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In this context, the supply of electricity generated by the MPP to the identified consumers was allowed.

We, may, however, notice that at a later stage the capital costs invested for the said purpose was raised to Rs.250 crores.

By G.O. Ms. No.152 dated 29th November, 1995 the terms and conditions of setting up of MPPs were laid down, some of which read thus :-

"3. Energy from the mini power plants can be supplied to identified consumers using either Andhra Pradesh State Electricity Board's existing distribution network of setting up a dedicated transmission after obtaining a licence under section (3) of the Indian Electricity Act, 1910. In the case of the former, Andhra Pradesh State Electricity Board may on request, lease out the distribution net work to the developer. Detailed arrangements like lease, rent etc., will be worked out on mutually acceptable terms between the Andhra Pradesh State Electricity Board and the Mini Power plant developers. Similar arrangement can also be finalised for the dedicated net works established by Mini Power Plant developers so as to confirm to statutory requirement.

6. In the event of the mini power plants generating power in excess of the requirement of their consumers, the same can be purchased by the Andhra Pradesh State Electricity Board. Such purchases by the Andhra Pradesh State Electricity Board may be upto 15% of individual Mini Power Plant capacity. The Andhra Pradesh State Electricity Board may also purchase power beyond 15% of the Mini Power Plant capacity, at Andhra Pradesh State Electricity Board's option without conferring any pre-emptive right of sale on the Mini Power Plant. The price for supplies made to the Andhra Pradesh State Electricity Board will be weighted average price of purchase of power made by the Andhra Pradesh state Electricity Board from Central and other State Electricity Enterprises on a monthly basis. Settlement of accounts will be on a monthly basis. The above procedure would be in force upto the end of December 2000 AD and would be subject to review thereafter.

"(v) Copies of the supply agreements entered into with the identified consumers should be supplied to the APSEB. The agreement with the APSEB for wheeling shall reflect the conditions in G.O.Ms. No.152 dated 29.11.1995 besides other conditions."

At paragraph 14 of the said order, the Commission recorded that various Associations of the officers of the Andhra Pradesh State Electricity Board inter alia submitted that third party right should not be allowed as it affected the financial viability of the main licensee, APTRANSCO, apart from the fact that they should not be permitted to generate power with residual fuel as the same is too costly for the purchase by the grid. It was also noted that third party sale should not be allowed as MPPs would not suffer Transmission and Distribution losses which the Licensee suffers and the Tariffs of the Licensee for industrial consumers include considerable cross-subsidies.

From the order dated 4th May, 2001 it appears that APSEB Engineers' Association and Assistant Engineers' Association, APSEB were heard. The main contention appears to have been advanced was as to whether MPPs should be allowed to generate power with residual fuel. The Commission noticed that out of 31 MPPs permission granted to 12 were cancelled. Out of 19, LVS Power Ltd. survived.

It noticed that some of the MPPs changed their capacities. It furthermore took notice of the fact that LVS had already drawn moneys from the financiers and the extension granted by GOAP in their case was to expire on 30th April, 2001.