THE CENTRAL ELECTRICITY REGULATORY COMMISSION
the matter of
in the matter of
following were present:
Shri B.Datta, Sr.Advocate
Shri Sachin Datta, Advocate
Shri Ajit Puduserry, Advocate
Shri R.K. Sharma, ED (Comm.), NHPC
Shri S.K.Agarwal, CE (T), NHPC
Shri A.N. Ghosh, DGM, UPPCL
Shri B.K. Saxena, Sr.AE, UPPCL
Shri V.K. Gupta, SE(ISP), RSEB
Shri H.S. Bedi, Dir., PSEB
Shri R.K. Arora, XEN, Tariff, HVPN
this petition, the petitioner, NHPC, has sought a direction to the
respondents to make payment of the secondary energy charges and to
continue to do so within a specified time.
The circumstances leading to filing of the petition are narrated in
the succeeding paragraphs.
In exercise of power conferred under Section 43 A (2) of the
Electricity (Supply) Act, 1948, the Central Government had issued a
notification dated 30th March, 1992, prescribing the factors
for determination of tariff for sale of electricity by the
generating companies to the boards and other persons.
The said notification dated 30th March, 1992 has been
amended from time to time. By a subsequent
notification dated 13th January, 1995 issued by Ministry of
Power, clause 2.10 was added
to the notification dated 30th March, 1992, providing that the
rate of incentive for secondary energy shall be mutually agreed between
the board and the generating companies, however, the maximum payment on
this account in any year cannot exceed 10% return on equity.
The above notification was further amended by the notification
dated 14th December, 1998 and clause 2.10 (ii) was substituted
Energy Charges for Secondary
Subsequent to the amendment by notification dated 14.12.98 Ministry of
Power, Government of India issued the tariff notification in respect of
individual Stations, prescribing
the terms and conditions and tariff for supply of power from the
Hydroelectric Power stations
for the period from 1st April 1997 to 31st March,
2002. The notifications in
respect of Tanakpur and Chamera (Stage-I) were issued on 8th
February, 1999, in respect of Salal
HEP on 29th March, 1999,
and in respect of Uri on 14th May, 1999.
The petitioner has also entered into Bulk Power Purchase Agreement
with the respondents. The
various tariff notifications provide for payment of secondary energy
charges. For facility of
reference, the relevant extract from the notification dated 29th
March, 1999 relating to Salal HEP is reproduced below:
rate of incentive for secondary energy shall be mutually agreed between
the NHPC and the beneficiaries for the period prior to 14.12.98. However, the maximum payment on this account in a year shall
not exceed 10 per cent return on equity.
rate of incentive for Secondary Energy with effect from 14.12.98 shall be
equal to the rate of primary energy as mentioned in para-1 (B) above.
incentive on account of higher Availability and Secondary Energy Shall be
payable on a monthly basis subject to a cumulative adjustment in each
month of the financial year and final adjustment at the end of the
The jurisdiction to regulate tariff of the central generating
stations is vested in the Commission w.e.f. 15th May, 1999. By virtue of proviso to Regulation 79 of the Central
Electricity Regulatory Commission (Conduct of Business) Regulations 1999
and the Commission’s notification dated 12th May, 1999, the
petitioner continues to charge the same tariff as was being charged prior
to vesting of jurisdiction in the Commission.
It has been alleged that the respondents have either not verified
the dues as per the notification or have only verified nominal rates of 5
paise per unit or 25 paise per unit for secondary energy.
It is also alleged that the State of Jammu & Kashmir and HPSEB
have verified the rates as per the notification but have not yet made the
full payment. In the above
background, the petitioner has sought direction to the respondents for
making the payment of the secondary energy charges equal to per unit cost
of primary energy in accordance with the notification issued by Ministry
of Power. The
project-wise rates (paise/kwh) of primary energy during 1998-99 and
1999-2000 are stated to be as under:
replies to the petition have been filed by PSEB, HVPNL, UPPCL and RSEB.
The other respondents, namely DVB, HPSEB and the Power Development
Department of Government of J&K have not filed their responses.
UPPCL in its response has stated that the question of payment of
charges for secondary energy to the petitioner has been the point of
discussion at various fora at
NREB. However, no decision
could be arrived at. It has been contended that rates for secondary energy could
not be equal to the rate of primary energy as provided in the tariff
notifications. Therefore, the
Chairman, NREB has already approached Ministry of Power requesting for a
review of rate of
secondary energy charges. Similar
replies have been filed on behalf of RSEB and HVPNL.
PSEB in addition to the points raised on behalf of other
respondents, has also submitted that in view of the provisions of clauses 3.3 and 3.4 of the
Government of India notification dated 30th March, 1992, the
petitioner cannot be permitted to claim the charges for secondary energy
at the same rate as for primary energy since the financial package for
investment in respect of these stations were approved before 30th
March, 1992 and these stations had been put into commercial operation
before 1st January, 1997.
It has been further contended on behalf of PSEB that the
notification dated 14.12.1998 was issued by the Central Government in
compliance to the new hydro policy released in August, 1998, according to
which it has been proposed to allow the sale rate for secondary energy at
the same rate which is applicable for a primary energy in order to provide
an additional incentive for attracting investment in hydel project.
The crux of the PSEB’s contention is that the petitioner is
entitled to charge for the secondary energy at the same rate as being
charged for the primary energy only in respect of the future stations.
In view of the submissions in the petition, it has been contended
that the respondents are liable to pay for secondary energy charges at the
rate of 5 paise per unit in respect of all stations, except Uri HEP in
whose case the secondary energy charges are payable at the rate of 25
paise per unit. It has been
argued on behalf of the respondents that the generation of secondary
energy does not involve any extra cost to the petitioner and for this
reason also, the higher charges for the secondary energy cannot be
justified and higher charge puts only an extra burden on the consumers.
The Respondents have entered into a Bulk Power Purchase Agreement
with the petitioner in respect of Bairasul , Salal , Tanakpur , Chamera
and Uri HEPs. Para 6 of the bulk purchase agreement deals with
tariff for supply of energy from these stations.
According to this para, the tariff and terms and conditions for
sale of energy supplied or to be supplied from NHPC stations shall be as
determined by Government of India from time to time w.e.f. the
date as may be notified by the Government of India under Section 43 A (2)
of the Electricity (Supply) Act and the notification
forms an integral part of the agreement ( emphasis supplied).
In view of the agreement entered into
by the parties, the
respondents are liable to pay for the secondary energy as prescribed by
the Central Government through the station-wise tariff notifications.
They cannot escape liability to make payment in accordance with the
terms and conditions determined by the Central Government and cannot be
permitted to deviate from the agreement entered into with the petitioner. The Central Government through the notifications dated
8.2.99, 26.3.99 and 14.5.99 has already decided that the rate of incentive
for secondary energy charges for the period prior to 14th
December, 1998 is to be mutually agreed to by the parties, subject to the
condition that the maximum payment on this account in a year shall not
exceed 10 per cent return on equity.
However, as regards the rate of incentive for secondary charges
w.e.f. 14.12.1998, it is to be equal to the cost of primary energy.
In view of this position, the contention raised on behalf of the
respondents that the rates prescribed are excessive or the norms
prescribed under Government of India notification dated 30th
March, 1992 are inapplicable to the NHPC stations in question, does not
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