Petition No.881 of 2013, 92 of 2014, 1043 of 201, 1092& 1093 of 2016 BEFORE THE UTTAR PRADESH ELECTRICITY REGULATORY COMMISSION LUCKNOW PRESENT: 1. Hon ble Sri. Desh Deepak Verma, Chairman 2. Hon ble Sri. Indu Bhushan Pandey, Member 3. Hon ble Sri. S. K. Agarwal, Member IN THE MATTER OF: Application under regulation 16 read with regulation 32 & 33 of UPERC (Conduct of Business) Regulation, 2004 for approval of additional term loans and revised means of finance in respect of330 MW Srinagar HEPP.(Petition No. 881 of 2013) Approval of provisional tariff for power to be generated at Srinagar Hydro Electric Project (4 x 82. MW) under the Power Purchase Agreement dated 28.6.2006. (Petition No. 92 of 2014) Approval for extension of Commercial Operation Dates of 330 MW Srinagar HEPP. (Petition No. 1043 of 201) Application for urgent hearing in the matter of revised provisional tariff and for revised provisional Capital Cost of 330 MW Srinagar HEPP. (Petition No. 1092 of 2016) Affidavit verifying the petition under Regulation 16 read with Regulation 32 & 33 of UPERC CBR 2004 for revision of Provisional Tariff330 MW Srinagar HEPP. (Petition No. 1093 of 2016) AND IN THE MATTER OF Alaknanda Hydro Power Company Limited Paigah House, 16 169, S.P. Road, Secunderabad 00003 Andhra Pradesh Petitioner AND UP Power Corporation Limited 14 Ashok Marg, Shakti Bhawan, Lucknow 226001 Government of UP (through Principal Secretary, Energy) Bapu Bhawan, Lucknow Page 1 Respondent
The following were present: 1. Sri. Sandeep Kumar, SE, UPPTCL 2. Sri. P. V. Prasana Reddy, CEO, AHPCL 3. Sri. D. Niranjan Reddy, Vice President, AHPCL 4. Sri. T.V. Bhaskar, Head Legal, GVK Group, AHPCL. Sri. Sriniwas Sisila, V.P., AHPCL 6. Sri. M. Sodakar, AGM Law, AHPCL 7. Sri. E. Chandan, AHPCL 8. Sri. Dileep Tripathi, Senior Liaison Officer, AHPCL 9. Sri. Rajiv Srivastava, Advocate, UPPCL 10. Sri. V. P. Srivastava, CE, UPPCL 11. Sri. S. K. Sinha, SE, UPPCL Order (Date of Hearing: 24.02.2016) 1. In Petition No. 881 of 2013 and 92 of 2014 in the matter of approval of additional term loans and revised means of finance and for the approval of provisional tariff for the project, the Public Hearing was held on December 16, 2014.The Commission s observation in this regard as provided in its Order dated January 19, 201 on the above mentioned hearing is reproduced below: The Commission specifically enquired whether price at which electricity would be supplied to UPPCL from this project is viable? Whether diligent examination of costs has been done by UPPCL? Further, whether the costs of exit from the existing PPA and its consequences have been calculated? In view of above, the Commission directed UPPCL to go for detailed examination, based on analysis of costs and benefits in consultation with GoUP and then file their detailed reply with specific recommendations. The reply must also contain consent or dissent on the capital cost submitted by the Expert Committee made by the Commission on their request. If there is any disagreement then they should give their specific recommendation as to what extent the capital cost is, in their view, admissible or inadmissible. The GoUP is also required to file its stand on above mentioned CEA letter and on the report of Expert Committee formed by the Commission on their request. AHPCL is directed to file reply on the submissions made by Sri Jhunjhunwala and on the comments made by UPPCL as above. GoUP, being a party in MoU and UPPCL, being a party in PPA both need to submit the agreed capital cost after proper examination of report submitted by the Page 2
Committee and after getting all the clearances from the concerned authorities. The Commission in its Order dated June, 201 observed as follows: UPPCL was directed to file their reply as per the directions of the Commission vide order dated 19.01.201 positively before 30.06.201. The reply should also cover the response on additional submission of AHPCL dated 23.04.201 and specific replies on capital cost / provisional tariff. They should also comment as to whether any part of time overrun is attributable to developer? AHPCL was directed to file detailed reply on the year wise cost increase due to geological changes and/or surprises and due to court cases. AHPCL was further directed to submit the details of year wise increase in IDC due to controllable / uncontrollable factors. In hearing dated June 30, 201 the Commission vide its Order dated July 14, 201 observed as follows: UPPCL filed a reply on 29.6.201 wherein it has replied to the queries raised in the orders dated 19.1.201 and.6.201. AHPCL also submitted its replies on the Commission s order dated.6.201. UPPCL informed that they have started provisionally paying AHPCL at the rate of Rs. 4.00 per kwh for the supplied electricity though the logic of arriving at this decision could not be explained by them. UPPCL also submitted that they are exploring the options of reasonable tariff under the existing provisions and for the purpose working on a rationalization plan through which impact of higher capital cost of this plant could be minimized on end consumer. However, in their written submission dated 29.6.201, they have propounded that for the purpose of provisional tariff they are agreeable to the capital cost as submitted by the Expert Committee i.e. Rs. 4218.80 Cr. minus sale proceed of scrap of the capital equipment. Based on this, UPPCL has agreed to 7% of the annual fixed charges claimed by the petitioner, considering the agreed capital cost as roughly 82% of the capital cost as claimed by the petitioner in the petition. The petitioner has claimed the capital cost of Rs. 088.77 Cr. as on 31.3.201. The view of UPPCL is at variance from its earlier submission dated 1.12.2014 wherein it has agreed to 60% of the annual fixed charge calculated on the basis of Rs. 4192 Cr. AHPCL also requested that the provisional tariff may be determined by the Commission on the basis of capital cost submitted by the Expert Committee. In the hearing dated August 14, 201, vide Order dated September 2, 201, the Commission directed AHPCL to submit its reply to the rejoinder filed by Page 3
Mr.Jhunjhunwala on June 4, 201 and also recalled its previous direction to UPPCL as extracted below for reference, The Commission recalled the directions given to UPPCL in the earlier orders seeking their categorical views on the Capital Cost, tariff and tariff rationalisation plan as discussed by them. The UPPCL has submitted 6 different models for determination of tariff. The Commission feels that it was not proper and would not serve the purpose. UPPCL needs to give its definite recommendations or at least give its order of preference among the six models. The Commission, therefore, directs UPPCL to come up with a firm proposal so that the tariff to the consumers may be rationalised. Although UPPCL has submitted its comments on increase in capital cost due to change in capital cost, geological changes, geological surprises and IDC but the Commission finds the comments on geological changes and geological surprises are not given specifically and separately. Therefore, the Commission decides that expenditure on geological changes & surprises would be sent to CEA for verification. Subsequently, a letter was sent by UPERC to CEA for verification of the expenditure on geological changes & surprises faced by AHPCL. CEA vide its reply dated December 1, 201 submitted that UPERC may take appropriate action for the determination of the capital cost or tariff, if required, taking cognizance of the report of the Expert Committee constituted by UPERC for increase in capital cost on account of geological changes/ surprises and other contributing factors. Further, AHPCL filed its reply to the rejoinder dated June 4, 201 of Mr. Bharat Jhunjhunwala on October 9, 201. 2. In the mean while following Petitions were filed by AHPCL i. Petition No. 1043 of 201 Extension of Commercial Operation Dates. ii. Petition No. 1092 of 2016 Application for urgent hearing in the matter of revised provisional tariff and for revised provisional Capital Cost. iii. Petition No. 1093 of 2016 Revision of Provisional Tariff for 330 MW AHPCL Plant. The Commission combined all the Petitions for hearing and decision. 3. In Petition No. 1043 of 201,AHPCL has sought the approval of extension of COD from the dates mentioned in Order dated July 2, 2012 to the date mentioned below: Uni t COD as per agreed PPA dated 28.6.2006 Extension of COD approved by the Commission vide Revised COD as per Order dated 2.07.2012 COD actually achieved Page 4
Order dated 12..2009 I 10.07.2010 31.12.2011 31.03.2013 II 10.08.2010 31.01.2012 31.03.2013 III 10.09.2010 28.02.2012 31.0.2013 IV 10.10.2010 31.03.2012 31.0.2013 23.04.201 21.06.201 02.0.201 21.06.201 Also, the Petitioner has prayed the Commission to declare that the reason behind not achieving the COD as per dates mentioned in Order dated July 2,2012 was unprecedented flash floods occurred in the state of Uttarakhand, in the month of June, 2013 which comes under Force Majeure event and was beyond the control of the Petitioner. Petitioner has further sought permission to approach the Commission for approval of project cost including cost incurred on account of force majeure event at an appropriate time in due course. 4. Further AHPCL in Petition No. 1092 of 2016filed on February, 2016 has prayed before the Commission to consider the financial hardship faced by the Petitioner as it has been warned by its lenders for actions under the loan agreements. AHPCL has submitted that they have proposed four (4) alternative options to UPPCL vide its letter dated December 19, 201 and have offered to sacrifice a part of its entitlement to ROE and to restructure the project debt.. AHPCL in petition No. 1093 of 2016, filed on February, 2016 has requested to approve revised provisional capital cost of Rs.,088.77 Crore and consider the same for determination of provisional Tariff until the capital cost is finalized by the Commission. It has also sought permission to file a Petition for determination of actual capital cost and for determination of the final Tariff based on such capital cost of the project for the power supplied with a direction to UPPCL to consider Rs.,088.77 Crore as provisional capital cost for determination of provisional tariff for the second control period i.e. FY 2016 17. 6. UPPCL has filed an affidavit dated February 23, 2016 in the matter of Petition No. 881 of 2013 and 92 of 2014, in compliance to the Commission s Order passed on September 2, 201. UPPCL has mentioned that acting on the Commission s direction in Order dated September 2, 201, it had considered two models out of four models proposed by AHPCL. It has further submitted that, when both of them agreed on one model, AHPCL proposed four new models for consideration. UPPCL was about to finalize the model for being placed before the Energy Task Force (ETF) for approval, for placing definite recommendations in order of its preference with justifications. But, the shift in stand by AHPCL has derailed the exercise. Page
AHPCL had previously proposed to file a joint Petition for determination of Tariff, but now it has filed a fresh Petition/application on February, 2016. In the said Petition, AHPCL has made prayers which as per UPPCL, are in nature of upsetting the process undertaken in compliance of Order dated September 2, 2016. UPPCL has further submitted that since the decision taken by the Board of Directors of UPPCL on January 18, 2016 are to be placed for consideration of ETF, meeting scheduled on 2 nd March, 2016, the response to the Petition filed by AHPCL on February, 2016 may be filed only after a decision is taken by the ETF and Management of UPPCL. In this counter affidavit, UPPCL has sought for some reasonable time to submit its response. 7. In another affidavit filed by UPPCL on February 23, 2016 it has been submitted that AHPCL, in violation of Article 8.3 of the PPA, never kept UPPCL informed about the progress of the construction of the project from time to time so that UPPCL would be in a position to further correlate its program in evacuation system and utilization of energy from the project. UPPCL has also submitted that no notice of the scheduled synchronization date of any unit was given to it by AHPCL. As per Article 8.3 of the PPA AHPCL was required to give 30 days advance notice for the same. UPPCL further mentioned that apart from those force majeure events which were considered by the Commission in granting extension of COD vide Order dated July 2, 2012, the only new force majeure ground taken in the petition is the unprecedented flash floods occurred in the state of Uttarakhand, in the month of June, 2013. After discounting the force majeure events considered by the Commission in granting extension of COD in its order dated July 2, 2012, there is no explanation in the petition as to why the COD of all the four units could not be achieved on the dates approved by the Commission, the last date being May 31, 2013 as the flesh floods came only after this i.e. in the month of June, 2013. In view of above, UPPCL has requested not to grant any extension of COD beyond the dates as allowed by the Commission in its Order dated July 2, 2012, (as mentioned above) for working out capital cost of the project. 8. During the hearing AHPCL submitted that it has already started generation and sale of power to UPPCL from the actual COD (as mentioned above) and has so far supplied about 1,200 MUs of energy to UPPCL. UPPCL is paying AHPCL only on an adhoc basis, at a rate of Rs. 4 per unit. AHPCL submitted that per unit charge of Rs. 4 is not sufficient to meet its debt service obligation. AHPCL requested the Commission to approve the extended actual COD date and approve a provisional tariff, to enable AHPCL meet its lenders obligations. Page 6
9. UPPCL reiterated its request to grant some more time to submit a firm proposal, as they are in the final stage of arriving at decision of the issue. 10. The Commission granted time to UPPCL to submit a detailed reply with firm recommendations before the next date of hearing which has been scheduled on March 16, 2016 at 11.30 Hrs. (S. K. Agarwal) (Indu Bhushan Pandey) (Desh Deepak Verma) Member Member Chairman Place: Lucknow Date: 03.03.2016 Page 7