ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION
Hyderabad
Sri
Surinder Pal, Member
O. P. No. 27 of 2004
M/s. Jocil Limited,
Dokiparru, Guntur.
Rep by it’s Managing Director
...
Petitioner
and
(Added as per order in I.A. No. 15 of 2006)
This petition coming on for hearing on 17.02.2007, 17.03.2007 and 07.04.2007 in the presence of Sri.K.Gopal Choudary, Advocate for the petitioner, Sri. N. Jayasurya, Advocate for Respondent No.1 and Sri. P. Shiva Rao, Advocate for Respondent No. 2, and having stood over for consideration to this day, the Commission delivered the following:
O R D E R
This is a petition originally filed against Respondent No.1 seeking directions to it (a) to make payment of Rs. 81,62,688 stated as having been deducted by the said Respondent from the amount due and payable to the petitioner for the energy exported by the latter to the former for the months of May 2003, July 2003, August, 2003, October 2003 to January 2004 and April 2004; (b) to enter into a Power Purchase Agreement (hereinafter, ‘PPA’) with the petitioner to purchase the entire surplus energy exported by the petitioner to the respondent after meeting its auxiliary and captive consumption, without any limitations on the basis of any notional capacity or otherwise; and (c) to take appropriate action according to law under Sections 142 and / or 146 of the Electricity Act, 2003 (hereinafter ‘the Act’) and other action as this Commission considers necessary on the facts and circumstances of the case.
2. The averments made in the petition are as follows:
(a) The petitioner established a 6 MW Biomass-based Power plant to meet its captive energy requirements and to sell the surplus power to 3rd parties / respondent(s). It entered into a Power Purchase and Wheeling Agreement with Respondent No.1. By an order dated 24.01.2001, the Commission accorded consent for captive consumption of 3.6 MW (including auxiliary consumption of 0.6 MW) and the said consent was valid up to 30.06.2003.
(b) Consequent to the order dated 20.06.2001 passed by the Commission in O.P No. 1075 / 2001, the petitioner entered into a PPA with the respondent on 06-07-2002, the validity of which was limited up to 30.06.2003 for the reason that the consent granted by the Commission as mentioned above was valid only up to the said date. Later, the Commission issued an order on 05.02.2003 granting renewal of consent up to 30.06.2004 and revised the capacity intended for captive use by the petitioner to 2 MW. In view of coming into force of the Act, the consent of the Commission is no longer required for captive use of any part of the energy generated from the petitioner’s plant.
(c) Respondent No.1 by letter dated 26.06.2003, informed that it will purchase power from the petitioner’s project for a limited period of 3 months from 01.07.2003 to 30.09.2003, the purchase of power would be limited to 2.4 MW only and it (the Respondent No.1) is not willing to purchase additional capacity.
(d) Meanwhile, for the billing month of May 2003, the petitioner was paid only for 17,28,000 units as against actual export of 17,56,500 units and the petitioner was given to understand that the balance 28,500 units were considered by the respondent as exported in excess of capacity indicated in the agreement. Such deduction was made without any notice to the petitioner and without any lawful basis. Respondent No.1 made such deductions for the months July 2003, August 2003, October 2003 to January 2004 and April 2004 also.
(e) By letter dated 26.06.2003, the petitioner brought to the notice of Respondent No.1 that the Commission had reduced captive consumption from 3.6 MW to 2.6 MW (including auxiliary consumption) and requested the Respondent No.1 to take the increase in exportable surplus power on record and renew the agreement. Consequent to the representations made by the petitioner, the Commission by its letter dated 05.12.2003 directed Respondent No.1 to amend the PPA and purchase additional / surplus power on account of reduction in captive consumption as per the standard PPA approved by it, which directions were reiterated by letters dated 28.01.2004 and 30.01.2004. Despite the repeated directions issued by the Commission, Respondent No.1 informed the petitioner by letter dated 13.05.2004 that power purchase will be limited to 2.4 MW only. Such act on the part of the respondent coupled with insistence of the respondent to include unreasonable clauses and delay in entering into a PPA, amounts to willful violation and defiance of the specific direction of the Commission.
(f) Up to the month of April 2004, a total amount of Rs.81, 62,688 remains unpaid by the Respondent No.1 to the petitioner.
3. Respondent No.1 submitted its comments / objections which are as follows;
(a) Contentions of the petitioner on amendments to the PPA are not acceptable as the amendments incorporated by the respondent were as approved by the Commission for non-conventional energy projects.
(b) The respondent purchased the delivered energy of 2.4 MW as agreed to for the period May 2003 to March 2004 and paid @ Rs.3.48 per unit for such purchased energy. The tariff of Rs. 3.48 per unit being on higher side has already been passed on to end-consumers and if surplus energy due to reduction in captive consumption as contended by the petitioner is also purchased at that rate, it will cause extra financial commitment to the respondent and will force the end-consumers to face more burden. In the interest of end-consumer, it is prayed that the request of petitioner to purchase surplus power at that rate may not be considered.
(c) In case of M/s Nava Bharat Ferro Alloys Limited and M/s Vizag Steel Plant where surplus energy is available for export after reducing captive consumption, the Commission directed that variable cost of the concerned captive power plant or highest variable cost among similarly placed projects, whichever is lower, shall be paid. On the same analogy, in the instant case also, the respondent requests the Commission to fix price of the energy to be paid only at variable cost. The quantum of power required for captive consumption and quantum of power available for export to the respondent have been decided while determining / fixing the capacity of the concerned project and the Commission after taking into consideration such parameters decided the tariff by way of fixed charges and variable charges. For arriving at fixed charges for the decided quantum of energy available for export, the Commission has taken into consideration the capital cost of the project, as such the issue of paying fixed charges does not arise. Therefore, it is reasonable to pay variable cost as per the rates decided by the Commission in its order dated 20.03.2004 for the surplus power which would be sold to the respondent.
(d) Surplus energy from the petitioner’s project is not dependable and purchase of the same from the petitioner will force the respondent to cut down its power purchases from cheaper sources of energy.
(e) For all the said reasons, it is prayed that the reliefs claimed by the petitioner need not be considered.
4. The petitioner submitted reply to the objections of the Respondent No.1 as follows:
(a) The respondent has materially altered the subject caption of the petition filed by the petitioner, which is for enforcement of the orders and directions of the Commission and to take action in accordance with law for wilful non-compliance, violation and defiance.
(b) Petitioner could not obtain copy of the amendments to the PPA as approved by the Commission, despite demanding the same from the respondent and even after approaching it under advice of the Commission in letter dated 11.06.2004.
(c) The averments of the respondent in paragraphs 3 to 9 of its comments/objections are entirely beyond the scope of the petitioner’s complaint / petition. They are mis-conceived and amount to continuation of defiance of the specific orders and directions of the Commission.
(d) The respondent has failed and omitted to answer the specific issues raised in the petitioner’s petition / complaint. It appears as though the respondent is attempting to indirectly make out a case for review of the directions of the Commission even after dismissal of review application at the admission stage itself. It is submitted that the same cannot be permitted.
(e) Therefore, it is prayed that the Commission may be pleased to allow the petition and take appropriate action against the respondent under sections 142 and / or 146 of the Act and such other action as the Commission considers appropriate, fit or necessary in the facts and circumstances of the case.
5. Subsequent to the filing of reply on behalf of the petitioner, the respondent filed additional submissions stating that -
(a) The Commission has no role to perform u/s 146 of the Act. Imposition of penalty is only permissible where a person violating the directions is guilty of deliberate and contumacious conduct. The case on hand does not justify action u/s 142, as direction in question has not become final.
(b) The Commission is not analogous to a court, nor is there any procedure laid down by law for executing its orders. Once the Commission decides an issue, it becomes functus officio. It can, if at all, entertain a review petition to the extent law permits for issuance of further orders or variance of its earlier order in respect of the said subject matter. There is no question of adding any further direction to the order already passed, much less in the nature of directions sought for.
6. In response, reply was filed on behalf of the petitioner to the additional submissions of the Respondent No.1 stating that:
(a) the additional submissions are set out in the format of note without any affidavit verifying the statement therein.
(b) It is not correct to state that the Commission has no role to perform u/s 146 of the Act, as the Commission can initiate a complaint in appropriate court to prosecute and punish the respondent for failure to comply with any order or direction of the Commission.
(c) The conduct of the respondent throughout has been in gross defiance of the orders of the Commission and there can be no doubt that the respondent is liable for action u/s 142 ibid.
(d) It is not correct to say that there is no procedure laid down by law for executing the orders of the Commission. The Commission is specifically empowered u/s 142 to impose a penalty for contravention of any direction issued by it and further impose additional penalty in cases of continuing failure for each day during which such failure continues after contravention.
7. On 07.11.2006, the petitioner filed an Interlocutory Application to implead Southern Power Distribution Company of Andhra Pradesh Limited (hereinafter ‘APSPDCL’) as Respondent No.2 as the capacity of the petitioner’s project is allotted to it. As APSPDCL is necessary party to the proceedings in view of G.O.Ms.No.58, Energy (Power-III) dated 07.06.2005 issued by Government of Andhra Pradesh, the said petition was allowed, vide separate orders passed in I.A. No.15 of 2006. Notice was issued to Respondent No.2 and on 06.01.2007, Sri P.Shiva Rao filed vakalat on its behalf. On 20.01.2007 objections/reply on behalf of Respondent No.2 was filed stating that it adopts the reply filed by Respondent No.1 and further stated that:
(a) The petition filed by the petitioner is mis-conceived and not maintainable under law.
(b) The directions of the Commission were challenged before the Appellate Tribunal for Electricity in Appeals No.4 and 6 of 2006. However, the same were dismissed on 28.09.2006. The respondent preferred further appeal before the Hon’ble Supreme Court of India and the same is under consideration before it, as such the directions sought to be enforced did not attain finality.
(c) Although filing of appeal by itself does not constitute stay of execution of order, coercive steps are not permitted to be taken under law for non-compliance of an order when it is under appeal.
(d) Under the Electricity Act, 2003, there is no provision which empowers the Commission to execute its orders/directions. Under Section 30 of the A.P.Electricity Reform Act, 1998 (hereinafter, ‘Reform Act’) the power of execution of directions is given to Civil Court.
(e) The enforcement of the order, otherwise than through execution, as sought by the petitioner u/s 146 is not within the jurisdiction of the Commission. Even otherwise, the present situation does not warrant invoking Section 146 of the Act. Section 142 is not applicable for non-compliance or enforcement of the orders of the Commission.
(f) The petitioner is seeking assistance of the Commission to compel the respondents to purchase energy beyond the terms of existing PPA.
(g) The petitioner claimed that it had reduced its captive use of energy and thereby has surplus power within the limits of capacity of its project. But no meter is fixed to ascertain the actual generation of electricity by the petitioner. Installation of meters at the delivery end of the petitioner project is inevitable requirement under the provisions of Electricity Laws.
(h) The claim of the petitioner that prior to May, 2003, the respondents paid amount even in respect of energy beyond the quantum that was specified in the PPA, can never be taken as a ground to compel the respondents to get a wrong perpetuated. For all these reasons, it is prayed that the petition filed by the petitioner may be dismissed.
8. On 17.03.2007, additional affidavit on behalf of the petitioner was filed stating that it is not correct to state that no meter is fixed to ascertain actual generation of electricity by the petitioner. Registers are being maintained at the station and they contain signatures of the officers of the utility with respect to installation and readings of the meter show that the averments made on behalf of Respondent No.2 are not correct. Copies of the extracts of the registers maintained at petitioner’s generating station, containing page Nos.114 to 118 and three other pages (total 8 pages), are filed before the Commission along with the affidavit on behalf of the petitioner.
9. On 17.02.2007, the counsel for the petitioner submitted arguments and reiterated the averments mentioned in the petition in a chronological order. He further submitted that letter dated 26.06.2003 sent by Respondent No.1 to the petitioner is the beginning of the dispute, wherein it was stated that Respondent No.1 would purchase power from the project of the petitioner for a limited period of 3 months i.e., from 01.07.2003 to 30.09.2003. Since the billing month of August, 2002, the petitioner has been exporting surplus power and Respondent No.1 has been making payment to it in terms of the PPA. But for the billing month of May, 2003, Respondent No.1 stopped paying for the power in excess of 2.4 MW. On 26.06.2003, petitioner addressed a letter requesting Respondent No.1 to pay for the balance units of 28,500 KwH or account the same as banked energy for its future consumption, while making it clear that generation from its project never exceeded 6 MW so far. On 1.07.2003, the petitioner sent a letter addressed to the Commission setting out the entire dispute, wherein it is stated interalia that the increase in surplus power is due to reduction in its own consumption. The Commission was requested to direct Respondent No.1 to pay for the balance units in the billing month of May, 2003. On 26.09.2003, Respondent No.1 sent another letter to the petitioner stating that it would purchase 2.4 MW up to 31.03.2004 and it is not willing to purchase additional capacity. The said letter is akin to the letter dated 26.06.2003 referred to above. Around that time the Electricity Act, 2003, came into force.
10. On 29.11.2003, the petitioner sent another letter addressed to the Commission giving details of units supplied to Respondent No.1 over and above 2.4 MW, requesting the Commission to direct it to release payment of Rs.19,11,912 and renew the agreement for purchase of 3.4 MW surplus power. By its letter dated 05.12.2003, the Commission directed APTRANSCO to amend the PPAs entered into with three developers including the petitioner herein and to purchase additional/surplus power on account of reduction in captive consumption. Subsequently by letter dated:28.01.2004, the Commission directed Respondent No.1 to purchase the surplus power delivered by the petitioner and make payments. Again on 30.01.2004, after examining the request of Respondent No.1 not to insist for purchase of additional / surplus power on account of reduction in captive consumption, the Commission reiterated its earlier directions to purchase the same as per its earlier directions. In spite of repeated directions of the Commission, the Respondent No.1, in its letter No.CE/Comml&IT/NCE(F-Jocil)/D.No.508/04 dated 13.05.2004 while agreeing to renewal of PPA dated 06.07.2002 for a period of 20 years from Commercial Operation Date (for short, ‘COD’) of the project, informed the petitioner that power purchase will be limited to 2.4 MW only and as per conditions communicated vide letter No.103 dated 26.09.2003 referred to above. This is where wilful disobedience of orders of the Commission by Respondent No.1 commences.
11. While such defiance of directions of the Commission is continuing, Respondent No.1 sent a letter dated 08.07.2004 addressed to the petitioner stating that the issue of purchase of surplus energy due to reduction in captive consumption by NCE developers at variable cost fixed for respective projects is under examination by the Commission, while reiterating that it purchases energy as per capacities of PPA dated 06.07.2002 only. The petitioner is not aware of any proceedings in this regard. Along with the letter, a draft of the proposed amendments to the PPA dated 06.07.2002 was also forwarded by Respondent No.1. After examining the draft amendment, it is found that Article 1.4 does not reflect the directions given by the Commission and certain clauses mentioned therein do not have approval of the Commission. A detailed letter dated 17.07.2004 was sent to Respondent No.1 with a request to resolve the issues within a week from the date of receipt of the same. As there was no response from Respondent No.1, petition was filed on 03.08.2004 before the Commission.
12. Had Respondent No.1 complied with the directions of the Commission, the petitioner would have been paid the amount of Rs.81,62,688 for the energy exported by it up to the billing month of April, 2004 and entered into PPA with the petitioner for purchase of entire surplus energy without any limitations. But in abuse of their dominent position, Respondent No.1 and Respondent No.2, being its successor-in-interest, are willfully defying the directions of the Commission and at the same time enjoying power exported by the petitioner, free of cost. Consequently, the respondents are liable for punishment u/s 142 and 146 of the Act.
13. The additional submissions of Respondent No.1 that in view of the financial implications, public interest will be prejudiced if the orders of the Commission are complied with, is a clear proof of wilful defiance of the orders of the Commission. Respondent No.1 is not guardian of public interest. If the respondent is concerned about public interest, it should have challenged the direction of the Commission before competent court of law, but it did not do so. The contention of Respondent No.2 that the Commission has no role to perform u/s 146 is incorrect. In fact, for non-compliance of orders/direction by anyone, action for punishment contemplated u/s 146 of the Act should be initiated by the Commission, otherwise it will lead to mis-conduct on the part of the person contravening the orders/directions issued by the Commission. Lastly, even though it is true that once the Commission decides an issue, it becomes functus officio, the same is not true with regard to enforcement of the orders or directions of the Commission, which is an altogether different issue. Hence, punishment as contemplated u/s 142 and / or 146 is liable to be imposed in this case.
14. With regard to objections/reply filed by Respondent No.2, it is submitted that CGM(Comml), Central Power Distribution of Andhra Pradesh Limited (CPDCL) should not have been allowed to file the same. In the verification affidavit, he states that he was authorized by Respondent No.1 to swear, execute and file objection/reply on behalf of Respondent No.2. It shows cavalier attitude as the said CPDCL is not even a party to the proceedings on hand. The objections with regard to meter, that no meter is fixed to ascertain the actual generation of the energy by the petitioner is made by an unrelated person to the proceedings and the same is not true. In this case, meters are placed not only at the interconnection point, but also at generation terminal. Registers are maintained by the petitioner and they contain signatures of the officers.
15. With regard to filing of counter by the CGM, CPDCL on behalf of the respondent No.2, its counsel filed a copy of the authorisation issued by the Company Secretary of the said Respondent No.2 to file affidavits, counter affidavits and other documents. He further submitted that the facts required to be considered in this petition are as follows:
(a) By letter dated 09.08.2004 which is a reply to letter dated 09.06.2004 of the Respondent No.1 seeking permission to pay variable charges only for the power delivered, the Commission replied that they have to follow the orders / directions given from time to time including the directions contained in letter dated 30.01.2004 which is referred to under references of the above letter. As per the PPA any modifications of the conditions is by consent of mutual agreement. The directions given in the letter dated 05.12.2003 would have to be understood and implemented subject to exigencies and contingencies. In case of difficulty in giving effect to covenants of the agreement, the remedies provided in the agreement are appropriate and should be invoked.
(b) Appeal is filed before the Hon’ble Supreme Court of India which is likely to be listed any time. It is the case of respondents that the issue before the Commission is under challenge and pending adjudication, hence not appropriate and tenable to be followed or directed to be followed. The direction with regard to additional energy is under challenge. The contention that the respondents did not challenge the orders of the Commission before the Appellate Tribunal for Electricity or the Hon’ble Supreme Court of India is not correct.
(c) In the instant case, the respondents have to limit their purchase to 2.4 MW only and not beyond the said agreed capacity. The law is settled in respect of agreements. Commission may not have the power to direct purchase of power beyond the agreed capacity.
(d) Reliefs claimed are independent of each other. The claim with regard to amounts is distinct and separate from that of punishing the respondents for non-compliance of the directions, which is a fresh issue. Likewise extension of PPA is also distinct from the other reliefs.
(e) The reliefs with regard to execution of punishment are
different and distinct. They need to be understood in such a manner as are
explained. The side headings referred to in the Act are not significant. While
Section 142 refers to contravention, Section 146 refers to non-compliance. They
are not equal and the Act has clearly stated the provisions and the
consequences under those provisions. Section 142 may allow the Commission to
initiate action, however, Section 146 does not empower the Commission to take
action, but to refer the same to the competent court. To the same effect is
Section 30 of the
A.P. Electricity Reform Act, 1998 (hereinafter, the ‘Reform Act’). The action
is in respect of specific performance of a direction given earlier. It is a
matter of interpretation in respect of Section 142 and 146 of the Act and
Section 30 of the Reform Act. Wide powers are conferred on the Commission with
regard to contravention of the orders of the Commission or non-compliance of
the directions for which action can be initiated separately. The Commission is
requested to await the orders of the Hon’ble Supreme Court on the appeals filed
by the respondents.
(f) The counsel for the respondent No. 2 stated that in the instant petition, the petitioner is not clear as to its request as to whether it is an execution, punishment or enforcement petition. The claim of money is a separate proceeding and not related to execution petition. In the absence of PPA, directions cannot be given. No proceedings for execution can be undertaken in the absence of any order. As no period is mentioned for payment of the amount, there is no order for payment which is required to be executed. Enforceability of the PPA is a limited exercise in this petition. In general, a decree is to be passed and then only execution proceedings are initiated. It is paramount that the proceedings now undertaken should be in consonance with paragraph 35 of the order of Appellate Tribunal for Electricity.
(g) The events between the years 2000 to 2004 have a bearing in this case. Stay of proceedings were sought and obtained before the various forums as regards the directions issued by the Commission. All the directions issued by the Commission are under challenge, and it is important to note as to what has been stated by the petitioner before the court of law along with the relevant documents. Therefore permission may be granted to file the relevant papers which were filed before the Hon’ble High Court and Appellate Tribunal for Electricity apart from Hon’ble Supreme Court.
(h) The counsel for Respondent No.2 filed additional set of documents indicating and enclosing all the petitions, affidavits and material papers that were filed before the Hon’ble High Court and Appellate Tribunal for Electricity and Hon’ble Supreme Court. It is stated that from 05.12.2003, all the subsequent directions are under challenge. There being no time limit, there is neither contravention nor non-compliance of the orders of the Commission. The petitioner may be directed to separate the prayers, as regards the claim of amounts and entering PPA from the present proceedings. The petitions may be dismissed.
(i) The counsel for Respondent No.1 stated that the situation after the enactment of the Electricity Act, 2003, has substantially changed position of the parties. The petitioner may undertake third party sale of the surplus energy available. The Respondent No.1 has become an STU (State Transmission Utility) u/s 39 of the Act from 09.06.2005. The important question that arises for consideration in this petition is with regard to compelling a party to do certain things particularly in this case to purchase the energy. The Commission has no authority to compel the same, against the will of the party. Issue of directions by the Commission not in conformity with the Commission’s Conduct of Business Regulations and without a regular hearing is an issue before the Hon’ble Supreme Court of India also. Moreover, the purported direction in the instant case is advisory in nature and not mandatory, as no time limit is fixed. Even if the directions are issued purportedly within the framework of the Regulation, their implementation or otherwise cannot be termed or attributed as wilful act of defiance, in the instant case does not exist. The contention that Sections 142 and 146 are attracted is not tenable. The respondents have already paid the charges up to the entitlement as per the agreement. Payment of additional amounts is a separate issue that cannot be decided as an issue in this petition. Variable charges for energy drawn can be directed to be paid. As regards drawal of power and directions to purchase surplus power, the Commission already took a view in LVS Power Limited (O.P.No.70A-LVS/2001). It is also submitted that the order of the Appellate Tribunal for Electricity is under challenge before the Hon’ble Supreme Court of India.
16. In reply to the arguments on behalf of the respondents, the counsel for the petitioner further submitted that;
(a) The contention of the respondents that the order/direction of the Commission cannot be enforced is not correct. Appellate Tribunal for Electricity gave specific direction in respect of implementation of the provisions of the Act. Appeal filed before the Hon’ble Supreme Court is yet to be numbered and no order is passed.
(b) The directions purportedly given in the letter dated 03.04.2003 have not been communicated / provided to the petitioners herein. Accordingly stood unchallenged. The issue involved is in respect of non-compliance of the directions of the Commission, entering into PPA and payment of amounts for the period May, 2003 to April 2004.
(c) The direction issued by the Commission through various letter in May, 2003, 05.12.2003, 28.01.2004 stood unchallenged and thus are operative on the respondents who have to implement the same. Mere filing of an appeal before the Hon’ble Supreme Court of India is of no help.
(d) The counsel for the petitioner while referring to various letters and the correspondence available on record, including letter dated 09.06.2004 stated that the respondents cannot be allowed to do mis-conduct and mis-chief and perpectuate them. For initiating action against the respondents, Section 142 and 146 have to be invoked and further cognizance of such offence has to be referred to the competent court.
(e) The statement made in the course of submission, that the directions given by the Commission are advisory and not mandatory is not brought by way of affidavit, otherwise severe action would have followed of such a mention. The other submission that the Commission is acting against public interest and contrary to the Commission’s endeavor the respondents appear to be taking care of public interest, cannot be an argument that directions of the Commission can be violated in the name of public interest. It appears that the respondents are in the presumption of getting indulgence in the matter while making such submissions.
(f) Both the sections invoked by the petitioner deal with non-compliance / contravention of orders/directions issued by the Commission. Commission may examine and pass appropriate directions for causing steps for execution of its orders. The respondents have derived pecuniary advantage by drawing the surplus power from the petitioners, but not paying for the same and also causing wrongful loss, as they have sold energy and realised charges for the same.
17. The issue that arise for consideration is –
“whether the petitioner is entitled for the reliefs sought for”
18. After careful consideration of the rival contentions, the crux of issue appears to be revolving around letter dated 05.12.2003 wherein the Respondent No.1 was directed to amend the PPA entered into with certain developers, including the petitioner herein, and purchase additional/surplus power on account of reduction in captive consumption as per the standard PPA approved by the Commission vide letter dated 03.04.2003, which provides that “the proposed captive consumption can be reduced by the company and additional surplus power can be sold to APTRANSCO in case of exigencies or otherwise”. No doubt, the Commission directed Respondent No.1 to amend PPA to be entered into with such developers, but the ultimate decision to enter into PPA with a developer is the exclusive prerogative of the licensee. If at all a licensee intends to enter into PPA with a developer, terms and condition of such PPA should be as suggested by the Commission. However, that does not mean that the licensee is bound to enter into PPA with every developer. Giving such extended meaning to the direction supposed to have been issued by the Commission would defeat the objectives of the Electricity Act. The licensees are independent entities and they are required to run their business on commercial lines, taking into consideration different aspects concerning supply and distribution of electricity to end-consumers. Risk in the process of conducting their business will have to be borne by the licensee concerned. Nextly, it is the contention of the counsel for the petitioner that direction contained in letter dated 05.12.2003 is reiterated in subsequent letters dated 28.01.2004 and 30.01.2004, also issued by the Commission. A plain reading of letter dated 28.01.2004 reveals that the Commission directed Respondent No.1 to purchase surplus power delivered by the petitioner herein and make the payments. Further, the letter dated 30.01.2004 relied upon by the counsel for the petitioner also refers to the direction communicated to Respondent No.1 with regard to purchase of additional/surplus delivered energy on account of reduction in captive consumption. The said two letters do not contain any direction with regard to entering into PPA. While the Commission can suggest amendments to a PPA submitted to it for consent, subject to fulfillment of such amendments, it can grant consent on resubmission of such PPA or in general approve a standard PPA for a class or category of developers to be entered into by licensee (s) with developers falling under such class or category, it cannot compel a licensee to enter into a PPA with a particular developer, if the licensee does not choose to enter into such PPA, unless for extraneous considerations.
19. The Hon’ble Appellate Tribunal for Electricity held in Appeal Nos.4, 5, 6, 8, 9, 10, 12, 13, 14 & 23 of 2006 dated 28.09.2006 that “thus, if approached by the signatories of the PPA the Commission could, if they feel convinced, may allow re-opening of the PPA for required amendments provided that it is in conformity with Sections 86(1)(e) and 61(h) of Electricity act, 2003.” (end of paragraph 28 of the order). In the present case, both the parties of the PPA have not approached the Commission to re-open the PPA for required amendments. It is only the petitioner which approached the Commission and the Commission gave direction to the respondent to amend the PPA suitably. In fact, the respondents who are licensees are opposing the said amendment from the beginning and the said directions are being questioned by the respondents even in the Appellate Tribunal for Electricity and also before the Hon’ble Supreme Court. The respondents are not signatories to the PPA.
20. The counsel appearing for the respondents contended that this petition has been filed on the ground that respondents dis-obeyed the orders of the Commission issued by way of letters dated 05.12.2003, 28.01.2004 and 30.01.2004, and that the respondents did not comply with the said directions. It is a fact that the Commission gave directions through letters dated 05.12.2003, 28.01.2004 and 30.01.2004. Since the directions given by the Commission are not acceptable to the respondents, the respondents filed a review petition before the Commission and also an appeal before the Appellate Tribunal for Electricity and also further preferred an appeal before the Hon’ble Supreme Court, questioning inter-alia the issue of directions by the Commission through letter, and not after conducting regular proceedings. Under the above circumstances, it cannot be contended by the petitioner that the respondent dis-obeyed the orders of the Commission. It is the further contention of the respondent counsel that only if the respondents agreed to implement the directions given by the Commission and then failed to comply into the said directions on or before a particular date specified by the Commission, then only it can be said that the respondents dis-obeyed the directions given by the Commission. There is some force in the above contention of the counsel appearing for the respondents.
21. The issue with regard to payment of amounts stated to have been deducted by the Respondents from the bills of petitioner and the former’s liability to pay for the energy exported by the petitioner to the respondents for the months of May, 2003, July, 2003, August, 2003, October 2003 to January, 2004 and April, 2004 has to be viewed separately from the issue with regard to entering into PPA with the petitioner by the respondents incorporating a condition therein to purchase entire surplus energy exported by the petitioner without any limitations. The very fact that the respondents received power from the power plant of petitioner, with or without a valid PPA, casts a duty upon the respondents to compensate the petitioner for such utilisation of energy. Irrespective of the fact, that the respondents have not entered into PPA as amended by the Commission containing provision for purchase of additional /surplus power on account of reduction in captive consumption, the respondents cannot get away from the fact that energy was pumped into its grid.
22. The matter has been carefully considered. In the case of the two other developers mentioned by the respondents, specific direction regarding the price to be paid was given by the Commission, which is not the case with regard to the petitioner. However, the fact has to be taken into account that the petitioner is a Captive Power Plant, and therefore not entitled to compensation for fixed costs. The fact that the petitioner uses a Non-conventional source of fuel is not relevant to the issues in the present petition, because the aforementioned directions of the Commission refer only to the reduction in captive consumption, and the sale of surplus power consequently becoming available with the petitioner. There is, therefore merit in the contention of the respondent that the petitioner need to be compensated only to the extent of the variable cost incurred by it. It would, therefore meet the ends of justice if the petitioner were paid the variable cost.
23. For the foregoing reasons, the Commission is of the view that the petitioner has failed to make out a case for punitive action against the respondents u/s 142 or 146 of the Electricity Act, 2003, and direction cannot be given to the respondents (licensees) to enter into PPA with the petitioner as prayed for in the petition, since the respondents have not come forward to enter into PPA with the petitioner herein. So far as the relief of payment of the amount as claimed by the petitioner in this petition, the petitioner is entitled to payment to the extent indicated in paragraph 22 above, for the reasons mentioned in foregoing paragraphs. The petition is allowed to the extent indicated above with regard to payment.
The order is
corrected and signed on this 21st day of April, 2007.
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Sd/- |
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(R.RADHA KISHEN) |
(SURINDER PAL) |
(K.SWAMINATHAN) |
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MEMBER |
MEMBER |
CHAIRMAN |
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