), (2),
(3) and (4) of Section 33 read with Section 86(1)(f) of the Electricity Act,
2003 seeking the following reliefs:
(i)
Directing the
respondents to pay the amount of Rs.9.017 crores towards the loss sustained by
the first petitioner (hereinafter referred to as ‘APTRANSCO’) for the period
from 01.04.2004 to 31.03.2005 by the respective generator as specified in the
Annexure-I to the petition.
(ii)
Directing the
respondents to pay an amount of Rs.14.700 crores towards the loss suffered by
the four petitioners, No. 3 to 6 (hereinafter collectively referred to as the ‘DISCOMs’)
for the period from 01.04.2005 to 31.03.2006 by the respective Generators as
specified in the Annexure-II to the petition.
(iii)
To award cost of
the petitions.
2. The averments made in the petition in brief are as follows:
a) The first petitioner was till June,
2005 engaged in the purchase of energy and transmission of power. Subsequently in the Third Transfer Scheme,
the power purchase function has been taken over by all the four DISCOMs. However, to have co-ordination in the
business of purchase of energy on behalf of all the four DISCOMs, the second
petitioner (APPCC) was constituted by G.O.Ms.No.59 dated 07.06.2005. However as far as maintenance and operation
of load dispatch centre is concerned, APTRANSCO is operating the same as per
Section 31(2) of the Electricity Act, based on the direction of Government of Andhra Pradesh (for
short GoAP). Thus all the applicants are
required to join together in filing this case against the
respondent-generators.
b) The Section 33 of the Electricity Act,
2003, contemplates achieving the maximum economy and efficiency in the
operation of power system in the State.
Besides, the Section 33 which deals with operation of State Load
Dispatch Centre (SLDC), there is yet another provision, namely, Section 86(1)(b)
from where the power of this Commission to regulate the Electricity purchase
and procurement process of distribution licensees including the price at which
the electricity shall be procured from the generating companies, can be traced. Thus the Hon’ble Commission has jurisdiction
to decide the dispute, which arose due to non-compliance of directions of SLDC
by the generating companies, u/s 33(4) as well u/s 86(1)(f) of the Electricity
Act, 2003.
c) It is
necessary to mention here that the formulation of principles of merit order and
monitoring of merit order in the real time, are integral parts of electricity
procurement process by the licensees.
The SLDC performs stupendous task of maintaining balance between the
merit order and real time constraints, thereby directing the generators time to
time either to ramp up or to back down, by taking into consideration the
overall economy and efficiency in the operation of power system in the
State. The SLDC alone has the
comprehension of State grid and has the real time information of the
intra-state network parameters as well as information of several network
parameters of Regional grid which need to be monitored in order to maintain the
stability of the power system. Thus it
is inevitable on the part of Generation Stations, licensees or any other person
using the State grid, to comply with the instructions of SLDC forthwith.
d) The necessity of compliance of the
instructions of SLDC has been outlined u/s 43 scheduling and dispatch of the
code of technical interface (Grid Code) 2001 approved by the Hon’ble
Commission. The non-compliance of the
instructions of SLDC by the generators amounts to violation of the Grid
Code.
e) The applicants submit that due to non-compliance with
instructions of SLDC by the respondent-generators, the other generators having
lesser variable cost of generation had to be backed down to operate the power
system in a safe and secured manner. The
said indiscipline of respondents resulted in high cost of purchase of power by
the licensees only to unjustly burden the end consumers. The financial burden on the applicants or the
end consumers, due to non-compliance of the instructions by the respondents is
set out in detail in the Annexures to the petition. The said default invites penal action
also. The applicants have submitted the
details of non-compliance to Hon’ble Commission from time to time every month.
f) The APTRANSCO during 2004-05 suffered
financial loss. In respect of thermal
generating stations of APGENCO, the first respondent the backing down
instructions of SLDC are based on the revised technical limits, as suggested by
APGENCO. Like-wise after June, 2005, all
the four DISCOMs have sustained financial loss, the details of which are
submitted in Annexure-2 to the petition.
Although the first applicant is entitled to impose penalty, to have
smooth conduct of business, penal action is not resorted to.
g) Cause of action to file the petition
arose when the respondents failed to comply with the instructions of backing
down and when the respondents failed to make good of the loss suffered by the
applicants.
h) In view of the limitations provided in
Section 158 of the Electricity Act, 2003, and other provisions in the repealed enactments,
though there is arbitration clause in PPA (the Power Purchase Agreements), the
same is not enforceable and the Hon’ble Commission has power to adjudicate upon
the dispute as per Section 33(4) of the Electricity Act, 2003. The necessary amount as required under
regulations has been paid.
3. Before
admitting the petition, notice was ordered to all the petitioners to appear
before the Commission on 29.07.2006. On that date, the Commission heard the
arguments of Sri. P. Shiva Rao, Advocate for the petitioners, who submitted
that --
(a) the prayer
is for payment
of about 9 crores, as apportioned in Annexure-I, towards
the loss sustained
by the Petitioner No.1 for
the period from
01.04.2004 to 31.03.2005
in view of
failure of the respondents to
comply with the
instructions of backing
down and for
payment of about
Rs.14 crores, as apportioned in
Annexure-II, also towards the loss suffered by the Petitioners No.3 to 6 for
the above-mentioned reason.
(b) SLDC is the authority to operate grid and to run the system in an appropriate manner. For that purpose, the petitioners are required to maintain balance between the merit order and real time constraints. Consequently, directions were issued to the respondents from time to time to ramp up or backing down the generation. However, the respondents did not follow the directions issued. As a result of non-compliance of such directions, the petitioners were forced to purchase power at higher rates.
(c) Two courses of action are open for the petitioners: (i) as per Section 33(5) of the Electricity Act, 2003 if a generating company fails to comply with the direction issued by SLDC in exercise of power of supervision and control for ensuring integrated grid operations, such generator shall be liable to pay penalty of Rs.5 lakhs. Under this provision of law, SLDC can itself levy fine which is a penal provision, but it will not remedy the loss sustained by the petitioners which is substantial compared to the amount of penalty prescribed under the above mentioned provision of law, and (ii) as per Section 33(4), if any dispute arises in relation to any directions by SLDC for ensuring integrated grid operations in the State, the petitioners can refer the same to the State Commission for a decision.
(d) As non-compliance of directions issued by the SLDC by the respondents resulted in loss to the petitioners, the matter falls under Section 33(4) of the Electricity Act, 2003, as mentioned above. Moreover, under Section 86(1)(f) of the Electricity Act, the Commission is empowered to adjudicate upon the dispute between licensee and the generating companies. Thus this is a fit case for the Commission to entertain the petition and to decide upon the dispute between the parties.
(e) In order to keep the system secure, the petitioners were forced to back down other generators having lesser variable cost of generation during the period mentioned in the petition and for that purpose, incurred additional expenditure. As the petitioners’ organizations are running on commercial and financial principles, levy of penalty of Rs.5 lakhs by SLDC against the generators will not be sufficient to offset the loss sustained by them. The respondents did not oblige to pay the loss sustained by the petitioners as demanded by them and therefore there exists a dispute.
(f) For all these reasons and for the reasons mentioned in the joint petition filed on behalf of the petitioners, it is prayed that the Commission may adjudicate the matter and grant the reliefs as prayed by the petitioner in the petition.
4. The
point that arises for consideration is:
“whether the petition is maintainable.”
5. For
better appreciation of the contentions of the petitioners’ counsel, it is
necessary to extract Section 33 of the Electricity Act, 2003 which reads as
follows:
“Section 33. Compliance of
directions::
(1) The State Load Despatch Centre
in a State may give such directions and exercise such supervision and control
as may be required for ensuring the integrated grid operations and for
achieving the maximum economy and efficiency in the operation of power system
in that state.
(2) Every licensee, generating
company, generating station, sub-station and any other person connected with
the operation of the power system shall comply with the directions issued by
the State Load Depatch Centre under sub section (1).
(3) The State Load Despatch Centre
shall comply with the directions of the Regional Load Despatch Centre.
(4) If any dispute arises with
reference to the quality of electricity or safe, secure and integrated
operation of the State grid or in relation to any direction given under sub-
section (1), it shall be referred to the State Commission for decision:
Provided that pending the decision
of the State Commission, the directions of the State Load Despatch Centre shall
be complied with by the licensee or generating company.
(5) If any licensee, generating
company or any other person fails to comply with the directions issued under
sub-section(1), he shall be liable to penalty not
exceeding rupees five lacs.”
6. The
contention of the petitioners’ counsel is that the respondents failed to comply
with the instructions given by SLDC with regard to backing down, due to which
the petitioners incurred loss. Violation
of the instructions issued by SLDC would come within the purview of the
provisions u/s 33 and the Commission has got jurisdiction to entertain the
petition under sub-section(4) of Section 33 of the
Electricity Act, 2003.
7. It is
also the contention of the petitioners’ counsel that the Commission is
empowered to decide the matter u/s 86(1)(f) of
Electricity Act, 2003. At this juncture,
it is also relevant to extract Section 86(1)(f) of the
said Act :
“Section 86. Functions of
State Commission:.
(1) The State Commission shall
discharge the following functions, namely: -
(a) xxxxxxxxxxx
(b) xxxxxxxxxxx
(c) xxxxxxxxxxx
(d) xxxxxxxxxxx
(e) xxxxxxxxxxx
(f)
adjudicate
upon the disputes between the licensees, and generating companies and to refer
any dispute for arbitration; “
8. It is
the contention of the petitioners’ counsel that due to non-compliance of the
instructions given by SLDC by the respondents, the petitioners incurred loss of
9.017 crores for the period from 01.04.2004 to 31.03.2005 and 14.700 crores for
the period from 01.04.2005 to 31.03.2006.
9. It is
also the contention of the petitioners’ counsel that even though there is a
remedy under sub-section (5) of Section 33 of the Electricity Act, 2003 for the
first petitioner operating the SLDC to impose penalty on the generators i.e.
the respondents, the remedy has not been invoked to have smooth conduct of
business with the respondent-generators.
It is the contention of the petitioners’ counsel that the Commission is
empowered to decide the dispute, hence the petition may be taken on file and
decide the matter.
The
Commission is not inclined to accept the above contentions of the petitioners’
counsel for the following reasons:-
10. The
intention of Section 33 is to ensure integrated grid operations and for
achieving maximum economy and efficiency in the operation of power system in
the State and the SLDC is empowered to issue directions and exercise supervision
and control over the grid operations for achieving that objective. If any licensee or generating company or any other
person fails to comply with the directions issued under sub-section (1) of the
Section 33, the said person shall be liable to a penalty not exceeding 5
lakhs. A bare reading of sub-section(4)
of Section 33 of the Electricity Act, 2003 would disclose that if any dispute
arises with reference to quality of electricity or safe, secure and integrated
operation of State grid or in relation to any direction given under sub-section
(1), it shall be referred to the State Commission. The recovery of the loss with regard to grid
operations is not covered under Section 33 of the Act ibid. The purpose
of Section 33 of the Electricity Act, 2003 is only to see that safe, secure and
integrated operation of State grid is achieved. In the present case, the petitioners have
not approached the Commission to direct the concerned respondent-generator to
implement the directions given by SLDC to maintain integrated grid operations
properly and for achieving maximum economy and efficiency in operation of power
system in the State. Moreover the relief
sought for is to direct the respondents to pay certain amounts which are said
to represent the quantum of loss sustained by the petitioners herein for the
respective periods as mentioned in the petition. None of the provisions of Section 33 ibid enables
the Commission to assume any power whatsoever to direct recovery of loss on
account of power purchases by the petitioners at higher cost due to
non-compliance of directions of SLDC by any generating company. The said section only provides for the levy
of penalty, by SLDC. Hence the petition filed u/s 33 of the Electricity Act,
2003, for recovery of financial loss, is not maintainable.
11. The other matter for consideration is whether
the petitioner is entitled to get the relief sought for, in this petition by
invoking the provisions of Section 86(1)(f) of the Electricity Act, 2003. In order to bring the matter u/s 86(1)(f), there must be a dispute between the licensee or
licensees and generating companies. In
this case, the dispute is not between the licensees and generating companies,
but between SLDC and generators as the only contention of the petitioners’
counsel is that the respondents have not complied with the directions given by
the SLDC with regard to backing down. For that reason, the contention of the
petitioners’ counsel
that the Commission can entertain this petition u/s 86(1)(f) the
Electricity Act, 2003 is also not tenable.
12. Even
though it is true that Petitioner No.1 is operating the SLDC as notified by the
State Government, yet it is also a fact that SLDC is not a party before this
Commission in this petition. In any
case, the SLDC is neither a licensee nor a generating company. The provisions of Section 86(1) (f) are
therefore not attracted.
13. On the
factual aspects also, the petitioners have not filed the necessary
documentation to enable the Commission to come to a possible conclusion that
there indeed is a dispute between the parties herein. The Commission directed the petitioners
herein to file the copies of the notices supposed to have been issued to the
respondents and also the response of the respondents to such notices, but this
was not done. In the absence of such
material, it is not possible to arrive at a conclusion that a dispute exists
between the parties.
14. For all the reasons mentioned above, the
Commission is of the view that the petitioners have failed to make out a case
for the maintainability of the petition.
In the result, the petition is not admitted as not
maintainable.
The Order is corrected and signed on this 10th
day of August, 2006.
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Sd/- |
Sd/- |
Sd/- |
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R. Radha Kishen |
Surinder Pal |
K. Swaminathan |
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MEMBER |
MEMBER |
CHAIRMAN |
CERTIFIED
COPY