RAJASTHAN ELECTRICITY REGULATORY COMMISSION, JAIPUR Suo

RAJASTHAN ELECTRICITY REGULATORY COMMISSION, JAIPUR

Suo-Moto

In the matter of RERC (Tariff for sale of power by captive power plants to distribution licensees) Regulations, 2010

Coram

1. Sh. D.C. Samant, Chairman 2. Sh. K. L. Vyas, Member (T) 3. Sh. S. K. Mittal, Member (F)

Memo on Statement of objects & reasons and consideration of Comments/ Objections/ Suggestions: Dated : 3.5.2010

(1) The Rajasthan Electricity Regulatory Commission, in exercise of powers conferred by Sec.61 read

with Section 181 of the Electricity Act. 2003 (Act 36 of 2003) framed the draft RERC (Tariff for sale of

power by captive power plants to distribution licensees) Regulations, 2009 and invited suggestions /

comments from the interested persons by publishing Public Notice in the following news papers:

1) Dainik Bhaskar - 3-10-09 2) Rashtradoot - 3-10-09 3) Times of India - 5-10-09

The last date for offering comments was kept as 3-11-09.

Subsequently, the last date for receiving suggestions on above draft Regulation was extended from

3rd November to 24th November 2009 and the public notice for date extension was published in the

following news papers:

1) Dainik Nav Jyoti - 8-11-09 2) Rajasthan Patrika - 8-11-09 3) Times of India - 8-11-09

(2) The notice along with the draft Regulations was also placed on the Commission’s website.

(3) The copies of draft Regulations were also sent to all the members of the State Advisory

Committee for seeking their suggestions.

(4) The Commission received comments/ suggestions from the following: 1) Sh. Shanti Prasad

2) Hindustan Zinc Limited (M/S HZL)

3) Jaipur Vidyut VItran Nigam Ltd. (JVVNL)

4) Jodhpur Vidyut VItran Nigam Ltd. (JdVVNL)

5) Rajasthan Chamber of Commerce & Industry (RCCI)

6) M/s Rudraksh Energy

7) Sh. G. L. Sharma

8) Rajasthan Biomass Power Developers Association

9) Ajmer Vidyut VItran Nigam Ltd. (AVVNL).

(5) The hearing in the matter was held on 22.1.2010, wherein the following were present:

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1 Sh. G. L. Sharma : Individual, Jaipur 2 Sh. A.K. Sharma : CE (Comml.), JVVNL, Jaipur 3 Sh. D.R. Mathur : Consultant, JVVNL, Jaipur 4 Sh. C.K. Khamesra : Dy, CE (Comml.) AVVNL, Ajmer 5 Sh. L. N. Soni : XEn, JdVVNL, Jodhpur 6 Sh. V.K. Gupta : On behalf of M/s Rudraksh Energy 7 Sh. D.S. Agarwal : On behalf of M/s Rudraksh Energy and Rajasthan

Chamber of Commerce & Industry, Jaipur 8 Sh. P. N. Bhandari : Advocate, on behalf of M/S HZL 9 Sh. Girish Agarwal : On behalf of Rajasthan Biomass Power Developers

Association 10 Sh.Subodh Kumar

Bhatnagar : Individual, Jaipur

Stake holders Comments/ suggestions and decision of the Commission.

The Clause wise views expressed by the commenters through their written submission and during

hearing are summarized below:

1. Proposed regulation No 1(3) : Short title and commencement : These Regulations will be applicable on captive power plants excluding power plants based on

Renewable Energy Sources.

Stake holder’s / Public Comments / Suggestions

JdVVNL suggested that after the world “applicable on” following sentence may be added. “all

existing captive power plants as well as proposed captive power plant having capacity 1 MW or

above irrespective of their connectivity with the grid”

Commission’s Ruling:

Regulations are meant for all existing and proposed captive power plants, irrespective of the

capacity and date of commissioning. For, specifying the minimum capacity as 1 MW, the

Commission is of the view that no such limits have been prescribed under Electricity Act 2003,

Electricity Rules 2005, National Electricity Policy or Tariff Policy, therefore, no modification is required

in the existing draft.

2. Proposed regulation No. 2(6) : Definitions :

‘Peak hours’ means 18:00 hours to 22:00 hours of the day or such other hours of the day as may be

notified by the licensee in its area of supply.


JdVVNL suggested that the peak hours should not be as notified by the licensee in its area of

Supply because CPP having firm/Non – firm power contract with more than one licensee. At a

given time may lead to supply to such licensees at different tariff in the same period and same

tariff in different period.

M/s Rudraksh Energy / RCCI suggested that according to past trend, Discoms may notify peak

hours & off peak hours in their area of supply and in the present context, the peak hours are those

in which grid frequency is low and vice-versa.


Commission recognizes that ‘peak hours’ and ‘off - peak hours’ for licensees could vary depending

on load profile and consumer mix of the licensee, hence, provision for licensee to notify its own

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peak hours is reasonable and incorporated in the draft Regulations which is the past trend also.

Therefore, no modification is required in the existing draft.


‘Off-Peak’ hours means 22:00 hours to 6:00 hours of the day or such other hours of the day as may

be notified by the licensee in its area of supply.


JVVNL suggested that the period 22 hrs to 6 hrs is covered in two days, hence, the term “Off Peak

hours” may correctly be defined as ’00:00 hours to 6:00 hours and 22:00 hours to 24:00 hours of the

day or …’.


Considering that the suggestions of the stakeholders that off peak hours of the day is defined

should not be spread to next day, the 2(7) may be reworded as under:

“2(7) – Off-Peak hours means 00:00 hour to 06:00 hours and 22:00 hours to 24:00 hours of the day or

such other hours of the day as may be notified by the licensee in its area of supply.”


‘Short term power supply’ means the agreement entered between the CPP and distribution

licensee for supply of power by CPP for the specified duration of the Contract Period of one day

but less than one year.


M/S HZL, M/s Rudraksh Energy and RCCI suggested that regulation 5(1) should be brought in

conformity with the definition in regulation 2(10).

JVVNL suggested that since the CPP is free to supply power even for certain hours of a day (say

peak hours), the Commission may consider deletion of minimum requirement of one day.


Considering the suggestions of the stakeholders, the CPP should be free to supply even during

certain hours of the day is agreed accordingly the words “one day but” appearing in the last line

may be deleted.


’Stand by Supply’ means supply required by the industrial unit of CPP, contracted with the

distribution licensee to cater the demand during the period of outage of the CPP.


JVVNL suggested that CPP is not necessarily an industrial unit; therefore, the words ‘industrial unit’

may be replaced by some appropriate words say ‘Power consumption unit’. The CPP- owner can

use the stand by supply even for start up of its CPP; hence, the term ‘Start up supply’ needs not to

be defined separately. Similar suggestions were received for 10(2) also.


Since the CPP can be installed by the consumer other than industrial unit we designate it as a

parent unit and accordingly, this definition is thus amended as under:

‘Stand by Supply’ means supply required by any person who have setup the power plant primarily

for his own use which shall also be called as parent unit of CPP, contracted with the distribution

licensee to cater the demand during the period of outage of the CPP.

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‘Start up Supply’ means essential load of the CPP required during outage as well as for start up load

of the CPP as contracted with the distribution licensee. Start-up supply thus includes stand by

supply for CPP.


JVVNL suggested that the CPP- owner can use the stand by supply even for start up of its CPP;

hence, the term ‘Start up supply’ needs not to be defined separately.


The Commission does not agree to the suggestion of the stakeholders, therefore, no change is

required in the existing draft.

7. Proposed regulation No. 2(Last Para): Definitions :

The words or expression in these Regulations, which are not defined herein, shall have the same

meaning as defined in the rules, regulations & Act in the order specified hereunder.

(a) Ministry of Power Rules ref. GSR 379(E) notified on June 8, 2005 including amendments thereto.

(b) Rajasthan Electricity Regulatory Commission (Terms & Conditions for determination of tariff) Regulation 2009 or in short RERC Tariff Regulations, 2009.

(c) The Electricity Act 2003 (the Act). Stake holder’s / Public Comments / Suggestions

JVVNL and Sh. G. L. Sharma suggested that instead of giving the reference of GSR number of

notification in sub-para (a) the name of Rules should be specified.


We don’t find force and justification in the suggestion hence no change is agreed.

8. Proposed regulation No. 3 : Options for Sale of Power by CPP

The Captive Power Plant, after meeting requirement of captive use by its unit, shall have option for

sale of electricity available subject to fulfillment of eligibility criteria of CPP as stipulated under MOP

Rules GSR 379(E) notified on June 8, 2005 or as amended from time to time;

(a) To Distribution licensee within the state under different mode of commercial arrangements;

and/or

(b) To third party, or to other than the distribution licensee, through open access which shall be

governed by RERC (Terms & Condition for Open Access) Regulations, 2004 and amendments

thereof.


Sh. Shanti Parsad and M/S HZL suggested that bilateral and collective transaction should also be

included and to avoid confusion, Commission may clarify that third party sale includes sale through

power exchange(s).

M/S HZL suggested to remove the stipulation about consumption of 51% of the generated power

for their own use, and beyond this, no further restrictions should be put. Since the industrial units are

also HT consumers and are entitled to use power from the Discoms for their use, hence it cannot be

insisted that they must first operate their captive plant. The use of captive plants has always been

discretionary with the consumers, therefore it should be left to the discretion of the CPP whether he

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wishes to operate it or not. M/S M/S HZL further suggested that in regulation 4(2) it could be laid

down that the Discom could also adopt the rates of the power Exchange as the base rate for

purchasing power from the CPPs. If need be, the rate to be given to the CPPs could be 95% of the

Power Exchange rate. It is not merely a question of determination of tariff under Section 86 (1) of

the Electricity Act. The issue should be visualized in the larger context of promoting CPPs and

encouraging them to expand so that the State can get more generation without any investment in

the Government sector. If appropriate rates are not allowed, the CPPs often tend to back down

their plant which is a national loss particularly during shortage of power. A routine tariff

determination without keeping in view the larger context may not be prudent.

The words ‘or as amended from time to time’ need not appear as, any Act or Rule etc. as referred

at various places, means its amended form prevailing as on that date.

The regulation under reference is applicable for CPP, which fulfills the conditions laid down in the

Rules, as has already been defined in the draft regulation itself. As such, the subjective proviso

referred in this para need not appear.

The state CPP should sale its spare capacity of power in the following order of priority:

i) Sale to the distribution licensee within the State.

ii) Third party sale within the state

iii) Third party sale outside the State.

JVVNL & Sh. G.L. Sharma suggested that instead of giving the reference of GSR number of

notification; the name of rules should be specified as ‘The Electricity Rules, 2005’


The Commission is of the firm view that the CPP should be fully paid for the fuel charges and

reasonable compensations toward fixed cost, the power exchange rates are on ‘day ahead basis’

which are market driven and quite variable and at times may not be sufficient to recover fuel cost.

The CPP is at liberty to transact through power exchange through open access. The Commission

also considers to accept the suggestion of stakeholders to simplify the stipulation as per Electricity

Rules. The Regulation is thus reworded as under:

“(3) The Captive Power Plant shall have the option for sale of electricity available after meeting the

eligibility criteria of CPP as stipulated under Electricity Rule 2005; to:

(a) distribution licensee within the state under different mode of commercial arrangements; and/or

(b) third party, including Power exchange, through open access which shall be governed by

existing Open Access Regulations.

9. Proposed regulation No. 4(1) : Tariff for sale of power by CPP to distribution licensee under “Long term” arrangement

A CPP, irrespective of any saleable capacity, having installed capacity of 50 MW and above, will

have option to either get the tariff determined on case to case basis as a generating company by

filing petition or may opt for normative fixed charges (levellised) and normative variable charges as

determined by the Commission under these regulations. Fixed charges shall be the levellised fixed

charges on per kWh basis and variable charges per kWh for supply during different time of the day

shall be admissible as under:-

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(a) during off peak hours: full variable charges and 20% of fixed charges,

(b) during normal supply hours: full variable charges plus fixed charges and

(c) during peak hours for supply: full variable charges plus fixed charges and incentive @ 50 paisa per kWh


JVVNL suggested that the provision (of normative tariff) for the plants having capacity less than

50MW as specified thereinafter under sub-regulation 4(6), should also be referred here.

Alternatively, sub-regulation 4(6) may appear first.

As per existing regulations, the CPP having installed capacity of 60 MW and above has the option

for normative or project specific tariff while in the proposed regulations this capacity has been

reduced to 50 MW. The Commission may consider keeping the capacity unchanged as 60 MW to

reduce the project specific cases.

JVVNL suggested that since the suppliers are hesitating in adopting different tariffs for different

hours of supply, so a single tariff on:

i) 24 hours basis (round the clock supply),

ii) Day hours basis and

iii) Night hours basis

which may be different for April to June, July to September and October to March as well

as for coal fired and oil fired CPP.

JdVVNL suggested that;

(a) During off-peak hours: full variable charges and 10% of fixed charges

(b) During normal hours of supply : full variable charges plus 90% of fixed charges

M/s Rudraksh Energy / RCCI requested that the proposed tariff be 40% instead of 20% of the

variable components of tariff.

Sh. Subodh Kumar Bhatnagar stated that the basis of incentive of Rs 50 p/kWh in tariff prescribed

for peak hours is not provided in background note and requested that if the incentive in tariff for

peak hours should be reasonably attractive.


JVVNL contention is not based on the supporting data about the capacity of CPP between 50-60

MW operating with surplus saleable capacity. As regards single tariff for round the clock supply, the

Commission considers it acceptable in view of long term supply arrangement. However, the

contention for day/night basis tariff is not accepted as the provision for Peak/off-peak hours

already exists. Further, JdVVNL requested for reduction in fixed charge component whereas M/s

Rudraksh / RCCI suggested to increase the same. The Commission considers that fixed charge

component of tariff provided is reasonable, as there has to be part compensation of fixed charges

in tariff as provided in tariff policy. Similarly, the incentive to be provided is enough to encourage

the CPP to supply power in peak hours. The request of JVVNL for separate tariff determination for

coal & oil fired CPP is not acceptable as the oil fired units are generally of very small size and tariff

to be allowed will not be economically viable for purchaser. Therefore, no consideration is to be

given for oil fired CPPs. Therefore, the regulation 4(1)(d) be added to cover the round-the-clock

supply as under:

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‘4(1)(d) Round-the-clock supply – Full variable charges + 80% for fixed charges.’


However, in case of procurement of power by Distribution Licensee through competitive bidding

from CPPs, the Commission shall adopt the tariff determined through transparent competitive

bidding process under section 63 of the Act. In case the tariff is determined by such bidding

process, the provisions of these Regulations for determination of tariff will not apply.


M/s HZL suggested that the competition would be much wider and transparent if it includes IPPs as

well as CPPs. Hence to avoid any ambiguity the following provision should be added in regulation

4(2) and 5(4) “from generating companies including CPPs.”

Sh. Shanti Prasad and JVVNL suggested that the draft Regulations, under reference, are not

applicable in case the procurement of power is through competitive bidding and through Power

Exchange. Therefore the sub-regulations appearing at 4(2) and 5(4) may be specified in general,

appropriately after sub regulation 1(3).


Commission considers that these Regulations are for CPPs, therefore the suggestion of M/S HZL is not

acceptable. Further, JVVNL’s suggestion about applicability of the regulations to be in the

beginning is accepted accordingly, proposed regulation 1(4) after proposed regulation 1(3) shall

be as under:

“1(4) In case of procurement of power by distribution licensee through Power Exchange or through

competitive bidding from generating companies including CPPs, the provisions of these regulations

shall not be applicable.” Proposed regulations 4(2) & 5(4) may thus be dropped.


Variable charge component shall cover fuel costs and shall be worked out on the basis of ex-bus

energy delivered from the generating station as per following formula------------.”


JVVNL suggested the revision in normative performance parameters for determination of variable

charges for Long-Term power supply with re-categorization of CPP- capacities shall increase the

power purchase cost. The Commission is requested to reconsider the matter.


Commission observers that JVVNL has not put-forth any supporting document demonstrating

increase in power purchase cost to support their contention, hence no change is required.

12. Proposed regulation No. 4(4)(a) : Tariff for sale of power by CPP to distribution licensee under “Long term” arrangement

Variable Charge (VC) in Rs/ kWh shall be the sum of the cost of normative quantities of primary and

secondary fuel for delivering ex-bus one kWh of electricity in Rs/kWh and shall be computed as

under: 100 x {Pp x (Qp) n + Ps x (Qs) n}

VC=______________________________

(100-(AUXn))

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Where,

Pp = Price of primary fuel namely coal or lignite, as the case may be, in Rs/kg.

(Qp)n = Normative Quantity of primary fuel required for generation of one kWh of electricity at

generator terminals in kg and shall be computed on the basis of normative gross Station Heat Rate

(less heat contributed by secondary fuel oil for coal/lignite based generating stations) and gross

calorific value of coal/lignite as fired.

Ps = Price of Secondary fuel oil in Rs. /ml,

(Qs) n =Normative Quantity of Secondary fuel oil in ml/kWh, and

AUXn= Normative Auxiliary Energy Consumption as % of gross generation.

Provided that Pp & Ps, for the year shall be based on audited figures of previous year & shall be

subjected to prudence check by the Commission.


Sh G. L Sharma suggested that aauxiliary has been defined as “Normative Auxiliary Energy

Consumption as %of gross generation” may be defined as “Limited to Normative Auxiliary Energy

consumption as %of gross generation” or “Normative or Actual, Whichever is less, Auxiliary Energy

Consumption as %of gross Generation.”


The normative consumption norms are applicable to CPPs following normative tariff. Normative

parameters are determined in advance based on overall perspective of operation of plants.

Further, check as per actual basis will not be feasible. Therefore, the suggestion is not accepted.

13. Proposed regulation No. 4(4)(d) : Tariff for sale of power by CPP to distribution licensee under “Long term” arrangement


The suggestion has been appropriately dealt under proposed regulation 4(4)(a) above.


The fixed charge component shall be worked out as per RERC tariff Regulation 2009 subject to

following changes.

a) The pre-tax return on equity shall be 15.5% of equity component without grossing up for Income Tax liability.

b) The operation and maintenance expense for CPPs for unit Size < 110 MW shall be Rs 12.17 Lakh/MW for 2009-10

The annual escalation rate for O&M Expenses shall be as per the provisions of RERC (Terms

&Conditions for determination of Tariff) Regulations 2009.


M/s Rudraksh Energy / RCCI desired to clarify the reasons for proposing pre tax return on equity as

15.5%.


The philosophy of pre-tax return as provided in existing CPP Regulation has been retained and the

rate of return as per RERC tariff Regulation 2009 has been adopted. Hence, no change is required.

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Annual Fixed Charge (AFC) will comprise of total annual expenses of CPP computed on the basis

of expenses and return allowed in terms of Part III read with Regulations 46, 48 & 49 of the RERC

(Terms and Conditions for determination of Tariff) Regulations, 2009 to the extent modified in these

Regulations. Provided that for determination of tariff, on case to case basis, for CPPs with installed

capacity of 50 MW and above, capital cost shall be considered as Rs 4 Crore per MW of installed

capacity. Provided further that, for the determination of normative tariff, for CPPs having installed

capacity less than 50 MW, capital cost shall also be considered as Rs 4 Crore per MW of installed

capacity.


M/s Rudraksh Energy / RCCI suggested that the capital cost of Rs. 4 Cr. per MW considered is less &

should be considered Rs. 4.5/5 Cr. per MW. Sh S. K. Bhatnagar also suggested that it should be

based on analysis of average rate as worked out by the Commission on new projects of IPP.


The objectors have not furnished supporting data of capital cost duly audited for the CPPs installed

in the State. Therefore, the Commission proposes to retain the norms specified earlier.

16. Proposed regulation No. 5(1) - Tariff for sale of power by CPP to distribution licensee under Short term Power supply

The arrangement for power supply by CPP to the distribution licensee for period less than one year

and more than one week shall be treated as short term power supply.


M/S HZL & JVVNL suggested that short term period may be any period less than one year without

one week restriction.


The suggestion is progressive, allowing transaction for less than a week and accordingly the word

“and more than one week” is deleted.

17. Proposed regulation No. 5(2) & 5(3) - Tariff for sale of power by CPP to distribution licensee under Short term Power supply

5(2) - The tariff for short term power supply by CPP up to system frequency of 50 Hz shall be as

follows:

Applicable Rate for Tariff Period Period

(November to June)

Note: Energy charge component shall include approved fuel cost adjustment (FCA) charge, as applicable.

(July to October)

Rate for procurement during ‘Peak hour’ (18:00 to 22:00 hours)

110% of energy charge component of HT industrial Tariff as applicable


Rate for procurement during ‘Non-peak hour’ (other than peak hours).

Applicable Rate for procurement during ‘Peak Hour’ less Rs 0.50/kWh


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5(3) - The tariff for short term power supply by CPPs at system frequency above 50 Hz shall be Rs

1.00 per kWh.

Provided that power supply at grid frequency above 50 Hz shall be subjected to curtailment

instructions issued by SLDC/ distribution companies.


JVVNL suggested that the period for STPS be categorised from April to June, July to September and

October to March.

The Nigam would not be able to get the CPP power at the rates indicated in the draft regulations.

Based on their experience, the JVVNL suggested rates as under:

Period Thermal CPP (Rs./Unit)

Oil fired CPP (Rs./Unit)

April to June 4.30 6.00

July to Sept 3.80 5.60

Oct to March 4.80 6.40

Sh. Subodh Kumar Bhatnagar suggested the rates of STPS are contrary to and against the reasons

stated in the back ground note under Para no. 3.3.1. whether it is stated that short term

transactions are little different in comparison to the long term transactions. The short term

transactions through power exchange or trading route are generally more than the long term

transactions.”

M/s Rudraksh Energy / RCCI considered it good to link with HT tariff & suggested to keep the tariff

for short term power supply at frequency above 50Hz as Rs. 2/2.5.


As already discussed in the background note attached with the draft regulations, the Commission

considered various options for prescribing the tariff for short term power supply and proposes to link

it with the HT industrial tariff including fuel cost adjustment charges such that the fuel charges are

fully recovered by the CPP. This is in line with the earlier policy framework for harnessing surplus

captive power of GoR. The RCCI has also supported this provision. However, the Commission has

observed that the tariff for short term supply has been prescribed on time-of-day basis i.e. Peak and

non-peak hours whereas in the proposals It is felt that available metering may be either on TOD

basis or frequency basis and the proposed stipulation would not be a complex provision and may

be non-starter. The Commission, therefore, decides to delete the provision of frequency and retains

the provision of differential tariff of Peak and Off-peak supply as provided in the tariff policy.

Therefore, the proposed regulation 5(2) is re-drafted as under and proposed regulation 5(3) is

deleted:

“5(2) The tariff for short term power supply by CPP shall be as follows:

Applicable Rate for Tariff Period Period

(November to June) (July to October)

Rate for procurement during ‘Peak hour’






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18. Proposed regulation No. 5(4) - Tariff for sale of power by CPP to distribution licensee under Short term Power supply

Comments/ suggestions considered at proposed regulation 4(2)

19. Proposed regulation No. 6(1) - Tariff for sale of power by CPP to distribution licensee for inadvertent power arrangement

The inadvertent power injection by CPP beyond 1% of the installed capacity of CPP or injection in

violation of SLDC’s intimations for deemed inadvertent power vide regulation 3(a), shall neither be

paid nor banked.


M/S HZL stated that this provision is harsh for CPPs because by definition the inadvertent supply

cannot be stopped by the CPP and it is “uninterruptible” then it cannot be called upon to remain

within 1% of the installed capacity and in the net result this power in excess of 1% would go free to

the Discoms and that limit of 1% is extremely low, which should be in the range of at least 10%.

M/s Rudraksh Energy / RCCI suggested increasing this limit up to 2.5%.


Inadvertent power injection by CPP is on account of the limitation of CPP to control its operation.

Since there is no contracted buyer for such power, so to allow any higher percentage of power

injection as inadvertent should not be treated as paid for because there is no designated buyer.

This is a complimentary arrangement made for settlement of energy accounting associated with

token payment so that losses in the system are accounted more correctly. Hence, no change is

required.

20. Proposed regulation No. 6(2) - sale of power by CPP to distribution licensee for inadvertent power arrangement

The UI rate, as applicable at 50.0 Hz, shall be applicable for net inadvertent power injection at the

end of six months settlement period.


M/s Rudraksh Energy / RCCI suggested reducing the period of settlement as 3 months.

M/s HZL suggested that payment at the end of six months is unfair and there is no justification. It

should be settled on monthly basis.


Considering the suggestions, the Commission proposes to reduce the settlement period as 3

months against six months provided in the proposed draft regulations.

21. Proposed regulation No. 7(1) (a) - Other charges

The connectivity of CPP to Grid or State transmission system shall be governed by the connection

conditions stipulated under State Grid Code and Connectivity Regulations of Central Electricity

Authority, as & when notified in accordance with sub-section (b) of Section 73 of the Electricity Act

2003.

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JVVNL suggested that the State Grid Code is already in force and the Connectivity Regulations

have also been notified by CEA vide Notification dated 21.2.07. This sub Regulation may therefore

be modified accordingly.


Commission agrees to the suggestion to delete the words “as & when notified in accordance with

sub-section (b) of Section 73 of the Electricity Act 2003”

22. Proposed regulation No. 7(2)(a) - Other charges

The CPP shall strive to maintain the power factor close to unity.


Sh G. L. Sharma stated that under this Regulation P.F. has been desired to be close to unity but no

minimum limit has been prescribed.


Since this is an enabling provision and no limit is required to be specified, since a provision to

regulate the reactive energy drawl / injection already exists.

23. Proposed regulation No. 7(4) - Other charges

Charges for Standby and start-up supply (Optional for CPP)

(a) Stand by supply and start up supply shall be effected at the request of CPP or as per

agreement with CPP by the distribution licensee. These will be available only during outages

for annual planned maintenance, other maintenance and forced outage. Annual planned

maintenance schedule will be given by 15th November, to be finalized by SLDC/NRLDC.

Other planned maintenance shall be effected with 2 days advance notice, except in

unforeseen circumstances such intimation may be sent within 30 minutes of unit outage.

(b) Standby and start up supply during a month shall be billed at temporary supply tariff on daily

basis as per tariff for supply of electricity notified by the distribution licensee with the approval

of the Commission as applicable to HT large industrial supply service. Contracted standby

start up supplies shall be subject to minimum annual drawl for 42 days in a financial year.

(c) In case CPP does not contract for standby or start-up supply, it can apply for temporary

supply as and when break down occurs as per prevailing terms & conditions of supply of the

distribution licensee.


Sh G. L. Sharma stated that this sub Regulation indicates that it is optional for CPP to have any

supply from the licensee for stand by and start up supply. Reference is invited to Para 132 (iv) of the

order dated 31.8.07 in respect of Rationalization of Retail Tariff (RERC/130/07) which is reproduced

below:-

“The CPP persons without any contract with the Discoms shall now get grid connectivity, when they

contract for a minimum power as under:-

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11 kV Supply ---------50 kVA

33 kV Supply --------375 kVA

132kV Supply-------1500kVA

220kV supply--------5000kVA”

Thus all CPP having connectivity with the grid must be having such connections. The commission

may kindly enlighten as to how this item is in consistence of the above decision.


The Commission considers that the order dated 31.8.07 as referred by the commenter relates to the

connectivity charges of the CPP with grid as provided in proposed regulation 7(1) for which no

comments/suggestions have been received. The provision proposed in regulation 7(4) is an

optional provision for CPP for availing stand-by and start-up supply. As such no modification is

required in the regulation.

24. Proposed regulation No. 11(1) - Commercial Arrangement - Agreement for Long term power supply

A Power Purchase Agreement for long term power supply will be signed between the licensee and

the CPP which will clearly indicate the capacity in MW contracted for supply and the agreed time

zone during which supply shall be affected. It shall provide payment security mechanism as

mutually agreed between licensee and CPP.


Sh G. L. Sharma stated that in the agreement besides MW contracted, the supply voltage is also

required to be mentioned.

JVVNL stated that the regulations should also specify the provisions of compensation payable to

the distribution licensee to the extent the CPP fails to supply the contracted power.


The Commission is of the view that the power purchase agreement is executed between the

distribution licensee and CPP therefore, the provision of compensation as suggested by JVVNL may

be made at their level while entering into the commercial agreement.

As regards the suggestions of Shri G. L. Sharma, to incorporate the voltage of supply in the

agreement, is not accepted since voltage of supply is mutually agreed between distribution

licensee and CPP as per point of injection and not required to be indicated in the regulations.

25. Proposed regulation No. 11(4)(c) - Commercial Arrangement – Billing and Payment

The bills for supply of inadvertent power shall be raised by CPP on six monthly period basis (April to

September & October to March) for the net power supplied during the six months period to the

Distribution Licensee(s), in whose area the CPP is located.


M/s Rudraksh Energy / RCCI suggested that the period of 6 months may be changed as 3 months.


As considered under proposed regulation 6(2), the period is changed to 3 months from the existing

6 months.

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26. Proposed regulation No. 11(4)(d) - Commercial Arrangement – Billing and Payment

The Distribution licensee shall raise the bill of power supply made to CPP and the CPP shall raise the

bill for power supplied by it at the end of each month. In case the distribution licensee needs to

make payment to the CPP, the same will be done after adjusting for amount payable by CPP for

the bills in respect of the energy consumed by the CPP and/ or other charges due to the

distribution licensee. The monthly billing shall be subject to interest charges for delay in payment as

specified at regulation 38 of RERC (Terms and Conditions for determination of tariff) Regulation,

2009.


JVVNL suggested that the provision relating to prompt payment rebate as specified at regulation

40 of the Tariff Regulations 2009, should also appear along with the provision of interest charges for

delay in payment.


The Commission considers to make provision for prompt payment rebate as specified at regulation

40 of the Tariff Regulations, 2009. Accordingly the word “and rebate for prompt payment” be

added after the word “for delay in payment” and the word “and 40” be added between word

“38” and “of RERC”. The proposed regulation is amended accordingly.

27. Proposed regulation No. 12 - Impact of Government Directives

If retail tariff is affected due to any directive issued by the State Government towards tariff for

power procurement by the distribution licensees from CPP, the State Government shall provide

subsidy in accordance with Section 65 of Electricity Act, 2003 to the extent of increase in retail tariff

due to such directive.


Sh. Shanti Parsad stated that though any Govt. directive to permit power purchase tariff higher

than regulated tariff will enhance cost of supply and will affect/ enhance retail as and when retail

tariffs are revised and prima facie State Govt. need compensate Discom(s) but section 65 does not

apply in such case. The section 65 of the Electricity Act applies only where State Government grant

any subsidy in the tariff determined by the commission under section 62. This section applies for

subsidy and not for prospective increase in retail tariff due to purchases affected, as per Govt.

directives, at higher cost, including that from CPP.

The commission has specified fuel price adjustment formula vide para 71 to 75 of its order dated

31.8.07 on rationalization of tariff. Fuel price adjustment is part of tariff and any direction of the state

Govt. not to levy or partially levy fuel adjustment will be the reduction in retail tariff effected by the

Govt. and will attract section 65 of the Act. In case state Govt. specify for CPP, tariff higher than

regulated tariff and also does not allow full recovery of its reflection in fuel price adjustment than it

can be called on to subsidies the Discom(s). However, this will not require provision in this regulation.

It is suggested that Regulation 12 may be considered for deletion.


The Commission sought legal opinion. The relevant extract states that “Clause 12 of the Draft

Regulation does not add any new value or dimension. Since, Section 65 is quite clear there is no

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need to provide any further clarification through regulations. It must be noted that retail tariff can

be affected by a direction of the State Government in the manner envisaged in Section 65 of the

Act.” Considering the merit in the suggestions based on the legal opinion obtained in the matter

and justifications advanced by the stakeholders the Commission is of the view that this proposed

regulation be dropped.

(28) Apart from above, minor changes due to apparent error of presentation, grammatical and

spelling etc. in language or text and as suggested by some stakeholders and other errors noticed

by the Commission, have been taken care of at appropriate places. Also, the representation

made by Rajasthan Bio-mass Power Developer Association with regards to CPP based on Bio-mass

fuel is not relevant since the proposed Regulation is not applicable to CPP based on RE sources.

(29) Based on above, the finalized Regulations duly authenticated, is as placed below, which

may be got published in official gazette. Copy of this memo along with the finalized Regulations

may be sent electronically and/or by post to the concerned utilities and other stakeholders.

(S. K. Mittal) (K. L. Vyas) (D. C. Samant)

Member (Fin.) Member (Tech.) Chairman

***********************************************

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NOTIFICATION

Jaipur, _________, 2010 No.RERC/Secy/Reg_____ -In exercise of the powers conferred on it by section 61 read with section 181 of the Electricity Act 2003 (No.36 of 2003),the Rajasthan Electricity Regulatory Commission, after previous publication, makes the following Regulations, namely: 1. Short title and commencement

(1) These Regulations may be called ‘The Rajasthan Electricity Regulatory Commission (Tariff for

sale of power by Captive Power Plants to distribution licensees) Regulations, 2010, in short RERC (CPP) Regulations, 2010.

(2) These Regulations shall come into force from the date of their publication in the official

gazette. (3) These Regulations will be applicable on captive Power plants excluding power plants based

on Renewable Energy Sources. (4) In case of procurement of power by distribution licensee through Power Exchange or through

competitive bidding from generating companies including CPPs, the provisions of these regulations shall not be applicable.

2. Definitions

(1) ‘Act’ means the Electricity Act, 2003.

(2) ‘Captive Power Plant’ or ‘CPP’ or “Captive Generating Plant” means a power plant as defined in the Electricity Act 2003 and meets the requirement of rule 3 of Electricity Rule 2005.

(3) ’Inadvertent power supply’ means unrestricted flow of power from CPP on account of inevitable mis-match between generation and load, and which can not be stopped by licensee/CPP. Inadvertent supply will however, be unscheduled, non contractual and uninterruptible.

(4) ‘Existing Captive Power Plants’ means CPPs in operation prior to date of notification of these Regulations including CPPs whose PPAs have been signed.

(5) ‘Long term power supply’ means the agreement entered between the CPP and distribution licensee for supply of power by CPP for the specified duration of the Contract Period equal to one year or more.

(6) ‘Peak hours’ means 18:00 hours to 22:00 hours of the day or such other hours of the day as may be notified by the licensee in its area of supply.

(7) ‘Off-Peak’ hours means 00:00 hour to 06:00 hours and 22:00 hours to 24:00 hours of the day or such other hours of the day as may be notified by the licensee in its area of supply.

(8) ‘Normal hours’ means hours other than Off Peak hours & Peak hours.

(9) ’Despatch Schedule’ means the ex-power plant net MW output of a CPP, scheduled to be exported to the grid from time to time.

(10) ‘Short term power supply’ means the agreement entered between the CPP and distribution licensee for supply of power by CPP for the specified duration of the Contract Period of less than one year.

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(11) ‘Stand by Supply’ means supply required by any person who have set-up the power plant primarily for his own use which shall also be called as parent unit of CPP, contracted with the distribution licensee to cater the demand during the period of outage of the CPP.

(12) ’Start up Supply’ means essential load of the CPP required during outage as well as for start up load of the CPP as contracted with the distribution licensee. Start-up supply thus includes stand by supply for CPP.

(13) ’Month’ means a calendar month commencing from 00:00 hours of the first day of the month and ending on 24:00 hours of the last day of the month.

The words or expression in these Regulations, which are not defined herein, shall have the same meaning as defined in the rules, regulations & Act in the order specified hereunder.

(d) Ministry of Power Rules ref. GSR 379(E) notified on June 8, 2005 including amendments thereto.

(e) Rajasthan Electricity Regulatory Commission (Terms & Conditions for determination of tariff) Regulation 2009 or in short RERC Tariff Regulations, 2009.

(f) The Electricity Act 2003 (the Act). 3. Options for Sale of Power by CPP

The Captive Power Plant shall have the option for sale of electricity available after meeting the eligibility criteria of CPP as stipulated under Electricity Rule 2005; to:

(a) distribution licensee within the state under different mode of commercial arrangements; and/or

(b) third party, including Power Exchange through open access which shall be governed by existing Open Access Regulations.

4. Tariff for sale of power by CPP to distribution licensee under “Long term” arrangement

(1) A CPP, irrespective of any saleable capacity, having installed capacity of 50 MW and above, will have option to either get the tariff determined on case to case basis as a generating company by filing petition or may opt for normative fixed charges (levellised) and normative variable charges as determined by the Commission under these regulations. Fixed charges shall be the levellised fixed charges on per kWh basis and variable charges per kWh for supply during different time of the day shall be admissible as under:- (a) during off peak hours: full variable charges plus 20% of fixed charges, (b) during normal supply hours: full variable charges plus fixed charges and (c) during peak hours for supply: full variable charges plus fixed charges and incentive @ 50

paisa per kWh. (d) Round-the-Clock supply: full variable charges plus 80% of fixed charges.

(2) The Commission shall determine Tariff for procurement of power by licensee from CPP under

long term power supply arrangement subject to following conditions: (a) The contract period shall be of duration one year or more. (b) The variable charge component shall be determined in accordance with sub-

regulation (3) below. (c) Fixed charge component shall be payable for the power delivered during each time

block and shall be determined in accordance with sub-regulation (1) above read with sub-regulation (4) below.

(3) Variable charge component shall cover fuel costs and shall be worked out on the basis of ex-

bus energy delivered from the generating station as per following formula:

(a) Variable Charge (VC) in Rs/ kWh shall be the sum of the cost of normative quantities of primary and secondary fuel for delivering ex-bus one kWh of electricity in Rs/kWh and shall be computed as under:

100 x {Pp x (Qp)n + Ps x (Qs)n } VC = ______________________________

(100-(AUXn) ) Where,

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Pp = Price of primary fuel namely coal or lignite, as the case may be, in Rs/kg. (Qp)n = Normative Quantity of primary fuel required for generation of one kWh of electricity at generator terminals in kg and shall be computed on the basis of normative gross Station Heat Rate (less heat contributed by secondary fuel oil for coal/lignite based generating stations) and gross calorific value of coal/lignite as fired. Ps = Price of Secondary fuel oil in Rs./ml, (Qs)n =Normative Quantity of Secondary fuel oil in ml/kWh, and AUXn= Normative Auxiliary Energy Consumption as % of gross generation. Provided that Pp & Ps, for the year shall be based on audited figures of previous year & shall be subjected to prudence check by the Commission.

(b) Station-wise energy charges will be worked out for the purpose of billing based on weighted average rate of actual units generated.

(c) Adjustment to variable charge on account of variation in price of fuels shall be carried out on quarterly basis based on actual cost of fuel and calorific value of fuel, during immediate preceding quarter. Provided that for any variation in Rate of Energy Charges exceeding 10% of that approved by the Commission during fiscal year, shall be subject to approval of the Commission for which necessary calculations with supporting documents shall be provided in support of the claim.

(d) Normative performance parameters for the determination of variable charge component under these Regulations shall be as under:

Unit Size of CPP (MW) Parameters Units

Less than 50 MW

More than 50 but less than

110 MW

110 MW & above

Station Heat Rate kcal/kWh 3200 3100 Specific Oil Consumption

ml/kWh 3.00 2.50

Auxiliary Consumption factor

% 11% 10.75%

As per RERC (Terms &Conditions for

determination of Tariff) Regulations 2009

Note:- In case of CPP having number of units of different rating, their average rating will be considered.

Provided that norms stipulated above shall be applicable in case of thermal power generating stations of CPPs based on rankine cycle technology and using coal as fuel. In case of lignite fired CPPs, the multiplying factor for Station Heat Rate as specified under Regulation 46(3)(b) of RERC Tariff Regulations 2009, for specific oil consumption operating norm as per Regulation 46(5), for auxiliary energy consumption operating norm as per Regulation 46(7)(c) and for limestone consumption operating norm as per Regulation 46(6) shall be applicable.

Provided further that the variable charge component of CPP based on any other technology other than rankine cycle technology under long term contract arrangement shall be determined on case-to-case basis.

(4) The fixed charge component shall be worked out as per RERC tariff Regulation 2009 subject

to following changes.

a) The pre-tax return on equity shall be 15.5% of equity component without grossing up for Income Tax liability.

b) The operation and maintenance expense for CPPs for unit Size < 110 MW shall be Rs 12.17 Lakh/MW for 2009-10

The annual escalation rate for O&M Expenses shall be as per the provisions of RERC (Terms

&Conditions for determination of Tariff) Regulations 2009. (5) Annual Fixed Charge (AFC) will comprise of total annual expenses of CPP computed on the

basis of expenses and return allowed in terms of Part III read with Regulations 46, 48 & 49 of

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the RERC (Terms and Conditions for determination of Tariff) Regulations, 2009 to the extent modified in these Regulations.

Provided that for determination of tariff, on case to case basis, for CPPs with installed capacity of 50 MW and above, capital cost shall be considered as Rs 4 Crore per MW of installed capacity.

Provided further that, for the determination of normative tariff, for CPPs having installed capacity less than 50 MW, capital cost shall also be considered as Rs 4 Crore per MW of installed capacity.

(6) Payment of Fixed Charges shall be made on monthly basis and based on delivered energy.

(7) Normative parameters vide sub-regulation (3) to (5) above shall be subject to review at the end of existing tariff control period.

5. Tariff for sale of power by CPP to distribution licensee under Short term Power supply

(1) The arrangement for power supply by CPP to the distribution licensee for period less than one year shall be treated as short term power supply.

(2) The tariff for short term power supply by CPP shall be as follows:

Applicable Rate for Tariff

Period (November to June)

Period (July to October)

Rate for procurement during ‘Peak hour’







6. Tariff for deemed sale of power by CPP to distribution licensee for inadvertent power

arrangement

(1) The inadvertent power injection by CPP beyond 1% of the installed capacity of CPP or injection in violation of SLDC’s intimations for deemed inadvertent power vide regulation 3(a), shall neither be paid nor banked.

(2) The UI rate, as applicable at 50.0 Hz, shall be applicable for net inadvertent power injection at the end of three months settlement period.

7. Other charges

(1) Grid connectivity charges

(a) The connectivity of CPP to Grid or State transmission system shall be governed by the connection conditions stipulated under State Grid Code and Connectivity Regulations of Central Electricity Authority.

(b) The Commission shall specify from time to time the 'Grid connectivity charges’ to be applicable for parallel operation of the CPP with the grid separately.

(2) Charges for Reactive Energy Exchanges

(a) The CPP shall strive to maintain the power factor close to unity.

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(b) The CPP shall inject/absorb the reactive energy as per the directions of state load dispatch centre. Such injection/absorption shall be undertaken on the basis of machine capability and in accordance with the directions issued by SLDC. A rate of charge/payment for shortfall in reactive energy exchange (injection or absorption) shall be levied on generating station at rate 5.75 paise/kVArh for FY 2009-10 escalated at 0.25 paise/kVArh annually in subsequent years, unless otherwise revised by Commission.

(c) Till meters as per sub-regulation (b) are installed, reactive energy charges shall be levied on net reactive energy drawl/ injection by the CPP.

(d) Above mechanism of reactive energy charges shall be applicable as interim arrangement till the RVPN undertake reactive energy planning studies and ascertain reactive power compensation requirement of the Grid as per State Grid Code.

(3) State Load Despatch Centre fee and charges

SLDC fee and charges including scheduling and operating charges shall be payable as specified in the Rajasthan Electricity Regulatory Commission (Levy of fee and charges by SLDC) Regulations, 2004.

(4) Charges for Standby and start-up supply (Optional for CPP)

(d) Stand by supply and start up supply shall be effected at the request of CPP or as per agreement with CPP by the distribution licensee. These will be available only during outages for annual planned maintenance, other maintenance and forced outage. Annual planned maintenance schedule will be given by 15th November, to be finalized by SLDC/NRLDC. Other planned maintenance shall be effected with 2 days advance notice, except in unforeseen circumstances such intimation may be sent within 30 minutes of unit outage.

(e) Standby and start up supply during a month shall be billed at temporary supply tariff on daily basis as per tariff for supply of electricity notified by the distribution licensee with the approval of the Commission as applicable to HT large industrial supply service. Contracted standby start up supplies shall be subject to minimum annual drawl for 42 days in a financial year.

(f) In case CPP does not contract for standby or start-up supply, it can apply for temporary supply as and when break down occurs as per prevailing terms & conditions of supply of the distribution licensee.

8. Applicability of ABT

As compensation to CPP is linked to ‘actual energy delivered’ by CPP and not linked to ‘energy schedules’ furnished by CPP, the provisions of Intra state ABT Regulations as notified in the RERC (Intra state ABT) Regulations 2006 shall not be applicable to CPP. However, in case CPP is required to sell any or part of its capacity outside the State of Rajasthan then provisions of RERC (Intra-State ABT) Regulations 2006 shall be applicable to such CPP.

9. Scheduling

CPPs with installed capacity of 25 MW and above, and effecting supply under long term and short term power supply agreement shall be subject to ‘Scheduling and Despatch Code’ as stipulated under State Grid Code and relevant Regulations. The methodology of scheduling and availability shall be as provided in the State Grid Code Regulations. However, it is clarified that the CPPs shall furnish schedules to SLDC for monitoring, co-ordination and control purposes alone; the payment to CPPs shall be based on actual energy delivered by CPP and not linked to schedules furnished by CPP.

10. Metering and Accounting

(1) Metering arrangements, including installation, testing and operation and maintenance of meters shall be as per the Central Electricity Authority (Installation and Operation of Meters) Regulations, 2006 and Rajasthan Electricity Regulatory Commission (Metering) Regulations, 2007.

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(2) In case, CPP and its parent unit are located within the same premises (i.e. embedded CPP) then there should be adequate arrangement of separate metering system for metering of generation by CPP and metering of consumption by its parent unit. If parent unit is also a consumer of the licensee and there is arrangement for sale of power by the CPP through the grid, such supply and drawl of power from the grid shall be metered separately, through export and import metering arrangement.

(3) Collection, transmission and processing of data required for accounting of energy exchanges on the basis of normal hour, peak hour and off-peak hour supply shall be organised by the State Transmission Utility/ State Load Despatch Centre.

11. Commercial Arrangement

(1) Agreement for Long term power supply A Power Purchase Agreement for long term power supply will be signed between the licensee and the CPP which will clearly indicate the capacity in MW contracted for supply and the agreed time zone during which supply shall be affected. It shall provide payment security mechanism as mutually agreed between licensee and CPP.

(2) Agreement for short term power supply

Short term power supply shall be either through PPA or contract established by exchange of letters, which will clearly indicate the capacity in MW contracted for supply and the agreed time zone during which supply shall be effected and shall provide payment security mechanism as mutually agreed between licensee and CPP.

(3) Reduction in contract demand. CPP will be allowed to reduce the contract demand of its parent unit with the licensee/Discom at one month notice but not more than once in a year.

(4) Billing and Payment

(a) The bills for supply of power under long term arrangement shall be raised by CPP on monthly basis for the power supplied during the month to the Distribution Licensee, in whose area the CPP is located.

(b) The bills for supply of power under short term arrangement shall be raised by CPP on monthly or fortnightly or weekly basis as mutually agreed depending upon the contract duration to the Distribution Licensee(s), as per the contract.

(c) The bills for supply of inadvertent power shall be raised by CPP on three monthly period basis (April to June, July to September, October to December & January to March) for the net power supplied during the three months period to the Distribution Licensee(s), in whose area the CPP is located.

(d) The Distribution licensee shall raise the bill of power supply made to CPP and the CPP shall raise the bill for power supplied by it at the end of each month. In case the distribution licensee needs to make payment to the CPP, the same will be done after adjusting for amount payable by CPP for the bills in respect of the energy consumed by the CPP and/ or other charges due to the distribution licensee. The monthly billing shall be subject to interest charges for delay in payment and rebate for prompt payment as specified at regulation 38 and 40 of RERC (Terms and Conditions for determination of tariff) Regulation, 2009.

12. Powers to deviate from norms

The Commission may deviate from the norms contained in these Regulations or specify alternative norms for particular cases, where it so deems appropriate, having regard to the circumstances of the case: Provided further that the reasons for such deviation(s) shall be recorded in writing.

13. Powers to amend

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The Commission may, at anytime, vary, alter, modify or amend any provisions of these Regulations, with reasons to be recorded in writing.

14. Power to remove difficulties

If any difficulty arises in giving effect to any of the provisions of these Regulations, the Commission may by general or special order, direct the State Transmission Utility, State Load Despatch Centre, CPP and licensees to take such action, as may appear to the Commission to be necessary or expedient for the purpose of removing difficulties.

15. Repeal and Saving :

(1) Save as otherwise provided in these Regulations the RERC (tariff for Captive Power Plant) Regulations, 2007 are hereby repealed.

2) Notwithstanding such repeal anything done or any action taken or purported to have been done

for the purpose of tariff for Captive Power Plant by the licensee shall be deemed to be done under the corresponding provisions of these Regulations.

(Ashwini Bhagat) Secretary

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RAJASTHAN ELECTRICITY REGULATORY COMMISSION, JAIPUR Suo

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