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3.6 The biomass power plants of Amreli and Junagadh Power Projects, the Appellants achieved Appeal no. 132 of 2012 & IA nos. 247 & 248 of 2012 Appeal no. 133 of 2012 & IA nos. 249 & 250 of 2012 commercial operation on 1.3.2011 and 22.5.2011 respectively.

3.7 Subsequently, the Appellants filed a Petition being no. 1114 of 2011 & 1113 of 2011 respectively before the State Commission requesting for re-determination of price of biomass fuel in view of the significant hike in the market price of biomass fuel and implementation of the order dated 7.2.2011 passed by the State Commission for increase in tariff for their projects which have air cooled condensers. 3.8 The State Commission passed the common impugned order dated 10.5.2012 rejecting the prayer of the Appellants with regard to re-determination of price of biomass fuel in view of hike in the price of biomass fuel. However, the State Commission directed to amend the PPA in view of increase in tariff on Appeal no. 132 of 2012 & IA nos. 247 & 248 of 2012 Appeal no. 133 of 2012 & IA nos. 249 & 250 of 2012 account of use of air cooled condenser in the power plants of the Appellants in accordance with its order dated 7.2.2011 passed in the case of Abellon Clean Energy.

(ii) In the tariff order dated 17.5.2010, it was noted that there was no reliable data regarding fuel cost and the market of biomass was unorganized.
(iii) In the tariff order dated 17.5.2010, the Central Commission's Regulations of 2009 for renewable energy sources were considered. The Central Commission's Regulations of 2009 for renewable sources of Appeal no. 132 of 2012 & IA nos. 247 & 248 of 2012 Appeal no. 133 of 2012 & IA nos. 249 & 250 of 2012 energy for biomass power plants indicated the biomass price for various States. Price for Gujarat is not specifically mentioned but for 'other States' which would also cover Gujarat, the price of biomass was specified as Rs. 1685 per MT for the FY 2009-10 with choice to project developer to either opt for escalation of 5% per annum or escalation to be given as per the formula specified in the Regulations. The State Commission after considering the objections and suggestions of the stakeholders decided price of Rs. 1600/MT for the FY 2010-11 for bio-mass fuel with 5% escalation per annum for a period of 20 years in the generic tariff order dated 17.5.2010, even though it was noted in Appeal no. 132 of 2012 & IA nos. 247 & 248 of 2012 Appeal no. 133 of 2012 & IA nos. 249 & 250 of 2012 the tariff order that there was no reliable data available regarding biomass price and the market of biomass fuel was unorganized.

(B) The State Commission in the impugned order has held that availability of fuel and other parameters is the responsibility of the Project Developers. While we agree that arranging the supply of fuel is the responsibility of the project developers, the price of fuel is uncontrollable factor and will vary depending on the demand and supply situation in the market which is beyond the control of the Appellants. In fact the variable cost of fossil fuel fixed power stations is Appeal no. 132 of 2012 & IA nos. 247 & 248 of 2012 Appeal no. 133 of 2012 & IA nos. 249 & 250 of 2012 determined at the prevailing price of fuel with a provision of adjustment in terms of Fuel Cost Adjustment formula specified by the State Commission. Such adjustment in tariff on account of variation in fuel price is also admissible under Section 62(4) of the Electricity Tariff. Accordingly the fossil fuel based power stations are being compensated according to change in actual landed price of fuel at the power station. In the present case the State Commission provided for fuel cost adjustment by providing for an annual escalation of 5% per annum which has subsequently been found to be inadequate. It is submitted by the Appellants that the price of biomass since the order dated 17.5.2010 has increased by 50% to 100% for different types of biomass fuels available in the State. GEDA, the Nodal Agency of the State Government had also submitted that the data which Appeal no. 132 of 2012 & IA nos. 247 & 248 of 2012 Appeal no. 133 of 2012 & IA nos. 249 & 250 of 2012 also indicated the substantial increase in the price of biomass fuel. The Central Commission in its Regulations of 2009 decided the price of biomass fuel for various States and the price for 'other States' category in which Gujarat would fall was determined as Rs.1685/MT for the base year 2009-10. The Central Commission in the 2012 Regulations applicable to the subsequent control period has since revised the price of biomass fuel to Rs. 2476/MT for the FY 2012-13 which has to be escalated every year according to the formula specified in the Regulations. (C) It has also been reported that the biomass projects in the State are partially closed down and operating at an extremely Low Plant factor due to high price of biomass fuel which has affected their commercial viability.

Appeal no. 132 of 2012 & IA nos. 247 & 248 of 2012 Appeal no. 133 of 2012 & IA nos. 249 & 250 of 2012 (D) The State Commission determined the base price of biomass fuel and escalation factor in order dated 17.5.2010 considering the various submissions made by the stakeholder and fixed the price at Rs. 1600/MT with escalation of 5% per annum which in its wisdom would compensate for increase in price of biomass fuel for next 20 years. However, the price of biomass fuel in the market has gone up excessively as the actual price of biomass fuel will depend on the demand and supply in the market. Admittedly, the Appellants accepted the generic tariff determined by the State Commission and entered into long term PPAs with the Respondent no. 1 for 20 years. However, in the changed circumstances if the price of biomass fuel in the market has increased to the extent that it has resulted in partial closure of the biomass plants and threat for total closure, it is the duty of the State Appeal no. 132 of 2012 & IA nos. 247 & 248 of 2012 Appeal no. 133 of 2012 & IA nos. 249 & 250 of 2012 Commission to interfere with the tariff agreed in the PPA according to its generic tariff order dated 17.5.2010 and re-determine the fuel price and tariff.