Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION 58 42/Order_91_of... · Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION ... NTPC National Thermal Power Corporation

Before the

MAHARASHTRA ELECTRICITY REGULATORY COMMISSION

World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai 400 005.

Tel. No. 022 22163964/65/69 – Fax 022 22163976

E-mail: [email protected]

Website: www.mercindia.org.in/www.merc.gov.in

Case No.91 of 2012

IN THE MATTER OF

Approval of Multi Year Tariff Business Plan of Maharashtra State Power

Generation Company Limited (MSPGCL) for the second Control Period from

FY 2013-14 to FY 2015-16

Shri V. P. Raja, Chairman

Shri Vijay L. Sonavane, Member

Date: 12 February, 2013

O R D E R

Upon directions from the Maharashtra Electricity Regulatory Commission

(Commission or MERC), the Maharashtra State Power Generation Company Limited

(MSPGCL or Mahagenco) submitted its application for approval of the Multi Year

Tariff (MYT) Business Plan for the second Control Period from FY 2013-14 to FY

2015-16, under affidavit on 31 August, 2012.

The Commission, considering the request made by MSPGCL in an earlier Petition in

Case No. 44 of 2011, invoked the proviso to Regulation 4.1 of Maharashtra

Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2011 [MERC

MYT Regulations], vide Order dated 23 August, 2011 and granted exemption to

MSPGCL from determination of tariff under MYT framework for a period of 2 years,

i.e., till 31 March, 2013. Further, pursuant to the First Amendment to the MERC

MYT Regulations, the Commission vide Order dated 21 June, 2012 (Case No. 6 of

2012), approved the Aggregate Revenue Requirement and Tariff of MSPGCL for FY

2011-12 and FY 2012-13.

mailto:[email protected]

http://www.mercindia.org.in/

Case No.91 of 2012 MERC Order for MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16

Page 2 of 168

In view of the above, the Commission, in exercise of the powers vested in it under

Section 61 and Section 62 of the Electricity Act, 2003 (EA 2003) and all other powers

enabling it in this behalf, and after taking into consideration all the submissions made

by MSPGCL, issues raised during the Public Hearing, and all other relevant material,

approves the MYT Business Plan for MSPGCL for the second Control Period from

FY 2013-14 to FY 2015-16 as under.


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Table of Contents 1 BACKGROUND AND BRIEF HISTORY ......................................................... 10

1.1 Background ................................................................................................... 10

1.2 MERC MYT Regulations ............................................................................. 10

1.3 Petition for MYT Business Plan approval, Admission of the MYT Business

Plan Petition and Public Process .............................................................................. 11

1.4 Organisation of the Order ............................................................................. 12

2 OBJECTIONS RECEIVED, MSPGCL’S RESPONSE AND COMMISSION’S

RULING ...................................................................................................................... 13

2.1 Clarity Regarding Transfer Scheme of MSEB ............................................ 13

2.2 Legality of considering MSPGCL in regulated regime even after de-

licensing of generation business under the EA 2003 .............................................. 14

2.3 Non-Payment of dues by MSEDCL ............................................................. 16

2.4 Sale to third Party by MSPGCL ................................................................... 18

2.5 Deviation from the applicable norms ............................................................ 18

2.6 Compliance to CPRI norms .......................................................................... 20

2.7 Power Purchase Agreement .......................................................................... 20

2.8 Plant Load Factor and Availability Factor .................................................... 22

2.9 GCV of the Coal ........................................................................................... 23

2.10 MOU for Coal Procurement with CIL .......................................................... 24

2.11 Generation Tariff .......................................................................................... 24

2.12 Operation and Maintenance Expenses .......................................................... 27

2.13 Depreciation .................................................................................................. 27

2.14 Interest on Loan ............................................................................................ 28

2.15 Interest on Working Capital .......................................................................... 29

2.16 Income Tax ................................................................................................... 30

2.17 Consumer Awareness ................................................................................... 31

2.18 Capacity Addition Plan ................................................................................. 32

2.19 Non consideration of Bhandardara Hydro Power Station............................. 32

2.20 Increase in Electricity Tariff ......................................................................... 33

2.21 Unrealistic Anticipations .............................................................................. 33


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2.22 Non-maintenance of Website by MSPGCL .................................................. 34

2.23 Renovation and Modernisation ..................................................................... 34

2.24 Capital Cost of the new Generating Stations ................................................ 35

3 SALIENT FEATURES OF THE PETITION ...................................................... 36

3.1 Applicability of Business Plan Order from FY 2013-14 to FY 2015-16 ...... 36

3.2 Premise for the Business Plan Petition ......................................................... 36

3.3 Summary of the MYT Business Plan Petition .............................................. 37

4 BUSINESS PLAN COMPONENTS ................................................................... 39

4.1 Operating Capacity of MSPGCL .................................................................. 39

4.1.1 Thermal Generating Capacity ............................................................ 39

4.1.2 Hydro Generating Capacity ................................................................ 41

4.2 Trajectory of Performance Parameters ......................................................... 43

4.2.1 Availability ......................................................................................... 43

4.2.1.1 Thermal Generating Stations .................................................. 43

4.2.1.2 Hydro Generating Stations ..................................................... 57

4.2.2 PLF projections of Thermal Generating Stations for second Control

Period 64

4.2.3 Heat Rate (kcal/kWh) ......................................................................... 65

4.2.4 Auxiliary Consumption ...................................................................... 76

4.2.4.1 Thermal Generating Stations .................................................. 76

4.2.4.2 Hydro Generating Stations ..................................................... 83

4.2.5 Secondary Oil Consumption .............................................................. 86

4.2.6 Transit and Handling Losses .............................................................. 90

4.2.7 Design Energy .................................................................................... 91

4.3 Fuel procurement plan for Thermal Generating Stations ............................. 94

4.4 Capital Expenditure Plan ............................................................................ 100

4.4.1 Capital Investment Plans for upcoming Units (Project Capex) ....... 100

4.4.2 Capital Investment Plans for Large Scale Renovation &

Modernisation Programmes (R&M Capex) ....................................................... 100

4.4.3 Capital Investment Plans for small Capex (Other Capex) ............... 103

4.5 Financing plan ............................................................................................. 116


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4.5.1 Financing Plan for Renovation & Modernisation Schemes ............. 116

4.5.2 Financing Plan for Small Capex Schemes ....................................... 117

4.6 Human resource plan .................................................................................. 118

4.6.1 Recruitment ...................................................................................... 118

4.6.2 Training ............................................................................................ 118

4.6.3 Reward Policy .................................................................................. 120

4.6.4 Health and safety management ......................................................... 120

4.7 Environment policy ..................................................................................... 121

4.8 Corporate social responsibility ................................................................... 123

4.9 Risk mitigation plan .................................................................................... 125

4.9.1 Mitigation Measures – Immediate Horizon...................................... 125

4.9.2 Mitigation measures – Medium to Long Term ................................ 126

4.10 Challenges faced by MSPGCL in the operation of the Generating Stations

128

5 PROJECTIONS FOR THE SECOND CONTROL PERIOD ........................... 132

5.1 Fuel Related Expenses ................................................................................ 132

5.2 Operation and Maintenance Expenses ........................................................ 133

5.3 Depreciation ................................................................................................ 143

5.4 Interest on Long Term Loan Capital ........................................................... 146

5.5 Interest on Working Capital ........................................................................ 150

5.6 Income Tax ................................................................................................. 152

5.7 Return on Equity ......................................................................................... 154

5.8 Lease Rent ................................................................................................... 157

5.9 Non-Tariff Income ...................................................................................... 158

5.10 Aggregate Revenue Requirement ............................................................... 159

6 DIRECTIONS .................................................................................................... 163

6.1 Directions for filing MYT Petition for the second Control Period ............. 163

6.2 Other Directions .......................................................................................... 164


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List of Abbreviations

ABT Availability Based Tariff

AFC Annual Fixed Cost

AOH Annual Overhaul

APH Air Pre Heater

APM Administered Pricing Mechanism

ARR Aggregate Revenue Requirement

ATE/APTEL Appellate Tribunal for Electricity

A&G Administrative & General

BBD Broyer Boulet Direct firing

BEST Brihanmumbai Electric Supply & Transport

Undertaking

BPCL Bharat Petroleum Corporation Limited

CAD Command Area Development

CAPEX/Capex Capital Expenditure

CDPH Canal Drop Power House

CEA Central Electricity Authority

CHP Coal Handling Plant

CIL Coal India Limited

CMDC Chhattisgarh Mineral Development Corporation

COD Commercial Operation Date

COH Capital Overhaul

CPI Consumer Price Index

CPRI Central Power Research Institute

DCS Distributed Control System

DPR Detailed Project Report

DWP Drinking Water Project

EA 2003 Electricity Act, 2003

ECO Economiser

EOH Equivalent Operating Hours

ESP Electrostatic Precipitator

FGD Flue Gas Desulfurization

FO Furnace Oil

FOST Forum of Sectional Teams

FSA Fuel Supply Agreement

FY Financial Year

GAIL Gas Authority of India Limited

GCR Generation Control Room

GCV Gross Calorific Value

GFA Gross Fixed Assets

http://en.wikipedia.org/wiki/Flue-gas_desulfurization


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GoM Government of Maharashtra

GoMWRD Government of Maharashtra- Water Resource

Department

GSECL Gujarat State Electricity Corporation Limited

GTPS Gas Turbine Power Station

HPCL Hindustan Petroleum Corporation Limited

HPS Hydro Power Station

HR Human Resource

ICB International Competitive Bidding

ID Induced Draft

IOCL Indian Oil Corporation Limited

IP Irrigation Project

IWC Interest on Working Capital

kcal kilo calories

kcal/kWh kilo calories per kilowatt hour

Kg Kilogram

kV kilo Volt

kW Kilo Watt

kWh kilowatt hour

KWDTA Krishna Water Dispute Tribunal Award

LC Letter of Credit

LDO Light Diesel Oil

LoA Letter of Assurance

LP Low Pressure

LSHS Low Sulphur Heavy Stock

LTSH Low Temperature Super Heater

m3 Cubic Meter

MAT Minimum Alternative Tax

MCL Mahanadi Coalfields Ltd.

MCM Million Cubic Meter

MDO Mine Development and Operator

MERC Maharashtra Electricity Regulatory Commission

Mkcal Million kilo calories

MMBTU Million Metric British Thermal Units

MMSCMD Million Metric Standard Cubic Metre per Day

MMT Million Metric Tonne

MoU Memorandum of Understanding

MPCB Maharashtra Pollution Control Board

MSEB Maharashtra State Electricity Board


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MSEDCL/

MAHADISCOM

Maharashtra State Electricity Distribution Co. Ltd.

MSETCL Maharashtra State Electricity Transmission Company

Ltd.

MSLDC/SLDC Maharashtra State Load Despatch Centre

MSPGCL Maharashtra State Power Generation Company Limited

MT Metric Tonnes

MTPA Million Tonne per Annum

MU Million Units

MW Mega Watt

MYT Multi Year Tariff

NAPAF Normative Annual Plant Availability Factor

NCDP New Coal Distribution Policy

NGO Non-Governmental Organisation

NTI Non Tariff Income

NTPC National Thermal Power Corporation

NVVN NTPC Vidyut Vyapar Nigam Ltd.

O&M Operations and Maintenance

ONGC Oil and Natural Gas Corporation Limited

PAFM Plant Availability Factor for the Month

PCQ Poor Coal Quality

PLF Plant Load Factor

PPA Power Purchase Agreement

PSS Pumped Storage Station

R&M Renovation & Modernisation

RIL Reliance Industries Ltd.

RInfra Reliance Infrastructure

RLNG Regassified Liquefied Natural Gas

RoE Return on Equity

RPO Renewable Purchase Obligation

R&M Repair & Maintenance

SCCL Singareni collieries Company Ltd.

SECL South Eastern Coalfields Limited

SFO Secondary Fuel Oil

SFOC Secondary Fuel Oil Consumption

SHP Small Hydro Power Plant

SHR Station Heat Rate

SPM Suspended Particulate Matter

SWOT Strengths, Weaknesses, Opportunities, and Threats


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TMC Thousand Million Cubic feet

TPC Tata Power Company

TPS Thermal Power Station

TVS Technical Validation Session

UPRVUNL Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd.

WCL Western Coalfields Ltd.

WPI Wholesale Price Index


Page 10 of 168

1 BACKGROUND AND BRIEF HISTORY

1.1 Background

A Petition has been filed by MSPGCL for approval of the MYT Business Plan for the

second Control Period from FY 2013-14 to FY 2015-16, under Section 61 to Section

64 of the EA 2003 and Regulation 7 of the MERC MYT Regulations.

MSPGCL is a Company formed under the Government of Maharashtra General

Resolution No. ELA-1003/P.K.8588/Bhag-2/Urja-5 dated 24 January, 2005 with

effect from 6 June, 2005 according to the provisions envisaged in Part XIII of the EA

2003. MSPGCL is a Company registered under the Companies Act, 1956.

The provisional Transfer Scheme was notified under Section 131(5) (g) of the EA

2003 on 6 June, 2005 to re-organize the erstwhile Maharashtra State Electricity Board

(MSEB) into the following four successor Companies:

MSEB Holding Company Ltd.

Maharashtra State Power Generation Company Ltd.(MSPGCL)

Maharashtra State Electricity Transmission Company Ltd. (MSETCL)

Maharashtra State Electricity Distribution Company Ltd. (MSEDCL)

1.2 MERC MYT Regulations

The Commission, in exercise of the powers conferred by the EA 2003, notified the

Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations,

2011, (hereinafter referred as the MERC MYT Regulations) on 4 February, 2011.

These Regulations are applicable for the second Control Period starting from FY

2011-12 to FY 2015-16. The said Regulations were amended vide notification dated

21 October, 2011 called Maharashtra Electricity Regulatory Commission (Multi Year

Tariff) (First Amendment) Regulations, 2011.

As per the said Amendment, the Commission has specified that for the Generating

Companies or Transmission Licensees or Distribution Licensees, which are exempted

for a particular period from the Multi Year Tariff framework, the approval of ARR

and Tariff for such exempted period shall be determined in accordance with MERC

Tariff Regulations, 2005.


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PETITION FOR MYT BUSINESS PLAN APPROVAL, ADMISSION OF THE

MYT BUSINESS PLAN PETITION AND PUBLIC PROCESS

Pursuant to notification of MERC MYT Regulations on 4 February, 2011 and MERC

MYT (First Amendment) Regulations 2011, the Commission directed MSPGCL to

submit their MYT Business Plan and MYT Petition for the second Control Period

from FY 2013-14 to FY 2015-16. MSPGCL submitted its MYT Business Plan

Petition for the second Control Period under affidavit on 31 August, 2012.

The Commission vide email dated 14 September, 2012 communicated the preliminary

data gaps identified in the MYT Business Plan to MSPGCL. A Technical Validation

Session (TVS) on the MYT Business Plan was held on 24 September, 2012. The list

of individuals, who participated in the TVS, is provided in Appendix-1. The

Commission directed MSPGCL to provide additional information and clarifications

on the issues raised during the TVS. MSPGCL responded with its replies to the data

gaps and additional clarifications vide its letters dated 17 October, 2012 and 1 November,

2012. MSPGCL also filed the revised MYT Business Plan Petition vide its affidavit dated

8 November, 2012 with the following main prayers:

“I. Admit the petition

II. Approve the Business Plan forecast for FY 2013-14 to FY 2015-16, as

detailed in the Business Plan (Annexure A) of this petition.

III. Approve the performance parameters for the Control Period as per the

rationale submitted in the Business Plan.

IV. Allow MSPGCL to annually update the Business Plan.

V. Condone any shortcomings/deficiencies in the petition and allow MSPGCL

to submit additional information/data at a later stage as may be required.

VI. Pass such further order(s) as it deems just, fit and proper in the facts and

circumstances of the case.”

The Commission admitted the Petition of MSPGCL on 9 November, 2012. In

accordance with Section 64 of the EA 2003, the Commission directed MSPGCL to

publish its MYT Business Plan Petition in the prescribed abridged form and manner,

to ensure adequate public participation. The Commission also directed MSPGCL to

reply expeditiously to all the suggestions and objections received from stakeholders

on its Petition. MSPGCL issued the public notice in newspapers inviting suggestions

and objections from stakeholders on its MYT Business Plan Petition. The public

notice was published in The Times of India, DNA (English) and Lokmat, Sakal

(Marathi) in all editions in Maharashtra state newspapers on 24th

November, 2012.

The copies of MSPGCL’s Business Plan Petition and its summary were made

available for inspection/purchase to members of the public at MSPGCL’s offices and


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on MSPGCL’s website (www.mahagenco.in). The copy of the public notice and an

executive summary of the Petition were also made available on the website of the

Commission (www.mercindia.org.in) in a downloadable format. The public notice

specified that the suggestions and objections, either in English or Marathi, may be

filed in the form of an affidavit along with proof of service on MSPGCL.

The Commission received written suggestions and objections on various issues. The

Public Hearing was held on 20 December, 2012 at 11.00 hours at Centrum Hall 1st

Floor, Centre No. 1, World Trade Centre, Cuffe Parade, Mumbai – 400005. The list

of individuals who participated in the Public hearing is provided in Appendix – 2.

The Commission has ensured that the due process as contemplated under the law to

ensure transparency and public participation was followed at every stage meticulously

and adequate opportunity was given to all persons concerned to file their say in the

matter.

1.3 Organisation of the Order

This Order is organised in the following six Sections:

Section 1 of the Order provides a brief history of the quasi-judicial regulatory

process undertaken by the Commission. For the sake of convenience, a list of

abbreviations with their expanded forms has been included.

Section 2 of the Order lists out the various suggestions and objections raised by

the objectors in writing as well as during the Public Hearing before the

Commission. Various suggestions and objections have been summarized,

followed by the response of MSPGCL and the rulings of the Commission on each

of the issues.

Section 3 of the Order summarises the salient features of the MYT Business Plan

Petition filed by MSPGCL.

Section 4 of the Order discusses the Business Plan components, key issues and

Commission’s Ruling on the same including trajectory for performance

parameters.

Section 5 of the Order details the views of the Commission on the projection of

ARR components as submitted by MSPGCL for the purpose of approval of

Business Plan.

Section 6 of the Order summarises the directives to MSPGCL.


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2 OBJECTIONS RECEIVED, MSPGCL’S RESPONSE

AND COMMISSION’S RULING

2.1 CLARITY REGARDING TRANSFER SCHEME OF MSEB

Shri N. Ponrathnam submitted that MSPGCL in the Business Plan Petition has

mentioned that consequent to power sector reforms in Maharashtra, the erstwhile

MSEB had been restructured into four successor Companies namely, MSEB Holding

Company Ltd., Maharashtra State Power Generation Company Ltd. (MSPGCL),

Maharashtra State Electricity Transmission Company Ltd. (MSETCL) and

Maharashtra State Electricity Distribution Company Ltd. (MSEDCL). Citing that

Section 131(2) of the EA 2003 provides only for creation of Companies for

discharging the functions of Generation, Transmission and Distribution of electricity,

he asked MSPGCL to submit the justification for creating MSEB Holding Company

Ltd. He also asked MSPGCL to submit the functions/activities of MSEB Holding

Company Ltd.

MSPGCL’s Response

MSPGCL submitted that pursuant to enactment of EA 2003, the Government of

Maharashtra unbundled the erstwhile Maharashtra State Electricity Board (MSEB)

into four Companies vide its G.R. No. ELA·1003/ P.K.8588/ Bhag-2/ Urja-5 dated 24

January, 2005. The provisional Transfer Scheme was notified under Section 131(5)

(g) of the EA 2003 on 6 June, 2005 to re-organize the MSEB.

MSPGCL submitted that the EA 2003 gives liberty to the State Government to notify

the Transfer Scheme and create such Company or Companies namely, Generation

Company or Transmission Licensee or Distribution Licensee, as the case may be.

Sections 131 (2) and 131 (5) of the EA 2003 states that:

“(2) Any property, interest in property, rights and liabilities vested in the State

Government under sub-section (1) shall be re-vested by the State Government

in a Government company or in a company or companies, in accordance with

the transfer scheme so published along with such other property, interest in

property, rights and liabilities of the State Government as may be stipulated in

such scheme, on such terms and conditions as may be agreed between the

State Government and such company or companies being State Transmission

Utility or generating company or transmission licensee or distribution

licensee, as the case may be..


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…

(5) A transfer scheme under this section may-

(a) provide for the formation of subsidiaries, joint venture companies or other

schemes of division, amalgamation, merger, reconstruction or arrangements

which shall promote the profitability and viability of the resulting entity,

ensure economic efficiency encourage competition and protect consumer

interests:”

MSPGCL, in its reply, also submitted the objects for which the MSEB Holding

Company has been established.

Commission’s Ruling

The Commission has noted the submissions of MSPGCL and is of the view that the

objection raised by the objector is not relevant for the present proceedings.

2.2 LEGALITY OF CONSIDERING MSPGCL IN REGULATED REGIME

EVEN AFTER DE-LICENSING OF GENERATION BUSINESS UNDER

THE EA 2003

Shri N. Ponrathnam submitted that no licence is required for generation business and

the EA 2003 mandates a generating company to operate on commercial principles. He

further submitted that a generating company can sell electricity at any rate in the open

market as per the demand, and generation is supposed to be driven by demand and

competition as per the EA 2003. Since, MSPGCL has a monopoly in the State of

Maharashtra, MSPGCL should clarify how it considers itself to be in a regulated

regime.

Advocate Anil N. Chavan submitted that the Generation, Transmission and

Distribution Companies were established in 2005 in Maharashtra under the EA 2003.

He submitted that as per the EA 2003, Generation has been kept out of the licence

regime, however, captive generation is freely permitted and hydro project is required

to get approval of State Government. He further submitted that there is a provision of

direct commercial relationship between a consumer and generating company in which

case, the price of power is not regulated and only transmission and wheeling charges

with surcharge are regulated. In view of the above, he requested to submit details,

such as declaration of responsibility, accountability, status, etc., of MSPGCL.

MSPGCL’s Response

MSPGCL submitted that it is correct that the generation business has been kept out of

the licence regime and captive generation is freely permitted as per the provisions of


Page 15 of 168

the EA 2003, and there is a provision of direct commercial relationship between a

consumer and a generating company. However, MSPGCL has entered into Power

Purchase Agreement with MSEDCL for sale of power from its generating stations. As

per the PPA, tariff for sale of such power shall be determined by the Commission.

Although the EA 2003 has de-licensed the generation function, however, Section 62

and Section 86 of the EA 2003 mandate that the Commission has the jurisdiction to

determine the tariff for sale of power from such de-licensed entities to the distribution

companies, as reproduced below:

“Section 62. (Determination of tariff): --- (1) The Appropriate Commission

shall determine the tariff in accordance with the provisions of this Act for –

(a) supply of electricity by a generating company to a distribution licensee:

…

(2) The Appropriate Commission may require a licensee or a generating

company to furnish separate details, as may be specified in respect of

generation, transmission and distribution for determination of tariff.”

“Section 86. (Functions of State Commission): --- (1) The State Commission

shall discharge the following functions, namely: -

(a) determine the tariff for generation, supply, transmission and wheeling of

electricity, wholesale, bulk or retail, as the case may be, within the State:

…

(b) regulate electricity purchase and procurement process of distribution

licensees including the price at which electricity shall be procured from the

generating companies or licensees or from other sources through agreements

for purchase of power for distribution and supply within the State;”

As regard the accountability, responsibility and status of MSPGCL, MSPGCL

submitted that it is a State-owned Generation Company and is formed under the

Government of Maharashtra General Resolution No. ELA·1003/P.K.8588 /Bhag·2

/Urja·5 dated 24 January, 2005 with effect from 6 June, 2005 according to the

provisions envisaged in Part XIII of the Electricity Act, 2003. MSPGCL submitted

that it is a Company registered under the Companies Act, 1956. MSPGCL further,

submitted that it is responsible for operation of generating stations as per the approved

norms and is currently operating in a cost-plus regime wherein the tariff of power

generated from MSPGCL stations is determined by the Commission.


Page 16 of 168


MSPGCL has entered into a Power Purchase Agreement (PPA) with MSEDCL for

sale of electricity from its generating stations to MSEDCL, which has been approved

by the Commission. Further, as extracted above, Section 62 and Section 86 of the

Electricity Act, 2003 empowers the Commission to determine the tariff for supply of

electricity by a generating company to a distribution licensee. In view of the above,

the tariff for supply of electricity by MSPGCL to MSEDCL for capacity tied up under

PPA is being regulated by the Commission.

2.3 NON-PAYMENT OF DUES BY MSEDCL

Shri N. Ponrathnam submitted that MSEDCL is the sole Distribution Licensee

enjoying monopoly in distribution in the major part of the State and is completely

dependent on MSPGCL for fulfilling its Universal Service Obligation. He submitted

that the tariff for MSEDCL and MSPGCL are approved, considering all the

expenditure incurred. Further, MSEDCL is also a State-owned Company and is not a

private Company, wherein there could be a fear of liquidation. He further submitted

that Section 56 of the Electricity Act, 2003 empowers MSPGCL to deal with

MSEDCL in case it fails to pay the amount agreed as per the Power Purchase

Agreement. In view of the above, he asked MSPGCL to submit the action taken by

MSPGCL in the context of non-payment by MSEDCL.

Advocate Anil N. Chavan submitted that MSPGCL has mentioned Rs. 4500 crore of

pending dues from MSEDCL and because of which MSPGCL has to take loan of Rs.

4500 crore to run its business. He submitted that MSPGCL in its Petition has

mentioned such dues from MSEDCL as a threat in its SWOT analysis, and as a

mitigation measure, MSPGCL may take recourse to third party sales, which might not

be in the interest of the consumers. Advocate Anil N. Chavan requested the

Commission to take appropriate steps for default of payment by MSEDCL.

MSPGCL’s Response

MSPGCL submitted the following extract of Section 56 of the EA 2003:

“Section 56. (Disconnection of supply in default of payment): -- (1) Where

any person neglects to pay any charge for electricity or any sum other than a

charge for electricity due from him to a licensee or the generating company in

respect of supply, transmission or distribution or wheeling of electricity to

him, the licensee or the generating company may, after giving not less than

fifteen clear days’ notice in writing, to such person and without prejudice to


Page 17 of 168

his rights to recover such charge or other sum by suit, cut off the supply of

electricity and for that purpose cut or disconnect any electric supply line or

other works being the property of such licensee or the generating company

through which electricity may have been supplied, transmitted, distributed or

wheeled and may discontinue the supply until such charge or other sum,

together with any expenses incurred by him in cutting off and reconnecting the

supply, are paid…”

MSPGCL, in view of the above, submitted that if the Letter of Credit (LC) is not

provided/renewed and in the event of non-payment of dues for two consecutive

months, MSPGCL is entitled to sell power to any open access customer or traders.

MSPGCL further submitted the relevant extract from the PPA between MSPGCL and

MSEDCL as under:

"If the MAHAVITARAN fails to make payments of consecutive two months

bills and also is unable to maintain the Payment Security Mechanism specified

in Article 10.1, for any reason whatsoever, the MAHAGENCO shall have the

right to sell such power to third party, after giving 15 days notice to the

MAHAVITARAN.

a. any consumer, subject to applicable law; and

b. any licensee or trader under the Electricity Act, 2003."

MSPGCL submitted that disconnection of supply to MSEDCL will only have a

cascading effect on consumers in the State in terms of prolonged load shedding.

MSPGCL submitted that though MSEDCL being the sole Distribution Licensee in the

major part of the State enjoys monopoly in distribution business, MSEDCL itself

being a regulated entity has its own set of issues with respect to timely submission of

Tariff Petition, receipt of Tariff Orders and cap on recovery of approved ARR from

the consumers. MSPGCL submitted that any issues faced by MSEDCL in recovery of

its expenses whether arising out of its compulsions under a regulated environment or

its own operational inefficiencies can have a cascading effect on the financial health

of MSPGCL. The resultant cash flow issues will only increase the short-term

borrowings of MSPGCL and worsen the risk perception of lenders. Such non-

desirable borrowings beyond the threshold level will further increase the precarious

financial health of the Company.

MSPGCL requested the Commission that in light of the serious nature of the issues,

the Commission should give consideration on this aspect especially appreciating the

fact that MSPGCL is driving an extensive programme to add new generation


Page 18 of 168

capacities in the State and requires extensive resources not only to run the current

stations but also to invest in the funding of the new Units. MSPGCL submitted that

failure to meet the necessary resource requirements may force MSPGCL to take such

adverse mitigation measures for its survival.

MSPGCL further submitted that the Commission may take a considerate view on the

submissions made by it.


The Commission has taken note of the submissions made by the Consumer and

MSPGCL as regards to non payment of dues by MSEDCL. The Commission is of the

view that as this is a commercial issue between MSGPCL and MSEDCL, this needs

to be resolved between the parties as per the provisions of Power Purchase

Agreement.

2.4 SALE TO THIRD PARTY BY MSPGCL

Shri. N. Ponrathnam submitted that MSPGCL is not restricted from third party sale, if

it is in the interest of MSPGCL. He submitted that the consumer/public interest is the

domain of the State Government and the Commission.

MSPGCL’s Response

MSPGCL submitted that its entire capacity is tied up under long-term PPA with

MSEDCL. As per the terms and conditions of the PPA and in the interest of

consumers in the State at large, MSPGCL is bound to supply power to MSEDCL at

first priority. Any surplus power beyond the requirement of MSEDCL can be sold to

third party without any restrictions.


As discussed in subsection 2.2 above, the Commission has regulated/determined the

Tariff of MSPGCL, for electricity supplied to MSEDCL. In case MSPGCL has any

surplus power available with it, the sale to any third party is at the sole discretion of

MSPGCL.

2.5 DEVIATION FROM THE APPLICABLE NORMS

Shri N. Ponrathnam submitted that it is the prime duty of the generating company to

take care of the entire requirement of men, material and services to run the plant at its

maximum capacity. He submitted that the unavailability of coal/gas neither comes


Page 19 of 168

under natural calamity nor force majeure. He submitted that the transit loss/loss in

calorific value/increase in moisture of coal are the responsibility of generating

company and MSPGCL can prevent such problems by taking due care, rather than

penalising the innocent consumers. He further submitted that MSPGCL is fully

responsible for the quantity and quality of the fuel required for generation for

achieving the normative parameters. There is no justification that can be accepted for

lower load factor/ lower availability factor when total MSPGCL tariff is approved by

the Commission.

MSPGCL’s Response

MSPGCL submitted that the major source of fuel for MSPGCL is domestic coal,

which is purchased from the various subsidiaries of Coal India Limited (CIL). There

are issues in procurement of coal, the transit loss, poor quality and quantity of coal,

delay in supply, etc. MSPGCL submitted that it is constrained in finding solutions to

these issues given the monopoly nature of coal supply in India and lack of a Regulator

for the Coal Industry as well as lack of alternatives of coal supply. MSPGCL

submitted that quality and quantity of coal is nation-wide issue and MSPGCL has no

control over it.

MSPGCL further submitted that the Central Electricity Authority (CEA) in its

monthly report on "Electricity Generation during the month of September 2012"

observed as under:

“Loss of generation due to various constraints and subsequently reasons for

low PLF during the period April-September'12 are represented in following

table:

S. No. Category

Energy Loss in the Month of April-

September'12 (BU)

Shortfall in Generation – reasons

1. Shortage of Coal 12.4

2. Wet/poor coal quality 2.5

… … …

5. Gas Shortage (up to Aug' 12) 9.17

…

Availability of Cool: During the current financial year 2012·13, the

anticipated gap between the requirement and availability of domestic coal was

estimated around 70 MT."


Page 20 of 168

MSPGCL submitted that it is exploring options to mitigate the impact of coal

shortages and quality issues by way of usage of imported coal and e-auctions for

domestic coal. MSPGCL submitted that there are constraints towards utilisation of

imported coal. MSPGCL submitted that as the imported coal usage is subject to

design GCV, loading and other constraints, the entire gap cannot be met through

usage of imported coal.


The Commission has dealt with the issue of Performance Parameters of MSPGCL’s

Generating Stations for the second Control Period in Section 4.2 of this Order.

2.6 COMPLIANCE TO CPRI NORMS

Shri N. Ponrathnam submitted that MSPGCL should adhere to all the norms based on

the recommendation made by CPRI. He submitted that MSPGCL should be

responsible for operating parameters such as auxiliary consumption and specific oil

consumption as per the set norms.

MSPGCL’s Response

MSPGCL submitted that it has given the detailed rationale for seeking deviation from

CPRI norms in its Petition. MSPGCL submitted that the implementation of CPRI

schemes is subject to availability of materials with vendors. MSPGCL submitted that

while the benefits of implementation of CPRI schemes will accrue to MSPGCL, same

will depend on timelines for implementation of schemes. MSPGCL hence, requested

the Commission to consider the above and take an appropriate view.


The Commission has dealt with the issue of Performance Parameters of MSPGCL’s

Generating Stations for the second Control Period in Sections 4.2 of this Order.

2.7 POWER PURCHASE AGREEMENT

Shri N. Ponrathnam submitted that Power Purchase Agreement (PPA) is a must to fix

the price of electricity and to ensure the availability of electricity in the time of

shortage. He submitted that PPA should be made compulsory and the terms and

conditions in the PPA should be in favour of the distribution companies, so that the

benefit can be passed on to the consumers. He submitted that the distribution

companies enter into agreements in favour of their sister concerns, i.e., the generating


Page 21 of 168

company and try to force the same to the consumers. He further submitted that the

PPA should separately specify the details for availing the fuel adjustment charges on

account of fuel price variations and determination of fuel adjustment charge levied

should be transparent to the public.

MSPGCL’s Response

MSPGCL submitted that the PPAs entered into between MSPGCL and MSEDCL are

already approved by the Commission after undertaking a due public process wherein

the comments of the public were considered. MSPGCL submitted that every

commercial activity of MSPGCL is under the scrutiny of the Commission.

As regard the Fuel Surcharge Adjustment, MSPGCL submitted that the same is under

the purview of MERC MYT Regulations, and Regulation 49.6 of MERC MYT

Regulations specifies:

“49.6 Adjustment of rate of energy charge (REC) [Fuel Surcharge

Adjustment] on account of variation in price or heat value of fuels

Any variation in Price and Gross Calorific Value of coal/lignite or gas or

liquid fuel vis-a-vis approved values shall be adjusted on month to month

basis on the basis of average Gross Calorific Value of coal/lignite or gas or

liquid fuel in stock, received and burnt and weighted average landed cost

incurred by the Generating Company for procurement of coal/lignite, oil, or

gas or liquid fuel, as the case may be for a power station. In its bills, the

Generating Company shall indicate rate of energy charges at base price of

primary and secondary fuel specified by the Commission and the Fuel

Surcharge to it separately. The Generating Company should submit the

computation to the Commission on six-monthly basis for post-facto approval

of Fuel Surcharge adjustment.”

MSPGCL, in view of the above, submitted that the claim of the Consumer

Representative is not correct, as the PPA is approved by the Commission after due

public process wherein the comments of public have been considered, and also the

Fuel Surcharge Adjustment is levied in a transparent manner as per the MERC MYT

Regulations.


The Commission agrees with the submissions of MSPGCL.


Page 22 of 168

2.8 PLANT LOAD FACTOR AND AVAILABILITY FACTOR

Shri N. Ponrathnam submitted that lower Plant Load Factor of MSPGCL’s generating

stations is a serious issue. As the Commission approves the capital expenditure for the

required infrastructure improvement, the same should also be reflected through

improved Plant Load Factor.

Shri. Rakshpal Abhrol submitted that MSPGCL should compare the performance of

its generating stations with that of Dahanu Thermal Station of Reliance Infrastructure

Limited, and Trombay Generating Station of TPC-G, which have been operating at

very high PLF and should make efforts to increase its generation so as to meet the

growing demand.

Shri. Pratap Hogade, Maharashtra Veej Grahak Sanghatana, submitted that out of the

total installed capacity of 7652 MW of MSPGCL as on 31 August, 2012, the average

Availability in the months of September, October and November in FY 2012-13 is

around 4400 MW, i.e., around 57% to 58%. He submitted that the PLF of Reliance

Dahanu had been 102% to 104% and that of TPC and other private generation

companies had been 85% to 90%. He further submitted that the national average of

PLF had been 73%. He submitted that per Unit cost had increased as a result of lower

PLF of MSPGCL.

MSPGCL’s Response

MSPGCL submitted that it is already implementing the schemes as recommended by

CPRI to improve the Plant Load Factor of the Generating Stations. MSPGCL further

submitted that wherever there is a deviation in implementing the schemes, the reasons

for the same have been explained in the Business Plan.

MSPGCL further submitted that the main problems faced by it are low Calorific

Value of received Coal, transit losses and lower supply of Coal. MSPGCL submitted

that the generation (MU) lost due to coal related problems during September 2012 to

November 2012 was in the range of 20% - 25%. MSPGCL submitted that the coal

related problems are being faced by the Utilities all over India and it had also been

highlighted by CEA that the PLF of coal based thermal generation was 68.27% during

April 2012 to September 2012.


As regards the lower PLF due to poor quality of coal, the Commission has been

reiterating that it is the responsibility of MSPGCL to arrange good quality coal for its


Page 23 of 168

power stations and the above view of the Commission has also been accepted by the

Hon’ble ATE in its Judgment dated 19 April, 2012, issued on the Review Petition No

9 of 2011 in Appeal No 199 of 2010, wherein the Hon’ble ATE has ruled as under:

“We do not accept that the quality of coal is totally beyond the control of the

appellant. If the quality of raw coal supplied by the coal companies is poor, the

appellant has to make arrangements for washing of coal and blending with

superior quality of coal.”

In view of the above, the Commission directs MSPGCL to take necessary and urgent

steps to arrange good quality of coal for its Stations. MSPGCL should further

prioritise the infrastructure development for its Stations, which should be reflected

through improved Plant Load Factor and Availability Factor during the second

Control Period.

2.9 GCV OF THE COAL

Advocate Anil N. Chavan submitted that MSPGCL should mention the GCV of the

domestic coal received or to be received from individual collieries, as well as MOU

with Coal India Ltd. or subsidiary of CIL in its Business Plan.

MSPGCL’s Response

MSPGCL submitted the GCV of domestic coal, which is expected to be received

during the second Control Period from the subsidiaries of Coal India Ltd, as shown in

the Table below:

Table 1: GCV of domestic coal expected to be received from subsidiaries of CIL as

submitted by MSPGCL

S No. Station/Unit GCV of Domestic Coal

(kcal/kg)

Source of domestic

Coal

1. Bhusawal 2800 WCL

2. Chandrapur 2871 WCL, SECL, MCL

3. Parli 3000 WCL, SECL, SCCL

4. Khaperkheda 2594 WCL, SECL, MCL

5. Koradi 3108 WCL, SECL, MCL

6. Nasik 3676 WCL, SECL

7. Paras- 3 3182 WCL, MCL

8. Paras- 4 3175 WCL, MCL

9. Parli-6 3000 WCL, SECL, SCCL


Page 24 of 168

S No. Station/Unit GCV of Domestic Coal

(kcal/kg)

Source of domestic

Coal

10. Parli-7 3000 WCL, SECL, SCCL

11. Khaperkheda- 5 2750 MCL

12. Bhusawal- 4&5 2600 MCL

13. Chandrapur - 8&9 3450 Machhakata

14. Parli- 8 3450 Machhakata

15. Koradi 8, 9 & 10 3450 Machhakata


The Commission has taken note of MSPGCL’s reply in this regard.

2.10 MOU FOR COAL PROCUREMENT WITH CIL

Advocate Anil N. Chavan submitted that MSPGCL in its Business Plan Petition has

mentioned that except Mahanadi Coalfields Ltd. for Parli, MSPGCL has not entered

into MOU with any other subsidiaries for the new Units. He asked MSPGCL to

submit the reason for not entering into MOUs with subsidiaries of CIL for procuring

coal for MSPGCL’s new and upcoming Units.

MSPGCL’s Response

MSPGCL replied that that it has already entered into MOUs with MCL for supply of

coal to Parli Unit 7, Paras Unit 4, Khaperkheda Unit 5, Bhusawal Unit 4 and Unit 5.

MSPGCL further submitted that signing of FSA (Fuel Supply Agreement) for the

above mentioned Units and MOU for the upcoming Units is under process.


The Commission has taken note of MSPGCL’s reply in this regard. The Commission

directs MSPGCL to expedite the process to ensure that the requisite quantity of fuel

supply is available for its upcoming as well as existing and new Units.

2.11 GENERATION TARIFF

Advocate Anil N. Chavan submitted that MSPGCL in its Business Plan Petition has

not mentioned the expected cost of selling electricity per Unit (Rs./kWh) during the

second Control Period. He asked MSPGCL to submit the expected cost per Unit (Rs.

/kWh) for each of its Generating Stations during the second Control Period.


Page 25 of 168

MSPGCL’s Response

MSPGCL submitted the estimated cost of generation of each generating station during

the second Control Period as shown in the Tables below:

Table 2: Fixed and Variable Charge for FY 2013-14 as submitted by MSPGCL

S. No. Station/Unit

Fixed

Charges

(Rs./kWh)

Energy

Charges

(Rs./kWh)

Total Cost

(Rs. /kWh)

1 Bhusawal 1.01 3.48 4.49

2 Chandrapur 0.73 2.67 3.40

3 Parli 0.93 3.97 4.90

4 Khaperkheda 0.98 2.81 3.79

5 Koradi 0.97 3.52 4.49

6 Nasik 0.91 3.55 4.46

7 Paras Unit 3 2.09 2.01 4.10

8 Paras Unit 4 2.17 3.15 4.18

9 Parli Unit 6 2.09 3.15 5.24

10 Parli Unit 7 2.25 3.07 5.32

11 Khaperkheda Unit 5 2.44 2.80 5.24

12 Bhusawal Unit 4 2.13 3.39 5.52

13 Bhusawal Unit 5 2.13 3.39 5.52

14 Chandrapur Unit 8 1.73 3.70 5.43


16 Parli Unit 8 2.69 2.07 4.76

17 Koradi Unit 8 1.96 3.09 5.05


S. No. Station/Unit

Fixed

Charges

(Rs./unit)

Energy

Charges

(Rs./unit)

Total Cost

(Rs. /unit)

1 Bhusawal 1.09 3.68 4.77

2 Chandrapur 0.90 2.82 3.72

3 Parli 1.08 4.12 5.20

4 Khaperkheda 1.02 2.98 4.00

5 Koradi 1.29 3.82 5.12

6 Nasik 1.13 3.79 4.92

7 Paras Unit 3 1.93 2.13 4.06

8 Paras Unit 4 2.00 2.12 4.12

9 Parli Unit 6 2.08 3.34 5.42

10 Parli Unit 7 2.20 3.26 5.46


12 Bhusawal Unit 4 2.16 3.57 5.73


Page 26 of 168

S. No. Station/Unit

Fixed

Charges

(Rs./unit)

Energy

Charges

(Rs./unit)

Total Cost

(Rs. /unit)

13 Bhusawal Unit 5 2.16 3.57 5.73



16 Parli Unit 8 2.40 2.91 5.31

17 Koradi Unit 8 2.00 4.01 6.01

18 Koradi Unit 9 1.99 3.89 5.88

19 Koradi Unit 10 2.00 4.12 6.12


S. No. Station/Unit

Fixed

Charges

(Rs./unit)

Energy

Charges

(Rs./unit)

Total

Cost

(Rs.

/unit)

1 Bhusawal 1.65 4.08 5.73

2 Chandrapur 1.01 2.99 4.00

3 Parli 1.10 4.25 5.35

4 Khaperkheda 1.05 3.17 4.22

5 Koradi 1.24 3.87 5.07

6 Nasik 1.08 4.00 5.07

7 Paras Unit 3 1.91 2.26 4.17

8 Paras Unit 4 1.96 2.25 4.21

9 Parli Unit 6 2.17 3.54 5.71

10 Parli unit 7 2.20 3.46 5.66


12 Bhusawal Unit 4 2.11 3.76 5.87

13 Bhusawal Unit 5 2.11 3.76 5.87



16 Parli Unit 8 2.55 3.08 5.63

17 Koradi Unit 8 2.19 3.81 6.00

18 Koradi Unit 9 2.19 3.81 6.00

19 Koradi Unit 10 2.20 4.06 6.26


The Commission has noted MSPGCL’s submission in this regard. However, the

Commission, in this Order, has not estimated the fixed charges and energy charges for

the second Control Period and the same shall be approved as a part of the Order on

Multi Year Tariff Petition for the second Control Period.


Page 27 of 168

2.12 OPERATION AND MAINTENANCE EXPENSES

Shri. B. M. Ghadhe asked MSPGCL to submit the percentage increase considered for

projecting the Operation and Maintenance Expenses for the second Control Period.

MSPGCL’s Response

MSPGCL submitted that it has considered the average of actual expenses for FY

2009-10, FY 2010-11 and FY 2011-12 for arriving at the O&M Expenses for FY

2010-11. MSPGCL submitted that while determining the O&M Expenses for FY

2010-11, the impact of one-time expenses and contributions towards the vintage Units

have been removed. MSPGCL submitted that the O&M Expenses so determined for

FY 2010-11 have been escalated at 8.31% (Commission approved escalation rate) for

FY 2011-12 and FY 2012-13. MSPGCL submitted that as per the MERC MYT

Regulations, the O&M Expenses for the subsequent years in the second Control

Period have to be escalated at 5.72% to arrive at permissible O&M Expenses for each

year in the second Control Period. MSPGCL submitted that considering that the

escalation factor will be subject to truing up, it has considered the escalation factor

approved for FY 2012-13, i.e., 8.31%.


The Commission has dealt with the issue of Operation and Maintenance Expenses for

the second Control Period for MSPGCL in Section 5.2 of this Order.

2.13 DEPRECIATION

Shri. B. M. Ghadhe asked MSPGCL to submit the percentage considered for arriving

at the Depreciation for the second Control Period.

MSPGCL’s Response

MSPGCL submitted that the percentage considered for arriving at the depreciation

figures for the second control period is as per the depreciation schedule given in

Annexure-1 of MERC MYT Regulations, 2011. For ease of reference, MSPGCL also

submitted the depreciation rates of various asset classes as specified in MERC MYT

Regulations, 2011, as shown in the Table below:


Page 28 of 168

Table 5: Asset class-wise rate of depreciation as submitted by MSPGCL

S. No. Asset Class Depreciation

(%)

1 Land & Rights -

2 Buildings 3.34%

3 Hydraulic Works 5.28%

4 Other & Civil Works 3.34%

5 Plant & Machinery 5.28%

6 Lines & Cable Network 5.28%

7 Vehicles 9.50%

8 Furniture & Fixtures 6.33%

9 Office equipments 6.33%


The rate of depreciation for different asset classes for the second Control Period shall

be considered as per the depreciation schedule specified in Annexure-1 of MERC

MYT Regulations.

2.14 INTEREST ON LOAN

Shri. B. M. Ghadhe asked MSPGCL to submit the rate of interest considered on long-

term loan capital during the second Control Period.

MSPGCL’s Response

MSPGCL submitted that the interest rate for the existing loans has been considered

based on the weighted average interest rate on existing loans and the interest rate for

the normative loans has been considered as 12% for the second Control Period.


It has been observed that MSPGCL has considered a 12% rate of interest for the

normative loans for the second Control Period. However, Regulation 33.5 of the

MERC MYT Regulations clearly specifies that the weighted average rate of interest

calculated on the basis of the actual loan portfolio at the beginning of each year

should be considered for computing the interest expenses for the second Control

Period. The relevant extract from the MERC MYT Regulations is reproduced below:

“33.5 The rate of interest shall be the weighted average rate of interest

calculated on the basis of the actual loan portfolio at the beginning of each


Page 29 of 168

year applicable to the Generating Company or the Transmission Licensee or

the Distribution Licensee:

Provided that if there is no actual loan for a particular year but normative

loan is still outstanding, the last available weighted average rate of interest

shall be considered:

Provided further that if the Generating Company or the Transmission

Licensee or the Distribution Licensee, as the case may be, does not have

actual loan, then the weighted average rate of interest of the Generating

Company or the Transmission Licensee or the Distribution Licensee as a

whole shall be considered.

33.6 The interest on loan shall be calculated on the normative average loan of

the year by applying the weighted average rate of interest.”

In view of the above, the Commission directs MSPGCL to submit the computation of

interest expenses strictly as per the above mentioned Regulations in its Multi Year

Tariff Petition for the second Control Period.

2.15 INTEREST ON WORKING CAPITAL

Shri. B. M. Ghadhe asked MSPGCL to submit the rate of interest considered for

computing the interest on working capital loan.

MSPGCL’s Response

MSPGCL submitted that as per Regulation 35.1 of MERC MYT Regulations, the rate

of interest on working capital should be equal to the State Bank Advance Rate

(SBAR) of State Bank of India as on date of application for determination of Tariff.

MSPGCL submitted that it has projected the interest rate on Working Capital as

14.75% for the second Control Period.


Regulation 35.1 (e) of MERC MYT Regulations, 2011 specifies that the interest on

working capital shall be computed at the rate equal to the State Bank Advance Rate

(SBAR) of State Bank of India as on the date on which the application for

determination of Tariff is filed. The relevant extract of the said Regulation is

reproduced below,


Page 30 of 168

“35 Interest on Working Capital

35.1

...

(e) Rate of interest on working capital shall be on normative basis and shall

be equal to the State Bank Advance Rate (SBAR) of State Bank of India as on

the date on which the application for determination of tariff is made.”

Accordingly, the interest on normative working capital shall be determined at the

normative rate interest in accordance with MERC MYT Regulations, 2011 in the

Multi Year Tariff Order of MSPGCL.

2.16 INCOME TAX

Shri. B. M. Ghadhe submitted that MSPGCL has considered the Income Tax for the

new Units and the upcoming Units during the second Control Period, however, since,

there would be no income generated from the new and the upcoming Units, Income

Tax should not be applicable for the new and the upcoming Units.

MSPGCL’s Response

MSPGCL submitted that Income Tax on New Units and Upcoming Units is

considered only after COD of such Units has been achieved. MSPGCL submitted that

it has considered the Income Tax considering the MAT Rate of 20.01% for the second

Control Period. MSPGCL further submitted that it may be appreciated that MSPGCL

has not formed any SPV for development of the new projects and overall, the

Company has been showing profits in its books of accounts and the income from

these projects will further increase the income tax liability of the Company. MSPGCL

submitted that as per the Income Tax rules, even if there is a loss as per the Income

tax calculations, MAT is applicable for a Company showing profits in its books of

accounts. Therefore, MAT (as per the prevailing rate) has been considered while

computing the Income Tax. MSPGCL further submitted that the income tax is subject

to truing - up by the Commission based on the actual tax paid by the Company for any

financial year.


The Commission has taken note of MSPGCL’s reply in this regard. The Commission

would consider the actual income tax paid by MSPGCL at the time of mid-term

performance review or at the time of final Truing up for the second Control Period by

the Commission. The income-tax considered by the Commission for the existing and


Page 31 of 168

the new Stations/Units for the years under consideration for the present MYT

Business Plan starting from FY 2013-14 to FY 2015-16 is covered in clause 5.6 of

this petition.

2.17 CONSUMER AWARENESS

Shri. N. Ponrathnam suggested that for better awareness and more public participation

during the hearings, the Public Notice should be sent along with the electricity bills.

He further submitted that for easy access, the Commission should also upload the full

Petition on its website.

MSPGCL’s Response

MSPGCL requested the Commission to take an appropriate view on the above

suggestions.


The due process for public participation has already been specified in the MERC

MYT Regulations, 2011, and the relevant extracts of the MERC MYT Regulations

have been reproduced below for reference:

“18 Determination of Tariff for Transmission, Distribution Wires Business

and Retail Supply Business

…

18.5 The applicant shall, within three (3) days of an intimation given to him in

accordance with Regulation 18.4, publish a notice, in at least two (2) English

and two (2) Marathi language daily newspapers widely circulated in the area

to which the application pertains, outlining the proposed tariff, and such other

matters as may be stipulated by the Commission, and inviting suggestions and

objections from the public:

Provided that the applicant shall make available a hard copy of the complete

application, to any interested party, at such locations and at such rates as may

be stipulated by the Commission:

Provided further that the applicant shall also put up on its internet website, in

downloadable spreadsheet format showing detailed computations, the

application made to the Commission along with all regulatory filings,

information, particulars and documents in the manner so stipulated by the

Commission:

Provided further that the web-link to the information mentioned in the second

proviso to Regulation 18.5 above shall be easily accessible, archived for

downloading and shall be prominently displayed on the applicant's internet

website:


Page 32 of 168

Provided also that the applicant may not provide or put up any such

information, particulars or documents, which are confidential in nature, with

the prior approval of the Commission.”

The Public Notification has been in accordance with the above Regulations. As

regards the uploading of the Petition on the Commission’s website, the Commission

uploads the Executive Summary and the Public Notice on its website upon admission

of the Petition.

2.18 CAPACITY ADDITION PLAN

Shri. N. Ponrathnam submitted that the capacity addition plan for the second Control

Period should have been made while considering the supply and demand of electricity

during the second Control Period. He further asked MSPGCL to justify the proposed

capacity addition of 4230 MW till the end of second Control Period.

MSPGCL’s Response

MSPGCL submitted that as Maharashtra is a power deficit State, the capacity addition

by MSPGCL would help in servicing the shortfall in the supply to meet the demand in

the State. MSPGCL submitted that supply and demand situation has been broadly

analysed while planning the capacity addition during the second Control Period.

MSPGCL submitted that the detailed demand-supply analysis can be done only by

MSEDCL and not by MSPGCL.


The Commission has taken note of MSPGCL’s submissions in this regard.

2.19 NON CONSIDERATION OF BHANDARDHARA HYDRO POWER

STATION

Shri. Rakshpal Abhrol submitted that MSPGCL has not included the Bhandardara

Hydro Power Station in its Business Plan Petition. He asked MSPGCL to submit the

justification for the same.

MSPGCL’s Response

MSPGCL submitted that Bhandardara Hydro Power Station is not owned and

operated by MSPGCL, hence, the same cannot be included in the Business Plan of

MSPGCL.


Page 33 of 168


The Commission agrees with MSPGCL that since, the Bhandardara Hydro Power

Station is neither owned nor operated by MSPGCL, the same cannot be included in

the Business Plan of MSPGCL.

2.20 INCREASE IN ELECTRICITY TARIFF

Shri Kamlakar Shenoy submitted that the cost of electricity before the inception of the

Commission was around Rs 1/ kWh and since, the inception of the Commission, the

price of electricity has increased by 5 to 6 times. He further stated that the Tariff

determination process involves lots of complex computations, which is very difficult

for a consumer to understand, and requested the Commission to adopt some simpler

mechanism to determine the electricity tariff.

MSPGCL’s Response

MSPGCL has not replied to the above objection/suggestion.


The Commission agrees that the tariff computation is a complex task. The

Commission has taken efforts over the years to ensure that the Public Notices and the

Tariff Petitions are self-explanatory, so that all consumers are able to understand the

tariff determination process and are able to contribute their suggestions on the same.

The generation of electricity involves various costs such as fuel cost, O&M

Expenditure, interest expenses, return on equity, depreciation, etc., which are directly

linked to the Tariff of electricity. Further, as regards the increase in electricity Tariff

in last few years, the Commission is of the view that such increase in generation

Tariff is on account of the major policy changes at the macroeconomic level, which

has resulted in the increased fuel price, which accounts for nearly 70% of the cost of

electricity generation.

2.21 UNREALISTIC ANTICIPATIONS

Shri. P P Karade submitted that MSPGCL in its earlier submissions had stated that it

will come up with a huge capacity addition in future, however, the actual capacity

addition achieved by MSPGCL is only 5000 MW to 6000 MW. He further submitted

that in FY 2007-08, MSPGCL submitted that the lower generation from Uran GTPS

is on account of lower quantum of gas allocation and it shall take necessary steps to

tackle the problem. He submitted that there has been no change in the situation since


Page 34 of 168

then and MSPGCL has not been keeping up its promises. He submitted that the

Business Plan submitted by MSPGCL should not project false or exaggerated

anticipations.

MSPGCL’s Response

MSPGCL’s Response

MSPGCL submitted that the Business Plan submitted for the second Control Period

has been prepared considering all the issues, present as well as expected in the future.

MSPGCL further submitted that though it has considered most of the anticipated

issues, there might be little variation in actual performance on account of the issues,

which might come up during the actual implementation of the projects. Further, as

regards the unavailability of gas, MSPGCL submitted that it is broader issue and it

has been taking all necessary efforts to tackle the situation.


The Commission has noted the response of MSPGCL.

2.22 NON-MAINTENANCE OF WEBSITE BY MSPGCL

Shri. Prakash Hogade from Maharashtra Veej Grahak Sangathana, submitted that

MSPGCL has not been maintaining its website properly. He submitted that MSPGCL

should keep its website updated so that the public can access the required information

for proper scrutinising of the matters.

MSPGCL’s Response

MSPGCL submitted that it has taken a serious note of the objection raised and shall

update its website at the earliest.


During the Public Hearing, the Commission directed MSPGCL to update its website

within 10 days from the date of Public Hearing.

2.23 RENOVATION AND MODERNISATION

Shri. Pratap Hogade, Maharashtra Veej Grahak Sanghatana, submitted that MSPGCL

has planned Renovation and Modernisation Expenses of around Rs. 5170.92 crore. He

submitted that the Commission should apply prudence check to these expenses and

Cost Benefit Analysis should be done for these expenses.

MSPGCL’s Response


Page 35 of 168

MSPGCL submitted that the Detailed Project Reports of Renovation and

Modernisation activities would be approved by the Commission prior to

implementation of those activities. MSPGCL submitted that Renovation and

Modernisation would increase the useful life of its old Generating Stations.


Prior approval of the Detailed Project Reports of Renovation and Modernisation

activities had been mandated by the Commission, which involves the analysis of the

cost benefit of the projects.

2.24 CAPITAL COST OF THE NEW GENERATING STATIONS

Shri. Pratap Hogade, Maharashtra Veej Grahak Sanghatana, submitted that MSPGCL

has projected huge capacity addition with an average per MW cost of Rs. 6.42 crore.

He submitted that the cost estimated by MSPGCL is higher than the cost of Rs. 4.5

crore to Rs. 5 crore per MW for the projects owned by the Private developers. He

submitted that proper guidelines should be provided on the Capital Cost for capacity

addition.

MSPGCL’s Response

MSPGCL submitted that the Capital Cost of a Generating Station depends on many

factors, which are specific to the location of the Station. MSPGCL submitted that the

Capital Cost per MW would be different for setting up a New Generating Station and

expansion of an existing Generating Station. MSPGCL submitted that the Capital

Cost of any new Station/Unit would be subject to prudence check by the Commission.


The Commission would approve the Capital Cost of the Project, based on prudence

check, once the project achieves COD and the audited capital cost is submitted to the

Commission.


Page 36 of 168

3 SALIENT FEATURES OF THE PETITION

3.1 Applicability of Business Plan Order from FY 2013-14 to FY 2015-16

The Commission, vide its Order dated 23 August, 2011 in Case No. 44 of 2011 on the

Petition filed by MSPGCL seeking deferment of implementation of MERC MYT

Regulations, invoked the proviso to Regulation 4.1 of MERC MYT Regulations and

granted exemption to MSPGCL from determination of Tariff under MERC MYT

Regulations for a period of 2 years, i.e., till 31 March, 2013.

Further, pursuant to the First Amendment to the MERC MYT Regulations, the

Commission, through its letter dated 4 November, 2011 also directed MSPGCL to

submit its Petition for approval of ARR for FY 2011-12 and FY 2012-13, as per the

MERC (Terms and Conditions of Tariff) Regulations, 2005 latest by 30 November,

2011. MSPGCL submitted its Petition on 10 December, 2011 and based on the

Commission’s inputs, submitted a revised Petition on February 27, 2012. The

Commission, vide its Order dated 21 June, 2012 in Case No. 6 of 2012, approved the

Aggregate Revenue Requirement and Tariff of MSPGCL for FY 2011-12 and FY

2012-13. Accordingly, MSPGCL filed its Petition for approval of the MYT Business

Plan for the second Control Period starting from FY 2013-14 to FY 2015-16.

The Commission after taking into consideration all the submissions made by

MSPGCL, objections and comments received from stakeholders, and after due

analysis, has approved the MYT Business Plan for MSPGCL for the period from FY

2013-14 to FY 2015-16.

3.2 Premise for the Business Plan Petition

MSPGCL submitted the revised MYT Business Plan Petition for the second Control

Period from FY 2013-14 to FY 2015-16 as per Regulation 7 of MERC MYT

Regulations on 8 November, 2012. The details regarding Business Plan components

as submitted by MSPGCL and the Commission’s rulings are elaborated in subsequent

sections of this Order. Regulation 7 of the aforesaid MERC MYT Regulations is

reproduced below for reference:

“ 7.1 The Generating Company, Transmission licensee and Distribution

Licensee shall file a Business Plan, for the Control Period of five (5) financial

years from April 1, 2011 to March 31, 2016, as directed by the Commission,

which shall comprise but not be limited to detailed category-wise sales and

demand projections, power procurement plan, capital investment plan,


Page 37 of 168

financing plan and physical targets, in accordance with guidelines and

formats, as stipulated by the Commission from time to time.

7.2 The capital investment plan shall show separately, ongoing projects that

will spill into the year under review and new projects (along with justification)

that will commence but may be completed within or beyond the tariff period.

The Commission shall consider and approve the capital investment plan for

which the Generating Company and Transmission Licensee or Distribution

Licensee may be required to provide relevant technical and commercial

details”

Further, MSPGCL also submitted the projections for the second Control Period as

required under the MERC MYT Regulations, which have been dealt in detail in

Section 4 and Section 5 of this Order.

3.3 Summary of the MYT Business Plan Petition

MSPGCL, in the present Petition, has submitted the following specific plans in its

MYT Business Plan for the second Control Period:

a) Outage Plan: MSPGCL has submitted a brief description of the annual planned

maintenance schedule and activities for all the Thermal Generating Stations and

Hydro Generating Stations.

b) Operational Performance Plan: MSPGCL has submitted the trajectory of

performance parameters for its Generating Stations/Units.

c) Fuel Procurement Plan: MSPGCL has submitted the fuel availability and

procurement plan for Thermal Generating Stations.

d) Challenges addressed by MSPGCL: MSPGCL has briefly described certain key

challenges that MSPGCL faces along with the proposed mitigation measures.

e) Capital Expenditure Plan: MSPGCL has submitted in detail the proposed

capital expenditure and capitalisation plan for the second Control Period broadly

under three heads, i.e., schemes approved by the Commission, schemes submitted

and yet to be approved by the Commission, and schemes yet to be submitted to

the Commission for approval.

f) Financing Plan: MSPGCL has submitted in brief, details regarding financing of

the capital expenditure for the second Control Period.

g) Human Resource Plan: MSPGCL has submitted its recruitment policy, training

and development plan for the second Control Period.

h) Environment Plan: MSPGCL has proposed to undertake various activities to

contribute towards a clean and green environment.


Page 38 of 168

i) Risk Mitigation Plan: MSPGCL has identified various risks and action plans to

mitigate the identified risks. MSPGCL has broadly classified these risks into two

categories; those which require immediate attention and those which can be

tackled over the medium to long term.

j) Community Relationship Strategy: MSPGCL has submitted various activities to

be taken up for the development of nearby communities.


Page 39 of 168

4 BUSINESS PLAN COMPONENTS

4.1 Operating Capacity of MSPGCL

4.1.1 Thermal Generating Capacity

MSPGCL submitted that it has an installed thermal generating capacity of 8777 MW

and on account of de-rating of some Units, and shutdown of old Units in FY 2010-11

and FY 2011-12, the net thermal operating capacity as on 31 August, 2012 is 7652

MW. The station-wise break-up of thermal operating capacity as submitted by

MSPGCL is shown in the Table below:

Table 4-1 Thermal Generating Capacity as submitted by MSPGCL

(MW)

S.

No. Station/Unit

Initial

Operating

Capacity

Derated

Capacity

(Vintage

+ PPA)

Capacity

withdrawn

in FY

2010-11

Capacity

withdrawn

in FY

2011-12

Remaining

Capacity

as on 31

August

2012

1 Bhusawal TPS 475.00 475.00 55.00 0.00 420.00

2 Chandrapur TPS 2,340.00 2,340.00 0.00 0.00 2,340.00

3 Khaperkheda

TPS 1,340.00 1,340.00 0.00 0.00 1,340.00

4 Koradi TPS 1,100.00 1,040.00 420.00 0.00 620.00

5 Nasik TPS 910.00 880.00 0.00 250.00 630.00

6 Paras TPS 62.50 55.00 55.00 0.00 0.00

7 Parli TPS 690.00 670.00 40.00 0.00 630.00

8 Uran GTPS 852.00 852.00 180.00 0.00 672.00

9 Paras TPS Unit

3 & Unit 4 500.00 500.00 0.00 0.00 500.00

10 Parli TPS Unit 6

& Unit 7 500.00 500.00 0.00 0.00 500.00

Total Thermal 8,777 8,652.00 750.00 250.00 7,652.00

MSPGCL submitted that the aforesaid net capacity shown in the above Table is

inclusive of Khaperkheda TPS Unit 5 (500 MW), which has been recently

commissioned on 16 April, 2012. MSPGCL also submitted that Bhusawal TPS Unit 4

and Unit 5 (500 MW each) are envisaged to be commissioned in FY 2012-13.

MSPGCL further submitted that in addition to the Bhusawal TPS Unit 4 and Unit 5, a

capacity of 3230 MW is also envisaged to be commissioned during the second

Control Period.


Page 40 of 168

MSPGCL, in its Petition, also submitted the likely dates of synchronisation and

commissioning of MSPGCL’s upcoming Units for the Second Control Period under

optimistic, realistic and pessimistic scenarios based on following assumptions:

The optimistic dates are on the basis of best efforts taken by MSPGCL and the

agencies to recoup the delay at present stage.

The realistic dates are considering the normal course of action, i.e., the scheduled

period required for completion of the project.

The pessimistic dates are considering the subsequent effect of current delay on

achievement of upcoming milestones. In case of future projects, dates of COD

and synchronisation are based on possible delay in land acquisition activities,

delay in statutory clearances, availability of adequate coal, etc.

The likely dates of synchronisation and commissioning of MSPGCL’s upcoming

projects under the optimistic, realistic and pessimistic scenarios till the end of second

Control Period as submitted by MSPGCL are shown in the Table below:

Table 4-2: Likely dates of synchronisation and commissioning of MSPGCL’s

upcoming Units as submitted by MSPGCL

Project Unit

Capa

city

of the

unit

Scheduled

date of

Completio

n

Synchronisation COD

Optimistic Realistic Pessimistic Optimistic Realistic Pessimistic

Bhusawal

TPS

Unit

4 500 22.08.2010 11.05.2011 15.11.2012 15.11.2012 15.11.2012

Bhusawal

TPS

Unit

5 500 22.12.2010 03.03.2012 30.11.2012 31.12.2012 31.01.2013

Chandrap

ur TPS

Unit

8 500 08.07.2012 09.06.2013 20.07.2013 20.07.2013 31.08.2013 30.11.2013 30.11.2013

Chandrap

ur TPS

Unit

9 500 08.10.2012 30.11.2013 15.01.2014 15.01.2014 28.02.2014 28.02.2014 28.02.2014

Parli TPS

Unit

8 250 19.01.2012 02.07.2013 02.07.2013 02.07.2013 20.08.2013 20.09.2013 20.09.2013

Koradi

TPS

Unit

8 660 21.12.2013 21.09.2013 21.09.2013 21.09.2013 21.12.2013 21.12.2013 21.12.2013

Koradi

TPS

Unit

9 660 22.06.2014 22.03.2014 22.03.2014 22.03.2014 22.06.2014 22.06.2014 22.06.2014

Koradi

TPS

Unit

10 660 21.12.2014 21.09.2014 21.09.2014 21.09.2014 21.12.2014 21.12.2014 21.12.2014


Page 41 of 168

4.1.2 Hydro Generating Capacity

MSPGCL submitted that the hydro-electric projects in the State of Maharashtra were

designed, erected and commissioned by GoMWRD (Water Resource Department of

Government of Maharashtra) and the projects were handed over on long-term lease to

MSPGCL (erstwhile MSEB) for Operation and Maintenance. MSPGCL submitted

that out of 28 hydro generating stations handed over by GoMWRD, Veer hydro

generating station of installed capacity 9 MW was handed back to GoMWRD on 1

June, 2010 and it is currently operating 27 hydro generating stations. Further,

MSPGCL, in its revised Petition, has also submitted the categorisation of hydro

generating stations depending upon the type of project, i.e., purely power projects,

pumped storage projects, irrigation projects or drinking water projects. The details of

categorisation of hydro projects as submitted by MSPGCL are shown in the Table

below:Table 4-3 Hydro Generating Capacity as submitted by MSPGCL

S.

No. Station

Operating Capacity

(MW) Unit Configuration

Purely Power Projects

1 Koyna I & II 600.00 4x70MW, 4x80MW

2 Koyna III 320.00 4x80MW

3 Koyna IV 1,000.00 4x250MW

4 Bhira T.R. 80.00 2x40MW

5 Tillari 60.00 1x60MW

Pumped Storage Projects

6 Ghatghar PSS 250.00 2x125MW

7 Paithan 12.00 1x12MW

8 Ujjani 12.00 1x12MW

Irrigation Projects

9 KDPH 36.00 2x18MW

10 Dudhganga 24.00 2x12MW

11 Eldari 22.50 3x7.5MW

12 Bhatghar 16.00 1x16MW

13 Warna 16.00 2x8MW

14 Pawna 10.00 1x10MW

15 Manikdoh 6.00 1x6MW

16 Surya 6.00 1x6MW

17 Dimbhe 5.00 1x5MW

18 Radhanagari 4.80 4x1.2MW

19 Kanher 4.00 1x4MW

20 Dhom 2.00 2x1MW

21 Teriwanmedhe 0.20 1x0.2MW

Drinking Water Projects


Page 42 of 168

S.

No. Station

Operating Capacity

(MW) Unit Configuration

22 Vaitarna 60.00 1x60MW

23 Bhatsa 15.00 1x15MW

24 Panshet 8.00 1x8MW

25 Varasgaon 8.00 1x8MW

26 Vaitarna D.T. 1.50 1x1.5MW

Total Hydro Capacity 2,579.00

The Commission observed that in its Order in Case No. 5 of 2012 dated 27 April,

2012, while approving the lease rent for the hydro generating stations owned by

GoMWRD and leased to MSPGCL, the Commission also approved the Lease Rent

for Surya RB hydro generating station, however, MSPGCL in its Business Plan has

not considered the Surya RB hydro generating station as a part of total hydro

generating capacity being operated by MSPGCL. The Commission asked MSPGCL

to submit an appropriate justification for not including Surya RB in the hydro

operating capacity in its MYT Business Plan Petition.

MSPGCL, in its reply, submitted that as per the practice of GoMWRD, Surya RB

(CDPH) was provisionally handed over to MSPGCL (erstwhile MSEB) on 15 May,

2002 by GoMWRD under the conditions that GoMWRD shall finish all the

incomplete works and also attend perennial problems of the Unit. GoMWRD, had

assured that all the problems shall be completed by them and the Unit remained under

GoMWRD.

MSPGCL, submitted that the issue of severe operational problems of Surya RB

(CDPH) was taken up by Director (Operations), MSPGCL with Secretary (CAD),

GoM through letter dated 10 November, 2005. Therein request was made not to

consider the lease rent of Surya RB (CDPH) since the Unit was not performing as per

design criterion. MSPGCL however, considering the assurance given by GoMWRD

for resolving the issues of pending work at the earliest, included Surya RB (CDPH) in

the petition for approval of lease rent for Hydel stations filed before the Commission.

MSPGCL submitted that, it has been highlighting the issues of non-performance of

Surya RB (CDPH) Unit through various correspondences and meetings with

GoMWRD. Despite GoMWRD assurance, Surya RB (1x0.75 MW) is still non-

functional. MSPGCL submitted that in view of the above it has not included Surya

RB in the installed Hydro Operating capacity.


Page 43 of 168

The Commission has gone though the submissions made by MSPGCL in this regard

and observes that MSPGCL has been paying the lease rent for Surya RB, though the

same has not been operational. Further, such lease rent for Surya RB has been passed

on to the Distribution Licensee resulting in undue burden on the end consumers. In

view of the above, MSPGCL is directed to submit a detailed note justifying its stand

to consider the lease rent payments for the Surya RB along with a note on its future

course of action on the above issue in its MYT Petition for the second Control Period.

The Commission on the basis of the same shall take a considered view in its MYT

Order for the second Control Period.

4.2 Trajectory of Performance Parameters

MSPGCL, in its MYT Business Plan Petition, has submitted the projections of

performance parameters for the second Control Period. As per Regulation 9.1 of

MERC MYT Regulations, 2011, the Commission shall stipulate the trajectory for

certain variables while approving the MYT Business Plan.

The projections of performance parameters submitted by MSPGCL, and the

Commission’s observations and ruling on each parameter has been elaborated in the

following sub-sections.

4.2.1 Availability

4.2.1.1 Thermal Generating Stations

MSPGCL, in the MYT Business Plan Petition, has submitted the projections of

Availability of Thermal Generating Stations for the second Control Period. MSPGCL,

in its revised Petition, has also submitted the Outage Plan for Thermal Generating

Stations. The summary of the Outage Plan and the projections of Availability for

thermal generating stations for the second Control Period as submitted by MSPGCL

are shown in the Tables below:

Table 4-4 Outage Plan of the Thermal Generating Stations for second Control Period

as submitted by MSPGCL

Station Unit

No. Capacity

FY 2013-14 FY 2014-15 FY 2015-16

Outage

Days

Outage

Days

Outage

Days


Page 44 of 168

Station Unit

No. Capacity

FY 2013-14 FY 2014-15 FY 2015-16

Outage

Days

Outage

Days

Outage

Days

Bhusawal 2 210 25 25 182

3 210 25 25 25

Chandrapur

1 210 25 25 180

2 210 25 25 25

3 210 45 25 25

4 210 25 45 25

5 500 25 25 25

6 500 60 25 25

7 500 25 25 25

Nasik

3 210 103 80 25

4 210 25 25 181

5 210 25 25 25

Khaperkheda

1 210 25 10 25

2 210 10 25 10

3 210 25 10 30

4 210 10 25 10

Koradi

5 200 25 25 -

6 210 25 242 -

7 210 25 - 25

Paras 3 250 45 25 25

4 250 25 25 45

Parli

3 210 25 25 120

4 210 25 25 25

5 210 25 25 25

6 250 35 25 25

7 250 25 35 25

Uran

5 108 0 90 0

6 108 0 0 90

7 108 90 0 0

8 108 90 0 0

A0 120 0 0 0

B0 120 35 0 0

Table 4-5 Availability of the Thermal Generating Stations for second Control Period


S.

No. Station/Unit

FY 2013-14 FY 2014-15 FY 2015-16

MYT

Regulations MSPGCL

MYT

Regulations MSPGCL

MYT

Regulations MSPGCL

1 Bhusawal TPS 80.00% 80.00% 80.00% 80.00% 80.00% 61.05%

2 Chandrapur TPS 80.00% 73.15% 80.00% 74.07% 80.00% 73.77%


Page 45 of 168

S.

No. Station/Unit

FY 2013-14 FY 2014-15 FY 2015-16

MYT

Regulations MSPGCL

MYT

Regulations MSPGCL

MYT

Regulations MSPGCL

3 Khaperkheda TPS 85.00% 80.59% 85.00% 81.00% 85.00% 81.59%

4 Koradi TPS 72.00% 66.36% 72.00% 51.62% 72.00% 70.53%

5 Nasik TPS 80.00% 80.00% 80.00% 69.00% 80.00% 80.00%

6 Parli TPS 80.00% 62.00% 80.00% 65.00% 80.00% 72.00%

7 Uran GTPS 85.00% 60.00% 85.00% 67.00% 85.00% 67.00%

8 Paras TPS Unit 3 85.00% 70.00% 85.00% 75.00% 85.00% 75.00%

9 Paras TPS Unit 4 85.00% 70.00% 85.00% 75.00% 85.00% 75.00%

10 Parli TPS Unit 6 85.00% 70.00% 85.00% 70.00% 85.00% 70.00%

11 Parli TPS Unit 7 85.00% 70.00% 85.00% 70.00% 85.00% 70.00%

12 Khaperkheda TPS

Unit 5 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%

As can be observed from the above Table, MSPGCL in many cases has projected

lower availability as compared to the normative Availability specified in the MERC

MYT Regulations. The Commission asked MSPGCL to submit the detailed reasons

for such deviation in the projected Availability as compared to the norms specified in

the MERC MYT Regulations. MSPGCL, in its reply, submitted the detailed reasons

for the deviations in the projections of Availability as compared to the Availability

norms specified in MERC MYT Regulations. The summary of reasons stated by

MSPGCL and the Commission’s ruling on the same has been elaborated below.

Bhusawal TPS

MSPGCL submitted that in FY 2015-16, Unit 2 of Bhusawal TPS is planned to

undergo Renovation & Modernisation (R&M) activity for 6 months and Unit 3 will be

subject to Annual Overhaul for 25 days, due to which the Availability of Bhusawal

TPS has been projected at 61.05% as compared to the normative availability of 80%.


As the Availability projections for Bhusawal TPS for FY 2013-14 and FY 2014-15

are in accordance with MERC MYT Regulations, 2011, the Commission has

approved the target Availability of 80% for Bhusawal TPS for FY 2013-14 and FY

2014-15. As regard the lower availability of Bhusawal TPS in FY 2015-16, MSPGCL

has submitted that such lower availability in on account of the outage of 25 days due

to Annual Overhaul of Unit 3 and outage of Unit 2 due to R&M activity. The

Commission is of the view that the outages due to the Annual overhaul cannot be

considered to provide relief in the Target Availability for a generating station, since

they have already been factored in while determining the normative Availability.


Page 46 of 168

Further, as regards the outage due to R&M activity, the Commission asked MSPGCL

to submit the status of approval for the R&M activity being planned for Unit 2 of

Bhusawal TPS. The Commission also asked MSPGCL to submit the details of

reduction in availability only on account of such R&M activity. MSPGCL, in its

reply, submitted that the DPR of the Renovation and Modernisation (R&M) Scheme

for Unit 2 of Bhusawal TPS planned in FY 2015-16 is yet to be submitted to the

Commission for approval. MSPGCL also submitted the projected Availability for FY

2015-16 after considering the removal of the capacity under outage/shutdown only on

account of the R&M activity in accordance with Regulation 44.1 (b) of MERC MYT

Regulations shall be 81.25%.

As submitted by MSPGCL, the detailed DPR of the scheme on account of which

MSPGCL has projected the lower Availability of Bhusawal TPS in FY 2015-16 is yet

to be submitted by MSPGCL. The Commission for the purpose of approval of MYT

Business Plan has approved the target availability of 80% for Bhusawal TPS for FY

2015-16 as specified in the MERC MYT Regulations. Further, as the projected

Availability for FY 2015-16 after considering the removal of the capacity under

outage/shutdown only on account of the R&M activity in accordance with Regulation

44.1 (b) of MERC MYT Regulations is higher than the target Availability of 80% as

specified in the MERC MYT Regulations, the Commission based on the approval

status and the actual impact on the Availability of the generating Station/Unit of such

R&M activity will review the normative target Availability for Bhusawal TPS for FY

2015-16 during the final Truing up of the second Control Period subject to prudence

check.

Chandrapur TPS

MSPGCL submitted that in FY 2013-14, decrease in Availability/PLF is due to

increase in Plant outage by 1.1% due to Unit 4 COH and Unit 5 DCS Upgradation.

MSPGCL submitted that in FY 2014-15, there is an increase in PLF due to decrease

in Plant outage by 0.7% due to Unit 6 DCS Upgradation. As regards FY 2015-16,

MSPGCL submitted that the decrease in PLF is due to increase in Plant outage by

1.4% due to Unit 1 R&M for 180 days.

MSPGCL also submitted that the projections of availability are based on realistic

scenario wherein the impact of quality of coal has been considered on loadability of

the Units. MSPGCL submitted that as compared to the actual performance of the

station in FY 2011-12, there is an increase of 8% in overall PLF of the station in the

projections.


Page 47 of 168


As regards the Plant outage due to DCS Upgradation and the R&M activity for

Chandrapur TPS, the Commission asked MSPGCL to submit the status of approval

for the activities resulting in the reduced Availability during the second Control

Period. MSPGCL, in its reply, submitted that the DCS Upgradation of Unit 5 and Unit

6 in FY 2013-14 and FY 2014-15, respectively, has already been approved by the

Commission vide letter MERC/CAPEX/20112012/01908 dated 3 November, 2011.

However, DPR of the Renovation and Modernisation (R&M) Scheme for Unit 1 is yet

to be submitted to the Commission for approval. MSPGCL also submitted the

projected Availability after considering the removal of the capacity under

outage/shutdown only on account of DCS up-gradation and R&M activity in

accordance with Regulation 44.1 (b) of MERC MYT Regulations, as shown in the

Table below:

Table 4-6: Projected Availability for Chandrapur TPS in accordance with Regulation

44.1 (b) of MERC MYT Regulations, 2011as submitted by MSPGCL

Particulars FY 2013-14 FY 2014-15 FY 2015-16

Revised Availability projections 75.81% 74.87% 77.18%

The Commission has gone through the submissions made by MSPGCL, and has

observed that the Availability projections even after considering the removal of

capacity in accordance with Regulation 44.1 (b) is lower than the Target Availability

of 80% as specified in the MERC MYT Regulations. However, the Commission for

the purpose of approval of MYT Business Plan has approved the target availability of

80% for Chandrapur TPS for FY 2013-14, FY 2014-15 and FY 2015-16 as specified

in the MERC MYT Regulations. Further, in accordance with Regulation 44.1 (b) of

MERC MYT Regulations, 2011 and based on the approval status and actual impact of

the outage due to DCS Upgradation and R&M scheme on the Availability of the

generating Station/Unit, the Commission will review the normative target availability

for Chandrapur TPS for FY 2013-14, FY 2014-15 and FY 2015-16 during the Mid-

term Performance Review or the final Truing up of the second Control Period subject

to prudence check.

Khaperkheda TPS

MSPGCL submitted that while the projections of Availability for Khaperkheda TPS

for the second Control Period are above 80%, they are lower in comparison to the


Page 48 of 168

norm of 85% as specified by MERC MYT Regulations. MSPGCL submitted that such

lower Availability projections during the second Control Period are on account of the

fact that Unit 1 and Unit 2 are designed for Coal GCV of 4400 kcal/kg, however, the

GCV of bunkered coal during FY 2010-11, FY 2011-12 and FY 2012-13 (till August)

was 3041 kcal/kg, 3196 kcal/kg and 3088 kcal/kg, respectively. Given this quality of

coal, it may not be realistically possible to achieve the normative availability of 85%.


The only reason cited by MSPGCL for lower projections of Availability during the

second Control Period is poor coal quality. As regards the consideration of poor

quality coal, the Commission has clearly stated in its Order in Case No. 6 of 2012

dated 21 June, 2012 as follows:

“3.2.5. Thus, poor coal quality has been the single most important reason

cited by MSPGCL for lower availability and PLF during FY 2010-11. As

regards the poor coal quality, Hon’ble ATE in its Judgment dated 19 April,

2012 in Review Petition No. 9 of 2011 in Appeal No. 199 of 2011, has opined

as follows:

“We do not accept that the quality of coal is totally beyond the control

of the appellant. If the quality of raw coal supplied by the coal

companies is poor, the appellant has to make arrangements for

washing of coal and blending with superior quality of coal”

3.2.6. As per the ATE Judgment, quality of coal is not totally beyond the

control of MSPGCL and MSPGCL can take other steps such as utilisation of

washed coal, imported coal, etc., to improve the performance of its stations

and MSPGCL has already taken some of these steps to a certain extent. In view

of this, the Commission has not considered the poor quality of coal as an

uncontrollable factor and has hence, not relaxed the availability and PLF norms

due to poor quality of coal.”

The Commission, therefore, in line with its previous approach has not considered any

relief in the Availability for Khaperkheda TPS and approved the target Availability of

85% for Khaperkheda TPS for the second Control Period as specified in the MERC

MYT Regulations.


Page 49 of 168

Koradi TPS

MSPGCL submitted that for FY 2013-14, the projection of Availability is based on

the Unit-wise planned outages, forced outages, present loadability constraints due to

poor coal quality, wet coal problems in monsoon season, and bag filter/ID fan

constraints in Units 5 and 6.

MSPGCL submitted that for FY 2014-15, the projection of availability has been made

based on the factors mentioned for FY 2013-14 along with planned outage of 8

months of Unit 6 for undertaking bag filter replacement. MSPGCL further submitted

that this outage needs to be examined as per Regulation 44.1(b) of MERC MYT

Regulations, which is reproduced below for reference:

“44.1

(b)

... Provided that the Commission may revise the norms of Availability for the

above mentioned Generating Stations in case of Renovation & Modernisation

undertaken for the Generating Station:

Provided further that if any of MSPGCL’s Generating Station is shut-down

due to implementation of Central Power Research Institute (CPRI)

recommendations, the Target Availability calculation for recovery of annual

fixed charges shall be computed after removing the Capacity under shut-down

for the actual period of shut-down subject to the prior approval of the

Commission for the improvement scheme along-with the approval of Capital

expenditure”

MSPGCL submitted that for FY 2015-16, the projection of Availability represents an

increase in PLF by around 14% from the actual PLF achieved in FY 2011-12 post

implementation of filter replacement.


As regard the Availability of Koradi TPS for FY 2013-14 and FY 2015-16, the

Commission has elaborated in the earlier paragraphs that the reasons of poor coal

quality and planned and forced outages cited by MSPGCL cannot be considered for

reduction in target Availability of the generating station. The Commission has hence,

approved the target Availability of 72% for Koradi for FY 2013-14 and FY 2015-16

as specified by MERC MYT Regulations.


Page 50 of 168

As regards the Availability of Koradi TPS for FY 2014-15, the Commission asked

MSPGCL to submit the status of approval of the schemes under which, Unit 6 is

projected to undergo an outage for 8 months in FY 2014-15. The Commission also

asked MSPGCL to submit the computation of the target Availability for FY 2014-15

after considering the removal of the Capacity under shut-down in accordance with

Regulation 44.1 (b) of MERC MYT Regulations, 2011. MSPGCL, in its reply,

submitted that the outage of Unit-6 in FY 2014-15 is for Renovation and

Modernisation of the Unit. MSPGCL also submitted that the Commission has

accorded in-principle clearance for the Renovation and Modernisation scheme vide

letter MERC/CAPEX/2010-11/00364 dated 24 May, 2010.

MSPGCL also submitted the projected Availability of 66.57% for Koradi TPS for FY

2014-15 after considering removal of the Capacity under outage/shutdown in

accordance with Regulation 44.1 (b) of MERC MYT Regulations.

The Commission has gone through the submissions made by MSPGCL, and has noted

the projections of Availability for Koradi TPS for FY 2014-15 after considering the

removal of the Capacity under outage/shutdown. The Commission for the purpose of

approval of MYT Business Plan, has approved the target availability of 72% for

Koradi TPS for FY 2014-15 as specified in the MERC MYT Regulations, 2011.

Further, on the basis of the actual impact of the outage due to R&M scheme on the

Availability of the generating Station/Unit for FY 2014-15, the Commission will

review the normative target availability for Koradi TPS for FY 2014-15, during the

Mid-term Performance Review or the final Truing up of the second Control Period

subject to prudence check.

Nasik TPS

MSPGCL submitted that for FY 2014-15, projection of availability has been made

based on 6 months outage period for Renovation & Modernisation programme of Unit

3 from period June 2014 to November 2014. Further, MSPGCL submitted that this

outage needs to be examined as per Regulation 44.1(b) of MERC MYT Regulations.


As the Availability projections for Nasik TPS for FY 2013-14 and FY 2015-16 are in

accordance with MERC MYT Regulations, the Commission has approved the target

Availability of 80% for Nasik TPS for FY 2013-14 and FY 2015-16. As regards the

lower availability of Nasik TPS in FY 2014-15, MSPGCL has submitted that such

lower availability is on account of 6 months outage period for Renovation &

Modernisation programme of Unit 3 from June 2014 to November 2014. The


Page 51 of 168

Commission asked MSPGCL to submit the status of approval of the Renovation &

Modernisation activity being planned for Unit 6 of Nasik TPS. The Commission also

asked MSPGCL to submit the details of projected availability for FY 2014-15 after

considering the removal of the capacity under shutdown in accordance with

Regulation 44.1 (b) of MERC MYT Regulations. MSPGCL, in its reply, submitted

that the Renovation & Modernisation scheme of Unit-3 has been approved by the

Commission vide letter MERC/CAPEX/20112012/07 dated 1 April, 2011. MSPGCL

also submitted the projected Availability of 82.24% for FY 2014-15 after considering

the removal of capacity under outage/shutdown in accordance with Regulation 44.1

(b) of MERC MYT Regulations.

The Commission has gone through the submissions made by MSPGCL, and has noted

the projections of Availability for Nasik TPS for FY 2014-15 after considering the

removal of the Capacity under outage/shutdown in accordance with Regulation 44.1

(b) of MERC MYT Regulations. MSPGCL during the discussions with the MERC

team submitted that the initial activities for R&M of Nasik TPS are yet to be started

and the R&M of Nasik TPS may not happen during the second Control Period. The

Commission for the purpose of approval of MYT Business Plan, has approved the

target availability of 80% for Nasik TPS for FY 2014-15 as specified in the MERC

MYT Regulations. Further, on the basis of the actual impact of the outage due to the

above mentioned R&M scheme on the Availability of the generating Station/Unit for

FY 2014-15, the Commission will review the normative target availability for Nasik

TPS for FY 2014-15, during the Mid-term Performance Review or the final Truing up

of the second Control Period subject to prudence check.

Parli TPS

MSPGCL submitted that the GCV of received coal is in the range of 3200 kcal/kg to

3400 kcal/kg, which is lower than the GCV of coal for which Unit 3, Unit 4 and Unit

5 are designed (i.e., 5000 kcal/kg, 4890 kcal/kg and 4445 kcal/kg, respectively).

MSPGCL submitted that due to this, an extra coal mill is required to run to get the

desired output. MSPGCL submitted that although the design ash content of the boilers

is 25%, the actual ash content is much higher than the design values, due to which the

boiler auxiliaries are loaded by 25%. MSPGCL also submitted that the problems of

maintenance have also increased and desired output is not being achieved. MSPGCL

further submitted that due to high sulphur content, the coal mills got damaged in FY

2007-08 and have not stabilised since then. MSPGCL submitted that during FY 2011-

12, the Availability and PLF of Parli TPS was 51.33%. MSPGCL also submitted that

by implementing the CPRI schemes and adopting the best O&M practices the


Page 52 of 168

improvement in Availability factor is expected as submitted in the MYT Business

Plan Petition.


As may be observed, poor coal quality has been the most important reason cited by

MSPGCL for lower Availability for Parli Station during second Control Period. The

Commission, in the earlier paragraphs, has already elaborated that the reasons of poor

coal quality cannot be considered for reduction in target Availability of generating

station. Further, the reasons of maintenance problem and instability of the coal mills

cited by MSPGCL cannot be considered as uncontrollable factors and MSPGCL

should take appropriate measures, so that such problems do not affect operational

parameters of the Generating Station. In view of the above, the Commission has

approved the Target Availability of 80% as specified by MERC MYT Regulations for

Parli TPS for the second Control Period.

Uran GTPS

MSPGCL submitted that since the availability of APM Gas and KG D6 Gas have

been lower, the gas availability for Uran GTPS are lower and hence, the projections

of availability are lower. MSPGCL further submitted that if gas availability increases,

Availability and PLF would improve.


The Commission asked MSPGCL to submit the basis for arriving at the projected

Availability of 60% for FY 2013-14 and 67% for FY 2014-15 and FY 2015-16 along

with the supporting computations, if any. MSPGCL, in its reply, submitted that in the

current year, i.e., FY 2012-13, PLF is 64.81% up to November 2012 due to reduction

in gas supply. Downward trend in gas supply has been observed due to less

production in KG D-6 gas fields. MSPGCL further submitted that while discussing

the issue with GAIL/RIL personnel, it was informed that gas supply may reduce

further. Hence, the PLF for FY 2013-14 is assumed to be 60%. Further, from March

2014 onwards, slight improvement in gas supply has been considered, and hence,

Availability/PLF for FY 2014-15 and FY 2015-16 has been considered as 67%.

On this issue, MSPGCL had preferred Appeal No. 47 of 2012 before the ATE on the

Commission’s Order dated 30 December, 2011 in Case No. 107 of 2011. However,

MSPGCL in its rejoinder, had sought leave of the ATE to approach the Commission


Page 53 of 168

with additional facts and figures. ATE granted leave to MSPGCL to approach the

Commission and the Commission may take a view on the issue taking into account

any additional facts and figures provided by the Appellant.

The Commission directs the Petitioner to submit the relevant facts and figures along

with the MYT Petition for the second Control Period for the Commission’s

consideration. However, in this Business Plan Order, the Commission has retained it

earlier stand on the issue and accordingly approves availability of 80% for the station.

Parli Unit 6

MSPGCL submitted that the actual Availability for last three years, i.e., FY 2010-11,

FY 2011-12 and FY 2012-13 (April to August) was 76.86%, 55.198% and 57.843%,

respectively, and the average Availability is 63.30%. MSPGCL submitted that the

major reason for lower Availability is coal shortage, poor coal quality, and CHP

problems due to single coal conveyor system. MSPGCL submitted that it is

considering to create redundancy in the CHP system and schemes are being evaluated

for the same. MSPGCL submitted that under the present circumstances, the

Availability on a realistic side has been projected at around 70%, which is better than

the actual performance in the previous years.


The Commission has observed that MSPGCL in its MYT Business Plan Petition has

submitted the same reasons for lower Availability as submitted in its Petition for the

Final True-up of FY 2010-11 in Case No. 6 of 2012. The Commission, in its Order

dated 21 June, 2012 in Case No. 6 of 2012 has clearly ruled as under:

“As regards Availability of the Paras Unit 3 and Parli Unit 6, the Commission

is of the view that since both the Units are new and have stabilized, they

should operate at full efficiency. Any defects in PCQ, CHP, AHP or Boiler

Tube Leakage, which have caused lower Availability or high number of forced

outages, would most likely be on account of deficiencies in quality control and

quality assurance effected during erection, testing and commissioning of these

Units. MSPGCL should have adequate clauses in the Contract with the

contractors so that the consumers are not affected due to inefficiencies and

negligence by the contracted agencies. Further, MSPGCL is responsible for

arranging the good quality of coal from the market.”


Page 54 of 168

The Commission, therefore, in line with its previous approach has not considered any

relief in the Availability for Parli Unit 6 and has approved the target Availability of

85% for Parli Unit 6 for the second Control Period as specified under MERC MYT

Regulations.

Parli Unit 7

MSPGCL submitted that the actual Availability for the last three years, i.e., FY 2010-

11 (August to March), FY 2011-12, and FY 2012-13 (April to August) are 65.95%,

56.88%, and 41.695%, respectively, and the average is 54.84%. MSPGCL submitted

that the major reason for lower availability is coal shortage, poor coal quality, and

CHP problems due to single coal conveyor system. MSPGCL submitted that under

the present circumstances, the proposed availability is around 70%.

MSPGCL submitted that it is preparing the scheme to implement mechanism for

transportation of coal from old to new plant in emergencies and to replace existing

wobbler feeder, to improve unloading. MSPGCL submitted that this would help in

improving the availability of the Units.


The Commission is of the view that like Parli Unit 6, Parli Unit 7 is also a new Unit

and having been stabilized; it should operate at full efficiency. Any defects in CHP or

any other component of the Unit, resulting in lower Availability during the second

Control Period would most likely be on account of deficiencies in quality control and

quality assurance effected during erection, testing and commissioning of the Unit.

MSPGCL should have adequate clauses in the Contract with the contractors so that

the consumers are not affected due to inefficiencies and negligence by the contracted

agencies. Further, MSPGCL is responsible for arranging the good quality of coal from

the market.

The Commission, in view of the above, has not considered any relief in the

Availability for Parli Unit 7 and has approved the target Availability of 85% for Parli

Unit 7 for the second Control Period as specified by MERC MYT Regulations.

Paras Unit 3

MSPGCL submitted that for FY 2013-14, projections of availability have been made

considering planned outages of 9.59%, forced outages of 3.62% and loadability of

80.15% as per past years' performance. MSPGCL submitted that for FY 2014-15,

projection of availability has been made considering planned outages of 6.79%,


Page 55 of 168

forced outages of 3.73% and loadability of 84.05% as per past years performance and

improvement in performance by reduction in loss due to controllable factors.



84.05% as per past years performance and improvement in performance by reduction

in loss due to controllable factors.

MSPGCL further submitted that for the calculation of Availability factor, COH of 35

days in FY 2013-14, AOH of 25 days in FY 2014-15 and FY 2015-16 and 4% forced

outage in the period excluding planned outages has been considered.


The Commission is of the view that the reasons of Planned and Forced outages and

the Capital and Annual overhaul cannot be considered as uncontrollable factors as

MSPGCL is responsible for ensuring timely completion of the overhaul of its

Generating Units. Further, Paras Unit 3 being a new Unit and having been stabilized,

MSPGCL should ensure that it should operate at full efficiency.

The Commission in view of the above has not considered any relief in the Availability

for Paras Unit 3 and has approved the target Availability of 85% for Paras Unit 3 for

the second Control Period as specified in MERC MYT Regulations.

Paras Unit 4

MSPGCL submitted that for FY 2013-14, projection of Availability has been made


78.59% as per past years' performance. MSPGCL submitted that for FY 2014-15,

projection of availability has been made considering planned outages of 6.76%,

forced outages of 3.73% and loadability of 84% as per past years' performance and

improvement in performance by reduction in loss due to controllable factors.



86.13% as per past years' performance and improvement in performance by reduction

in loss due to controllable factors.

MSPGCL further submitted that for the calculation of Availability factor, COH of 35

days in FY 2013-14, AOH of 25 days in FY 2014-15 and FY 2015-16 and 4% forced

outage during the period excluding planned outages have been considered.


Page 56 of 168


As elaborated earlier, the Commission is of the view that Annual Overhaul and

Capital overhaul are planned outages and for the new unit, MSPGCL must plan well

ahead and complete the work in shortest possible time. The Commission has observed

that MSPGCL has considered a period of unit shutdown of 13 to 14 days due to

“Forced outage”. Even after considering ramping up periods after a forced outage, the

said period of forced outages during a year appears to be high for a new unit. The

Commission further observes that over and above these forced outages, MSPGCL has

considered loadability only to the tune of 80% to 86% for the said new unit. This is

unacceptable and as explained above loadability of 100% is expected from the said

new unit during the time that it is operational. Therefore even after accepting the

AOH, COH and forced outage periods as stipulated by MSPGCL, the availability

would be around 87% to 89%. Paras Unit 4 being a new Unit commissioned on

August 31, 2010 and having been stabilized, MSPGCL should ensure that the Unit

operates at full efficiency.

The Commission in view of the above has not considered any relief in the Availability

for Paras Unit 4 at this stage and has approved the target Availability of 85% for

Paras Unit 4 for the second Control Period as specified under MERC MYT

Regulations. However, the Commission will analyse the reasons in details for actual

lower availability at the time of mid-term performance review or at the time of final

Truing up for the second Control Period.

Khaperkheda Unit 5 and other new Units to be commissioned till the end of the

second Control Period.

As regards the performance parameters for Khaperkheda Unit 5 and other new Units

to be commissioned till the end of the second Control Period, MSPGCL in its MYT

Business Plan Petition submitted that it will make efforts to adhere to the normative

parameters as per the MERC MYT Regulations subject to influence from the external

factors.


The Commission, in view of the submissions made by MSPGCL, has approved the

target Availability of 85% for Khaperkheda Unit 5 and other new Units to be

commissioned during the second Control Period as specified under MERC MYT

Regulations. The summary of Availability of the thermal generating Stations/Units as

approved by the Commission is shown in the Table below:


Page 57 of 168

Table 4-7 Summary of Availability of Thermal Generating Stations as approved by

the Commission for the second Control Period

S.

No. Station/Unit

FY 2013-14 FY 2014-15 FY 2015-16

MSPGCL Approved MSPGCL Approved MSPGCL Approved

1 Bhusawal TPS 80.00% 80.00% 80.00% 80.00% 61.05% 80.00%

2 Chandrapur TPS 73.15% 80.00% 74.07% 80.00% 73.77% 80.00%

3 Khaperkheda TPS 80.59% 85.00% 81.00% 85.00% 81.59% 85.00%

4 Koradi TPS 66.36% 72.00% 51.62% 72.00% 70.53% 72.00%

5 Nasik TPS 80.00% 80.00% 69.00% 80.00% 80.00% 80.00%

6 Parli TPS 62.00% 80.00% 65.00% 80.00% 72.00% 80.00%

7 Uran GTPS 60.00% 80.00% 67.00% 80.00% 67.00% 80.00%

8 Paras TPS Unit 3 70.00% 85.00% 75.00% 85.00% 75.00% 85.00%

9 Paras TPS Unit 4 70.00% 85.00% 75.00% 85.00% 75.00% 85.00%

10 Parli TPS Unit 6 70.00% 85.00% 70.00% 85.00% 70.00% 85.00%

11 Parli TPS Unit 7 70.00% 85.00% 70.00% 85.00% 70.00% 85.00%

12 Khaperkheda TPS

Unit 5 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%

13 Bhusawal TPS

Unit 4 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%

14 Bhusawal TPS

Unit 5 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%

15 Koradi TPS Unit

8 - - 85.00% 85.00% 85.00% 85.00%

16 Koradi TPS Unit

9 - - 85.00% 85.00% 85.00% 85.00%

17 Koradi TPS Unit

10 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%

18 Chandrapur TPS

Unit 8 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%

19 Chandrapur TPS

Unit 9 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%

20

Parli

Replacement Unit

8

85.00% 85.00% 85.00% 85.00% 85.00% 85.00%

4.2.1.2 Hydro Generating Stations

Regulation 47.1 of MERC MYT Regulations specifies the Normative Annual Plant

Availability Factor (NAPAF) index for the hydro generating stations. MSPGCL, in its

original Petition had not submitted the details and computation of NAPAF index for


Page 58 of 168

its hydro generating stations. The Commission asked MSPGCL to submit the details

of the type of Hydro Generating Stations and corresponding NAPAF index for each

type of Hydro Generating Station as per Regulation 47.1 of MERC MYT Regulations.

MSPGCL, in its reply and its revised Business Plan Petition, submitted the

computation of NAPAF in accordance with Regulation 47.1 of MERC MYT

Regulations for its hydro generating Stations with installed capacity of more than 25

MW. The computation of NAPAF for the hydro generating stations as submitted by

MSPGCL is shown in the Table below:

Table 4-8: Computation of Normative Annual Plant Availability Factor (NAPAF) for

hydro generating stations as submitted by MSPGCL

Sr.

No.

Hydro

Station

Capacity

(MW)

Type of

Plant

Head at

FRL

(Mtr)

Head at

MDDL

(Mtr)

Head

variatio

n in %

Rated Head

as per design

(Mtr)

NAPAF

Multiplyi

ng factor

%

NAPAF

of HPS

Remarks

(Head at

MDDL/R

ated

head)x0.5

+0.52

90% x

MF

1 KOYNA - I 280

Storage

515 466 10 475 1.01 90*

2 KOYNA - II 320 10 491 0.99 90*

3 KOYNA - IV 1000 537 496 8 500 1.02 90

Head

variation is

8%

4 K.D.P.H. 36 76 32 74 59 0.79 71

5 KOYNA -III 320

ROR

with

Pondage

117 114 3 110 1.04 90

Head

variation is

less than

8%

6 VAITARNA 60 Pondage 288 284 1.3 283 1.02 90

Head

variation is

less than

8%

7 BHIRA TAIL

RACE 80

ROR

with

Pondage

52 48 9 48 1.01 90*

8 TILLARI 60 Pondage 639 632 1 625 1.03 90

Head

variation is

less than

8%

*NAPAF limited to 90%

MSPGCL further submitted that out of all the hydro generating Stations operated by

MSPGCL, only 3 Stations namely Koyna Stage I to IV (1920 MW), Bhira TR (80

MW) and Tillari HPS (60 MW) are purely Power Projects, while Ghatghar (250

MW), Ujjani (12 MW), Paithan (12 MW) are Pumped Storage Stations. MSPGCL

submitted that the remaining stations are either irrigation projects (IP) or drinking

water projects (DWP). MSPGCL further submitted that for these IP/DWP Hydro


Page 59 of 168

Stations, power generation is incidental benefit and is accrued only during water

discharge as per instructions of GoMWRD. MSPGCL submitted that the generation

from Irrigation and Drinking Water Projects is purely dependent on water release

programme of GoMWRD and hence, even if the machines are available, MSPGCL

may not be able to generate power from these stations. MSPGCL further submitted

that it faces the following issues for operating hydro generating stations under the

regulatory mechanism.

Small/Mini/Micro Hydro Stations

MSPGCL submitted that only few hydro generating stations are having capacity

more than 25 MW while all other stations are small/mini hydro stations as per

MERC (Terms and Conditions for determination of Renewable Energy Tariff)

Regulations, 2010. MSPGCL submitted that as per Regulation 11 of MERC

(Terms and Conditions for determination of Renewable Energy Tariff)

Regulations, 2010 the dispatch principles for small /mini /micro are as under:

“11. Dispatch principles for electricity generated from Renewable Energy

Sources:

11.1 All renewable energy power plants except for biomass power plants and

co-generation plants shall be treated as ‘MUST RUN’ power plants and shall

not be subjected to ‘merit order dispatch’ principles.

11.2 The biomass power generating station and co-generation projects shall be

subjected to scheduling and dispatch code as specified under the State Grid

Code (SGC) including amendments thereto”

MSPGCL further submitted that small hydro stations are treated as must run

power plants and are not scheduled on day ahead basis by SLDC, therefore, it is

not possible to obtain SLDC certification for Plant Availability Factor for these

stations.

MSPGCL also submitted that even if the machines are available for generation,

the actual generation is subject to availability of water and under such

circumstances, it is not possible to achieve NAPAF for most of these small hydro

stations. MSPGCL submitted if the above stated reasons are not considered and


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the recovery mechanism as per MERC MYT Regulations is implemented, it might

lead to under recovery of fixed cost. MSPGCL submitted that because of the

reasons stated above, it cannot submit NAPAF and projected PAFM for the hydro

generating stations with capacity lower than 25 MW.

MSPGCL further submitted that the recovery mechanism as per MERC MYT

Regulations should not be implemented for small/mini/micro hydro stations

and it should be allowed to recover the entire ARR of such stations as per the

current mechanism wherein the fixed charges are recovered over a twelve

month period in equal instalments. Hydro Generating Stations with

capacity more than 25 MW

MSPGCL submitted that it had tried to compile the information based on various

assumptions as per MERC MYT Regulations and computed the NAPAF for the

hydro generating stations with capacity more than 25 MW. MSPGCL further

submitted that it faces the following difficulties regarding the PAFM calculations

of different stations, which needs to be considered by the Commission.

a) Koyna Dam Foot HPS (36 MW) and Vaitarna HPS (60 MW): MSPGCL

submitted that Koyna Dam Foot HPS is an Irrigation Project and Vaitarna

HPS is a Drinking Water Project and hence, plant availability is purely

dependent upon water release programme of GoMWRD.

b) Bhira HPS (80 MW): MSPGCL submitted that though Bhira HPS is a power

project, it was designed for only 2 hours peaking power. MSPGCL submitted

that this fact had been specifically mentioned by Sri VVRK Rao (Ex-

Chairman CEA) in his Report to the Commission in Case No. 142 of 2011

(M/s Dodson Vs M/s MSEDCL), in the capacity as MERC appointed

Consultant in the matter. MSPGCL, in its Petition, also submitted the

following extract of the above mentioned Order.

“16. The qualifying criterion of 3 hours operation for the Declared Capacity

is in MERC regulations, which is the same as that adopted by CERC. The 3

hour prescription is based on the general experience of peaking hours of

Hydro Projects in operation. There could however be some exceptions to this


Page 61 of 168

criterion. One example is Bhira Tailrace HE Project in Maharashtra. As I

recall, this project was planned for two hour peaking and under MERC

regulations this station can never achieve normative capacity index which

requires 3 hour peaking operation. This is just to point out that the criterion

considered in the project planning cannot be ignored and are to be duly

considered whenever there is an exception to the general criterion.”

c) Koyna HPS:

a. MSPGCL submitted that for Koyna HPS, there is a constraint on total

water usage as per guidelines of Krishna Water Dispute Tribunal

Award (KWDTA). MSPGCL submitted that 67.5 TMC of water is

available in a water year (1 June to 31 May).

b. MSPGCL submitted that although Koyna Stage I, II, III and IV are

designed as peak load stations, the Units of Stage I and II are run on

minimum load even during Off Peak period as hot reserve as per the

operating strategy of SLDC (Kalwa). MSPGCL submitted that due to

this reason, it might happen that on a given day, Koyna HPS might not

run on rated capacity for 3 peaking hours but might be operated at full

capacity throughout the off peak hours and hence the PAFM for Koyna

will be less than NAPAF. MSPGCL submitted that this would result in

under recovery of half of approved fixed charges for that period

because of reasons beyond MSPGCL’s control.


MSPGCL submitted that norms for Pumped Storage Stations have not been

specified in the MERC MYT Regulations. MSPGCL also submitted that in case of

Ghatghar PSS, currently a barter system is being adopted for energy exchange

between MSPGCL and MSEDCL. MSPGCL submitted that it does not bill any

energy charge to MSEDCL for energy sent out and MSEDCL does not bill any

energy charge for the pumping energy consumed. MSPGCL submitted that

MSEDCL only pays the approved AFC and would pay approved Lease Rent

along with water royalties subsequent to approval of Lease Rent Petition by the

Commission.


Page 62 of 168

MSPGCL submitted that recovery mechanism for 50% AFC based on PAFM/NAPAF

is not suitable for most of its hydro generating stations and requested the Commission

to review the same.


As regards the hydro generating stations with capacity less than 25 MW, the

Commission agrees that such hydro generating stations are treated as must run power

plants and are not scheduled on a day ahead basis by SLDC. The Commission is

consequently of the view that the Tariff determination process in accordance with

Regulation 50 of MERC MYT Regulations, 2011 cannot be applicable for such plants

and a considerate view needs to be taken for the same.

The Commission, in this Order, has therefore, not approved the NAPAF for the hydro

generating stations with capacity lower than 25 MW and the recovery of the Annual

Fixed Charges for such stations shall be considered as per the current mechanism

wherein the Annual Fixed Charges are recovered over a twelve-month period in equal

instalments.

As regards the hydro generating stations with capacity higher than 25 MW, the

Commission is of the view that the recovery mechanism specified in MERC MYT

Regulations should be applicable. However, for power projects catering to drinking

and irrigation purposes, i.e., Koyna Dam Foot HPS (36 MW) and Vaitarna HPS (60

MW), the Commission shall examine the actual data regarding water available for

generation purposes subject to submission of documentary evidence by MSPGCL

with regards to curtailment of water supply by GoMWRD. The Commission is of the

view that the recovery mechanism for such hydro generating stations should be in

accordance with Regulation 50 of MERC MYT Regulations. The Commission has

therefore, computed the NAPAF in accordance with Regulation 47.1 of MERC MYT

Regulations as shown in the Table below:


Page 63 of 168

Table 4-9 Normative Annual Plant Availability Factor (NAPAF) for hydro generating

stations as approved by the Commission

Sr.

No. Hydro Station

Capacity

(MW)

Type of

Plant

Head

at

FRL

(Mtr)

Head

at

MDDL

(Mtr)

Head

variation in

%

Rated

Head

as per

design

(Mtr)

NAPAF

Multiplying

factor

%

NAPAF

of HPS Remarks

(Head at

FRL-Head at

MDDL)/Head

at FRL

(Head at

MDDL/Rated

head)x0.5+0.52

90% x

MF

1 KOYNA - I 280

Storage

515 466 9.5% 475 1.01 90%*

2 KOYNA - II 320 9.5% 491 0.99 90%*

3 KOYNA - IV 1000 537 496 7.6% 500 1.02 90% Head variation

less than 8%

4 K.D.P.H. 36 76 32 57.9% 59 0.79 71%

5 KOYNA -III 320

ROR

with

Pondage

117 114 2.6% 110 1.04 90% Head variation

less than 8%

6 VAITARNA 60 Pondage 288 284 1.4% 283 1.02 90% Head variation

less than 8%

7 BHIRA TAIL

RACE 80

ROR

with

Pondage

52 48 7.7% 48 1.02 90% Head variation

less than 8%

8 TILLARI 60 Pondage 639 632 1.1% 625 1.03 90% Head variation

less than 8%

* Limited to 90%

As regards the Pumped Storage station with capacity more than 25 MW, i.e.,

Ghatghar PSS, it has been observed that so far, MSPGCL has not entered into any

Agreement with MSEDCL for the above mentioned Station. The Commission, in this

Order, has not approved the recovery mechanism for pumped storage stations with

capacity more than 25 MW. Further, the Commission in its Order dated 27 December,

2012 in Case No. 2 of 2012 also directed MSPGCL to file a separate Petition for the

approval of the agreement between MSPGCL and MSEDCL for supply of energy

generated during peak hours and energy used for pumping during off-peak hours from

Ghatghar PSS within one month from the date of the above-mentioned Order.

Accordingly, MSPGCL should file a separate Petition for approval of the Agreement

between MSPGCL and MSEDCL. The Commission shall take an appropriate view

upon the approval of the Agreement for Ghatghar PSS between MSPGCL and

MSEDCL. The Commission further directs MSPGCL to propose an appropriate

recovery mechanism for the Pumped storage stations with capacity more than 25 MW


Page 64 of 168

(i.e., Ghatghar PSS) in its MYT Petition for the second Control Period upon the

approval of Agreement for Ghatghar PSS between MSPGCL and MSEDCL.

4.2.2 PLF projections of Thermal Generating Stations for second Control

Period

MSPGCL, in the MYT Business Plan Petition, has submitted the projections of PLF

of Thermal Generating Stations for the second Control Period. The projections of PLF

submitted by MSPGCL for Thermal Generating Stations are shown in the table

below.

Table 4-10 PLF projections of Thermal Generating Stations for second Control Period


S.

No. Station/Unit

FY

2013-14

FY

2014-15

FY

2015-16

1 Bhusawal TPS 80.00% 80.00% 61.05%

2 Chandrapur TPS 73.15% 74.07% 73.77%

3 Khaperkheda TPS 80.59% 81.00% 81.59%

4 Koradi TPS 66.36% 51.62% 70.53%

5 Nasik TPS 80.00% 69.00% 80.00%

6 Parli TPS 62.00% 65.00% 72.00%

7 Uran GTPS 70.00% 70.00% 70.00%

8 Paras TPS Unit 3 70.00% 75.00% 75.00%

9 Paras TPS Unit 4 70.00% 75.00% 75.00%

10 Parli TPS Unit 6 70.00% 70.00% 70.00%

11 Parli TPS Unit 7 70.00% 70.00% 70.00%

MSPGCL further submitted that as regards the performance of Khaperkheda Unit 5

and other new Units to be commissioned till the end of the second Control Period,

MSPGCL will make efforts to adhere to the normative parameters as per the MERC

MYT Regulations subject to influence from external factors.

The Commission has noted the projections of PLF of Thermal Generating Stations for

the second Control Period. However, the Commission in this Order has not approved

the PLF for the second Control Period, and the same shall be approved as a part of the

Order on Multi Year Tariff Petition for the second Control Period.


Page 65 of 168

4.2.3 Heat Rate (kcal/kWh)

MSPGCL, in its MYT Business Plan Petition for the second Control Period, has

submitted the projections of Heat Rate for the Thermal Generating Stations.

MSPGCL submitted that the projections are based on CPRI Study, current issues

pertaining to quantity and quality of coal, proposed capital expenditure, issues

pertaining to wet coal during monsoon season and usage of imported coal, etc. The

projections of Heat Rate for existing and new thermal generating Stations/Units as

submitted by MSPGCL for the second Control Period are shown in the Table below:

Table 4-11 Projections of Heat Rate of Thermal Generating Stations for second Control Period as submitted by MSPGCL

(Kcal/kWh)

S.

No. Station/Unit

FY 2013-14 FY 2014-15 FY 2015-16

MYT

Regulations

CPRI

Report

Version 2

MSPGCL MYT

Regulations

CPRI

Report

Version 2

MSPGCL MYT

Regulations

CPRI

Report

Version 2

MSPGCL

1 Bhusawal TPS 2671 2764 2778 2677 2743 2780 2683 2739 2777

2 Chandrapur TPS 2539 2686 2686 2544 2680 2680 2549 2684 2684

3 Khaperkheda TPS 2424 2606 2612 2429 2607 2617 2433 2607 2625

4 Koradi TPS 2873 2835 2851 2881 2814 2861 2889 2761 2762

5 Nasik TPS 2664 2736 2825 2670 2719 2815 2677 2715 2785

6 Parli TPS 2679 2842 2949 2684 2841 2928 2690 2850 2917

7 Uran GTPS 2017 - 2045 2021 - 2045 2025 - 2030

8 Paras Unit 3 2450 - 2521 2450 - 2509 2450 - 2499

9 Paras Unit 4 2450 - 2501 2450 - 2494 2450 - 2490

10 Parli Unit 6 2450 - 2580 2450 - 2580 2450 - 2580

11 Parli Unit 7 2450 - 2580 2450 - 2580 2450 - 2580

As can be observed from the above Table, MSPGCL’s projections are in deviation

from the normative Heat Rate specified in the MERC MYT Regulations or as

recommended by CPRI in its Report Version 2. The Commission asked MSPGCL to

submit the detailed reasons for such deviation in the projected Heat Rate. MSPGCL,

in its reply, submitted the detailed reasoning for the deviations in the projections of

Heat Rate, and the summary of reasons stated by MSPGCL and the Commission’s

ruling on the same, are elaborated below.

Bhusawal TPS

MSPGCL submitted that for calculation of SHR for FY 2012-13, it has considered the

actual SHR of 2789 kcal/kWh for FY 2011-12 as the base and after replacement of

ECO and LTSH coil of Unit 2 and inter-stage sealing of Unit 2 turbine in August

2011, and replacement of LP heater tube nest for Unit 2, improvement in SHR of 12

kcal/kWh was considered. MSPGCL further submitted that although the schemes

suggested by CPRI have been planned in the respective year, the effect of schemes in

improvement in SHR has been considered after implementation of the scheme based

on time indicated by the suppliers.


The Commission has observed that the prime reason submitted by MSPGCL for

deviation in SHR from the recommendations in CPRI Report Version 2 is on account

of delay in implementation of the schemes recommended by CPRI. The Commission

is of the view that the judicious and timely implementation of the CPRI schemes is in

the control of MSPGCL and the same should materialise in a timely manner, and

hence, MSPGCL’s submission for deviation in Heat Rate are not tenable. Further, the

Commission, in its Order in Case No. 6 of 2012, had considered the recommendations

of CPRI for Bhusawal TPS for FY 2011-12 and FY 2012-13. Hence, in line with its

earlier approach, the Commission has approved Heat Rate of Bhusawal TPS for the

second Control Period as recommended in CPRI Report Version 2.

Chandrapur TPS

MSPGCL submitted that the projections of Heat Rate are in line with the

recommendations in CPRI report Version 2.


The Commission has approved the Heat Rate for MSPGL for the second Control

Period from FY 2013-14 to FY 2015-16 as recommended by CPRI Report Version-2.


Page 68 of 168

Khaperkheda TPS

MSPGCL submitted that deviation in Heat Rate is due to difficulties and problem

faced in implementation of CPRI Recommendations. MSPGCL submitted that during

2nd

CPRI Energy Audit conducted in January 2012, difficulties and problems faced in

implementation of CPRI Recommendations were discussed in detail. MSPGCL

submitted that after giving due consideration to the difficulties and problem faced in

implementation of CPRI Recommendations, CPRI had revised the recommended

Heat Rate in CPRI Report Version 2.

MSPGCL submitted that the Heat Rate was 2658 kcal/kWh for FY 2010-11, 2606

kcal/kWh for FY 2011-12, and 2619 kcal/kWh for FY 2012-13 (till August).

MSPGCL submitted that with implementation of CPRI Recommendations, Capex

schemes and correction of 0.3% degradation, achievable Heat Rate has been given in

the Business Plan. MSPGCL submitted that the maximum deviation projected in

Business Plan as compared to Heat Rate recommended by CPRI is less than 1%.

MSPGCL submitted that the deviation is also on account of quality of coal.


As submitted by MSPGCL, CPRI in Version 2 of its report has given due

consideration to the difficulties and problems faced in the implementation of the

schemes for improvement in performance parameters, therefore, it may not be

appropriate to consider further increase in the Heat Rate as recommended by CPRI in

Version 2 of its report. The Commission has hence, approved the Heat Rate as

recommended in CPRI Report Version 2 for Khaperkheda TPS for the second Control

Period.

Koradi TPS

MSPGCL submitted that for FY 2013-14 and FY 2014-15, the primary concern is the

quality of coal, which leads to reduced loadability of the Units. MSPGCL submitted

that the specific issue pertains to bag filter replacement of Unit-6 in FY 2014-15.

MSPGCL submitted that for FY 2015-16, an improvement of around 100 kcal/kWh,

after the replacement of bag filters in Unit 6 under R&M could be observed.

MSPGCL submitted that the Heat Rate for FY 2015-16 has also been aligned to the

Heat Rate projections of CPRI in their Report.

MSPGCL further, submitted that apart from low loadability, degradation due to

ageing has been considered (0.34% degradation factor) per year over the previous


Page 69 of 168

year. MSPGCL submitted that CPRI has also considered the same degradation factor

while projecting the heat rate trajectories. MSPGCL submitted that there shall be an

improvement of around 108.73 kcal/kWh after the implementation of various schemes

in R&M of Unit-6 resulting in performance improvement in FY 2015-16. MSPGCL

also submitted the following computation for arriving at the projected Heat Rate for

the second Control Period.

Table 4-12: Computation for arriving at the projected Heat Rate for Koradi TPS for

the second Control Period as submitted by MSPGCL

Particulars FY 2013-14 FY 2014-15 FY 2015-16

Previous Year SHR (kcal/kWh) 2816 2851 2861

Degradation factor (%) 0.34% 0.34% 0.34%

Improvement due to R&M

(kcal/kWh) 108.73

Reduction in SHR due to poor coal

quality and other issues 25.4

SHR considered for the Financial

Year (kcal/kWh) 2851 2861 2762


From the above computation of the projected Heat Rate for the second Control

Period, it is observed that the higher Heat Rate projected for FY 2014-15 is on

account of the delay in implementation of the schemes recommended by CPRI.

Further, the other major reason mentioned by MSPGCL is the poor quality if coal.

The Commission has already discussed in detail that the coal quality issue and timely

implementation of the CPRI recommended schemes is in the control of MSPGCL and

cannot be considered as tenable for providing relief in the form of deviation in Heat

Rate from the Heat Rate as recommended by CPRI. The Commission has thus

approved the Heat Rate for second Control Period as per the recommendation of

CPRI in Version 2 of its Report.

Nasik TPS

MSPGCL submitted that in FY 2013-14, improvement measures proposed for Unit 4

are COH works including Insulation, Steam path audit, Condenser de-scaling and

high energy drains. MSPGCL submitted that in light of the above, against the actual

SHR of 2847 kcal/kWh in FY 2011-12, the heat rate has been projected to improve on

account of the aforementioned schemes. MSPGCL submitted that the prime reason


Page 70 of 168

for the deviation between CPRI study and projections is the current assessment made

by MSPGCL while actually undergoing implementation of the schemes.

MSPGCL submitted that in FY 2014-15, Stage-II improvement measures proposed

are Unit 3 R&M during June to November, 2014 resulting in improvement of 19.3

kcal/kWh, which has been considered from December, 2014 to March, 2015.

MSPGCL submitted that the projected Heat Rate of 2815 kcal/kWh is after

considering degradation as per CPRI.

MSPGCL submitted that an improvement in Heat Rate of 39.3 kcal/kWh has been

considered due to Unit 3 R&M. MSPGCL submitted that the projected Heat Rate of

2785 kcal/kWh is after considering degradation as per CPRI. MSPGCL submitted that

for FY 2015-16, proposed Heat Rate is different from that recommended by CPRI as

Unit 4 and Unit 5 R&M outage dates have been revised to January 2016 to June 2016

for Unit 5 and October 2016 to March 2017 for Unit 4, considering the supply lead

time and implementation of the schemes.

MSPGCL submitted that it might be observed that while the CPRI is considering the

reduction of 21 kcal/kWh from FY 2013-14 to FY 2015-16, MSPGCL has projected a

decrease of around 40 kcal/kWh over the same period. MSPGCL submitted that the

primary deviation is because the Heat Rate projection for FY 2013-14 has been made

on realistic basis based on coal related issues, and technical constraints that are yet to

be rectified through capital expenditure.

Further, on a specific query raised by the Commission, MSPGCL also submitted the

following computation for arriving at the projected Heat Rate for the second Control

Period.

Table 4-13: Computation for arriving at the projected Heat Rate for Nasik TPS for the

second Control Period as submitted by MSPGCL

Particulars FY 2013-

14

FY 2014-

15

FY 2015-

16

Previous Year SHR (kcal/kWh) 2846 2825 2815

Degradation factor (%) 0.33% 0.33% 0.33%

Improvement due to immediate

measures (kcal/kWh) 30

Improvement due to R&M

(kcal/kWh) 19 39

SHR considered for the Financial

Year (kcal/kWh) 2825 2815 2785


Page 71 of 168


From the above submission of MSPGCL, it has been observed that the prime reason

for the higher Heat Rate during the second Control Period is due to consideration of

the higher base while computing the projected Heat Rate for the second Control

Period. MSPGCL submitted that the higher Heat Rate for FY 2013-14 has been

projected on realistic basis based on coal related issues, and other technical

constraints. As detailed earlier, the Commission is of the view that coal related issues

cannot be considered for providing relief in the Heat Rate. Further, the Commission in

its Order dated 21 June, 2012 in Case No. 6 of 2012 has already approved the Heat

Rate of 2756.50 kcal/kWh for FY 2012-13 based on the recommendation of CPRI in

Version -2 of its report. The Commission has considered the same Heat Rate as the

base for projecting the Heat Rate for the second Control Period.

Further, the other reasons related to the delay in implementation of the schemes

recommended by CPRI and poor quality of coal envisaged during the second Control

Period cannot be considered tenable. In view of the above, the Commission for the

purpose of approval of MYT Business Plan has not considered any relief in the Heat

Rate for Nasik TPS for the second Control Period. The Commission has hence,

approved the Heat Rate for the Nasik TPS for the second Control Period as

recommended by CPRI in Version-2 of its report.

Parli TPS

MSPGCL submitted that after considering actual Heat Rate of FY 2011-12 (2989

kcal/kWh) and the implementation of CPRI schemes, the projected values have been

worked out. MSPGCL submitted that the primary reasons responsible for increase in

SHR are low quality and high ash content of received coal, coal mills which got

damaged in FY 2007-08 due to high sulphur content and have not stabilised since

then.


The Commission has observed that the prime reason submitted by MSPGCL for

deviation in SHR from the recommendations in CPRI Report Version 2 is the low

quality of received coal and coal mill problem. As stated earlier, MSPGCL’s

submissions in this regard are not tenable as these are controllable factors for

MSPGCL. Hence, for the purpose of approval of MYT Business Plan, the


Page 72 of 168

Commission has approved the Heat Rate values for Parli TPS for the second Control

Period as recommended in CPRI Report Version 2.

Uran GTPS

On a specific query raised by the Commission regarding the basis for arriving at the

higher Heat Rate projected for the second Control Period, MSPGCL submitted that

the deviation in Heat Rate for Uran GTPS is on account of lower gas availability, due

to which the Units are running on partial load and this leads to increase in Heat Rate.

Further, MSPGCL submitted that replacement of complete modified upgraded rotor

along with modified air intake system and boiler duct for Gas Turbine Unit-5 and

Unit-8 has been considered in FY 2013-14. After installation and commissioning of

this rotor, improvement in Heat Rate has been considered from 2045 kcal/kWh to

2030 kcal/kWh in FY 2015-16.


The Commission has specified the Heat Rate norms for the Uran GTPS in MERC

MYT Regulations. The Commission, as discussed earlier, has not considered the

reasons for lower availability of the gas during the second Control Period in this

Order and will consider the same upon submission of complete details by MSPGCL

in its Multi Year Tariff Petition. The Commission, for the purpose of approval of

MYT Business Plan for the second Control Period, has hence, approved the Heat Rate

for Uran GTPS as specified under MERC MYT Regulations.

Paras Unit 3 and Unit 4

MSPGCL submitted that the projected Heat Rate figures are based on average of Heat

Rate in FY 2010-11, FY 2011-12, actuals from April 2012 to July 2012 and

projections from August 2012 to March 2013. MSPGCL submitted that the Heat Rate

during monsoon is higher due to wet coal received from WCL that contains black

cotton soil. MSPGCL submitted that wet coal causes choke up problems leading to

loadability problems, flame instability, and tripping of Unit. MSPGCL submitted that

excess oil would be required to operate the Unit thereby increasing the overall Heat

Rate.


The Commission opines that actual higher Heat Rate in the preceding years cannot be

a reason for relaxing the norms. Further, Paras Unit 3 and Unit 4 being new Units,


Page 73 of 168

MSPGCL should be able to operate these Units at the normative Heat Rate as

specified in MERC MYT Regulations. The Commission has observed that the prime

reason submitted by MSPGCL for the deviation in Heat Rate is the low quality of

received coal. The Commission, in line with earlier approach, does not find merit in

MSPGCL’s submission for relaxing the norms of Heat Rate due to coal quality

problems. Hence, for the purpose of approval of MYT Business Plan, the Commission

has approved the Heat Rate of 2450 kcal/kWh as specified in MERC MYT

Regulations, 2011 for Paras Unit 3 and Unit 4 for the second Control Period.

Parli Unit 6 and Unit 7

MSPGCL submitted that the actual Heat Rate for Parli Unit 6 for FY 2010-11 , FY

2011-12, FY 2012-13 (April to August) are 2557 kcal/kWh, 2639 kcal/kWh, and 2689

kcal/kWh, respectively, and average for three years is 2628 kcal/kWh. MSPGCL

submitted that the projections have been made based on the above and considering the

improvement in Availability and PLF.

As regards Parli Unit 7, MSPGCL submitted that the actual Heat Rate for FY 2010-

11, FY 2011-12, and FY 2012-13 (April to August) are 2582 kcal/kWh, 2640

kcal/kWh, and 2717 kcal/kWh, respectively, and average for three years is 2647

kcal/kWh, which has been considered for projecting the Heat Rate for the second

Control Period.


As discussed earlier, the actual higher Heat Rate in the preceding years cannot be

considered for relaxing the norms for the Heat Rate for the second Control Period.

Further, Parli Unit 6 and Unit 7 being new Units, MSPGCL should be able to operate

these Units at the normative Heat Rate specified in MERC MYT Regulations. Hence,

for the purpose of approval of MYT Business Plan, the Commission has approved the

Heat Rate of 2450 kcal/kWh for Parli Unit 6 and Parli Unit 7 for the second Control

Period.


second Control Period


to be commissioned during the second Control Period, MSPGCL in its MYT Business

Plan Petition submitted that it will make efforts to adhere to the normative parameters

as per the MERC MYT Regulations subject to influence from the external factors.


Page 74 of 168


The Commission has taken note of MSPGCL’s submission and approves the heat rate

in accordance with the provisions of MERC MYT Regulations.

As regards the new Units which are proposed to be commissioned after the

effectiveness of MERC MYT Regulations, 2011, the Commission has approved the

Heat Rate for such generating Units in accordance with Regulation 44.3 of MERC

MYT Regulations, 2011, As regards the same, the Commission asked MSPGCL to

submit the following set of design parameters for the Units envisaged to be

commissioned during the second Control Period:

i. Pressure Rating (kg/cm2),

ii. Super Heat Temperature/Re-Heat Temperature (0C)

iii. Maximum Turbine Cycle Heat Rate (kcal/kWh), and

iv. Minimum Boiler Efficiency

MSPGCL in its reply submitted the details for the Units envisaged to be

commissioned during the second Control Period as shown in the Table below:

Table 4-14: Design Parameters for the upcoming Units envisaged to be commissioned

during the second Control Period as submitted by MSPGCL

Project Steam Parameters Guaranteed

Parameters

Superheater

outlet

Pressure

Superheater

outlet

Temperature

Reheat

outlet

Temperature

Turbine

Heat rate

Boiler

Efficiency

kg/cm2 Deg C Deg C kcal/kWh %

Parli Unit 8

(250 MW)

151 540.00 540.00 1936.30 85.15

Chandrapur

Unit 8 & 9

(500 MW)

178 540.00 540.00 1944.50 87.64

Koradi

Unit 8, 9 &

10 (660 MW)

257.00 568.00 596.00 1850.00 87.00


Page 75 of 168

MSPGCL also submitted the computation of the normative Heat Rate for the above

mentioned Units to be commissioned during the second Control Period in accordance

with Regulation 44.3 of MERC MYT Regulations, as shown in the Table below:

Table 4-15: Computation of the normative Heat Rate for the upcoming Units during

the second Control Period as submitted by MSPGCL

Project Guaranteed Parameters Design Heat

Rate

(kcal/kWh)

Station Heat

Rate

(kcal/kWh)

Turbine Heat

Rate (kcal/kWh)

Boiler

Efficiency (%)

(1) (2) (3) (4)=(2)/(3) (5)=1.065x(4)

Parli Unit 8

(250 MW) 1936.30 85.15 2273.99 2421.80

Chandrapur

Unit 8 & 9

(500 MW)

1944.50 87.64 2218.74 2362.95

Koradi

Unit 8, 9 & 10

(660 MW)

1850.00 87.00 2126.44 2264.66

The Commission has gone through the above computations submitted by MSPGCL.

The Commission, on the basis of the details submitted, has computed the normative

Heat Rate for the above mentioned Units and has verified that the computation

submitted by MSPGCL is in order and therefore, the Commission has approved the

normative Heat Rate for the Units envisaged to be commissioned during the second

Control Period as submitted by MSPGCL.

The summary of Heat Rate of Thermal Generating Stations for the second Control

Period as approved by the Commission is as shown in the table below:

Table 4-16 Summary of Heat Rate of Thermal Generating Stations for second Control

Period approved by the Commission

(Kcal/kWh)

S.

No. Station/Unit

FY 2013-14 FY 2014-15 FY 2015-16


1 Bhusawal TPS 2778.00 2764.36 2780.00 2743.21 2777.00 2739.46

2 Chandrapur TPS 2686.00 2686.42 2680.00 2679.52 2684.00 2683.63

3 Khaperkheda TPS 2612.00 2605.64 2617.00 2607.24 2625.00 2606.70


Page 76 of 168

S.

No. Station/Unit

FY 2013-14 FY 2014-15 FY 2015-16


4 Koradi TPS 2851.00 2835.14 2861.00 2813.53 2762.00 2760.72

5 Nasik TPS 2825.00 2735.84 2815.00 2718.58 2785.00 2715.26

6 Parli TPS 2949.00 2842.25 2928.00 2841.30 2917.00 2850.35

7 Uran GTPS 2045.00 2017.00 2045.00 2021.00 2030.00 2025.00

8 Paras TPS Unit 3 2521.00 2450.00 2509.00 2450.00 2499.00 2450.00

9 Paras TPS Unit 4 2501.00 2450.00 2494.00 2450.00 2490.00 2450.00

10 Parli TPS Unit 6 2580.00 2450.00 2580.00 2450.00 2580.00 2450.00

11 Parli TPS Unit 7 2580.00 2450.00 2580.00 2450.00 2580.00 2450.00

12 Khaperkheda Unit 5 2425.00 2425.00 2425.00 2425.00 2425.00 2425.00

13 Bhusawal Unit 4 2425.00 2425.00 2425.00 2425.00 2425.00 2425.00

14 Bhusawal Unit 5 2425.00 2425.00 2425.00 2425.00 2425.00 2425.00

15 Koradi Unit 8 - - 2264.66 2264.66 2264.66 2264.66

16 Koradi Unit 9 - - 2264.66 2264.66 2264.66 2264.66

17 Koradi Unit 10 2264.66 2264.66 2264.66 2264.66 2264.66 2264.66

18 Chandrapur Unit 8 2362.95 2362.95 2362.95 2362.95 2362.95 2362.95

19 Chandrapur Unit 9 2362.95 2362.95 2362.95 2362.95 2362.95 2362.95

20 Parli Replacement

Unit 8 2421.80 2421.80 2421.80 2421.80 2421.80 2421.80

4.2.4 Auxiliary Consumption

4.2.4.1 Thermal Generating Stations

MSPGCL, in the MYT Business Plan Petition for the second Control Period, has

submitted the projections of Auxiliary Consumption for the existing Thermal

Generating Stations. MSPGCL submitted that the projections are based on CPRI

Study, current issues pertaining to quantity and quality of coal, proposed capital

expenditure, issues pertaining to wet coal during monsoon season and usage of

imported coal, etc. The projections of Auxiliary Consumption for the existing and

new thermal generating Stations/Units as submitted by MSPGCL for the second

Control Period are shown in the Table below:

Table 4-17 Auxiliary Consumption of Thermal Generating Stations for second Control Period as submitted by MSPGCL

S.

No. Station/Unit

FY 2013-14 FY 2014-15 FY 2015-16

MYT

Regulations

CPRI

Report

Version 2

MSPGCL MYT

Regulations

CPRI

Report

Version 2

MSPGCL MYT

Regulations

CPRI

Report

Version 2

MSPGCL

1 Bhusawal TPS 9.47% 10.79% 10.79% 9.00% 10.75% 10.75% 8.80% 9.94% 10.75%

2 Chandrapur TPS 8.18% 8.84% 9.09% 8.18% 8.75% 9.09% 8.18% 8.71% 9.00%

3 Khaperkheda TPS 8.63% 9.74% 9.74% 8.50% 9.71% 9.71% 8.50% 9.70% 9.70%

4 Koradi TPS 10.21% 10.81% 11.96% 10.00% 10.51% 12.03% 9.80% 9.91% 11.20%

5 Nasik TPS 8.50% 13.35% 13.35% 8.50% 13.48% 13.48% 8.50% 13.41% 13.41%

6 Parli TPS 9.12% 14.02% 14.02% 8.50% 14.21% 14.21% 8.50% 14.57% 14.57%

7 Uran GTPS 3.00% - 3.00% 3.00% - 3.00% 3.00% - 3.00%

8 Paras Unit 3 8.50% - 10.00% 8.50% - 10.00% 8.50% - 10.00%

9 Paras Unit 4 8.50% - 10.00% 8.50% - 10.00% 8.50% - 10.00%

10 Parli Unit 6 8.50% - 10.50% 8.50% - 10.50% 8.50% - 10.50%

11 Parli Unit 7 8.50% - 10.50% 8.50% - 10.50% 8.50% - 10.50%


from the normative Auxiliary Consumption specified in the MERC MYT Regulations

or as recommended by CPRI in its Report Version 2. The Commission asked

MSPGCL to submit the detailed reasons for such deviation in the projected Auxiliary

Consumption. MSPGCL, in its reply, submitted the detailed reasoning for the

deviations in the projections of Auxiliary Consumption and the summary of reasons

stated by MSPGCL and the Commission’s ruling on the same are elaborated below.

Bhusawal TPS

MSPGCL submitted that the projections for FY 2013-14 and FY 2014-15 are based

on the CPRI recommendations that have been adopted by the Commission for

determination of tariff. MSPGCL submitted that the deviation in FY 2015-16 is due to

the outages for undertaking the Renovation & Modernisation. MSPGCL submitted

that as the PLF of the plant is low, the auxiliary consumption in percentage terms is

higher.


The Commission has observed that MSPGCL’s projections of Auxiliary Consumption

for FY 2013-14 and FY 2014-15 are in line with the recommendations in CPRI

Report Version 2. Hence, the Commission has approved MSPGCL’s projections of

Auxiliary Consumption for Bhusawal TPS for FY 2013-14 and FY 2014-15.

As regards the auxiliary consumption for FY 2015-6, the Commission has specified

the mechanism for sharing of gains/losses on account of controllable factors in the

MERC MYT Regulations. When the actual generation of a Generator is on higher

side, the Auxiliary Consumption in percentage terms will be lower and the Generator

would receive performance incentive. When the actual generation of a Generator is on

the lower side, the Auxiliary Consumption in percentage terms will be higher and the

Generator should be accordingly penalised. Therefore, for maintaining the sanctity of

the mechanism of sharing of gains/losses on account of controllable factors, the claim

of MSPGCL for revising the Auxiliary Consumption is not admissible. Hence, the

Commission has approved the Auxiliary Consumption of 9.94% for Bhusawal TPS

for FY 2015-16 as recommended in CPRI Report Version 2.

Chandrapur TPS

MSPGCL submitted that CPRI recommendations in Version 2 Report are based on

80% Availability, and the projections in the Business Plan are based on projected PLF

for the second Control Period. MSPGCL submitted that with the implementation of


Page 79 of 168

the schemes, the PLF of the station would improve and subsequently the auxiliary

consumption will get reduced. MSPGCL submitted that the Auxiliary Consumption

during the second Control Period will reduce by around 7%in comparison to the

actual Auxiliary Consumption in FY 2011-12.


As discussed earlier, the Commission does not find merit in revising the Auxiliary

Consumption vis-a-vis CPRI recommendations on account of lower/higher PLF. The

Commission has thus, approved the Auxiliary Consumption of Chandrapur TPS for

second Control Period as recommended in CPRI in Version 2 report.

Khaperkheda TPS

MSPGCL submitted that the projections are in line with the CPRI recommendations

in Version 2 of their Report.


The Commission has observed that the MSPGCL’s projections are in line with the

recommendations in CPRI Report Version 2. Hence, the Commission has approved

the Auxiliary Consumption for Khaperkheda TPS for the second Control Period as

recommended by CPRI in Version 2 of its Report.

Koradi TPS

MSPGCL submitted that for FY 2013-14, the norm of Auxiliary Consumption

specified under MERC MYT Regulations is based on normative PLF. MSPGCL

submitted that as the projected PLF is lower than the normative value, the projection

of auxiliary consumption is higher than the normative value.

MSPGCL submitted that for FY 2014-15, the projection of Auxiliary Consumption is

based on projected Availability. MSPGCL submitted that the projection of Auxiliary

Consumption is higher on account of planned outages and due to the planned outages;

there would be a significant reduction in PLF.

MSPGCL submitted that for FY 2015-16, the projection of Auxiliary Consumption is

based on projected Availability. MSPGCL submitted that after improvement of PLF

of Unit 6 after R&M, the auxiliary consumption has been projected to reduce.



Page 80 of 168

As discussed earlier, the Commission does not find merit in revising the Auxiliary

Consumption from that recommended by CPRI because of lower PLF or on account

of the higher planned outages during the second Control Period. Hence, the

Commission has approved the Auxiliary Consumption for Koradi TPS for the second

Control Period as recommended in CPRI Report Version 2.

Nasik TPS

MSPGCL submitted that the projections are in line with the recommendations in

CPRI Report Version 2.




the Auxiliary Consumption for Nasik TPS for the second Control Period as


Parli TPS

MSPGCL submitted that the projections are in line with the recommendations in

CPRI Report Version 2.




the Auxiliary Consumption for Parli TPS for the second Control Period as


Uran GTPS

MSPGCL submitted that the projections are in line with the norms specified under

MERC MYT Regulations.


The Commission has observed that MSPGCL’s projections of Auxiliary Consumption

for Uran GTPS are in line with the norms specified under MERC MYT Regulations.

Hence, the Commission has approved the Auxiliary Consumption for Uran GTPS for

the second Control Period as specified under MERC MYT Regulations.


Page 81 of 168

Paras Unit 3 and Unit 4

MSPGCL submitted that the projections of Auxiliary Consumption for the second

Control Period are based on the average value of actual Auxiliary Consumption

during FY 2010-11, FY 2011-12, FY 2012-13 (April to July) and projected value for

remaining period of FY 2012-13 (August to March). MSPGCL submitted that the

following factors are contributing to higher auxiliary consumption.

a) Use of Ozonization plant consuming about 0.14 to 0.17% of gross energy

generation.

b) Power requirement to operate newly added Balapur Barrage.

c) Higher AHP Auxiliary Consumption due to higher quantity of coal required

and higher ash content in the received coal.

d) BBD type Ball and tube coal mill consuming @1.14 to 1.43% of gross energy

generation.


As regards the coal quality related problem, the Commission in line with its earlier

approach, does not find MSPGCL’s submission for relaxation of the norms because of

the inferior coal quality, as tenable. As regards the other reasons submitted by

MSPGCL, the Commission asked MSPGCL to submit if the above stated auxiliaries

have been in operations prior to the second Control Period or are proposed to be

operational from the second Control Period. MSPGCL, in its reply, submitted that all

the above mentioned auxiliaries have been operational prior to the second Control

Period.

In view of the submission made by MSPGCL, the Commission is of the view that

there should be no change in the Auxiliary Consumption requirement during the

second Control Period as compared to the Auxiliary Consumption for FY 2012-13.

The Commission, in its Order dated 21 June, 2012 in Case No. 6 of 2012 has

approved the Auxiliary Consumption for Paras Unit 3 and Unit 4 in accordance with

then applicable MERC Tariff Regulations, 2005. Hence, the Commission has

approved the Auxiliary Consumption for Paras Unit 3 and Paras Unit 4 for the second

Control Period as 8.50% as specified under MERC MYT Regulations applicable for

the second Control Period.

Parli Unit 6 and Unit 7

MSPGCL submitted that the projections of Auxiliary Consumption during second

Control Period have been made on the basis of the actual Auxiliary Consumption in


Page 82 of 168

FY 2010-11 , FY 2011-12, and FY 2012-13 (April to August). MSPGCL further

submitted that based on the expectation that Availability would be higher than that in

the last three years and reduction in partial loading on Units due to availability of

coal, auxiliary consumption of the Units is proposed to be 10.50%.


The Commission is of the view that actual higher Auxiliary Consumption in the

preceding year cannot be considered for relaxing the norms for the second Control

Period. Further, MSPGCL’s submission that higher Auxiliary Consumption is due to

lower Availability is also not tenable because of the reasons explained in the earlier

paragraphs.

Further, Parli Unit 6 and Parli Unit 7 being new Units, MSPGCL should be able to

operate these Units at normative Auxiliary Consumption. Hence, the Commission has

approved the Auxiliary Consumption of 8.50% for Parli Unit 6 and Parli Unit 7 for

the second Control Period as specified under MERC MYT Regulations.


second Control Period


to be commissioned till the end of the second Control Period, MSPGCL in its MYT

Business Plan Petition, submitted that it will make efforts to adhere to the normative

parameters specified under the MERC MYT Regulations subject to influence from

external factors.


The Commission has taken note of MSPGCL’s submission. The Commission, for the

purpose of approval of MYT Business Plan, in accordance with Regulation 44.5 of

MERC MYT Regulations, has approved the Auxiliary Consumption of 6.00% for

Khaperkheda TPS Unit 5 and other generating Units of 500 MW size proposed to be

commissioned during the second Control Period considering MSPGCL’s submission

that these Units have natural draft cooling tower. For Parli Replacement Unit 8, the

Commission has approved the Auxiliary Consumption of 8.50% for the second

Control Period considering MSPGCL’s submission that this Unit has natural draft

cooling tower.

The summary of Auxiliary Consumption of Thermal Generating Stations for the

second Control Period approved by the Commission is shown in the Table below.


Page 83 of 168

Table 4-18 Summary of Auxiliary Consumption of Thermal Generating Stations for

second Control Period approved by the Commission

S.

No. Station/Unit

FY 2013-14 FY 2014-15 FY 2015-16


1 Bhusawal TPS 10.79% 10.79% 10.75% 10.75% 10.75% 9.94%

2 Chandrapur TPS 9.09% 8.84% 9.09% 8.75% 9.00% 8.71%

3 Khaperkheda TPS 9.74% 9.74% 9.71% 9.71% 9.70% 9.70%

4 Koradi TPS 11.96% 10.81% 12.03% 10.51% 11.20% 9.91%

5 Nasik TPS 13.35% 13.35% 13.48% 13.48% 13.41% 13.41%

6 Parli TPS 14.02% 14.02% 14.21% 14.21% 14.57% 14.57%

7 Uran GTPS 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%

8 Paras Unit 3 10.00% 8.50% 10.00% 8.50% 10.00% 8.50%

9 Paras Unit 4 10.00% 8.50% 10.00% 8.50% 10.00% 8.50%

10 Parli Unit 6 10.50% 8.50% 10.50% 8.50% 10.50% 8.50%

11 Parli Unit 7 10.50% 8.50% 10.50% 8.50% 10.50% 8.50%

12 Khaperkheda Unit

5 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%

13 Bhusawal Unit 4 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%

14 Bhusawal Unit 5 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%

15 Koradi Unit 8 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%

16 Koradi Unit 9 - - 6.00% 6.00% 6.00% 6.00%

17 Koradi Unit 10 - - 6.00% 6.00% 6.00% 6.00%

18 Chandrapur Unit 8 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%

19 Chandrapur Unit 9 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%


Unit 8 8.50% 8.50% 8.50% 8.50% 8.50% 8.50%

4.2.4.2 Hydro Generating Stations

MSPGCL, in its Original Petition filed on 31 August, 2012, had not submitted the

projections of Auxiliary Consumption for the Hydro Generating Stations. The

Commission asked MSPGCL to submit the details of type of each Hydro Generating

Station and the projections of Auxiliary Consumption for Hydro generating stations in

accordance with Regulation 47.2 of MERC MYT Regulations.

MSPGCL submitted the details of the type of Hydro Generating Stations along with

the corresponding Auxiliary Consumption in accordance with Regulation 47.2 of

MERC MYT Regulations, 2011. The Normative Auxiliary Consumption for Hydro

Generating Stations as submitted by MSPGCL for the second Control Period is shown

in the Table below.


Page 84 of 168

Table 4-19 Auxiliary Consumption of Hydro Generating Stations for second Control

Period as submitted by MSPGCL

S No. Station

Power Station

Location

Excitation

System Type

Norm proposed by

MSPGCL


1 Koyna I & II Under Ground Static Semipole 1.20%

2 Koyna III Under Ground Rotary 0.90%

3 Koyna IV Under Ground Static Semipole 1.20%

4 Bhira T.R. Surface Rotary 0.70%

5 Tillari Under Ground Static 1.20%


6 Ghatghar PSS Under Ground Static NA

7 Paithan Surface Static Thyrister NA

8 Ujjani Surface Static NA

Irrigation Projects

9 KDPH Surface Rotary 0.70%

10 Dudhganga Surface Static 1.00%

11 Yeldari Surface Rotary 0.70%

12 Bhatghar Surface Rotary 0.70%

13 Warna Surface Static 1.00%

14 Pawna Surface Static 1.00%

15 Manikdoh Surface Static 1.00%

16 Surya Surface Static 1.00%

17 Dimbhe Surface Static 1.00%

18 Radhanagari Surface Rotary 0.70%

19 Kanher Surface Static 1.00%

20 Dhom Surface Static 1.00%

21 Teriwanmedhe Surface Static 1.00%


22 Vaitarna Under Ground Rotary 0.90%

23 Bhatsa Surface Static Thyrister 1.00%

24 Panshet Surface Static 1.00%

25 Varasgaon Surface Static Thyrister 1.00%

26 Vaitarna D.T. Surface Rotary 1.00% *Excluding Transformation losses of 0.5%


As may be observed from the above Table, MSPGCL has submitted that the Auxiliary

Consumption norm is not applicable for the Pumped Storage Stations. The

Commission is of the view, that the Pumped Storage Stations operated by MSPGCL

also comes under the capacity regulated by the Commission, and there must be some

Auxiliary Consumption norm applicable for these Stations. The MERC MYT

Regulations does not specify the Auxiliary Consumption norm specifically for the


Page 85 of 168

Pumped Storage Stations, but the Auxiliary Consumption norm for normal Hydro

Stations has been specified by the MERC MYT Regulations. Further, the Commission

in its Order dated 9 February, 2009 in Case No. 94 of 2007 had discussed the issue for

approving the norms for the Pumped Storage Stations. The Commission in the said

Order was of the view that it will not be proper to specify uniform norms of operation

for all the pumped storage stations and the norms for the any Pumped Storage Station,

needs to be approved on case to case basis. As regard the same, MSPGCL is directed

to propose the Auxiliary Consumption norms along with an appropriate justification

and supporting details for pumped storage stations in its MYT Petition for the second

Control Period. The Commission upon submission of the details shall approve the

Auxiliary Consumption norm for the Pumped Storage Stations in its Order on MYT

Petition for the second Control Period.

As regard the other Hydro Stations, based on the details of the type of Hydro

Generating Stations as submitted by MSPGCL, and in accordance with Regulation

47.2 of MERC MYT Regulations has approved the Auxiliary Consumption for Hydro

Generating Station for the second Control Period, as shown in the Table below:

Table 4-20: Auxiliary Consumption of Hydro Generating Stations for second Control

Period as approved by the Commission

S No. Station MSPGCL Approved


1 Koyna I & II 1.20% 1.20%

2 Koyna III 0.90% 0.90%

3 Koyna IV 1.20% 1.20%

4 Bhira T.R. 0.70% 0.70%

5 Tillari 1.20% 1.20%


6 Ghatghar PSS NA ---

7 Paithan NA ---

8 Ujjani NA ---

Irrigation Projects

9 KDPH 0.70% 0.70%

10 Dudhganga 1.00% 1.00%

11 Yeldari 0.70% 0.70%

12 Bhatghar 0.70% 0.70%

13 Warna 1.00% 1.00%

14 Pawna 1.00% 1.00%

15 Manikdoh 1.00% 1.00%


Page 86 of 168

S No. Station MSPGCL Approved

16 Surya 1.00% 1.00%

17 Dimbhe 1.00% 1.00%

18 Radhanagari 0.70% 0.70%

19 Kanher 1.00% 1.00%

20 Dhom 1.00% 1.00%

21 Teriwanmedhe 1.00% 1.00%


22 Vaitarna 0.90% 0.90%

23 Bhatsa 1.00% 1.00%

24 Panshet 1.00% 1.00%

25 Varasgaon 1.00% 1.00%

26 Vaitarna D.T. 1.00% 1.00%

Further, in addition to the above norms, the Commission has also approved the

Transformation Losses of 0.50% as specified under Regulation 47.3 of MERC MYT

Regulations.

4.2.5 Secondary Oil Consumption

MSPGCL, in the MYT Business Plan Petition for the second Control Period, has

submitted the projections of Secondary Oil Consumption for the existing Coal based

Generating Stations. MSPGCL submitted that the projections are based on CPRI

Study, current issues pertaining to quantity and quality of coal, proposed capital

expenditure, issues pertaining to wet coal during monsoon season and usage of

imported coal, etc. The projections of Secondary Oil Consumption for existing and

new thermal generating Stations/Units as submitted by MSPGCL for the second

Control Period are shown in the Table below:

Table 4-21 Secondary Oil Consumption of Coal based Generating Stations for second Control Period as submitted by MSPGCL

(ml/kWh)

S.

No. Station/Unit

FY 2013-14 FY 2014-15 FY 2015-16

MYT

Regulations

CPRI Old

Report MSPGCL

MYT

Regulations

CPRI Old

Report MSPGCL

MYT

Regulations

CPRI Old

Report MSPGCL

1 Bhusawal TPS 2.00 2.00 3.50 2.00 2.00 3.50 2.00 2.00 2.50

2 Chandrapur TPS 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00

3 Khaperkheda TPS 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00

4 Koradi TPS 2.00 2.81 3.88 2.00 2.81 4.10 2.00 2.81 3.77

5 Nasik TPS 2.00 3.00 3.83 2.00 3.00 3.33 2.00 3.00 3.33

6 Parli TPS 2.00 2.00 3.00 2.00 2.00 2.50 2.00 2.00 2.00

7 Paras Unit 3 1.00 - 3.11 1.00 - 3.06 1.00 - 2.81

8 Paras Unit 4 1.00 - 3.28 1.00 - 3.03 1.00 - 2.53

9 Parli Unit 6 1.00 - 4.00 1.00 - 4.00 1.00 - 4.00

10 Parli Unit 7 1.00 - 4.00 1.00 - 4.00 1.00 - 4.00


from normative Secondary Oil Consumption specified under the MERC MYT

Regulations or as recommended by CPRI in its Old Report. The Commission asked

MSPGCL to submit the detailed reasons for such deviation in the projected Secondary

Oil Consumption as compared to the norms specified or the CPRI recommendations.

MSPGCL, in its reply, cited the following coal related reasons for the existing

generating stations for deviation from the normative parameters:

a) Wet coal

b) Flame instability due to wet coal/choking

As regards the new Units, i.e., Paras Unit 3 and Unit 4 and Parli Unit 6 and Unit 7,

MSPGCL submitted that SFO consumption is on higher side due to single stream

CHP, which impact the oil support requirement. MSPGCL also submitted that it has

considered the actual SFO consumption in the previous years for projecting the SFO

consumption for the second Control Period.


As regards the existing generating stations, the Commission has already elaborated on

the coal quality issues in the preceding Sections. The Commission, in the previous

Orders has been approving the SFO consumption for existing Stations based on the

CPRI recommendations. Further, as the reasons cited by MSPGCL for not achieving

the normative SFO consumption, i.e., wet or poor quality of coal, are not tenable, the

Commission for approving the SFO consumption for the existing generating stations

for the second Control Period has considered the recommendations of the CPRI old

Report.

As regards the CHP problem in new Units, i.e., Paras Unit 3 and Unit 4 and Parli Unit

6 and Unit 7, the Commission in its previous Orders has elaborated that such

problems would most likely be on account of deficiencies in quality control and

quality assurance effected during erection, testing and commissioning of these Units.

In view of the above, the Commission has approved the SFO consumption for Paras

Unit 3 and Unit 4 and Parli Unit 6 and Unit 7 as specified under MERC MYT

Regulations.


Page 89 of 168

Khaperkheda Unit 5 and other new Units to be commissioned during the second

Control Period

As regards the performance Parameters for Khaperkheda Unit 5 and other new Units

to be commissioned during the second Control Period, MSPGCL in its MYT Business

Plan Petition submitted that it will make efforts to adhere to the normative parameters

as per the MERC MYT Regulations, 2011 subject to influence from the external

factors.


The Commission has taken note of MSPGCL’s submission. The Commission for the

purpose of approval of Business Plan has approved the SFO Consumption of 1

ml/kWh for Khaperkheda Unit 5 and other new Units to be commissioned during the

second Control Period as specified under MERC MYT Regulations.

The summary of SFO Consumption of Coal based Generating Stations for the second

Control Period approved by the Commission is shown in the table below.

Table 4-22 Summary of Secondary Oil Consumption of Coal based Generating

Stations for second Control Period approved by the Commission

(ml/kWh)

S.

No. Station/Unit

FY 2013-14 FY 2014-15 FY 2015-16


1 Bhusawal TPS 3.50 2.00 3.50 2.00 2.50 2.00

2 Chandrapur TPS 2.00 2.00 2.00 2.00 2.00 2.00

3 Khaperkheda TPS 2.00 2.00 2.00 2.00 2.00 2.00

4 Koradi TPS 3.88 2.81 4.10 2.81 3.77 2.81

5 Nasik TPS 3.83 3.00 3.33 3.00 3.33 3.00

6 Parli TPS 3.00 2.00 2.50 2.00 2.00 2.00

7 Paras TPS Unit 3 3.11 1.00 3.06 1.00 2.81 1.00

8 Paras TPS Unit 4 3.28 1.00 3.03 1.00 2.53 1.00

9 Parli TPS Unit 6 4.00 1.00 4.00 1.00 4.00 1.00

10 Parli TPS Unit 7 4.00 1.00 4.00 1.00 4.00 1.00

11 Khaperkheda TPS

Unit 5 1.00 1.00 1.00 1.00 1.00 1.00

12 Bhusawal Unit 4 1.00 1.00 1.00 1.00 1.00 1.00

13 Bhusawal Unit 5 1.00 1.00 1.00 1.00 1.00 1.00

14 Koradi Unit 8 1.00 1.00 1.00 1.00 1.00 1.00

15 Koradi Unit 9 - - 1.00 1.00 1.00 1.00


Page 90 of 168

S.

No. Station/Unit

FY 2013-14 FY 2014-15 FY 2015-16


16 Koradi Unit 10 - - 1.00 1.00 1.00 1.00

17 Chandrapur Unit 8 1.00 1.00 1.00 1.00 1.00 1.00

18 Chandrapur Unit 9 1.00 1.00 1.00 1.00 1.00 1.00


Unit 8 1.00 1.00 1.00 1.00 1.00 1.00

4.2.6 Transit and Handling Losses

Regulation 44.6 of MERC MYT Regulations specifies the Transit and Handling

Losses for Coal based Generating Stations as a percentage of quantity of coal for both

Pit head Generating Stations and Non-pit head Generating Stations. The aforesaid

Regulation is reproduced below for reference.

“44.6 Transit and handling Losses

Transit and handling losses for coal based Generating Stations, as a

percentage of quantity of coal dispatched by the coal supply company during

the month shall be as given below:

(a) Pit head Generating Stations - 0.2%

(b) Non-pit head Generating Stations - 0.8%

The above norms shall be applicable for all types of coal, i.e., domestic coal,

washed coal and imported coal:

Provided that for procurement of coal on delivery basis, no transit and

handling loss shall be allowed.”

MSPGCL, in the MYT Business Plan Petition for the second Control Period,

submitted that the Transit and Fuel Handling Losses may be considered at normative

level of 0.8% for Coal based Generating Stations. MSPGCL submitted that in case of

any deviation in the transit losses, it would apprise the Commission regarding the

reasons for the same. MSPGCL requested the Commission to apply prudence to the

submission of MSPGCL during the truing-up exercise and allow such transit losses as

deemed appropriate.


Page 91 of 168


In view of the submissions made by MSPGCL regarding the Transit and Handling

Losses of Coal based Generating Stations for the second Control Period, the

Commission has approved the Transit and Handling Losses of Coal based Generating

Stations of MSPGCL for the second Control Period at 0.8% as specified in MERC

MYT Regulations.

4.2.7 Design Energy

Regulation 50 of MERC MYT Regulations specifies the methodology for recovery of

fixed charges of Hydro Generating Stations by allowing recovery of the Annual Fixed

Costs to the extent of 50% based on the availability of the hydro station, while the

balance is allowed to be recovered through the Energy Charges. For the determination

of Energy Charges, it is imperative to determine the Design Energy of Hydro

Generating Stations.

The Commission asked MSPGCL to submit the Design Energy Computations along

with the water inflow/discharge data for the last 20 years for its Hydro Generating

Stations in accordance with the provisions of MERC MYT Regulations. MSPGCL, in

its reply, submitted the Design Energy as per the DPR for its hydro generating

Stations with installed capacity of more than 25 MW.

MSPGCL further submitted that as per the definition, Design Energy is the quantum

of energy that can be generated in a 90 per cent dependable year with 95 per cent

installed capacity of the Generating Station. MSPGCL submitted that however, as per

the document received from GoMWRD, the Design Energy has been considered at

90% dependable year only in the case of Power projects, and in case of

irrigation/drinking water projects, the Design Energy envisaged in DPR is based on

70% dependable year.

MSPGCL also submitted the information regarding the Inflow/discharge data along

with the gross water rate for the purely hydro power projects for last 20 years.

MSPGCL further submitted that the Design Energy based on this data may differ

from the Design Energy envisaged in the DPR for these stations.

Further, in the context of the NAPAF for the Hydro Generating Stations, citing

various reasons as discussed earlier, MSPGCL submitted that the recovery

mechanism for 50% of AFC based on Design Energy may not be feasible for its hydro

stations. MSPGCL submitted that it is important to appreciate that MSPGCL is

merely the operator of these hydro assets that are owned by the GoMWRD. Further,


Page 92 of 168

the water input is also controlled by the GoMWRD. MSPGCL submitted that on its

part, MSPGCL ensures that the machines are available to the extent of normative

parameters. Therefore, in no case should MSPGCL be penalized under such

regulatory mechanisms, which are beyond the control of the Utility.

The Design Energy as submitted by MSPGCL for the Hydro projects with installed

capacity more than 25 MW as envisaged in the concerned project DPR is as shown in

the Table below:

Table 4-23 Design Energy of Hydro Generating Stations with installed capacity more

than 25 MW for second Control Period as submitted by MSPGCL

(MU)

S.

No. Station/Unit

MSPGCL (Submission in

revised Petition)

1 Koyna I, II 788.00

2 Koyna III 550.00

3 Koyna IV 1,730.00

4 K.D.P.H. 90.00

5 Vaitarna 144.00

6 Bhira T.R. 70.00

7 Tillari 131.00

Total Hydro 3,503.00


As discussed earlier, the hydro generating stations with capacity lower than 25 MW

are defined as small/mini/micro hydro stations as per the MERC (Terms and

Conditions for determination of Renewable Energy Tariff) Regulations, 2010. Hence,

the tariff determination process in accordance with Regulation 50 of MERC MYT

Regulations will not apply for such plants and therefore, a considerate view needs to

be taken for the same.

The Commission has therefore, not approved the Design Energy for the hydro

generating stations with capacity less than or equal to 25 MW in this Order, and the

recovery of the AFC for such stations shall be considered as per the current

mechanism wherein the fixed charges are recovered over a twelve month period in

equal instalments.


Page 93 of 168

As regards the hydro generating stations with capacity higher than 25 MW, as stated

earlier, the Commission is of the view that the recovery mechanism for such hydro

generating stations should be in accordance with the Regulation 50 of MERC MYT

Regulations. However, for power projects catering to drinking and irrigation purposes

i.e., Koyna Dam Foot HPS (36 MW) and Vaitarna HPS (60 MW), the

Commission shall examine the actual data with regards to water available for

generation purposes subject to submission of documentary evidence by MSPGCL

with regards to curtailment of water supply by GoMWRD

MSPGCL submitted the Design Energy for its Hydro Generating Stations as per the

Project DPR as submitted below:

Table 4-24: Design Energy for Hydro Generating Stations as submitted by MSPGCL

Particular Unit Tillari Vaitarna Bhira

Koyna

Stage I

& II

Koyna

Stage

III

Koyna

Stage IV KDPH

MSPGCL's

submission of

Design Energy

MU 131.00 144.00 70.00 788.00 550.00 1730.00 90.00

Since, the Design Energy submitted by MSPGCL is as per the Project DPR, the

Commission has approved the Design Energy for the Hydro Generating Stations of

capacity higher than 25 MW as submitted by MSPGCL. However, the Commission

shall look into the Design Energy in detail in the MYT Petition for the second Control

Period.

Table 4-25: Design Energy for the Hydro Generating Stations with installed capacity

higher than 25 MW as approved by the Commission for the second Control Period

S. No. Station/Unit Approved

1 Koyna I, II 788.00

2 Koyna III 550.00

3 Koyna IV 1,730.00

4 K.D.P.H. 90.00

5 Vaitarna 144.00

6 Bhira T.R. 70.00

7 Tillari 131.00

Total Hydro 3,503.00


Page 94 of 168

4.3 FUEL PROCUREMENT PLAN FOR THERMAL GENERATING

STATIONS

MSPGCL, in the MYT Business Plan Petition, submitted that the thermal generating

capacity comprises of 7 Coal based Generating Stations and 1 Gas based Generating

Station. MSPGCL submitted that for FY 2012-13, the requirement of domestic coal

and imported coal is envisaged at around 43.31 MMT and 7.032 MMT, respectively,

to perform at normative parameters. MSPGCL submitted that Fuel Supply

Agreements (FSAs) with the Coal Companies have been signed based on the

requirement of domestic coal, and the quantity of coal that would be supplied, along

with other commercial terms and conditions are covered in the FSA.

MSPGCL further submitted that the New Coal Distribution Policy (NCDP) 2007 had

introduced the concept of Letter of Assurance (LoA) and it provided for assured

supply of coal to Developers upon meeting certain milestones within the stipulated

time. MSPGCL submitted that on achieving the milestones under the LoA, it will be

mandatory for the LoA holders to enter into FSAs with the Coal Companies for long-

term supply of coal.

MSPGCL submitted that notwithstanding the Policy of the Government of India and

even after the fulfilment of the specified milestones provided under the respective

LoA for Parli Unit 7 (250 MW), Paras Unit 4 (250 MW) and Khaperkheda Unit 5

(500 MW), till date only the MOU has been signed with MCL. MSPGCL submitted

that the said MOU is a one page document ensuring an annual quantity of coal to be

supplied without making any provision with regard to monthly quantity, quality,

mode of procurement, joint sampling, etc., as provided under FSAs. MSPGCL further

submitted that for the aforesaid Units, no FSA has been signed so far. As regards

Bhusawal Unit 4 and Unit 5, MSPGCL submitted that not even MOUs have been

signed with the subsidiaries of CIL.

MSPGCL submitted that they had preferred an appeal before the Competition

Commission in this regard against the abuse of dominant position by the subsidiaries

of CIL so that FSAs could be signed for the remaining Units and the terms of FSAs

could be enforced on the Coal Companies.

MSPGCL submitted that the coal requirement for future projects would be met from

the Machhakata-Mahanadi coal blocks in Angul District, Talcher Coal Field, Orissa,

Chenipada-I and Chenipada-II coal blocks and Bhivkund coal block.

Further, the Commission asked MSPGCL to submit the detailed fuel procurement

plan for the second Control Period in the prescribed format. MSPGCL, in its reply


Page 95 of 168

and the revised Petition, submitted the fuel procurement plan for its thermal

Generating Stations, as shown in the Table below:

Table 4-26 Domestic Coal procurement Plan for the second Control Period as

submitted by MSPGCL

S.

No. Station/Unit Particulars FY 2013-14 FY 2014-15 FY 2015-16

1 Bhusawal

TPS

Quantity Required (MT) 17,13,600 17,13,600 17,13,600

Tied up Quantity (MT) 28,00,000 28,00,000 28,00,000

Source WCL WCL WCL

2 Chandrapur

TPS

Quantity Required (MT) 1,05,70,000 1,05,70,000 1,05,70,000

Tied up Quantity (MT) 1,28,00,000 1,28,00,000 1,28,00,000

Source WCL, SECL,

MCL

WCL, SECL,

MCL

WCL, SECL,

MCL

3 Khaperkheda

TPS



Source WCL, SECL,

MCL

WCL, SECL,

MCL

WCL, SECL,

MCL

4 Koradi TPS



Source WCL, SECL,

MCL

WCL, SECL,

MCL

WCL, SECL,

MCL

5 Nasik TPS



Source WCL, SECL WCL, SECL WCL, SECL

6 Parli TPS



Source WCL, MCL,

SCCL

WCL, MCL,

SCCL

WCL, MCL,

SCCL

7 Parli TPS

Units 6 & 7



Source WCL, MCL,

SCCL

WCL, MCL,

SCCL

WCL, MCL,

SCCL

8 Paras TPS

Units 3 & 4



Source WCL, MCL WCL, MCL WCL, MCL

9 Khaperkheda

TPS Unit 5




Page 96 of 168

S.

No. Station/Unit Particulars FY 2013-14 FY 2014-15 FY 2015-16

Source MCL MCL MCL

10

Bhusawal

TPS Units 4

& 5



Source MCL MCL MCL

11 Chandrapur

TPS Unit 8



Source Machhakata Machhakata Machhakata

12 Chandrapur

TPS Unit 9

Quantity Required (MT) 80,000 8,00,000 12,00,000



13 Parli TPS

Unit 8



Source WCL Machhakata Machhakata

14 Koradi TPS

Unit 8




15 Koradi TPS

Unit 9

Quantity Required (MT) - 8,00,000 16,00,000

Tied up Quantity (MT) - 10,00,000 20,00,000

Source - Machhakata Machhakata

16 Koradi TPS

Unit 10

Quantity Required (MT) - 1,60,000 11,20,000

Tied up Quantity (MT) - 2,00,000 14,00,000

Source - Machhakata Machhakata

Machhakata-Mahanadi coal blocks

MSPGCL submitted that Machhakata-Mahanadi coal blocks have been allotted jointly

in favour of MSPGCL and Gujarat State Electricity Corporation Limited (GSECL)

under Government Dispensation Route vide letter no. 13016/13/2005-CA-I dated 06

February 2006. MSPGCL submitted that a Joint Venture Company by the name

Mahaguj Collieries Limited has been established by MSPGCL and GSECL with share

ratio of 60:40. MSPGCL submitted the brief description of the captive coal mines as

follows:


Page 97 of 168

Phase I (Machhakata Coal Block)

MSPGCL submitted that the annual coal production from Machhakata Coal Block is

expected to be 50 MTPA. MSPGCL submitted that the Mine Developer and Operator

contract had been awarded to M/s. Adani Enterprises Limited through International

Competitive Bidding (ICB) route. MSPGCL submitted that the coal from Machhakata

Coal Block would be supplied to their seven generation Units. MSPGCL submitted

that the delivery of coal could be expected to commence from October 2013

depending upon the land acquisition and other related issues.

Phase II (Mahanadi Coal Block)

MSPGCL submitted that the annual target coal production from Mahanadi Coal Block

is expected to be 30 MTPA. MSPGCL submitted that the tender for selection of Mine

Developer and Operator is in process and the delivery of coal could be expected from

February 2017. MSPGCL submitted that the coal from Mahanadi coal block would

be supplied to their seven generation Units.

Chendipada-I and Chendipada-II Coal Blocks

MSPGCL submitted that the coal block was jointly allotted to UPRVUNL, CMDC

and MSPGCL on 25 July, 2007. MSPGCL submitted that the expected production of

40 MTPA would be shared among UPRVUNL, CMDC and MSPGCL in the ratio of

50%, 31.47% and 18.53%, respectively. MSPGCL submitted that M/s. Adani

Enterprises Limited had been appointed the MDO through ICB route. MSPGCL

submitted that the coal production is scheduled from February, 2015 and it would

supply coal to 2 x 660 plants at Dhondaicha, District Dhule.

Bhivkund Coal Block

MSPGCL submitted that the Bhivkund coal block was allotted to MSPGCL by MoC

on 17 July, 2008. MSPGCL submitted that the bids had been invited by

MAHADISCOM for MDO and to put up the Power Plant based on this Coal.

MSPGCL submitted that Order is yet to be placed by MAHADISCOM.

MSPGCL also submitted the details of Imported Coal requirement during the second

Control Period, as shown in the Table below:


Page 98 of 168

Table 4-27 Requirement of Imported Coal for second Control Period as submitted by

MSPGCL

(MT)

S.

No. Station/Unit FY 2013-14 FY 2014-15 FY 2015-16

1 Bhusawal TPS 5,61,286 5,50,619 5,48,758

2 Chandrapur TPS 22,89,561 22,72,742 22,83,955

3 Khaperkheda TPS 9,39,382 9,40,452 9,40,452

6 Parli TPS 10,10,027 10,09,116 10,17,309

7 Parli TPS Units 6 & 7 5,39,238 5,39,238 5,39,238

9 Khaperkheda TPS Unit 5 7,17,437 7,17,437 7,17,437

10 Bhusawal TPS Units 4 & 5 17,11,052 17,11,224 17,11,224

11 Chandrapur TPS Unit 8 5,00,907 12,85,253 10,00,717

12 Chandrapur TPS Unit 9 1,00,583 12,85,253 10,00,717

13 Parli TPS Unit 8 - 3,67,686 3,67,686

14 Koradi TPS Unit 8 1,58,440 18,78,637 13,09,565

15 Koradi TPS Unit 9 - 13,28,741 13,09,565

16 Koradi TPS Unit 10 - 5,56,791 16,51,008

As regards the source of procurement of the imported coal during the second Control

Period, MSPGCL submitted that the same shall be procured by inviting the annual

contracts during the second Control Period.

MSPGCL also submitted the Gas procurement plan for the second Control Period as

shown in the Table below:

Table 4-28 Procurement of Gas for second Control Period as submitted by MSPGCL

S.

No. Station Particulars

FY

2013-14

FY

2014-15

FY

2015-16

1 Uran GTPS

APM Gas

Quantity Required

(mmscmd) 840 705 725

Tied up Quantity

(mmscmd) 1278 1278 963

Source GAIL GAIL GAIL

RIL Gas

Quantity Required

(mmscmd) 438 363 373

Tied up Quantity

(mmscmd) 438 24

Source RIL RIL


Page 99 of 168

MSPGCL further submitted that APM gas capacity of 3.5 mmscmd/day has been

contracted till 31 December, 2015 and RIL gas capacity of 1.2 mmscmd/day has been

contracted till 20 April, 2014. MSPGCL submitted that the gas requirement has been

projected for 90% availability, however, the actual gas availability is only 60% to

70%.

In view of the above, the Commission asked MSPGCL to submit the steps being

taken up by it to renew such contracts to ensure adequate Gas availability for Uran

GTPS during the second Control Period. The Commission further asked MSPGCL to

submit measures that it would adopt to procure the shortfall in availability of required

quantity of Gas.

MSPGCL, in its reply, submitted that it is in the process of procuring pooled price

RLNG from Govt. Companies like BPCL/ IOCL/ GAIL. MSPGCL submitted that it

will also seek to procure RLNG through spot market as an alternate option. MSPGCL

further submitted that considering the current market trends, Spot RLNG is available

at a price of $18 per MMBTU. This would lead to a variable cost of around Rs.

6.5/kWh to Rs. 7/kWh. MSPGCL submitted that considering the higher energy

charges, it requests the Commission to give an appropriate direction and MSPGCL

would procure Spot RLNG accordingly.

The Commission has considered the submissions of MSPGCL in this regard. Fuel,

being the most important input for power generation, the Commission is of the view

that focused attention should be given to the same so that the generation is not

hampered due to unavailability of fuel during the second Control Period. MSPGCL

should take all the necessary actions on priority basis to tie up the remaining un-tied

fuel capacity for the second Control Period. Further, keeping consumer’s interest in

mind, the Commission is of the view that MSPGCL should make concerted efforts to

procure pooled price RLNG from Govt. Companies like BPCL/ IOCL/ GAIL or other

cheaper sources of Gas supply.


Page 100 of 168

4.4 CAPITAL EXPENDITURE PLAN

4.4.1 Capital Investment Plans for upcoming Units (Project Capex)

MSPGCL submitted that capacity expansion schemes of 1000 MW had been planned

to be operational in FY 2012-13 and 3230 MW had been planned to be operational

during the second Control Period. MSPGCL submitted that the total fund requirement

for the proposed capacity expansion schemes of 4230 MW is estimated to be around

Rs. 25,704.12 crore. The investment plan of the capacity expansion schemes

envisaged to be operational in FY 2012-13 and during the second Control Period as

submitted by MSPGCL is shown in the Table below.

Table 4-29 Capital Expenditure for Capacity Expansion Schemes

S.

No. Unit(s)

Capacity

(MW)

Capital Expenditure (Rs. crore) Total

(Rs. Crore) Till FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

1

Bhusawal

Unit 4 and

Unit 5

1,000 5,534.81 645.05 285.02 - - 6,464.88

2

Koradi Unit

8, Unit 9 and

Unit 10

1,980 1,977.87 2,296.26 4,500.52 2,750.31 355.04 11,880.00

3

Chandrapur

Unit 8 and

Unit 9

1,000 2,726.99 1,048.00 1,250.00 475.00 - 5,500.00

4 Parli Unit 8 250 978.61 437.58 328.19 114.87 - 1,859.24

Total 4,230 25,704.12

4.4.2 Capital Investment Plans for Large Scale Renovation & Modernisation

Programmes (R&M Capex)

MSPGCL submitted that it had identified certain units of the power stations for

undertaking large scale Renovation and Modernisation and Life Extension

programmes. MSPGCL submitted that for some Units like Koradi Unit 6 and Nasik

Unit 3, the study of finalisation of scope of Renovation and Modernisation has been

undertaken and the World Bank has agreed to fund the envisaged capital expenditure

and for other identified Units, it would arrange funds for undertaking the study for

determination of feasibility of undertaking Renovation and Modernisation together

with finalisation of scope of such initiative. MSPGCL submitted that tenders would

be floated and EPC contractors will be appointed for actual implementation of the

programme.


Page 101 of 168

MSPGCL submitted that in case of other stations like Chandrapur, Parli and

Bhusawal, the feasibility report of Consultants for the Renovation and Modernisation

schemes are yet to be finalized. MSPGCL submitted that the cost estimates and the

perceived benefit in performance parameters due to implementation of Renovation

and Modernisation scheme had been estimated based on the assessment done in

Koradi and Nasik TPS.

The Capital Investment Plan for the Renovation and Modernisation Schemes as

submitted by MSPGCL are shown in the Tables below:

Table 4-30 Capital Expenditure and Capitalisation of R&M Schemes for Koradi TPS

for second Control Period as submitted by MSPGCL

Koradi TPS

Particulars

Capital Expenditure

(Rs. crore)

Capitalisation

(Rs. crore)

FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already approved

by the Commission 190.87 143.15 4.82 - - 486.00

DPR Schemes to be submitted to

the Commission 102.00 700.00 100.00 - - -

Total 292.87 843.15 104.82 - - 486.00

Table 4-31 Capital Expenditure and Capitalisation of R&M Schemes for Bhusawal

TPS for second Control Period as submitted by MSPGCL

Bhusawal TPS

Particulars

Capital Expenditure

(Rs. crore)

Capitalisation

(Rs. crore)

FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16


by the Commission - - - - - -


the Commission 100.00 200.00 150.00 - - 450.00

Total 100.00 200.00 150.00 - - 450.00


Page 102 of 168

Table 4-32 Capital Expenditure and Capitalisation of R&M Schemes for Nasik TPS

for second Control Period as submitted by MSPGCL

Nasik TPS

Particulars

Capital Expenditure

(Rs. crore)

Capitalisation

(Rs. crore)

FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16


by the Commission 121.00 48.00 192.31 - - 481.46


the Commission 81.00 400.00 450.00 - - -

Total 202.00 448.00 642.31 - - 481.46

Table 4-33 Capital Expenditure and Capitalisation of R&M Schemes for Parli TPS for


Parli TPS

Particulars

Capital Expenditure

(Rs. crore)

Capitalisation

(Rs. crore)

FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16




the Commission - 50.00 350.00 - - -

Total - 50.00 350.00 - -


Page 103 of 168

Table 4-34 Capital Expenditure and Capitalisation of R&M Schemes for Chandrapur


Chandrapur TPS

Particulars

Capital Expenditure

(Rs. Crore)

Capitalisation

(Rs. Crore)

FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16




the Commission 100.00 350.00 400.00 - - 500.00

Total 100.00 350.00 400.00 - - 500.00

The summary of the total Capital Expenditure and Capitalisation of Renovation and

Modernisation Schemes for the second Control Period as submitted by MSPGCL is

shown in the Table below:

Table 4-35 Summary of Capital Expenditure and Capitalisation of R&M Schemes for


Particulars

Capital Expenditure

(Rs. crore)

Capitalisation

(Rs. crore)

FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already

approved by the Commission 311.87 191.15 197.13 - - 967.46

DPR Schemes submitted but

yet to be approved by the

Commission

383.00 1,700.00 1,450.00 - - 950.00

Total 694.87 1,891.15 1,647.13 - - 1,917.46

4.4.3 Capital Investment Plans for small Capex (Other Capex)

MSPGCL submitted that CPRI has given recommendations for all existing coal based

stations for improving the levels of all the key performance parameters. The summary

of suggestions given by CPRI as submitted by MSPGCL is as follows:

Process re-engineering measures to be adopted by MSPGCL in the immediate

and near future with focus on processes and procedures.


Page 104 of 168

Important parameters, which affect the input costs like coal, oil, water need to

be measured and not estimated.

Both receipt and consumption need to be separately monitored and reconciled

through computerized system in respect of coal, fuel oil, water flows through

the plant.

Elimination of human intervention in the measurement and recording systems

of coal, fuel oil and water resources, which affect the station input costs.

Implementation of a fuel monitoring system.

Coal losses to be separately accounted for as weight loss and not be included

in the estimation of heat rate.

Responsibility and accountability for coal quantity and GCV to be divided

between Fuel cell, Coal Handling Plant and Operations.

Avoiding procurement of standalone measuring equipment that cannot be

connected to a central server for database collection purposes.

MSPGCL submitted that the CPRI recommendations have been first clustered into 14

function-wise projects for ease of monitoring and initialisation. MSPGCL submitted

the overall function-wise classification of recommendations as under:

Measures to monitor coal consumption

Measures to monitor water consumption

Monitoring of Coal Quality

Measures to monitor Oil consumption

Improvement in monitoring of Heat Rate and Auxiliary Consumption

Improvement in Condition Monitoring System

Measures to improve purchase and Procurement procedure

Measures to improve Maintenance Procedures

Improvement in ABT and GCR

Improvement in Operation Procedures

Improvement in HR Training and Quality Circle

Upgradation and Technology interventions in the System

Improvement of Heat Rate and Auxiliary Consumption

Improvement in Work Place area.

MSPGCL submitted that all the capital expenditure proposed during the second

Control Period is not aimed to improve the performance of the stations, and some of

the expenditure is also proposed for improvement in process measurements, better


Page 105 of 168

decision making, operational sustenance and statutory compliances. MSPGCL

submitted that apart from the CPRI recommendations for Thermal projects, it has also

identified certain other schemes for thermal and Hydel power stations for improving

their performance over the short-term, long-term and medium-term.

MSPGCL submitted that it will submit the DPR for the schemes for in-principle

approval of the Commission. MSPGCL further submitted that the capitalisation

schedule is based on the expected timeline for approval of schemes, lead time for

supply of equipment and implementation of the schemes, which is subject to change

on a real time basis. The capital investment plan for the small Capex (Other Capex)

for Thermal and Hydro Generating Stations as submitted by MSPGCL are shown in

the Tables below.

Table 4-36 Capital Expenditure and Capitalisation of Other Capex Schemes for

Bhusawal TPS for second Control Period as submitted by MSPGCL

Bhusawal TPS

Particulars

Capital Expenditure

(Rs. crore)

Capitalisation

(Rs. crore)

FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already approved by

the Commission 21.55 12.57 0.00 21.55 12.57 0.00

DPR Schemes submitted but yet to

be approved by the Commission 19.91 9.79 3.74 19.91 9.79 3.74

DPR Schemes to be submitted for

Commission’s approval 53.18 72.31 19.68 53.18 72.31 19.68

Non-DPR Schemes 0.00 0.00 0.00 0.00 0.00 0.00

Total 94.64 94.67 23.42 94.64 94.67 23.42


Page 106 of 168


Chandrapur TPS for second Control Period as submitted by MSPGCL

Particulars

Capital Expenditure

(Rs. crore)

Capitalisation

(Rs. crore)

FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already

approved by the

Commission

209.77 104.85 102.81 180.14 173.85 102.81

DPR Schemes submitted

but yet to be approved by

the Commission

43.28 0.00 0.00 50.16 0.00 0.00

DPR Schemes to be

submitted for

Commission’s approval

426.98 404.76 292.99 432.35 508.25 314.59

Non-DPR Schemes 42.30 32.08 49.83 61.23 32.33 49.83

Total 722.34 541.69 445.64 723.89 714.42 467.24


Khaperkheda TPS for second Control Period as submitted by MSPGCL

Khaperkheda TPS

Particulars

Capital Expenditure (Rs. crore) Capitalisation (Rs. crore)

FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already

approved by the

Commission

8.17 0.00 0.00 39.69 0.00 0.00



Commission

0.00 0.00 0.00 0.00 0.00 0.00

DPR Schemes to be

submitted for Commission’s

approval

133.11 50.89 83.93 128.07 51.69 52.88


Page 107 of 168

Khaperkheda TPS

Particulars


FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

Non-DPR Schemes 5.95 2.60 1.75 9.44 2.60 1.75

Total 147.23 53.49 85.68 177.20 54.29 54.63


Koradi TPS for second Control Period as submitted by MSPGCL

Koradi TPS

Particulars


FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already

approved by the Commission 0.00 0.00 0.00 0.00 0.00 0.00



Commission

16.44 6.19 3.00 16.44 6.19 3.00

DPR Schemes to be


approval

58.91 41.80 58.94 58.91 41.80 58.94

Non-DPR Schemes 14.64 3.38 5.80 14.64 3.38 5.80

Total 89.99 51.37 67.74 89.99 51.37 67.74

Table 4-40 Capital Expenditure and Capitalisation of Other Capex Schemes for Nasik


Nasik TPS

Particulars


FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already

approved by the

Commission

58.70 15.39 13.78 55.28 19.69 17.88

DPR Schemes submitted

but yet to be approved by 0.00 0.00 0.00 0.00 0.00 0.00


Page 108 of 168

Nasik TPS

Particulars


FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

the Commission

DPR Schemes to be

submitted for

Commission’s approval

127.19 91.79 25.40 151.28 94.16 26.05

Non-DPR Schemes 1.05 0.00 0.00 1.05 0.00 0.00

Total 186.94 107.18 39.18 207.60 113.85 43.93

Table 4-41 Capital Expenditure and Capitalisation of Other Capex Schemes for Parli


Parli TPS

Particulars


FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already




Commission

0.00 0.00 0.00 0.00 0.00 0.00

DPR Schemes to be


approval

101.29 153.92 39.72 101.29 153.92 39.72

Non-DPR Schemes 5.16 3.05 3.19 5.16 3.05 3.19

Total 132.06 179.19 57.39 132.06 179.19 57.39

Table 4-42 Capital Expenditure and Capitalisation of Other Capex Schemes for Uran

GTPS for second Control Period as submitted by MSPGCL

Uran GTPS

Particulars


FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already



Page 109 of 168

Uran GTPS

Particulars


FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16



Commission

0.00 0.00 0.00 0.00 0.00 0.00

DPR Schemes to be


approval

355.51 826.34 29.64 44.74 1195.79 244.60

Non-DPR Schemes 0.00 0.00 0.00 0.00 0.00 0.00

Total 355.51 826.34 29.64 44.74 1195.79 244.60

Table 4-43 Capital Expenditure and Capitalisation of Other Capex Schemes for Paras

Unit 3 for second Control Period as submitted by MSPGCL

Paras Unit 3

Particulars


FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already




Commission

0.00 0.00 0.00 0.00 0.00 0.00

DPR Schemes to be


approval

17.69 7.25 1.15 20.32 7.75 1.15

Non-DPR Schemes 0.00 0.00 0.00 0.00 0.00 0.00

Total 17.69 7.25 1.15 20.32 7.75 1.15


Page 110 of 168

Table 4-44 Capital Expenditure and Capitalisation of Other Capex Schemes for Paras


Paras Unit 4

Particulars


FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already




Commission

0.00 0.00 0.00 0.00 0.00 0.00

DPR Schemes to be


approval

10.98 1.09 0.48 10.98 1.09 0.48

Non-DPR Schemes 0.00 0.00 0.00 0.00 0.00 0.00

Total 10.98 1.09 0.48 10.98 1.09 0.48



Parli Unit 6

Particulars


FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already




Commission

0.00 0.00 0.00 0.00 0.00 0.00

DPR Schemes to be


approval

2.33 80.67 108.85 7.80 77.70 106.35

Non-DPR Schemes 0.00 0.00 0.00 0.00 0.00 0.00

Total 2.33 80.67 108.85 7.80 77.70 106.35


Page 111 of 168



Parli Unit 7

Particulars


FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already




Commission

0.00 0.00 0.00 0.00 0.00 0.00

DPR Schemes to be


approval

0.00 25.62 16.40 0.00 25.62 16.40

Non-DPR Schemes 0.00 0.00 0.00 0.00 0.00 0.00

Total 0.00 25.62 16.40 0.00 25.62 16.40


Koyna Hydro Generating Station for second Control Period as submitted by

MSPGCL

Koyna Hydro

Particulars


FY

2013-14

FY 2014-

15

FY 2015-

16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already




Commission

0.00 0.00 0.00 0.00 0.00 0.00

DPR Schemes to be


approval

18.95 11.96 20.29 18.95 11.96 20.29

Non-DPR Schemes 1.79 1.48 2.05 1.79 1.48 2.05

Total 20.74 13.44 22.34 20.74 13.44 22.34


Page 112 of 168

Table 4-48 Capital Expenditure and Capitalisation of Other Capex Schemes for Nasik

Hydro Generating Station for second Control Period as submitted by MSPGCL

Nasik Hydro

Particulars


FY

2013-14

FY 2014-

15

FY 2015-

16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already




Commission

0.00 0.00 0.00 0.00 0.00 0.00

DPR Schemes to be


approval

0.00 0.00 0.00 0.00 0.00 0.00

Non-DPR Schemes 2.85 1.95 2.02 2.85 1.95 2.02

Total 2.85 1.95 2.02 2.85 1.95 2.02

Table 4-49 Capital Expenditure and Capitalisation of Other Capex Schemes for Pune

Hydro Generating Station for second Control Period as submitted by MSPGCL

Pune Hydro

Particulars


FY

2013-14

FY 2014-

15

FY 2015-

16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already




Commission

0.00 0.00 0.00 0.00 0.00 0.00

DPR Schemes to be


approval

0.00 0.00 0.00 0.00 0.00 0.00

Non-DPR Schemes 9.10 3.19 0.63 9.10 3.19 0.63

Other (specify details)

Total 9.10 3.19 0.63 9.10 3.19 0.63


Page 113 of 168

Table 4-50 Summary of Capital Expenditure and Capitalisation of Other Capex for

existing and new Stations/Units for second Control Period as submitted by MSPGCL

Particulars

Capital Expenditure

(Rs. crore)

Capitalisation

(Rs. crore)

FY

2013-14

FY

2014-15

FY

2015-16

FY

2013-14

FY

2014-15

FY

2015-16

DPR Schemes already




Commission

79.62 15.98 6.74 86.50 15.98 6.74

DPR Schemes to be


approval

1,306.12 1,768.39 697.47 1,028.16 2,242.03 901.13

Non-DPR Schemes 82.84 47.73 65.27 105.27 47.98 65.27

Total 1,792.39 1,987.13 900.55 1,542.20 2,534.31 1,108.31


As regards MSPGCL’s capital investment plan for the new capacity addition till the

end of the second Control Period, the Commission is of the view that the capital cost

for such plants cannot be approved though this Order and the same shall be approved

through separate Orders on Petitions for capital cost determination for each

Generating Unit separately. The Commission has therefore, in this Order, not

approved the Capital Cost of Khaperkheda Unit 5, Bhusawal Unit 4 and Unit 5,

Koradi Unit 8, Unit 9 and Unit 10, Chandrapur Unit 8 and Unit 9, and Parli Unit 8.

As regards the capital investment plan for the Renovation & Modernisation schemes

and other small capital expenditure, the Commission has verified the projected

Capital Investment Plan vis-a-vis the in-principle approved schemes and has

estimated capital cost for the purpose of MYT Business Plan projections. The

regulatory provisions under MERC MYT Regulations in relation to capital

expenditure have been considered for approval of the capital investment plan.

Accordingly, it is clarified that the detailed scrutiny, review and approval of the

capital cost subject to prudence check would be undertaken separately.

As regards the capitalisation of DPR schemes for the other capex submitted by

MSPGCL for FY 2013-14 to FY 2015-16, the Commission has considered only those

schemes, which have already been granted in-principle approval by the Commission.


Page 114 of 168

As regard the capitalisation of the Renovation & Modernisation schemes for Koradi

and Nasik TPS, the DPR for these Renovation & Modernisation schemes have already

been approved by the Commission. However, in the meeting held on 15 January,

2013 with the internal team of the Commission at the Commission’s office submitted

that Renovation & Modernisation activities for Nasik TPS are yet to be kicked off and

are expected to start only after successful completion of Renovation & Modernisation

of Koradi Unit 6. MSPGCL submitted that the Renovation & Modernisation of Nasik

TPS is not expected to get completed during the second Control Period. Hence, the

Commission has approved the capitalisation on account of Renovation &

Modernisation activity of Koradi TPS, which is expected to get completed during the


Further, the Commission’s rationale for approving the capitalisation for the second

Control Period from FY 2013-14 to FY 2015-16 in this Order is discussed below:

Regarding DPR schemes (above Rs. 10 crore each): 100% capitalization

approved for all DPR schemes for which in-principle approval is available.

Regarding Non DPR schemes (Schemes less than Rs. 10 Crore): Where there

are DPR schemes capitalized in the said financial year, upto 20% cost of

capitalized DPR schemes has been considered towards capitalization of Non

DPR schemes.

Where there has been no capitalization of any DPR scheme in the said

financial year, 50% cost of capitalized non-DPR scheme has been considered

by the Commission.

Accordingly, for the purpose of MYT Business Plan approval, the Commission has

approved the following year-wise capitalisation for small capex and the Renovation &

Modernisation schemes for the Generating Stations of MSPGCL for the period from

FY 2013-14 to FY 2015-16 as shown in the Tables below. MSPGCL is required to

complete the schemes as per the Plan, and submit the completion report with cost

benefit analysis before actual capitalisation in respective financial years.

Table 4-51: Capitalisation of Existing and New Units for small capex as approved by

the Commission for the second Control Period (Rs. crore)

Station/Unit Particulars FY 2013-14 FY 2014-15 FY 2015-16

Bhusawal

DPR 44.47 12.77 3.74

Non-DPR 8.89 2.55 0.75

Total 53.36 15.32 4.49


Page 115 of 168

Station/Unit Particulars FY 2013-14 FY 2014-15 FY 2015-16

Chandrapur

DPR 155.55 90.33 0.00

Non-DPR 31.11 18.07 52.80

Total 186.66 108.40 52.80

Parli

DPR 32.97 22.22 14.47

Non-DPR 6.59 4.44 2.89

Total 39.56 26.66 17.36

Khaperkheda

DPR 39.70 0.00 0.00

Non-DPR 7.94 17.60 10.27

Total 47.64 17.60 10.27

Nasik

DPR 37.16 10.15 5.02

Non-DPR 7.43 2.03 1.00

Total 44.59 12.18 6.02

Koradi

DPR 18.31 15.88 0.00

Non-DPR 3.66 3.18 8.87

Total 21.97 19.06 8.87

Uran

DPR 23.31 0.00 0.00

Non-DPR 4.66 12.64 8.30

Total 27.97 12.64 8.30

Hydro

DPR 0.00 0.00 0.00

Non-DPR 16.40 9.30 3.94

Total 16.40 9.30 3.94

Paras Unit 3

DPR 0.00 0.00 0.00

Non-DPR 8.85 3.63 0.57

Total 8.85 3.63 0.57

Paras Unit 4

DPR 0.00 0.00 0.00

Non-DPR 5.49 0.54 0.24

Total 5.49 0.54 0.24

Parli Unit 6

DPR 0.00 0.00 0.00

Non-DPR 3.90 9.85 18.17

Total 3.90 9.85 18.17

Parli Unit 7

DPR 0.00 0.00 0.00

Non-DPR 0.00 12.81 8.20

Total 0.00 12.81 8.20

Total

DPR 351.47 151.35 23.23

Non-DPR 104.93 96.64 116.01

Total 456.40 247.99 139.24


Page 116 of 168

Table 4-52: Capitalisation of Existing and New Units for R&M Scheme for Koradi as

approved by the Commission for the second Control Period (Rs. crore)

Station/Unit FY 2013-14 FY 2014-15 FY 2015-16

Koradi R&M Scheme 0.00 0.00 486.00

4.5 FINANCING PLAN

4.5.1 Financing Plan for Renovation & Modernisation Schemes

MSPGCL submitted the Financing Plan for Renovation & Modernisation Schemes in

its MYT Business Plan Petition. MSPGCL submitted that for the projects in which no

funding has been currently arranged from multilateral agencies, the funding is

proposed to be arranged from FIs/Banks in India with a debt equity ratio of 80: 20.

MSPGCL submitted that as the projects are yet to take off, it is envisaged that the

benefits of such programmes would most likely be made available in the third Control

Period.

MSPGCL also submitted the total debt and equity requirement for the Renovation &

Modernisation schemes during and beyond the second Control Period as shown in the

Table below.

Table 4-53 Debt and Equity requirement for R&M Schemes during and beyond the


Station Equity

(Rs. crore)

Debt

(Rs. crore)

Nasik TPS 322.86 1290.60

Koradi TPS 330.00 1116.00

Bhusawal TPS 90.29 361.17

Parli TPS 120.00 480.00

Chandrapur TPS 200.00 800.00

Total 1063.15 4047.77

MSPGCL submitted that the loan has been tied up for Renovation & Modernisation of

Unit 3 of Nasik TPS from KFW, Germany and for the Renovation & Modernisation

Project for Koradi TPS (Indian coal fired generation rehabilitation project) for Unit 6,

loan has been tied up with IBRD at applicable LIBOR Rate with tenure of 24 years

and moratorium period of 6 years.


Page 117 of 168

4.5.2 Financing Plan for Small Capex Schemes

MSPGCL, in its MYT Business Plan, did not submit the detailed Financing Plan for

Small Capex schemes. The Commission asked MSPGCL to submit details of

initiatives being taken by MSPGCL to tie-up the funds for the capital expenditure

planned for the second Control Period. The Commission also asked MSPGCL to

submit the detailed Financing Plan for the second Control Period, clearly mentioning

the planned source-wise funding for each station/Unit to meet its debt requirements.

MSPGCL, in its reply, submitted that it is not prudent to tie up the entire loan

requirement for other capex for the second Control Period at this point of time as the

actual capital expenditure would change with the progress of time and also the interest

rates on these loans keep changing from year to year. MSPGCL submitted that

therefore it has considered normative loans for capitalization in the second Control

Period. MSPGCL further submitted that the normative loans have been assumed to be

financed at weighted average rate of interest of actual loans.

MSPGCL further submitted that it will ensure availability of funds in a timely manner

either from Financial Institutions/Banks or from internal accruals for the funding

requirements of the second Control Period.

The Commission has gone through the submissions of MSPGCL in this regard.

Considering the significant capital expenditure requirements proposed by MSPGCL

in its MYT Business Plan Petition for the second Control Period from FY 2013-14 to

FY 2015-16 and as the second Control Period is about to start, the Commission is of

the view that MSPGCL should be able to tie up the firm funding arrangements for

supporting the capital expenditure envisaged for the second Control Period. MSPGCL

should make concerted efforts in this regard to ensure timely and adequate availability

of the funds for the capital expenditure for the second Control Period.

MSPGCL is further directed to submit a detailed Note on the financing plan, covering

the sources of finance, initiatives being taken up by MSPGCL to tie-up the funds for

project execution, and funding from internal accruals, if any, to fund Capital

Expenditure requirements during the second Control Period in its Multi Year Tariff



Page 118 of 168

4.6 HUMAN RESOURCE PLAN

4.6.1 Recruitment

MSPGCL submitted that the future manpower requirements for expansion projects

envisaged to be completed during the second Control Period shall be recruited at least

one year prior to completion of projects and commencement of operations. MSPGCL

also submitted that there would be average induction of around 500 new engineers for

the next 5 years considering the large number of retiring employees during this

period. The future manpower requirement as submitted by MSPGCL is shown in the

Table below.

Table 4-54 Manpower requirement as submitted by MSPGCL

S.

No. Station/Unit

Year wise requirement

FY

2011-12

FY

2012-13

FY

2013-14

FY

2014-15

FY

2015-16

1 Chandrapur TPS

Units 8 & 9 200 250 250 - -

2 Parli TPS Unit 8 100 100 - - -

3 Koradi TPS Units 8, 9

& 10 - 500 500 - -

4 Bhusawal TPS Unit 6 - - - 250 250

5 Bhusawal TPS Units

4 & 5 170 176 185 190 190

Total 470 1026 935 440 440

4.6.2 Training

MSPGCL submitted that engineers and technicians are given induction training at the

time of joining the organisation at the central training centres at Koradi and Nasik.

MSPGCL also submitted that it endeavours to conduct refresher training at periodic

intervals.

MSPGCL submitted that it is undertaking the following measures for imparting

training to its employees:

Technical Employees: Undertake assessment of level of proficiency of

technical employees through scientific evaluation and thereafter impart

systematic sectional Training of these technical employees.

Management Positions: Identify employees who are in strategic management

positions and impart training to enhance their management capabilities. The


Page 119 of 168

management staff also needs to be trained in the marketing concepts and

theories to enable them to become overall well developed managers capable of

handling higher positions.

Support Staff: Apart from the Technical staff of Engineers, there is an

immediate need for capacity building of staff in support services like welfare,

security, stores, general administration, Accounts and Human Resources

management.

MSPGCL also submitted the various measures taken to ensure the performance of

manpower as follows:

Constitution of “Training Advisory Committee” comprising of five members,

which will address issues for streamlining the Training & development

activities.

Apart from the Training Centres at Nasik and Koradi, Training Sub Centres

(TSCs) at 9 Major Power Plants namely Khaperkheda, Chandrapur, Koradi,

Paras, Bhusawal, Nasik, Parli, Hydro and Uran have been established.

FOSTs (Forum of Sectional Teams) have been formed in all Sections of all

MSPGCL Power Plants/Offices with at least two Functional Experts,

Approved training faculties and self-motivated training coordinators in each

section. Inter-power station Functional FOSTs are formed to ensure

standardization of best practices and for identifying performance gaps to

ensure planned progress in every functional area across MSPGCL.

MSPGCL submitted that it has identified stages for structural transformation

of MSPGCL into a Learning Organization and they include the following:

o Formation of Project Teams

o Promoting Inter Functional FOSTs Video Conferencing

o Web Based Training Need Assessment Survey utilities on Sectional

Web page.

o E-learning and Virtual Class rooms arrangements

o Performance Excellence Programs through FOSTs/ Quality Circles

o Six monthly TNA and Routine Performance Planning exercise

o Blended training approach through CBT packages/ Simulators

o Proper establishment of Training Sub centres and Main training

Centres and separate CGM (Training) office.


Page 120 of 168

o Establishing standard deputation Norms

o Self-Learning Concepts and On-Line Examinations

4.6.3 Reward Policy

MSPGCL, in the MYT Business Plan Petition, submitted that an incentive mechanism

scheme for its employees at various levels would be formulated in order to motivate

them towards better performance and bring about improvement in various

performance parameters.

The Commission asked MSPGCL to clarify the formulation of reward policy

proposed by MSPGCL. MSPGCL replied that the reward policy, covering all

employees of the company engaged in power stations and projects, would be linked to

the plant performance. MSPGCL submitted that the likely relational criteria of plant

performance include the following:

Coal based Thermal Generating Stations – SFOC, SHR, Availability

Gas based Thermal Generating Stations – SHR

Hydro Generating Stations – Availability

Project implementation timelines

4.6.4 Health and safety management

MSPGCL submitted that the following steps have been taken to identify and assess all

types of occupational health and safety risks and reduce the significant risk to reduce

the occurrence of accidents:

All the power stations are equipped with dispensaries with qualified doctors

and have all primary facilities;

All the major locations in power stations are equipped with primary aid boxes

and provision of round the clock ambulance is made in the power stations

All the employees are issued Health Register that are maintained for history of

their health

All employees are issued with personal protective safety equipments and

Safety officers are posted at all power stations to take care of safe working

practices


Page 121 of 168

Efforts are made to create awareness of occupation health and safety in all

employees, contractors and contract labourers and training them adequately

for safe working practices

MSPGCL observes Safety Week from 4th – 10th March wherein awareness of

safety is done through conduct of plays, safety slogan writing competition,

posters making, essay writing, etc., to demonstrate and highlight the

importance of Safety

MSPGCL submitted that in relation to ensuring safety of Project site, an

officer of Executive Engineer level is nominated to ensure that safety aspects

at project site are adhered to. Where the labourers do not have protective gear,

MSPGCL submitted that it provides for these gear. MSPGCL submitted that it

also takes Group Insurance for contract labourers on the Project site.

The Commission has noted the submissions of MSPGCL in this regard.

4.7 ENVIRONMENT POLICY

MSPGCL submitted that it is committed to the safety of the environment and has

received certification under ISO:14001, which is a standard for environmental

systems. MSPGCL submitted that it has received certification for its major power

stations at Chandrapur, Koradi, Khaperkheda, Nasik, Parli, Uran and Koyna Power

stations under the ISO: 14001.

MSPGCL submitted that it has initiated installation of Solar Photovoltaic Power

Plants through National Solar Mission as per the guidelines of Ministry of New and

Renewable Energy and achieved 5 MW installed capacity in 11th

Five Year Plan and

is likely to achieve another 750 MW installed capacity by the end of 12th

Five Year

Plan.


Page 122 of 168

MSPGCL also submitted the brief details of the solar photovoltaic plants as shown in

the Table below:

Table 4-55 Details of MSPGCL’s Solar Photovoltaic Power Plants as submitted

by MSPGCL

S.

No. Project

Capacity

(MW)

COD

Actual (A)/Anticipated PPA Status

1 1 MW Solar PV

Chandrapur 1 09.04.2010 (A) executed with MSEDCL

2 2 MW Solar crystalline PV

Chandrapur

2 18.10.2011 (A) executed with NVVN

3 2 MW Solar Thin film PV

Chandrapur 2 12.02.2012 (A) executed with NVVN

4 25MW Solar Photovoltaic

Project, Sakri 25 March 2013

executed with BEST (10

MW) & MSEDCL (15

MW)

5

125 MW Solar

Photovoltaic Project at

Shivajinagar,tq. Sakri,Dist.

Dhule

125 March 2013 executed with MSEDCL

6

Solar Photovoltaic

Project, Kaudgaon, Dist.

Osmanabad

75

250

March 2014

March 2017 Not yet executed

7

Solar Photovoltaic Project

at Gangakhed, Dist.

Parbhani

100 March 2015 Not yet executed

8

Mangladevi-Pimpri –

Nawbpur – (I&II) –

Malkhed Tq. Ner, Dist.

Yeotmal

100 March 2016 Not yet executed

9 Lohara MIDC, Dist.

Yeotmal 75 March 2016 Not yet executed

MSPGCL submitted that state-of-the-art pollution control system devices have been

installed to control air pollution, which include:

o Well designed Electrostatic Precipitators for controlling the stack emission

o Ammonia Flue Gas Injection systems

o Low NOx Burner and ambient air quality monitoring to have better control

over SPM, SO2 and NOx


Page 123 of 168

o Ash Dykes and Ash Handling System

o Upgradation and retrofitting of Pollution Control Systems

o Dust suppression and Dust extraction system

MSPGCL submitted that the following measures have been adopted to conserve water

and avoidance of contamination of soil and water bodies in the power station

adjoining areas:

o Ash water recycling system used to help reduce use of fresh water required

for disposal of ash

o Effluent treatment plant

o Sewage water recycling plant set for treatment of domestic sewage from the

power station and its residential township.

o Conservation of water by reduction of water for main plant and ash disposal

areas through recycling and reuse of water.

MSPGCL submitted that all the power stations have entered into agreement with the

Maharashtra Pollution Control Board (MPCB) nominated agencies for disposal of

hazardous waste from the plants. MSPGCL also submitted that the effluents generated

are recycled through Effluent Treatment Plant, Sewage Treatment plant and Ash bund

recovery pump and again used in the power station for achieving zero discharge.

MSPGCL further submitted that a formal ash utilisation programme was launched in

1999 to ensure maximum usage of ash produced. MSPGCL submitted that it has

entered into long-term contracts with cement companies for ash lifting. MSPGCL also

submitted that afforestation is undertaken in areas around the Project site and

abandoned ash pond sites are being reclaimed and afforestation being carried out on

these sites.


4.8 CORPORATE SOCIAL RESPONSIBILITY

MSPGCL submitted that the Company’s focus is to help enrich the quality of life of

the people who live and work in operational territory and power plants vicinity as

enshrined in the Mission statement of MSPGCL and preserve ecological balance and

heritage through a strong environment conscience.

MSPGCL submitted that as a constructive partner in the communities in which it

operates, MSPGCL will be taking concrete action to realize its social responsibility


Page 124 of 168

objectives, thereby building value for its stakeholders. MSPGCL submitted that it

respects human rights, values its employees and will invest in innovative technologies

and solutions for sustainable energy flow and economic growth.

MSPGCL submitted that besides focusing primarily on the welfare of economically

and socially deprived sections of society, it also aims at developing techno-

economically viable and environment-friendly output for the benefit of society,

ensuring the highest standards of safety and environment protection in its operations.

MSPGCL submitted that it has a concerted social responsibility programme to partner

communities in health, family welfare, education, environment protection, providing

potable water, sanitation, and empowerment of women and other marginalized groups

such as:

Initiatives for Education

o Safety, Energy Conservation awareness training programs is conducted

all over the state to educate people on importance of energy

conservation etc.

o Educating and encouraging farmers for utilization of fly Ash for

Agricultural use.

o Educating farmers as well as small entrepreneurs for Ash Brick

manufacturing business and other similar small scale business.

o Running Computer awareness programs in the villages near power

stations.

o Distribution of books, uniform, school bags to needy students along

with active NGO participation.

Social Initiatives: MSPGCL submitted that as part of social obligation, it has

undertaken a number of initiatives for the betterment of the people around the

power plant as well for Project affected persons such as

o Making infrastructure facilities like approach road, water facilities,

cremation ground and other civil works for benefit of residents near the

power stations.

o Providing water facilities to nearby villages

o Motivating economically weaker / backward class lady groups for

Entrepreneurship, viz., Mahila Bachat Gat.

o Providing infrastructure facilities for, School, Computer centres, Bank,

City Bus, Post Office, Telephone, domestic Gas Cylinder, ATM,

Library, Play Grounds, Gardens etc.


Page 125 of 168

o Local community will be encouraged to participate in Social as well as

Cultural programs of Colony.

Health related measures

o MSPGCL submitted that it arranges medical, health check-up camps

for nearby villages surrounding the power station.

o MSPGCL submitted that it arranges Blood donation camps for needy

patients.

o MSPGCL submitted that De-addiction camps run in the company

premises/ centres are made available to nearby villages


4.9 RISK MITIGATION PLAN

MSPGCL submitted that the risk mitigation measures can be segregated into two

main categories, i.e., those which require immediate attention and those which can be

tackled over the medium to long term.

4.9.1 Mitigation Measures – Immediate Horizon

Old Machines:

MSPGCL submitted that its thermal generating stations are comparatively old based

on outdated technologies and hence, difficulty is experienced in meeting the

performance parameters set by the Commission. MSPGCL submitted that it has

already started incorporating CPRI’s recommendations for its generating stations to

the extent financially and technically feasible to improve the performance of the

generating stations. MSPGCL also submitted that it is undertaking Renovation &

Modernisation work for 5 power stations in order to improve the operational

parameters and life expectancy of the generating stations. MSPGCL submitted that

the focus is mainly on improving Plant Load Factor, Availability Factor, Heat Rate,

Secondary Oil Consumption, Specific coal consumption and Auxiliary energy

consumption.


Page 126 of 168

HR Issues:

MSPGCL submitted that the major human resource related issues are:

Availability of required manpower: MSPGCL submitted that in order to

overcome the issue of manpower due to shortage and ageing profile of its

employees, it is envisaging the recruitment of manpower required for

expansion projects at least one year prior to completion of projects and

commencement of operations.

Employee attrition: MSPGCL submitted that it is bound by the constraints of

being a government Utility with respect to salary issues, and ways are being

devised to work around this issue by offering employees other incentives such

as implementation of a reward policy based on generating station performance

as well as individual performance.

4.9.2 Mitigation measures – Medium to Long Term

Increasing the Competitiveness of MSPGCL:

MSPGCL submitted that increased competition is due to opening of electricity market

through Open Access and operational issues of MSPGCL such as old age of

machineries and it would address the risk in the following ways:

Improving the operational efficiencies of existing plants through intensive

Renovation & Modernisation and process improvement activities

Ensuring that the new Units remain in close conformance to the normative

parameters through proactive maintenance of Units

Use of imported coal to mix with low quality domestic coal to ensure

maximum operational efficiency.

Timely Mine development:

MSPGCL submitted that to ensure fuel security, it has entered into a Joint Venture

with Gujarat State Electricity Co. Ltd. for captive mining of coal blocks at

Machhakata and also a Joint Venture with Uttar Pradesh Rajya Vidyut Utpadan

Nigam Ltd. (UPRVUNL) and Chhattisgarh Mineral Development Corporation

(CMDC) to share the output of Coal to be generated from Chendipada I and


Page 127 of 168

Chendipada II coal blocks. MSPGCL submitted that it will endeavour to ensure

timely development of these mines with state-of-the-art technology to enhance the

productivity and exploitable quantity of coal.

The Commission asked MSPGCL to submit the phase-wise expected date of

commissioning and expected phase-wise production of each mine under realistic

scenario. MSPGCL, in its reply, submitted that during the period of FY 2013-14 to

FY 2015-16 the delivery of coal is expected only from Machhakata and Chendipada

Coal Blocks. MSPGCL submitted the production details for Machhakata and

Chendipada Coal Block as shown in the Table below:

Table 4-56: Expected date of commissioning and phase-wise production from

Machhakata Coal Block as submitted by MSPGCL

Expected date of commissioning: August 2014

Expected phase wise production for this MYT period

Financial Year 2013-14 2014-15 2015-16

Production (MMT) 0 1.2 4.2

Production in case 1 year delay (MMT) 0 0 1.2

Table 4-57: Expected date of commissioning and phase-wise production from

Chendipada Coal Block as submitted by MSPGCL

Expected date of commissioning: February 2015

Expected phase wise production for this MYT period

Financial Year 2013-14 2014-15 2015-16

Production (MMT) 0 2.5 7.0

Production in case 1 year delay (MMT) 0 0 2.5

The Commission further asked MSPGCL to submit its Contingency plan for

procuring coal if there is any delay in the commissioning of the mine thereby

affecting the quantum of coal supply from the mine to the allocated stations.

MSPGCL, in reply, submitted that in case of delay in coal production, the short fall in

coal quantity will be met through tapered linkage from Ministry of Coal and through

additional import of coal. MSPGCL also submitted that as per the coal production

schedule of Machhakata coal block, MSPGCL needs tapered coal linkage for

Chandrapur (2x500 MW) and Koradi (3 x 660 MW) projects. MSPGCL submitted

that it has applied to Ministry of Coal for grant of tapered linkage for these upcoming

projects. MSPGCL also submitted that as per communications with CEA, it is


Page 128 of 168

understood that the application for tapered linkage is under consideration for

recommendation to Ministry of Coal to sanction the tapered linkage.

Alternate Sources of Fuel:

MSPGCL submitted that it will endeavour to identify alternate sources of fuel supply,

rather than depending upon Coal India Limited for all its requirements. MSPGCL

submitted that it would ensure that envisaged quantum of imported coal is arranged in

time to maintain the generation plan and this has already been set into motion with the

joint allocation of the coal blocks. MSPGCL submitted that it is also making

endeavours for acquiring more domestic coal mines to meet its future coal

requirement. MSPGCL submitted that Cost plus mine allocation from WCL is also an

important step, and in this regard, it would also pursue means such as e-auction to get

additional quantum of coal as and when available. MSPGCL also submitted that it

will participate in e-auction opportunities as and when available in order to get

additional quantum of coal.

The Commission has taken a note of the risk mitigation plan submitted by MSPGCL.

It has been observed that the most important concern during the second Control

Period would be availability of the required quantity of fuel. Though as per the

submissions of MSPGCL it seems that it is taking various measures to ensure the fuel

availability during the second Control Period, the availability of adequate quantity of

fuel during the second Control Period is still doubtful. The Commission is of the view

that in addition to other risk mitigation measures, MSPGCL should give focused

attention to the fuel availability so that the generation is not hampered due to

unavailability of fuel during the second Control Period. MSPGCL should take all the

necessary actions on priority basis to tie up the remaining un-tied fuel capacity for the


4.10 CHALLENGES FACED BY MSPGCL IN THE OPERATION OF THE

GENERATING STATIONS

MSPGCL submitted that the following challenges are experienced during the

operation of the Thermal Generating Stations

Most of the Units have outlived their Useful Life

Quantum of coal received is less than required quantity

Units had been designed for coal with higher GCV and due to the lower GCV

of received coal, additional quantity of 20-50% of coal is required to be

handled.


Page 129 of 168

Quality of coal received from various mines is not uniform and the SHR of the

Stations largely vary wherein coal from WCL and MCL is being used.

Impact of monsoon on coal quality

MSPGCL submitted that rainfall aggravates the issues associated with poor quality of

coal. MSPGCL submitted that CPRI had acknowledged this issue and had factored in

the impact of rainfall in FY 2010-11 on case to case basis. MSPGCL submitted that

around 50% of received coal quantity is from WCL mines. MSPGCL submitted that

WCL mines are open cast mines and the black cotton soil was getting loaded with the

coal. MSPGCL submitted that this black cotton soil becomes highly sticky and muddy

during monsoon season and wet coal leads to choking of bunkers, flame instability,

trippings, bunker level maintenance, and loadability constraints, resulting in excess oil

consumption for operational stabilization. MSPGCL submitted that heavy rainfall

would lead to higher secondary oil consumption and would result in higher SHR.

MSPGCL submitted that these issues would likely prevail and their impact needs to

be considered in the Regulations.

Restricted usage of Imported Coal

MSPGCL submitted that the usage of imported coal is a function of design

constraints, availability of space and infrastructure support in the power stations.

MSPGCL submitted that CEA had recommended restrictions in usage of imported

coal in the Indian context. MSPGCL submitted that blending of coal would face

technical constraints and need to be carefully monitored. MSPGCL submitted that the

technical efficiency improvement by the usage of imported coal for blending with

domestic coal would depend on season of the year and compatibility of imported coal

with domestic coal. MSPGCL submitted that they had filed an appeal before Hon’ble

ATE (Appeal 47 of 2012) to direct them or the Commission to appoint CPRI for

undertaking detailed study on the possible level of blending and measures to improve

the performance of MSPGCL’s generating stations. MSPGCL submitted that the

outcome of the appeal would have an impact on the normative assessment of

performance of the power stations.


Page 130 of 168

Non-consideration of practical constraints under regulated regime

MSPGCL submitted that in the regulated regime, they are only entitled to ROE and

with a small equity base, it would imply that any operational deviation could

adversely affect the financial condition of the Company. MSPGCL submitted that

they had been facing a precarious financial condition on account of delays in truing

up and disallowances of incurred expenditure by the Commission. MSPGCL

submitted that this has led to heavy borrowings for the working capital requirement of

the Company. MSPGCL submitted that disallowances of expenses by the

Commission would have an impact on the profitability of the Company and the

Company does not have any other mechanism to recover these costs given the

regulated nature of the business.

Quantity and Quality of Fuel

MSPGCL submitted that the major source of fuel is domestic coal, which is

purchased from the various subsidiaries of CIL. MSPGCL submitted that there are

issues in procurement terms of coal, the transit loss, poor quantity and quality of coal,

delay in supply, etc. MSPGCL submitted that they are constrained in finding solutions

to these issues due to the monopoly nature of coal supply in India and lack of

regulator in Coal Industry as well as lack of alternatives of supply.

MSPGCL submitted that the quality of coal is a major cause of concern. MSPGCL

submitted that domestic coal is being supplied from WCL, MCL, SECL, SCCL and

the quality of coal from these sources had been steadily declining in the recent past.

MSPGCL submitted that bad quality of coal had led to an increase in purchase of

imported coal. MSPGCL submitted that the imported coal is much costlier and would

impact all stakeholders including the consumers.

MSPGCL submitted that domestic coal is the major fuel for generating stations and

there had been a shortage of coal in the recent times. MSPGCL submitted that

Railways constitute the major system of coal transportation in India and coal is the

largest single commodity transported by the Railways. MSPGCL submitted that the

transportation of coal is dependent on the availability of rakes, freight corridors,

freight rates, etc. MSPGCL submitted that the Railways being a monopoly in India, it

is at times difficult to ensure timeliness of supply, reduction in transit loss, etc.

MSPGCL submitted that these issues would hamper the overall efficiency of the

power stations.


Page 131 of 168

Non payment of dues by MSEDCL

MSPGCL submitted that an important aspect, which poses a pertinent threat is the

non-payment of dues by MSEDCL. MSPGCL submitted that the genesis of this threat

lies in the underlying fact that they are currently operating with a single consumer

model. MSPGCL submitted that the financial health of the Company is a function of

their capability to recover the receivables from MSEDCL in time.

MSPGCL submitted that MSEDCL itself being a regulated entity has its own set of

issues with respect to timely submission of Tariff Petition, receipt of Tariff Orders

and cap on recovery of approved ARR from the consumers. MSPGCL submitted that

any issues faced by MSEDCL in recovery of its expenses whether arising out of its

compulsions under a regulated environment or its own operational inefficiencies

could have a cascading effect on their financial health.

MSPGCL submitted that the resultant cash flow issues would only increase the short-

term borrowings of MSPGCL and would increase the risk perception of lenders. Such

non-desirable borrowings beyond the threshold level would likely get disallowed

under the Regulations, and could worsen the precarious financial health of the

Company. MSPGCL submitted that the outstanding amount to be recovered from

MSEDCL is around Rs. 4,500 crore.

The Commission has noted the submissions regarding the challenges being faced by

MSPGCL in the operation of the Generating Stations/Units. The Commission is of the

view that most of the challenges faced by MSPGCL are common for any generating

Company. Better management of various resources, and sound SWOT analysis would

help in overcoming most the challenges. MSPGCL may look at adopting best

practices of the better performing Utilities that may be NTPC or other private

generating Companies for overcoming the mentioned challenges. Further, as regard

the non payment of dues of around Rs. 4500 by MSDECL, the Commission has

already discussed the matter in Section 2 of this Order.


Page 132 of 168

5 PROJECTIONS FOR THE SECOND CONTROL

PERIOD

MSPGCL, in its Petition, has given details of its Operational Plan along with

projected expenses for FY 2013-14 to FY 2015-16 under various heads, viz., O&M

expenses, Depreciation, interest on loans, etc.

The Commission is of the view that the Petition for approval of ARR of the

Generating Utility would be considered once it is filed after the MYT Business Plan

Order is issued. Therefore, excepting according approval to the ARR, this Chapter

analyses the projections of some of the components of ARR based on the projected

capital expenditure, O&M expenses, etc., so that consumers get an idea of the impact

of the Plans proposed by MSPGCL. Hence, for completeness of this Order, the

Commission has captured the ARR as projected by MSPGCL in this Chapter.

MSPGCL, in its revised MYT Business Plan Petition, has submitted the projections of

components of ARR for each year of the second Control Period (FY 2013-14 to FY

2015-16). The projections of ARR components as submitted by MSPGCL along with

the Commission's views on the same have been discussed in subsequent paragraphs.

5.1 FUEL RELATED EXPENSES

MSPGCL submitted that the projections of fuel related expenses are based on

operating parameters that would improve due to anticipated capital expenditure.

MSPGCL submitted that for the purpose of fuel cost projection, the fuel base price

had been considered as approved by the Commission in its Order dated 21 June, 2012

in Case No. 6 of 2012 for FY 2012-13. MSPGCL submitted that the escalation rates

considered for the projection of fuel related expenses are 7.07% for Domestic Coal as

prescribed by CERC, 4.05% for Gas, 5% for imported Coal, and 4% for FO and LDO.

The projections of fuel related expenses for the second Control Period as submitted by

MSPGCL are shown in the Table below.

Table 5-1 Projections of Fuel related expenses for second Control Period as submitted

by MSPGCL (Rs. crore)

S.


Existing Units

1 Bhusawal TPS 914.89 966.76 820.95

2 Chandrapur TPS 3,640.29 3,886.06 4,127.88

3 Parli TPS 1,168.09 1,267.23 1,414.77

4 Khaperkheda TPS 1,505.51 1,606.00 1,721.43


Page 133 of 168

S.


5 Koradi TPS 1,115.66 942.67 1,332.86

6 Nashik TPS 1,356.43 1,247.76 1,532.19

7 Uran GTPS 894.55 1,039.25 1,112.20

Total 10,595.41 10,955.72 12,062.28

New Units

8 Paras Unit 3 276.97 315.14 335.33

9 Paras Unit 4 276.65 314.00 333.24

10 Parli Unit 6 433.29 459.09 487.64

11 Parli Unit 7 422.05 447.56 475.84

12 Khaperkheda Unit 5 981.64 1,034.55 1,092.63

Total 2,390.60 2,570.34 2,724.68

Upcoming Units

13 Bhusawal Unit 4 1,186.30 1,249.75 1,319.60

14 Bhusawal Unit 5 1,186.30 1,249.75 1,319.60

15 Chandrapur Unit 8 429.68 1,244.46 1,157.28

16 Chandrapur Unit 9 96.03 1,244.46 1,157.28

17 Parli replacement Unit 8 185.76 494.94 526.03

18 Koradi Unit 8 391.08 1,851.66 1,766.15

19 Koradi Unit 9 - 1,393.96 1,766.15

20 Koradi Unit 10 - 521.04 1,879.09

Total 3,475.15 9,250.00 10,891.16

Total Fuel Expenses 16,461.16 22,776.06 25,678.12


The Commission has noted MSPGCL’s submission in this regard. However, the

Commission in this Order has not undertaken the detailed scrutiny of the fuel related

expenses for the second Control Period. The same shall be scrutinized and approved as a

part of the Order on MYT Petition for the second Control Period.

5.2 OPERATION AND MAINTENANCE EXPENSES

MSPGCL, in its original MYT Business Plan Petition, had not submitted the

projections of Operation and Maintenance expenses for the second Control Period.

The Commission asked MSPGCL to submit the projections of Operation and

Maintenance expenses for each year of the second Control Period in accordance with

Regulations 45, 46 and 48 of the MERC MYT Regulations. The relevant extracts of

the aforesaid Regulations are reproduced below for reference.

“45 Operation and maintenance expenses

45.1 Existing Generating Stations


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a) The Operation and Maintenance expenses including insurance shall be

derived on the basis of the average of the actual Operation and Maintenance

expenses for the three (3) years ending March 31, 2010, based on the audited

financial statements , excluding abnormal Operation and Maintenance

expenses, if any, subject to prudence check by the Commission.

b) The average of such operation and maintenance expenses shall be

considered as operation and maintenance expenses for the financial year

ended March 31, 2009 and shall be escalated based on the escalation factor

as approved by the Commission for the respective years to arrive at operation

and maintenance expenses for the base year commencing April 1, 2011.

c) The O&M expenses for each subsequent year shall be determined by

escalating the base expenses determined above for FY 2010-11, at the

escalation factor 5.72% to arrive at permissible O&M expenses for each year

of the Control Period.

Provided that in case, an existing Generating Station has been in operation

for less than three (3) years as at on the date of effectiveness of these

Regulations, the O&M Expenses shall be as specified at Regulation 46 for

New Generating Stations”

“46 New Generating Stations:

a) For Coal based Generating Stations:

Particulars 200/210/250 MW

Sets

500 MW and above

Sets

FY 2011-12 14.81 13.32

FY 2012-13 15.66 14.08

FY 2013-14 16.55 14.89

FY 2014-15 17.50 15.74

FY 2015-16 18.50 16.64

Note:

For the Generating Stations having combination of 200/210/250 MW sets and

500 MW and above sets, the weighted average value for operation and

maintenance expenses shall be adopted.”


Page 135 of 168

“48 Operation and Maintenance Expenses for Hydro Generating Stations

48.1 For Existing Stations:

(1) The normative O&M expenses for the second Control Period shall

be derived on the basis of the average of the actual O&M expenses for

the three (3) years ending March 31, 2010, based on the audited

financial statements, excluding abnormal O&M expenses, if any,

subject to prudence check by the Commission.

(2) The average of such O&M expenses shall be considered as the

expenses for the financial year ended March 31, 2009, which shall be

escalated based on the escalation factor as approved by the

Commission for the respective years to arrive at O&M expenses for the

base year commencing April 1, 2011.

(3) The O&M expenses for each subsequent year shall be determined

by escalating the base expenses determined above for FY 2010-11, at

the escalation factor of 5.72% to arrive at permissible O&M expenses

for each year of the Control Period.

48.1 For Existing Stations:

(1) O&M expenses for first year of operation shall be specified as 2%

of the original project cost (excluding cost of rehabilitation and

resettlement works) for the first year of operation.

(2) The O&M expenses for each subsequent year shall be determined

by escalating the base expenses determined above, at the escalation

factor of 5.72%.”

MSPGCL, in its replies and in the revised MYT Business Plan Petition, submitted the

projections of O&M expenses for the second Control Period. MSPGCL submitted that

for the purpose of working out O&M expenses for second Control Period, the actual

expenses for FY 2009-10, FY 2010-11 and FY 2011-12 have been considered.

MSPGCL submitted that the actual O&M expenses for the aforesaid years have been

considered, unlike the principles specified in the MERC MYT Regulations, as the

second Control Period would commence from FY 2013-14. MSPGCL submitted that

the advantage of considering the same is that the impact of Pay Revision has got

factored in the actual expenses.


Page 136 of 168

MSPGCL submitted that for the removal of impact of contribution of O&M expenses

of vintage Units, it has calculated the factor (Rs. Lakh/MW) for the entire year for

each of the three years by dividing the actual expenses as per accounts with the total

operating MW during the year. MSPGCL submitted that this factor (Rs. Lakh/MW)

was multiplied with the operational MW (Units still operating under PPA) to work out

the normalized O&M expense for such capacity.

MSPGCL submitted that it has reduced the following one-time expenses as approved

by the Commission in Case No 6 of 2012 from the FY 2010-11 actual O&M

Expenses to work out the average:

i. De-Capitalisation of Gratuity and leave encashment cost of Rs. 22 crore

ii. Consideration of Credit/reduction in liabilities of PF planned Assets of Rs.

17.86 crore

iii. Increased R&M Expenditure of Rs. 33.44 crore at Chandrapur due to water

crisis.

MSPGCL submitted that these normalized O&M expenses were then averaged out to

work out the expense for FY 2010-11. MSPGCL submitted that as per Regulation

45.1 (b) the MERC MYT Regulations, the O&M expense for the subsequent year in

the Control Period was to be escalated at 5.72% to arrive at permissible O&M

Expense for each year of the Control Period. MSPGCL submitted that considering

that this escalation factor would be subject to truing up, it has considered the

escalation rate of 8.31% for FY 2012-13 as approved by the Commission in its Order

dated 21 June, 2012 in Case No. 6 of 2012.

MSPGCL submitted that the O&M expenses for the new Stations have been estimated

in the following manner:

i. As Parli Unit 6 achieved COD 3 years prior to effectiveness of MERC MYT

Regulations, O&M Expenses have been projected as specified for existing

Unit.

ii. Although the Commission has specified the O&M norms for new Units in

MERC MYT Regulations, the norms have not factored in the impact of Pay

Revision. MSPGCL submitted that the current norms in MERC MYT

Regulations are based on escalation factors applied on the base norms, i.e., Rs

10.81 lakhs/MW specified for FY 2005-06 in the MERC Tariff Regulations,

2005. MSPGCL submitted that in order to factor in the impact of pay revision


Page 137 of 168

in O&M norms for new Units, it has considered the base O&M Expense for

FY 2005-06 specified in MERC Tariff Regulations, 2005 and applied the

approved escalation rates.

iii. MSPGCL submitted that it has considered the MERC Tariff Regulations, 2005

to incorporate the impact of Pay revision that has taken place in FY 2008-09

in the O&M Expenses norm. MSPGCL submitted that the Pay Revision in FY

2008-09 had an impact of Rs. 95 crore on the employee expenses. MSPGCL

submitted that this impact was approximately 21% of the actual employee

expense for FY 2007-08. MSPGCL submitted that it has escalated the

Employee Expenses for FY 2007-08 by 21% to capture the impact of Pay

Revision as approved by the Commission in Case No. 6 of 2012.

MSPGCL further submitted that as of now it has not taken into consideration the

impact of Pay Revision due with effect from 1 April, 2013 while projecting the O&M

expenses. MSPGCL requested the Commission to take into consideration the impact

of this Pay Revision on actual basis at the time of truing up.

The Commission has analysed the above submissions of MSPGCL for considering the

base year as FY 2009-10, FY 2010-11 and FY 2011-12 while computing the O&M

Expenses for the second Control Period. The Commission asked MSPGCL to also

submit the projections of O&M expenses for the second Control Period strictly as per

the Regulations 45, 46 and 48 of MERC MYT Regulations.

MSPGCL, in its reply, submitted that it had projected the Operation & Maintenance

expenses for the second Control Period based on the actual average Operation and

Maintenance expenses for FY 2009-10, FY 2010-11 and FY 2011-12. MSPGCL

reiterated the advantages of considering the proposed years that in all the three years

i.e., from FY 2009-10 to FY 2011-12, the impact of pay revision is already getting

factored in the actual expenses. MSPGCL further submitted that it had computed the

per MW O&M expenses for FY 2009-10 to FY 2011-12 and multiplied it with the

remaining capacity of the Units under the PPA to remove the impact of vintage Units

before averaging. The Average O&M Base expense for FY 2010-11 thus obtained

have been further escalated with the approved escalation rate (@ 8.31%) to obtain the

O&M expenses for the second Control Period.

The projections of O&M Expenses considering the base years as FY 2009-10, FY

2010-11 and FY 2011-12 as submitted by MSPGCL are shown in the Table below:


Page 138 of 168

Table 5-2: O&M Expenses for second Control considering base years from FY 2009-

10 to FY 2011-12 as submitted by MSPGCL (Rs. Crore)

Stations FY 2013-14 FY 2014-15 FY 2015-16

Bhusawal 146.08 158.22 171.37

Chandrapur 428.42 464.02 502.58

Khaperkheda 178.31 193.13 209.18

Koradi 187.95 203.57 220.48

Nashik 168.02 181.98 197.10

Paras 0.00 0.00 0.00

Parli - Existing 140.65 152.34 165.00

Uran GTPS 51.73 56.03 60.69

Hydro (including

Ghatghar) 123.41 133.66 144.77

Total Existing 1424.57 1542.96 1671.18

MSPGCL, in its reply, also submitted the projections of O&M Expenses as per the

Regulation 45.1 (a) of MERC MYT Regulation, i.e., considering the base years from

FY 2007-08 to FY 2009-10. MSPGCL submitted that it has recomputed the O&M

expense with the following changes:

a) O&M expenses have been recomputed based on the average of actual O&M

expense for FY 2007-08 to FY 2009-10. However, as actual O&M expenses

for FY 2008-09 and FY 2009-10 had a component of pay revision in it,

MSPGCL has additionally considered pay revision in FY 2007-08 and

allocated it to all stations on the basis of O&M expenses before averaging the

O&M expense for FY 07-08 to FY 09-10.

b) Escalation factor of 5.72% has been considered for projecting the O&M

expense for the second Control Period.

Table 5-3: O&M Expenses for second Control considering base years from FY 2007-

08 to FY 2009-10 as submitted by MSPGCL

Stations FY 2013-14 FY 2014-15 FY 2015-16

Bhusawal 124.95 132.10 139.65

Chandrapur 402.34 425.35 449.68

Khaperkheda 151.27 159.92 169.07

Koradi 147.51 155.95 164.87

Nashik 161.30 170.53 180.28

Paras 0.00 0.00 0.00

Parli - Existing 146.65 155.04 163.91

Uran GTPS 71.25 75.32 79.63

Hydro (including 106.23 112.31 118.73


Page 139 of 168

Stations FY 2013-14 FY 2014-15 FY 2015-16

Ghatghar)

Total Existing 1311.50 1386.52 1465.83

MSPGCL, in its reply, also requested the Commission to consider the O&M expenses

as per MSPGCL’s methodology for the second Control Period. MSPGCL also

submitted that there is wide variation between the O&M Expenses computed as per

MERC MYT Regulations and the O&M Expense as approved by MERC in previous

orders as shown below:

Table 5-4: Comparison of O&M Expenses based on the above mentioned

methodologies for previous years as submitted by MSPGCL (Rs. crore)

O&M Expense for the PPA Unit FY 2011-12 FY 2012-13

MSPGCL’s submission in the Business Plan (based on

averaging of FY 2009-10 to FY 2011-12 O&M Expense) 1214.36 1315.27

As per MYT Regulations 2011 (based on averaging of FY

2007-08 to FY 2009-10 O&M Expense) 1145.36 1240.54

Approved by Commission in Case 6 of 2012 (includes O&M

expense of Nashik vintage Unit operation for 91 days in FY

12)

1220.09 1301.02

Actual O&M Expense (includes O&M expense of Nashik

vintage unit operation for 91 days in FY 12) 1433.45

MSPGCL further, submitted that such kind of deviation is not observed in case of

other Utilities like TPC and RInfra where the O&M expense as per MERC MYT

Regulations and O&M expenses as per previous Orders are in sync. Hence, MSPGCL

requested the Commission to consider the O&M expenses as submitted in the

Business Plan for approving the ARR projections for the second Control Period.

The Commission has gone through the above submissions of MSPGCL and observed

that the major reasons for proposing the deviation in the methodology for computing

the O&M Expenses for existing Stations for the second Control Period is on account

of inclusion of the impact of the Pay Revision and removal of the vintage Units from

the generating capacity of MSPGCL. The Commission is of the view that the above

mentioned issues can be incorporated without deviating from the basic methodology

for computing the O&M Expenses as per Regulation 45.1 (a) and 48.1 (1) of MERC

MYT Regulations, i.e., considering the average of the actual Operation and

Maintenance expenses for existing Stations for FY 2007-08, FY 2008-09 and FY

2009-10.


Page 140 of 168

In view of the above, the Commission, in accordance with Regulation 45.1 and 48.1

of MERC MYT Regulations has computed the O&M Expenses for the existing

Stations on the basis of the average of the actual allowable O&M Expenses for the three

years from FY 2007-08 to FY 2009-10, excluding abnormal O&M Expenses to arrive at

O&M Expenses for FY 2008-09. The same has been escalated at escalation rates as

approved by the Commission for the respective years in the respective Tariff Orders, to

arrive at the O&M Expenses for FY 2012-13. The Commission has considered the

approved escalation rate of 5.48% and 7.02% for FY 2009-10 and FY 2010-11,

respectively. For FY 2011-12 and FY 2012-13, the Commission has considered the

approved escalation rate as 8.31%. The summary of escalation rates as considered the

Commission to arrive at the O&M Expenses for FY 2012-13 is shown in the Table below:

Table 5-5: Escalation rates considered by the Commission

Year Escalation Rate

FY 2009-10 5.48%

FY 2010-11 7.02%

FY 2011-12 8.31%

FY 2012-13 8.31%

The O&M expenses for each subsequent year under consideration for the present MYT

Business Plan starting from FY 2013-14 to FY 2015-16 have been determined by

escalating the expenses derived for FY 2012-13, at an escalation rate of 5.72% to arrive at

permissible O&M expenses for each year of the second Control Period, in accordance

with the provisions of MERC MYT Regulations.

Further, the Commission has also considered the following while computing the

O&M Expense for the second Control Period:

a) Impact of Pay Revision has been considered in addition to the O&M Expenses

as computed by above methodology.

b) The O&M Expenses for the Vintage Units have been reduced in proportion to

the capacity taken out of the PPA.

The detailed computation undertaken by the Commission for the O&M Expenses for

the existing generating Stations is shown in the Table below:


Page 141 of 168

Table 5-6: O&M Expenses for the existing generating Stations as computed by the Commission

Stations

FY

2007-

08 (Rs.

Crore)

FY

2008-

09 (Rs.

Crore)

FY 2009-

10 (Rs.

Crore)

Average

O&M

Expenses

for total

capacity

(Rs. Crore)

Total

Capacity

(MW)

Non

Vintage

Capacity

(MW)

Average

O&M

Expenses

for Non

Vintage

(Rs.

Crore)

Pay

Revisio

n (total

Capaci

ty) (Rs.

Crore)

Pay

Revision

(Non-

Vintage

Capacity)

(Rs.

Crore)

Excluding Pay revision Including Pay revision

FY 2013-

14 (Rs.

Crore)

FY 2014-

15 (Rs.

Crore)

FY

2015-16

(Rs.

Crore)

FY

2013-14

(Rs.

Crore)

FY

2014-

15 (Rs.

Crore)

FY

2015-

16 (Rs.

Crore)

a b c

d=(a+b+c)/

3 E F g=d* f / e h i=h* f /e

j=g

*(1+5.48%

)(1+7.02%)

((1+8.31%)

^2)(1+5.72

%)

k=j*(1+5.

72%)

l=k*(1+

5.72%) m=j+i n=k+i o=l+i

Bhusawal 80.03 99.19 97.18 92.13 475 420 81.46 7.86 6.948 114.05 120.57 127.47 121.00 127.52 134.42

Chandrapur 230.37 290.65 271.32 264.11 2340 2340 264.11 22.46 22.456 369.77 390.92 413.28 392.22 413.37 435.73

Parli 105.95 99.31 95.11 100.12 670 630 94.15 10.93 10.279 131.81 139.35 147.32 142.09 149.63 157.60

Paras 24.18 15.86 25.22 21.75 55 - - 1.98 - - - - - - -

Khaperkheda 95.91 100.11 98.23 98.08 840 840 98.08 9.57 9.567 137.32 145.17 153.48 146.89 154.74 163.05

Nasik 144.94 137.37 159.52 147.28 880 630 105.44 12.31 8.813 147.62 156.06 164.99 156.43 164.87 173.80

Koradi 146.34 162.93 172.30 160.52 1040 620 95.70 15.92 9.493 133.98 141.64 149.74 143.47 151.14 159.24

Uran 80.12 51.36 45.31 58.93 852 672 46.48 4.37 3.447 65.07 68.80 72.73 68.52 72.24 76.18

Hydro 59.81 53.91 64.45 59.39 - - 59.39 5.15 5.155 83.15 87.91 92.93 88.30 93.06 98.09

Total 967.65 1010.68 1028.64 1002.32 7152.00 6152.00 844.81 90.55 76.16 1182.76 1250.41 1321.94 1258.92 1326.57 1398.10

As regards Paras Unit 3 and Parli Unit 6, which achieved COD on 31 March, 2008 and 31

October, 2007, respectively, i.e., more than 3 years prior to effectiveness of MERC MYT

Regulations, the O&M Expenses have to be computed in accordance with Regulation

45.1(c) of MERC MYT Regulations as defined for existing Unit/Station and therefore

should also be computed based on the average of actual O&M Expenses for FY 2007-08,

FY 2008-09 and FY 2009-10. However, as the above-mentioned Units did not operate for

entire FY 2007-08, the actual O&M Expenses for these Units cannot be considered for FY

2007-08. Hence, in case of Paras Unit 3 and Parli Unit 6, the base years have been

considered from FY 2008-09 to FY 2010-11.

The detailed computation of O&M Expenses for Paras Unit 3 and Parli Unit 6 by the

Commission for the second Control Period is shown in the Table below:

Table 5-7: O&M Expenses for Paras Unit 3 and Parli Unit 6 as computed by the

Commission

Stations

FY

2008-09

(Rs.

Crore)

FY

2009-10

(Rs.

Crore)

FY

2010-11

(Rs.

Crore)

Average

O&M

Expenses

(Rs. Crore)

Excluding Pay Revision Including Pay Revision

FY

2013-14

(Rs.

Crore)

FY

2014-15

(Rs.

Crore)

FY

2015-16

(Rs.

Crore)

FY

2013-14

(Rs.

Crore)

FY

2014-15

(Rs.

Crore)

FY

2015-16

(Rs.

Crore)

a b c

d=(a+b+c)/

3

e=d*(1+

7.02%)((

1+8.31%

)^2)(1+5

.72%)

f=e*(1+

5.72%)

g=f*(1+

5.72%)

h=e+2.2

75

i=f+2.27

5

i=g+2.2

75

Paras Unit 3 16.87 27.02 46.63 30.17 40.05 42.34 44.76 42.32 44.61 47.03

Parli Unit 6 28.07 37.58 38.24 34.63 45.96 48.59 51.37 48.24 50.87 53.65

Further, Regulation 46 of MERC MYT Regulations has clearly specified a separate norm

(Rs. lakh per MW) for the O&M Expenses of new Units. The Commission, for the purpose

of approval of the Business Plan, has therefore, approved the O&M Expenses for the new

Units and the upcoming Units in accordance with Regulation 46 of MERC MYT

Regulations.

Table 5-8: O&M Expenses norm for new Units as specified in MERC MYT Regulations

(Rs. lakh/MW)

Particulars 200/210/250 MW

Sets

500 MW and above

Sets

FY 2013-14 16.55 14.89

FY 2014-15 17.50 15.74

FY 2015-16 18.50 16.64

Case No.91 of 2012 MERC Order on MSPGCL Business Plan Petition for FY 2013-14 to FY 2015-16

Page 143 of 168

The summary of Operation and Maintenance expenses for the second Control Period as

submitted by MSPGCL and as computed by the Commission is shown in the Table below:

Table 5-9 Summary of Operation & Maintenance expenses for second Control Period for

existing and new Units as submitted by MSPGCL and as computed by the Commission

(Rs. crore)

S.

No. Station/Unit

FY 2013-14 FY 2014-15 FY 2015-16

MSPGCL

Approve

d

MSPGCL

Approved

MSPGCL

Approved

Base

Year

(FY 09-10

to FY 11-

12)

Base

Year

(FY 07-08

to FY 09-

10)

Base

Year

(FY 09-10

to FY 11-

12)

Base

Year

(FY 07-08

to FY 09-

10)

Base

Year

(FY 09-10

to FY 11-

12)

Base

Year

(FY 07-08

to FY 09-

10)

Existing

Stations

1 Bhusawal

TPS 146.08 124.95 121.00 158.22 132.10 127.52 171.37 139.65 134.42

2 Chandrapur

TPS 428.42 402.34 392.22 464.02 425.35 413.37 502.58 449.68 435.73

3 Parli TPS 140.65 151.27 142.09 152.34 159.92 149.63 165.00 169.07 157.60

4 Khaperkheda

TPS 178.31 147.51 146.89 193.13 155.95 154.74 209.18 164.87 163.05

5 Nashik TPS 168.02 146.65 156.43 181.98 155.04 164.87 197.10 163.91 173.80

6 Koradi TPS 187.95 161.30 143.47 203.57 170.53 151.14 220.48 180.28 159.24

7 Uran GTPS 51.73 71.25 68.52 56.03 75.32 72.24 60.69 79.63 76.18

8 Hydro 123.41 106.23 88.30 133.66 112.31 93.06 144.77 118.73 98.09

Total 1424.57 1311.50 1258.92 1542.96 1386.52 1326.57 1671.18 1465.83 1398.10

New Units

9 Paras Unit 3 47.75 - 42.32 51.72 - 44.61 56.01 - 47.03

10 Parli Unit 6 49.25 - 48.24 53.34 - 50.87 57.77 - 53.65

11 Paras Unit 4 47.75 - 41.38 51.72 - 43.75 56.01 - 46.25

12 Parli Unit 7 47.75 - 41.38 51.72 - 43.75 56.01 - 46.25

13 Khaperkheda

Unit 5 85.90 - 74.45 93.04 - 78.70 100.77 - 83.20

Total 278.39 - 247.77 301.53 - 261.68 326.58 - 276.38

5.3 DEPRECIATION

MSPGCL submitted that the provisions of MERC MYT Regulations with respect to

depreciation state that the rates notified under the said Regulations shall apply to assets for

depreciation up to 70% of original cost and thereafter, the remaining depreciable value of

the assets as on 31st March of the year shall be spread over the balance useful life of the

asset.


Page 144 of 168

MSPGCL submitted that it has considered the balance useful life of such assets, which has

been depreciated up to 70% of the original cost as 10 years (equal to loan repayment

period) for the purpose of depreciation calculations. MSPGCL submitted that in accordance

with the existing practice, depreciation has been computed both on opening balance as well

as half of asset additions done during the year.

MSPGCL further submitted that for the projection purposes in the Business Plan, it has

considered the entire capitalisation during the second Control Period in the “Plant and

Machinery” head. However, at the time of submitting the MYT Petition, it would work out

the depreciation based on the asset-class wise capitalisation.

The projections of depreciation based on the above as submitted by MSPGCL are shown in

the Table below:

Table 5-10: Summary of Depreciation for second Control Period as submitted by MSPGCL

(Rs. crore)

S.


Existing Stations

1 Bhusawal TPS 20.39 25.39 40.39

2 Chandrapur TPS 55.84 203.92 235.12

3 Parli TPS 14.50 49.57 55.82

4 Khaperkheda TPS 49.52 57.00 63.13

5 Koradi TPS 7.00 13.85 54.66

6 Nashik TPS 31.15 39.60 43.77

7 Uran GTPS 22.78 114.52 152.55

8 Hydro 3.61 5.91 12.16

Total 204.79 509.78 657.59

New Units

9 Paras Unit 3 74.66 75.40 75.64

10 Paras Unit 4 70.35 70.57 70.61

11 Parli Unit 6 73.61 75.83 80.69

12 Parli Unit 7 66.77 67.45 68.56


Total 477.82 484.90 491.15

Upcoming Units

14 Bhusawal Unit 4 163.36 170.67 170.67

15 Bhusawal Unit 5 163.36 170.67 170.67

16 Chandrapur Unit 8 43.07 146.34 154.47

17 Chandrapur Unit 9 11.03 146.34 154.47



Page 145 of 168

S.


19 Koradi Unit 8 52.25 190.73 212.67

20 Koradi Unit 9 0.00 147.88 212.67

21 Koradi Unit 10 0.00 52.25 212.67

Total 476.97 1,115.69 1,386.46

Total Depreciation 1,159.57 2,110.37 2,535.19


As regards the existing Stations and new Units, the Commission has gone through the

projections of depreciation for the second Control as submitted by MSPGCL. It has been

observed that MSPGCL in its MYT Business Plan has not proposed any reduction in GFA

on account of the asset retirement/replacement during the second Control Period in

accordance with Regulation 31.2 (a) of the MERC MYT Regulations, 2011. As regards the

same, MSPGCL is directed to submit the details of the asset retirement/replacement

envisaged during the second Control Period in its MYT Petition. MSPGCL is further

directed to consider the original cost of retired assets for working out the depreciation in

accordance with the provisions of the MERC MYT Regulations in its MYT Petition.

Further, as MSPGCL has also not provided the asset class-wise capitalization during the

second Control Period, the Commission has not taken up the detailed scrutiny of the

computations submitted as per the provisions of MERC MYT Regulations and the same

shall be scrutinized and approved as a part of the Order on MYT Petition for the second

Control Period. The Commission has however, for indicative purposes, estimated the

depreciation based on the closing GFA for FY 2012-13 as approved in the Commission’s

Order dated 8 February, 2013 on the Review Petition filed by MSPGCL in Case No. 77 of

2012, and the capitalization approved for each year of the second Control Period from FY

2013-14 to FY 2015-16 under this Business Plan Order.

Regulation 31.2 (b) of MERC MYT Regulations, 2011 specifies that once the assets are

depreciated to the extent of 70%, remaining depreciable value shall be spread over the

balance useful life of the assets. MSPGCL submitted that while computing the deprecation

it has considered the balance useful life of 10 years which is equivalent to the loan

repayment period. However, as it is expected that the loan repayment period for the assets

depreciated up to 70% would already be over and hence it may not be appropriate to

consider the the balance useful life of 10 years for computing the deprecation.

The Commission in this Order for estimating the depreciation for the second Control

Period has considered the balance useful life of such asset which has been depreciated up to


Page 146 of 168

70% of the original cost as 10 years as submitted by MSPGCL. However, as mentioned

above, the loan repayment period for the assets depreciated up to 70% would already be

over. In view of this, the Commission directs MSPGCL to submit the revised computation

of depreciation in its MYT Petition for the second Control Period.

Further, as discussed earlier, the Commission in this Order has not approved the capital

cost of the upcoming Units to be commissioned during the second Control Period, and the

Commission has therefore, not estimated the depreciation for Khaperkheda Unit 5,

Bhusawal Unit 4 and Unit 5, Koradi Unit 8, Unit 9 and Unit 10, Chandrapur Unit 8 and

Unit 9, and Parli Unit 8 in this Order.

The depreciation for the existing and new Stations/Units for the second Control Period as

submitted by MSPGCL and as estimated by the Commission is summarised in the Table

below:

Table 5-11: Depreciation for existing and new Stations/Units as submitted by MSPGCL

and as estimated by the Commission (Rs. crore)

Station/Unit

FY 2013-14

FY 2014-15

FY 2015-16

MSPGCL Commission MSPGCL Commission MSPGCL Commission

Bhusawal 20.39 24.53 25.39 26.20 40.39 26.61

Chandrapur 55.84 127.53 203.92 138.79 235.12 77.95

Parli 14.50 11.88 49.57 13.71 55.82 15.08

Khaperkheda 49.52 44.53 57.00 40.02 63.13 37.98

Nasik 31.15 17.88 39.60 17.85 43.77 17.43

Koradi 7.00 20.41 13.85 19.90 54.66 47.48

Uran 22.78 13.90 114.52 18.49 152.55 9.63

Hydro 3.61 9.10 5.91 9.77 12.16 10.12

Total Existing 204.79 269.75 509.78 284.74 657.59 242.28

Paras Unit 3 74.66 72.85 75.40 73.07 75.64 73.17

Paras Unit 4 70.35 70.10 70.57 70.25 70.61 70.27

Parli Unit 7 66.77 66.89 67.45 67.23 68.56 67.79

Parli Unit 6 73.61 79.24 75.83 79.58 80.69 80.28

Total New 285.38 289.09 289.25 290.13 295.49 291.50

5.4 INTEREST ON LONG TERM LOAN CAPITAL

MSPGCL, in its MYT Business Plan, submitted that the proposed capitalisation (excluding

capitalisation of Renovation & Modernisation schemes) is projected to be funded though

debt and equity in the ratio of 70:30. As regards the capitalisation for Renovation &


Page 147 of 168

Modernisation schemes and the upcoming Units till the end of second Control Period, the

funding is projected to be in the debt: equity ratio of 80:20.

MSPGCL submitted that for repayment purposes, it had considered the repayment of loans

in accordance with Regulation 33.3 of MERC MYT Regulations. MSPGCL submitted that

it has considered the amount of repayment equal to the amount of depreciation on the fixed

assets to which such loan relates.

MSPGCL submitted that it has considered the interest rate of 12% for normative loans in

the second Control Period. MSPGCL submitted that for the existing loan, interest has been

computed on the actual weighted average rate of interest calculated on the actual loan

portfolio.

MSPGCL, in the formats, also submitted the computation of the interest on loan for the

existing and new Stations/Units for the second Control Period. The Commission observed

that in the computations MSPGCL, instead of considering the debt: equity ratio of 80:20

for the Renovation & Modernisation capitalisation, MSPGCL has considered a debt: equity

ratio of 70:30. The Commission asked MSPGCL to clarify whether the proposed debt:

equity ratio for the R&M capitalisation is 80:20 or 70:30 and accordingly submit the

revised computation of the interest expenses for the second Control Period.

MSPGCL, in its reply, clarified that the projected capitalization for Renovation &

Modernisation schemes is planned to be funded with a debt equity ratio of 80:20. MSPGCL

submitted that it has inadvertently clubbed the Renovation & Modernisation capitalisation

along with other capitalisation while computing the interest and ROE, therefore, it

erroneously considered the debt equity funding of 70:30 for R&M capitalisation. Further,

as the DPR for Renovation & Modernisation of only Bhusawal and Koradi TPS have been

approved by the Commission, MSPGCL in its reply submitted the revised computation of

the interest expenses only for Bhusawal and Koradi TPS. The summary of Interest on Long

Term Loans for the second Control Period as submitted by MSPGCL is shown in the Table

below:

Table 5-12 Summary of Interest on Long Term Loans for the second Control Period as

submitted by MSPGCL

(Rs. crore)

Sr no. Station/Unit FY 2013-14 FY 2014-15 FY 2015-16

Existing Stations

1 Bhusawal TPS 8.98 14.31 36.92


Page 148 of 168


2 Chandrapur TPS 70.81 117.34 141.23

3 Parli TPS 17.72 27.12 30.8


5 Koradi TPS 13.8 18.63 42.95

6 Nashik TPS 16.93 26.45 28.12

7 Uran GTPS 7.3 51.92 96.84

8 Hydro 8.63 10.33 11.32

Total 153.68 278.95 398.4

New Units

9 Paras Unit 3 53.43 46.38 38.51

10 Paras Unit 4 94.58 87.32 79.81

11 Parli Unit 6 41.86 37.93 37.11

12 Parli Unit 7 80.78 74.48 68.93


Total 533.84 492.84 449.81

Upcoming Units

14 Bhusawal Unit 4 269.63 262.6 241.27

15 Bhusawal Unit 5 269.63 262.6 241.27

16 Chandrapur Unit 8 59.86 266.56 263.17

17 Chandrapur Unit 9 15.34 266.56 263.17

18 Parli replacement Unit

8 116.47 160.82 162.95

19 Koradi Unit 8 89.49 326.64 382.54

20 Koradi Unit 9 0 253.26 382.54

21 Koradi Unit 10 0 89.49 382.54

Total 820.41 1,888.55 2,319.45

Total Interest

expenses 1,507.93 2,660.34 3,167.66


The Commission has gone through the submissions of MSPGCL and has reworked the

opening loan balance for FY 2013-14 based on the closing loan for FY 2012-13 as

approved by the Commission in its Order dated 08__ February, 2013 in Case No. 77 of

2012. Further, the Commission has considered the debt amount for each year of the second

Control Period from FY 2013-14 to FY 2015-16 based on the capitalisation approved under

this Business Plan for the respective years. The Commission has considered the debt:

equity ratio for small capex and the Renovation & Modernisation capitalisation as 70:30

and 80:20, respectively.


Page 149 of 168

As regards the interest rate, Regulation 33.5 and 33.6 of MERC MYT Regulations specifies

as follows:

“33.5 The rate of interest shall be the weighted average rate of interest calculated

on the basis of the actual loan portfolio at the beginning of each year applicable to

the Generating Company or the Transmission Licensee or the Distribution Licensee

Provided that if there is no actual loan for a particular year but normative loan is

still outstanding, the last available weighted average rate of interest shall be

considered:

Provided further that if the Generating Company or the Transmission Licensee or

the Distribution Licensee, as the case may be, does not have actual loan, then the

weighted average rate of interest of the Generating Company or the Transmission

Licensee or the Distribution Licensee as a whole shall be considered.

33.6 The interest on loan shall be calculated on the normative average loan of the

year by applying the weighted average rate of interest.”

The Commission, in accordance with the above Regulation, has considered the rate of

interest for the existing as well as for the normative loans as the weighted average rate of

interest calculated on the actual loan portfolio as submitted by MSPGCL.

Further, as the details of the proposed retirement/replacement during the second Control

Period have not been submitted by MSPGCL, the Commission, at this point of time, in the

absence of the relevant details, has not considered the reduction in the loan amount on

account of the asset replacement/ retirement. The Commission shall consider the impact of

such asset replacement/retirement in its Order on MYT Petition upon submission of the

relevant details by MSPGCL.

As regards the loan repayments, the same have been considered equal to the depreciation

for the respective years in accordance with Regulation 33.3 of the MERC MYT

Regulations, 2011.

Further, as discussed earlier, the Commission in this Order has not approved the capital cost

of the upcoming Units to be commissioned during the second Control Period and hence,

the Commission has not estimated the interest expenses for Khaperkheda Unit 5, Bhusawal

Unit 4 and Unit 5, Koradi Unit 8, Unit 9 and Unit 10, Chandrapur Unit 8 and Unit 9, and

Parli Unit 8 in this Order.


Page 150 of 168

The interest expenses on long-term loans for existing and new Stations/Units, as computed

by the Commission for the years under consideration for the present MYT Business Plan

starting from FY 2013-14, in view of the capitalisation considered, is summarised in the

Tables below:

Table 5-13: Interest Expenses for existing and new Stations/Units as submitted by

MSPGCL and as estimated by the Commission for second Control Period (Rs. crore)

S

no. Station/Unit

FY 2013-14 FY 2014-15 FY 2015-16


Existing

Stations

1 Bhusawal TPS 8.98 14.21 14.31 14.60 36.92 12.89

2 Chandrapur TPS 70.81 28.24 117.34 26.88 141.23 23.04

3 Parli TPS 17.72 15.78 27.12 17.32 30.8 18.03

4 Khaperkheda

TPS 9.51 7.44 12.85 5.18 10.22 1.72

5 Koradi TPS 13.8 10.53 18.63 10.23 42.95 30.67

6 Nashik TPS 16.93 16.75 26.45 17.65 28.12 17.01

7 Uran GTPS 7.3 6.95 51.92 6.81 96.84 6.28

8 Hydro 8.63 4.74 10.33 4.73 11.32 4.34

Total 153.68 104.64 278.95 103.40 398.4 113.99

New Units

9 Paras Unit 3 53.43 50.52 46.38 43.01 38.51 35.22

10 Paras Unit 4 94.58 94.60 87.32 87.11 79.81 79.62

11 Parli Unit 6 41.86 49.83 37.93 42.60 37.11 35.12

12 Parli Unit 7 80.78 80.97 74.48 74.09 68.93 67.65

Total 270.65 275.92 246.11 246.80 224.36 217.61

5.5 INTEREST ON WORKING CAPITAL

MSPGCL submitted that it has computed the Interest on Working Capital in accordance

with Regulation 35.1 of MERC MYT Regulations. MSPGCL has computed the interest on

working Capital at State Bank Advanced Rate, which has been submitted as 14.75%. The

Interest on Working Capital, so computed, for the second Control Period is as shown in the

Table below:


Page 151 of 168

Table 5-14 Summary of Interest on Working Capital for the second Control Period as

submitted by MSPGCL

(Rs. crore)


Existing Stations

1 Bhusawal TPS 72.97 67.72 58.49

2 Chandrapur TPS 293.92 282.20 289.93

3 Parli TPS 90.61 87.34 93.44

4 Khaperkheda TPS 128.92 119.66 121.80

5 Koradi TPS 88.82 68.07 90.60

6 Nashik TPS 106.09 87.66 101.27

7 Uran GTPS 72.79 77.69 87.00

8 Hydro 21.98 19.60 19.37

Total 876.11 809.94 861.90

New Units

9 Paras Unit 3 34.89 32.54 32.12

10 Paras Unit 4 34.97 32.49 31.98

11 Parli Unit 6 44.63 40.36 40.80

12 Parli Unit 7 44.67 40.19 40.08


Total 270.49 245.59 243.21

Upcoming Units

14 Bhusawal Unit 4 118.36 107.78 106.30

15 Bhusawal Unit 5 118.36 107.78 106.30

16 Chandrapur Unit 8 38.58 103.87 95.79

17 Chandrapur Unit 9 8.94 103.87 95.79

18

Parli replacement Unit

8 24.69 47.66 48.82

19 Koradi Unit 8 38.64 149.49 141.55

20 Koradi Unit 9 111.91 141.55

21 Koradi Unit 10 41.21 147.94

Total 347.56 773.55 884.04

Total Interest on

working Capital 1,494.15 1,829.08 1,989.15

The Commission has noted the submissions of MSPGCL in this regard, however, as the

Commission has not approved the Generation and the fuel cost for the second Control

Period in this Order, the Commission has not estimated the interest on working capital

requirement in this Order. The same shall be scrutinized and approved as a part of Order on

MYT Petition for the second Control Period.


Page 152 of 168

5.6 INCOME TAX

Regulation 34 of MERC MYT Regulations, 2011 has specified the provisions regarding the

Tax on Income, as reproduced below:

“34.1 The Commission, in its MYT Order, shall provisionally approve Income Tax

payable for each year of the Control Period, if any, based on the actual income tax

paid on permissible return as allowed by the Commission relating to the electricity

business regulated by the Commission, as per latest Audited Accounts available for

the applicant, subject to prudence check:

Provided that no Income Tax shall be considered on the amount of efficiency gains

and incentive earned by the Generating Companies, Transmission Licensees and

Distribution Licensees.

Provided further that the Generating Company, Transmission Licensee and

Distribution Licensee shall bill the Income Tax under a separate head called

"Income Tax Reimbursement" in their respective bills.

34.2 Variation between Income Tax actually paid and approved, if any, on the

income stream of the regulated business of Generating Companies, Transmission

Licensees and Distribution Licensees shall be reimbursed to/recovered from the

Generating Companies, Transmission Licensees and Distribution Licensees, based

on the documentary evidence submitted at the time of Mid-term Performance

Review and MYT Order of third Control Period, subject to prudence check.

34.3 Under-recovery or over-recovery of any amount from the beneficiaries or the

consumers on account of such income tax having been passed on to them shall be

on the basis of income-tax assessment under the Income-Tax Act, 1961, as certified

by the statutory auditors. The Generating Company, or the Transmission Licensee

or Distribution Licensee, as the case may be, may include this variation in its Mid-

term Performance Review Petition and MYT Petition of third Control Period:

Provided that tax on any income stream from other than the business regulated by

the Commission shall not constitute a pass through component in tariff and tax on

such other income shall be borne by the Generating Company or Transmission

Licensee or the Distribution Licensee, as the case may be.”

MSPGCL, in its MYT Business Plan, has submitted that it has considered the MAT Rate of

20.01% for computing the Income Tax for the second Control Period. The summary of

Income Tax as submitted by MSPGCL for the second Control Period is shown in the Table

below:


Page 153 of 168

Table 5-15 Summary of Income Tax for the second Control Period as submitted by

MSPGCL

(Rs. crore)

S.


Existing Stations

1 Bhusawal TPS 3.53 4.41 5.29

2 Chandrapur TPS 27.22 33.96 40.61

3 Parli TPS 4.63 5.85 7.52


5 Koradi TPS 3.97 4.81 5.28

6 Nashik TPS 6.49 8.42 9.48

7 Uran GTPS 8.73 9.14 20.27

8 Hydro 0.25 0.55 0.73

Total 83.35 97.34 119.88

New Units

9 Paras Unit 3 13.56 13.75 13.83

10 Paras Unit 4 9.17 9.27 9.28

11 Parli Unit 6 13.55 13.62 14.35

12 Parli Unit 7 11.37 11.37 11.61


Total 81.00 82.50 83.54

Upcoming Units

14 Bhusawal Unit 4 18.33 20.05 20.05

15 Bhusawal Unit 5 18.33 20.05 20.05

16 Chandrapur Unit 8 5.06 16.24 18.15

17 Chandrapur Unit 9 1.30 16.24 18.15


19 Koradi Unit 8 6.14 22.41 23.84

20 Koradi Unit 9 0.00 17.37 23.84

21 Koradi Unit 10 0.00 6.14 23.84

Total 54.32 128.30 159.44

Total Income Tax 218.67 308.14 362.86


In accordance with Regulation 34.1 of MERC MYT Regulations, the income tax for FY

2013-14 to FY 2015-16 will have to be considered at the same level as approved by the

Commission for existing and new Stations/Units for FY 2010-11 in its Order dated 21

June, 2012 in Case No. 6 of 2012, since that is the latest year for which audited accounts

have been provided and prudence check has been undertaken by the Commission. Further,

the true up based on actual income tax paid by MSPGCL shall be considered at the time of


Page 154 of 168

mid-term performance review or at the time of final Truing up for the second Control

Period by the Commission. The income-tax considered by the Commission for the existing

and the new Stations/Units for the years under consideration for the present MYT Business

Plan starting from FY 2013-14 to FY 2015-16 is as shown in the Tables below:

Table 5-16: Income Tax as considered by the Commission for existing and new

Stations/Units for second Control Period (Rs. Crore)

Station/Unit FY 2013-14 FY 2014-15 FY 2015-16

Existing Stations 171.45 171.45 171.45

Paras Unit 3 0 0 0

Paras Unit 4 0 0 0

Parli Unit 6 0 0 0

Parli Unit 7 0 0 0

5.7 RETURN ON EQUITY

MSPGCL, in its MYT Business Plan, submitted that the proposed capitalisation (excluding

capitalisation for Renovation & Modernisation) is projected to be funded though debt and

equity in the ratio of 70:30. As regard the capitalisation for Renovation & Modernisation

schemes and the upcoming Units till the end of second Control Period, the funding is

projected to be in the debt: equity ratio of 80:20.

MSPGCL, in the formats, also submitted the computation of the Return on Equity for the

existing and new Stations/Units for the second Control Period. MSPGCL submitted that in

accordance with MERC MYT Regulations, it has computed the Return on Equity at

15.50% per annum on opening equity for the year.

As stated earlier, the Commission asked MSPGCL to clarify whether the proposed debt:

equity ratio for the Renovation & Modernisation capitalisation is 80:20 or 70:30 and

submit the revised computation of the Return on Equity for the second Control Period.

MSPGCL clarified that the projected capitalization for R&M schemes is planned to be

funded through a debt equity ratio of 80:20, and also submitted the revised computations of

Return on Equity for Bhusawal and Koradi TPS. The summary of Return on Equity for the

second Control Period as submitted by MSPGCL is shown in the Table below:


Page 155 of 168

Table 5-17: Summary of Return on Equity for the second Control Period as submitted by

MSPGCL (Rs. Crore)


Existing Stations

1 Bhusawal TPS 17.63 22.04 26.44

2 Chandrapur TPS 136.04 169.70 202.93

3 Parli TPS 23.12 29.26 37.59

4 Khaperkheda TPS 142.64 150.89 153.42

5 Koradi TPS 19.84 24.02 26.41

6 Nashik TPS 32.41 42.06 47.36

7 Uran GTPS 43.62 45.70 101.30

8 Hydro 1.24 2.76 3.63

Total 416.57 486.46 599.09

New Units

9 Paras Unit 3 67.79 68.73 69.09

10 Paras Unit 4 45.81 46.32 6.37

11 Parli Unit 6 67.73 68.09 71.70

12 Parli Unit 7 56.83 56.83 58.02


Total 404.78 412.28 417.49

Upcoming Units

14 Bhusawal Unit 4 91.62 100.21 100.21

15 Bhusawal Unit 5 91.62 100.21 100.21

16 Chandrapur Unit 8 25.29 81.14 90.69

17 Chandrapur Unit 9 6.48 81.14 90.69

18 Parli replacement Unit

8 25.77 48.99 57.64

19 Koradi Unit 8 30.68 11.98 119.13

20 Koradi Unit 9 86.82 119.13

21 Koradi Unit 10 30.68 119.13

Total 271.45 41.17 796.82

Total Return on

Equity 1,092.80 1,539.91 1,813.40

The Commission has gone through the submissions of MSPGCL and has reworked the

opening equity for FY 2013-14 based on the closing equity for FY 2012-13 as approved by

the Commission in its Order dated 08 February, 2013 in Case No. 77 of 2012. Further, the

Commission has considered the equity addition for each year of the second Control Period

from FY 2013-14 to FY 2015-16 based on the capitalisation approved under this Business

Plan for the respective years. The Commission has considered the debt: equity ratio for


Page 156 of 168

small capex and the Renovation & Modernisation capitalisation as 70:30 and 80:20,

respectively.

The Commission has computed the Return on Equity by considering the rate of return on

equity as 15.5% on the opening equity of the year, in accordance with the MERC MYT

Regulations.

As discussed earlier, MSPGCL has not submitted the details of the asset

replacement/retirement during the second Control Period, and the Commission, in the

absence of the relevant details, has not considered the reduction in equity capital or the loan

amount on account of the asset replacement/retirement. MSPGCL is directed to consider

the original cost of retired assets for working out the Return on Equity in accordance with

the provisions of the MERC MYT Regulations in its MYT Petition.The Commission shall

consider the impact of such asset replacement/retirement in its Order on MYT Petition

upon submission of the relevant details by MSPGCL.

Further, as discussed earlier the Commission in this Order has not approved the capital cost

of the upcoming Units to be commissioned during the second Control Period and hence,

the Commission has not estimated the Return on Equity for Khaperkheda Unit 5, Bhusawal

Unit 4 and Unit 5, Koradi Unit 8, Unit 9 and Unit 10, Chandrapur Unit 8 and Unit 9, and

Parli Unit 8 in this Order.

The summary of Return on Equity as submitted by MSPGCL and as estimated by the

Commission for the existing and the new Stations/Units for the second Control Period

under the present MYT Business Plan Order starting from FY 2013-14 is shown in the

Table below:

Table 5-18: Return on Equity for existing and new Stations/Units as submitted by

MSPGCL and as estimated by the Commission for second Control Period (Rs. crore)

S

no. Station/Unit

FY 2013-14 FY 2014-15 FY 2015-16


Existing

Stations

1 Bhusawal TPS 17.66 22.45 22.06 24.93 26.46 25.64

2 Chandrapur TPS 136.04 125.65 169.70 134.33 202.92 139.37

3 Parli TPS 19.77 23.12 23.65 29.26 25.49 23.12

4

Khaperkheda

TPS 142.64 143.09 150.88 145.31 153.41 146.13

5 Koradi TPS 19.84 19.47 24.02 20.49 26.41 21.38


Page 157 of 168

S

no. Station/Unit

FY 2013-14 FY 2014-15 FY 2015-16


6 Nashik TPS 32.41 34.68 42.06 36.76 47.36 37.32

7 Uran GTPS 43.62 43.54 45.70 44.84 101.30 45.43

8 Hydro 1.24 0.13 2.76 0.90 3.63 1.33

Total 413.22 412.14 480.83 436.82 586.97 439.72

New Units

9 Paras Unit 3 67.79 66.35 68.73 66.77 69.09 66.93

10 Paras Unit 4 45.81 45.94 46.32 46.20 46.37 46.22

11 Parli Unit 6 67.73 72.78 68.09 72.96 71.70 73.41

12 Parli Unit 7 56.83 56.96 56.83 56.96 58.02 57.55

Total 238.15 242.03 239.97 242.88 245.19 244.12

5.8 LEASE RENT

MSPGCL submitted that it has considered the Lease Rent for Hydro Generating Stations

owned by GoMWRD and operated by MSPGCL as per the Commission’s Order dated 27

April, 2012 in Case No. 5 of 2012. The Commission has therefore, for the purpose of

approval of MYT Business Plan, considered the Lease Rental for the Hydro Generating

Stations (excluding Ghatghar PSS) as approved by the Commission in its Order dated 27

April, 2012 in Case No. 5 of 2012, as shown in the table below.

Table 5-19 Lease Rental for Hydro Generating Stations (excluding Ghatghar PSS) second

Control Period as considered by the Commission

(Rs. crore)

Particular FY 2013-14 FY 2014-15 FY 2015-16

Lease Rental (excluding

Ghatghar PSS) 326.26 321.55 318.35

Further, the Commission has also approved the Lease Rent for Ghatghar PSS owned by

GoMWRD and operated by MSPGCL in its Order dated 27 December, 2012 in Case No. 2

of 2012. However, as discussed earlier MSPGCL has so far, not entered into any

Agreement with MSEDCL for Ghatghar PSS, and the Commission has therefore, not

considered the Lease Rental for Ghatghar PSS while estimating the total Lease Rent for

Hydro Stations to be paid by MSEDCL to MSPGCL. The Commission shall take an

appropriate view in this regard upon the approval of Agreement between MSPGCL and

MSEDCL for Ghatghar PSS.


Page 158 of 168

5.9 NON-TARIFF INCOME

MSPGCL has submitted that it has projected the Non-Tariff income for the second Control

Period by escalating the Non-Tariff income as approved by the Commission for FY 2012-

13. MSPGCL, in its Business Plan, has not projected Non-Tariff income from the

upcoming Units and has stated that the same would be projected at the time of MYT

filing/true-up. The projections of Non-Tariff income for existing and new Units as

submitted by MSPGCL is shown in the Table below:

Table 5-20 Summary of Non-Tariff Income for second Control Period as submitted by

MSPGCL

(Rs. crore)

S.


Existing Units

1 Bhusawal TPS 5.66 5.89 6.12

2 Chandrapur TPS 21.17 22.01 22.90

3 Parli TPS 16.69 17.36 18.06


5 Koradi TPS 13.49 14.03 14.59

6 Nashik TPS 13.17 13.70 14.25

7 Uran GTPS 2.06 2.14 2.23

8 Hydro 1.06 1.10 1.14

Total 87.61 91.12 94.76

New Units

9 Paras Unit 3 2.71 2.82 2.93

10 Paras Unit 4 2.71 2.82 2.93

11 Parli Unit 6 4.10 4.27 4.44

12 Parli Unit 7 0.59 0.62 0.64


Total 10.11 10.52 10.94

Total Non-Tariff Income 97.73 101.63 105.70

The Commission has noted MSPGCL’s submission in this regard and observed that

MSPGCL in its Business Plan has not submitted the full details of its forecast of non-tariff

income to the Commission, under the various heads to be considered for non- tariff income

as per Regulation 43.1 of MERC MYT Regulations, as extracted below:

“43.1

…


Page 159 of 168

The indicative list of various heads to be considered for non tariff income shall be

as under:

a) Income from rent of land or buildings;

b) Income from sale of scrap;

c) Income from statutory investments;

d) Income from sale of Ash/rejected coal;

e) Interest on delayed or deferred payment on bills;

f) Interest on advances to suppliers/contractors;

g) Rental from staff quarters;

h) Rental from contractors;

i) Income from hire charges from contactors and others;

j) Income from advertisements, etc.;

k) Any other non tariff income”

The Commission, in this Order, has therefore, not estimated the non-tariff income for the

second Control Period. The same shall be approved as a part of MYT Order, upon the

submission of full details of forecast on non tariff income under the list of various heads as

stipulated in Regulation 43.1 of MERC MYT Regulations.

5.10 AGGREGATE REVENUE REQUIREMENT

MSPGCL, in its MYT Business Plan, submitted the projections of Aggregate Revenue

Requirement (ARR) for the second Control Period under the realistic, optimistic and

pessimistic scenarios. The basic assumptions for the above scenarios as submitted by

MSPGCL are as under:

Optimistic scenario: MSPGCL submitted that this scenario is based on the assumption

that the stations would be able to achieve all normative parameters despite the technical

constraints, quality and quantity of fuel and impact during monsoon season with assumed

usage of imported coal. Further, MSPGCL submitted that it has outstanding working

capital loan of approximately Rs 4500 Crore. The same is largely on account of non-

payment of dues by MSEDCL. In the Optimistic scenario, it has assumed that apart from

paying the receivables due in the current year, MSEDCL will also pay against the arrears.

Such payment of past dues will help MSPGCL in repaying the outstanding working capital

loans. The scenario is prepared considering a payment of 5 % over and above the ARR for

a given year in the Control Period.

Pessimistic Scenario: MSPGCL submitted that this scenario is based on the assumption

that the stations would face the worst technical constraints, quality and quantity issues of

coal and wet coal related issues and hence, the worst performance during the last three


Page 160 of 168

years is assumed. In pessimistic scenario, it is assumed that MSEDCL will pay only 95 %

against the current year allowed receivables.

Realistic scenario: MSPGCL submitted that this scenario is based on anticipated capital

expenditure, which is envisaged to provide progressive improvement in the parameters.

The same shall be supplemented by the usage of imported coal, which will help in

minimizing the impact of poor quality of coal. In realistic scenario, it is assumed that

MSEDCL will pay the amount pertaining only to the prevalent year.

Based on the above assumptions, MSPGCL submitted the projections of Aggregate

Revenue Requirement under the optimistic, pessimistic and realistic scenarios as shown in

the Tables below:

Table 5-21: Projections of Aggregate Revenue Requirement for Exiting Stations for second

Control Period as submitted by MSPGCL (Rs. crore)

Particulars Realistic Scenario Optimistic Scenario Pessimistic Scenario

2013-14 2014-15 2015-16 2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Fuel Related

Expenses 10595.41 10955.72 12062.28 11090.75 11846.02 12622.12 10655.06 11392.32 12136.54

Operation &

Maintenance

Expenses

1424.57 1542.96 1671.18 1424.57 1542.96 1671.18 1424.57 1542.96 1671.18

Depreciation 204.79 509.78 657.59 204.79 509.78 657.59 204.79 509.78 657.59

Interest on

Long-term

Loan Capital

153.68 278.95 398.40 153.68 278.95 398.40 153.68 278.95 398.40

Interest on

Working

Capital

876.11 809.94 861.90 843.19 707.88 639.16 922.88 963.65 1111.04

Income Tax 83.35 97.34 119.88 83.35 97.34 119.88 83.35 97.34 119.88

Return on

Equity

Capital

413.22 480.83 586.97 413.22 480.83 586.97 413.22 480.83 586.97

Lease rental 326.26 321.55 318.35 326.26 321.55 318.35 326.26 321.55 318.35

Aggregate

Revenue

Requirement

14077.39 14997.07 16676.54 14539.81 15785.30 17013.65 14183.82 15587.37 16999.94

Non Tariff

Income 87.61 91.12 94.76 87.61 91.12 94.76 87.61 91.12 94.76

Aggregate

Revenue

Requirement

13989.78 14905.95 16581.78 14452.20 15694.19 16918.89 14096.21 15496.25 16905.18


Page 161 of 168

Table 5-22: Projections of Aggregate Revenue Requirement for New Units (Paras Unit 3 &

4, Parli Unit 6 & 7 and Khaperkheda Unit 5 for second Control Period as submitted by

MSPGCL (Rs. crore)


2013-14 2014-15 2015-16 2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Fuel Related

Expenses 2390.60 2570.34 2724.68 2539.43 2695.54 2868.33 2335.35 2471.42 2621.82

Operation &

Maintenance

Expenses

278.39 301.53 326.58 278.39 301.53 326.58 278.39 301.53 326.58

Depreciation 477.82 484.90 491.15 477.82 484.90 491.15 477.82 484.90 491.15

Interest on Long-

term Loan Capital 533.84 492.84 449.81 533.84 492.84 449.81 533.84 492.84 449.81

Interest on

Working Capital 270.49 245.59 243.21 260.05 207.49 179.76 279.56 276.14 304.37

Income Tax 81.00 82.50 83.54 81.00 82.50 83.54 81.00 82.50 83.54

Return on Equity

Capital 404.78 412.28 417.49 404.78 412.28 417.49 404.78 412.28 417.49

Aggregate

Revenue

Requirement

4436.92 4589.97 4736.46 4575.32 4677.08 4816.66 4390.73 4521.60 4694.77

Non Tariff Income 10.11 10.52 10.94 10.11 10.52 10.94 10.11 10.52 10.94

Aggregate

Revenue

Requirement

Bulk Supply

Tariff

4426.80 4579.45 4725.52 4565.20 4666.56 4805.73 4380.62 4511.08 4683.83

Table 5-23: Projections of Aggregate Revenue Requirement for Upcoming Units (for

second Control Period as submitted by MSPGCL (Rs. crore)


2013-14 2014-15 2015-16 2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Fuel Related

Expenses

3,475.15

9,250.00

10,891.16

3,475.15

9,250.00

10,891.16

3,475.15

9,250.00

10,891.16

Operation &

Maintenance

Expenses

263.75

675.54

858.13

263.75

675.54

858.13

263.75

675.54

858.13

Depreciation

476.97

1,115.69

1,386.46

476.97

1,115.69

1,386.46

476.97

1,115.69

1,386.46

Interest on

Long-term

Loan Capital

820.41

1,888.55

2,319.45

820.41

1,888.55

2,319.45

820.41

1,888.55

2,319.45

Interest on

Working

Capital

347.56

773.55

884.04

321.87

634.13

632.00

364.42

891.47

1,133.98

Income Tax

54.32

128.30

159.44

54.32

128.30

159.44

54.32

128.30

159.44

Return on

Equity

Capital

271.45

641.17

796.82

271.45

641.17

796.82

271.45

641.17

796.82


Page 162 of 168


2013-14 2014-15 2015-16 2013-14 2014-15 2015-16 2013-14 2014-15 2015-16

Aggregate

Revenue

Requirement

5,709.60

14,472.79

17,295.50

5,683.92

14,333.37

17,043.46

5,726.47

14,590.71

17,545.44

Aggregate

Revenue

Requirement

Bulk Supply

Tariff

5,709.60

14,472.79

17,295.50

5,683.92

14,333.37

17,043.46

5,726.47

14,590.71

17,545.44

The Commission has noted MSPGCL’s submission in this regard. Further, as detailed

above, the Commission has analysed only some of the ARR components. The Commission,

in this Order has not estimated the Aggregate Revenue Requirement for MSPGCL and the

same shall be estimated and approved upon thorough examination in its Order on MYT



Page 163 of 168

6 DIRECTIONS

6.1 Directions for filing MYT Petition for the second Control Period

Through this Order on Business Plan petition, MSPGCL is hereby directed to comply with

the following directives while filing the MYT Petition for the second Control Period:

a) MSPGCL, while submitting the MYT Petition, shall submit the description of

assets proposed to be retired along with original cost of such assets to be retired

over the second Control Period, as well as corresponding equity and debt

component to be retired.

b) As detailed in Section 2.14 of this Order, MSPGCL is directed to submit the

computation of interest expenses for the second Control Period as per the

Regulation 33.5 and 33.6 of the MERC MYT Regulations, 2011 in its MYT


c) As detailed in Section 4.1.2 of this Order, MSPGCL is directed to submit a detailed

note justifying its stand to consider the lease rent payments for the Surya RB and

submit a note on its future course of action on the discussed issue in its MYT


d) As detailed in Section 4.2.1 of this Order, MSPGCL is directed to propose an

appropriate recovery mechanism for the Pumped storage stations with capacity

more than 25 MW (i.e., Ghatghar PSS) in its MYT Petition for the second Control

Period upon the approval of agreement for Ghatghar PSS between MSPGCL and

MSEDCL.

e) As detailed in Section 4.2.1.1 of this Order in the matter of approval of Availability

for Uran GTPS, MSPGCL is directed to submit the relevant facts and figures along

with the MYT Petition for the second Control Period for the Commission’s

consideration.

f) As detailed in Section 4.2.4.2 of this Order MSPGCL is directed to propose the

Auxiliary Consumption norms along with an appropriate justification and

supporting details for pumped storage stations in its MYT Petition for the second

Control Period


Page 164 of 168

g) As detailed in Section 4.5.2 of this Order, MSPGCL is directed to submit a detailed

note on the financing plan, covering the sources of finance, initiatives being taken

up by MSPGCL to tie-up the funds for project execution, funding from internal

accruals, if any, to fund Capital Expenditure requirements during second Control

Period in its MYT Petition for the second Control Period.

h) As detailed in Section 5.3 of this Order, MSPGCL is directed to submit the details

of the asset retirement/replacement envisaged during the second Control Period in

its MYT Petition. MSPGCL is further directed to consider the original cost of

retired assets for working out the depreciation in accordance with the provisions of

the MERC MYT Regulations, 2011 in its MYT Petition.

i) As detailed in Section 5.3 of this Order, MSPGCL is directed to submit the revised

computation of the depreciation in its MYT Petition for the second Control Period.

j) As detailed in Section 5.7 of this Order, MSPGCL is directed to consider the

original cost of retired assets for working out the Return on Equity in accordance

with the provisions of the MERC MYT Regulations in its MYT Petition.

6.2 OTHER DIRECTIONS

a) As outlined in Section 2.8 of this Order, MSPGCL is directed to take concerted

steps to arrange good quality of coal for its Power Stations. MSPGCL should

further prioritize the infrastructure development for its Power Stations, which

should be reflected through improved Plant Load Factor and Availability Factor

during the second Control Period.

b) As outlined in Section 2.10 of this Order, MSPGCL is directed to expedite the

process to ensure that the requisite quantity of fuel supply is available for its

upcoming as well as existing and new Units.

c) MSPGCL shall submit its truing petition for the FY 2011-12 and APR FY 2012-

2013 as per MERC Tariff Regulations, 2005, as a separate section, in its MYT

Petition for FY 2013-14 to FY 2015-16.


Page 165 of 168

As regards MSPGCL’s prayer to permit MSPGCL to annually update the Business Plan,

the Commission is of the view that the whole purpose of the MYT Business Plan is to

inculcate the discipline of long-term planning, and if the Business Plan is allowed to be

modified/updated every year, then the very purpose of approving the Business Plan for the

entire Control Period will be defeated. Further, the MERC MYT Regulations do not permit

such modification/revision/updating of the Business Plan on an annual basis.

This approved MYT Business Plan of MSPGCL shall form the basis for filing the MYT

Petition for the second Control Period. MSPGCL shall submit the MYT Petition within 60

days from the date of issuance of this Business Plan Order.

With the above, MSPGCL’s Petition in Case No. 91 of 2012 stands disposed of.

Sd/- Sd/-

(Vijay L. Sonavane) (V. P. Raja)

Member Chairman


Page 166 of 168

APPENDIX-1

List of people attended Technical Validation Session held on 24.09.2012 at 11:00 Hrs

In the Matter of petition of MSPGCL for approval of Business Plan FY 2013-2014 to

FY 2015-2016

Venue: Maharashtra Electricity Regulatory Commission Centre no -1, WTC, Cuffe

Parade, Mumbai-400005

Sr.no Name of Person Name of Institution

1 R.K GOEL MSPGCL

2 V.P.RATHOD MSPGCL

3 S.V.BEDEKAR MSPGCL

4 S.A.NIKALJE MSPGCL

5 A.A.BAPAT MSPGCL

6 J.K. SRINIVASAN MSPGCL

7 RAMANDEEP SINGH CONSULTANT MSPGCL

8 D.S.DHAKATE MSPGCL

9 A.A.HARNE MSPGCL

10 L.N.MARGADE MSPGCL

11 A.G.KHONDE MSPGCL

12 SWATI KEDIA CONSULTANT MSPGCL

13 R.R. KULKARNI MSPGCL

14 A.D PIMPLE MSPGCL

15 M.G.WAGHMODE DIRECTOR(OPN) MSPGCL

16 S.B.WAGHMARE C.E. WORKS MSPGCL

17 B.O.BAGADE DY.CE,MSPGCL

18 P.K. KOTECHA EE,MSPGCL

19 SACHIN KAVITAKE AE, MSPGCL

20 ASHOK PENDSE CONS. REP. -TBIA

21 C.S.THOTWE DIR(P) ,MSPGCL

22 S S KURADE DY EE MSPGCL

23 SANJIV SINGH ABPS INFRA

24 RAMAN GULATI ABPS INFRA

25 U.K. DHAMANKAR MSPGCL

26 V.W.DESHPANDE MSPGCL

27 AASHISH SHARMA MD. MSPGCL

28 V.S.PATIL ED. MSPGCL

29 K.V.BHAGWAT EE.MSPGCL

30 ARVIND PARATE MSPGCL

31 ARVIND PARATE MSPGCL

32 NARAYAN BIPANE MSPGCL

33 BHARAT JADHAV MSPGCL

34 S.TIRLOK KUMAR CONSULTANT MSPGCL

35 S.K. LABADE MSPGCL

36 B.C.DUBEY MSPGCL

37 V.K. WADMAR MSPGCL

38 A.J.SOMVANSHI MSPGCL

39 V.M.JAIDEV MSPGCL


Page 167 of 168

APPENDIX-2

List of people attended Public Hearing Session held on 20.12.2012 at 11:00 Hrs In the

Matter of petition of MSPGCL for approval of Business Plan FY 2013-2014 to FY

2015-2016

Venue Centrum Hall 1st Floor, Centre no -1, WTC, Cuffe Parade, Mumbai-400005

Sr.no Name of Person Name of Institution

1 J.K. SRINIVASAN MSPGCL

2 A.A.HARNE MSPGCL

3 V.P.RATHOD MSPGCL

4 S.TIRLOK KUMAR CONSULTANT MSPGCL

5 G.S.PURANIK MSPGCL

6 RAMANDEEP SINGH CONSULTANT MSPGCL

7 D.A.BHAWRE MSPGCL

8 U.K. DHAMANKAR MSPGCL

9 V.S. KOMPALI MSPGCL

10 A.G.KHONDE MSPGCL

11 L.N.MARGADE MSPGCL

12 A.D PIMPLE MSPGCL

13 R.G.SUBHEDAR MSPGCL

14 R.R. KULKARNI MSPGCL

15 G.D.PATIL MSPGCL

16 S.K. LABADE MSPGCL

17 A.A.BAPAT MSPGCL

18 S.A.NIKALJE MSPGCL

19 B.H.GUJRATHI SLDC

20 P.P. KARHADE URJA PRABODHAN

21 S.M.MADAN MSPGCL

22 S.REGO MSPGCL

23 DESHPANDE MSPGCL

24 S.B.WAGHMARE C.E. WORKS MSPGCL

25 MAHESH APHALE MSPGCL

26 SURESH GEHANI ABPS INFRA

27 RAMAN GULATI ABPS INFRA

28 SANJIV SINGH ABPS INFRA

29 CHIRAG GANDHI R RAMAKRISHNA & ASSOC.

30 VIRAL SONI R RAMAKRISHNA & ASSOC.

31 KAMLKAR SHENOY AAM ADAMI PARTY

32 ASHISH CHOUBEY AAM ADAMI PARTY

33 R.K.SINGH AAM ADAMI PARTY

34 MAHESH DOSHI AAM ADAMI PARTY

35 BALKRISHNA SHETTY AAM ADAMI PARTY

36 P.N.ALUSKAR AAM ADAMI PARTY

37 ALKA HARKE AAM ADAMI PARTY


Page 168 of 168

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