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ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION4th & 5th Floors, Singareni Bhavan, Red Hills, Hyderabad-500 004

I.A.(SR) No. 41 of 2010in

O.P. (SR) No. 29 of 2010

Dated: 18. 04.2011

Present

Sri A. Raghotham Rao, ChairmanSri R.Radha Kishen, Member

Sri C.R.Sekhar Reddy, MemberBetween

M/s. The South Indian Sugar Mills Association Andhra Pradesh 5-9-22 / 69, Adarshnagar, Hyderabad. …Petitioner

AND

1. Andhra Pradesh Power Co-ordination Committee,2. Transmission Corporation of AP Ltd (APTRANSCO)3. Central Power Distribution Company of AP Ltd (APCPDCL)4. Southern Power Distribution Company of AP Ltd (APSPDCL)5. Northern Power Distribution Company of AP Ltd (APNPDCL)6. Eastern Power Distribution Company of AP Ltd (APEPDCL)

... Respondents

This petitions coming up for hearing on 23.10.2010 and on 02.04.2011 in the

presence of Sri. J. Suraj Singh, Advocate on behalf of Sri. C. Gunaranjan, Advocate

for the petitioner and Sri. P. Shiva Rao, Advocate the respondents, the Commission

passed the following:

ORDER

The petitioner has filed original petition u/s 11 (2) and the Conduct of Business

Regulations (CBR) seeking determination of tariff for generation of power using coal.

The petitioner herein also filed an Interlocutory Application for interim relief by taking

the price at Rs. 4.50 per unit pending disposal of the main petition.

2. The contention of the Petitioner Association has set up bagasee based co-

generation power projects with in Andhra Pradesh. Some of the members entered

PPA with R1 to R 6. The members are captive consumers of Electricity generating

and selling part of surplus to R 2 to R 6. Hence the petitioner respondents the

common interest of its members.

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3. In terms of the directions issued in GO Rt No. 54, the first respondent issued a

notice of meeting on 01.05.2010 to provide details of expected power by using coal,

sources of coal and expected cost of generations, stock details of bagasse and its

usage period. The members of the petitioner submitted relevant information as

sought for.

4. The members of the petitioners have commenced the generation of power by

using coal as fuel during the present non crushing season in terms of the directions

issued by Government and the said power is being supplied to the respondents. In

respect of the power so supplied and in terms of the directions issued by the

Government the respondents have to pay the tariff as is in force and also pay

additional amounts as per the orders that may be passed by this Commission.

5. The petitioner members have been procuring and purchasing imported coal

from various sources. It is respectfully submitted that the cost of generation of power

using coal as fuel is much higher than the cost of generation using Bagasse as fuel

and therefore, the present rate as per PPA @ Rs. 2.63 as per unit is inadequate and

the petitioner company is not even able to meet its fuel cost. The petitioner company

craves leave of this Commission to read the contents of the original petition as part

and parcel of the present Interlocutory Application.

6. The petitioner has also mentioned that the respondents have conveyed

meeting on 19.07.2010 for the purpose of arriving at an a interim tariff for the power

generated and supplied by the petitioner company and other similar companies,

wherein the parties including the respondent herein on detailed discussion have

arrived consensus for an interim price of Rs. 4.50 as per unit pending finalization and

passing of orders in the original petitions filed by the petitioner company herein

before this Commission. It is further agreed that the above said interim price will be

in operation till the duration of the validity of G.O.Ms.Nos. 54 & 83 dt. 22.04.2010 and

19.06.2010. Therefore considering the peculiar facts and circumstances of this case

and in order to support the petitioner company and to meet its expenditure for

operating and generating the power station by using coal as fuel, the petitioner herein

prays this Commission to approve the interim price of Rs. 4.50 ps per unit pending

consideration of fixation of final price in the original petition in the interest of justice.

The petitioner company will not be able to continue to generate power at the present

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price paid by the respondents, if the same continues, the petitioner company will

suffer great hardship and irreparable loss.

7. It is also further mentioned that even in the State of Karnataka, the

Government of Karnataka issued similar directions to all the co-generation sugar

factories for generation and supply of power by using coal as fuel. The Government

therein also fixed provisional rate of Rs. 5.50 ps per unit for the supplies so made

during the said period, which was subject to approval of the Commission therein. On

an application filed by South Indian Sugar Mills Association (Kakrnataka) and others

in O.P. No. 16 of 2010 the Commission wherein passed orders dt. 14.05.2010

approving the provisional rate of Rs. 5.50 ps per unit fixed by the Government as an

interim measure pending further orders of the Commission in the said original

petition, which is also is subject to final orders. The copies of these proceedings are

filed herewith as annexures.

8. In the light of the above said circumstances and for the facts and reasons

stated above, it is prayed that this Commission may be pleased to fix / approve the

interim price of Rs. 4.50 ps per unit for the units generated and supplied by the

petitioner company by using coal as fuel 0pending finalization of the final price in the

original petition and pass such other order or orders as this Commission may deems

fit and proper in the interest of justice.

9. The respondents 1 to 6 have filed their reply as hereunder.

a) The GoAP issued directions G.O.Rt. No. 54 dated 22.04.2010 u/s 11 of

the Electricity Act, 2003 to Bagasse Co-generation project developers, who

are having Power Purchase Agreements (PPAs) with DISCOMs for sale of

energy at tariff determined by the Commission to generate power with coal

after availing the available bagasee fuel and supply to APDISCOMs. The

GoAP directed APDISCOMs to pay the tariff as is in force from time to time

immediately and also to pay any additional amount as per the orders that may

be passed by the Commission u/s 11 (2) of the Electricity Act, 2003. The

GoAP also sought Commission to decide the adverse financial impact, if any,

on the bagasse cogeneration developers in complying the said directions.

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b) Subsequently, the GoAP vide GO Rt. 83 Energy (Power-II) Department

dated 19.06.2010 extended the earlier orders upto 15.11.2010 or

commencement of crushing operations, whichever is earlier.

c) On the request of bagasse cogeneration project developers to fix

interim price, the GoAP vide GO Rt. No. 87 dated 21.06.2010 constituted a

High Level Committee with the following officers to asses the quantum of

power availability and for fixation of interim price subject to issue of final

orders by the Commission.

i) Special Chief Secretary, Finance Department

ii) Principal Secretary, Energy Department

iii) Principal Secretary, Industries & Commerce (Sugar) Department

iv) CMDs / APTRANSCO & DISCOMs

d) The high level committee had meeting on 16.08.2010. IN the said

meeting, the high level committee took a decision that APDISCOMs shall pay

interim price of Rs. 4.50 per unit to bagasse cogeneration projects for

generation with coal subject to final orders to be passed by the Commission

on petitions filed by the bagasse cogeneration developers.

e) In that connection, the APDISCOMs submit that they may not be able

to effect payment as interim arrangement except with the approval of

Commission. As such, the Commission is requested to pass appropriate

orders in the matter enabling APDISCOMs to implement the decision taken by

the high level committee.

10. At the time of addressing arguments, both parties have agreed for the price of

Rs. 4.50 per unit as per interim arrangement pending disposal of the main petition.

11. The NEDCAP raised an objection that they require to get clearance of Ministry

of New & Renewable Energy (MNRE) for any shift in the policy. The same was

opposed by the petitioner by filing a rejoinder on those lines.

12. However, the very objection can be considered at the time of disposal of the

main petition.

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13. The matter is reopened to hear on the unit price as no data is placed before

the Commission. Sri P. Shiva Rao, counsel for respondent represented that the cost

of fuel on net exportable power worked out to Rs.3.99per unit, but the High level

committee has recommended to pay Rs.4.50 per unit as an interim measure pending

disposal of the main petition as a tentative arrangement and they have been paying

the same pending disposal of this order. When the Commission has asked about the

unexplained 0.51paise, Sri Shiva Rao has submitted that it is towards working

capital. The explanation for the said 0.51paise is not convincing. However 50% of

the differential amount out of 0.51paise may be added to the net exportable power

worked at Rs.3.99. Thus, it comes to Rs.4.24paise and we feel that it is reasonable

position to accept the same. The decision taken by the High level committee cannot

be accepted in toto in the absence of full data for the total amount.

14. Hence, we are of the considered opinion that the proposal for Rs.4.24 per unit

is accepted and approval for interim payment at the rate of Rs.4.24 per unit is

accorded subject to Commissions final orders in the main O.P itself. The main O.P.

is ordered to be numbered and post the same for counter since the main O.P. is at

the stage of O.P.(SR).

This order is corrected and signed on this 18th day of April , 2011.

Sd/- Sd/- Sd/-(C.R.Sekhar Reddy) (R.Radha Kishen) (A.Raghotham Rao) Member Member Chairman

//Certified Copy//