Partly allowed

A.Nos. 73 of 2018 & 196 of 2019 of Mb Power (Madhya Pradesh) Ltd. v. Central Electricity Regulatory Commission & Ors.

APTEL6 Oct 2022A.Nos. 73 of 2018 & 196 of 2019

Case brief

AI extract

What is this about?

The Appellate Tribunal for Electricity (APTEL) allowed the generator's appeal regarding IDC and transmission charges but dismissed the utility's appeal concerning a directive to pay reverse charges and return a Bank Guarantee. The court ruled the transmission system was ready when startup power was drawn. The utility failed to coordinate LTA commissioning, warranting compensation and return of the

What did the court decide?

Petitioner (MBPL) appeal allowed; Impugned Order-141 set aside; Central Commission directed to pass consequential orders. Respondent appeal dismissed.

A.Nos. 73 of 2018 & 196 of 2019 of Mb Power (Madhya… — Company and Corporate | APTEL (2022)

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Appeal No. 73 of 2018 and 196 of 2019

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IN THE APPELLATE TRIBUNAL FOR ELECTRICITY (Appellate Jurisdiction)

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APPEAL NO. 73 OF 2018 &

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APPEAL NO. 196 OF 2019

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Dated: 06.10.2022

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Present: Hon’ble Mr. Justice R.K. Gauba, Officiating Chairperson Hon’ble Mr. Sandesh Kumar Sharma, Technical Member

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In the matter of:

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APPEAL NO.73 of 2018

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IN THE MATTER OF:

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MB Power (Madhya Pradesh) Ltd., Through Chairperson, 239, Okhla Industrial Estate Phase III, New Delhi-110020.

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… Appellant

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Versus

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Central Electricity Regulatory Commission, Through its Secretary, 3^rd & 4^th Floor, Chanderlok Building, Janpath, New Delhi-110001.

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Power Grid Corporation of India Limited, Through Chairman “Saudamini”, Plot No.2, Sector 29, Near IFFCO Chowk, Gurgaon (Haryana) – 122001

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Madhya Pradesh Power Trading Company Limited Shakti Bhawan, Rampur, Jabalpur- 482 008.

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Maharsahtra State Electricity Distribution Company Limited Through Chairman Prakashgad, 4^th Floor,

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Page 1 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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Andheri (East), Mumbai-400 052.

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Gujarat Urja Vikas Nigam Limited Through Chairman Sardar Patel Vidyut Bhawan, Race Course Road,

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Vadodra – 390 007.

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Electricity Department, Government of Goa, Through Managing Director, Vidyut Bhawan, Panaji, Near Mandvi Hotel, Goa – 403 001.

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Electricity Department of Daman & Diu Through Executive Engineer, Administration of Daman & Diu, Vidyut Bhwan, Near 66/11 KV Kachigam Sub-station, Somnath-Kachigam Road, Kachigam, Daman-396210.

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Electricity Department of Dadra Nagar Haveli Through Managing Director, Administration of Dadra Nagar Haveli Vidyut Bhawan, Near Secretariat, Amli, Silvasaal,

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Dadra and Nagar Haveli– 396 230.

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Chhattisgarh State Electricity Board Through Chairman P.O. Sunder Nagar, Dangania, Raipur, Chhattisgarh – 492 013.

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Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Limited Through Managing Director 3/54, Press Complex, Agra Bombay Road, Indore-452 008. … Respondents

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: Counsel for the Appellant (s) Mr. Sanjay Sen, Sr. Adv.

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Page 2 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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Mr. Gopal Jain, Sr. Adv. Mr. Hemant Sahai Ms. Molshree Bhatnagar Ms. Nipun Sharma Mr. Utkarsh Singh Ms. Shefali Tripathi Mr. Apoorva Misra Mr. Nitish Gupta Mr. Aditya K. Singh Mr. Shreshth Sharma Ms. Puja Priyadarshini Ms. Nived Veerapaneni Ms. Anukriti Jain Ms. Jyotsna Khatri Ms. Parichita Chowdhury Mr. Sakya Singh Chaudhari Ms. Samykya Mukku Mr. Anand Srivastava Ms. Gayatri Arpan Mr. Rajeev Lochan Mr. Abhishek Gupta Counsel for the Respondent (s) : Mr. M.G. Ramachandran, Sr. Adv. Ms. Ranjitha Ramachandran Mr. Shubham Arya Mr. Ravi Nair Mr. Nipun Dave Ms. Poorva Saigal Mr. Arvind Kumar Dubey Ms. Anushree Bardhan Mr. Pulkit Agarwal For Res2

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Mr. Nitin Gaur Mr. Varun K Chopra Mr. Gurtej Pal Singh For Res3

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APPEAL NO.196 of 2019

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IN THE MATTER OF: Central Transmission Utility of India Ltd., Through its Chief G.M.(Commercial)

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Page 3 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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having its registered office at: B-9, Qutub Institutional Area, Katwaria Sarai, New Delhi-110016. And Corporate office at: “Saudamini”, Plot No.2, Sector-29, Gurgaon – 122001. … Appellant

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Versus

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Central Electricity Regulatory Commission, Through its Secretary, 3^rd & 4^th Floor, Chanderlok Building, Janpath, New Delhi-110001.

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MB Power (Madhya Pradesh) Ltd., Through its Authorised Signatory, Corporate Office: 239, Okhla Industrial Estate Phase III, New Delhi-110020.

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Power Grid Corporation of India Limited, Through its Chief G.M.(Commercial) having its registered office at: B-9, Qutub Institutional Area, Katwaria Sarai, New Delhi-110016. And Corporate office at: “Saudamini”, Plot No.2, Sector-29, Gurgaon – 122001. … Respondents : Counsel for the Appellant (s) Ms. Suparna Srivastava Ms. Soumya Singh Ms. Astha Jain Counsel for the Respondent (s) : Mr. Basava Prabhu Patil, Sr. Adv. Mr. Hemant Sahai Ms. Rachita Herimath Mr. Geet Ahuja Mr. Shreshth Sharma Ms. Molshree Bhatnagar Ms. Nipun Sharma

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Page 4 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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Mr. Utkarsh Singh Ms. Shefali Tripathi Mr. Nitish Gupta Mr. Aditya K. Singh Ms. Puja Priyadarshini Mr. Nived Veerapaneni for R-2

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J U D G M E N T

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PER HON’BLE MR.SANDESH KUMAR SHARMA, TECHNCIAL MEMBER

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M/s MB Power (Madhya Pradesh) Limited (for short “Generator” or “MBPL”), the Appellant in the first captioned Appeal i.e. Appeal No. 73 of 2018 (in short “Appeal-73”) is a Generating Company, has filed the Appeal-73 against the order passed by Central Electricity Regulatory Commission (hereinafter referred to as “Central Commission” or “CERC”) on 15.12.2017 in Petition 141/TT/2015 (in short “Impugned Order-141”).

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Separately, the Central Transmission Utility of India Limited (for short “CTU”), the Appellant in the second captioned Appeal i.e. Appeal No. 196 of 2019 (in short “Appeal-196”) aggrieved by order dated 10.5.2019 (in short “Impugned Order-96”) passed by CERC in Petition No.96/MP/2018, filed the second captioned appeal i.e. Appeal-196.

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The Generator, MBPL has challenged the Impugned Order-141 on account of direction to pay IDC and IEDC charges for the period 08.08.2014 to 24.02.2015 and transmission charges for the period 25.02.2015 to 19.05.2015 to CTU whereas CTU has challenged the Impugned Order-96 assailing the direction of the Central Commission to pay reverse transmission

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Page 5 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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charges for the period 20.05.2015 to 26.08.2015 to MBPL, return of the Bank Guarantee (BG) of Rs. 60 crores along with bank charges towards extension of validity period of the BG.

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Considering that the two Appeals are arising out of dispute between the Generator and the CTU in lieu to the agreements signed between the two, the two Appeals are taken up for adjudication together.

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Description of Parties

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The MB Power (Madhya Pradesh) Limited (MBPL), the Appellant in the first captioned Appeal and 2^nd Respondent in the second captioned Appeal, is a generating company within meaning of sub-section (28) of Section 2 of the Electricity Act, 2003 and has established a 1200 MW (2x600 MW) coal based thermal power project in Anuppur district in Madhya Pradesh.

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The Central Transmission Utility (CTU) has been carved out of the Power Grid Corporation of India Ltd. (“PGCIL”) along with the functions directly related to the dispute herein and the change of name of the Respondent and Appellant in the two captioned Appeals has been allowed from PGCIL to CTU as the Respondent in the first captioned Appeal and Appellant in the second captioned Appeal, has been entrusted with the functions of ensuring development of an efficient, coordinated and economic system of Inter-State Transmission lines for smooth flow of electricity from

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Page 6 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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generating stations to the load centers and providing non-discriminatory open access to generators and licensees on payment of transmission charges.

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It is noted here that during the period of dispute the function of CTU was vested with PGCIL, accordingly the correspondences made and referred by the Generator were addressed to PGCIL, however, after the filing of the appeal, the CTU was carved out from PGCIL.

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The Central Electricity Regulatory Commission, Respondent No. 1 is a statutory body under Section 76 of the Electricity Act, 2003 and has been vested with the powers to adjudicate disputes under Section 79 of the Electricity Act, 2003 between a generating company and a licensee as defined under the Electricity Act, 2003.

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PGCIL, Respondent no. 3 in the second captioned Appeal, is a government company within the meaning of Companies Act, 1956. In exercise of its power under sub-section (1) of Section 38 of the Electricity Act, 2003, the Government of India has declared PGCIL to act as Central Transmission Utility (hereinafter referred to as “CTU”) before bifurcation into PGCIL and CTU.

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Respondent nos. 3 to 10 in the first captioned Appeal are the beneficiaries of the Generator.

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Page 7 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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Factual Matrix

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The Generator and the CTU entered into two agreements namely Transmission/ Connectivity Agreement and the Bulk Power Transmission Agreement (BPTA) for the Long Term Access (LTA) for evacuation of power from the 1200 MW Thermal Generating Station set up by the MBPL, the Generator. The evacuation system for transmission of power from the Generating station to the 765/400 kV Jabalpur pooling point was commissioned by PGCIL as “MB TPS – Jabalpur Pooling Station 400 kV D/c (Triple) line” (hereinafter the “Dedicated Transmission System” or “the Transmission Asset”), for which MBPL shall bear the full transmission charges.

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On 25.02.2010, the Appellant had applied simultaneously for Connectivity & Long-Term Access (LTA), against which on 19.04.2010, CTU granted Connectivity with effect from 01.02.2013 and LTA with effect from 01.08.2013, identifying the said Transmission Asset as a part of Inter-State Transmission System, for evacuation and transmission of power from the Generating Station of the Appellant to its beneficiaries. As per the LTA sought for, 200 MW is proposed to be evacuated to the Western Region (WR) and 192 MW to the Northern Region (NR) beneficiaries, balance power is proposed to be supplied to Government of Madhya Pradesh (GoMP) and for short term sale.

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MBPL vide the said letter of 25.02.2010 has requested as under:

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Page 8 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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“Dear Sir,

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As you are aware that we are developing a 1200 MW Coal Based Thermal Power Plant in the District Anuppur of Madhya Pradesh, for which we had already applied for Long Term Open Access vide our application dated 06^th Jan 2009 along with the requisite fee of Rs. 1 Lac and subsequent consultancy charges of Rs. 22 Lacs (approx.) dated 09^th May 2008.

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In line with the “Central Electricity Regulatory Commission (Grant of Connectivity, Long-Term Access and Medium-Term Open Access in Inter-State and related matters) Regulations, 2009”, we hereby apply for “Grant of Connectivity in ISTS” and “Grant of Long-Term Access to ISTS” in the required format. As per the Clause #31 of the “Detailed Procedure on grant of Connectivity, Long-Term Access and Medium-Term Open Access” issued by CERC dated 31-Dec-2009 which outlines “Treatment of Present Long-Term Open Access application already made to CTU”, we are not required to pay either the application fees or Bank Guarantee of Rs. 10,000/- per MW. Accordingly, we are submitting the following documents:

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For connectivity to ISTS

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1) Application of LTA to ISTS in the stipulated form (FORMATLTA-2)

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2) Sworn in affidavit per the format given at FORMAT-LTA-1

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Page 9 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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For LTA to ISTS

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1) Application for Connectivity to ISTS in the stipulated form (FORMAT-CON-2)

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2) Information required to be submitted with the application for connectivity (along with the supporting documents)

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3) Sworn in affidavit per the format given at FORMAT-CON-1. We request you to kindly process our applications.”

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(Emphasis supplied)

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Subsequently, in response PGCIL confirmed the same vide letter dated 19.04.2010 stating as under:

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“Dear Sir

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We write with reference to your application for grant of connectivity and Long term Access dated 25.02.2010 for your MB TPS generation project (1200 MW) in Madhya Pradesh. In this regard, Intimation for grant of Connectivity and Long Term Access (LTA) is enclosed. It is to mention that connectivity and LTA is granted subject to the signing of requisite BPTA and fulfillment of other conditions as mentioned in the enclosed respective intimation format(s).

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In regard to the above grant of connectivity and LTA, applicant shall abide by all provisions of the CERC (Grant of Connectivity, Long-Term Access and Medium-term Open

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Page 10 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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Access in Inter-State transmission and related matters) Regulations, 2009.

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Thanking you,”

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(Emphasis supplied)

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From, the above, it can be seen that the two agreements have been proposed and accepted through common request letter by the Generator and response letter by PGCIL, thus, need to be read together, the same shall be referred in foregoing paragraphs.

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In accordance with the above correspondence, the Transmission Agreement was executed on 14.06.2010 and the Bulk Power Transmission Agreement (BPTA), to provide LTA to MBPL, on payment of transmission charges, was signed on 17.06.2010 between the Generator and PGCIL. In compliance to the agreements entered upon, the Generator, on 10.07.2010, furnished the Bank Guarantee of rupees 60 crores for the 1200 MW installed capacity in favor of PGCIL in its capacity as a CTU.

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Further, the Western Regional Load Despatch Centre (WRLDC), on 13.11.2013, communicated to both PGCIL and MBPL, a Metering Scheme, in accordance with the Clause 6.4.21 of the Indian Electricity Grid Code, 2010 for the subject Transmission Asset for which the Scheduled Date of Commissioning (SCOD) was 19.09.2013. As per the Metering Scheme 07 SEMs were required to be installed.

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Page 11 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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On 18.01.2014, the Generator signed a long-term Power Purchase Agreement (PPA) with Uttar Pradesh for supply of 361 MW from its Generating Station, effective from 30.10.2016 for which Generator vide letter dated 21.01.2014, requested PGCIL to formalize the LTA of 361 MW to UP from the LTA granted quantum of 392 MW, and later on the Generator vide its letter dated 19.12.2014 requested PGCIL to prepone the date of LTA to 01.03.2015. It is noted here that the original agreement provided LTA effective from 01.08.2013 for 392 MW consisting of 200 MW for beneficiaries of WR and 192 MW for the beneficiaries of NR.

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In accordance with the Metering Scheme as specified by the WRLDC, PGCIL installed 02 nos. of SEMs out of required number of 07 SEMs, and on 31.07.2014, the Chief Electrical Inspector (CEI) issued a certificate for ‘AntiTheft Charging’ of the Transmission Asset under Regulation 43 of the CEA Regulations.

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Immediately, thereafter, the Generator, on 02.08.2014, requested compliance by PGCIL towards the required procedural, statutory and regulatory provisions etc. for declaration of COD of the Transmission Asset, however, only on 04.08.2014, after repeated communications PGCIL realized the shortcomings inter-alia installation of 7 nos. of SEMs and accordingly, vide its e-mail, PGCIL, for the first time, raised the demand on the Generator for the cost of 07 SEMs. The request was made for the first time by PGCIL even to the fact that WRLDC informed the Generator and the PGCIL about

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Page 12 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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the required metering scheme in November, 2013 as noted in the preceding paragraphs.

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Thereafter, PGCIL vide its letter dated 08.08.2014 declared the Date of Commercial Operation (in short “DOCO” or “COD”) of the Transmission Asset without the installation of required number of SEMs and separately, on 09.08.2014, within 5 days of raising of the demand towards the cost of 07 SEMs, PGCIL vide its e-mails revised the cost of these SEMs, subsequently, on 13.08.2014, on receipt of e-mail dated 09.08.2014, the Generator made entire payment towards the cost of 7 nos. SEMs to PGCIL.

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On 16.08.2014, PGCIL provided meter readings to WRLDC through the 2 nos. SEM installed, being aggrieved, the Generator, on 13.10.2014, again raised the issue of non-installation of required 07 SEMs before the Central Commission, further, on 01.11.2014, the Generator once again requested PGCIL to install 07 SEMs and only on 07.11.2014, PGCIL installed 7 SEMs as per the WRLDC Metering Scheme and 10.11.2014, upon installation all SEMs, PGCIL provided the information to WRLDC, on the basis of which WRLDC issued a certificate of charging of the Transmission Asset w.e.f. 08.08.2014.

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It is important to note here that WRLDC issued the certificate of charging of the Transmission Asset retrospectively, for the period for which the meter reading of the 7 nos. SEMs was not available, if the requirement of

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Page 13 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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installation of 7 nos. of SEMs was not there, the certificate of charging by WRLDC should have been issued earlier i.e. immediately after 08.08.2014, the DOCO declared by PGCIL or by 16.08.2014 when PGCIL provided meter readings to WRLDC through the 2 nos. SEM installed.

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As already noted, the request of the Generator vide its letter dated 19.12.2014 to prepone the date of LTA to 01.03.2015, PGCIL declined to accept the same as it has failed to commission the necessary Transmission System required for the LTA, as agreed in the BPTA, as per the schedule contained in the agreement wherein the date of LTA was 01.08.2013 and indicated that the expected date of commissioning of the Transmission System as December, 2015, the Generator also informed WRLDC on 31.12.2014 regarding preponement request, however, the request as was declined by PGCIL (now CTU) for preponement of its LTA and informing that the LTA has been granted subject to availability of common Transmission System which, inter alia, includes Gwalior-Jaipur 765 kV S/c (2^nd ) which is facing severe Right of Way (RoW) issues for which the PGCIL is making all out efforts to resolve the same, also informed that its second application for LTA of 200 MW to NR (with UP as beneficiary of 71 MW with target region NR) is under process for which a comprehensive scheme for transfer of power from WR to NR is being evolved. It is important to note here that the PGCIL granted Connectivity and LTA with effect from 01.02.2013 and 01.08.2013 as per the agreement.

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Page 14 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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On 25.02.2015, the Generator started drawing start up power and also injecting infirm power into the grid, resulting into use of the Dedicated Transmission System, subsequently, the first unit of the generating station was commissioned on 20.05.2015.

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The Gwalior-Jaipur 765 kV S/c line, which is a part of the High Capacity Power Transmission Corridor (HCPTC) corridor for power evacuation from IPP projects in Orissa is commissioned in August, 2015, as required to be used for evacuation of power from the generating station of MBPL against the LTA approved. Accordingly, on 19.8.2015, PGCIL operationalized the subject LTA with the commissioning of the Gwalior-Jaipur 765 kV S/c (2^nd line) and Jaipur-Bhiwani 765 kV S/c line. PGCIL submitted that expected commissioning date for HCPTC was December, 2015, however, there was no amendment made in the agreement or acceptance of the date by MBPL.

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Thereafter, the PGCIL filed Petition No.141/TT/2015 before the Central Commission seeking approval of transmission tariff for the connectivity system i.e. “MB TPS (Anuppur)-Jabalpur Pooling Station 400 kV D/c (triple snowbird) line” for tariff block 2014-19 under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 claiming its Commercial Operation Date (COD) as 8.8.2014, which is one of the issues under dispute in the two captioned Appeals.

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Page 15 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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The Generator, in Appeal no. 73 of 2018, has challenged the decision of the Central Commission vide the Impugned Order-141 on the following issues:

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(i) Declaring the commissioning of the Transmission Asset on 08.08.2014 and DOCO on 25.02.2015, directing the Appellant to pay IDC & IEDC to PGCIL from 08.08.2014 to the DOCO (25.02.2015) of the Transmission Asset.

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(ii) Directing the Generator to pay transmission charges in relation to the Transmission Asset from 25.02.2015 to 19.05.2015.

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The CTU, in Appeal no. 196 of 2019, has challenged the decision of the Central Commission vide the Impugned Order-96 on the following issues:

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(iii) Directing CTU to pay transmission charges to the Generator from 20.5.2015 till 26.8.2015 for the period for which LTA has been delayed.

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(iv) CTU to return the bank guarantee of Rs.60 crore (subsequently reduced to Rs.30 crores) to the Generator within 15 days of issuance of the Impugned Order.

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Appeal No. 73 of 2018 and 196 of 2019

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(v) CTU to reimburse the bank charges paid by the Generator to the issuing bank towards extension of validity period of the bank guarantee beyond 20.11.2015 till the date of release of the said bank guarantee.

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The important dates including the effective dates of the Connectivity and the LTA as per the two agreements signed by the Generator and the PGCIL are:

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a. Date of application by the Generator for grant of Connectivity and LTA is 25.02.2010,

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b. Date of confirmation by PGCIL, subject to directions given, is 19.04.2010,

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c. Grant of Connectivity w.e.f. 01.02.2013 as per Transmission Agreement

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d. LTA w.e.f. 01.08.2013 as per the BPTA.

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However, the Transmission network to be commissioned by PGCIL for connectivity of the Generator to the pooling station (Jabalpur sub-station) and the LTA was delayed, the date of commissioning and DOCO for the Dedicated Transmission System for connectivity as declared by PGCIL or as approved by the Central Commission in under challenge by the Generator, on the other side, the COD of the Generator was also delayed.

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Analysis & Observations

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Page 17 of 49

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Appeal No. 73 of 2018 and 196 of 2019

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It is worth noticing, before proceeding further, that the two agreements have been signed between the identical parties i.e. MBPL, the Generator and the PGCIL, subsequent to single application made by the Generator to PGCIL on 25.02.2010 and confirmed by PGCIL through the single confirmation letter dated 19.04.2010 inter-alia directing the Generator to sign the two said agreements. There cannot be any dispute that the purpose of the agreements is to evacuate the power from its generating station to its beneficiaries. The subject and the purpose of the application of the Generator and confirmation by the PGCIL is “Grant of Connectivity and Long Term Access (LTA) for the 1200 MW generating project being set up by MBPL in Madhya Pradesh”. The power generated was supposed to be evacuated for supply to Government of Madhya Pradesh (GoMP), the beneficiaries under LTA and sale through short term.

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The disputes raised by the Generator was regarding the date of commissioning and COD of the Dedicated Transmission Asset, the availability of the LTA and the related charges for the Dedicated Transmission Asset, the LTA, accordingly, it is important to note the contents of the two agreements, the role of the parties under the agreements and the interrelation/dependence of the said agreements. The Connectivity agreement was signed for the Generating capacity of 1200 MW with effective date from 01.02.2013 (evacuation capacity for 1122 MW, reduced due to auxiliary consumption) against the scheduled date of commissioning of Unit-1 of the Generating Station as on 01.08.2013 and on 01.12.2013 for Unit-2, through 400 kV transmission system to be built by PGCIL whereas the BPTA was signed for supply of power to the tune of 392 MW for 25 years starting from

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Appeal No. 73 of 2018 and 196 of 2019

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01.08.2013 with target beneficiaries as Western Region (WR) and Northern Region (NR).

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Additionally, the Generator brought our attention to the relevant provisions of the 2014 Tariff Regulations, whereby, a transmission asset can be declared operational / commissioned, if the following is accomplished:

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i. The transmission asset is in ‘regular service’;

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ii. The transmission asset has achieved ‘successful trial-run operation’;

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iii. Successful charging of the transmission asset for 24 hours at continuous flow of power, with requisite metering system along with protection system in service; and

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iv. Concerned Regional Load Despatch Centre (“RLDC”) has issued certificate endorsing ‘successful trail-run operation’.

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The Generator, further, submitted that in addition to the aforementioned mandatory compliances under 2014 Tariff Regulations, the Central Electricity Authority (“CEA”), which has been statutorily vested with inter alia powers and functions to specify technical standards and safety requirements and conditions for installation of meters vide its Central Electricity Authority (Installation and Operation of Meters) Regulations, 2006 (“CEA Metering Regulations”) has laid down that:

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Appeal No. 73 of 2018 and 196 of 2019

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a) Installation of Meters by transmission licensee / generating company is mandatory;

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b) Number of Meters to be installed will be governed by Regulation 7, which in the present case has been notified as 07 SEMs as per the scheme notified by WRLDC.

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Also added that CEA (Measures relating to Safety and Electric Supply) Regulations, 2010 (“CEA Safety Regulations”) mandates that prior to commencement of supply of power, a certificate under Section 43 of the CEA Safety Regulations will be obtained, the Respondent – PGCIL has failed to comply with the aforementioned statutory and regulatory mandates and the Central Commission, has regardless allowed COD and tariff for the transmission asset in utter disregard to the settled law.

¶153

The relevant Regulation of 2014 Tariff Regulations is quoted as under:

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“CHAPTER – 2

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GENERAL

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4. Date of Commercial Operation: The date of commercial operation of a generating station or unit or block thereof or a transmission system or element thereof shall be determined as under:

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(3) Date of commercial operation in relation to a transmission system shall mean the date declared by the transmission licensee from 0000 hour of which an element of the transmission system is in regular service after successful trial operation for

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transmitting electricity and communication signal from sending end to receiving end:

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Provided that:

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26. where the transmission line or substation is dedicated for evacuation of power from a particular generating station, the generating company and transmission licensee shall endeavour to commission the generating station and the transmission system simultaneously as far as practicable and shall ensure the same through appropriate Implementation Agreement in accordance with Regulation 12(2) of these Regulations:

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(ii) in case a transmission system or an element thereof is prevented from regular service for reasons not attributable to the transmission licensee or its supplier or its contractors but is on account of the delay in commissioning of the concerned generating station or in commissioning of the upstream or downstream transmission system, the transmission licensee shall approach the Commission through an appropriate application for approval of the date of commercial operation of such transmission system or an element thereof.”

¶164

(Emphasis supplied)

¶165

However, it is important to take cognizance of the Proviso (clause (ii)) to Regulation 4 of the Tariff Regulation 2014 as placed before us by the Generator, as per the Proviso, in addition to the provisions as submitted by the Generator, if the Transmission Licensee is prevented from regular service

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Appeal No. 73 of 2018 and 196 of 2019

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on account of the delay in commissioning of the generating station, the Transmission Licensee shall approach the Commission (the Central Commission in the instant case) for approval of the date of commercial operation of such transmission system or an element thereof. Accordingly, PGCIL approached the Central Commission seeking relief in the matter as there was a delay on the part of Generator to commission the Generating Station.

¶169

However, the Generator also argued regarding the applicability of the Certificate issued by the Chief Electrical Inspector (CEI), it was submitted that the CEI issued the certificate for anti-theft charging only under Regulation 43 of the Safety Regulations and not for commencement of supply of electricity as specified for supply of electricity, on being asked none of the contesting parties could produce the Certificate for commencement of Supply, even the start up power drawn by the Generator is based on this certificate only.

¶170

Therefore, at this stage we are refraining ourselves from commenting on the Certificate of commencement of Supply, considering that the Transmission Asset is in operation since 2015.

¶171

The WRLDC, as per the statutory provisions, also granted the certificate of charging from 08.08.2014, however, retrospectively through an order dated 18.11.2014 stating that the trial run on no-load conditions is completed on 07.08.2014. As already pointed out earlier, whether, the asset can be considered to be fully commissioned without installation of requisite number

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Appeal No. 73 of 2018 and 196 of 2019

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of meters is one of the disputes raised before us. The Central Commission vide the Impugned Order-141 has held that:

¶175

“25. The petitioner has prayed for approval of COD of assets covered in instant petition from 8.8.2014 under proviso (ii) of Regulation 4(3) of the 2014 Tariff Regulations, since the instant asset could not be put into regular service because of nonreadiness on the part of MBPL. CEA vide its certificate dated 31.7.2014 has granted approval for antitheft charging of the line. It is indicated in CEA certificate dated 31.7.2014 that generator end switchyard was not ready as on 31.7.2014. Further, RLDC has issued trial run certificate dated 18.11.2014 indicating that the trial run was completed on 7.8.2014 on “no load” due to non-availability of bays at MBPL end. This implies that the petitioner was ready on 8.8.2014 but could not declare commercial operation of the line due to nonavailability of bays at MBPL end.

¶176

26. The petitioner has been relying on the trial run certificate issued by RLDC showing that the trial run was completed on 7.8.2014 on “no load condition” due to non-availability of bays at MBPL end. In other words, the assets have not been put to use. Therefore, we are not inclined to consider COD of the assets with effect from 8.8.2014 under proviso (ii) of Regulation 4(3) of the 2014 Tariff Regulations as the asset was not put into regular service on that date. It is further noticed that neither the petitioner

¶177

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nor the respondent has submitted documents as regards date on which switchyard at MBPL end was ready for use. However, on perusal of the DSM accounts available on the website of WRPC, we notice from the account for the week 23.2.2015 to 1.3.2015 issued by WRPC vide letter dated 18.7.2016, that the MBPL started drawing start up power with effect from 25.2.2015 which is possible when the switchyard at MBPL end was ready. Accordingly, we hold that the asset was put to regular service on 25.2.2015 i.e. date of drawl of start-up power by MBPL and the COD of the instant transmission line is approved as 25.2.2015. The IDC and IEDC for the period from 8.8.2014 to 24.2.2015 shall be borne by MBPL since the line despite being ready from 8.8.2014 could not be put to commercial operation due to non-availability of bays at MBPL end.”

¶180

From the said order, it cannot be denied that the Dedicated Transmission System to be commissioned by the PGCIL was ready except the installation of the requisite number of SEMs on the part of the PGCIL, whereas, the Generating Station (the switchyard) was not ready on the part of the Generator as certified by the Central Electricity Authority (CEA), a statutory body under the Electricity Act 2003 vested with the statutory function of Electrical Inspection.

¶181

Also, the Central Commission has observed that “ Therefore, we are not inclined to consider COD of the assets with effect from 8.8.2014 under proviso (ii) of Regulation 4(3) of the 2014 Tariff Regulations as the asset was

¶182

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not put into regular service on that date”, as such the COD can be declared only once the Transmission Asset is put to regular service i.e. achieved its intended purpose of supplying power to the beneficiaries.

¶185

We are inclined to accept the COD as declared by the Central Commission for the Dedicated Transmission System on 25.02.2015, as the purpose of the said System is not only to evacuate power under the LTA but to service the electricity supply to GoMP and for short term sale, which could have been achieved if the Generating Station was ready, therefore the default on the part of Generator cannot be attributed to the PGCIL for the equivalent quantum as envisaged under the agreement(s).

¶186

At the same time, it is necessary to decide, whether the start up power or injection of infirm power in the grid can be called as equivalent to “regular service”. The two agreements signed between the contesting parties provides that the purpose of the two agreements signed in conjunction by the Generator and PGCIL is to evacuate the power generated from the Generating Station of MBPL and supplying it to the beneficiaries i.e. 392 MW under LTA (200 MW to WR and 192 MW to NR), 393 MW reserved for Govt of Madhya Pradesh and 392 MW for short term sale. If the two agreements are read together, the “regular service” for the Dedicated Transmission Asset is to evacuate power from the Generating Station to the pooling point and the “regular service” of the BPTA is to arrange transfer of the 392 MW generated from the generating station, quantum as specified under the LTA. Therefore, the purpose of the Transmission Asset is not limited to evacuation of power only for LTA beneficiaries, major share is to be evacuated for supply to GoMP and short term sale.

¶187

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¶189

It is also important to note the essence of the role of the PGCIL interalia the CTU under the provisions of the Electricity Act, 2003 (the “Act”). Undisputedly, CTU, the statutory body, constituted under section 38 of the Act has been vested with the responsibility of discharging all functions of planning and co-ordination relating to inter-state transmission system in addition to undertake transmission of electricity through inter-State transmission system. Accordingly, the PGCIL cannot evade its responsibility from coordinating and developing a Transmission Asset so as to achieve a target which is conducive to all including the generators and the consumers/ distribution licensees or any other beneficiary of its transmission asset.

¶190

Undisputedly, PGCIL/ CTU is bound by the statutory duty under section 38 of the Act to develop a most efficient, coordinated and economical system enjoying the powers vested with for undertaking not only transmission of electricity through inter-state transmission systems but also towards ‘planning and coordination’ in relation thereto, taking along the State Transmission Utilities (STUs), Central and State Governments, generating companies, Regional Power Committees (RPCs), Central Electricity Authority and other licensees (transmission, distribution licensees, etc ). However, in the present case, PGCIL/CTU has not scrupulously planned and coordinated its own activities for developing the Dedicated Transmission Asset and the HCPTC required for the LTA which subsequently, resulted into the dispute in hand and financial loss to the Generator as well as to the PGCIL itself.

¶191

On the other side the argument of PGCIL/CTU, citing the two agreements as independent agreements even to the fact that the two have

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been signed for the reasons as quoted in the application of the MBPL and the response thereof by the PGCIL, is not convincing. We are not inclined to accept the same.

¶195

Once the two agreements have been signed against the same application of the Generator and confirmed by PGCIL vide single letter, there cannot be any argument that the purpose of seeking connectivity and the LTA by the Generator is to supply power to its beneficiaries and any delay in any component of the two shall result into failure of supply of power by the Generator to its beneficiary, therefore, PGCIL cannot deny the fact that the Generator signed the agreement for the sole purpose of supplying power to its beneficiaries. Therefore, the two agreements have to be read together, as by providing mere connectivity, the power generated cannot be evacuated and supplied to the beneficiaries under the LTA, however, any quantum of power evacuated through the Dedicated Transmission System shall attract the appropriate transmission charges limited to such an extent.

¶196

Also, the “regular service” shall mean availability of the transmission system for evacuation and supply of power to the beneficiaries including the beneficiaries supplied power through the LTA, simple connectivity cannot serve the purpose of “regular service” if no power is evacuated and supplied to the beneficiaries.

¶197

Regarding the issue of readiness of the Dedicated Transmission System, we do not find any fault in the decision of the Central Commission, once certificate of charging even if for the purpose of Anti-Theft Charging has been issued by CEI, except to the fact that whether the transmission asset

¶198

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should be considered as “ready” from 08.08.2014 or from the date of issuance of certificate of charging by WRLDC on 18.11.2014. The Generator invited our attention to the judgment dated 02.07.2012 passed by this Tribunal in Appeal no. 123 of 2011, as under:

¶201

“20. Summary of our findings:

¶202

According to Tariff Regulations, the COD of a transmission line shall be achieved when the following conditions are met.

¶203

i) The line has been charged successfully, ii) its trial operation has been successfully carried out, and iii) it is in regular service.

¶204

The above conditions in the case of 400 kV Barh-Balia line were not fulfilled on 01.07.2010, the date on which COD was declared by the Respondent no.1. Merely charging of the line from one end without the switchgear, protection and metering arrangements being ready at the other end, even if not in the scope of works of the transmission licensee, would not entitle the line for declaration of commercial operation.

¶205

21. In view of the above, the Appeal is allowed, the impugned order is set aside and matter is remanded back to the Central Commission for redeterming the COD and tariff of 400 kV Barh-Balia double circuit line after hearing all concerned within 3 months of the date of this judgment. No order as to costs.”

¶206

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¶208

The Generator, assailing the COD, has also submitted that the Central Commission has failed to appreciate that drawl of start-up power by the Generator does not mean that the subject Transmission Asset was put to “r egular service ” , and declared COD on 25.02.2015 from the date of drawl of startup power, further added that the subject Transmission Asset was put to “r egular service ” only when the power generated from the associated Generating Project of the Generator started getting evacuated and transmitted to its beneficiaries, the Generator in the instant case has simultaneously applied for Connectivity as well as Long-term Open Access (LTA) on 25.02.2010, under the CERC (Grant of Connectivity & Long-Term Access) Regulations 2009, for end to end evacuation and transmission of power f rom its 1200MW (2X600MW) Anuppur Thermal Power Project, against the Connectivity to the grid along with the LTA, cumulatively, was granted to the Appellant on 19.04.2010, identifying end to end Transmission System for evacuation of power from the Generating Project of the Appellant to the beneficiaries. However, the argument of the Generator needs to be examined in the light of supply of power as anticipated under the agreements, which is as under:

¶209

Contrary to the submission of the Generator, the PGCIL submitted that the Generator on this connectivity line has imported up to about 20 MW of power from Jabalpur (from where it is connected to entire regional grid) and has availed the same for its start-up requirement and has also exported infirm

¶210

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power up to about 520 MW in to the grid 30tilizing this connectivity line, therefore, the Dedicated Transmission Asset was ready for connecting and supplying power to the beneficiaries other than the beneficiaries under the LTA.

¶213

The Central Commission vide the Impugned Order-141 has held that:

¶214

“30. We have considered submissions of petitioner and MBPL. We are not in agreement with MBPL that no liability towards payment of transmission charge should be levied on MBPL till August, 2015 as Annupur-Jabalpur D/C line could not have achieved the intended purpose for which it was constructed. We are of the view that the line under instant petition is dedicated line meant for evaluation of power from the generating station of MBPL for which PGCIL has granted Connectivity vide letter dated 19.4.2010 with the indicative date of operationalisation of connectivity as 1.2.2013. The said line is also indicated as connectivity line in Agreement dated 17.6.2011 between the petitioner and MBPL. Operationalisation of LTA depends on the availability of system strengthening in addition to the connectivity line included in the LTA Agreement. Only because some of the transmission lines covered under the System Strengthening have not been commissioned will not prevent the use of the connectivity line. In fact the connectivity line has been used to the extent of LTA operationalised with effect from 25.5.2015. Regulation 8(6) of the Sharing Regulations provides as under:-

¶215

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“(6) For Long Term Transmission Customers availing power supply from inter-State generating stations, the charges attributable to such generation for long term supply shall be calculated directly at drawal nodes as per methodology given in the Annexure-I. Such mechanism shall be effective only after commercial operation of the generator. Till then it shall be the responsibility of the generator to pay transmission charges.”

¶218

In terms of the above provision, the transmission charges for the connectivity lines from 25.2.2015 (date approved as COD of the transmission lines in this order) till the COD of the first unit of generating station of MBPL shall be borne by MBPL.”

¶219

It is clear that the Central Commission has held that the COD was achieved on 25.02.2015, date on which the Dedicated Transmission System was put to use due to drawl of startup power and injection of infirm power as the SCOD of the Generating Station was delayed, we are inclined to accept the said decision as the Dedicated Transmission System was ready to provide “ Regular Service ” of supplying the power to GoMP and for short term sale, as already observed that the purpose of the Dedicated Transmission System is not limited to the power evacuated under the LTA for 392 MW only, therefore, it cannot be construed that the “ Regular Service ” shall be achieved only when the power under the said LTA is supplied to the beneficiaries. On the other side, in the light of the judgment, it can also be construed that the asset was ready only on the date the requisite meters (SEMs) were installed by PGCIL and WRLDC issued the certificate of charging i.e. 18.11.2014.

¶220

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¶222

Therefore, the Central Commission is bound to pass the order accordingly, thereby making a balance against the regular service provided by the Transmission Licensee for evacuation and supply of power from the Generator for the purpose as specified in the Agreement.

¶223

Therefore, the contention of the Generator cannot be accepted, as held in the preceding paragraphs to the extent that the subject Transmission System has not achieved the “Regular Service” as it cannot be used for supplying power under the LTA, contrary to it, the Dedicated Transmission System is used for drawl of startup power and injection into the grid for supply to GoMP and for short term sale of power, if required.

¶224

We are satisfied that the Dedicated Transmission Asset has become operational, and is used for injection of power into the grid or for drawl of startup power required for commissioning of the Generating Station, therefore, the Transmission Licensee cannot be penalized for the delay on the part of the Generator in commissioning its project and achieving the COD.

¶225

Also, no asset can be used as freebees, therefore, appropriate charges are bound to be paid by the Generator, the issue is remitted to the Central Commission for review/ re-examination and decide in accordance with law to the extent that the Dedicated Transmission Asset was ready to the extent of evacuating the power generated to the pooling point but limited to the extent of supplying power to other beneficiaries except the beneficiaries under the LTA.

¶226

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¶228

Regarding the issue of reverse transmission charges levied on PGCIL, it is observed that CTU/ PGCIL has failed in its statutory duty by not ensuring proper coordination and construction of the two assets in synchronism and also failed to inform and take necessary action in matching with the commissioning of the Generating Station, as also observed by the Central Commission in its various orders including its order dated 13.12.2011 in Petition No. 154/MP/2011 and IA No. 17/2011 wherein it has repeatedly emphasized that in order to ensure optimum utilization of both generation and transmission capacities and to avoid stranded transmission assets, it is imperative for the transmission licensee to take up implementation of associated transmission system matching with the commercial operations of the Generation Project, so as not to burden the consumers with the transmission charges without getting benefit of the extra power.

¶229

We are inclined to take cognizance of the above as it is the statutory duty of the PGCIL/ CTU for exercising due diligence, proper coordination and planning in the implementation of transmission systems, therefore, it is the responsibility of PGCIL vested with the powers of the CTU to coordinate and implement the Transmission Systems under the two agreements.

¶230

On the other hand, PGCIL raised the issue of levying of reverse transmission charges by the Central Commission as the transmission system required for evacuating the power under the LTA was delayed on account of events due to force majeure .

¶231

It is noted in the foregoing paragraphs that the Connectivity of the Dedicated Transmission Asset cannot be treated as a separate and distinct

¶232

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activity from the grant of LTA for providing end to end connectivity for supplying power to the beneficiaries under the LTA also, therefore, the “regular service” could not have been achieved without first operationalizing the LTA by PGCIL thereby stranding transmission of electricity to the extent of 392 MW from the Generating Project of the Appellant.

¶235

The Central Commission vide Impugned Order-96 has held as under:

¶236

21. We have considered the submissions of the Petitioner and PGCIL. It is noticed that as per the LTA grant letter dated 19.4.2010, the start date for LTA was given as 1.8.2013. Further, the Annexure-1 of the LTA Agreement dated 17.6.2011 provides for commencement of 392 MW LTA from August 2013. Since in the instant case, LTA was granted with the system strengthening, PGCIL should have planned the commissioning schedule of system strengthening line as per the LTA commencement date granted to the Petitioner as per the LTA Agreement. Therefore, we are not inclined to accept the contentions of PGCIL.

¶237

22. Further, with regard to the scheduled commissioning of the transmission system associated with LTA granted by PGCIL to the Petitioner, we observe that Gwalior-Jaipur 765 kV S/c transmission line (G-J Line) is a part of downstream transmission system for operationalization of LTA granted to the Petitioner. We further observe that the Commission, in its order dated 25.4.2016 in

¶238

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Petition No. 422/TT/2014, determined the tariff for the GwaliorJaipur 765 kV transmission line and recorded the Schedule commissioning date of the line as 1.4.2014 and not December 2015 as contended by PGCIL, against the scheduled commissioning date of 1.4.2014, the line was commissioned only on 13.8.2015, with a time-overrun of 16 months and 12 days. The relevant portion of the order dated 25.4.2016 is extracted as under:

¶241

“Time Over-run

¶242

16. As per the investment approval dated 17.3.2011, the project was scheduled to be commissioned within 36 months from the date of investment approval. Hence, the assets were to be commissioned progressively upto 1.4.2014. The details of the actual date of commercial operation and time over-run in case of the instant assets is given below:-

¶243

Assets Name	SCOD as per IA dtd 17.3.201 1	Actual date of commercial operation	Delay in months
Asset-I	1.4.2014	1.4.2015	12 months
Asset-II		2.8.2014	4 months
Asset-III		24.11.2014	7 months and 23 days
Asset-IV		13.8.2015	16 months and 12 days
Asset-V		7.5.2014	1 month and 6 days

¶244

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23. From the above, it can be seen that Asset-IV (765 kV S/C Gwalior-Jaipur 2^nd circuit transmission line and bay extension of 765/400 kV Phagi (RVPN-Jaipur) Substation) was commissioned on 13.8.2015 with a delay of 16 months and 12 days. We observe that PGCIL signed revised BPTA with revised schedule of commissioning with IPPs of Odisha only when such system was linked with other generators. PGCIL should have signed the revised schedule with the Petitioner or such other generators who have been granted access through the said system, in terms of the agreement entered between them. PGCIL cannot unilaterally revise the date when the Petitioner has been granted LTA from the above transmission line.

¶247

24. In view of the above, we observe that PGCIL was required to commission the downstream transmission system associated with LTA granted to the Petitioner not later than 1.4.2014 and that there has been delay by PGCIL in commissioning of the transmission system from which the LTA was granted by PGCIL to the Petitioner.

¶248

25. We have perused the LTA Agreement dated 17.6.2011 signed between PGCIL and the Petitioner. Annexure-I of this LTA Agreement provides the quantum of LTA and date of Commencement of the LTA as under:

¶249

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¶251

26. We have also perused the LTA intimation for grant of LTA FORMAT-LTA-5. The relevant extract is extracted as under:

¶252

“9 Transmission System for LTA Details of transmission system enclosed at Annexure-1.

¶253

9a Date from which LTA is granted 01.08.2013* 9b Date upto which LTA is granted 31.07.2038

¶254

9c Implementing Agency for CTU i.e. POWERGRID transmission system required for LTA

¶255

27. We observe that under the LTA Agreement and LTA intimation letter, commencement date of LTA of 392 MW by PGCIL was August 2013. However, PGCIL was obliged to operationalize this 392 MW LTA not later than 1.4.2014 i.e. scheduled commissioning date of Gwalior-Jaipur 765 kV transmission line. In view of the above and also in accordance with our conclusions in the Issue No. 1 and Issue No 2 above, we observe that there has been delay in operationalization of LTA of 392 MW granted by PGCIL to the Petitioner.

¶256

28. Having observed that there had been a delay by PGCIL in operationalization of 392 MW LTA granted to the Petitioner, we now proceed to decide whether PGCIL is obliged to pay any

¶257

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charges to the Petitioner for such delay in operationalization of LTA of 392 MW granted to the Petitioner.

¶260

29. The Commission in Para 33 of the Order dated 15.12.2017 in Petition No. 141/TT/2015 has dealt with this issue as under:

¶261

“33. In terms of Clause 6(d) of the LTA Agreement dated 17.6.2011 and Annexure-4, the petitioner is required to make alternative arrangement for despatch of power from the generating station and in the event of delay in commissioning of the concerned transmission system from its schedule, transmission charges proportionate to the concerned LTA shall be paid by the petitioner. It is accordingly, directed that the petitioner and MBPL shall settle the issue of delay in operationalisation of LTA on account of delay in COD of the transmission lines covered under Annexure 4 of the LTA in terms of the LTA Agreement.”

¶262

30. Clause 6(d) of the LTA Agreement dated 17.6.2011 provides as under:

¶263

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Transmission Customer proportionate to its commissioned capacity (which otherwise would have been paid by the concerned Long Term Transmission Customer to POWERGRID) provided generation is ready and POWERGRID fails to make alternate arrangement for dispatch of power”

¶267

31. According to the Petitioner, as per the Commission’s directions in 141/TT/2015, it has raised a claim of 25,10,43,783/against PGCIL. However, PGCIL refused to pay the amount and comply with the directions of the Commission.

¶268

32. We notice that the Unit-1 (600 MW) of the Petitioner‟s Generation Project was ready as on 20.5.2015. However, PGCIL operationalized the LTA of 392 MW only on 26.8.2015. Thus, there has been a delay on the part of PGCIL from 20.5.2015 to 26.8.2015. Accordingly, we direct PGCIL to pay the applicable transmission charges for LTA of 392 MW from 20.5.2015 to 26.8.2015 to the Petitioner in terms of the Clause 6(d) of the LTA Agreement as directed by the Commission in its order dated 15.12.2017 in Petition No. 141/TT/2015. This Order not having been challenged by PGCIL has attained finality. We direct PGCIL to make payments within 15 days of issue of this Order.”

¶269

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¶271

As noted in the preceding paragraphs, it is noted that the date of LTA was 01.08.2013 as agreed between PGCIL and the Generator, the Central Commission is right in acknowledging that PGCIL is bound to provide the LTA from the agreed date and in case it was linked to system strengthening under HCPTC, the commissioning of system strengthening should have coincided with the LTA commencement date granted to the Petitioner as per the LTA Agreement.

¶272

We do not agree with the submission of PGCIL that as per the commissioning schedule the system strengthening was scheduled to be completed by December, 2015, the Central Commission in the above said quoted order has confirmed the date of commissioning as 01.04.2015 and not December, 2015, also noted that it was commissioned on 13.08.2015 with a time over-run of 16 months and 12 days.

¶273

It was also brought to our notice that the revised BPTA with revised commissioning schedule was signed with the IPPs of Orissa and other generators, however no such revised agreement was signed with MBPL, therefore, PGCIL is bound to comply with the original agreement and is liable to pay penalty in the form of compensation to MBPL for delay in grant of LTA.

¶274

Therefore, as per Clause 6(d) of the LTA Agreement dated 17.6.2011, PGCIL is bound to pay the proportionate transmission charges to MBPL. The relevant provisions for the sake of clarity is quoted as under:

¶275

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“6(d) In the event of delay in commissioning of the concerned transmission system from its schedule, as indicated in the Annexure-4 POWERGRID shall pay proportionate transmission charges to the concerned Long Term Transmission Customer proportionate to its commissioned capacity (which otherwise would have been paid by the concerned Long Term Transmission Customer to POWERGRID) provided generation is ready and POWERGRID fails to make alternate arrangement for dispatch of power”

¶278

We agree with the decision of the Central Commission to direct PGCIL to pay to the Generator (MBPL) applicable transmission charges for LTA of 392 MW from 20.5.2015 to 26.8.2015 in terms of the Clause 6(d) of the LTA.

¶279

The second issue raised by the PGCIL/CTU is regarding the direction of the Central Commission to CTU to return the bank guarantee of Rs.60 crore (subsequently reduced to Rs.30 crores) to the Generator within 15 days of issuance of the Impugned Order.

¶280

The Bank Guarantee was furnished by the Generator in compliance with clause 5(b) and 5(c) of the Transmission Agreement.

¶281

“5---

¶282

(b) In case MBPMPL fails / delays to utilize the connectivity provided or makes an exit or abandon its project. POWERGRID shall have the right to collect the transmission

¶283

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charges and/ or damages as the case may be in accordance with the notification/regulation issued by CERC from time to time. MBPMPL shall furnish a Bank guarantee from a nationalized bank for an amount which shall be equivalent to Rs.5 (five) Lakhs/MW as mentioned in the Detailed Procedure approved by the Commission, to partly compensate such damages. The bank guarantee format is enclosed as per FORMAT CON-7. The details and categories of bank would be in accordance with clause 2 (f) above. The Bank guarantee would be furnished in favour of POWERGRID within 1 (one) month of signing of this Agreement.

¶286

©This bank guarantee would be initially valid for a period upto six months of the scheduled date of commissioning of the Transmission system indicated at Annexure-2. The bank guarantee would be encashed by POWERGRID in case of adverse progress assessed during coordination meeting as per para 6 below. However, the validity should be extended by MBPMPL as per the requirement to be indicated during coordination meeting.”

¶287

As per the above quoted clauses, the Bank Guarantee is furnished against the default committed by the Generator by exiting or abandoning its project resulting into financial loss to PGCIL/ CTU, and extending right to PGCIL/CTU to collect charges or damages, as the case may be, against such default.

¶288

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¶290

Once the Generating Plant is commissioned and the associated transmission system become operationalized, the transmission charges are recovered through Letter of Credit (LC) in case of default for payment of transmission charges by the generator. The clause 6(b) provides that:

¶291

“(b)This bank guarantee would be initially valid for a period up to six months after the expected date of commissioning schedule of generating unit(s) mentioned at Annexure-1 (however, for existing commissioned units, the validity shall be the same as applicable to the earliest validity applicable to the generator in the group mentioned at Annexure-1). The bank guarantee would be encashed by POWERGRID in case of adverse progress of individual generating unit(s) assessed during coordination meeting as per para 7 below. However, the validity should be extended by concerned Long Term transmission customer(s) as per the requirement to be indicated during co-ordination meeting.”

¶292

The PGCIL/CTU was bound to return the Bank Guarantee once the Generating Project is commissioned, the Transmission System is put to use by the Generator and Transmission charges are paid by the Generator against the LC. In the instant case, the Transmission System achieved COD on 25.02.2015, and put to use from such date by the Generator which achieved COD on 20.05.2015. The Central Commissioned vide the Impugned Order-96 has observed that:

¶293

“--------

¶294

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41. From the above, it can be seen that the Commission had held that once the LC has been opened for the LTA granted, then the Bank Guarantee shall be returned. The applicant is not required to furnish Bank Guarantee and open LC for the same LTA quantum at the same time. Once the LTA is operationalized and LC is opened, the Bank Guarantee is required to be returned to the applicant.

¶297

42. We note that in Petition No.141/TT/2015 filed by PGCIL (the Respondent herein), the Commission vide its Order dated 15.12.2017 has held that the IDC and IEDC for the period from 8.8.2014 to 24.2.2015 shall be borne by MBPMPL, since the line despite being ready from 8.8.2014, could not be put to commercial operation due to non-availability of bays at MBPMPL end. In the same Order, the Commission has further held that the transmission charges for the period 25.2.2015 to 19.5.2015 shall be borne by MBPMPL. MBPMPL has stated that the decision of the Commission that MBPMPL would bear IDC and IEDC for the period from 8.8.2014 to 24.2.2015 and transmission charges for the period 25.2.2015 to 19.5.2015 has been appealed before the APTEL and the same is pending decision.

¶298

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¶300

43. The Respondent, PGCIL has stated that it has retained the BG due to nonpayment of these charges by the Petitioner amounting to about Rs. 30 crore and that if the Petitioner provides the payment security for this amount, PGCIL would release the BG of Rs. 60 crore after following the due process.

¶301

44. We have already observed above that PGCIL should have returned the BG latest by six months after commissioning of associated generation project i.e. by 20.11.2015. We note that the Order in Petition No.141/TT/2015 where the Commission has held that the IDC and IEDC for the period from 8.8.2014 to 24.2.2015 and transmission charges for the period 25.2.2015 to 19.5.2015 shall be borne by the Petitioner, has been issued only on 15.12.2017. In view of this, we do not find any merit in the contention of PGCIL that it has held the BG that was to be released by 20.11.2015 in view of an Order of the Commission which came more than two years later on 15.12.2017.

¶302

45. We, therefore, reject the contention of PGCIL and direct PGCIL to return the Bank Guarantee to the Petitioner within 15 days of issue of this order.

¶303

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Appeal No. 73 of 2018 and 196 of 2019

¶305

46. With regard to PGCIL‟s contention that the Petitioner is liable to pay it around Rs. 30 crore on account of IDC, IEDC and Transmission Charges for the period 8.8.2014 to 19.5.2015 as decided by the Commission it its order dated 15.12.2017 in Petition No. 141/TT/2015, it is noted that the Petitioner has challenged the above order before the Appellate Tribunal vide Appeal No. 73 of 2018, which is pending for adjudication. Further, the Appellate Tribunal, by way of its interim order dated 17.8.2018 has issued the following order :

¶306

“Order

¶307

In the meanwhile, both the parties are directed not to precipitate in the matter till the next day of hearing i.e.03.12.2018.”

¶308

47. In view of the above, we are not inclined to issue any direction with regard to the Petitioner’s liability of Rs. 30 crore on account of IDC, IEDC and Transmission Charges for the period 8.8.2014 to 19.5.2015.”

¶309

Page 46 of 49

¶310

Appeal No. 73 of 2018 and 196 of 2019

¶311

The observations of CERC are just and reasonable, we are obliged to accept the same, as such the order has merit on the issue of issuance of direction to PGCIL/CTU to return the Bank Guarantee.

¶312

The third grievance raised before us in Appeal no. 196 of 2019 filed by CTU is the decision of the Central Commission directing CTU to reimburse the bank charges paid by the Generator to the issuing bank towards extension of validity period of the bank guarantee beyond 20.11.2015 till the date of release of the said bank guarantee.

¶313

The Central Commission vide the Impugned Order-96 adjudicated as under:

¶314

“We have considered the submission of the Petitioner and PGCIL. The Petitioner has submitted that insistence of PGCIL to keep extending BGs is illegal whereas PGCIL has contended that BG needs to be kept alive in view of various liabilities of the Petitioner towards grant of connectivity and LTA. We have already concluded that PGCIL should have returned the BG latest by 20.11.2015. We have held that such demand of PGCIL was against the provisions of the Connectivity Regulations and the Detailed Procedure framed thereunder. The Petitioner had to pay bank charges in keeping the BG alive only because of insistence of PGCIL to extend the BGs. Having declared that the BGs should have been returned by 20.11.2015 by PGCIL, we find merit in contention of the Petitioner that the charges

¶315

Page 47 of 49

¶316

Appeal No. 73 of 2018 and 196 of 2019

¶317

borne by it for extension of the BGs should be reimbursed by PGCIL. Hence, PGCIL is directed to reimburse bank charges towards extension of validity period of the Bank Guarantee kept with the bank for issuance of the Bank Guarantee paid by the Petitioner beyond 20.11.2015 till the date of release of BG. The Petitioner, MBPMPL may claim the payment from PGCIL upon furnishing of documentary proof in this regard to PGCIL.PGCIL shall make payment within one month of receipt of claim.”

¶318

Once it is decided that the Bank Guarantee should have been returned by CTU / PGCIL, however, the non-compliance of the directions of the Central Commission regarding returning the Bank Guarantee is bad in law, as such decision of the Central Commission has merit in compensating the Generator against the bank charges incurred by the Generator in keeping the Bank Guarantee alive.

¶319

ORDER

¶320

For the foregoing reasons as stated supra, we are of the considered view that the first Captioned appeal filed by the Generator, (MBPL) i.e. Appeal no. 73 0f 2018 has merit and thus allowed.

¶321

The Appeal No. 196 of 2019 is devoid of merit and is disposed of as dismissed.

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Page 48 of 49

¶323

Appeal No. 73 of 2018 and 196 of 2019

¶324

The Impugned Order passed by Central Electricity Regulatory Commission on 15.12.2017 in Petition 141/TT/2015 is set aside to the extent as observed in the foregoing paragraphs.

¶325

The Central Commission is directed to pass necessary consequential orders in light of the observations and conclusions recorded by us.

¶326

PRONOUNCED IN THE OPEN COURT ON THIS 6^th DAY OF OCTOBER, 2022.

¶327

(Sandesh Kumar Sharma) Technical Member

¶328

(Justice R.K. Gauba) Officiating Chairperson

¶329

- REPORTABLE / NON REPORTABLE

¶330

pr/mkj

¶331

Page 49 of 49

A.Nos. 73 of 2018 & 196 of 2019 of Mb Power (Madhya Pradesh) Ltd. v. Central Electricity Regulatory Commission & Ors.

Case brief

What is this about?

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A.Nos. 73 of 2018 & 196 of 2019 of Mb Power (Madhya Pradesh) Ltd. v. Central Electricity Regulatory Commission & Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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