Case No. 61 of In the matter of. Petition of Wardha Power Company Ltd. for Review of Order dated 17 January, 2014 in Case No.

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1 Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai Tel /65/69 Fax Website: Case No. 61 of 2014 In the matter of Petition of Wardha Power Company Ltd. for Review of Order dated 17 January, 2014 in Case No. 91 of 2013 Smt. Chandra Iyengar, Chairperson Shri Azeez M. Khan, Member Shri Deepak Lad, Member Wardha Power Company Limited Petitioner 1) Reliance Infrastructure Limited...Respondents 2) Vidarbha Industries Power limited Present on behalf of Petitioner Present for Respondent No.1 Ms. Dipali Sheth (Advocate) Shri. Ghanashyam Thakkar ORDER Dated: 21 October, 2014 M/s Wardha Power Company Limited (WPCL) (now M/s Sai Wardha Power Ltd.) has filed the present Petition for review of the Commission s Order dated 17 January, 2014 in Case No. 91 of That Case related to a Petition filed by Vidarbha Industries Power Ltd. (VIPL) and Reliance Infrastructure Ltd. (RInfra) for determination of provisional Tariff in respect of VIPL s Butibori Power Plant of 600 MW in Nagpur District for supply of power to RInfra in FY MERC- Case No.61 of 2014 Page 1 of 7

2 and The Review Petition was filed on 24 February, 2014, within the period of 45 days stipulated in the MERC (Conduct of Business) Regulations, The Petitioner s prayers are as follows: a) Admit the present review petition; b) Review and set aside the order dated passed by the Hon ble Commission; c) Hold and declare that the power procurement by R-Infra from VIPL is not to be approved in view of the tariff indicated being higher when electricity is available from the Petitioner at a cheaper cost; d) Require Wardha Power to supply power at the reduced tariff than that of VIPL for the interim period of six months, subject to the condition that the supply shall be continued on comparison of the tariff being cheaper than that of VIPL determined on actual basis; e) Pass such other further order(s) as the Hon ble Commission may deem just in the facts of the present case. 3. In its Petition, WPCL has contended that: a) During the proceedings in Case No. 91 of 2013, WPCL had offered to supply electricity to RInfra from its 540 MW (4x135 MW) generating station at Warora, Maharashtra at a tariff lower than that proposed by VIPL. b) By its Order dated 17 January, 2014, the Commission held that it is for RInfra to mutually enter into agreements with generators, and not for the Commission to interfere with them. The Commission further held that the Power Purchase Agreement (PPA) was approved and there was no requirement to go into the availability of power at cheaper sources at this stage when a provisional tariff was to be determined. c) The impugned Order suffers from errors apparent and is subject to the review jurisdiction of the Commission. The premise on which the Commission has proceeded, i.e. that it is for RInfra to bilaterally enter into agreements with generators without the Commission having any role, is incorrect. The premise that the Commission has no jurisdiction or power with regard to power purchases and their approval at this stage is also incorrect and contrary to the provisions of the Electricity Act (EA), MERC- Case No.61 of 2014 Page 2 of 7

3 d) Under the EA, 2003, the Commission exercises regulatory jurisdiction over the distribution and retail supply activities of RInfra, which has to ensure that only reasonable costs and expenses are passed on to consumers and electricity from the cheapest available source is procured. e) The Distribution Licensee cannot contend that it will procure expensive electricity though it is available from a cheaper source. This is particularly so where the electricity is sought to be procured by RInfra from its sister concern, VIPL, even though cheaper electricity is available. The regulatory jurisdiction of the Commission over R-Infra as a Distribution Licensee extends to refusing approval of power purchases at high cost, and also to direct R-Infra to procure from other available cheaper sources. The power purchases to be tied up by R-Infra as a Distribution Licensee are not bilateral in nature, but subject to directions and regulatory jurisdiction of the Commission. f) The EA, 2003 does not refer to the approval of a PPA but to regulating the power procurement by the Distribution Licensee, including tariff. The purpose is that the Commission ensures that only the cheapest electricity is passed on to the consumers. g) The approval of the power procurement can be done only after the tariff is determined or indicated. It cannot be that the PPA is approved prior to the tariff, since it becomes binding notwithstanding how much the tariff works out to. WPCL had pointed out during the PPA approval proceedings that cheaper electricity is available from it. However, the Commission did not come to any finding on the issue. h) Even when the tariff is determined, the Commission still retains the right to refuse power purchase after the tariff is known. There is no justification in holding that the Commission has no jurisdiction or role with regard to approval of the procurement after the tariff is indicated or determined. i) The Commission s conclusion that there is no provision or power to regulate the power procurement and to refuse power purchase at a higher cost is incorrect and contrary to the EA, This constitutes an error on the face of the record and is subject to review. j) There is no dispute raised by RInfra or any finding by the Commission that the power procurement from VIPL is the most economical. The fixed cost of WPCL is substantially lower than that of VIPL. WPCL has firm fuel supply arrangements, and the variable cost will not be higher than that of VIPL, the proposed source of fuel supply being the same. WPCL will ensure the availability of power at a lower tariff than proposed by VIPL in the interim period if the issues raised in this Petition were to be considered by the Commission. The facts and circumstances mentioned in the impugned Order dated 17 January, 2014 are liable to be reviewed. MERC- Case No.61 of 2014 Page 3 of 7

4 4. After postponement of the hearing fixed on 15 July, 2014 at the Petitioner s request due to unavailability of Counsel, the matter was heard on 18 September, WPCL reiterated the points made in its Petition. It also referred to the Supreme Court judgment in the Case of Tata Power vs Reliance Energy ((2009) 16 SCC 659) with regard to the wide scope of the regulatory jurisdiction of the Commission under S. 86(1)(b) of the EA, 2003 relating to power procurement and its tariff. These aspects were not considered by the Commission in its Order. The approval of the PPA was initially without tariff; and the tariff finally approved is higher than what WPCL could offer. On behalf of RInfra, it was stated that a tariff application had been filed, to which WPCL had objected. The Commission had duly heard and considered WPCL s contentions before passing its Order. The Commission directed both parties to submit further written submissions. 5. While reiterating the contentions made in its Petition, WPCL submitted on 22 September, 2014, that: a) The Commission s Order dated 17 January, 2014 determining the provisional tariff for supply of electricity from VIPL to RInfra suffers from errors apparent and is liable to review. The premise on which the Commission has proceeded, namely that is for RInfra to bilaterally enter into agreements with generators without the Commission having any role, is incorrect. That the Commission has no jurisdiction or power with regard to power purchases and their approval at this stage is also incorrect and contrary to the provisions of the EA, b) The Distribution Licensee cannot contend that it will procure more expensive electricity, particularly from its sister concern (VIPL in this case), when it is available more cheaply from elsewhere. The regulatory jurisdiction of the Commission over the distribution and retail supply activities of RInfra is to be exercised to ensure that only reasonable costs and expenses are passed on to the consumers and electricity from the cheapest available sources is procured. c) The Supreme Court judgment (para 111) in the Tata Power vs Reliance Energy case cited during the hearing confirms the wide scope of the Commission s regulatory jurisdiction. Moreover, the purpose of the EA, 2003 is to regulate and ensure that the tariff to consumers is the cheapest possible. The Appellate Tribunal for Electricity has held (in NTPC vs CERC 2010 ELR (APTEL) 833) that, under S. 61(d) of EA, 2003, the consumers interest must be safeguarded while determining the tariff; hence, the tariff should be determined such that it would be the cheapest for consumers; and that this is a basic objective of the law. MERC- Case No.61 of 2014 Page 4 of 7

5 d) The power procurement can be done only after the tariff is determined or indicated. It cannot be that the PPA is approved prior to the tariff, since it becomes binding notwithstanding how much the tariff works out to. WPCL had, even during the PPA approval proceedings, pointed out that the electricity is available at a cheaper cost from it. e) WPCL is willing to supply electricity for the same tenure as VIPL, which would work out to be cheaper than from VIPL. VIPL s capital cost is much higher, at Rs.6.77 crore/mw, and subject to further revision on account of Interest During Construction. As against this, WPCL s project cost is only Rs.5.22 crore/mw. f) The process would only result in RInfra paying a higher cost for the benefit of its sister concern and to fund its profits, whereas RInfra does not have any financial outgo of its own and the entire tariff is recovered from the consumers at large. 6. In its written submission dated 22 September, 2014, RInfra has submitted that: a) The Commission approved, under S. 86(1)(b) of EA, 2003 and R.25 of the MERC (Multi Year Tariff (MYT)) Regulations, 2011, a consolidated PPA for 600 MW between RInfra and VIPL vide its Order dated 19 July, 2013 in Case No.76 of Thereafter, it approved the provisional tariff vide Order dated 17 January, 2014 in Case No. 91 of 2013 under S. 61 and 62 and the MYT Regulations. The Commission has also considered this power purchase in its MYT Order dated 22 August, 2013 in respect of RInfra. b) At the Public Hearing held on 17 October, 2013 in Case No. 91 of 2013, WCPL had raised objections regarding the PPA between RInfra and VIPL and then made written submissions on 23 October, After carefully considering all its submissions, the Commission held that the issue raised by WPCL is not relevant as far as determination of provisional tariff of VIPL for supply of power to RInfra is concerned. c) The Review Petition is not maintainable as no new grounds whatsoever have been made out by WPCL, and the grounds raised are the same in its submissions of 23 October, Moreover, no new facts or any other sufficient reasons have been brought out, nor is there any mistake or error apparent on the face of the Order dated 17 January, 2014 as required under R. 85 of the Commission s Conduct of Business Regulations. Commission s Analysis and Ruling 7. The Petition has been filed under Section 94 (1) (f) of the EA, 2003, i.e. the power of the Commission to review its decisions, directions and orders. Regulation 85 of the MERC MERC- Case No.61 of 2014 Page 5 of 7

6 (Conduct of Business) Regulations, 2004 further governs such review. Regulation 85((a) and (d)) reads as follows: 85. (a) Any person aggrieved by a direction, decision or order of the Commission, from which (i) no appeal has been preferred or (ii) from which no appeal is allowed, may, upon the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the direction, decision or order was passed or on account of some mistake or error apparent from the face of the record, or for any other sufficient reasons, may apply for a review of such order, within forty-five (45) days of the date of the direction, decision or order, as the case may be, to the Commission. (d) When it appears to the Commission that there is no sufficient ground for review, the Commission shall reject such review application. 8. The Petitioner has sought review of the Order dated 17 January, 2014 claiming that it suffers from errors apparent in that Order, as set out in the Petition and WCPL s additional submissions along with the grounds for contending that these constitute errors falling within the ambit of review under Regulation 85. WCPL s contentions have been summarised above at paras 3 to 5 of this Order. 9. It cannot be the Petitioner s case that the Commission did not take cognizance of its say during the proceedings in Case No. 91 of 2013: indeed, paras to of the impugned Order extensively set out WPCL s contentions along with the Commission s view and its basis. Elsewhere in that Order, the Commission has also set out the fact of the earlier PPA approval and the basis for its approval of the provisional tariff in the light of the provisions of the EA, 2003 and the MYT Regulations. Instead, the Petitioner is in disagreement with the Commission s view and conclusion, and has essentially argued that it is erroneous for the reasons that WPCL has now put forward. 10. The term mistake or error apparent signifies an error which is evident per se from the record of the case and does not require detailed examination, scrutiny and elucidation either of the facts or the legal position. Under the guise of review, it is not permissible under Regulation 85 for a decision which is erroneous to be virtually reheard and reconsidered. There is a clear distinction between an erroneous decision and an error apparent on the face of record. A Review Petition has a limited purpose and cannot be tantamount to an appeal against a purportedly erroneous decision. In the present case, that is to be adjudicated elsewhere and not by the Commission. This is a long-settled position which has also been so held by the Supreme Court, for instance in the case of Parsion Devi vs Sumitri Devi in CA 5245 of 1997 in the context of S. 114 read with Order 47 Rule 1 of the Civil Procedure Code (which is similar to Regulation 85). MERC- Case No.61 of 2014 Page 6 of 7

7 11. In the light of the foregoing, the Commission is of the view that the grounds set out by the Petitioner do not satisfy the requirements for review of the impugned Order in terms of the provisions of Regulation 85 of the MERC (Conduct of Business) Regulations, The Petition of M/s Wardha Power Company Ltd. is disposed of accordingly. Sd/- Sd/- Sd/- (Deepak Lad) (Azeez M. Khan) (Chandra Iyengar) Member Member Chairperson MERC- Case No.61 of 2014 Page 7 of 7