Appellate Tribunal For Electricity
Chhatisgarh State Power Transmission ... vs M/S R R Energy Ltd. & Ors on 24 May, 2011
Appeal no. 166 of 2010
Before the Appellate Tribunal for Electricity
(Appellate Jurisdiction)
Appeal No. 166 of 2010
Dated : May 24, 2011
Present: Hon'ble Mr. Justice M. Karpaga Vinayagam, Chairperson.
Hon'ble Mr. V.J. Talwar, Technical Member
In the matter of:
Chhatisgarh State Power Transmission Co. Ltd.
Vidyut Seva Bhawan, Danganiya,
Raipur, Chhattisgarh - 492013 Appellant
Versus
1 M/s R R Energy Ltd
Post Office Garhumaria
NH 200, Jharsuguda Road
Raigarh - 450001
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Appeal no. 166 of 2010
2 Chhatisgarh State Electricity Regulatory Commission
Irrigation Colony, Shanti Nagar
Raipur - 492001 ...Respondents
Counsel for Appellant: Ms Suparana Srivastva
Counsel for Respondents: Mr S C Sood for R -1
Mr. M.G. Ramachandran for R -2
Judgment
Per Hon'ble Shri V.J. Talwar, Technical Member
1 Chattisgarh State Transmission Company Limited is the
Appellant. Chhatisgarh State Electricity Board is the
predecessor of the Appellant.
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Appeal no. 166 of 2010
2 M/s R R Energy Limited is the first Respondent. Chhatisgarh
State Electricity Regulatory Commission (State Commission)
is the 2nd Respondent.
3 M/s R R Energy Limited (R-1) is a generating company
having rice husk (biomass) based power plant of 14 MW
capacity in state of Chhatisgarh. Respondent - 1 has
constructed 132 kV line to evacuate power from its power
plant. Appellant had charged 15% of the cost of the line as
supervision charges from the Respondent - 1 before
providing connectivity to its system. State Commission vide
its order dated 29.10.2009 directed the Appellant to refund
the supervision charges to Respondent -1.
4 Aggrieved by this impugned order of State Commission, the
Appellant has filed this appeal.
5 Brief facts of the case are as under:
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Appeal no. 166 of 2010
6 M/s. R.R. Energy Limited, the Respondent No.1 is a
generating company which has a rice husk based (biomass)
power plant of 14MW capacity at village Garhumaria in
District Raigarh, Chhattsigarh. Power generated by this
power plant was being evacuated at 33 kV and sold to
Chhatisgarh State Electricity Board (the Board), the
predecessor the Appellant. State Commission notified the
State Grid Code on 23.10.2006. In terms the State Grid
Code, power from all generating plants in the state having
capacity of more than 10 MW would have to be evacuated at
132 kV. Accordingly, M/s R R Energy (Respondent No.1)
was required to switch over from 33 kV to 132 kV. For this
purpose M/s R R Energy was required to have
independent/dedicated 132 kV transmission line from its
power plant to the Appellant's EHV sub-station at Raigarh for
evacuation of power.
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Appeal no. 166 of 2010
7 M/s R R Energy (Respondent No.1) requested the
Chhattisgarh State Electricity Board (the predecessor of the
Appellant) to construct 132 kV line from its power station to
Appellant's nearest sub-station and 132 kV bay on payment
of requisite charges as per Appellant's rules. Appellant
Board approved the construction of 132 kV line from 1st
Respondent's power plant to Raigarh substation along with
132 kV bay at Raigarh on payment of cost of the said works
as per Board's rules. Accordingly, the Appellant Board
carried out a detailed route survey for the line. However,
Respondent - 1 decided to construct the aforesaid
transmission line by itself and informed the same to the
Appellant on 17.8.2007. Appellant agreed for construction
of 132KV independent line by Respondent -1 from its power
plant to the 132KV sub-station at Raigarh subject to the
following conditions:
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Appeal no. 166 of 2010
(i) Respondent No.1 would have to pay in advance to
the Board supervision charges @ 15% of
estimated cost of line amounting to Rs.67,60,853/-
(ii) The construction to be carried out through 'A'
class contractor strictly under the supervision of
the Appellant as per the relevant drawing and
design approved by the Appellant;
(iii) The completed line in all respects would be
handed over to the Appellant after commissioning
of the line for further necessary action regarding
maintenance, etc.;
(iv) The construction of 132KV bay at 132KV sub-
station will be carried out by the Appellant on
payment of Rs.1,29,31,500/- towards cost of the
line bay by Respondent No.1.
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Appeal no. 166 of 2010
8 Accordingly, M/s R R Energy (Respondent No.1) agreed to
pay supervision charges @ 15% of estimated cost of line
and also cost of 132 kV bay at Raigarh sub-station for
termination of the said line. In the mean time Ms R R
Energy also approached State Government for mandatory
prior approval for construction of 132kV overhead line under
section 68 of the Electricity Act 2003. On 9.10.2007, the
State Government accorded approval for the construction of
the aforesaid 132 kV line subject to certain conditions. Upon
receipt of the State Government's approval, Respondent
No.1 informed the Appellant Board about its carrying out the
construction work of the line. It also requested the Board to
supply drawings and design of tower foundations and
structure along with survey report. The Appellant Board
agreed to supply these on payment of costs incurred by it
which was duly paid by the Respondent No. 1.
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Appeal no. 166 of 2010
9 Thereafter, Respondent No.1 carried out the construction
work of the said line. Upon completion of the line, the Chief
Electrical Inspector carried out mandatory inspection of the
installations of the Respondent -1 under Indian Electricity
Rules 1956. After being satisfied with installation work, Chief
Electrical Inspector granted permission to Respondent No.1
for charging its line. However, Appellant did not allow
connectivity with its system on the ground of non-payment of
supervision charges by the Respondent -1 in terms of the
Supply Code. Hence, Respondent No.1 deposited the 15%
supervision charges "under protest" to avail connectivity for
evacuation of power from its plant, claiming that it has laid
the line as per the approval of the State Government
according to which the ownership of line would lie with
Respondent No.1 only.
10 Thereupon, the Respondent No.1 filed a Petition
No.46/2009(M) before the Respondent No.2 State
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Appeal no. 166 of 2010
Commission, praying for refund of the amount of 15%
supervision charges already deposited under protest with the
Appellant. Accordingly the State Commission Vide its order
dated 29.10.09 held that Respondent No.1 is not liable to
pay supervision charges to the Appellant and directed for the
refund.
11 Being aggrieved by the this order of the State Commission,
the Appellant filed a Review Petition No.01/2010(M) before
the State Commission on 5.1.2010 pleading, inter alia, that
(i) Connectivity of the generator with the grid not only
involves supervision of the erection of the line for its
technical soundness but also involves estimation of line
work for execution together with supervision of proper
synchronization of generator with the grid through its
own technical experts to avoid mishaps during
synchronization as far as possible. Therefore, the levy
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Appeal no. 166 of 2010
of such charge is neither unreasonable nor without any
purpose;
(ii)Respondent No.1 had also availed 1100KVA startup
power connection from the Board through the same line
and so the entire arrangement would be liable to be
regulated as per the provisions of the Supply Code;
(iii) the State Government's approval under Section 68 of
the 2003 Act has only conferred authority for erection of
the line. The State Government has no jurisdiction to
prescribe any charge recoverable by the licensee or to
prescribe any terms and conditions for availing the
connectivity with the grid. Therefore, the said approval
does not absolve Respondent No.1 from payment of
charges to the Appellant;
(iv) the Appellant has checked the line before allowing its
connectivity with the grid which is the basic intention
behind the levy of supervision charges together with
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Appeal no. 166 of 2010
estimation of work and supervision of synchronization
with the grid.
12 Vide the impugned order passed in the above Review
Petition on 10.3.2010, the State Commission again held that
Respondent No.1 is not liable to pay 15% supervision
charges as demanded by the Appellant for the reason that
supply code clearly specified that levy of 15% supervision
charges would be applicable only where the asset is created
by the consumer (i.e. the consumer incurs the cost on
material and labour) and hand over the such asset to the
Board. Thus, in such cases the ownership of such asset
would remain with the Board and the responsibility of
operation and maintenance of the line would also be that of
the Board. State Commission further observed that in the
instant case the asset i.e. the line is created by M/s R R
Energy and they intend to own and maintain the line by
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Appeal no. 166 of 2010
themselves in accordance with the provision of Section 10(1)
of the Act, according to which the duties of a generating
company shall be to establish, operate and maintain the
dedicated transmission lines connected to the generating
stations and the transmission system. Accordingly, State
Commission held that in the instant case M/s R.R. Energy
shall not be liable to pay 15% supervision charges on cost of
work.
13 Aggrieved by the impugned Order of the State Commission,
the Appellant has filed this Appeal before this Tribunal.
14 Learned Counsel for the Appellant has urged the following
contentions in support of its claim:
I. While getting the approval of the State Government
under section 68 of the Electricity Act 2003, the
Respondent -1 had kept the Appellant in the dark.
Similarly he had also not informed the State
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Appeal no. 166 of 2010
Government about approval of the Board for
construction of the same line by the Board.
II. State Government had accorded approval to construct
the line only. State Government has no authority to
specify any charges to be recovered by the Appellant
Board from Respondent. Only State Commission has
such authority and State Commission has specified the
applicable charges in its Supply Code.
III. Respondent -1 is also getting startup power from the
Appellant and as such he is also a consumer of the
Board. Therefore, the provisions of Supply Code would
be applicable to the Respondent 1 also, being the
consumer of the Appellant Board.
IV. The line in question is also a service line meant to meet
Respondent-1's startup power requirement. According
to provisions of Supply Code, the Respondent -1 is
liable not only for payment of supervision charges to the
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Appeal no. 166 of 2010
Appellant Board but is also bound to hand over the
above line to the Appellant after Commissioning.
V. Connectivity of the generator with the grid not only
involves supervision of the erection of the line for its
technical soundness but also involves estimation of line
work for execution together with supervision of proper
synchronization of generator with the grid through its
own technical experts to avoid mishaps during
synchronization as far as possible. Therefore, the levy
of such charge is neither unreasonable nor without any
purpose.
VI. Respondent - 1 prevented the Appellant from carrying
out the supervision of the line during construction by not
intimating the progress during various stages of
construction of the line.
15 Sh Sood, representative of Respondent -1 ( M/s. R.R.
Energy) countered the said arguments advanced by the
Appellant and submitted the following:
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Appeal no. 166 of 2010
I. Section 10 of the Electricity Act 2003 mandates a
generating company to establish, operate and maintain
"dedicated transmission line".
II. Section 68 requires prior approval of the Appropriate
Government for establishment of any over head line.
Accordingly, it was the duty of Respondent - 1 to take
prior approval of the State Government in terms of
Section 68 of the Electricity Act 2003 irrespective who
actually constructed the line either by Appellant Board
or Respondent -1 itself.
III. The approval of State Government is subject to certain
conditions prescribed by the Government under
subsection (3) of section 68 of the Act. One of such
conditions is that the line would be operated and
maintained by M/s R R Energy (Respondent No.1). In
view of the condition laid down in the approval of the
State Government, line cannot be handed over to the
Appellant.
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Appeal no. 166 of 2010
IV. Despite being well aware of the fact that line was being
erected by Respondent -1, the Appellant had not
carried out any supervision during the construction of
line. The Appellant had just inspected the line only after
its completion and, therefore, it is not entitled for any
supervision charges.
V. As per Electricity (Removal of Difficulty) Fifth Order,
2005, Respondent - 1, being a generating company
would not be required to obtain a transmission license
under the act to operate and maintain "dedicated
transmission line". As per provisions of this order, it has
to comply with, interalia, the Grid Code and Grid
connectivity Standards. Supply Code, which is meant
for consumers of the distribution licensee, has not
application in his case.
16 Learned Counsel for State Commission (R-2) reiterated the
findings of the State Commission given in the impugned
order and submitted as below:
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Appeal no. 166 of 2010
I. The line in question is a dedicated transmission line
meant for evacuation of power from generating station
of the Respondent -1.
II. Respondent -1 cannot be considered to be the
consumer of the distribution licensee in terms of
Section 43 of the Act merely on the ground that he
draws startup power from the grid.
III. Section 46 of the Act also has no application to the
instant case as it deals with expenditure reasonably
incurred by distribution licensee in providing supply line
used for the purpose giving supply under section 43 of
the Act.
IV. The activities of the Respondent -1 are to be governed
by Grid Code of State Commission and not by the
Supply Code. Both Grid Code and Supply Code have
exclusive operational fields and cannot be applied
simultaneously to set of circumstance as in the present
case.
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Appeal no. 166 of 2010
17 We have heard the Learned Counsel for the parties and
carefully considered the submissions made by the rival
parties.
18 In the light of the rival contentions referred to above urged by
the learned counsel for parties, following questions would
arise for consideration:
I. Whether Respondent -1 has committed any wrong by
approaching the State Government for approval under
section 68 of the Electricity Act 2003 pending Appellant
Board's approval for construction of his line.
II. Whether a generating company can also be termed as
a consumer merely because he would be drawing
'startup power' from grid occasionally.
III. Whether line in question is a ' dedicated transmission
line' of generating company for evacuation of power
from its generating station or is a 'service line' for
meeting the requirements of a consumer.
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Appeal no. 166 of 2010
IV. Whether the Appellant is entitled for supervision
charges for supervision of proper synchronization of
generator with the grid through its own technical
experts to avoid mishaps during synchronization as far
as possible.
19 We shall now deal with each question one by one.
20 First question for our consideration is Whether Respondent -
1 has committed any wrong by approaching the State
Government for approval under section 68 of the Electricity
Act 2003 pending Appellant Board's approval for
construction of his line.
21 To answer this question, we have to examine the relevant
provisions of the Electricity Act 2003 and State
Commission's Regulations framed there under.
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Appeal no. 166 of 2010
22 Section 10 of the Electricity Act 2003 deals with duties of
generating company to establish, operate and maintain a
dedicated transmission line. Section 10 of the Act is
reproduced as under:
"10. Duties of generating companies.--(1) Subject to
the provisions of this Act, the duties of a generating
company shall be to establish, operate and maintain
generating stations, tie-lines, sub-stations and
dedicated transmission lines connected therewith in
accordance with the provisions of this Act or the rules
or regulations made there under..."
23 'Dedicated transmission line' has been defined in section
2(16) of the Act as under:
"(16) "dedicated transmission lines" means any electric
supply-line for point to point transmission which are
required for the purpose of connecting electric lines or
electric plants of a captive generating plant referred to
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Appeal no. 166 of 2010
in section 9 or generating station referred to in section
10 to any transmission lines or sub-stations or
generating stations, or the load centre, as the case may
be;"
24 Section 68 of Electricity Act 2003 requires prior approval of
the Appropriate Government for installation of any overhead
line. Relevant portion of section 68 is reproduced below:
"68. Overhead lines.--(1) An overhead line shall, with
prior approval of the Appropriate Government, be
installed or kept installed above ground in accordance
with the provisions of sub-section (2).
(2) The provisions contained in sub-section (1) shall not
apply--
(a) in relation to an electric line which has a nominal
voltage not exceeding 11 kilovolts and is used or
intended to be used for supplying to a single consumer;
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...
(3) The Appropriate Government shall, while granting approval under sub-section (1), impose such conditions (including conditions as to the ownership and operation of the line) as appear to it to be necessary." 25 Admittedly Respondent -1 is a generating company having a Bio-mass based generating station of 14 MW. Power generated from generating station was being evacuated through a 33 kV line. On 30th December 2006 the State Commission notified Grid Code 2007. As per Clause 4.1.2 of this code, all existing generators having capacity more than 9 MW were required to have grid connectivity through dedicated feeder at 132 kV for evacuation of power and availing startup power from the grid. The said clause is quoted below:
"4.1.2 ... Existing generator whose installed capacity is 10 MVA/9 MW and above will also have to have Page 22 of 55 Appeal no. 166 of 2010 connectivity through independent/ dedicated 132 KV feeder with EHV sub-station for availing startup power and evacuation of power within one year from the date of coming this code in force. CSEB shall examine all such cases and issue notices to them to have connectivity with EHV substation through independent/dedicated EHV feeder and shall issue demand note/ advice to them within three months and the generator shall complete the formalities for having connectivity with the EHV substation including payment within two months."
26 To comply with the above provision of the Grid Code, the Respondent -1 was required to switch over from 33 kV to 132 kV and was required to lay a independent/dedicated line at 132 kV connected to Appellant's EHV substation. Accordingly, the Respondent -1 approached the Appellant Board to carry out the entire work related to erection of 132 Page 23 of 55 Appeal no. 166 of 2010 kv line and associated terminal line bay at 132 kV Raigarh substation of Appellant. Appellant Board agreed to undertake the works subjected to payment of full costs of works including 15% supervision charges. 27 Various provisions of the Act and Grid Code do not require that works were to be carried out only by the Appellant Board. The Respondent -1 could as well have entrusted the works related to construction of line to any class -1 Electrical Inspector as per provisions of Indian Electricity Rules 1956. Thus the role of Appellant Board was restricted to that of a class -1 Electrical Contractor. Getting prior approval of the State Government for any overhead line is mandatory, irrespective of who constructs the line. This approval was also necessarily required even if the line was constructed by the licensee i.e. Appellant Board.
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Appeal no. 166 of 2010 28 We would like to clarify here that the prior approval of the Appropriate Government under section 68 of the Act is mandatory even if the works are carried out by a licensee. To remove any doubt about this requirement, we would also like mention that prior approval under section 68 is being obtained by POWERGRID, a Central Transmission Utility, who have been authorized to exercise the powers of Telegraph Authority under section 164 of the Act. The requirement of prior approval under section 68 of the Act cannot be replaced by mere sanction of a licensee to undertake the works as a contractor.
29 Thus the Respondent -1 has correctly met with requirements of the Act and had not done anything wrong by obtaining the State Government's approval under section 68 of the Act. We answer this question accordingly.
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Appeal no. 166 of 2010 30 Next Question for our consideration is to whether a generating company can also be termed as a consumer merely because he would be drawing 'startup power' from grid occasionally.
31 The State Commission has carried out in depth examination of this issue in the impugned order dated 10.3.2010. The relevant portion of findings of the State Commission are as under:
"5. The contention of petitioner that since the generator M/s R.R. Energy has also availed 1100 KVA start-up power from CSEB through the same line and so the entire arrangement is liable to be regulated as per provision of Supply Code, is not convincing. The State grid code deals with the matters related to technical standards, metering, operation, protection, safety co- ordination of the transmission system in the State and Page 26 of 55 Appeal no. 166 of 2010 shall have to be complied with by all entities and open access customers connected to the State transmission system. ... Thus, the customer also includes consumer and the State Grid Code will also be applicable to the consumer connected with transmission system of the State so far technical standard, metering, operation, protection safety of grid are concerned. However, Supply Code shall be applicable for such consumers in dealing with Distribution Company in relation with meter reading, billing etc. as a consumer. Since, the start-up power by the generator is optional it cannot be concluded that in case the generator avails facility of start-up power the Supply Code shall be applicable for the entire arrangement, and only in case it does not avail start-up power the Grid Code will be applicable, though the connectivity in both the cases with system remains the same. Thus, we do not agree with this pleading of the petitioner on this Page 27 of 55 Appeal no. 166 of 2010 point. The petitioner further stated that section 4.6, 4.8, 6.43 and 6.45 of the effective supply code are the relevant provisions in this case. ... We have gone through the clause wise details and observed that the clause 4.6 of the Supply Code is related with the extension of distribution mains/service connection for releasing supply to a consumer by the licensee and this line is to be maintained by the licensee and shall also have the right to use the service connection / extension for supply of electricity to the other consumers. Since, the instant case is basically of a generator which is connected by dedicated line with the grid as per provision in modified clause 4.1.2 of the amended Grid Code, 2008, therefore, the clause 4.6 of the Supply Code will not be applicable here. The clause 4.8 of the Supply Code referred by the petitioner is related with the service line from the distribution mains to the point of supply of the Page 28 of 55 Appeal no. 166 of 2010 consumer which should not normally be more than 30 meters, hence this clause is also not applicable in the present case. The clause 6.43 and 6.45 of the Supply Code referred by the petitioner is related with operation of a generator in consumer's installation to run in parallel with the licensee's system only with the due written consent of the licensee and with proper protection system. This point is not related with the payment of 15% supervision charges. ..."
32 Sh M G Ramachandran, Learned Counsel for the State Commission reiterated the findings of the State Commission as given above and has raised a very important point during discussions. He stated that every generator, except DG set, requires startup power. Even large generating companies like NTPC require startup to start their generators during black start i.e. just after complete grid failure. If a generator is also termed as a consumer merely because he avails Page 29 of 55 Appeal no. 166 of 2010 startup power from the grid, it will cause serious repercussions and unsettle the already settled issues relating to providing startup power to these stations. He further urged that such arrangements do not qualify the requirements of section 43 of the Act. He also pointed out that even if it is accepted that the Respondent -1 is also a consumer, since the metering is done at 132 kV substation of Appellant, point of supply being outgoing terminals of the meter, the responsibility of Appellant Board ends there itself. 33 Ms. Suparana Srivastva, Learned Counsel for the Appellant, countered the contentions of the Respondent -1. She placed on record an agreement entered between the Appellant Board and the Respondent -1 for availing 1100 kVA startup power from the licensee. She stated that this agreement had been entered upon in pursuance of application by the Respondent -1 for startup power. As regards metering arrangement, she clarified that undoubtedly metering for Page 30 of 55 Appeal no. 166 of 2010 export of power is being done at 132 kV Raigarh substation, but metering for import of power (startup power) is done at generating station itself. In support of her arguments, clause 7(a) of the said agreement was brought to our notice which states that "For the purpose of registering the electrical energy taken by the Consumer under this agreement there shall be provided one ____ volt metering arrangement (hereinafter referred as main meter) on the feeder of the consumer which shall be the property of and be kept in repair and Calibrated by the Board." She also drew our attention towards relevant portion of State Commission's Retail Supply Tariff Order for the year 2006-07, wherein the State Commission has classified 'startup power' as separate category and has specified tariff for this category of consumers.
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Appeal no. 166 of 2010 34 Learned representative of the Respondent -1 did not counter the contentions of the Appellant in regard to Agreement and metering arrangement at his premises. He, however, urged that drawal of 'startup power' from grid is only occasional and is in fraction of export of power. The Respondent -1 is undoubtedly a generator and there is no term such as generator cum consumer in the Act. One has to be either generator or a consumer. The Respondent -1, being a generator, is governed only by the provisions of Grid Code and not by supply Code.
35 Though, at this stage, we are of the view that the findings of the State Commission are well reasoned and there is no reason to interfere with the same, however, as brought out above, the issue under discussion is of great importance and could have large ramification, we would like to carry out denovo examination of various sections of the Act dealing with distribution of electricity, the supply code and relevant Page 32 of 55 Appeal no. 166 of 2010 provisions of State Commission's Tariff Order in detail to arrive at final conclusion.
36 The Appellant's case revolves around provisions of Sections 43, 45, 46 and 50 of the Act. The Appellant has also placed great reliance on clause 4.10 of Supply Code. Let us examine each of these one by one and analyse the validity of the Appellant's claim. Section 43 casts Universal Obligation of Supply on the distribution licensee. Section 43 is reproduced below:
"43. Duty to supply on request.--(1) Save as otherwise provided in this Act, every distribution licensee, shall, on an application by the owner or occupier of any premises, give supply of electricity to such premises, within one month after receipt of the application requiring such supply:
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Appeal no. 166 of 2010 Provided that where such supply requires extension of distribution mains, or commissioning of new sub- stations, the distribution licensee shall supply the electricity to such premises immediately after such extension or commissioning or within such period as may be specified by the Appropriate Commission:..."
37 According to the Appellant, existence of agreement between him and the Respondent -1 for startup power is a proof that supply had been provided by him to the Respondent -1 in pursuance of Section 43. Section 45 deals with powers of Distribution Licensee to recover charges for supply of electricity by him in accordance with the tariff fixed by the State Commission. Relevant portion of Section 45 of the Electricity Act 2003 is reproduced below:
"45. Power to recover charges.--(1) Subject to the provisions of this section, the prices to be charged by a Page 34 of 55 Appeal no. 166 of 2010 distribution licensee for the supply of electricity by him in pursuance of section 43 shall be in accordance with such tariffs fixed from time to time and conditions of his licence..."
38 According to the Appellant, State Commission has classified 'startup power as separate category and has given tariff for this category of consumers in Tariff Orders year after year. Therefore, requirements of this section are also met with. 39 Section 46 authorizes the distribution licensee to recover expenses reasonably incurred in providing electric line for the purpose of giving supply in accordance with regulations specified by the State Commission. Provisions of section 46 are important and are reproduced below:
"46. Power to recover expenditure.--The State Commission may, by regulations, authorise a distribution licensee to charge from a person requiring a Page 35 of 55 Appeal no. 166 of 2010 supply of electricity in pursuance of section 43 any expenses reasonably incurred in providing any electric line or electrical plant used for the purpose of giving that supply."
40 According to Appellant, the State Commission has authorized him to recover Supervision Charges in case service line is laid by consumer himself under clause 4.10 of the Supply Code specified by the State Commission under Section 50 of the act.
41 Clause 4.10 of Supply Code is reproduced below:
"4.10 The consumer can get the work of drawing of service line from the licensee's distribution mains up to his premises as per the estimates and layout approved by the licensee through a 'C' or higher-class licensed electrical contractor, and the work of extension of EHT and HT line, distribution or HT substation and LT line Page 36 of 55 Appeal no. 166 of 2010 through an 'A' class contractor as per the estimates and layout approved by the licensee. In such case the consumer himself shall procure the materials. The material should, conform to relevant BIS specification or its equivalent and should bear ISI mark wherever applicable. The licensee may ask for documentary evidence to verify the quality of materials used. The consumer shall be required to pay the supervision charges as approved by the Commission in the Schedule of Miscellaneous Charges on the cost of works as per the estimates approved by the licensee." {emphasis added}
42 After going through various provisions referred above, prima facie, it appears that the claim of the Appellant could be justified. However, considering the importance of the case Page 37 of 55 Appeal no. 166 of 2010 and its likely impact of the power sector, it requires further examination.
43 Before proceeding, further let us understand what startup power is and for what purpose it is required. 44 Startup Power has not been defined in the Electricity Act 2003 or in the Rules and Regulations framed there under. It has also not been defined in the repealed Acts viz., Indian Electricity Act 1910, Electricity (Supply) Act 1948 and Electricity Regulatory Commission Act 1998. Thus we have to go by its general meaning. In general parlance, word 'Startup' means to start any machine or motor. In terms of electricity, Startup Power is power required to start any machine. Thus Startup Power is power required to start a generator. Next question is why it is required. Thermal generating units, (to some extent large hydro generating units also) have many auxiliaries, such as water feed pump, Page 38 of 55 Appeal no. 166 of 2010 coal milling units, draft pumps etc.,. These auxiliaries operate on electrical power and are essentially required to run before generating unit starts producing power of its own. These auxiliaries would draw power from grid till unit start producing power and is synchronized with the grid. Once unit is synchronized, requirement of 'startup power' vanishes. Thus 'startup power' is required only when all the generating units in a generating station are under shutdown and first unit is required to startup. Once any one unit in a generating station is synchronized, power generated by the running unit is used to startup other units. Period of requirement of startup would vary from few minutes to few hours depending upon the size of unit.
45 Above discussion shows that requirement of startup power is essential for every generating station and is very limited both in quantum (MW) and duration terms.
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Appeal no. 166 of 2010 46 It is admitted that the Respondent -1 have applied for startup power under section 43. But can we say that existence of an agreement for startup power meets the requirements of section 43? Let us now examine this aspect. Under section 43 of the Electricity Act 2003, it is the duty of licensee to supply power to any person on demand. The whole Act does not put any restriction on consumer in regard to quantum of power or duration of drawal. A consumer may demand any quantum of power. He can consume power at any load factor ranging from zero to 100% during any time of the day. In the light of the above, Can we say that a startup consumer as categorized by the State Commission in its Tariff orders enjoys all or any of these privileges? Let us refer to the relevant observations in Retail Tariff Order.
"Start-up power required by generators including plants based on biomass, captive power plants, small hydel plants etc. shall now be billed as per this tariff Page 40 of 55 Appeal no. 166 of 2010 from the effective date of this order. However, the condition that working has to be on single shift and the provision of TOD meter will not be applicable for start-up power connections. Similarly, start-up power consumers will be exempted from payment of a monthly minimum charge of units equivalent to any load factor on the contract demand, but will be required to pay only demand charge every month on the contract demand or recorded MD, whichever is higher. However, to be eligible to avail this tariff, the generating unit has to have a contract demand which does not exceed 10% capacity of the highest generating capacity of generating station and restricts the drawal of power within 10% load factor every month. In case the load factor in a month goes beyond 10%, the generating unit will be required to pay twice the demand charge" {emphasis added} Page 41 of 55 Appeal no. 166 of 2010 47 From the above observations, it is clear that a 'startup power' consumer can have a contract demand up to maximum of 10% of highest generating capacity unit of generating station. Further his total drawal from the grid during the month is also restricted to 10% load factor. In other words at full contracted demand, he can draw power from grid for less than three hours in a day (720 x 0.1 / 30 hours per day). Further his operational time is also restricted to one shift operation. With such restrictions, supply given to a generator as 'startup power' cannot be termed in pursuance to section 43 of the Electricity Act 2003. 48 Further, consumer as defined in the Act is a person who is supplied with electricity for his own use. Here startup power is supplied to Respondent -1 to startup its generating unit. Once generating unit is synchronized with the grid, the power so generated is supplied to Appellant. Without startup power, generators cannot start and produce power. Thus, in Page 42 of 55 Appeal no. 166 of 2010 way, startup power is supplied for the benefit of Appellant only. From this point of view, a generator taking startup power from distribution licensee and supply power to same licensee on startup, cannot be termed as a consumer. 49 In light of above discussions a generator requiring 'startup up power' from the grid cannot be termed as a consumer. 50 Next Question before us for consideration is the status of line in question i.e. whether line in it is a ' dedicated transmission line' of generating company for evacuation of power from its generating station or is a 'service line' for meeting the requirements of a consumer. Page 43 of 55
Appeal no. 166 of 2010 51 An offshoot of this question would be who would operate and maintain this line licensee or generator. Thus, we feel it necessary to answer it to settle the issue once for all. 52 As already discussed above, Section 10 of the Act requires any generating company to establish, operate and maintain dedicated transmission line. Dedicated transmission line has been defined in section 2(16) of the Act. Section 68 (1) requires prior approval of the state government which had been obtained by the generator. Subsection (3) of section 68 of the Act empowers the State Government to impose conditions, including ownership and operation of the line while granting such approval. State Government has according impose 19 conditions on the generator while granting approval under section 68 (1). 18th Condition in the said approval provides that operation and maintenance of the line shall be under taken necessarily by the Respondent
-1 company. Above provisions leave no doubt about status Page 44 of 55 Appeal no. 166 of 2010 of the line and who would operate and maintain it. The line in question is a dedicated transmission line of a generating company and have to be operated and maintained by the generating company.
53 The Appellant has placed reliance on certain provisions of supply code and also on clause 3 of the Agreement between him and the Respondent -1 for startup power. According to these provisions the ownership of the line would rest with the Appellant Board and will be maintained by the Appellant Board at its cost. Leaned Counsel of the Appellant argued that the Supply Code has power of law and its provisions would have to be applied in totality. We fail to appreciate the arguments of the Appellant. Supply Code is a subordinate legislation created under the Electricity Act 2003. Thus its provisions cannot overrule the explicit provisions of the Act. Page 45 of 55
Appeal no. 166 of 2010 54 It would be pertinent to mention that Respondent -1 generating units were operating and power was being sold to Appellant Board at 33 kV. It was because of Clause 4.1.2 of State Commission's grid Code notified on 30.12.2006, Respondent -1 had to upgrade evacuation system to 132 kV. This upgradation from 33 kV to 132 kV was because of its generating capacity was more than 9 MW. Its startup power requirement was only 11 kVA for which existing 33 kV line was adequate. On this ground also 132 KV line in question is a 'dedicated transmission line' to evacuate power from generating station of Respondent -1 and not a 'service line' to meet startup power requirement.
55 Thus the line in dispute is a 'dedicated transmission line' in terms of section 10 of the Electricity Act 2003. Accordingly, it has to operated and maintained by the Respondent -1. Page 46 of 55
Appeal no. 166 of 2010 56 Next question for consideration is to whether the Appellant is entitled for supervision charges for supervision of proper synchronization of generator with the grid through its own technical experts to avoid mishaps during synchronization as far as possible.
57 The issue had been dealt with in detail by the State Commission in its impugned order dated 29.10.2009. The findings of the State Commission are as under:
4. The argument of the petitioner was heard in length.
In the matter of contention of petitioner that as per clause 6.9 of Commission order dated 10.08.07, 15% supervision charge is payable in both cases either the extension work is done by the CSEB or by generator, we refer clause 6.9 of our order dated 10.08.07 passed in petition No. 40 of 2006 (M) in the matter of approval of miscellaneous and general charges under sections Page 47 of 55 Appeal no. 166 of 2010 43, 45 and 46 of the Electricity Act, 2003 which is shown as follows:
"The Commission's views in respect of levy of 15% supervision charges have been dealt with para 6.7. Here the asset is created by the consumer and handed over to the Board. The consumer incurs the cost of material and labour. Thus, there appears justification in charging of supervision charge of 15% on cost of material and labour. This practice is also being followed for many years in the Board. The Commission approves supervision charges at 15% on the cost of estimate of work approved by the Board including cost of material, labour etc."
Here it is clearly specified that levy of 15% supervision charges is applicable where the asset is created by the consumer i.e. the consumer incurs the cost on material and labour and hands over the Page 48 of 55 Appeal no. 166 of 2010 Board. Thus, in such case the ownership of the line remains with the Board and the responsibility of operation and maintenance of the line also remains with the Board. Here in instant case the asset i.e. the line is created by M/s R.R. Energy and they intend to own and maintain the line by themselves in accordance with the provision of section 10(1) of the Act, as per which the duties of a generating company shall be to establish, operate and maintain the dedicated transmission lines connected to the generating stations and the transmission system. The para 6.9 of our order dated 10.08.07 clearly state that payment of 15% supervision charges will be applicable where asset is created by consumer and handed over to the Board. Therefore in the instant case M/s R.R. Energy shall not be liable to pay 15% supervision charges on cost of work. Further, it is not specified in clause 6.9 of the order dated 10.08.07 that 15% Page 49 of 55 Appeal no. 166 of 2010 supervision charge also includes the estimation, general consumer consultancy and supervision towards synchronization of generating plant to the grid. The provision of levy of fee as decided by the CSERC exists in clause 4.2.1 of the CSERC Grid Code, 2007 for providing the grid connectivity by CSEB (now CSPTCL) from generators/CGP/Discom/open access customer etc. which may cover such services, but CSEB/CSPTCL have not submitted any proposal to the Commission to decide such fee. The clause 4.2.1 of CSERC Grid Code, 2007 read as "any generator/CGP/Discom/open access customer seeking to establish new or modified arrangement for connection to and/or use of the transmission system shall submit an application to the STU/Transmission licensee and deposit the prescribed fee as decided by CSERC." {Emphasis added} Page 50 of 55 Appeal no. 166 of 2010 58 We find that the above observations of the State Commission are well reasoned. Levy of 15% supervision charges are justified in cases where an asset is established by consumer and is handed over to licensee for operation and maintenance. The rationale for such view is that since the asset is to be maintained by licensee for whole of its life. Licensee has to replace any part of the asset which got defective during life time at his costs; he is entitled to claim supervision charges. Thus we do not find any reason to interfere with the findings of the State Commission. 59Summary of our findings.
I. Question number 1: Whether Respondent -1 (R.R. Energy) has committed any wrong by approaching the State Government for approval under section 68 of the Electricity Act 2003 pending Appellant Board's approval for construction of its line? Page 51 of 55
Appeal no. 166 of 2010 Our answer is this: The Respondent -1 ( R.R. Energy) has correctly met with requirements of the Act and had not done any wrong by obtaining the State Government's approval under section 68 of the Act.
II. Question no 2: Whether a generating company can also be termed as a consumer only because it would be drawing 'startup power' from grid occasionally?
Our answer is this: A generator requiring 'startup up power' from the grid occasionally cannot be termed as a consumer.
III. Question no 3: Whether line in question is a 'dedicated transmission line' of generating company for evacuation of power from its generating station or is a 'service line' for meeting the requirements of a consumer?
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Appeal no. 166 of 2010 Our answer of this question is this: The line in dispute is a 'dedicated transmission line' in terms of section 10 of the Electricity Act 2003. Accordingly, the line has to be operated and maintained by the Respondent -1 (R.R. Energy). IV. Question No. 4. Whether the Appellant is entitled for supervision charges for supervision of proper synchronization of generator with the grid through its own technical experts to avoid mishaps during synchronization as far as possible?
Our answer is this: The levy of 15% supervision charges are justified in cases where an asset is established by consumer and is handed over to licensee for operation and maintenance. In such cases the asset is to be maintained by licensee for whole of its life including replacement any defective part of the asset during life time at his costs. In the present case Page 53 of 55 Appeal no. 166 of 2010 line is to be operated and maintained by the Respondent -1. There is no justification for supervision charges.
45. In view of our above findings, we do not find any ground to interfere with the impugned order passed by Chhatisgarh State Commission dated 29.10.2009.
46. Hence, this Appeal being devoid of merit is dismissed.
However, there is no order as to cost.
47. Pronounced in the open court today, the 24th May, 2011.
(V J Talwar) (Justice M Karpaga Vinayagam)
Technical Member Chairperson
INDEX : REPORTABLE/NON-REPORTABLE
np
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Appeal no. 166 of 2010
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