The Supreme Court has accepted the assurance given by generating company Vidarbha Industries Power (VIPL), an arm of Anil Ambani-led Reliance Power, that it will not recover R800 crore from consumers on account of enhanced cost of power based on higher fuel cost for the next three-four months for its 600-MW plant in Maharashtra.
A bench led by Justice Dipak Mishra, while issuing notice to Reliance Infrastructure and VIPL, accepted the assurance given by its senior counsel Kapil Sibal, who argued that no recovery will take place for the next three-four months. The next date of hearing is on March 7.
The assurance came during the hearing of an appeal filed by Maharashtra Electricity Regulatory Commission (MERC) challenging the Appellate Tribunal for Electricity’s (APTEL) decision of November last year, which upheld the company’ claim for fuel cost pass-through in the tariff for its coal-fired thermal power station at Butibori in Nagpur district. The tribunal had asked MERC to rework fuel cost pass-through in the tariff. The commission told the court that consumers of suburban area of Mumbai should not be burdened with an excessive and unwarranted cost of power.
VIPL had challenged the MERC order, which partially disallowed fuel costs for 2014-16. The MERC order pertained to truing up for FY2014-15, provisional truing up for FY2015-16 and multi-year tariff for 2016 -20.
Senior counsel Parag Tripathi and counsel Buddy Ranganathan, on behalf of MERC, said that the tribunal could not have overlooked five of its earlier judgments where it held that the principles underlying the original determination cannot be deviated from in the truing up exercise.
According to MERC, VIPL is undisputedly responsible in law for the quality and quantity of coal procured and could not be allowed to pass through in tariff whatever cost it actually incurred on such procurement to the prejudice of the consumers.
The impugned judgment will have the effect of negating the entire fundamental basis and reason behind MERC having approved the sale of power by VIPL to the distribution licencee RInfra under Section 62 (cost-plus basis) of the Electricity Act, rather than requiring the latter to resort to competitive bidding under Section 63, the petition stated.
MERC had earlier approved the PPA for Butibori project of VIPL under Section 62 of Electricity Act.
However, the petition said that even before approving the PPA, MERC was concerned regarding the competitiveness of the tariff. “The commission had directed RInfra to undertake and submit an analysis to support its claim that a tariff determined under Section 62 in respect of the proposed PPA would be competitive vis-à-vis the tariffs being discovered through alternative bidding process under Section 63. As the distribution licensee in the matter of PPA approval, RInfra submitted that it strongly believed that the VIPL offer was competitive compared to the competitive bidding tariff recently discovered in India and in the best interest of the consumers,” it stated.
“The dispensation allowed by the Tribunal could not have been passed at a stage of truing up completely overlooking the principle that the true-up must be on the same basis which formed the foundation of the original tariff determination. In this case, the original determination for FY 2014-15 and FY 2015-16 is contained in the Tariff Order issued by the Commission on March 9, 2015… In that order, the Commission considered the coal mix and coal parameters for determination of the tariff for FY 2014-15 and FY 2015-16 as proposed by VIPL in its petition,” the petition stated.