1

BEFORE THE MADHYA PRADESH ELECTRICITY REGULATORY

COMMISSION AT BHOPAL

PETITION NO. 57 OF 2018

IN THE MATTER OF: Petition under Section 62 and Section 86(1)(a) of the Electricity Act,

2003 read with Part VII of the Electricity Act, 2003 for True-up of

Tariff for Unit-2 (600 MW) of 2 x 600 MW coal based Anuppur

Thermal Power Project (Phase-I) comprising of Unit-1 & Unit-2

(of 600 MW each) at District Anuppur, Madhya Pradesh for the

period from 01st April 2017 to 31

st March 2019 under Madhya

Pradesh Electricity Regulatory Commission (Terms and Conditions

for determination of Generation Tariff) Regulations, 2015.

AND

IN THE MATTER OF:

MB Power (Madhya Pradesh) Ltd.,

Laharpur, Jaithari,

Anuppur, Madhya Pradesh - 484330 … PETITIONER

VERSUS

1. M.P Power Management Company Ltd.,

(Erstwhile Madhya Pradesh Power Trading Company Ltd.)

Shakti Bhawan, Vidyut Nagar, Rampur,

Jabalpur, Madhya Pradesh – 482008, India

2. Madhya Pradesh Poorv Kshetra Vidyut Vitaran Company Ltd.,

Shakti Bhawan, Vidyut Nagar, Rampur,

Jabalpur, Madhya Pradesh – 482008, India

3. Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company Ltd.,

Bijli Nagar Colony, Nishtha Parisar,

Govindpura, Bhopal, Madhya Pradesh – 462023

4. Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Ltd.,

GPH Compound,

Polo Ground, Indore, Madhya Pradesh – 452003 …RESPONDENTS

2

The Petitioner, MB Power (Madhya Pradesh) Limited submits that:-

1. The Petitioner is a generating company defined under Section 2(28) of the Electricity Act,

2003, hereinafter referred as 'Act', and is filing the instant Petition for determination of

True-up tariff for supply of power from Unit-2 (600 MW) of its 1200 MW (2x600 MW)

sub-critical coal based Anuppur Thermal Power Project (Phase-I) at District Anuppur,

Madhya Pradesh, hereinafter referred as 'Project' (comprising of 2 Units of 600 MW each), for

the period commencing from 01st April 2017 till 31

st March 2019 under Madhya Pradesh

Electricity Regulatory Commission (Terms and Conditions for determination of Generation

Tariff) Regulations, 2015, hereinafter referred as 'Tariff Regulations, 2015'.

2. The Petitioner has entered into two separate Power Purchase Agreements, hereinafter referred

as 'PPAs', with Madhya Pradesh Power Management Company Ltd., formerly known as

Madhya Pradesh Power Trading Company Ltd., hereinafter referred as 'MPPMCL',

(Respondent No. 1) as follows:

(a) PPA dated 05.01.2011 as amended on 31.07.2013 with Respondent No. 1 being the lead

procurer for Madhya Pradesh Poorv Kshetra Vidyut Vitaran Company Ltd. (Respondent

No. 2), Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company Ltd. (Respondent

No. 3) and Madhya Pradesh Pashchim Kshetra Vidyut Vitaran Nigam Limited

(Respondent No. 4) for supply of an aggregate of 30% of the installed capacity of the

Project for a period of 20 years at the regulated tariff to be determined by the Hon’ble

Commission, hereinafter referred as 'Non-Concessional PPA'; and

(b) PPA dated 04.05.2011 with Government of Madhya Pradesh, hereinafter referred as

'GoMP', (Respondent No. 1 being the nominated agency of GoMP) for supply of 5% of

the net power generated from the Project at the variable charges for the life of the

Project, hereinafter referred as 'Concessional PPA'.

3. This Hon’ble Commission by its Order dated 07.09.2012 passed in Petition No. 7 of 2012 and

Order dated 04.02.2013 passed in Petition No. 82 of 2012 has accorded approval to the

aforesaid Non-Concessional PPA.

4. The Unit-1 (600 MW) of the Project achieved Commercial Operation Date, hereinafter

referred as 'COD', w.e.f. 00.00 Hours of 20th

May 2015 and Unit-2 (600 MW) of the Project

achieved COD w.e.f. 00.00 Hours of 07th

April 2016.

3

Summary of Tariff Orders

A. Tariff Orders for Unit-1 of the Project

5. This Hon'ble Commission vide Order dated 01.12.2017 passed in Petition No. 68 of 2016,

determined the final tariff of the Unit-1 of the Project as under:

a) Tariff for the period from COD of Unit-1 (i.e. 20.05.2015) till 31.03.2016 based on

Annual Audited Accounts for FY 2015-16 in terms of Madhya Pradesh Electricity

Regulatory Commission (Terms and Conditions for determination of Generation Tariff)

Regulations, 2012 hereinafter referred as 'Tariff Regulations, 2012' and;

b) Tariff for the period from 01.04.2016 to 31.03.2019 (for the control period

FY 2016-2019) in terms of MPERC Tariff Regulations 2015 on provisional basis subject

to true up on annual basis by this Hon’ble Commission based on Annual Audited

Accounts for the respective years.

6. Subsequently, this Hon'ble Commission vide Order dated 06.09.2018 passed in

Petition No. 11 of 2018, determined the true-up tariff of Unit-1 of the Project for the period

from 01.04.2016 to 31.03.2017 based on Annual Audited Accounts for FY 2016-17, in terms

of MPERC Tariff Regulations 2015;

7. Further, the Petitioner has already filed the Petition No. 51 of 2018 before this Hon’ble

Commission for determination of True-up tariff for supply of power from Unit-1 (600 MW) of

its Project for the period from 01.04.2017 to 31.03.2019 (i.e remaining control period under

MPERC Tariff Regulations 2015) based on Annual Audited Accounts for FY 2017-18 and

projected Additional Capital Expenditure for FY 2018-19 in terms of MPERC Tariff

Regulations 2015. The said Petition was admitted by this Hon’ble Commission by its daily

Order dated 12.12.2018.

B. Tariff Orders for Unit-2 of the Project

8. This Hon'ble Commission vide Order dated 29.11.2018 passed in Petition No. 10 of 2018,

determined the final tariff of the Unit-2 of the Project as under:

a) Tariff for the period from COD of Unit-2 (i.e. 07.04.2016) till 31.03.2016 based on

Annual Audited Accounts for FY 2016-17 in terms of Tariff Regulations, 2015;

b) Tariff for the period from 01.04.2017 till 31.03.2019 in terms of MPERC Tariff

Regulations 2015 on provisional basis subject to true-up on annual basis by the Hon’ble

Commission based on the Annual Audited Accounts for the respective years.

9. In accordance with aforesaid Order dated 29.11.2018, the Petitioner is hereby filing the instant

Petition in terms of Regulations 8.4 of MPERC Tariff Regulations 2015 for true-up of tariff

for the supply of power from Unit-2 for the period 01.04.2017 to 31.03.2019 (i.e remaining

4

control period under MPERC Tariff Regulations 2015) based on Annual Audited Accounts

for FY 2017-18 and projected Additional Capital Expenditure for FY 2018-19.

10. The submissions made by the Petitioner in the aforesaid Petitions i.e Petition No. 10 of 2018

and Petition No. 51 of 2018 may kindly be considered as an integral part of the instant Petition

which have not been repeated in the instant Petition for the sake of brevity.

Capital Cost of the Project as per the Annual Audited Accounts for FY 2017-18

11. The Petitioner submits that the Annual Audited Accounts for FY 2017-18 of the Petitioner’s

Company have now been placed on record for the consideration of this Hon’ble Commission,

a copy of which is attached hereto and marked as ANNEXURE-1.

12. The Petitioner further submits that the Annual Audited Accounts for FY 2017-18 have been

prepared under IND AS Accounting Standards in compliance with the Gazette Notification

dated 16.02.2015 issued by Ministry of Corporate Affairs.

13. The Petitioner submits that the reconciliation of the Gross Fixed Assets as on 31.03.2018

based on transition from Indian GAAP to IND AS, duly certified by the Auditor is attached

hereto and marked as ANNEXURE-2.

14. The Capital Cost of the Project as filed in Petition No. 10 of 2018 was Rs 8350.47 Crore

which was estimated on the basis of capitalized assets/expenditures, capital work in progress

and balance commitments/provisions of expenditure outstanding as on COD of Unit-2

(07.04.2016) as reflected in the Annual Audited Accounts for FY 2016-17.

15. However, the Petitioner further submits that based on the Annual Audited Accounts for

FY 2017-18, the capital cost of the Project has been re-estimated and reconciled as follows:

(Rs. Crore)

Particulars (in I-GAAP accounting standards) Amount

Gross Fixed Assets as on 31.03.2018 8001.53

Capital Work in Progress as on 31.03.2018 18.38

Sub Total 8019.91

Less: Disallowance by this Hon’ble Commission in its Order 29.11.2018 passed in Petition

No. 10 of 2018

(88.77)

Net Capital Cost 7931.13

Add: FERV Losses charged to P&L as allowed by this Hon’ble Commission in Order dated

29.11.2018 passed in Petition No. 10 of 2018 as on COD of Unit-2 (07.04.2016)

(Unit-1: Rs 46.69 Crore; Unit-2: Rs 101.35 Crore)

148.04

Add:Unamortized Finance Cost to Borrowings (as on COD of Unit-2) 34.93

Add: Provision for Custom Duty/ Excise Duty 163.97

Add: Carrying Cost considered as a part of Project Cost by this Hon’ble Commisison in its

Order dated 29.11.2018 passed in Petition No. 10 of 2018

28.09

Total – Capital Cost of the Project 8306.16

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16. The Petitioner humbly submits that in accordance with the Order dated 29.11.2018 passed in

the Petition No. 10 of 2018 by Hon’ble Commisisons, the estimated Capital Cost of the

Project has now been revised to Rs 8306.16 Crore from Rs 8350.47 Crore, as earlier submitted

in the Petition No. 10 of 2018.

17. The item wise reconciliation of the revised estimated Project Capital Cost vis-à-vis the earlier

submitted Project Capital Cost is as hereunder:

(Rs. Crore)

S.

No Particulars

Project

Capital Cost

(as filed

under

Petition No.

10 of 2018)

Reconciled

Project Capital

Cost with

Annual Audited

Accounts for

FY 2017-18

Capital Exp.

Allowed(+)/

Disallowed(-)

by this Hon’ble

Commission in

its Order dated

29.11.2018

Revised

Project

Capital

Cost

A B C D E F = D-E

1 Freehold Land 150.53 156.21 - 156.21

2 Leasehold Land 21.58 21.58 - 21.58

3 Plant & Machinery 4565.83 4586.97 - 4586.97

4 Building & Civil Works 895.11 895.11 - 895.11

5 Pre-operative Expenditure 437.99 437.99 (19.31) 418.68

6 IDC/Finance Charges 1893.29 1893.29 (69.46) 1823.83

7 Custom Duty/Excise Duty

(Paid and capitalized)

28.75 28.75 - 28.75

Sub Total 7993.08 8019.91 (88.77) 7931.13

8 Custom Duty/Excise Duty

(Provision)

163.97 163.97 - 163.97

9 Add: FERV Losses charged

to revenue till Unit-2 COD

158.49 158.49 (10.45) 148.04

10 Add: Unamortized Cost to

Borrowings till Unit-2 COD

34.93 34.93 - 34.93

11 Add: Carrying Cost

considered as a part of

Project Cost by this Hon’ble

Commisison in its Order

dated 29.11.2018 passed in

in Petition No. 10 of 2018

- - +28.09 28.09

Capital Cost of the Project 8350.47 8377.29 (71.13) 8306.16

Firmed-up Unit-wise Capital Cost of the Project

18. The Petitioner submits the Auditor’s Certificate dated 12.11.2018 for unit-wise cash

expenditure as on 31.03.2018 along with Auditor’s Certificate dated 06.02.2018 for unit-wise

cash expenditure as on 31.03.2017 attached hereto and marked as ANNEXURE-3 (Colly).

Accordingly, the Project cash expenditure has been summarized as under:

6

(Rs. Crore)

S.

N

o

Particulars

Project

Cash Exp.

As on

31.03.2017*

Project

Cash Exp.

As on

31.03.2018*

Project

Cash

Exp.

during

FY 17-18

Additional

Cash Exp.

for Unit-1

during

FY 2017-18

Additional

Cash Exp.

for Unit-2

during

FY 2017-18

1 Land & Site

Development 92.11 103.59 11.48 - 11.48

2 Plant & Machinery 4337.32 4559.50 222.19 95.30 126.89

3 Building & Civil

Works 854.19 890.63 36.44 32.49 3.95

4 Pre-operative

Expenditure 419.62 437.52 17.90 10.80 7.10

5 IDC/Finance

Charges 1887.97 1891.32 3.35 - 3.35

6

Custom Duty/

Excise Duty

(Paid &capitalized)

28.75 28.75 - - -

Sub Total 7619.96 7911.31 291.36 138.59 152.77

7

Custom Duty/

Excised Duty

(Provision)

- - - - -

8

Add: FERV Losses

charged to revenue

till COD of Unit-2

158.49# 197.12 38.63 - 38.63

#

9

Add: Unamortized

Cost to Borrowings

till COD of Unit-2

34.93 34.93 - - -

Total 7813.38 8143.36 329.99 138.59 191.40

*excluding cash expenditure pertaining to CWIP as on date

#: Against the claimed FERV of Rs. 158.49 Crore for the Project till FY 2016-17, this Hon’ble Commission

has allowed FERV of Rs 148.04 Crore (Unit-1: Rs 46.69 Crore + Unit-2: Rs 101.35 Crore) corresponding to

the Project contruction period. Further, FERV of another Rs 5.84 Crore has been allowed by this Hon’ble

Commisison for Unit-2 for FY 2016-17 (operating period of Unit-2). As such the balance of Rs 4.61 Crore

(Rs 158.49 Crore - Rs 148.04 - Rs 5.84 Crores) has been carried forward for Unit-2 for FY 2017-18 in

addition to FERV of Rs 38.63 Crores claimed for Unit-2 for FY 2017-18 as per Annual Audited Accounts for

FY 2017-18

19. As approved and allowed by this this Hon’ble Commision vide its Order(s) dated:

(i) 06.09.2018 passed in Petition No. 11 of 2018 (True-up Tariff for Unit-1 for FY 2016-17);

(ii) 29.11.2018 passed in Petition No. 10 of 2018 (Final Tariff of Unit-2), the Petition submits

that opening capital blocks for Unit-1 & Unit-2 and Unit wise Additional Capital Expenditure

hereinafter referred as 'ACE' for FY 2017-18 are as follows:

7

(Rs. Crore)

S.No Particulars (on cash basis) Project Unit-1 Unit-2

1 Opening Capital Block as on 01.04.2017 7713.50 4303.40 3410.12

2 Actual ACE during FY 2017-18* 291.36 138.59 152.77

3 Closing Capital Block as on 31.03.2018 8004.86 4441.99 3562.90

*excluding FERV losses of Rs 38.63 Crore and treated as part of Annual Fixed Charges as per this Hon’ble

Commission;s Order dated 29.11.2018 in Petition No.10 of 2018

20. Based on the revised estimates of the Project Capital Cost as detailed our in Paragraph 17 of

the instant Petition & estimated closing capital block till 31.03.2018, the outstanding liabilities

and Projected ACE for FY 2018-19 is as follows:

(Rs. Crore)

S.

No Particulars

Revised

Project

Capital

Cost

Projected

Capital

Block as on

31.03.2018

Outstanding

Liabilities/

Provisions as on

31.03.2018

Projected ACE

for FY 2018-19

1 Land & Site Development 177.79 103.59 74.20 12.00

2 Plant & Machinery 4586.97 4559.50 27.47 27.47

3 Building & Civil Works 895.11 890.64 4.47 4.47

4 Pre-operative Expenditure 418.68 418.21 0.47 0.47

5 IDC/Finance Charges 1823.83 1821.86 1.97 1.97

6 Custom Duty/ Excise Duty

(Paid & capitalized) 28.75 - - -

Sub Total 7931.13 7822.55 108.58 46.38

7 Add: Custom Duty/ Excise

Duty (Provision) 163.97 - 163.97 163.97

8

Add: FERV Losses charged

to P&L as allowed by this

Hon’ble Commission in

Order dated 29.11.2018

passed in Petition No. 10 of

2018 as on COD of Unit-2

(07.04.2016)

148.04 148.04 - -

9 Add: Unamortized Cost to

Borrowings till Unit-2 COD 34.93 34.93 - -

10

Add: Carrying Cost

considered as a part of

Project Cost by this Hon’ble

Commisison in its Order

dated 29.11.2018 passed in

in Petition No. 10 of 2018

28.09 28.09 - -

Total 8306.16 8004.86 272.55 210.35

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21. The Unit wise projected ACE for FY 2018-19 is as follows:

(Rs. Crore)

S.

No Particulars

Projected ACE for

the Project for

FY 18-19

Projected ACE

for Unit-1 for

FY 18-19

Projected ACE

for Unit-2 for

FY 18-19

1 Land & Site Development 12.00 6.00 6.00

2 Plant & Machinery 27.47 - 27.47

3 Building & Civil Works 4.47 - 4.47

4

Pre-operative Expenditure incurred

prior to COD of Unit-2 but now

projected to capitalized.

0.47 - 0.47

5

IDC/ Finance Charges incurred prior

to COD of Unit-2 but now projected

to capitalized.

1.97 - 1.97

6 Customs Duty/ Excise Duty

(Provision) 163.97 - 163.97

Total 210.35 6.00 204.35

22. In view of above, Capital Cost for Unit-2 considered in the instant Petition for the purpose of

tariff for Unit-2 is as shown below:

(Rs. Crore)

Particulars FY 2017-18 FY 2018-19

Opening Capital Cost 3410.12 3562.89

ACE during FY 2017-18 152.77 204.35

Closing Capital Cost 3562.90 3767.24

Average Capital Cost 3486.51 3665.07

Debt Equity Ratio for truing up of Additional Expenditure

23. The Petitioner submits that the debt-equity ratio of (73.51) : (26.49) as approved by this

Hon’ble Commisison in its Order dated 29.11.2018 pased in Petition No. 10 of 2018 has been

retained for the purpose of tariff in the instant Petition.

9

Components of Annual Capacity (Fixed) Charges for Unit-2

A. Return on Equity

24. In terms of Regulation 30 of Tariff Regulations, 2015, the Petitioner submits that for the

FY 2017-18, it has neither paid any Normal Tax nor MAT, accordingly Return on Equity has

been computed considering base rate of 15.50%. The Return on Equity computation is as

shown below:

(Rs. Crore)

Particulars FY 2017-18 FY 2018-19

Opening Equity 903.34 943.81

Addition in Equity during the year/ period 40.47 54.13

Closing Equity 943.81 997.94

Average Equity 923.58 970.88

Base rate of Return on Equity 15.500% 15.500%

Effective Tax rate 0.000% 0.000%#

Rate of return on equity 15.500% 15.500%

Annual Return on Equity 143.15 150.49

# Petitioner craves leave to claim tax as applicable as a part of the true-up Petition for FY 2018-19.

B. Interest on Loan

25. Regulation 32.5 of Tariff Regulations, 2015 stipulates that the rate of interest shall be

weighted average rate of interest calculated on the basis of the actual loan portfolio after

providing appropriate adjustment for interest capitalized.

26. Accordingly, the Petitioner submits that the weighted average rate of interest (WAROI) of

13.34% (calculation detailed out under Form-13 of Tariff Forms enclosed with the instant

Petition) has been considered for computation of interest on loan for the period FY 2017-18

and FY 2018-19. The interest on loan claimed has been computed as shown below:

(Rs. Crore)

Particulars FY 2017-18 FY 2018-19

Gross Opening Normative Loan 2506.78 2619.08

Less: Cumulative repayment of Normative Loan 161.12 331.18

Opening Normative Loan 2345.66 2287.90

Add: Increase in Loan during the year / period 112.30 150.22

Less: Normative Repayment during the year / period 170.06 178.78

Closing Normative Loan 2287.90 2259.34

Average Normative Loan 2316.78 2273.62

Weighted Average Rate of Interest 13.34% 13.34%

Annual Interest & Finance Charges 309.09 303.33

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C. Depreciation

27. The Petitioner in accordance with Regulation 33 of Tariff Regulations, 2015 submits that it

has accordingly computed weighted average rate of depreciation of 4.88% for FY 2017-18

and 4.88% for the period FY 2018-19 considering Fixed Asset Register based on “Previous

Indian GAAP” and the rates of depreciation as per Appendix-II to Tariff Regulations, 2015.

The working of weighted average rate of depreciation is placed at Form-11 of the Tariff

Forms enclosed with the instant Petition. The depreciation claimed has been computed as

shown below:

(Rs. Crore)

Particulars FY 2017-18 FY 2018-19

Opening Capital Cost 3410.12 3562.89

Closing Capital Cost 3562.89 3767.24

Average Capital Cost 3486.51 3665.07

Weighted Average rate of Depreciation 4.88% 4.88%

Depreciation (for the period) 170.06 178.78

D. Operation and Maintenance Expenses (O&M Expenses)

28. The Petitioner submits that O&M Expenses have been claimed considering the norms for the

tariff period 2017-19 as specified in Regulation 35.8 of Tariff Regulations, 2015. The

necessary computation of O&M Expenses claimed is as shown below:

(Rs. Crore)

Particular Unit FY 2017-18 FY 2018-19

Installed Capacity MW 600 600

O&M Exp. (as per norms) in Rs.Lakh/MW 17.30 18.38

Annual O&M Expenses In Rs. Crore 103.80 110.28

E. Interest on Working Capital

29. Regulation 34.3 of Tariff Regulations, 2015 prescribes that rate of interest on working capital

shall be considered as bank rate [defined under Regulation 4.1(e) of the MPERC Tariff

Regulaitons as base rate of interest as specified by the SBI plus 350 basis points] as on

01st April of the year in which the Project is declared under COD. The Petitioner’s Project

achieved COD in FY 2016-17. Further, SBI’s base rate of interst as on 01.04.2016 (i.e. the

year of Project COD) was 9.30%. Accordingly, in accordance with the above referred

regulations, the applicable rate of interest on working capital is 12.80% (i.e. 9.30% plus 350

basis points). A copy of yearwise base interest rates of SBI as published on its website

evidencing SBI’s base rate of interst as on 01.04.2016 as 9.30% in attached hereto and marked

as ANNEXURE-4. Accordingly, the Petitioner has claimed interest on working capital for

the period FY 2017-18 and FY 2018-19 as 12.80% and the calculation of Interest on

Working Capital is as shown below:

11

(Rs. Crore)

Particulars FY 2018-19

Cost of Coal towards Stock 67.29 67.29

Cost of Coal towards Generation 67.29 67.29

Cost of Main Secondary Fuel Oil 0.99 0.99

O & M Expenses 8.65 9.19

Maintenance Spares 20.76 22.06

Receivables 272.08 267.61

Total Working Capital 437.07 434.44

Rate of Interest 12.80% 12.80%

Interest on Working Capital 55.94 55.61

F. Non Tariff Income

30. The Petitioner submits that it has earned non-tariff income of Rs. 8.63 Crore at the Project

level (i.e. for both Unit-1 and Unit-2) during FY 2017-18 in accordance with Regulation 53.1

of Tariff Regulations, 2015.

31. The details of the non-tariff income for FY 2017-18 are as here under:

(Rs. Crore)

S.No. Particulars Amount

1 Interest Income

Bank Deposits 6.02

Others 0.79

2 Scrap Sales 1.04

3 Others 0.74

4 Gain on sale of investments 0.04

Total 8.63

32. Further, the Petitioner has apportioned the above non-tariff income of Rs.8.63 Crore on 50:50

basis between Unit-1 and Unit-2 of its Project. Accordingly, the non-tariff income considered

for Unit-2 for FY 2017-18 is Rs.4.32 Crore.

33. The Petitioner has considered projected non-tariff income of Rs. 2 Crore for Unit-2

(i.e. projected non-tariff income of Rs. 4 Crore for the Project) FY 2018-19 which is subject to

true-up based on the Annual Audited Accounts for FY 2018-19.

G. Foreign Exchange Rate Variation (FERV):

34. The Petitioner submits that during the period of FY 2017-18 petitioner has incurred a FERV

loss of Rs. 43.24 Crore for Unit-2 and accordingly the same has been claimed in Annual Fixed

Charges for Unit-2 for FY 2017-18. Following is the reconciliation of FERV claimed in the

instant Petition:

12

(Rs. Crore)

Particulars Amount

Total FERV Losses realized as on 31.03.2018 as per Auditor’s Certificate of

Expenditure dated 12.11.2018 197.12

FERV losses capitalized with Unit-1 on its COD (20.05.2015) as allowed by this

Hon’ble Commission in its Order dated 01.12.2017 passed in Petition No. 68 of 2016 46.69

FERV losses capitalized with Unit-2 on its COD (07.04.2016) as allowed by this

Hon’ble Commission in its Order dated 29.11.2018 passed in Petition No. 10 of 2018 101.35

FERV Losses allowed as part of AFC by by this Hon’ble Commission in its Order

dated 29.11.2018 passed in Petition No. 10 of 2018 5.84

Balance FERV Losses allocated to Unit 2 as part of AFC for FY 2017-18 43.24

Summary for Annual Capacity (Fixed) Charges for Unit-2

35. In view of above, the Annual Fixed (Capacity) Charges claimed for Unit-2 for FY 2017-18

and FY 2018-19 (i.e remaining control period under MPERC Tariff Regulations 2015) are as

under:

(Rs. Crore)

36. It is submitted that in line with Tariff Regulations, 2015 the Tariff Forms for FY 2017-18 and

FY 2018-19 (i.e remaining control period under MPERC Tariff Regulations 2015) are

attached hereto and marked as ANNEXURE-5

Norms of Operation

A. Normative Annual Plant Availability Factor (NAPAF)

37. In accordance with Regulation 39.3(A) of Tariff Regulations, 2015, NAPAF of 85% has been

considered in the present Petition. The same has also been allowed by the Hon’ble

Commisison in its Order dated 29.11.2018 passed in Petition No. 10 of 2018.

Particulars FY 2017-18 FY 2018-19

Return on Equity 143.15 150.49

Interest on Loan 309.09 303.33

Depreciation 170.06 178.78

Interest on Working Capital 55.94 55.61

O&M Expenses 103.80 110.28

FERV 43.24 -

Total 825.29 798.49

No. of Operational Days Applicable for the Period 365 365

Total Capacity Charges for applicable days 825.29 798.49

Less: Non Tariff Income 4.32 2.00

Net Capacity Charges for applicable days 820.98 796.49

Capacity Charges for contracted Capacity i.e. (30%) of installed

Capacity 246.29 238.95

13

B. Gross Station Heat Rate (SHR)

38. Regulation 39.3 (C) of Tariff Regulations, 2015 provides the following:

"(C) Gross Station Heat Rate

(a) Existing Coal based thermal generating stations having COD on or after 1.4.2012

till 31.03.2016, (other than those covered under clause 39.2) shall be the heat rate

norms approved during FY 2012-13 to FY 2015-16.

New thermal generating stations achieving COD on or after 1.4.2016:

(b) Coal-based Thermal Generating Stations = 1.045 X Design Heat Rate (kCal/kWh)

Where the Design Heat Rate of a Unit means the Unit heat rate guaranteed by the

supplier at conditions of 100% MCR, zero percent make up, design coal and design

cooling water temperature/back pressure:

Provided that the design heat rate shall not exceed the following maximum design

Unit heat rates depending upon the pressure and temperature ratings of the Units:

.

.

Provided further that in case pressure and temperature parameters of a Unit are

different from above ratings, the maximum design Unit heat rate of the nearest class

shall be taken:

Provided also that where Unit heat rate has not been guaranteed but turbine cycle

heat rate and boiler efficiency are guaranteed separately by the same supplier or

different suppliers, the Unit design heat rate shall be arrived at by using guaranteed

turbine cycle heat rate and boiler efficiency:

Provided also that if one or more Units were declared under commercial operation

prior to 1.4.2016, the heat rate norms for those Units as well as Units declared under

commercial operation on or after 1.4.2016 shall be lower of the heat rate norms

arrived at by above methodology.

Note: In respect of Units where the boiler feed pumps are electrically operated, the

maximum design Unit heat rate shall be 40 kCal/kWh lower than the maximum design

Unit heat rate specified above with turbine driven BFP."

39. The Petitioner submits that in accordance with provisions contained in Regulation 39.3 (C) of

Tariff Regulations, 2015, the SHR of 2361.51 kCal/kWh as considered by this Hon’ble

Commisison in its Order dated 29.11.2018 (at Paragraph 192), has been retained in the instant

Petition.

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C. Specific Fuel Oil Consumption (SFOC)

40. The Petitioner submits that in accordance with the provisions of Regulation 39.3 (D) of Tariff

Regulations, 2015, it has considered SFOC of 0.50 ml/kWh for the purpose of tariff, which

has also been considered by this Hon’ble Commisison in its Order dated 29.11.2018 (at

Paragraph 196).

D. Auxiliary Energy Consumption (Aux)

41. The Petitioner submits that in accordance with the provisions of Regulation 39.3 (E) of Tariff

Regulations, 2015, it has considered Auxiliary Energy Consumption of 5.75% i.e. (5.25% +

0.5%) for the purpose of tariff, which has also been considered by this Hon’ble Commisison

in its Order dated 29.11.2018 (at Paragraph 195).

Energy Charges for Unit-2 for FY 2017-18 and FY 2018-19 (i.e remaining control period

under MPERC Tariff Regulations 2015)

42. Considering the norms of operations in terms of SHR, Aux etc. as stated above, the Petitioner

has estimated the Energy Charges of Rs.1.917 per kWh for Unit-2 of the Project for the period

FY 2017-18 and FY2018-19 . The same has been calculated based on the actual fuel price and

calorific values for the three months (Jan’ 2016, Feb’ 2016 and Mar’ 2016) preceding

01.04.2016 as stipulated under Regulation 34.2 of Tariff Regulations, 2015 and has also been

considered by this Hon’ble Commisison in its Order dated 29.11.2018 (at Paragraph 222).

43. Accordingly, the weighted average landed cost and GCV of fuel as shown below has been

considered in the Petition:

S.No Particulars Values

1 Weighted Avg. GCV of Coal 3587.09 kCal/Kg

2 Weighted Avg. Price of Coal Rs. 2707.61/MT

3 Weighted Avg. GCV of Secondary Oil 9920 kCal/Lt

4 Weighted Avg. Price of Oil Rs. 26663/KL

44. The Energy charges for Unit-2 claimed for FY 2017-18 and FY 2018-19 in the instant Petition

are tabulated below:

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Particulars FY 2017-18 FY 2018-19

Capacity (MW) 600 600

Target Availability (%) 85% 85%

Hours in a Day 24 24

Days in the Year 365 365

Annual Hours of Operation 8760 8760

Energy Generated (MU) 4467.60 4467.60

Aux. Power Consumption 5.75% 5.75%

Aux. Power Consumption (MU) 256.887 256.887

Energy Sent Out (MU) 4210.713 4210.713

Gross Station Heat Rate (kCal/kwh) 2361.51 2361.51

Specific Fuel Oil Consumption (ml/kwh) 0.50 0.50

Oil Stock

Weighted Avg. GCV of Oil (kCal/Lit.) 9920 9920

Heat Contribution by Oil (kCal/kwh) 4.96 4.96

Annual Requirement of Oil (KL) 2233.8 2233.8

Oil Stock (2 months) (KL) 372.30 372.30

Weighted Avg. Price of Oil (Rs./KL) 26663.00 26663.00

Oil Stock- 2 months- (Rs. Crore) 0.99 0.99

Coal Stock

Weighted Avg. GCV of Coal (kCal/kg) 3587.09 3587.09

Heat Contribution by Coal (kCal/kwh) 2356.55 2356.55

Specific Coal Consumption (kg/kwh) including

transit loss @ 0.8% 0.662 0.662

Annual Requirement of Coal (MT) 2982342 2982342

Coal Stock (30 days) (MT) 248529 248529

Weighted Avg. Price of Coal (Rs./MT) 2707.61 2707.61

Coal Stock (30 days) (Rs.Crore) 67.29 67.29

Variable Charges (Ex Bus)

Coal (Rs/kwh) 1.902 1.902

Oil (Rs/kwh) 0.014 0.014

Rs./kwh 1.917 1.917

Variable Charges per Year (Rs. Crore) 807.19 807.19

Receivables

Variable Charges - 2 Months (Rs. Crore) 134.53 134.53

Fixed Charges - 2 Months (Rs. Crore) 137.55 133.08

Total Receivables -2 Months (Rs. Crore) 272.08 267.61

45. However, the actual billing of Energy Charges shall be as per the formula and other provision

detailed in Regulation 36 of Tariff Regulations, 2015.

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46. In terms of MPERC (Fees, Fines and Charges) (Revision-I) (First Amendment) Regulations,

2010, the requisite filling fees for the Unit-2 (600 MW) amounting to Rs. 1.00 Lakh has

already been paid by the Petitioner vide Demand Draft No. 12200 dated 20.12.2018 effected

by AXIS BANK. The said Demand Draft is attached hereto and marked as ANNEXURE-6

Statutory Charges

47. The Petitioner prays that this Hon’ble Commission may be pleased to allow recovery of

statutory charges, duties, taxes and cess on pass through basis from the beneficiary. It is

submitted that the Tariff Regulations, 2015 allow the recovery of electricity duty, cess and

water charges in terms of Regulation 52. However, there are certain other statutory charges,

duties and taxes which are linked with the generation of a power station. Just as in the case of

other fuel related/variable charges, there are express provisions in several tariff orders and

regulations framed by other State Commissions which allow the recovery of statutory charges,

taxes and duties on pass through basis based on actuals.

(a) Chhattisgarh

Regulation 47(1) of the Chhattisgarh State Electricity Regulatory Commission (Terms

and Conditions for Determination of Tariff according to Multi-year Tariff Principles and

Methodology and Procedure for determination of Expected revenue and Tariff and

Charges) Regulations, 2012 provide:-

“3. The Statutory Taxes and Duties shall be recoverable on reimbursement basis,

as per actual.”

(b) Uttar Pradesh

Further, the Ld. Uttar Pradesh Electricity Regulatory Commission in the Multi Year

Tariff Order for FY 2009-10 to 2013-14 in respect of the state thermal generating

company namely Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited had allowed the

recovery of:

(A) Recovery of Water Cess and Tax on Income etc.

“In addition to the above tariff UPRVUNL is allowed to recover the payment of

statutory charges like water cess, cost of water, payment to Pollution Control

Board, rates and taxes, FBT and Regulatory Fee paid to the Commission, on

production of details of actual payments made and duly supported with the

certificate of the Statutory Auditors. The Petitioner has claimed certain

additional charges as variable charges towards other fuel related costs, station

supplies, lubricants and consumables critical to the generating stations as

separate pass through on actuals. The same is allowed for the consideration

17

period of MYT subject to verification of audited accounts at the time when true up

would be considered by the Commission.”

48. In view of the above, it is prayed that this Hon’ble Commission may permit recovery of other

Statutory Charges on actual incurred basis as they are variable in nature and directly

attributable to generation of electricity from the Project.

PRAYER

49. In view of the above, the Petitioner respectfully prays that this Hon’ble Commission may

kindly:

(a) Determine the Trued-up tariff for Unit-2 of the Project as required under the

Non-Concessional PPA dated 05.01.2011 for the period from 01.04.2017 till 31.03.2019;

(b) Allow the recovery of the application filing fees from the beneficiary as per

Paragraph 46 of the instant Petition;

(c) Allow the recovery of the publication expenses from the beneficiary as and when

incurred;

(d) Allow the recovery of other charges including but not limited to RLDC/ NLDC charges,

Electricity Duty, Cess, Water Charges, other Statutory Charges, Taxes, Duties & Cess,

re-imbursement of any fee and/or expenses etc. on pass through basis from the

beneficiary for the period from 01.04.2017 to 31.03.2019;

(e) Allow carrying cost / interest on the under-recovered amount in accordance with

Regulation 8.15 of Tariff Regulations, 2015.

(f) Permit recovery of expenses understated/ not considered/ missed in the instant Petition at

a later stage, if required;

(g) Condone any inadvertent omissions/errors/rounding off differences/ shortcomings and

permit the Petitioner to add/alter this filing and make further submissions as may be

required by this Hon’ble Commission; and

(h) Pass such further and other Orders, as this Hon’ble Commission may deem fit and proper,

keeping in view the facts and circumstances of the case.

MB Power (Madhya Pradesh) Limited

DATE: 20.12.2018

PLACE: NEW DELHI