BEFORE THE GUJART ELECTRICITY REGULATORY COMMISSION

GANDHINAGAR

Petition No. 1885 of 2020.

In the matter of:

Petition under Section 86 (1) (b) of the Electricity Act, 2003 for seeking the
approval of the Commission for Third Supplemental Agreement to the PPA dated
26.02.2007 with the Respondent M/s ACB ((India) Limited for incorporating
fixed discount in energy tariff towards generation of power for utilization of the
coal allocated under Shakti Scheme B (ii) Round 3 of Government of India.

Petitioner : Gujarat Urja Vikas Nigam Limited

Sardar Patel Vidyut Bhavan,
Race Course Circle, Vadodara - 390 007, Gujarat.

Represented by : Learned Advocate Ms. Ranjitha Ramachandran along

with Shri Sanjay Mathur, Shri S. K. Nair and Shri K. N.
Chudasama

V/s.

Respondent : ACB (India) Limited

C-102, LGF Surya Enclave,
New Multan Nagar, Rohtak Road,
New Delhi – 110 056.

Represented by : Learned Advocates Shri Matrugupta Mishra and Shri

Samyak Mishra along with Shri Harinder Jain and Shri
Kataria

CORAM:
Shri Anand Kumar, Chairman
Shri P. J. Thakkar, Member

Date: 12/10/2020

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 ORDER

1. The present Petition has been filed by Petitioner seeking following prayers:

(i) To admit the present petition.

(ii) To approve the addendum to be incorporated in the Schedule 10 of the
PPA dated 26.02.2007 read with Supplemental Agreement dated
17.03.2020 with M/s ACB (India) Pvt. Limited for availing benefit of
discounted tariff for supply of power to GUVNL under PPA for the
generation towards coal received under SHAKTI scheme B (ii) Round 3.
(iii) To approve the draft of 3rd Supplementary PPA by the Petitioner with
M/s ACB (India) Limited for incorporating the addendum in Schedule
10 of the PPA dated 26.02.2007;
(iv) To pass any such further order or orders as the Commission may deem
just and proper in the circumstances of the case.

2. Facts mentioned in the Petition are stated briefly as under:

2.1. The Petitioner, Gujarat Urja Vikas Nigam Limited (GUVNL) is a Company
incorporated under the provisions of the Companies Act, 1956 and engaged in
the activities of bulk purchase and bulk supply of electricity and is a licensee
for the said activities under the provisions of the Electricity Act, 2003.

2.2. The Respondent, M/s ACB (India) Limited erstwhile M/s Aryan Coal
Beneficiation Pvt. Limited is also a Company incorporated under the
provisions of the Companies Act, 1956 and also is a generating company within
the meaning of Section 2 (28) of the Electricity Act, 2003 and installed 2 x 135
MW Power project at Chakbura, Chhattisgarh.

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2.3. GUVNL has entered into Power Purchase Agreement dated 26.02.2007 with
the Respondent M/s ACB (India) Limited for supply of 200 MW contracted
capacity at levelised tariff of Rs. 2.2498 / unit at GETCO periphery pursuant to
selection under the Competitive Bidding process undertaken under the
Section 63 of Electricity Act, 2003. The supply of power to the Petitioner is
from 2 x 135 MW Thermal Power Plant located in Chhattisgarh. The aforesaid
PPA was approved and adopted under the tariff under Section 63 of the
Electricity Act, 2003 through Order dated 20th December, 2007 (Order No. 4 of
2007). M/s ACB (India) Limited has been supplying contracted capacity to
GUVNL from Unit No. 1 which was put under Commercial Operation on
13.12.2011 and Unit No. 2 on 21.06.2012.

2.4. Government of India vide notification dated 22.05.2017 has notified the
Scheme for Transparent Allocation of Coal for Power Sector namely SHAKTI
Scheme. As per the Scheme, the actual coal supply to the power plants shall be
to the extent of long-term PPAs which DISCOMs/State Designated Agencies
and medium term PPAs to be concluded in future against bids to be invited by
DISCOMs as per biding guidelines issued by Ministry of Power, Govt. of India.

2.5. Clause (B) (ii) of the scheme provides that CIL/SCCL may grant coal linkages
on notified price on auction basis for power producers/IPPs having already
concluded PPAs under Section 62 & 63 of the Electricity Act, 2003 based on
domestic coal. Power producers/IPPs participating in auction will bid for
discount on the tariff in paise/unit.

2.6. The scheme provides that the discount quoted by generating companies would
be adjusted from the gross bill amount payable by Procurer. The discount shall
be computed with reference to scheduled generation from linkage coal
supplied under the auction. Accordingly, PPA may be amended or

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 supplemented mutually between the developer and the procurer to pass on
the discount to the procurer and the approval of Appropriate Commission be
obtained as per provisions of the PPA or Regulations.

2.7. It is submitted that earlier Supplementary PPA dated 02.02.2018 & 17.03.2018
were signed between Petitioner and Respondent for incorporating addendum
in Schedule 10 (Tariff) of PPA dated 26.02.2007 towards availing benefits of
discounted levelised tariff @ 3.02 paise/Kwh for supply of power to GUVNL
for balance period under PPA for generation towards Coal of 2 Lac MT of G-12
received under SHAKTI Scheme pursuant to approval of the Commission vide
Orders dated 02.02.2018 & 15.03.2018.

2.8. The Respondent has passed credit of Rs. 65,90,595.00 for the period from May
2018 to March 2019 and Rs. 69,87,457.00 for the period from April 2019 to
March 2020 towards reduction in the quoted tariff @ 3.02 paise /Kwh for
supply of power to GUVNL under PPA for generation from coal received under
SHAKTI Scheme.

2.9. The Respondent through its letter dated 21.01.2020 intimated the Petitioner
regarding participating under “SHAKTI” Scheme, B (ii) Round 3 and has sought
Verification Certificate from the Petitioner for applying linkage coal under the
Scheme in the prescribed format.

2.10. The Petitioner vide letter dated 22.01.2020 forwarded the Verification
Certificate to M/s ACBIL for participation in SHAKTI Scheme, B (ii) Round 3
subject to the condition that there shall be no implication including tariff on
the Petitioner and any reduction / benefit has to be passed on in tariff.

2.11. Respondent vide letter dated 23.07.2020 has informed regarding allocation of
long term linkage of 2.441 Lac MT of G11 grade coal under SHAKTI B(ii)

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 Round-3 scheme with the provisions of levelised 7.02 paise/Kwh discount in
the PPA and out of allocated coal, GUVNL’s share works out to 2,27,954 MT
after excluding the capacity for which linkage coal is already allocated under
SHAKTI Scheme Round 1. Further, as per provisions of Letter of Intent (LOI)
an addendum to PPA duly approved by the Commission is to be submitted
within 60 days of issue of LOI dated 10.07.2020.

2.12. In order to avail the benefit of the levelised discount of 7.02 paise/Kwh in the
fixed energy charge payable by the Petitioner to M/s ACB (India) Limited
towards the generation and supply of power for the quantum of coal allocated
under SHAKTI Scheme for the balance life of the PPA, the following addendum
is to be made by incorporating para under the Schedule 10 of the existing PPA
dated 26.02.2007 & Supplemental PPA dated 17.03.2018:

....................................

“REBATE ON ACCOUNT OF COAL LINKAGE UNDER SHAKTI B (ii) Round-3

SCHEME

ACB (India) Ltd. shall pass on year-on-year discount as mentioned in the

table below in the fixed energy charge starting from the date of receipt of
linkage coal and for the full balance tenure of the PPA on the energy (Kwh)
generated during the year with the 2,27,954 MT of G-11 grade allocated
under SHAKTI B (ii) Round-3 scheme and delivered after accounting for the
following:

(i) Actual quantity of coal linkage made available to ACB (India) Ltd
against above allocation
(ii) Actual average GCV of Coal as received / measured at Plant-head
against different lots during the month.
(iii) Actual auxiliary consumption of the plant during the month subject to
ceiling of 10%

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 (iv) Weekly POC losses as notified by CERC / NLDC

The rebate shall be reflected in the monthly energy bill proportionate to the
coal received during the previous month subject to annual reconciliation as
above.

Year on Year tariff discount to be passed on by ACBIL to GUVNL

Calculated
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 levelised
discount
Year to year
discount 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 8 7.02
(paise/Kwh)

2.13. It is submitted that as per the Letter of Intent dated 10.07.2020 issued by South
Eastern Coalfields Limited (Coal India) to M/s ACB (India) Limited, the
amended PPA along with approval of Appropriate Commission is to be
submitted within 60 days of issue of LOI otherwise the LOI issued shall lapse.

2.14. It is mentioned that Petitioner’s Plant would be able to generate and supply
around 266.65 MUs per annum to the Petitioner under PPA using coal
allocated under SHAKTI Scheme Round-3. The estimated annual energy is
subject to change depending on allocation of coal under the Scheme, GCV of
coal and the weekly Injection/Drawl losses. Considering the discounted tariff
of 7.02 paise/Kwh, the annual benefit to the Petitioner and consequently to the
consumers of the State would be around Rs. 1.87 Crore towards supply of coal
under the Scheme.
2.15. In view of the above, the Petitioner requested the Commission to approve the
addendum to the PPA dated 26.02.2007 with M/s ACB (India) Limited for
availing benefit of discounted levelised tariff @ 7.02 paise/Kwh under SHAKTI
Scheme.

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 3. The Respondent ACB (India) Limited vide its reply dated 03.09.2020 submitted
that the Petitioner, by way of present petition, inter alia, sought for approval of
the addendum to be incorporated in the Schedule 10 of the PPA read with the
supplemental PPA dated 17.03.2018 executed between the parties. The said
addendum is sought to be inserted for availing benefit of discounted tariff for
supply of power to the Petitioner under the PPA for the generation in respect
of the coal received under the SHAKTI Scheme, B (ii) round 3 auction. The
Petitioner also prayed for approval of the draft 3rd Supplementary PPA
between the Petitioner and the Respondent for incorporating the said
addendum.

3.1. Per se the Respondent does not contend or dispute the addendum and it has no
objection in incorporation of the said addendum clause and also in the
consequential approval of draft 3rd Supplementary PPA. It is further submitted
that the addendum may be approved by the Commission subject to the
discounting of tariff being allowed to be offered or passed on in the respect of
actual generation and supply to the Petitioner, i.e. the discount shall be
admissible on the actual units generated and delivered with the coal received
against above allocation and after taking into account the following, viz. (i)
Actual quantity of coal linkage made available to the Respondent against the
allocation under the SHAKTI Scheme; (ii) Actual Average GCV of the Coal is As
Receive Basis (ARB) at the plant-head against different lots during the
month/year; (iii) actual average auxiliary consumption of the plant during the
month/year; (iv) actual weekly POC losses as notified by the CERC and (v)
average of the actual SHR recorded on daily basis for the month/year.

3.2. The Respondent has been allocated 2,00,000 MT G-Coal in Trench-I and
2,44,100 MT Coal in Trench-II which is equivalent to 28166 MT G-3 Grade and

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 GUVNL share is 2,68,181.50 MT. With the above, it would be possible to
generate about 96 MW against PPA of 200 MW (208 MW at Generator Bus).

3.3. The Respondent has offered levelised discount of 3.02 paise/kWh discount in
Trench-I and 7.02 paise/kWh discount in Trench-II. It has committed to pass
on the discount on the actual generation possible with this coal and should not
be put to loss by hypothetical assumptions. The computation of technical
possible generation with the coal allocated is very essential as the Respondent
is recovering only 60 paise/kWh (67 paise, less 7 paise) as variable cost in the
PPA as against actual cost of coal more than 150 paise/kWh. The Respondent
is already incurring loss of approx. Rs. 1 paise/kWh in supply of power to
GUVNL with coal allocated under Shakti Scheme. Thus, any discount over and
above the possible generation shall put the Respondent to immense loss. It
may be mentioned that the Respondent has got linkage for about 96 MW gross
generation as against 208 MW Net (232 MW gross generation) share of
GUVNL. Therefore, the principle of computation of technical possible
generation of power with coal allocated under Shakti Scheme should be fare
and technically feasible considering implications of the decision on total
quantity of coal when allocated under Shakti Scheme.

3.4. It is submitted that unless the manner of calculation submitted herein are
adhered to the very objective of getting allocation of coal under the SHAKTI
Scheme for viability of the project as a firm source through which cheap power
can be supplied to the State, would be defeated. Further, the quoted discount
would not pinch the generator beyond the quoted levelised 7.02 paise per unit
in actual terms.

3.5. As regards the SHAKTI Scheme, it is a matter of record and the Respondent has
not denied or disputed the same. It is further submitted that the Respondent

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 vide letter dated 23.07.2020, informed the Petitioner that it has been further
allocated 2.441 Lac MT of G-11 grade coal under SHAKTI Scheme B (ii) Round–
3 long-term linkage scheme with the provision of 7.02 paise/kWh levelised
discount in quoted tariff for the energy generated/supplied to Petitioner (on
utilization of the coal received under the said long term linkage auction), for
the balance term of PPA. Further, the Respondent informed the Petitioner that
the allocation has been made against the balance requirement of coal for the
Respondent’s project (i.e. 10,72701 MT) as recommended by CEA. Moreover,
the Petitioner was also informed that proportionate share of the coal in respect
of PPA dated 26.02.2007 works out to be 2,27,954 MT, out of the coal received
under the said Round-3 auction. Significantly, the Respondent highlighted its
specific concern in respect of the said tariff discount qua utilization of the
Round-3 linkage coal for generation/supply of electricity to Petitioner.

3.6. The Respondent has proposed that the said tariff discount can only be
calculated after taking into account viz.
i.) Actual quantity of coal linkage made available to the Respondent
against the allocation under the SHAKTI scheme;
ii.) Actual average GCV of the coal ARB at the plant-head against different
lots during the month/year;
iii.) Actual average auxiliary consumption of the plant during the
month/year;
iv.) Actual weekly POC losses as notified by the CERC. Accordingly, the
Respondent proposed an addendum clause, taking into various
factors as highlighted in the said letter.

3.7. The Respondent requested the Petitioner for taking immediate action to
amend the PPA and place it for approval before the Commission so that duly

9
 approved amended PPA can be supplied within 60 days from the date of issue
of the LOI i.e. 10.07.2020.

3.8. The Respondent vide its letter dated 10.08.2020 addressed to the Petitioner,
further represented that in addition to the concerns highlighted vide the letter
dated 23.07.2020 and the proposition made therein, the Station Heat Rate is
also required to be computed by accounting for the de-rating factor as
provided for under Regulation 49(C)(b) of the CERC (Terms and Conditions of
Tariff) Regulations, 2019 which reads as under:

“b) Thermal Generating Stations achieving COD on or after 1.4.2009:

(i) For Coal-based and lignite-fired Thermal Generating Stations: 1.05 X

Design Heat Rate (kCal/kWh)

Where the Design Heat Rate of a generating unit means the unit heat rate
guaranteed by the supplier at conditions of 100% MCR, zero percent make up,
design coal and design cooling water temperature/back pressure.”

Accordingly, the Respondent urged the Petitioner to take into account the SHR
as 1.05 of the design heat rate, i.e. in accordance with the 5% de-rating allowed
by the CERC for all thermal plants commissioned after 01.04.2009. However,
the Respondent is agreeable to the proposition whereby the average of the
actual of SHR recorded in daily basis for the month/year, would be taken into
consideration for the purpose of the required calculation.

3.9. It is submitted that although the said addendum that is sought to be approved
by the Petitioner, in letter and substance, is in tandem and/or in line with the
aforesaid averments above, the Respondent seeks to highlight that
calculations/computations towards the annual discounted amount on the
quoted tariff that have been provided for under the Petitioner under para 17

10
 read with the Annexure H to the Petition, are problematic and misconceived
on account of the fact that the said computations have been made taking into
account normative/ standardized and/or benchmark values.

3.10. It is further submitted that the generation value and accordingly, the estimated
annual amount to be discounted on quoted tariff and to be passed on, that is
referred to under para 17 of the petition are subject to actual generation and
supply to the Petitioner, on utilization of the coal received under the SHAKTI
Scheme B(ii) Round 3. In this regard, it is submitted that if actual
parameters/values, as opposed to normative/benchmark/ ideal values are
taken, the actual generation in practice and accordingly, the total annual
discount to be passed on would be much less in comparison to what has been
mentioned by the Petitioner.

3.11. Further, it is submitted that the values referred to under the said para 17, can
be at best considered to be notional or indicative of the maximum possible
annual discount on quoted tariff that can be passed on to the Petitioner, on
account of utilization of the coal received under SHAKTI Scheme B(ii) Round 3
auction. It is submitted that consideration of values such as the average actual
value of the GCV of coal on ARB basis should be considered rather than the
normative value of 4200 kcal/kg. Similarly, average of the actual SHR recorded
ought to be taken, rather than the designed SHR itself. Further, a normative
auxiliary consumption of 10% cannot be considered as opposed to an actual
average auxiliary consumption in respect of the Respondent's project. This
would, invariably and in all likelihood mean that the Respondent would have
passed on tariff discount to the Petitioner even on its own auxiliary
consumption, which on the face of it evidences as a grossly misconceived
scenario. If seen from the other angle, the generation as per the Petitioner is
more than the actual generation since the additional auxiliary consumption for

11
 e.g. 1.29% (i.e. 11.29% - 10% considering an auxiliary consumption of
11.29%) is also deemed to be a part of the generated units, computed for the
purpose of determining the tariff discount. This invariably defeats the purpose
of the said tariff discount on account of utilization of linkage coal (for
generation/supply to Petitioner) and instead of being revenue neutral,
becomes a detriment to the financial return of the Respondent for the above
reasons.

3.12. It is submitted that calculation of the energy generated on account of

utilization of the coal allocated/received under the SHAKTI Scheme B(ii)
Round 3, for the purposes of adjusting the said discount (levelised discount of
7.02 paise/kwh on the quoted tariff in the present case, for the balance tenure
of the PPA) cannot be done taking into account normative/standardized or
benchmark parameters/values, but rather, adjusting/calculating the
rebate/discount of tariff to be adjusted/deducted from the gross bills/ actual
generation/supply of electricity to the Petitioner has to be calculated by taking
into account the actual parameters as stated hereinabove.

3.13. It is submitted that the Respondent vide letter No. ACBIL/GUVNL/20-21/3248

dated 10.08.2020 issued to the Petitioner also represented similar concerns
that were highlighted vide its earlier letter No. ACBIL/GUVNL/20-21/3249
dated 10.08.2020, in respect of the earlier approved Supplementary PPA dated
17.03.2018 in respect of computation of energy (units) supplied with linkage
under SHAKTI Scheme at levelised discount of 3.02 paise per unit. That in
respect of the computation of the actual energy units supplied/with the earlier
linkage coal i.e. 2 Lac MT at a discount of 3.02 paise/ kWh also needs to be
calculated in terms of taking into account actual parameters such as stated
above.

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3.14. It is submitted that the Petitioner needs to take into account the actual GCV of
coal. The Petitioner is adopting the highest GCV of billed grade of coal for
computing the energy generated by utilizing allotted coal under the SHAKTI
Scheme, whereas it is a well-known fact that the coal recovered is of much
lower GCV than what is actually billed by Coal India Limited/its subsidiaries.
This is particularly significant in terms of the fact that once a higher GCV (than
what is actually received is used for computation), the consequent
computation of generation of electricity also invariably comes to more than
the actual generation and supply to the Petitioner. Accordingly, the Petitioner
was requested to compute the energy generated at the lowest of grade and the
same would not be problematic, since the coal actually received is even inferior
than the same.

3.15. As far as GCV of coal is concerned the GCV (ARB) is to be computed, which is
also prescribed by the Central Electricity Regulatory Commission under
Regulation 40(1) read with Regulation 43 of the CERC (Terms and Conditions
of Tariff) Regulations, 2019. The following methodology of computation may
be adopted in order to convert equilibrated GCV into GCV (ARB), since the test
certificate shared by South Eastern Coalfields Ltd. (SECL) is of equilibrated
GCV as tested at the colliery end. Formula for converting the equilibrated GCV
into ARB GCV is as mentioned below:

GCV (ARB)= GCV (Eq. Basis) X (100-TM) I (100-IM)

Where, TM = Total Moisture, IM = Inherent Moisture

3.16. The Petitioner is not taking into account the de-rating factor of 5% in SHR. It
was informed that the said de-rating factor is applicable to all generating
stations and is even applicable to generating plants in Gujarat. Accordingly, the
Respondent averred that this de-rating needs to be taken into account while

13
 computing the energy generated from SHAKTI coal. It is not disputed that the
efficiency of thermal plants would go down over the years and thus, CERC has
in fact allowed for a de-rating factor. Thus, this de-rating factor ought to be
taken into account and as opposed to it computing the energy generated at the
designed SHR is grossly misconceived. It is clear that the computed generation
on the basis of designed SHR would be significantly more than the actual
energy generated and supplied to the Petitioner. However, at the cost of
repetition, it is stated that the Respondent is agreeable to factoring average of
the actual SHR of the plant recorded on a day to day basis for the month/ year.

3.17. The Petitioner has considered a normative value for auxiliary consumption, i.e.
10% for fixing the proportionate share of GUVNL in time slot basis. However,
the concession/discount of levelised 3.02 paise per unit is to be given on the
actual energy generated and delivered to the Petitioner from the linkage coal
(round I auction). The actual average auxiliary consumption is required to be
considered for computing energy generated eligible for rebate. In addition, if
the average actual value of auxiliary consumption for the Respondent's project
is not taken into account, it would mean that the Respondent has been passing
on the tariff discount to the Petitioner even for its own auxiliary consumption.
It is submitted that the Commission may take judicial note of this fact and to
consider this issue raised by the Respondent. For the purpose of ascertaining
the actual auxiliary consumption of the plant, reference can be made of the
Electricity Duty paid by the Respondent on such auxiliary consumption. This
will depict the actual auxiliary consumption of the plant in a month.
3.18. It is submitted that all the aforesaid factors are technically relevant and the
Petitioner may take the same into account for calculation of actual energy
generated with linkage coal. In this regard, the Petitioner has been resorting
to a misconceived computation rather wrongful computation of the energy
generated on the basis of normative values, rather parameters in ideal

14
 condition much opposed to the real/actual parameters encountered in
practice.

3.19. It is submitted that the Respondent vide its letter dated 10.08.2020 addressed
to the Petitioner clearly stated that it has concerns in terms of the
miscalculation, rather misconceived calculation/computation of the energy
generation done by the Petitioner in respect of the said levelised discount of
3.02 paise per unit in tariff and thus, the Respondent submitted that the
Commission may direct for re-determination of the annual tariff as per the
stand of the Respondent and accordingly, the latter may be compensated for
the balance amount over-adjusted from the gross bills payable by the
Petitioner.

4. In response to the reply of the Respondent, the Petitioner filed rejoinder vide
affidavit dated 14.09.2020 and submitted that with regards to the contention
made by the Respondent with respect to under recovery of coal cost as against
quoted tariff, the Respondent was selected pursuant to Competitive Bidding
Process undertaken by the Petitioner on the basis of lowest quoted levelised
tariff. As per the bidding documents, the responsibility for arranging fuel lies
on the Respondent. It was the Respondent’s choice to quote a tariff and the now
the Respondent cannot claim that the said tariff is not sufficient or it is suffering
any loss. Moreover, it is submitted that the Respondent has been allocated coal
under SHAKTI Scheme based on PPA dated 26.02.2007 with GUVNL after
having agreed to pass on a fixed discount of 7.02 paise/Kwh in the energy
charge for the generation based on coal received under the Scheme.

4.1. It is submitted that the contention of the Respondent on its ability to generate
power based on coal as per SHAKTI allocation is not admitted. The units of

15
 electricity to be considered for discounted tariff is the electricity capable of
being generated from the quantum of coal and the same has to be determined
based on certain parameters. The contention of the Respondent to consider
the parameters ‘as per actuals’ cannot be accepted. This would be contrary to
the consumers’ interest. If the Respondent is unable or unwilling to meet the
parameters and generate less than it should, given the quantity of the coal, the
same cannot be a reason to deny the discounted tariff to the Petitioner and
accordingly to the consumers at large. It is submitted that there is nothing
unfair or unfeasible in regard to parameters considered by the Petitioner.

4.2. With regards to the contentions of Respondent on Technical Parameter to be

considered for computing discount on energy generated through SHAKTI Coal,
it is submitted that the Respondent was selected pursuant to Competitive
Bidding Process undertaken by the Petitioner on the basis of quoted levelised
tariff and the Petitioner had no information regarding various parameters on
which the bid was premised. Therefore, while working out the discount in
tariff towards the energy generated using coal received under SHAKTI Scheme
and supplied to Petitioner, the following operational parameters as
guaranteed by OEM based on document submitted by the Respondent were
considered:

1. Turbine Heat Rate @ 100% TMCR – 2025 Kcal/Kwh;

2. Boiler efficiency @ 100% TMCR – 84%;
3. Station Heat Rate – (2025 / 84%) = 2411 Kcal/Kwh.

4.3. The above operational parameters have been considered in the indicative
calculation of rebate on the coal received under SHAKTI Scheme. With regard
to the de-rating factor @ 1.05 for calculating SHR as stated in the reply of the
Respondent, Petitioner has prepared comparison statements of SHR as per

16
 OEM, as per the Commission’s MYT Regulation 2016 and as per CERC Tariff
Regulation 2019-20 considering the technical configuration (Boiler Pressure –
150 Kg/cm2, Super Heater Temperature – 535º C) as per OEM submitted by
Respondent. It is submitted that the derating factor is not applicable to OEM
Parameter as it is distinguished from the design heat rate.

4.4. The Petitioner is agreeable to the request of Respondent that SHR should be
considered the average of the actual SHR recorded on daily basis for the
month/year, however in the interest of consumers, it shall be subject to a
ceiling of SHR as per OEM. There has to be ceiling on the parameters, as the
Respondent cannot be permitted to operate inefficiently.

4.5. With regard to the submission of the Respondent for consideration of Station
Heat Rate based on the actual SHR of the plant as shown in the chart for April
– July 2020 annexed with the reply by the Respondent, it is submitted that
allowing any reduction in plant efficiency would tantamount to indirectly
passing on the consequences of plant inefficiency to the Petitioner and passing
lower discount which cannot be directly done. Therefore, Respondent is not
eligible for any benefits over and above Station Heat Rate as guaranteed by
OEM. The consumers should not bear the burden of inefficiency or inability of
Petitioner to meet the parameters.

4.6. As far as the submissions of the Respondent for consideration of Auxiliary

Consumption as per actual is concerned, it is submitted that the Commission
in its Order dated 01.07.2015 in the Petition No. 1397 of 2014 filed by the
Respondent, seeking reimbursement of increase in Electricity Duty as a
Change in Law under PPA dated 26.02.2007, has approved the Auxiliary
Consumption @ 10%. The Respondent has been claiming and receiving
reimbursement of increase in Electricity Duty as per the Commission’s Order.
The Commission’s Order was not challenged by the Respondent and has

17
 therefore attained its finality. Accordingly, the Auxiliary Consumption has
been considered at actual with a ceiling of 10% in the indicative calculation of
discount to be passed on to the Petitioner.

4.7. It is submitted that G11 grade coal has been allocated to the Respondent under
SHAKTI Scheme, Round 3 which is in the GCV range of 4000 – 4300 Kcal/Kg.
However, while calculating the actual discount in monthly energy charges for
the coal consumed from allocation under SHAKTI Scheme, the actual GCV of
coal as received at the power plant under the Scheme shall be considered
subject to the Respondent furnishing certificate from independent agency in
support of GCV of coal received at plant.

4.8. With regards to computation of actual energy generated by consuming coal

received under SHAKTI – I, it is submitted that the present petition has been
filed for approval of addendum to PPA by incorporating fixed discount in
energy tariff towards generation of power from the coal allocated under
SHAKTI Scheme B (ii), Round 3 of Government of India. It is therefore not open
for the Respondent to raise any issue with regard to SHAKTI - I and any such
claim is beyond the scope of the present Petition.

4.9. In past, the Respondent has not raised any dispute regarding the computation
by the Petitioner for coal received under SHAKTI – I and even the letter dated
10.08.2020 referred in reply dated 03.09.2020 of the Respondent has been
submitted as an afterthought after the filing of the present Petition and shall
not be taken on record in the present Petition.

4.10. It is submitted that the Respondent in its reply to the Petitioner has referred
the letter dated 10.08.2020 written to the Petitioner wherein reference is
drawn to CEA letter dated 06.08.2020 clarifying the computation of coal share
of GUVNL. The CEA letter dated 06.08.2020 refers to an earlier notification

18
 dated 27.03.2019 wherein the norms for coal consumption in Thermal Power
Plants w.e.f. 01.04.2019 are specified. The same norms have been considered
by PFCCL in the scheme documents issued for participation in the bidding
process under SHAKTI Scheme Round 3. The norms stipulate 2600 Kcal/Kwh
as the upper ceiling for subcritical units having capacity up to 200 MW.

4.11. With regards to the contention of the Respondent that operational parameters
need to be considered on actual basis and not on normative basis as per
Annexure – H of the reply of the Respondent, the Petitioner has relied upon the
following Orders passed by the CERC while approving amended tariff on
account of coal allocation under SHAKTI Scheme wherein Technical
Parameters viz. SHR & Auxiliary is allowed as per regulatory norms and not on
actual:

i. Order dated 21.02.2018 passed by CERC in the matter of KSK Mahanadi

Power Co. Limited V/s. TANGEDCO & Ors., Petition No. 21/MP/2018;

ii. Order dated 10.08.2018 passed by CERC in the matter of Adhunik Power
& Natural Resources Limited V/s. JBVNL, Petition No. 216/MP/2018.

4.12. It is submitted that any consideration of actuals has to be subjected to ceiling.

The Respondent cannot be left open to claim actuals when it is acting
inefficiently. The Commission has consistently upheld the consideration of
parameters and the Respondent cannot be exempted from such consideration.

4.13. Based on the above, the Petitioner submitted that the Commission may
approve the addendum to be incorporated in the Schedule 10 of the PPA dated
26.02.2007 for availing benefit of discounted tariff for supply of power to
GUVNL under the PPA for the generation towards coal received under SHAKTI
Scheme, B (ii) Round 3 and the draft 3rd Supplementary PPA attached with the
Petition.

19
5. The matter was kept for hearing on 31.08.2020, 5.09.2020, and 17.09.2020 for
virtual hearing through Video Conferencing, physical presence being not
insisted on account of prevailing COVID 19 pandemic and containing its spread.
Accordingly, the Petitioner and the Respondent were provided the link for
virtual hearing in the present matter. Both the Petitioner and the Respondent
remained present during the hearing.

6. Learned Advocate Ms. Ranjitha Ramachandran, appearing on behalf of the

Petitioner, reiterated the facts as stated in para 2 and 4 above. She further
submitted that the Respondent is a successful bidder in the competitive bidding
process initiated by the Petitioner earlier for supply of 200 MW power on long-
term basis. The Petitioner and the Respondent have signed a PPA dated
26.02.2007.

6.1. She submitted that the present Petition has been filed seeking approval of the
Draft Supplemental PPA and the addendum of “Rebate on account of Coal
Linkage under Shakti B (ii) Round 3 Scheme” which are filed along with the
Petition and is to be made by incorporating para under Schedule 10 of the
existing PPA dated 26.02.2007 and Supplemental PPAs dated 02.02.2018 &
17.03.2018. The Draft Supplemental Agreement is to be signed by the
Petitioner with Respondent in respect of fixed levelised discount of 7.02 paise
per Kwh in energy tariff payable by the Petitioner to the Respondent towards
generation and supply of power for the quantum of coal allocated to the
Respondent under SHAKTI Scheme B(ii), Round 3 for the balance life of the
PPA. Therefore, in order to account the aforesaid discount offered/quoted by
the Respondent while participating in SHAKTI Scheme B (ii), Round 3 of
Government of India and thereafter, the Respondent informed GUVNL
regarding allocation of long term linkage of 2.441 Lac MT of G11 grade coal

20
under the SHAKTI B(ii) Round-3 Scheme with the provision of fixed levelised
discount in energy tariff of 7.02 paise per unit in the PPA. Accordingly, in order
to pass on the discount quoted by the Supplier to the Procurer, the PPA
executed between the present parties needs to be amended or supplemented
mutually between the developer and the procurer to pass on the discount to
the procurer and the approval of Appropriate Commission needs to be
obtained as per provisions of the PPA or Regulations, which in the present case
is this Commission. One of the condition of the said SHAKTI scheme is that the
discount has to be passed on to the distribution licensees to whom the
generator is generating and supplying power under existing PPA. She
submitted that earlier when the matter was heard by the Commission on
05.09.2020 the representatives of GUVNL had submitted various aspects of the
present Petition. She further submitted that pursuant to filing of the present
Petition the matter was listed for hearing on 28.08.2020 wherein the
representatives of the Petitioner briefly gave the background of the PPA
executed between the parties and allocation of long term linkage of 2.441 Lac
MT of G11 grade coal under the SHAKTI B(ii) Round-3 Scheme with the
provision of fixed levelised discount in energy tariff of 7.02 paise per unit to be
incorporated in the existing PPAs by executing Supplemental PPA. However,
during the said hearing the Respondent raised certain issues with regard to
SHR, GCV, Aux. consumption, Rebate etc. and sought adjournment on the
ground to file its reply to the Petition. Subsequently, the Respondent filed reply
before the Commission and when the matter was thereafter listed for hearing
on 05.09.2020, the Petitioner sought adjournment submitting that the reply
dated 03.09.2020 filed by the Respondent was received by the Petitioner just
one day prior to the date of hearing and therefore, the Commission may grant
some time to the Petitioner to file their rejoinder reply in the matter. The
Petitioner has accordingly filed its rejoinder reply and everything is presented
and filed which is sufficient in deciding the matter and in case the Commission

21
 has any specific queries in the matter or the SHAKTI policy, the same can be
addressed by the parties including any issues that may be raised by the
Respondent which can be addressed by the Petitioner and as such, the
Petitioner has already filed the submissions and have nothing more to add in
the matter.

6.2. She submitted that the Petition has been filed under Section 86 (1) (b) of the
Electricity Act, 2003 for approval of the third Supplemental Agreement to the
PPA dated 26.02.2007 with the Respondent M/s ACB (India) Limited for
incorporating fixed discount in energy tariff towards generation of power by
utilization of the coal allocated under Shakti Scheme B (ii) Round 3 of
Government of India. She further submitted that the Petitioner proceeded in
filing the present Petition on the basis of an earlier Petition No. 1703 of 2018
filed before this Commission by GUVNL seeking approval for incorporating
addendum in Schedule 10 (Tariff) of PPA dated 26.02.2007 for availing the
benefits of discounted levelised energy tariff of 3.02 paise per unit for supply
of power to the Petitioner for balance period under PPA for generation
towards coal received under an earlier SHAKTI Scheme wherein similar draft
Supplemental PPA was filed and the Respondent ACB (India) Limited had not
raised any objections but on the contrary agreed and accordingly the approval
was granted by the Commission vide Order dated 02.02.2018 in Petition No.
1703 of 2018 read with Order dated 15.03.2018 in Review Petition No. 1707
of 2018. However, now in an identical Supplemental PPA and addendum filed
alongwith present Petition, the Respondent is having objection. Even, the
working and methodology submitted by the Petitioner in the present Petition
is similar to that which was earlier submitted in Petition No. 1703 of 2018 and
in accordance to the approval granted by the Commission in its Orders dated
02.02.2018 & 15.03.2018. She submitted that the aforesaid methodology of
accounting the proportion of energy to the Petitioner out of the total energy

22
 generated with the coal allocated to the Respondent under the earlier SHAKTI
Scheme has been working well over the past few years based on the certain
parameters required for working out and determining the proportionate
energy of Petitioner after the approval of the Commission in above referred
Orders of Petition No. 1703 of 2018 and 1707 of 2018. However, it is now that
the Respondent is raising issues in the present matter on the said parameters.

6.3. She fairly submitted that the Commission is correct that the parties first need
to mutually agree upon terms and condition of the Supplement PPA and
thereafter, approach the Commission for seeking approval for the third draft
Supplemental Agreement to the PPA dated 26.02.2007 and thereafter based
such mutually agreeable draft of Supplemental PPA be filed on the record of
the present matter. She also submitted that that the SHAKTI Scheme stipulates
certain timelines to be adhered and as per provisions of Letter of Intent (LOI),
an addendum to PPA duly approved by the Commission has to be submitted
within 60 days from the issuance of LOI. Since, the LOI is dated 10.07.2020, the
time limit to submit the addendum to PPA duly approved by the Commission
in the present case was up to 10.09.2020 else the LOI shall lapse. She submitted
that although the said date is gone, it has been given to understand by the
Respondent that a request seeking extension of time limit has already been
made to appropriate authorities. She also submitted that the issue is only with
respect to certain parameters i.e. how much electricity would be accounted to
the Petitioner from the generation of electricity based on quantum of coal
received by the Respondent against the allocation under the SHAKTI Scheme.
She further submitted that the Commission has already decided and approved
the auxiliary consumption in one of the previous matter regarding ‘Change in
Law’ on account of electricity duty levied by Chhattisgarh Government on the
Respondent. The Petitioner is considering the said Auxiliary Consumption
which is approved by the Commission and therefore, there should not be any

23
 issue in respect of Auxiliary Consumption by the Respondent. As regards the
issue of station heat rate, the Petitioner is consistently relying on the
guaranteed SHR by the Original Equipment Manufacturer.

6.4. Learned Advocate Ms. Ranjitha Ramachandran submitted that there are issues
and differences between the parties on the parameters to be considered and
that too on Station Heat Rate, GCV, Auxiliary consumption etc. because
according to the Respondent the SHR and Auxiliary consumption be average
of actually achieved which is not agreeable to the Petitioner and more
particularly when the auxiliary consumption is already decided by the
Commission earlier in a previous matter involving same parties. She submitted
that the Commission cannot approve on basis of ‘actual’ because at no point of
time tariff has been determined and decided by the Commission on basis of
‘Actual SHR’ or ‘Actual Auxiliary consumption. Even, otherwise it will be
contrary to the Regulations framed by GERC or the CERC Regulations and the
Orders on the SHAKTI Scheme of this Commission. Therefore, the insistence of
the Respondent on ‘Actuals’ cannot be allowed.

6.5. On a query from the Commission to the Petitioner that pursuant to the
rejoinder reply filed by it before the Commission whether the Petitioner is
proposing to change the draft supplemental PPA which is submitted alongwith
the Petition duly incorporating various parameters submitted in the rejoinder
reply and whether the same are accommodated as per the submissions by the
Respondent because the Petitioner has not placed on records any draft
Supplemental PPA which is agreeable to both parties since the Petitioner had
earlier filed a draft Supplemental PPA which was not objected by the
Respondent and accordingly agreeable to both parties alongwith earlier
Petition No. 1703 of 2018 filed before this Commission by GUVNL and the
Commission had accordingly approved the same, Learned Advocate Ms.

24
 Ranjitha Ramachandran submitted that the Petitioner is not proposing or
intending to file any new draft Supplemental PPA or not even considering to
change the draft Supplemental PPA filed alongwith the present Petition but it
is the Respondent who is proposing some changes in the parameters, which
are not agreeable or accepted by the Petitioner.

6.6. Based on the above, she requested the Commission to approve the addendum
to be incorporated in the Schedule 10 of the PPA dated 26.02.2007 for availing
benefits of discounted tariff for supply of power to GUVNL under the PPA for
the generation towards coal received under SHAKTI Scheme, B (ii) Round 3
and the draft 3rd Supplementary PPA attached with the petition.

7. Learned Advocate Shri Matrugupta Mishra and Shri H. M. Jain, appearing on

behalf of the Respondent, reiterated the facts as stated in para 3 above.

7.1. Shri H. M. Jain, on behalf of the Respondent submitted that the extension of
time is sought by the Respondent on technical grounds from Coal India Limited
and that it may take some time for approval of the PPA by the Commission but
the same is still awaited and is taking time due to procedural requirements of
approval. He submitted that the Respondent is expecting that the concerned
authorities will grant the extension because even during the earlier round of
coal allocation under SHAKTI Scheme, such extension was sought by the
Respondent and the same was granted to the Respondent at relevant point of
time and therefore, the Respondent is hopeful that there shall not be any issue
on the extension being granted.

7.2. Learned Advocate Shri Matrugupta Mishra, on behalf of the Respondent fairly
submitted that pursuant to rejoinder reply filed by the Petitioner on the reply
of the Respondent, though there are certain issues, the Petitioner has already

25
 agreed on the issue of considering GCV on ‘As received basis’ of the coal.
However, with regard to the SHR, the Petitioner has provided ceiling whereas
according to the Respondent the same ought to be on actual SHR achieved
since the Respondent has already agreed for giving levelised discount of 7.02
paise per unit. He submitted that the SHR considered by the Petitioner is quite
low and accordingly the tariff received by the Respondent gets reduced and if
the Petitioner does not accept the request of the Respondent for considering
the actual SHR, then the Respondent is going to suffer. He submitted that as
per the working submitted by the Petitioner and the calculation in its Petition,
the same is not viable for the Respondent. Therefore, the Respondent cannot
agree to the ceiling in SHR and accordingly, the Commission may decide that
the applicability of average of SHR actually achieved and similarly average of
actual Auxiliary consumption.

7.3. Learned Advocate Shri Matrugupta Mishra submitted that the auxiliary
consumption previously approved by the Commission was for the purpose of
calculation with respect to Electricity Duty leviable on the Respondent by the
Chhattisgarh authorities qualifying as ‘Change in Law’, which cannot be
accepted in the present matter wherein proportion of electricity to be
accounted as supply to Petitioner from the generation achieved through
utilisation of coal received under SHAKTI Scheme by the Respondent and on
that basis applying the levelised discount of 7.02 paise per unit by the
Petitioner. He submitted that for authenticate ascertainment of actual
auxiliary consumption, the Petitioner may consider relevant meter data or the
electricity duty bills and the Respondent is even agreeable for considering the
average auxiliary consumption that can be worked out by the Petitioner on
basis of such data. However, the Respondent cannot agree or commit for
considering one specific percentage of auxiliary consumption. He also
submitted that if the auxiliary consumption is more in that case the

26
 Respondent will also be effected and even otherwise eligibility to get ‘Change
in Law’ benefit @ 12% exists. He accordingly submitted that based on the
above, the auxiliary consumption could be considered on basis of ‘Average’
instead of ‘Actuals’.

7.4. He submitted that the Petitioner GUVNL has relied upon CEA document in
which the SHR is mentioned as 2600 kcal/kWh for unit above 100 MW and
below 200 MW. Since, the units of the Respondent fall within the stipulated
range, the ceiling of SHR can be considered as 2600 kcal/kWh provided the
Petitioner has no objection to the same because the actual SHR in case of the
Respondent is lower as compared to 2600 kcal/KWh.

7.5. Shri H.M. Jain, on behalf of the Respondent submitted that the Petitioner has
referred the CERC norms in its rejoinder and as per the annexures submitted
by the Petitioner with its rejoinder, the norm for Station Heat Rate as
prescribed by CERC is 2273 kcal/kWh and the same was stated in the bidding
documents of the Petitioner against which the Respondent quoted the SHR as
2410 kcal/kWh which has been agreed by the Petitioner GUVNL and also
agreed that there is de-rating over time in the SHR. The Petitioner has set the
SHR as 2273 kcal/kWh which if escalated by 5%, then the same works out to
2385 kcal/kWh which is much less than the SHR originally quoted by the
Respondent in its bid submitted to the Petitioner. He submitted that the de-
rating in the steam parameters is also well known phenomenon. Further, with
passage of time over the years due to welding aberrations there are steam
leakages and due to erosion in the glass wool on the steam piping which runs
in kilometres in power plants, there is not only steam loss but also heat loss
from steam. He submitted that these norms are adopted when there is no
specific input available for a specific plant. He submitted that even the CERC
has allowed SHR for NTPC Tanda plant which is about 2830 kcal/kWh and for

27
 NTPC Talcher power plant the SHR allowed by CERC is 2750 kcal/kWh, which
is also similar in Damodar Valley Plants. He submitted that accordingly, the
SHR needs to be allowed on basis of size of plant, its vintage and other relevant
factors. He further submitted that the plant of the Respondent has advanced
technology of automatic recording of actual SHR, which can be considered by
the Petitioner. He submitted that the contention of the Petitioner that the
Respondent has committed to pass on the benefit on the actual energy
generation possible with the linkage coal under SHAKTI Scheme which
otherwise is not viable for the Respondent on basis of the parameters
considered by the Petitioner. He submitted that the Respondent is paying
much higher electricity duty towards the auxiliary consumption and therefore,
accepting the principle for calculation of discount to be offered by the
Respondent as per parameters considered by Petitioner may result in loss to
the Respondent. He also requested the Petitioner for considering ‘Actual’ SHR
and Auxiliary consumption or alternatively GUVNL may propose the norms
duly taking into account a principle driven approach similar to Tanda and
Talcher power projects. He also submitted that the Commission may consider
the request of the Respondent regarding actual SHR and Auxiliary
consumption.

7.6. Based on the above, he requested that the Commission apart from
adjudicatory power is also conferred with regulatory powers and requested
that the Commission in exercise of such regulatory powers deal and decide the
present Petition also.

8. Based on the submissions made by the Petitioner and the Respondent, the issue
emerged for the decision of the Commission is whether the draft supplemental
PPA to be signed by the parties by incorporating the addendum to Schedule 10
of the PPA dated 26.02.2007 for availing the benefit of discount in tariff for

28
 supply of power to the Petitioner by the Respondent under the PPA for
generation against coal received under SHAKTI scheme notified by the
Government of India be approved or not?

8.1. We have carefully considered the submissions of the Petitioner and the
Respondent. It is undisputed that the Petitioner had conducted competitive
bidding under Section 63 of the Electricity Act, 2003 in which the Respondent
who is a generating company within the meaning of Section 2(28) of the
Electricity Act, 2003 was selected as a successful bidder for supply of 200 MW
power to the Petitioner from its 2 x 135 MW Plant located at Chakbura,
Chhattisgarh.

8.2. The tariff discovered under the Competitive bidding conducted by the
Petitioner was Rs. 2.2498 per unit and Power Purchase Agreement dated
26.02.2007 was signed by the Petitioner and the Respondent. The Commission
adopted the said tariff vide Order dated 20.12.2007.

8.3. It is also admitted by the Petitioner that Unit No. 1 of the Respondent was put
under commercial operation on 13.12.2011 and Unit No. 2 on 21.06.2012. The
Respondent is supplying power from the aforesaid units to the Petitioner.
Government of India vide notification dated 22.05.2017 notified the Scheme
for Transparent Allocation of Coal for Power Sector namely “SHAKTI”–
(Scheme for Harnessing and Allocating Koyala Transparently in India).

8.4. As per the provisions of the Scheme of the Government of India, the IPPs/
Power Producers who are having long term PPA under Section 62 or 63 of the
Electricity Act, 2003 are eligible to participate in the bidding process for
receiving coal linkages on notified price. The Power Producers are required to
quote for discount on the tariff (in paise per unit) in the auction. The bid
evaluation criteria will be non-zero levelised value of the discount quoted by

29
 the bidder on the existing tariff for each year of the balance period of the PPA.
Ministry of Coal in consultation with Ministry of Power are to work out a
methodology on normative basis to be used in the bidding process for
allocation of coal linkages. Further, the discount by generating Companies
would be adjusted from the gross amount of the bill at the time of billing raised
as per the terms and conditions of the PPA and the discount amount would be
reduced from the gross amount of the bill. The discount shall be computed with
respect to scheduled generation from linkage coal supplied under this auction.
It is also provided that PPA may be amended or supplemented mutually
between the Developer and the Procurer to pass on the discount to the
Procurer and it needs to be approved by the Commission.

8.5. The Commission has issued the Daily Order dated 09.10.2020 pursuant to the
hearing held on 17.09.2020. The relevant para of the aforesaid order is
reproduced as under:
“…..
15.6. We are of the view that in the absence of the consensus between the
parties on terms and conditions of the draft Supplemental PPA and
addendum, it is not possible for the Commission to accord any
approval to third supplementary PPA submitted by the parties herein
under Section 86 (1) (b) of the Electricity Act, 2003. Hence, we direct
both the parties to mutually discuss various issues, parameters etc.
and decide upon the same so as to arrive at consensus ad-idem on the
agreement to be executed amongst themselves and thereafter, inform
the Commission based on such mutually agreeable draft of
Supplemental PPA by filing the same through affidavit on the record
of the present Petition. Hence, we grant 15 days’ time from the date
of hearing to both the parties for discussing the above and liberty is
granted to file appropriate submissions as deemed appropriate on

30
 affidavit. We once again make it clear that the Commission does not
want to reopen the original PPA again.”

8.6. We have carefully considered the submissions made by the parties. As recorded
in earlier para there were disputes with regards to certain parameters/provisions to
be agreed in draft Supplemental PPA and addendum for incorporating para under
the Schedule 10 of the PPA dated 26.02.2007 read with Supplemental PPA dated
17.03.2018 between the parties. Therefore, the Commission during the hearing held
on 17.09.2020 directed the parties to resolve the disputes with regards to the
parameters/clause of the addendum for incorporating para under the Schedule 10 of
the PPAs since the present Petition is filed under Section 86 (1) (b) of the Electricity
Act, 2003 for approval of the Commission. The Commission is not empowered to
adjudicate the disputes between the parties in the present case as the Petition is not
filed under Section 86 (1) (f) of the Act but it is filed under Section 86 (1) (b) of the
Electricity Act, 2003 and when the parties have not executed the third Supplemental
PPA. While passing the Order under section 86 (1) (b) of the Act, it is essential that
the Power Purchase Agreement executed between the generator and the licensee or
licensees put before the Commission for approval, wherein on various terms &
conditions of the Agreement/PPA, there must be consensus between the parties who
have signed the Agreement. Therefore, as there was no consensus amongst the
parties, the Commission directed the parties that first they mutually discuss and
arrive on agreed terms of the proposed Supplemental PPA and thereafter approach
the Commission for approval, which is recorded in Daily Order dated 09.10.2020.

8.7. In response to the above decision of the Commission, the Petitioner vide its
additional affidavit dated 09.10.2020 submitted as under:
“…..
2. The captioned petition has been filed by the Petitioner under Section 86(1)(b)
of the Electricity Act, 2003 (hereinafter referred to as the ‘Electricity Act’)
seeking approval of the Hon’ble Commission to the ‘Third Supplemental

31
 Agreement’ to the power purchase agreement dated 26.02.2007 (hereinafter
referred to as the ‘PPA’) executed between the Petitioner and M/s ACB (India)
Ltd. (hereinafter referred to as the ‘Respondent/ACB’), for incorporating the
discount in the fixed energy tariff towards generation and supply of electricity,
for utilization of coal allocated under SHAKTI Scheme B(ii) Round 3 auction
conducted by the Ministry of Coal, Government of India.

3. The captioned matter was listed for hearing on 17.09.2020 before the
Commission, whereby the Commission has directed the parties to resolve the
issues and arrive at a consensus in order to enable the Commission to pass an
order under Section 86(1)(b) of the Electricity Act, 2003.

4. It is humbly submitted that Parties had discussion on the issue and have
arrived at consensus ad-idem in the matter. Respondent through affidavit
dated 8.10.2020 has filed its consent to the Addendum to the PPA as prayed by
the Petitioner in the Petition.

5. Since, both Petitioner and the Respondent agrees to the terms and conditions
of the draft Supplementary Agreement, Hon'ble Commission is requested to
approve the addendum to be incorporated in the Schedule 10 of the PPA dated
26.02.2007 as submitted with the Petition to enable the Respondent to procure
linkage coal under the SHAKTI Scheme and supply power to the Petitioner at
discounted price which shall be in the benefit of consumers of the State.
…..”

8.8. We note that, the Respondent also filed its additional affidavit on 09.10.2020
submitting as under:

“…..
2. The captioned petition has been filed by Gujarat Urja Vikas Nigam Limited
(hereinafter referred to as ‘Petitioner/GUVNL’) before this Hon’ble
Commission under Section 86(1)(b) of the Electricity Act, 2003 (hereinafter
referred to as the ‘Electricity Act’) seeking approval of the ‘Third
Supplemental Agreement’ to the power purchase agreement dated
26.02.2007 (hereinafter referred to as the ‘PPA’) executed between the
Petitioner and M/s ACB (India) Ltd. (hereinafter referred to as the
‘Respondent/ACB’), for incorporating the discount in the fixed energy tariff
towards generation and supply of electricity, for utilization of coal allocated

32
 under SHAKTI Scheme B(ii) Round 3 auction conducted by the Ministry of
Coal, Government of India.
3. By way of the captioned Petition, the Petitioner has, inter alia, sought for
approval of the addendum to be incorporated in the Schedule 10 of the PPA
read with the supplemental PPA dated 17.03.2018, executed between the
Petitioner and respondent. The said addendum is sought to be inserted for
availing the benefit of discounted tariff for supply of power to the petitioner
under the PPA for generation in respect of the coal received under the
SHAKTI Scheme, B(ii) Round 3 auction. Further, the Petitioner has also
prayed for approval of the draft 3rd Supplementary PPA between the
Petitioner and Respondent for incorporating the said addendum thereof.
4. The captioned matter was listed for hearing on 17.09.2020 before this
Commission, whereby the Commission has directed the parties to resolve
the issues and arrive at a consensus in order to enable this Hon’ble
Commission to pass an order under Section 86(1)(b) of the Electricity Act,
2003. Accordingly, the Parties have had discussions and deliberations on
the issues in hand pursuant to the already agreed issues deliberated by the
Petitioner in its rejoinder. The parties have agreed that the discount shall
be admissible on the units generated and delivered with the cost received
against the allocation and accordingly, the amendment may be allowed
after taking into account the following as stated below:

(i) Actual quantity of coal linkage made available to the Respondent

against the allocation under SHAKTI Scheme.
(ii) Actual average GCV of coal calculated on as received basis
(ARB)/measured at the plant-head against different lots during the
month/year.
(iii) The actual average auxiliary consumption of the plant during the
month/year subject to ceiling of 10%.
(iv) Actual weekly POC losses as notified by the CERC.

5. Therefore, in the light of the above consensus ad-idem, the Hon’ble

Commission may take immediate steps in approving the addendum to the
PPA as prayed by the Petitioner in its Petition, which shall enable the
Respondent to procure linkage coal under the SHAKTI scheme, which shall
ultimately be utilized for supplying of power at a discounted price to the
33
 Petitioner. Hence, in the interest of justice as well as in furtherance to the
benefit of the consumers at large, necessary orders may kindly be passed in
the light of the above read with prayers made by the Petitioner in the
captioned Petition, for the interest of justice.
…..”

8.9. We note that both the parties have filed additional affidavits before the
Commission and arrived at mutual agreement with regard to issues between
them. We also note that both the Petitioner as well as the Respondent vide
their respective affidavits stated above have confirmed that they have no
objection to the incorporation of addendum to Schedule 10 of the PPA dated
26.02.2007 readwith Supplemental PPA dated 17.03.2018 executed between
the Petitioner and the Respondent for availing the benefit of discounted tariff
for supply of power to the Petitioner under the PPA for generation from the
coal received under SHAKTI scheme and the Draft Supplemental PPA. From
the aforesaid submissions of the parties, we note that there is consensus ad-
idem arrived between the parties with regards to parameters/terms of the
agreement as per aforesaid settlement, which is to form a part of Schedule 10
of the PPA dated 26.02.2007 as an addendum.

8.10. We also note that earlier Supplementary PPA dated 02.02.2018 & 17.03.2018
were signed between Petitioner and Respondent for incorporating addendum
in Schedule 10 (Tariff) of PPA dated 26.02.2007 towards availing benefits of
discounted levelised tariff @ 3.02 paise / Kwh for supply of power to GUVNL
for balance period under PPA for generation towards Coal of 2 Lac MT of G-12
grade coal received under SHAKTI Scheme pursuant to approval of the
Commission vide its Orders dated 02.02.2018 & 15.03.2018.

8.11. The Petitioner has submitted the draft supplemental PPA along with the
Petition, which contains the recital as well as other conditions in the
amendment to PPA dated 26.02.2007 and Supplemental Agreements dated
34
02.02.2018 and 17.03.2018. The relevant portion of the said draft
supplemental PPA is reproduced below:
“…..

A. Procurer initiated a competitive bidding process named as 02/

LTPP/ 2006 for procurement of generation capacity and purchase
and supply of electricity to the Procurer in bulk as per the bidding
guidelines notified by Government of India.

B. Consortium of Aryan Coal Beneficiations Private Limited and

Indian Coal Agency had participated as bidders in the competitive
bidding process and offered aggregate of 200 MW (100 MW x 2)
capacity at Delivery Point (GETCO periphery) from its 2 x 135 MW
Thermal Power Plant located in District Korba, Chattisgarh.

C. Pursuant to the bidding process, Consortium of Aryan Coal

Beneficiations Private Limited and Indian Coal Agency were
selected by Procurer as Selected Bidder to sell and supply electricity
in bulk to the Procurer in accordance with the terms of the Bid
documents.

D. Parties have signed Power Purchase Agreement on 26th February

2007, hereinafter called the Agreement setting out the terms and
conditions of the sale and supply of electricity in bulk by the Seller
to the Procurer.

E. Subsequently, M/s Aryan Coal Beneficiations Private Limited was

changed to the abbreviated name M/s ACB (India) Limited in
September 2009

F. Government of India vide notification dated 22.05.2017 has notified

the SHAKTI Scheme for Harnessing and Allocating Koyala
transparently in India.

G. As per the Scheme, the actual coal supply to the power plants shall
be to the extent of long - term PPAs which DISCOMs / Designated
Agencies and medium term PPAs to be concluded in future against
bids to be invited by DISCOMs as per biding guidelines issued by
Ministry of Power.

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H. Clause (B) (ii) of the scheme provides that Coal India Ltd. (CIL) /
South Eastern Coalfields Ltd. (SECL) may grant coal linkages on
notified price on auction basis for power producers / IPPs having
already concluded PPAs (both under Section 62 & 63 of the
Electricity Act, 2003) based on domestic coal. Power producers /
IPPs participating in auction will bid for discount on the tariff in
(paise / unit)

I. The discount computed with reference to scheduled generation from

linkage coal supplied under the auction by generating companies
would be adjusted from the gross bill amount on monthly basis.
Accordingly, PPA may be amended or supplemented mutually
between the developer and the procurer to pass on the discount to
the procurer and the approval of Appropriate Commission be
obtained as per provisions of the PPA or Regulations.

J. The parties have signed Supplementary PPA dated 02.02.2018 and

17.03.2018 for incorporating addendum in Schedule 10 (Tariff) of
PPA dated 26.02.2007 towards availing benefits of discounted
levelised tariff @ 3.02 paise / kwh for supply of power to GUNVL for
balance period under PPA for generation towards Coal of 2 Lac MT
of G-12 received under SHAKTI Scheme pursuant to approval of
Hon’ble GERC vide orders dated 02.02.2018 & 15.03.2018.

K. M/s ACB (India) Ltd vide letter dated 23.07.2020 has informed
GUVNL regarding allocation of coal linkage of 2.441 Lac MT under
SHAKTI B (ii). Round 3 to the Chhattisgarh power plant vide Letter
of Intent dated 10.07.2020. out of which the proportionate share of
GUVNL under PPA is worked out to 2,27,954 MT after excluding the
capacity for which linkage coal is already allocated under SHAKTI
Scheme Round 1. It is also stated that the amended PPA reflecting
the levelised discount @ 7.02 paise / Kwh is to be submitted to CIL
within 60 days of Letter of Intent. M/s ACB (India) Ltd. has
requested GUVNL for addendum to the para under Schedule 10 of
the PPA.

NOW THEREFORE, in consideration of the premises, mutual

agreements, covenants and conditions set forth in this Amendment
36
 Agreement, IT IS HEREBY AGREED BY AND BETWEEN THE
PARTIES AS FOLLOWS:

1. All capitalised terms unless specifically defined in this

Supplemental Agreement shall have the meanings ascribed to
them respectively in the Agreement.

2. The Agreement shall be supplemented and modified as under:

2.1 In the Schedule 10: QUOTED TARIFF the following shall be

added:

"REBATE ON ACCOUNT OF COAL LINKAGE UNDER SHAKTI B (ii)

Round - 3 SCHEME

ACB (India) Ltd. shall pass on year-on-year discount as mentioned

in the table below in the fixed energy charge starting from the date
of receipt of linkage coal and for the full balance tenure of the PPA
on the energy (Kwh) generated during the year with the 2.27.954
MT of G-11 grade coal allocated under SHAKTI B (ii) Round-3
scheme and delivered after accounting for the following:

(i) Actual quantity of coal linkage made available to ACB

(India) Ltd against above allocation.
(ii) Actual average GCV of Coal as received / measured at
Plant - head against different lots during the month.

(iii) Actual auxiliary consumption of the plant during the

month subject to ceiling of 10 %

(iv) Weekly POC losses as notified by CERC / NLDC.

The rebate shall be reflected in the monthly energy bill proportionate to

the coal received during the previous month subject to coal received
during the previous month subject to annual reconciliation as above.
Year on Year tariff discount to be passed on by ACBIL to GUVNL

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 Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Calculated
levelised
discount
F-O-F 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 8 7.02
discount

3. All other terms and conditions of Power Purchase Agreement

dated 26th February 2007 and Supplemental Agreements dated
02.02.2018 & 17.03.2018 shall remain unchanged.

4. This supplemental PPA is approved by Hon’ble GERC wide order

dated______ in Petition No. ________ of 2020.

…….”

8.12. As per the aforesaid provisions of the supplementary PPA, it is admitted by the
parties that the parties are having long-term PPA and that the Petitioner, at the
request of the Respondent, forwarded the Verification Certificate vide letter
dated 22.01.2020 to the Respondent for participation in SHAKTI Scheme
stating that there will be no implication including tariff on GUVNL and any
reduction/benefit to be passed on to GUVNL in tariff. The Respondent informed
to GUVNL vide it’s letter dated 23.07.2020 regarding allocation of coal linkage
to its Plant vide LoI dated 10.07.2020 and stated that the amended PPA
reflecting the levelised discount @ 7.02 paise per Kwh with year on year
discount of 7 paise per unit for the Year-1 to Year-16 and 8 paise per unit for
Year-17 to be submitted to CIL within 60 days of LoI before FSA is concluded
and accordingly, requested GUVNL for addendum to Schedule 10 of the PPA.

The rebate shall be reflected in the monthly energy bill proportionate to the
coal received during the previous month subject to annual reconciliation.

8.13. Now, we deal with the actual terms of the addendum proposed by the parties
and later on submissions filed on 09.10.2020 vide their respective affidavit by

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the Petitioner and the Respondent have been compared and dealt in the
following paras to Schedule 10 of the PPA dated 26.02.2007 are as under:

As per original Petition filed by the Petitioner vide affidavit dated 11.08.2020.

(i) Actual quantity of coal linkage made available to ACB (India) Ltd against
above allocation
(ii) Actual average GCV of Coal as received / measured at Plant-head against
different lots during the month.
(iii) Actual auxiliary consumption of the plant during the month subject to
ceiling of 10%
(iv) Weekly POC losses as notified by CERC / NLDC

As per additional affidavit filed by the Respondent.

(i) Actual quantity of coal linkage made available to the Respondent

against the allocation under SHAKTI Scheme
(ii) Actual average GCV of Coal calculated on as received basis (ARB)/
measured at Plant-head against different lots during the month/year.
(iii) The Actual average auxiliary consumption of the plant during the
month/year subject to ceiling of 10%
(iv) Actually, Weekly POC losses as notified by CERC / NLDC

On comparison of clause (i) of the aforesaid submissions, it transpires that

there is agreement between the parties. As such there is no change in the
earlier proposed terms of agreement to Schedule 10 as an addendum. Even,
the clause (i) proposed in the Petition filed by the Petitioner, there is no
change. As there is no change, we decide that the clause (i) stated by the
Petitioner in Petition is approved.

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On comparison of clause (ii) of the aforesaid addendum to Schedule 10 of the
PPA originally proposed by the Petitioner and later on agreed between the
parties except that the Respondent is substituting the word earlier proposed
by Petitioner ‘as received’ by ‘as received basis (ARB) and also replacing
‘month’ proposed by the Petitioner by ‘month/year’. Since, there is no material
change in earlier proposed terms of agreement to Schedule 10 as an
addendum. Even, the clause (ii) proposed in the Petition filed by the Petitioner,
there is no change. As there is no change, we decide that the clause (ii) stated
by the Petitioner in Petition is approved.

On comparison of clause (iii), in the original Petition it is stated that actual

auxiliary consumption of the plant during the month subject to ceiling to 10%
be considered. Moreover, the Respondent has stated that the same may be
‘Actual average auxiliary consumption of the plant during the month subject
to ceiling of 10%’. Thus, there is no material change and it transpires that there
is agreement between the parties. As such there is no change in the earlier
proposed terms of agreement to Schedule 10 as an addendum. Even, the clause
(iii) proposed in the Petition filed by the Petitioner, there is no change. As there
is no change, we decide that the clause (iii) stated by the Petitioner in Petition
is approved.

On comparison of clause (iv), it seems that in original Petition, the addendum

to Schedule 10 proposed by the parties was “Weekly POC losses as notified by
CERC / NLDC”. However, later the Respondent submitted the proposed clause
as “Actual weekly POC losses as notified by CERC”. The agreed terms between
the parties as per their respective affidavits filed by the Respondent and the
Petitioner, the approved terms for applicability of POC losses remains
unchanged and same is as proposed by the Petitioner in clause (iv) is
approved.

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8.14. In terms of aforesaid the parties are directed to sign the Supplemental PPA and
addendum for incorporating para under the Schedule 10 of the PPA dated
26.02.2007 and Supplemental PPA 17.03.2018 and the signed Supplemental
PPA between the parties be submitted to the Commission for record. Further,
the said addendum to the supplemental PPA be uploaded on the website of the
Petitioner and Respondent for one month for wide publicity of the same for
knowledge and information for the stakeholders.

8.15. The discount offered by the Respondent in the fixed levelised energy charge is
7.02 paise per unit in the levelised tariff of Rs. 2.2498 per unit for remaining
tenure of the PPA, which is beneficial to the licensee due to annual reduction in
the power procurement cost of the licensee to the extent of about Rs. 1.87 Crore
as envisaged by the Petitioner subject to receipt of allocated quantity of coal
under the aforesaid scheme. There will be no other change. This will only
benefit the consumers of the licensee and there will be no other impact on
account of SHAKTI scheme. Hence, we decide to approve the proposal of the
Petitioner for addendum to Schedule 10 of the PPA dated 26.02.2007 and
execution of the third supplemental PPA as per the draft annexed to the present
Petition.

9. In view of above, the present Petition succeeds. We decide and approve the
addendum to be incorporated in Schedule 10 of the PPA dated 26.02.2007 to
be executed between the Petitioner and M/s. ACB (India) Limited for availing
the benefit for discounted tariff for supply of power to the Petitioner under PPA
for generation towards coal received under SHAKTI Scheme. This approval is
subject to the condition that there shall be no implication including tariff
approved by the Commission vide Order dated 20.12.2007 in Order No. 04 of
2007 on the Petitioner and only reduction/rebate has to be passed on in tariff.
We also decide and approve the draft supplemental PPA submitted with this

41
 Petition in which addendum to Schedule 10 of the PPA dated 26.02.2007 has
been incorporated.

10. The Petitioner and the Respondent are directed to sign the supplemental PPA
as above at para 9 by revising the addendum to Schedule 10 of the PPA dated
26.02.2007 and supplemental PPA dated 17.03.2018 signed between the
parties. We also decide and direct that once the Supplemental PPA is executed
between the parties, the Petitioner and the Respondent is required to file with
the Commission the aforesaid Supplemental PPA as per the present order by
revising the addendum to Schedule 10 of the PPA dated 26.07.2007. We direct
the Petitioner to upload the supplemental PPA signed with the Respondent on
their website for one month for wide publicity of the same for
information/knowledge of the consumers/stakeholders.

11. With this, the present Petition stands disposed of.

12. We order accordingly.

Sd/- Sd/-
[P. J. THAKKAR] [ANAND KUMAR]
Member Chairman

Place: Gandhinagar.
Date: 12/10/2020.

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