031112-mppgcl-sgtps500mw-final-tariff-petition-58-12.pdf

7/21/2019 031112-mppgcl-sgtps500mw-final-tariff-petition-58-12.pdf

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M.P. POWER GENERATING COMPANY LTD.

PETITION FOR APPROVAL OF FINAL GENERATION

TARIFF

(PERIOD FROM 28/08/2008 to 31/03/2012 )

OF

Sanjay Gandhi Thermal Power Station

500 MW, Extn. Unit No.5

U/s 62 and 86 (1)(a) of the Electricity Act, 2003

PETITION NO.:_________

MPPGCL, SHAKTI BHAWAN, RAMPUR, JABALPUR - 482008


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Petition For Final Generation Tariff of 500MW SGTPS Ext.#5Jul 2012

M.P. Power Generating Co. LtdM.P. Power Generating Co. LtdM.P. Power Generating Co. LtdM.P. Power Generating Co. LtdPagePagePagePage 2222

INDEX

S.No. PARTICULARS PAGE No.

1. AFFIDAVIT 3 - 4

2.

AUTHORIZATION 5

3.

PETITION 6- 16

4. PRAYER 17

5. INDEX OF CHAPTERS 18

6. CHAPTER 1 to 17 19-57

7. INDEX OF FORMS 58

8. FORMS 59-86

9. ANNEXURES Attached as booklet


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BEFORE THE M.P. ELECTRICITY REGULATORY COMMISSIONBHOPAL

Filing No

Petition No. of 2012

IN THE MATTER OF Approval of final Generation Tariff for 500 MW,

SGTPS Ext. Unit No.5, Birsinghpur for the period

28/08/2008 to 31/03/2012 under Section 62 and 86

(1)(a) of the Electricity Act, 2003

PETITIONER M.P. Power Generating Company Ltd, Jabalpur.

RESPONDENT 1. M.P. Power Management Company Ltd., Jabalpur

2.

M.P. Poorv Kshetra Vidyut Vitaran Company

Ltd., Jabalpur

3. MP Madhya Kshetra Vidyut Vitaran Company

Ltd., Bhopal

4. MP Paschim Kshetra Vidyut Vitaran Company

Ltd., Indore

5. M.P. Power Transmission Co. Ltd. Jabalpur.

The above named Petitioner, M.P. Power Generating Company Ltd, respectfully

submits as under:-

1.

The Petitioner is wholly owned company of Government of M.P engaged in

generation of electricity in the State of Madhya Pradesh. It is a successor

entity of erstwhile Madhya Pradesh State Electricity Board (MPSEB).

2.

The Company has been incorporated as part of implementation of the power

sector reform in M.P., initiated by the Government of MP. The Company

has taken over the generation activities of MPSEB. The company while

operating and maintaining its existing Units is also constructing new power

plants for increasing generating capacity in the State of Madhya Pradesh.

The Company is registered under Companies Act 1956 and was incorporated

on 22.11.2001. Its registered office is at Shakti Bhawan, Rampur, Jabalpur.


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3. The activities of Generation, Transmission and Distribution have been

looked after earlier in the State of M.P. by the integrated utility i.e. MPSEB

constituted under Section 5 of Electricity (Supply) Act 1948. The

Government of MP enacted M.P. Vidyut Sudhar Adhiniyam 2000 and in the

spirit of said Act the unbundling process of the MPSEB was initiated by

registering the following five Companies;

(i) Madhya Pradesh Power Generating Co. Ltd., Jabalpur (MPPGCL)

(GENCO).

(ii). Madhya Pradesh Power Transmission Co. Ltd., Jabalpur (MPPTCL)

(TRANSCO).

(iii). Madhya Pradesh Poorva Kshetra Vidyut Vitaran Company Ltd.

Jabalpur (MPPKVVCL) (EAST DISCOM).

(iv). Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company Ltd.Bhopal. (MPMKVVCL) (CENTRAL DISCOM).

(v). Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Ltd.

Indore (MPPKVVCL) (WEST DISCOM).

4.

The above mentioned five companies which were registered in November

2001 entered into Operation & Management Agreement with erstwhile

MPSEB and they worked as agent of MPSEB from July 2002 to May 2005.

The companies started independent functioning w.e.f. 1.6.2005 under Cash

flow mechanism as per State Government order dated 31.5.2005.

5. A sixth Company, namely MP Power Trading Company Ltd, was

incorporated as per the State Governments Notification dated 03/06/2006

specifying the functions of TRADECO for purchase of electricity in bulk

from Generating companies /Traders, from within & outside the State and to

supply electricity in bulk to the Electricity Distribution Companies in the

State of Madhya Pradesh. GoMP vide letter No. 6074/13/12/02 dated

29/03/12 has changed the name of M.P. Power Trading Co. Ltd. to M.P.

Power Management Co. Ltd. and it has been made the holding company for

all the DISCOMS of M.P. Further, GoMP, vide its Notification dated 26th

April 2012, has merged M.P. State Electricity Board with M.P. Power

Management Co. Ltd.

6. The Petitioner is having various power stations/projects in the state of

Madhya Pradesh. Sanjay Gandhi Thermal Power Station (SGTPS) is one

such coal based power stations of the Petitioner located at Birsinghpur in

Umaria District of Madhya Pradesh. Earlier it was envisaged to install 6


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units of 210MW each at SGTPS Birsinghpur out of which 4 Units of 210

MW were commissioned. However, with the advent of technology and

availability of 500 MW Units in the country, it was decided by erstwhile

MPSEB to set up 1x500 MW capacity in lieu of 2x210 MW Units in the

Stage-III of the project, in the space available in the Birsinghpur Plant site.

7.

Administrative approval for setting up of the 500 MW Unit at Sanjay

Gandhi Thermal Power Station, Birsinghpur was accorded by Government

of Madhya Pradesh vide letter No. 10197/F-3/31/13/97 dated 24/12/1997

(Annexure-1). Techno-economic clearance to the project was granted by

CEA vide O.M. No. 2/MP/46/96-PAC/11280 302 dated 20/12/2002 at a

total estimated cost of Rs. 2093.75 Crore (Annexure-2). This estimated

approved project cost of Rs. 2093.75 Cr. has been revised to Rs. 2300 Cr and

the same has been approved by GoMP, vide letter No. 3193/13/2007 dated

04/05/2007 (Annexure-3).

8.

GoMP vide its notification dated 3rd Jun 2006 has provided that the

Petitioner will sell entire power generated by the Sanjay Gandhi Thermal

Power Station to the MP Power Trading Company Ltd., now M.P. Power

Management Company Ltd., Respondent 1, at a rate determined by Honble

MPERC. A Power Purchase Agreement to this effect signed between

MPPGCL and MP Tradeco on 29th

Nov 2006 has already been submitted to

the Honble Commission on 30th

Nov 2006.

9.

The instant petition is filed under Section 62 of Electricity Act, 2003 which

provides determination of tariff by the Appropriate Commission for supply of

electricity by a generating company. The Honble Commission is vested with

the jurisdiction to regulate the tariff of Generating Companies owned or

controlled by a State Government and other Generating Companies as

envisaged under Section 86(1)(a) & (b) of Electricity Act, 2003.

10.

500 MW SGTPS Extn. Unit-5, Birsinghpur, was synchronized on

18/06/2007 and its COD was envisaged w.e.f. Nov, 2007. Accordingly, a

petition, No. 51/2007 dated 19/09/2007, was filed before the Honble

Commission for determination of provisional generation tariff of 500 MW

SGTPS Extn. Unit, in accordance to MPERC (Terms and Conditions for

Determination of Generation Tariff) Regulation 2005 (G-26 of 2005).

11.

However, during the hearing held in the matter at MPERC on 30/10/2007,

the Commission rejected the request of the Petitioner for approval of

provisional tariff. The Commission observed that the Unit had not started


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commercial generation and as such opined that till the Unit starts generating

electricity commercially, the Commission may consider allowing the cost of

Infirm Power injected into the grid on the basis of fuel and employee related

expenses. The Commission, therefore, directed the Petitioner to file the cost

of fuel, i.e., cost of coal and oil used exclusively for generation of electricity

from the subject Unit along with the expenditure made by the company on

the employees working in the Unit (Annexure-4). In compliance, the

Petitioner submitted before MPERC, vide letter dated 27/11/2007, the actual

fuel cost and other costs for the 500 MW Unit.

12.

The Honble Commission, vide its order dated 18/01/2008 (Annexure-5),

disapproved the Petitioners request for approval of provisional tariff stating

that the Unit has not started generating electricity commercially, however

the Commission allowed the Petitioner recovery of Infirm Power charges,

till CoD of the Unit, as per the latest Regulations/ amendments/

clarifications issued by CERC. The Honble Commission also directed the

Petitioner to file the petition for determination of provisional tariff for 1x500

MW Extn. Unit at SGTPS, Birsinghpur, as soon as COD of the Unit was

achieved.

13.

The State Load Dispatch Centre (SLDC) raised objection over the date of

effectiveness of the order passed by the Honble Commission dated

18/01/2008 under Petition No. 51/2007. The Petitioner, vide its letter dated

18/08/2008 (Annexure-6), informed the Commission regarding SLDCsobjection that since the CERC order, referred by the Honble Commission in

its order dated 18/01/2008, came into force from 07/01/2008 therefore its

retrospective effect could not be allowed from October 2007. The Petitioner

sought suitable directives of the Honble Commission for computation of

Infirm Power from October 2007.

14.

The Honble Commission, vide its order dated 20/10/2008 (Annexure-7),

upheld SLDCs interpretation, since the applicability of CERC amendment

of regulation 19 of Tariff regulations, which provides accounting of Infirm

Power as UI and its being paid for at the applicable frequency linked UI

rates, was made effective from 07/01/2008. Further, since there was no

regulation in vogue to govern the rate of Infirm Power before the

applicability of the amended regulation of CERC, the Honble Commission

decided to base the cost of Infirm Power prior to 07/01/2008 on CERCs

decision on costing of Infirm Power for Vindhyachal Thermal Power Station


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Stage-III. Accordingly, the Commission allowed the Petitioner to claim the

Infirm Power energy at the rate of 101.35 Paise per kWh, determined by the

Commission in its Order dated 20/10/2008, from the date of synchronization

up to 06/01/2008. Infirm Energy with effect from 07/01/2008 till COD was

allowed to be billed as given in the Commissions order dated 18/01/2008.

15.

COD of 500 MW SGTPS Extn. Unit-5, Birsinghpur, was achieved on

28/08/2009. The Unit supplied Infirm Power of 1573.838 MU in the Grid

during the period from 01/10/2007 to 27/08/2008 and the amount billed for

Infirm Power Generation is Rs.498.41 Crores, in accordance with MPERC

Orders dated 18/01/2008 (Annexure-5) and 20/10/2008 (Annexure-7).

16. In Compliance to the Honble Commissions directives, given vide its Order

dated 18/01/2008, the Petitioner filed a Petition (No.12/2009) on 24/03/2009

for determination of provisional generation tariff for 500 MW SGTPS Extn.Unit-5, Birsinghpur, from 28/08/2009, i.e., the Date of Commercial

Operation (COD) to 31/03/2009, as per MPERC (Terms And Conditions For

Determination Of Generation Tariff) Regulations, 2005 (G-26 Of 2005).

17.

A presentation on the tariff proposal of MPPGCL was made by the

Commission before the members of State Advisory Committee on

03/06/2009 and a Public Hearing in the matter was held on 15/09/2009 at

MPERC office Bhopal.

18. Honble Commission passed an Order dated 24/11/2009 (Annexure-8)and

provisionally allowed the total cost of generation for 500 MW SGTPS Extn.

Unit-5, Birsinghpur, from 28/08/2009 to 31/03/2009, as given below:

SN Particulars Unit Amount

1 Fixed Cost Calculated by MPERC for 216

Days (28/08/2008 to 31/03/2009)

Rs. Cr. 206.28

2 Amount of Fixed Cost allowed by the

Commission for recovery at Normative

Availability (at 95% of the Fixed Cost

Calculated for 216 Days)

Rs. Cr. 195.96

3 Fuel Cost at Normative % PLF Paise/kWh 98.414 MPERC Fee Rs. Lakh 14.58333

19.

Clause 3.6 of MPERC (Terms And Conditions For Determination Of

Generation Tariff) Regulations, 2005 (G-26 Of 2005) stipulates that for

generating Units/Stations commissioned after 01/04/2006, principles and

norms as prescribed by CERC vide its order dated 26/03/2004 shall be


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applicable. Since the SGTPS Extn. Unit-5, Birsinghpur, was MPPGCLs

first 500 MW Unit and MPPGCL did not have previous experience of

operation and maintenance of 500 MW size Units, the Petitioner in its

Petition for Provisional Tariff (No. 12/2009) had sought relaxed norms of

operation for initial six months. However, Honble Commission did not

consider the Petitioners request on the grounds that as per clause 16 of

CERC Regulations 2004 stabilization period and relaxed norms applicable

during the stabilization period ceased to apply from 01/04/2006.

20. Therefore, in the instant Petition, for the period FY09 the Petitioner has

considered Norms of operation as prescribed in CERC Regulations 2004.

For FY10 to FY12 the Norms of operation as stipulated in MPERC (Terms

And Conditions For Determination Of Generation Tariff) Regulations, 2009

(RG-26 (I) Of 2009) have been considered.

21. In the Petition for Provisional Tariff (No. 12/2009), the Petitioner had

submitted a revised project cost estimate of Rs. 2300.00 Crores along with

reasons for revision in the project cost estimate. The Honble Commission

vide its letter No. 1072 dated 29/05/2009 (Annexure-9) had desired some

additional information along with reference documents in respect of the

revised project cost of Rs. 2300 Crores. In compliance, the Petitioner vide

letter No. 240 dated 22/06/2009 (Annexure-10) submitted the information

desired by the Commission. GoMPs approval in respect of the revised

project cost of Rs. 2300 Crore, for 500MW SGTPS Extn. Unit No. 5Birsinghpur, accorded vide letter No. 3193/13/2007 dated 04/05/2007, was

already submitted by the Petitioner before the Honble Commission.

22.

However, the Honble Commission, in its Order dated 24/11/2009, made an

observation that the Petitioner had not taken approval from CEA for the cost

over-run. The Commission, therefore, decided to take original project cost as

approved by CEA for determination of provisional tariff. The Commission

also directed the Petitioner, vide its aforesaid order, to take approval from

CEA for the cost over-run before filing the petition for final generation

tariff.

23. During the Public Hearing held in MPERC in Sept 2009 in the matter of

Petition for Provisional Tariff of 500 MW SGTPS Extn. Unit-5, Birsinghpur,

the Petitioner had submitted before the Honble Commission that, after the

implementation of Electricity Act 2003, approval of project cost estimate

from CEA was not mandatory and that since the Petitioner had already


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obtained approval of the State Government for the revised project cost,

approval of CEA should not be insisted.

24.

MPPGCL had filed a petition (No. 54/2009) before the Honble Commission

on 30/09/2009 for approval of generation tariff for the new control periodfrom FY10 to FY12, under MYT Principles. The Commission while passing

the Order dated 03/03/2010 in the matter, observed in respect of 500MW

SGTPS Extn. Unit No. 5 that since the Petitioner had not filed the petition

for determination of final tariff in respect of the new 500MW SGTPS Extn.

Unit No. 5, the Commission had, therefore, considered capital cost and other

components for the 500MW Unit, in the MYT Order dated 03/03/2010,

same as those provisionally admitted by the Commission in the Provisional

Tariff Order dated 24/11/2009 passed by the Commission in respect of

500MW SGTPS Extn. Unit No. 5. The Commission, therefore, allowed the

petitioner to recover the fixed charges only to the extent of 95% of the fixed

charges for 500MW SGTPS Extn. Unit No. 5 determined in the MYT Order

dated 03/03/2010, on provisional basis subject to retrospective adjustment

on determination of final tariff of the Unit.

25. In compliance to the Honble Commission directives, given in MPERC

Order dated 24/11/2009, the Petitioner approached CEA, vide letter dated

17/07/2010 (Annexure-11), seeking approval of the revised project cost of

Rs.2300.00 Crores for 500 MW SGTPS Extn. Unit-5, Birsinghpur. CEA,

vide their letter dated 08/11/2010 (Annexure-12), quoting references ofdecisions of Honble High Court of Delhi and CERC in similar cases, has

informed that approval of CEA for the project cost estimate of 500 MW

SGTPS Extn. Unit-5, Birsinghpur, is not required.

26. The Honble Commission in its Order dated 22/03/2012, in the matter of

Petition (No. 55/2011) filed by the Petitioner for True-up of Generation

Tariff for FY 2008-09, observed in respect of 500MW SGTPS Extn. Unit

No. 5 that since the project cost and funding of the new 500MW Unit shall

be finalized in its final tariff order on filing of petition by the Petitioner, any

change in cost on account of 500MW SGTPS Extn. Unit No. 5 was not

considered in the aforesaid True-up Order dated 22/03/2012 for FY 2008-09.

27.

In its petition for determination of provisional tariff (No. 12/2009), the

Petitioner had submitted month wise details of fuel cost incurred during

Infirm Power generation. Honble Commission had observed some

inconsistency in the rate of coal and oil consumed during Infirm Power


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generation as compared with the audited figures for October, November and

December 2007. The Commission, therefore, in its order dated 24/11/2009

(Annexure-8), provisionally computed the cost of fuel during Infirm Power

generation as Rs. 174.21 Crores and directed the Petitioner that the actual

quantity and rate of coal & oil shall be determined and allowed at the time of

final tariff as and when the exact and authentic figures are filed by the

Petitioner. Based on the fuel expenditure provisionally computed as

mentioned above, the Honble Commission, in its order dated 24/11/2009

for provisional tariff, had determined a figure of Rs. 324.20 Crores as the net

revenue from Infirm Power generation.

28.

In compliance to the Honble Commissions directives, audited figures for

fuel expenditure during Infirm Power generation have been filed in the

instant Petition. The amount for fuel expenditure during Infirm Power

generation, as per audited books of accounts of MPPGCL, is Rs.222.80

Crores (Annexure-13). Accordingly, the net revenue earned from Infirm

Power generation is Rs. 275.60 Crores and the same has been applied for

reduction in capital cost as per MPERC Regulations 2005.

29.

The Petitioner has filed this petition for approval of final tariff of 500 MW,

SGTPS Extension Unit-5 w.e.f. its date of commercial operation (COD), i.e.,

28/08/2008, up to 31/03/2012 based on the numbers in the audited books of

accounts of MPPGCL for FY09, FY10 and FY11. Figures for FY12

submitted in the petition are on provisional basis and true-up for the same

shall be done on completion of the balance works of the project and on

finalization of accounts for FY12.

30.

The Petition has been prepared for the period FY09 based on the terms and

conditions of tariff notified by the Honble Commission vide MPERC

(Terms And Conditions For Determination Of Generation Tariff)

Regulations, 2005, {G-26 of 2005} and for the period FY10 to FY12 based

on the terms and conditions of tariff notified by the Commission vide

MPERC (Terms And Conditions For Determination Of Generation Tariff)Regulations, 2009, {RG-26(I) of 2009}. Necessary formats to be filed with

the petition have been filled in and enclosed with this petition. It is

submitted that the Petitioner has furnished the information/details as

required under the aforesaid formats to the extent the same is available with

the Petitioner. However, the Petitioner submits that where the

data/information has not been submitted as per the format due to its non-


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availability / non-applicability with the petition, the same has been marked

accordingly.

31.

Net revenue earned from the sale of Infirm Power, after accounting for the

fuel expenses for infirm power generation, is Rs. 275.60 Crores and thesame has been applied for reduction in capital cost as on COD. As such the

net capital expenditure towards the project as on COD, as per the audited

books of accounts, is Rs. 1994.23 Crores (Annexure-14). This has been

considered for tariff determination purpose.

32.

Additional capital expenditure after COD up to 31/03/2011, as per audited

books of accounts, is as given below:

Period Amount

a.

W.E.F. COD to 31/03/2009 : Rs. 3.35 Crs.

b.

W.E.F. 01/04/2009 to 31/03/2010 : Rs. 33.02 Crs.

c. W.E.F. 01/04/2010 to 31/03/2011 : Rs. 26.45 Crs.

Total : Rs. 62.82 Crs.

33. As on 31/03/2011, a cumulative amount of Rs. 15.87 Crores which was

spent on capital spares has inadvertently been charged to O&M works of

500 MW SGTPS Extn. Unit No. 5, instead of having been capitalized. Such

cumulative amounts at the end of respective financial Years from COD till

31/03/2011 are as below:

a. As on 31/03/2009 : Rs. 1.37 Crores

b.

As on 31/03/2010 : Rs. 7.00 Crores

c.

As on 31/03/2011 : Rs. 15.87 Crores

Necessary treatment for capitalizing the cumulative expenditure of Rs.15.87

Crores, as on 31/03/2011, detailed above shall be done in the books of

accounts in subsequent accounting Year.

34.

The additional capital expenditure w.e.f. 01/04/2011 to 31/03/2012,

including the capitalization of amount of Rs.15.87 Crores which was

charged to O&M, is Rs.42.00 Crores (provisional) and that from 01/04/2012

till completion of the project is Rs. 85.35 Crores (projected). Thus the total

additional capital expenditure w.e.f. COD and up to completion of

remaining works, is projected to be Rs.190.17 Crores. The completed project


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cost, including expenditure on works related to Second Phase Ash bund, is

projected to be Rs. 2184.40 Crores against the approved estimated cost of

Rs.2300.00 Crores.

35.

The additional capital expenditure till completion of the Project is within theoriginal scope of work of SGTPS extension Unit-5 and is in accordance with

the Regulation 19 of MPERC Tariff Regulations, 2005. It is submitted that

the provisional additional capital expenditure from 01/04/2011 to

31/03/2012 and projected additional capital expenditure from 01/04/2012 till

completion of Project, estimated by the Petitioner, may not be considered as

the ceiling expenditure and that the Petitioner may be allowed to

claim/amend the impact of additional capitalization for revision of tariff.

36.

It is further submitted that levies, taxes, duties, service tax, SLDC charges,

water charges, etc, levied by the various authorities on the Petitioner in

accordance with law shall be billed to beneficiaries additionally on actuals.

MPPGCL has not considered any tax liability for FY09, FY10 and FY11,

while for FY12 Minimum Alternate Tax (MAT), including surcharge and cess,

has been considered. In case, due to any change in Government policy or

otherwise, if any liability of tax and duties arises for any Year of the control

period, the same shall be charged extra.

37.

The performance parameters and cost elements have been duly elaborated in

different Chapters as enclosures to the petition. CoD of 500 MW, Sanjay

Gandhi Thermal Power Station Extn. Unit-5 is 28th

Aug 2008. As such the

actual generation in FY09 was available only for 216 days.

38.

Accordingly, the Year wise cost of generation works out as given in Table

No. 1, below:-


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Generation Cost ofGeneration Cost ofGeneration Cost ofGeneration Cost of 500500500500 MWMWMWMW SSSSGGGGTPSTPSTPSTPS, Extn. Unit No. 5, Extn. Unit No. 5, Extn. Unit No. 5, Extn. Unit No. 5

Table No. 1.

Particulars FY 09 FY10 FY11 FY12 *Normative Net Generation MU 1928 3500 3500 3509

Scheduled Generation MU 1626 3183 3449 3506

Return on Equity (Pre Tax) Cr.Rs 47.87 89.55 89.55 111.95

Interest and Fin. Charges on Loan Cr.Rs 91.38 151.95 148.41 143.39

Depreciation Cr.Rs 42.51 104.91 106.28 108.45

O&M Expenses Cr.Rs 32.40 53.50 56.80 60.25

Interest Charges on Working

Capital

Cr.Rs 15.36 26.30 29.28 46.45

Cost of Secondary Fuel Oil Cr.Rs 12.56 11.23 12.20 16.07

Total Fixed Cost Cr.Rs. 229.51 437.44 442.51 486.56p/u 141.18 137.45 128.30 138.80

Variable Charges Cr.Rs 172.94 356.35 468.14 835.14

p/u 106.39 111.97 135.73 238.23

Other Charges

MPERC Fee Cr.Rs. 0.00 0.25 0.25 0.25

Cess Cr.Rs. 0.00 2.06 1.92 0.78

Water Charges Cr.Rs. 0.00 0.28 0.39 0.39

Rent rates & taxes Cr.Rs. 0.00 0.01 0.46 0.46

Entry Tax Cr.Rs. 0.00 0.00 0.00 0.00

Common expenseCr.Rs. 0.00 1.41 2.00 2.00

Total of Other Charges Cr.Rs 0.00 4.01 5.02 3.88

Total Cr.Rs 402.45 797.80 915.67 1325.58

Indicative Average Rate p/u 247.57 250.68 265.49 378.14

* Charges for FY12 are provisional as the figures for FY12 are unaudited.


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PRAYERPRAYERPRAYERPRAYER

In light of the above submissions, the Petitioner respectfully prays that

Honble Commission may be pleased to:-

a. Approve the final tariff of 500 MW, Sanjay Gandhi Thermal Power

Station Extension Unit- 5, as given in Para 38, for the period 28/08/2008 to

31/03/2011 on actual basis and for FY12 on provisional basis which shall

be trued up separately after finalization of audited accounts of FY12.

b.

Allow the Petitioner to raise Arrear Bills for the recovery on account of

approved final tariff in accordance with applicable Tariff Regulations.

c.

Permit additional recovery on account of Water Charges, Cess, Rent Rates

and Taxes, Duties and Levies, Filing Fee, as and when paid to the HonbleCommission, Common expenses, publication expenses, Entry Tax on

R&M, admissible Income tax as per applicable Tariff Regulations, fringe

benefit tax and any other tax, if payable, etc., on actual basis, over and

above the fixed and variable charges.

d.

Permit recovery of expenses understated / not considered in this petition at

a later stage, if required.

e. Condone any inadvertent omissions / errors / short comings and permit the

applicant to add / change /modify / alter this filing and make further

submissions as may be required at later stages.

f.

Pass such orders as Honble MPERC finds appropriate in light of the facts

and circumstances of the case, to grant relief to Petitioner.

Date : 25/07/2012 (S.K. Khiani)

Place: Jabalpur Addl. C.E. (Corporate Services)

For & on behalf of

M. P. Power Generating Co. Ltd.


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INDEX OF CHAPTERS

S. No. Chapter Page

1 Introduction of 500 MW SGTPS Extn. Unit No.5. 19-26

2 Project Cost Estimates & Actual Capital Expenditure 27-33

3 Funding of the Project 34-36

4 Norms of Operation 37

5 Components of Tariff 38

6 Return on Equity 39-40

7 Interest & Finance charges 41

8 Depreciation 42-45

9 O&M Expenses 46-47

10 Interest on Working Capital 48-49

11 Cost of Secondary Fuel Oil Consumption 50

12 Energy Charges (Variable Charges) 51-52

13 Prior Period Expenses and Expenditure on Terminal Benefits

including Pension

53

14 Other Expenses 54

15 Actual Generation 55

16 Cost of Generation and Billing 56

17 Tariff Formats 57


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1.1.1.1.IntroductionIntroductionIntroductionIntroduction ofofofof 500500500500MWMWMWMW SGSGSGSGTPSTPSTPSTPS Extn.Extn.Extn.Extn.UnitUnitUnitUnit #5#5#5#5

1.1 Sanjay Gandhi Thermal Power Station (SGTPS) is located in Umaria, District

of Madhya Pradesh. Initially it was envisaged to install 6 coal based units of210MW each at SGTPS Birsighpur, in stages. However, with the advent of

technology and availability of 500 MW size Units in the country, it was

decided by erstwhile MPSEB to set up one 500 MW Unit in lieu of 2*210

MW, fifth and sixth Units, in the space available at SGTPS Birsinghpur.

Accordingly the project was taken up after obtaining requisite following

clearances:

Administrative approval of State Govt. vide letter No. 10197/F-3/31/13/97

dated 24/12/97 for setting up of 1 x 500 MW additional unit at Sanjay

Gandhi Thermal Power Station, Birsinghpur.(Annexure-1)

Approval for supply of Water by Deptt. Of Water Resources vide No.

29/12/96/M/31/399 dated 26/4/2002 from River Johilla.(Annexure-15)

Approval of M.P.P.C.B. No. 1558/TS/MPPCB/2002 dated 13/9/2002

granting permission to establish the Unit. (Annexure-16)

Environmental clearances from Ministry of Environmental and Forest,

vide their letter dated 19/07/2002.(Annexure-17 )

Approval of S.L.C. for grant of linkage of coal from Korba Coalfields,

vide O.M. dated 16/01/2001. (Annexure-18)

Techno-economic clearance of the project granted by CEA vide O.M. No.

2/MP/46/96-PAC/11280302 dated 20/12/2002. (Annexure-2)

Civil Aviation Clearance from Airport Authority of India for a Chimney

with height of 275 M vide letter No. AAI/NAD/ 20012/35/9-ARI dated

26.11.97 and subsequent extension. (Annexure-19)

1.2

Since, 500 MW Unit was to be located within the existing plant boundary of

SGTPS, as an extension to the existing power station, major land which was

already acquired earlier in Phase-I has been used for installation of main plant

and equipment. However, due to change in the scheme of Coal Handling Plant

and for laying of ash pipe line, forest land to the tune of 4.7 Ha was additionally

required. The same was granted by MoEF, Regional office, Bhopal in May 2004.


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Against our requirement of 292 Ha of forest land for ash disposal, Department of

Agriculture & Co-operation, Ministry of Agriculture, had allowed 100 Ha of

land in PhaseI of SGTPS, and also agreed to consider balance 192 Ha of land in

further two phases, so as to avoid large number of trees from being clear felled at

one time and also to avoid excessive soil erosion. The Forest Department

awarded another 100 Ha of Forest land in Nov.2006, for the 2nd

phase of Ash

Bund.

1.3 With the addition of 500 MW capacity at SGTPS, Birsinghpur, the total

capacity of the station became 1340MW and it thus became the largest

Thermal Power Station of MPPGCL.

1.4 Major Systems of SGTPS 500 MW Extn, Unit No.5

Brief description of some of the major systems of SGTPS 500 MW Extn. Unit

No. 5 is given below:-

1.4.1 Steam Generator

The steam generator is outdoor, two pass, tap supported, reheat,

controlled circulation, single drum, balanced draft, dry bottom type

designed for burning pulverized coal as principle fuel. It is

provided with oil support burners and adequate number of coal

mills.

Steam generators are designed to operate with the HP Heaters out

of service condition and deliver steam to meet the Turbo Generator

electrical output at 100% MCR.

Steam generator is suitable for operation with HP-LP turbine by-

pass system. Four regenerative air pre-heaters with electric motor

main drive and air motor as standby drive are provided at back end,

which are connected with gas duct bifurcated to two air heaters.

The boiler is provided with a set of soot blowers for on load

cleaning of heat transfer surfaces i.e. water walls, super heaters, re-

heaters, economizers and air heaters.

1.4.2 Boiler Feed Pump

Three number of Boiler Feed Pumps each having 50 % capacities,

horizontal, multistage, barrel casing, centrifugal type are provided. Out


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of three pumps two are steam driven and one is electrically driven.

Each pump is supported by a single stage booster pump.

1.4.3 Milling Plant

The boiler is provided with 10 (8+2) Bowl Mills type XRP 1003, with 5 oneither side. Three Nos. primary fans of axial reaction single suction type,

driven by direct coupled motors are also provided.

1.4.4 Electrostatic Precipitator

The steam generating unit is provided with one set of Electrostatic

Precipitator having four passes. Each pass comprises of nine fields in

series for collection of fly ash, of which, eight fields would be in

service and the other one would remain as standby. The ESP is having

adequate number of ash hoppers for storing ash collected in operation

of the Boiler. The ESP is equipped with automatic voltage control to

minimize power consumption.

1.4.5 Draft Equipment

Two number radial, plate bladed, backward curved, double suction

(NDZV), pin type flexible coupling F.D Fans and three number radial,

plate bladed, backward curved, double suction (NDZV), hydraulic

coupling with inlet damper controlled ID Fans are provided.

1.4.6 Steam Turbine Generator Unit

Steam Turbine

The steam turbine is a 500 MW MCR, three cylinder (one

single flow HP, one dual flow IP and one dual flow LP), 3000

RPM, multistage, tandem compound, condensing, and reaction

turbine type. All essential controls and safety inter-locks are

provided. It is having all the essential auxiliaries.

Condensing Equipment

Two pass, rectangular, box type, surface condenser, with 5

minute hot well capacity, capable for maintaining the required

vacuum while condensing steam at the maximum rating of the

turbine, is provided with on load tube cleaning equipment and

an arrangement of On-load maintenance of one half of the

condenser at a time. One set of on-load debris filters are also

provided in CW supply pipe line. Three vertical centrifugal,


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multistage condensate pumps, each of 50% capacity, are

provided to pump condensate from condenser hot well to the

Deaerator. Two number vacuum pumps with 100% capacity

each are provided to maintain the vacuum in the condenser by

expelling the non-condensable gases.

Deaerator and Feed Heater

The unit is provided with a variable pressure spray type/ spray-

cum-tray-cum-re-boiling type deaerating heater with a feed

water tank.

The high pressure closed heaters are horizontal type and

provided with both drain cooling and de-superheating zones in

addition to the normal condensing zone.

The low pressure feed water heaters are also horizontal/vertical

type and are equipped with only drain cooling and condensing

zones.

Generator

The generator is directly connected, horizontal shaft,

cylindrical rotor, commensurately rated for the turbine outputs.

The generator is provided with brushless excitation with PMG.

It is capable of operating in isolation or in parallel and with the

power grid, with voltage variations of ( + ) 10% and frequency

variations between 47.5 Hz to 51.5 Hz.

The excitation system is capable of supplying excitation current

of the generator under all conditions of operation of load,

voltage and power factor.

1.4.7 Coal Handling System

The unloading conveyor system through Track hopper has been

provided with Primary Crusher House (PCH), from where the coal istaken to Secondary Crusher House # 2. The crushed coal is either

taken to fill Boiler bunkers or stacked in crushed coal stock piles by

using conveyor for feeding boiler bunkers or Stacker for stacking in

stock yard.


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1.4.8 Ash Handling System

Bottom Ash (BA) is collected in water impounded BA hopper located

beneath the boiler. Bottom ash from water impounded BA hopper is

removed and sent to ash slurry pump house using jet pumps. Thebottom ash so collected in the slurry sump shall be pumped in slurry

form to ash pond.

Fly ash, collected in Economizer /APH /ESP hoppers, is extracted and

pneumatically conveyed dry, to the transfer tanks through vacuum,

created by Vacuum Pumps.

Dry fly ash from transfer tanks is conveyed to RCC silos through

Pressure Conveying System and unloaded into trucks for disposal to

cement industry/ brick making plants & balance Ash may be disposed

off in wet form to Ash Dyke Area.

Ash handling system has also been provided with Ash Water Recovery

System to meet out the requirement of Environmental norms in this

regards. This system comprises of barge mounted recovery water

pumps to recycle the excess water from Ash Pond through recovery

water pipes leading to clarifier in PH premise for subsequent treatment

and utilization.

1.4.9 Fuel Oil (FO) System

HFO / LDO system is envisaged for boiler start-up and flame

stabilization and has been taken from existing oil unloading station for

4x210 MW units. However for 500 MW unit, one no. additional

storage tanks each for HFO and LDO are provided with separate Fuel

Oil Pump House to meet out the requirement.

1.4.10 Plant Water System

Water drawn from Johila Reservoir meets the requirements of CW for

Condenser and other Auxiliaries, Ash water make up, Fire water make

up, Coal handling plant dust suppression, Service water system (Plant /colony washing & gardening, Air washer and AC system make up, seal

water for Ash handling plant, ESP/APH washing), Water treatment

system (DM Water, DMCW system make up and potable water).

A channel tapped off from the existing intake canal, draws water to

meet complete water requirements of 1x500 MW Unit, through the


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water screens. A common pump house is located downstream of Water

Screens from where the cleaned water flows to the once through

CW/ACW system and to other needs of the plant after proper treatment

as required for the relevant services.

CW system is once through system employing a siphon head recovery

arrangement across the condenser for cooling water flow. The CW

system delivers cooling water to the condenser for its cooling. The hot

return water from Condenser and ACW system leads to seal pit for

further discharge to raw water reservoir through discharge channel.

The CW system comprises of 4x33.33% vertical wet pit type CW

pumps. Whereas raw water system comprises of 3x100% vertical wet

pit type Raw Water Pumps. Raw water is supplied to Traveling Water

Screen spray system, CW chlorination system, Ash handling plant, Fire

water tank and to Pre-treatment plant and then to Clarified Water tank

for further services. Water from Clarified tank is also drawn for

meeting out the requirement of DM plant.

1.4.11 Electrical System

The power evacuation facilities available at Sanjay Gandhi Thermal

Power Station for 4x210 MW and 1*500MW are give below:

220 KV DCDS linking between SGTPS & Amarkantak

220 KV SCSS between SGTPS & Amarkantak

220 KV 4 Nos. I/C between SGTPS & 220 KV S/S of

MPPTCL, Birsinghpur

220 KV SCSS line between SGTPS & 220 KV S/S of PGCIL at

Sukha (Jbp)

220 KV SGTPS Satna

400 KV 3 Nos between SGTPS & Damosh S/S of MPPTCL.

400KV 2 Nos. between SGTPS & Damoh S/S (PGCIL).

400KV 1 No. between SGTPS & Katni S/S of MPPTCL.

400 KV Birsinghpur-Balco

400 KV Birsinghpur-Korba (NTPC)


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A total of eleven bays have been provided for the 400KV Switchyard,

with two main and transfer bus. Existing 220KV Switchyard has been

extended by including two more bays complete with all equipment

including metering protection and control panel and bus bar protection

system.

Three single phase, 200 MVA, 21/420 KV, oil-immersed, outdoor,

Generator Transformers are being used for feeding power to 400KV

grid.

The inter-connecting transformer comprise three single phase auto

transformers rated 166.7 MVA, 400/220/33KV, oil-immersed, outdoor

type, with graded, star-connected primary& secondary windings and

open delta-connected, uniformly insulated, tertiary windings. 2 Nos. 63

MVA station transformers (one connected to 220KV and the other to400KV) are used to derive auxiliary power for unit start up/emergency

and for station auxiliaries by stepping down from 220KV system

and/or from 400KV system. Each station transformer have two

secondary transformer one for 11KV and the other for 6.6 KV. 415 V

supply is obtained from 11KV/ 6.9 KV bus through step down

distribution transformers of 2 MVA/1.6 MVA ratings.

1.4.12 Instrumentation and Controls

A Distributed Digital Control and Management Information System(DDCMIS) with CRT / Keyboard operation for SG and TG controls

and hard-wired back-up controls with monitoring and controlling

devices needed for operation is provided.

For systematic and sequential start-up shutdown and safe operation of

Boiler, Burner Management System (BMS), with fail-safe cards, is a

part of DDCMIS.

1.5 Present status of the project

Sanjay Gandhi Thermal Power Station Unit-5 (500 MW), Birsinghpur, started

trial stage generation w.e.f. 01st of Oct 2007. The Unit was declared on

commercial operation w.e.f. 28th

Aug, 2008. EPC portion awarded to M/s

BHEL has been completed in Sep 2011, except for the supply of two number

lab items and few issues requiring commercial settlement. As regards the non

EPC Portion of works which were ordered directly by MPPGCL on other


26/59



agencies, most of such works have already been executed. However, certain

non EPC works such as construction of Weather Monitoring Station,

procurement of electrical lab equipments, Canteen equipments, etc., are at

different stages of execution or procurement. The construction of second

Phase Ash Dyke has been taken-up and for which civil works are reaching

completion whereas for E&M works, tender has been published in April 2012.

Proposal for construction of Administrative Building is under approval for

placement of order whereas the proposal for construction of new quarters is

yet to be taken up. Around 8 to 10% balance supplies of the capital spares,

ordered separately on BHEL and their Sub-vendors are still going on. Details

of balance works as on April 2012 are given in Annexure-20.


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2.2.2.2. PPPProject Cost Estimatesroject Cost Estimatesroject Cost Estimatesroject Cost Estimates &&&& ActualActualActualActual CapitalCapitalCapitalCapital ExpenditureExpenditureExpenditureExpenditure

2.1 CEA Approved Initial Project Cost Estimate:

Initially, an estimate of the total cost of the Project was prepared on the basis ofprices appearing in BHELs Commercial offer No. MS-1-01-E-0021, dated

10/04/2002 & 11/04/2002. For the works not covered in BHELs scope (Non

EPC items), prices had been estimated separately. Cost towards overheads had

been worked out on the basis of scope settled with M/s BHEL and taking into

account the requirement of Project. Techno-economic clearance of the project

was granted by CEA vide O.M. No. 2/MP/46/96-PAC/11280 302 dated 20th

Dec. 2002 (Annexure-2) at a total estimated cost of Rs. 2093.75 Crore, as per

following breakup:

CEACEACEACEA ApprovedApprovedApprovedApproved InitialInitialInitialInitial Project CostProject CostProject CostProject Cost EstimateEstimateEstimateEstimateTable No. 2.1.Table No. 2.1.Table No. 2.1.Table No. 2.1.1111 Cr.Rs.Cr.Rs.Cr.Rs.Cr.Rs.

2.2 The above project cost estimate has been revised to Rs.2300 Crores, for reasons

elaborated in subsequent Para. Revised estimated project cost has been approved

by GoMP, vide letter No. 3193/13/2007 dated 04/05/2007, (Annexure-3)

RevisedRevisedRevisedRevised ApprovedApprovedApprovedApproved EstimateEstimateEstimateEstimate VisVisVisVis----aaaa----vis the Initialvis the Initialvis the Initialvis the Initial EstimaEstimaEstimaEstimatetetete

Table No. 2Table No. 2Table No. 2Table No. 2....2222....1111 Cr.Rs.Cr.Rs.Cr.Rs.Cr.Rs.

S

N

Particulars As per TEC by CEA

20/12/2002

1 Turnkey EPC cost 1629.93

2 Non EPC cost 69.84

3 Land & RR 06.50

4 Overheads 82.43

5 IDC + Fin. Cost 305.05

6 Total 2093.75

SN Particulars TEC by CEA

22/12/2002

GoMP Approved

04/05/2007

1 Turnkey EPC cost 1629.93 1861.12

2 Non EPC cost 69.84 99.44

3 Land & RR 6.50 13.70

4 Overheads 82.43 56.40

5 IDC + Fin. Cost 305.05 269.00

6 Total 2093.75 2300.00


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2.3 Reasons for revision in Project Cost Estimate to Rs.2300 Crores

2.3.1 Land and RR Cost

This cost was revised due to change in scope and rise in prices.

2.3.2

EPC Cost

The base EPC cost has remained constant. However estimated provision

for price variation was increased so as to take care of inflation in the price

indices of material and labor components as per terms of EPC contract

placed in BHEL. Amount towards works contract tax on civil works has

been revised downwards due to exercising of option for composition mode

as per provisions of Commercial Tax Act 1994. Amount estimated towards

taxes & duties on materials purchased was increased due to change in

Price Variation amount and imposition of education Cess. Additional

provision was required to be made due to imposition of service tax on civil

works and erection contracts.

2.3.3 Non-EPC Cost

Under this cost the major head covered are spares and railway siding. It

was increased due to increase in price inflation for spares and change in

scope and design of railway-siding during approval by railways.

2.3.4 IDC & FC

This cost was estimated to be less as compared to original provision due tochange in rate of interest by M/s PFC from time to time. The rate was

originally stated to be 11% and had changed from time to time. The

revised estimate of IDC was made assuming completion of trial operations

by Feb/Mar 2007, as per the commitment given by BHEL in April 2006,

and the rate of interest as 10% per annum. Thus, the IDC was estimated to

be Rs.269 Crores as against Rs. 305.05 Crores envisaged originally.

2.4

Actual Project Cost till COD as per Audited Books of Accounts:

2.4.1

Accounts of MPPGCL for FY09, FY10 and FY11 have been finalized andduly audited by the Statutory Auditors and CAG Auditors. Based on the

audited books of accounts for FY09, FY10 and FY11, the Project

cost/expenditure break up as on COD and subsequent to COD till

31/03/2011, is annexed (Annexure-16). As indicated in the project

cost/expenditure break up statement, against the approved estimate of

Rs.2300.00 Crores the actual expenditure till COD as per the audited books


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of accounts including IDC and after deducting the net revenue earned from

Infirm Power generated by the Unit is Rs. 1994.23 Crores. The IDC amount

capitalized as per the audited books of accounts is Rs. 407.74 Crores. The net

revenue from Infirm Power generated by the Unit which has been considered

for reduction in the capital cost as per clause 37 of MPERC (Terms &

Conditions of determination of Generation Tariff) Regulation 2005 and in

accordance with clause 19 of CERC Tariff Regulations 2004, is Rs.275.60

Crores. Account Head wise details of the capital expenditure till COD, as per

audited books of accounts, are furnished in Form TPS-5B.

2.4.2

Details of amount recovered through infirm power charges are as given

below:-

Amount Recovered Through Infirm Power ChargesAmount Recovered Through Infirm Power ChargesAmount Recovered Through Infirm Power ChargesAmount Recovered Through Infirm Power Charges

Table 2Table 2Table 2Table 2....4444....2.2.2.2.1.1.1.1.

SN Month Power

Injected

(MUs)

Billing

Amount

(Cr. Rs.)

1 Oct 2007 (01/10/2007 to 31/10/2007) 38.97 3.95

2 Nov-07 60.13 6.09

3 Dec-07 162.14 16.43

4 Jan 2008 (01/01/2008 to 06/01/2008) 40.65 4.12

5 Jan 2008 (07/01/2008 to 31/01/2008) 143.11 56.66

6 Feb-08 186.12 75.00

7 Mar-08 51.23 20.85

8 Apr-08 120.92 46.39

9 May-08 222.21 71.65

10 Jun-08 237.10 80.79

11 Jul-08 197.45 77.54

12 Aug 2008 (01/08/2008 to 27/08/2008) 113.83 38.92

Total 1573.84 498.41

Infirm Power billing has been done for the period 01/10/2007 till

27/08/2008, as per MPERC orders dated 18/01/2008 (Annexure-5) and

dated 20/10/2008 (Annexure-7). Month wise energy account details of

Infirm Energy from 500MW SGTPS Extn. Unt No. 5, provided by SLDC,

are enclosed as Annexure-21to Annexure-31.

2.4.3

Expenditure incurred on fuel during Infirm Power generation was

Rs.222.80 Cr. (Annexure-13). Therefore, the net revenue from Infirm

Power generated from the Unit was Rs.275.60 Crores.


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2.4.4 The table below elaborates the Project Cost as on COD:

Net ProjeNet ProjeNet ProjeNet Project Cost as on CODct Cost as on CODct Cost as on CODct Cost as on COD

Table 2.Table 2.Table 2.Table 2.4444.4.1..4.1..4.1..4.1. Amount in Cr. Rs.Amount in Cr. Rs.Amount in Cr. Rs.Amount in Cr. Rs.

SN Particulars Unit Amount

1 Capital expenditure up to CoD excluding IDC Rs. Cr. 1862.09

2 IDC amount capitalized as per audited books of A/c Rs. Cr. 407.74

3 Capital expenditure up to CoD including IDC (1+2) Rs. Cr. 2269.83

4 Amount billed for sale of Infirm Power Rs. Cr. 498.41

5 Expenditure on fuel for generation of Infirm Power Rs. Cr. 222.80

6 Net revenue earned on A/c of sale of Infirm Power Rs. Cr. 275.60

7 Net Capital cost as on CoD after duly accounting for

the revenue earned from sale of Infirm Power (3-6)

Rs. Cr. 1994.23

2.5 Additional Capital Expenditure

The Year wise additional capital expenditure subsequent to COD and the

cumulative project costs at the end of respective financial years, as per audited

books of accounts of FY09, FY10 and FY11, are given in the Table below.

Additional CapitalAdditional CapitalAdditional CapitalAdditional Capital ExpenditureExpenditureExpenditureExpenditure AfterAfterAfterAfter CODCODCODCOD till 31/03/2011till 31/03/2011till 31/03/2011till 31/03/2011

Table 2.5.1 ((((in Cr. Rs.)in Cr. Rs.)in Cr. Rs.)in Cr. Rs.)

As per Audited Books of Accounts

As on

COD

COD to

31/03/2009

Total as

on

31/03/2009

01/04/2009

to

31/03/2010

Total as on

31/03/2010

01/04/2010

to

31/03/2011

Total as on

31/03/2011

1994.23 3.35 1997.58 33.02 2030.6 26.45 2057.05

Provisional capital expenditure during FY12 and that projected for the period

from 01/04/2012 till completion of balance works including second phase of

Ash Bund is given in Table below.


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Additional Capital ExpAdditional Capital ExpAdditional Capital ExpAdditional Capital Exp.... from 01/04from 01/04from 01/04from 01/04/2011/2011/2011/2011 till completion of Balance Workstill completion of Balance Workstill completion of Balance Workstill completion of Balance Works

Table 2.5.2 ((((in Cr. Rs.)in Cr. Rs.)in Cr. Rs.)in Cr. Rs.)

Provisional Projected

From

01/04/2011

to

31/03/2012

Total as on

31/03/2012

From 01/04/2012 till

Completion of balance

works including the work

of second phase Ash Bund

Total as on completion

of balance works

including the work of

second phase Ash

Bund

42.00 2099.05 85.35 2184.40

As shown in above Tables, the total project cost on completion of facilities,

including the work for second phase Ash Bund, shall be Rs.2184.40 Crores

(on projected basis), which is well within the GoMP approved project cost

estimate of Rs. 2300 Crores. Account head wise details of additional capital

expenditure, subsequent to COD and upto 31/03/2011, as per the auditedbooks of accounts, are given in Form TPS-9.

2.6

Interest During Construction (IDC)

Funding of the 500MW SGTPS Extn. Unit No. 5, is through PFC Loan of

Rs.1560.00 Crores and GoMP/MPSEB Equity of Rs. 625.00 Crores. As per

the PFC demand statements, the figure for IDC is Rs. 397.81 Crores. Details

of quarter wise drawls and interest and finance charges till COD is given in

Form 16. However, as per the audited Books of Accounts of MPPGCL, the

amount for Interest during Construction (IDC), included in the project cost ason COD, is Rs. 407.74 Crores. The additional amount of Rs. 9.93 Crores

booked under IDC as per audited books of accounts is mainly for the MPSEB

period when ESAAR 1985 accounting procedure was being followed, which

eliminates identification of source to its use while capitalization of interest on

funds.

The difference of Rs. 9.93 Crores in the figures for IDC as per PFC demand

statements and as per audited books of accounts is mainly due to capitalization

of interest liability by erstwhile MPSEB to various Power Stations considering

the ratio of CWIP at various Power Stations. As the interest liability pertaining

to SGTPS 500 MW was transferred to MPPGCL through final opening

balance sheet as on 1st June, 2005, notified by GoMP vide its notification No.

No.4068-FRS-18-2002-XIII dated 12th June, 2008, same has been considered

by MPPGCL for determination of Project cost.


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In view of the above submissions, MPPGCL humbly requests the Honble

Commission to allow the IDC amount of Rs. 407.74 Crores as per audited

books of accounts.

2.7

Capital expenditure for Phase-II Ash Bund and allied works:

Since the capacity of the existing ash dump area at SGTPS Birsinghpur was

assessed to be exhausted by January 2011 or earlier, which could endanger the

operation of the thermal generating Units of SGTPS Birsinghpur, development

works for the second phase of ash dump (in 100 Hectares of forest land)

needed to be taken up timely. Accordingly, necessary approvals from MoEF

(GoI) and Forest Department, GoMP, Bhopal were obtained and other

activities were initiated in this regard for design of ash bund and its cost

estimation, etc. The estimated expenditure for the second phase of Ash Bund

is Rs. 46.26 Crores and the same shall be funded through the presently tied up

funds for 500 MW SGTPS Extn. Unit No. 5.

CEA while according techno-economic clearance and approving the initial

project cost estimate of Rs. 2093.75 Crores for 500MW SGTPS Extn. Unit

No. 5, vide its letter dated 20/12/2002 (Annexure-2), had not allowed the

provision for the construction of ash dyke for new ash pond as the existing ash

pond of stage-I was considered adequate to meet the requirement of ash

disposal of existing stage-I and proposed stage-II of the project up to 2008 and

also in view of MOEFs notification of September, 1998 requiring 100%utilization of fly ash by 2008. However, it was stated that any provision

required at a later date will be allowed as capital addition based on the

assessment of the stipulated requirements at that time by the concerned

regulatory authority.

In this regard, it may be highlighted that during the techno-economic clearance

stage of SGTPS Birsinghpur Project, the MoEF (GoI) had approved to take up

the works related to ash bund including ash disposal system in phased manner,

in three phases. Thus, the works related to the Phase-II and Phase-III ash

bunds were also a part of the original project report of Birsinghpur Complex.

However, the cost estimates for Phase-II and Phase-III ash bunds were not

made part of the project cost of 4*210 MW and 1*500 MW Units, during

installation and commissioning of these Units, as the same were not finalized

at that time.


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As per MPERC (Terms And Conditions For Determination Of Generation

Tariff) Regulations, 2005 (G-26 Of 2005), additional capital expenditure

actually incurred after the date of commercial operation and duly audited may

be considered by the Commission, subject to prudence check. As per clause

19(f) of MPERC Regulations 2005, any additional works/ services, which

have become necessary for efficient and successful operation of a generating

station but not included in the original capital cost is considered as additional

capital expenditure. Accordingly, the Petitioner requested the Honble

Commission, vide letter dated 20/02/2009, Annexure-32, to accord In-

principle approval for additional capital expenditure for development of

Phase-II of Ash disposal and allied works and financing from the project cost

of 1*500 MW Unit.

The Honble Commission vide letter dated 27/04/2009, Annexure-33,informed that the Commission shall consider the additional capital expenditure

incurred or projected to be incurred within the original scope of work after the

date of commercial operation in accordance with the Regulation 20 of the

terms and conditions of generation tariff for the next control period

commencing 2009.

2.8 There was a clause in the contract agreement for deduction of Liquidated

Damages from BHELs invoices on account of delays in the project

attributable to BHEL. An amount of Rs.93.04 Crores has been deducted

towards LD from BHELs dues which will be settled in due course of time. A

brief write-up on reasons for project delays is given in Annexure-34. Besides

LD, a cumulative amount of Rs. 18.89 Crores as on 31/03/2011 had been

retained as ERV/CDV. Year wise cumulative amounts retained as ERV/CDV

as on COD, end of FY09, end of FY10 and at end of FY11 are Rs.3.70 Crores,

Rs.5.77 Crores, Rs.17.54 Crores and Rs. 18.89 Crores, respectively. The

cumulative retention amount towards ERV/CDV as on 31/03/2011 should

actually have been limited to Rs.18.5 Crores only. Excess retained amount of

Rs.0.39 Crores has, therefore, been adjusted in May 2012. As such the net

amount retained as ERV/CDV is Rs.18.50 Crores. The amounts of LD and

ERV/CDV shall be finalized after reconciliation of accounts with BHEL prior

to closure of contract(s). These amounts are appearing as liability in the books

of accounts. Final decision in the matter of treatment of LD and ERV/CDV

deducted/retained from BHELs invoices shall be taken at the time of project

closure.


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3.3.3.3.Funding ofFunding ofFunding ofFunding of thethethethe ProjectProjectProjectProject

3.1 The approved funding pattern for the project cost of Rs. 2300.00 Crores is as

below:

ApprovedApprovedApprovedApproved Project FundingProject FundingProject FundingProject Funding

Table 3.1.1.

Particulars Amount (Rs. Cr.) %

Loan

Loan I (From PFC- Loan No. 20101011) 1560.00

Loan II / Additional Loan 115.00

Total Loan 1675.00 72.83

Equity

Foreign 0

Domestic (GOMP + MPSEB) 625.00Total Equity 625.00 27.17

Total Finance (Loan + Equity) 2300.00 100.00

3.2

The project funding till COD and subsequently in FY10, FY11 and FY12 is

given below. Figures for FY12 are on provisional basis:-

Details of Project FundingDetails of Project FundingDetails of Project FundingDetails of Project Funding

Table 3.2.1. Amount in Cr. Rs.

SN Particulars Equity PFC

Loan

Total

1 Up to March 2004 10.77 242.76 253.53

2 During FY05 43.31 300.02 343.33

3 During FY06 280.15 459.12 739.27

4 During FY07 270.00 163.02 433.02

5 During FY08 20.77 101.16 121.93

6 During FY09 (Till COD) 0.00 34.72 34.72

Sub Total (Till COD) 625.00 1300.79 1925.79

8 During FY09, from COD to 31/03/2009 0.00 17.82 17.82

9 During FY10 0.00 82.54 82.5410 During FY11 0.00 71.87 71.87

11 During FY12* 0.00 51.81 51.81

Sub Total (After COD till 31/03/2012) 0.00 224.05 224.05

Grand Total (Till 31/03/2012) 625.00 1524.83 2149.83

* Provisional


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Cumulative Project FundingCumulative Project FundingCumulative Project FundingCumulative Project FundingTable 3.2.2 Amount in Cr. Rs.

3.3 Out of the total equity of Rs. 625.00 Crores, an amount of Rs. 14.08 Crores

has been funded by MPSEB through its internal resources while Rs. 610.92

Crores has been funded as GoMP equity released as detailed in Table 3.3.1

below. Copies of release letters are attached as Annexure-35to Annexure-45

DetailsDetailsDetailsDetails ofofofof GoMPGoMPGoMPGoMP EquityEquityEquityEquity Released ReleasedReleasedReleasedTable 3.3.1SN Approval Letter Dated Amount

(Rs. Cr.)

Received Date

1 6334 & 6335/13/2004 30/10/2004 27.00 Nov 2004

2 1702/13/2005 01/03/2005 13.00 Mar 2005

3 7056/13/2005 29/10/2005 60.00 Nov 2005

4 494/13/2006 30/01/2006 50.00 Jan 2006

5 1726/13/2006 16/03/2006 70.15 Mar 2006

6 1991/13/2006 25/03/2006 100.00 Mar 2006

7 3639/F-5-3/13/2006 14/06/2006 56.00 Jun 20068 5119/F-5-3/13/2006 05/08/2006 34.00 Aug 2006

9 6467/F-5-3/13/2006 10/10/2006 75.00 Oct 2006

10 MPPGCL/917 04/04/2007 105.00 Mar 2007

11 F-5-3/13/2006 16/01/2008 20.77 Jan 2008

Total 610.92

Source

of fund

Till

COD

In FY-09

From

COD to31/03/20

09

Cumulativ

e Funding

till31/03/2009

In FY10

01/04/20

09 to31/03/20

10

Cumulativ

e Funding

till31/03/2010

in FY11

01/04/2010

to31/03/2011

Cumulativ

e Funding

till31/03/2011

Equity 625.00 0.00 625.00 0.00 625.00 0.00 625.00

Loan 1300.79 17.82 1318.61 82.54 1401.15 71.87 1473.02

Total 1925.79 17.82 1943.61 82.54 2026.15 71.87 2098.02

Source of fund in FY12

01/04/2011 to

31/03/2012

Cumulative

Funding till

31/03/2012

From 01/04/2012

to completion of

works (Projected)

Cumulative

Funding till

completion of

works

(Projected)

Equity 0.00 625.00 0.00 625.00

Loan 51.81 1524.83 34.57 1559.40

Total 51.81 2149.83 34.57 2184.40


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3.4 PFC has sanctioned a loan amounting to Rs.1560.00 Cr. (No. 20101011) for

setting up of 500MW SGTPS Extn. Unit No. 5, Birsinghpur. Details of this

loan have been provided in Form TPS-7 in this petition and copy of PFC

sanction letter dated 02/05/2003 is attached as Annexure-46. Table no. 3.2.1

above elaborates the loan amounts drawn for the project, starting from FY04

till COD and subsequently for the additional capital expenditure till FY12.

Total loan drawal till CoD amounts to Rs.1300.79 Crores. Subsequent loan

drawals in FY09 (from COD to 31/03/2009), FY10, FY11 and FY12 are Rs.

17.82 Crs, Rs.82.54 Crores, 71.87 Crores and Rs. 51.81 Crores respectively.

Quarter wise loan drawals are elaborated in Form -16. As a part of the total

loan funding of Rs. 1675.00 Crores in the approved total estimated cost of Rs.

2300.00 Crores, an additional loan of Rs. 115.00 Crores was also applied for

from PFC, in Oct 2006. However, subsequently, due to expected delay in the

project execution MPPGCL had decided to levy LD on M/s BHEL resultinginto reduction in fund requirements. Therefore, PFC was requested to defer the

processing of MPPGCLs proposal for sanctioning additional loan of Rs. 115

Crores, in Feb 2007.

3.5 Ratio of loan and equity drawls as on COD is given in table below:

Approved Funding Pattern and Actual Funding as on CODApproved Funding Pattern and Actual Funding as on CODApproved Funding Pattern and Actual Funding as on CODApproved Funding Pattern and Actual Funding as on COD

S

N

Item As per Approved

Estimate

Funding As on

COD

Cr. Rs. % Cr. Rs. %

1 LoanPFC Loan-I (20101011) 1560.00 67.83% 1300.79 67.55%

Additional PFC Loan 115.00 5.00% 0.00 0.00%

Total Loan 1675.00 72.83% 1300.79 67.55%

2 Equity

GoMP 610.92 26.56% 610.92 31.72%

MPSEB 14.08 0.61% 14.08 0.73%

3 Total Equity 625.00 27.17% 625.00 32.45%

4 Total Funding 2300.00 100.00% 1925.79 100.00%

As seen from the above table, total equity drawn till COD is 32.45%. ThePetitioner has, therefore, considered admissible equity amount of Rs. 577.74

Crores only, 30% of total funding as on COD, for computing the return on

equity as per MPERC (Terms and Conditions for Determination of Generation

Tariff) Regulations, 2005 {G-26 of 2005}. The balance equity amount of

Rs.47.26 Crores has been treated as Normative Loan and interest has been

claimed at weighted average rate of interest for the Year.


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4.4.4.4.Norms of OperationNorms of OperationNorms of OperationNorms of Operation

4.1 As per Clause 1.5 of "MPERC (Terms and Conditions of Generation Tariff)

Regulations, 2005 {G-26 OF 2005}", applicable norms for SGTPS 500 MW

Unit No. 5 for the period FY09 are those as prescribed by CERC vide its order

dated 26/03/2004. For the Control Period FY10 to FY12, the Norms

prescribed by the Honble Commission, in "MPERC (Terms and Conditions of

Generation Tariff) Regulations, 2009 {RG-26 (I) OF 2009}" are applicable.

4.2 Accordingly, following norms are applicable for 500 MW SGTPS Unit No. 5,

Birsinghpur, for the period FY09 to FY12:

NormsNormsNormsNorms of Operationof Operationof Operationof Operation

Table No. 4.2.1.

Particulars Unit For FY09 For FY10

to FY12

Target Availability for Recovery of

Full Capacity (Fixed Charges)

% 80 -

Normative Plant Availability Factor % - 85

Target PLF for Incentive % 80 -

Gross Station Heat Rate kCal/kWh 2450 2425

Specific Secondary Fuel Oil

Consumption

ml/kWh 2 1

Auxiliary Energy consumption % 7 6


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5.5.5.5. Components of TariffComponents of TariffComponents of TariffComponents of Tariff

5.1 In accordance with "MPERC (Terms and Conditions of Generation Tariff)

Regulations, 2005 {G-26 OF 2005}" and "MPERC (Terms and Conditions of

Generation Tariff) Regulations, 2009 {RG-26 (I) OF 2009}", the tariff for sale of

electricity from a thermal power generating station shall comprise of two parts,

namely the recovery of annual capacity (fixed) charges and energy (variable)

charges.

5.2 As per "MPERC (Terms and Conditions of Generation Tariff) Regulations, 2005

{G-26 OF 2005}":-

5.2.1

The annual capacity (fixed) charges consist of :-

5.2.1.1

Interest on Loan Capital,

5.2.1.2

Depreciation, including advance against depreciation,5.2.1.3

Return on Equity,

5.2.1.4

Operation & Maintenance Expenses,

5.2.1.5

Interest on Working Capital,

5.2.1.6 Actual Expenditure incurred on terminal benefits including

pension,

5.2.1.7

Prior Period Expenditure.

5.2.2 The Energy (Variable) Charges shall cover fuel cost.

5.3

As per "MPERC (Terms and Conditions of Generation Tariff) Regulations, 2009{RG-26 (I) OF 2009}":-

5.3.1 The annual capacity (fixed) charges consist of :-

5.3.1.1

Return on Equity

5.3.1.2

Interest and Financing Charges on Loan Capital

5.3.1.3

Depreciation

5.3.1.4 Lease/Hire Purchase Charges

5.3.1.5 Operation and Maintenance Expenses

5.3.1.6

Interest Charges on Working Capital

5.3.1.7

Cost of Secondary Fuel Oil

5.3.1.8

Special allowance in lieu of R&M or separate compensation

allowance, wherever applicable

5.3.2

The Energy (variable) Charges shall cover main fuel cost.

5.4 Calculation of these charges, as per the aforesaid Regulations, has been detailed in

the forthcoming chapters.


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6.6.6.6. Return on EquityReturn on EquityReturn on EquityReturn on Equity

6.1

Return on Equity for the period FY09 has been computed on the paid up

equity capital determined in accordance with regulation 20 of "MPERC

Regulations, 2005 {G-26 OF 2005}" and has been computed at 14% (post tax)

per annum. Where equity employed is in excess of 30%, the amount of equity

for the purpose of tariff has been limited to 30% and the balance amount has

been considered as loan. The interest rate applicable on the equity in excess of

30%, treated as loan, has been taken as specified in regulation 22 of "MPERC

Regulations, 2005 {G-26 OF 2005}". Where actual equity employed is less

than or equal to 30%, the actual equity has been considered.

6.2 Return on Equity for the period FY10 to FY12 has been computed on the paid

up equity capital determined in accordance with regulation 21 of "MPERC

Regulations, 2009 {RG-26 (I) OF 2009}" and has been computed on pre-tax

basis at the base rate of 15.5% to be grossed up as per regulation 22.3 of

"MPERC Regulations, 2009 {RG-26 (I) OF 2009}". Where equity actually

employed is in excess of 30%, the amount of equity for the purpose of Tariff

has been limited to 30% and the balance amount has been considered as loan.

The interest rate applicable on the equity in excess of 30%, treated as loan, has

been taken as specified in Regulation 23 of "MPERC Regulations, 2009 {RG-

26 (I) OF 2009}". Where actual equity employed is less than or equal to 30%,

the actual equity has been considered.

6.3 Since no tax has been paid by MPPGCL in FY10 and FY11, the return on

equity has been computed on the base rate of 15.5 % for FY10 and FY11. For

FY12, the rate of return on equity has been computed by grossing up the base

rate with the Minimum Alternate Tax (MAT) rates applicable. In case,

MPPGCL becomes liable to pay any other type of tax /surcharge on RoE, thesame shall be chargeable separately.

6.4 Accordingly, Return on Equity for the respective Years works out as under :-


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Return on EquityReturn on EquityReturn on EquityReturn on Equity

Table No. 6.4.1 Amount in Cr. Rs.

S.No. Particulars FY09(COD to

31/03/2009)

FY10 FY11 FY12 *

1 Opening Equity Cr.Rs. 577.74 577.74 577.74 577.74

2 Addition in Equity Cr.Rs. 0.00 0.00 0.00 0.00

3 Closing Equity Cr.Rs. 577.74 577.74 577.74 577.74

4 Average Equity Cr.Rs. 577.74 577.74 577.74 577.74

5 Base Rate of Return on

Equity

% 14.00% 15.50% 15.50% 15.50%

6 Tax Rate Considered

(MAT includingsurcharge and Cess &

SHEC for FY12)

% 0.000% 0.000% 0.000% 20.008%

7 ROE Rate (Pre Tax) % 14.000% 15.500% 15.500% 19.377%

8 Pre Tax ROE Amount

on Yearly Basis, Cr.

Rs.

Cr.Rs. 80.88 89.55 89.55 111.95

9 Period of operation

during the Year (indays)

Days 216 365 365 366

10 ROE for the actual

period of operation,

Cr. Rs.

Cr.Rs. 47.87 89.55 89.55 111.95

11 Amount of MAT, Cr.

Rs.

Cr.Rs. 0.00 0.00 0.00 22.40

12 Post Tax ROE , Cr. Rs. Cr.Rs. 47.87 89.55 89.55 89.55

* ROE figures for FY12 are provisional.

6.5 It is humbly requested before Honble Commission to kindly permit the same.


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7.7.7.7.Interest & Finance CInterest & Finance CInterest & Finance CInterest & Finance Chargeshargeshargesharges

7.1 Considering the terms of the loan sanctioned by PFC, as detailed in Chapter

No. 3, interest and finance charges on loan capital have been worked out in

accordance with regulation 22 of "MPERC Regulations, 2005 {G-26 OF

2005}" for the period FY09 and in accordance with regulation 23 of "MPERC

Regulations, 2009 {RG-26 (I) OF 2009}" for the period FY10 to FY12.

7.2 For FY09, as per clause 2.17 of regulation 22 of "MPERC Regulations, 2005

{G-26 OF 2005}", depreciation provided for in the tariff during the years of

moratorium has been treated as repayment during the respective year and

interest on loan capital has been calculated accordingly. For FY10 to FY12, as

per clause 23.4 of regulation 23 of "MPERC Regulations, 2009 {RG-26 (I)

OF 2009}", the repayment of loan has been considered equal to the annual

depreciation allowed.

7.3 Accordingly, the interest and finance charges worked out are given in Table

7.3.1.

Interest & Finance ChargesInterest & Finance ChargesInterest & Finance ChargesInterest & Finance ChargesTable No. 7.3.1 Rs. In CrRs. In CrRs. In CrRs. In Cr

Particulars FY09 FY10 FY11 FY12 *

Gross Normative loan -

Opening

1348.05 1323.37 1434.06 1543.36

Cumulative repayments of

Normative Loans upto previousyear

0.00 0.00 133.07 276.77

Net Normative loan - Opening 1348.05 1323.37 1301.00 1266.59

Add: Drawal(s) during the Year 17.82 82.54 71.87 51.81

Less: Repayment (s) of

Normative Loans during the

year

42.51 104.91 106.28 108.45

Net Normative loan - Closing 1323.37 1301.00 1266.59 1209.95

Avg. Normative Loan 1335.71 1312.18 1283.79 1238.27

Weighted Avg. Rate of Interest

on Actual Loans

11.56 11.58 11.56 11.58

Interest on Normative Loan ** 91.38 151.95 148.41 143.39

* Interest on Normative Loan for FY12 is provisional as the figures for

FY12 are unaudited.

** Interest on Normative Loan for FY09 is for 216 days.

7.4 It is humbly requested before Honble Commission to kindly permit the same.


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8.8.8.8. DepreciationDepreciationDepreciationDepreciation

8.1 Honble Commission in its regulation "MPERC (Terms and Conditions of

Generation Tariff) Regulations, 2005 {G-26 OF 2005}" has specified the

principles of charging depreciation. MPPGCL has determined the weighted

average rate of depreciation for FY09 as per the Regulations, 2005, at rates

specified in Appendix I of the Regulation. Further the Honble Commission,

in its Regulations 2005, clause 2.20, permits Advance against Depreciation

(AAD) for new projects in addition to allowable depreciation, provided if the

cumulative repayment up to a particular year exceeds the cumulative

depreciation up to that year. Since the cumulative repayment up to FY09 is nil,

MPPGCL has not claimed any AAD, as per Regulations 2005.

8.2 Honble Commission in its Regulation "MPERC (Terms and Conditions of

Generatio

Documents

031112-mppgcl-sgtps500mw-final-tariff-petition-58-12.pdf