Tribunal modifies State Commission's order on coal procurement costs, upholds decisions on various expenses and refunds.

The Tribunal partly allowed the appeal, modifying the Impugned Order passed by the State Commission. The Appellant's costs for coal procurement due to delays in the Fuel Supply Agreement were allowed. The Tribunal upheld the State Commission's decisions on Auxiliary Energy Consumption, Gross Station Heat Rate, Interest on Working Capital, Income Tax, Ash Utilization Expenses, O&M expenses, and the State Commission's jurisdiction to order refunds. The refund quantum was to be recalculated in light of the Tribunal's decisions.

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Issues Involved:

1. Disallowance of fuel cost for FY 2014-15 and FY 2015-16.
2. Approval of Auxiliary Energy Consumption and computation of Availability for FY 2014-15.
3. Approval of Gross Station Heat Rate for FY 2014-15.
4. Consideration of actual Interest on Working Capital for FY 2014-15.
5. Computation of Income Tax for FY 2015-16.
6. Disallowance of Ash Utilization and Disposal Expenses for FY 2015-16.
7. Disallowance of Additional O&M expenses towards RO Plant.
8. Jurisdiction of the State Commission to order refund of the excess amount.

Detailed Analysis:

Issue No. 1: Disallowance of fuel cost for FY 2014-15 and FY 2015-16

The Appellant argued that the fuel costs incurred due to delays in executing the Fuel Supply Agreement (FSA) with Coal India Limited (CIL) and its subsidiaries should be recoverable. The State Commission disallowed these costs, considering that the procurement of fuel was done at higher rates than those considered while approving the Power Purchase Agreement (PPA). The Commission had approved the PPA assuming 100% domestic coal supply, and any deviation from this was not justified. The Tribunal found that the Appellant made efforts to secure FSA and was forced to use alternative sources for coal. The Tribunal directed the State Commission to allow the cost of coal for Unit-I to the extent of what was allowed for Unit-II during the period from COD till the FSA for Unit-I is executed.

Issue No. 2: Approval of Auxiliary Energy Consumption and computation of Availability for FY 2014-15

The Appellant sought approval for higher Auxiliary Energy Consumption of 9.61% due to backing down instructions and initial teething problems. The State Commission approved 9.05%, treating the difference as efficiency loss. The Tribunal noted that the Indian Electricity Grid Code (IEGC) amendments regarding part load compensation on Auxiliary Power Consumption had not come into effect. Therefore, the Tribunal upheld the State Commission's decision, maintaining the Auxiliary Energy Consumption at 9.05% and Availability at 84.83%.

Issue No. 3: Approval of Gross Station Heat Rate for FY 2014-15

The Appellant proposed a Gross Station Heat Rate (SHR) of 2457 kcal/kWh, citing initial teething problems and part load operations. The State Commission approved 2401 kcal/kWh based on the Tariff Regulations. The Tribunal upheld the State Commission's decision, noting that the IEGC amendments regarding part load compensation on SHR had not come into effect.

Issue No. 4: Consideration of actual Interest on Working Capital for FY 2014-15

The Appellant claimed that internal accruals used for working capital carry a cost and should be compensated. The State Commission considered the actual Interest on Working Capital (IWC) as Rs. 33 crore, as reflected in the audited accounts. The Tribunal upheld the State Commission's decision, finding no merit in the Appellant's contention.

Issue No. 5: Computation of Income Tax for FY 2015-16

The Appellant argued that the State Commission should have allowed Income Tax as proposed by the Appellant, irrespective of disallowances such as fuel cost. The State Commission provisionally approved Income Tax based on actual Income Tax paid for FY 2014-15, subject to final truing up. The Tribunal upheld the State Commission's decision, noting that the Income Tax for FY 2015-16 would be subject to final truing up as per the MYT Regulations.

Issue No. 6: Disallowance of Ash Utilization and Disposal Expenses for FY 2015-16

The Appellant sought expenses for ash disposal, which were disallowed by the State Commission due to inappropriate design of the ash pond. The Tribunal upheld the State Commission's decision, agreeing that the impact of such disposal difficulties should not be passed on to the beneficiaries.

Issue No. 7: Disallowance of Additional O&M expenses towards RO Plant

The Appellant argued for additional O&M expenses for the RO Plant, which were disallowed by the State Commission. The Tribunal upheld the State Commission's decision, noting that the actual O&M expenses were substantially lower than the normative, and there was no need to separately allow the O&M expenses for the RO Plant.

Issue No. 8: Jurisdiction of the State Commission to order refund of the excess amount

The Appellant contended that the State Commission had no jurisdiction to direct a refund from a generator to a distribution company. The Tribunal found that the State Commission had the jurisdiction to determine the Generation Tariff and direct refunds based on the true-up exercise. The Tribunal upheld the State Commission's decision, noting that the quantum of refund would have to be reworked in light of the Tribunal's decisions on other issues.

Order:

The Tribunal partly allowed the appeal, modifying the Impugned Order dated 20.06.2016 passed by the State Commission to the extent decided above. No order as to costs.

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