before the haryana electricity regulatory commission - panchkula case no. herc/pro-6 ... · ·...

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BEFORE THE HARYANA ELECTRICITY REGULATORY COMMISSION - PANCHKULA

Case No. HERC/PRO-6 of 2016

Date of Hearing : 10.08.2016

Date of Order : 12.09.2016

IN THE MATTER OF

Petition/application for approval of draft PPA signed with four Solar Power Developers

selected through Tender under NIT No. 51.

Petitioner Haryana Power Purchase Centre, Panchkula

Present On behalf of the Petitioner (Public hearing)

1. Shri. Nitin Yadav, MD, UHBVNL

2. Shri Shubham Arya, Advocate

3. Shri O.K. Sharma, CE, HPPC

4. Smt. Poorva Saigal, Advocate

5. Shri Neeraj Sharma, SE, HPPC

6. Shri. Gaurav Gupta, Xen., HPPC.

7. Smt. Seema Sidana, AE, HPPC.

QUORUM Shri Jagjeet Singh, Chairman

Shri M. S. Puri, Member

Back ground of the case

1. On 16.06.2014, the Petitioner, vide memo no C43/HPPC/SE/ C&R- 1/PPA-136

sent the communication to the Commission intimating as under:-

“Subject: NIT for purchase of 50 MW solar & 100 MW non-solar power to meet

RPO – approval thereof

It is intimated that HPPC is in the process of floating Two no. NITs for purchase

of 50 MW solar & 100 MW non-solar power. The date of opening of tenders has

been fixed as 31.7.2014 for solar & 14.8.2014 for non- solar power.

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Although NIT is based on the Standard RFP for procurement of power under

“Case 1 -RE” Bidding procedure through Tariff based Competitive Bidding

Process (As per Guidelines for tariff Based Competitive Bidding Process for

Grid Connected Power Projects Based on Renewable Energy Sources” issued

by the Govt. of India), however a few changes have been done mainly affiliates

have not been allowed, Delivery point is Haryana periphery and tariff to be

quoted and evaluated will be at Delivery point, negotiation will be done etc.

It is requested that HERC may furnish its valuable comments, if any, on the NIT

latest by 25.6.2014 so that HPPC may proceed further with tender process.”

2. By communication-dated 25.06.2014, the Commission held as under:-

“Subject: NIT for purchase of 50 MW solar & 100 MW non-solar power to

meet RPO.

This is with reference to your office memo no. Ch-43/HPPC/SE/C&R-I/PPA-136

dated 16.06.2014 vide which copy NITs for purchase of 50 MW solar & 100

MW non-solar power have been forwarded for comments.

Before the case is further processed, it is requested to clarify/intimate the

following:-

A copy of the Standard Bidding Documents for procurement of power under

“Case 1-RE” Bidding procedure through Tariff based Competitive Bidding

Process for Grid Connected Power Projects Based on Renewable Energy

Sources issued by the Government of India be provided.

The deviations made in the NIT with respect to the Standard Bidding Document

for procurement of power under “Case 1-RE” issued by the Government of

India be tabulated.

The copy of the statute, under which the deviations sought by HPPC from the

Standard Bidding Documents issued by the Government of India requires the

approval of the Commission, may also be provided.

The above clarification/information be provided within a week from the date of

issue of this letter.”

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3. Thereafter, by communication-dated 01.07.2014, the Petitioner furnished the

deviations from the Standard Bidding Document as per the direction of the

Commission with a covering letter as under:-


RPO- approval thereof

This is with reference to your Memo. No. 1124/HERC/PPA/NIT-RE/Tariff dated

25.6.2014 on the subject.

In this regard, Standard Request for Proposal for Procurement of Power Under

case1 – RE” Bidding Procedure through tariff Based Competitive Bidding

Process (As per Guidelines for tariff Based Competitive Bidding Process for

Grid Connected Power Projects based on Renewable Energy Sources”) is

enclosed (Annexure A).

Deviations made in the NIT w.r.t the SBD for procurement of power under

“Case1- re” in tabulated form is enclosed. (Annexure B)

It is submitted that approval of Honorable Commission on the Two Nos. subject

cited NITs is required in view of the Clause 3.1.2 of MNRE “Guidelines for Tariff

based Competitive Bidding Process for Grid Connected Power Projects Based

on Renewable Energy Sources- December 2012” (Annexure C) which states

that

“Approval of the Appropriate Commission shall be sought in the event of the

deviations from the bidding conditions contained in these guidelines and SBD,

following the process described in para 6.9 of these guidelines.”

It is humbly requested that approval may please be granted on the NITs for

purchase of 50 MW solar and 100 MW non-solar power.”

4. In response to the above, the Commission by letter dated 28.07.2014 wrote as

under:-


RPO.

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This is with reference to your office memo no. Ch-46/HPPC/SE/C&R-//PPA-

dated 25.06.2014.

The Commission has observed that there are many other deviations particularly

to Bid Bond, CPG, Payment Security etc. The Standard Bid Document may

have PPA also.

You are requested to submit all deviations made in the NIT with respect to the

Standard Bidding Document (SBD) for procurement of power under “Case 1-

RE” issued by the Government of India in tabulated form and also the PPA

attached with the SBD within a week from the date of issue of this letter.”

5. On 05.08.2014, the Petitioner submitted as under:-


RPO

This is with reference to your memo No. 1535/HERC/PPA/NIT-RE/Tariff dated

28.7.2014 on the subject.

In this regard, it is submitted that major deviation in NIT from SBD in respect of

Bid Bond & Contract Performance Guarantee is that of the amount per MW to

be paid. All the minor deviations will be rectified to have the NIT exactly the

same as that of SBD. All these deviations have been color coded in the

comparison done in the tabular form. (Annexure A)

Also, Standard Bid Document does not contain any PPA.

It is humbly submitted that the date of opening of tenders is 22.8.2014 for solar

power and 29.8.2014 for non-solar power.

Submitted for the kind consideration of the Commission please.”

Along with the above letter, the list of deviation was also given.

6. On 08.08.2014, the Commission issued a letter-dated 08.08.2014, with the

approval of Hon’ble Member only, which read as under:-

“Subject: NIT for Purchase of 50 MW solar & 100 MW non-solar power to meet

RPO – approval thereof.

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kindly refer to your memo no Ch-43/HPPC/SE/C&R -I/PPA – 136 dated

16.06.2014 and Ch-46/HPPC/SE/C&R-I/PPA-67 dated 1.07.2014 vide which

approval of the Commission was sought to be deviations in the bid documents

vis-à-vis the Case – 1 RE Bidding Procedure of the Government of India. The

Commission has considered your application/petition and observes that the NIT

No. 51 & 52 for inviting competitive bids purchase of 50 MW for Solar Power

and 100 MW of Non- Solar (renewable energy) were issued on 16.04.2014 and

the approval of the Commission to the deviations were sought on 1.07.2014 i.e.

ex post facto.

The Commission observes that the Discoms have not fulfilled their RPO

including by way of purchase of REC. Consequently, the accumulated shortfall

allowed to be carried forward from FY 2011-12 up to FY 2013-14 (up to

December 2013) is about 720.83 Mus and the total RPO target set for FY

2014-15 is 1463.41 Mus. On several occasions the Commission has observed

that HPPC/HAREDA may invite bids/ reverse bids for purchase of renewable

energy in order to meet with the RPO targets and the fact that the bidding

process is already under way, HPPC may proceed with the same. Once the

bids are opened HPPC shall analyze the same and submit the details to the

Commission for its order and approval of the PPA with the successful bidders.

7. Subsequently, vide memo No. Ch-2/HPPC/SE/C&R-1/PPA-196, dated

16.07.2015 the HPPC informed the Commission that “after negotiation with the

eligible bidders, Rs. 6.44/kWh has been discovered as the lowest price for which LOI

has been issued to the following five bidders for a capacity of 25 MW solar power:-

Sr. No.

Name of the Bidder Quantity offered in MW

Levelized Tariff (Rs./kWh)

1. Balarch renewable energy Pvt. 20Ltd 1 6.44

2 Neel Metal Product Limited 20 6.44

3 Sudhakar Infratech Ltd 2 6.44

4 Ultimate Sun Systems Pvt. Ltd. 1 6.44

5 M/s Subhash Infraengineers Pvt. Ltd. 1 6.44

Total 25

HPPC has signed PPA with the above bidders except M/s Sudhakar Infratech

Ltd. Accordingly, HPPC seeks approval of PPA from the Hon’ble Commission.”

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8. The Commission vide Memo No. 1653/HERC/Tariff/PPA/Bid/2015 dated

10.09.2015 conveyed certain observations on the PPA. HPPC, vide its office letter

Memo No. Ch-30/HPPC/SE/C&R-I/T-26 dated 29.09.2015 submitted its reply on the

observations of the Commission.

9. Subsequent to the above and after examining the Draft PPA, the Commission

considered it appropriate to hear the matter especially in view of the fact that the

deviations to the SBD had not been approved by the Commission at any stage in the

case. Also, the petitioner had signed PPA in contravention of the Commission’s

directions issued vide memo No. Memo. No. 1725 dated 08.08.2014 without prior

approval of the Commission. The case was accordingly heard on 11.02.2016.

10. The Commission, in its interim order dated 11.02.2016, observed as under:-

a. HPPC may explain as to why the proper procedure as mandated by the

SBD was not adopted in this regard.

b. Disclose the composition of Bid evaluation committee and also that the

same was constituted in accordance with the SBD.

c. Whether the Bid evaluation committee consisted of an external expert in

the Committee as mandated by the SBD.

d. Whether the Bid Evaluation Committee certified that the rates quoted by

the bidders were aligned to the market conditions. As per the news item published in

“The Times of India” dated 20.01.2016, the Solar price tariff hits new low in Rajasthan

i.e. Rs. 4.34 to Rs. 4.63 paisa per unit quoted by Fortum India in one of the six

pockets bid out by state run generation utility NTPC in Rajasthan. Also, the latest bids

called by HPPC for 150MW solar power have thrown up the rate of Rs.5.00/Kwh.

e. In the present scenario how HPPC can negotiate with the developer at

such a high price of Rs. 6.44 per unit without any justification.

f. Why the HPPC has not followed its own process as mandated in Para

3.1.4 (IV).

g. Why negotiations were carried out with the bidders in spite of clear

instructions in the SBD forbidding the same.

11. HPPC, under affidavit dated 09.03.2016, made the following submissions:-

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i) The Commission, in its Order dated 29.05.2014, in Case relating to the

Aggregate Revenue Requirement for the Distribution & Retail Supply

Business under Multi Year Tariff Framework for the control period i.e.

Financial Year (FY) 2014-15 to FY 2015-16, held as under:-

Renewable Purchase Obligation (RPO)

Section 86 (1) (e) of the Electricity Act, 2003 mandates the Commission to promote

cogeneration and generation of electricity from renewable sources of energy by

providing suitable measures for connectivity with the grid and sale of electricity to

any person, and also specify, a percentage of the total consumption of electricity in

the area of distribution licensee, for mandatory purchase of electricity from such

sources. In accordance with the Regulation 64 of HERC (Terms and Conditions for

determination of Tariff for Renewable Energy Sources, Renewable Purchase

Obligation and Renewable energy Certificate) Regulations, 2010 the RPO for FYs

2011-12, 2012- 13 and 2013-14 as approved by the Commission are as under:-

Financial year

Energy Consumption (MU)

%age of overall RPO

Renewable energy (other than solar) required to be purchased as per overall RPO (MU)

%age of solar RPO (as a %age of overall RPO)

Energy required to be purchased as per solar RPO (MU)

Total renewable energy required to be purchased (MU)

2011-12 36075 1.50% 541 0.31% 1.69 543

2012-13 40000 2.00% 800 0.05%* 20 820

2013-14 41086 3.00% 1191.49 0.10%* 41.09 1232.58

As per data provided by the State Nodal Agency for FY 2011-12, FY 2012-13 and FY

2013-14 (up to Dec. 2013), the shortfall in meeting the RPO for the aforesaid years

has been worked out as under:-

Table 3.37: Shortfall in meeting RPO (MUs)

Type of RE source

FY 2011-12 FY 2012-13 FY 2013-14 (upto Dec 2013)

Solar 0 7.14 25.69

Non-Solar 143.00 319.89 695.14

Total 143.00 327.03 720.83

The Commission observes that the Discoms have failed to achieve the RPO target set

by the Commission. The Discoms have also not purchased any Renewable Energy

Certificates (REC) to fulfil their RPO.

ii) HPPC submitted that necessary approval of the Commission was duly

obtained, vide Commission’s letter dated 08.08.2014.

iii) HPPC further submitted that negotiation with the bidders, in the present

case did not vitiate the bidding process in any manner and it rather, added

value to the Haryana Utilities and the consumer at large. At the outset, it

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may be stated that the Petitioner or any other agency involved did not

undertake negotiation with the bidders in a manner to ignore a bidder who

had given a better price. The lowest bidder, namely, L1 had quoted a tariff

of Rs. 6.44/kwh. In the bidding documents, the Petitioner had already

disclosed the criteria for evaluation of the bid. These particularly included

the following:-

“3.1.4 STEP IV – Successful Bidder(s) Selection

Bids qualifying in Step III shall only be evaluated in this stage

I. The Bidder with the lowest levalized Tariff for 25 years in its

Financial Bid shall be considered as L-I.

II. The price discovered for per unit rate of solar power shall

generally determined based on the rates quoted by the L-1 bidder

and the negotiation, if any, held with the lowest bidder. However,

the negotiations could be held with remaining eligible bidders. In

case, the L-1 bidder refuses to further reduce his offered price

and the remaining bidders come forward to offer a price better

than the price offered by L-1 bidder, then the bidder offering the

lowest rate would become the L-1 bidder. However, in such a

situation, the original L-1 bidder shall be given one more

opportunity to match the discovered price.

III. On determination of the price discovery pursuant to the above

price, a counter offer would be made to all such eligible bidders,

for acceptance of the discovered price.

IV. Form the outcome of the above process, the bidders from

anywhere in India, agreeing to accept the counter-offer of the

discovered price, will be considered and selection will be done on

the following criteria.

i) Solar power Projects in the State of Haryana will be given

first priority.

ii) Thereafter, the bidder offering the maximum capacity will be

given priority.

V. At any step during the selection of Successful Bidder(s) in

accordance with Clauses I to IV above, the HPPC reserves the

right to increase / decrease the Requisitioned Capacity by up to

ten percent (10%) of the quantum indicated in Clause 2.1.

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VI. The Letter(s) of Intent shall be issued to all such Successful

Bidder(s) selected as per the provisions of this Clause 3.1.4.

VII. Each successful Bidder shall unconditionally accept the LoI, and

record on one (1) copy of the LoI, “Accepted Unconditionally”,

under the signature of the authorized signatory within seven (7)

days of issue of LoI.

VIII. If the Successful bidder, to whom the LoI has been issued, does

not fulfil any of the conditions specified in the Clauses 2.9 & 2.12,

HPPC reserves the right to annul the award of the letter of Intent

of such successful bidder.

IX. HPPC, in its own discretion, has the right to reject all Bids if the

Single Quoted Tariff is not aligned to the prevailing market

prices.”

iv) In the negotiation, the above criteria were only adopted. There were no new

or additional criteria introduced.

v) HPPC submitted that there has been no violation of the bidding documents

in regard to the non-constitution of evaluation Committee as per the

Guidelines issued by the Ministry of Non-Conventional Energy Sources.

HPPC further submitted that solar projects do not have to be compared with

other sources of energy to decide on the quoted price being aligned to

market prices. The committee would be relevant if power could be procured

from different sources. In terms of the RPO obligation, the power was to be

procured only from solar energy sources. Further, based on the market

prices prevalent, the Commission had decided on Rs 7.45/unit as the ceiling

price. In the circumstances, the issue of an evaluation Committee deciding

on the prices being aligned to the market forces, will have no application.

Further, the above requirement is in the Guidelines and does not form part

of the Bidding documents, as approved by the Commission.

vi) HPPC further submitted that after the opening of the Bid on 25.10.2015, the

following steps were taken

a. The technical and commercial bids (excluding the price bid-financial)

received from 10 participating bidders were first opened on

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22.10.2014 and was then evaluated by a Committee consisting of

Chief Engineer HPPC, Financial Advisor and Superintending

Engineer, HPPC. 8 out of 10 participating bidders were found to be

responsive.

b. The price bid of the 8 bidders was then opened on 22.12.2014. The

price bids were in the range of Rs. 6.50 to 7.45/kWh.

c. The Steering Committee for Power Planning constituted for

evaluating the purchase of power consisting of Additional Chief

Secretary, Power and Managing Directors of Electricity Utilities

(GENCO, TRANSCO AND TWO DISCOMS), CE/HPPC considered

the price bids and decided on the course of action to be taken in

accordance to the tender terms and conditions.

vii) In view of the position brought out above, HPPC has prayed as under:-

a. Approve the Power purchase Agreements entered into between the

Haryana Utilities and the four selected bidders; and

b. Pass such further order or order(s) as may be deemed necessary

and fit in the circumstances of the case.

12. The case was heard again by the Commission on 19.02.2016 and 10.03.2016.

The Petitioner was asked to clarify certain issues and also to submit certain

documents related to the tendering process. Additionally, in order to gain first hand

knowledge of the physical progress of the Solar Power Projects of the selected

bidders, the Chairman deputed a Committee of HERC Officers to visit the sites of the

Solar Power Developers.

Public Proceedings

13. During public hearing in the ARR held on 01.03.2016 and 30.05.2016, people

at large desired to be heard while approving the Power Purchase Agreement(s) of

the Discoms. Further, the Member of State Advisory Committee in the meeting held

on 29.05.2015, had also raised similar concerns. Additionally, the Government of

Haryana has also made it mandatory that public at large should be heard while

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formulating the public policies. As the tariff, so adopted/ determined by the

Commission, while approving the Power Purchase Agreement(s) is to be paid by the

consumer of Haryana State, the Commission, in order to ensure transparency,

decided to hold a public hearing in this regard.

The Commission issued Public Notice in The Tribune (English) and Dainik

Jagran (Hindi) dated 7.7.2016 inviting objections and intimating the date of hearing the

Petition(s). Public hearings, as per the aforesaid notice, were scheduled to be held on

21.07.2016 at 11:00 A.M. Since the hearing of the Petition(s) was rescheduled to

10.8.2016, Public Notice for the hearing was again published in the same newspapers

on 27.7.2016 intimating the stakeholders and general public regarding the change in

the date of public hearings. The Public Notice was also hosted on the website of the

Commission under the heading “Schedule of Hearings”.

The HPPC made detailed presentation of the petition(s) for approval of PPAs,

in the hearings wherein they highlighted the need for approval of PPAs in light of RPO

obligations imposed upon them.

14. In response to the Public Notice issued by the Commission in the present case,

the stakeholders/general public as listed below filed objections/comments:-

a. Kaushalya Devi, Sarpanch, Village Khokha, Hisar.

b. Rajvir, Sarpanch, Village Niyana, Hisar-I.

c. Suresh, Sarpanch, Gram Panchyat, Chirod, Hisar-I.

d. Manhoar, Sarpanch, Gram Panchyat, Dhansu, Hisar.

e. Dharamvir, Sarpanch, Gram Panchyat, Mirka, Hisar-I.

f. Suresh Devi, Sarpanch, Gram Panchyat, Kharkhari, Hisar-I.

g. Jaswant Singh, Sarpanch, Gram Panchyat, ramayana hansi, Hisar-I.

h. Sunil Kumar, Sarpanch, Gram Panchyat, Kharar, Hisar-I.

i. Om Prakash, Sarpanch, Gram Panchyat

j. Kuldeep Kaur, Sarpanch, Gram Panchyat, Theri, Fatehabad.

k. Saroj Devi, Sarpanch, Gram Panchyat, Alipur, Hisar-I.

l. Rajvir Singh, Sarpanch, Gram Panchyat, Village Mirzapur, Hisar-I.

m. Shakti Singh, Sarpanch, Gram Panchyat, Village Bhagana, Hisar-I.

n. Suresh Kumar, Sarpanch, Gram Panchyat, Village Balawas, Hisar-I.

o. Sanjay Kumar, Sarpanch, Gram Panchyat, Village Dubeta, Hisar-I.

p. Sarpanch, Gram Panchyat, Village Behbalpur, Jind.

q. Resident Welfare Association, Sector-9 & 11, Hisar

r. Welfare Association (Regd.), Sector-13 (P), Urban Estate, Hisar (Haryana).

s. Resident Welfare Association (Regd.), Sector-16-17 & Part-II, Hisar.

http://www.indiamapia.com/Hisar/Behbalpur.html

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t. Sector-15 A Welfare Association, Hisar, H.No. 575, Sector-15/A, Hisar.

u. Sector-14 Resident Welfare Association, Hisar.

v. Kuldeep Kaur, Sarpanch, Gram Panchyat, Theri, Fatehabad.

w. Manmohan Kaur, Gram Panchyat, Fatehabad.

x. Mr.Subhash and other advocates, District Court Complex, Panchkula.

y. Rattan Singh Pannu, # 3693, Sector-9 & 11, Hissar.

z. Satya Welfare Association, 10-92, Urban Estate-2, Hisar.

aa. Senior Citizens' Council (Regd.), Panchkula.

bb. President-cum-Chairman, Action Committee, CWA as endorsed by General

Secretary, House Owners Welfare Association, Sector-21, Panchkula,

President, R.W.D.A., Sector-15, Panchkula etc.

cc. Faridabad Industries Association

dd. Sh. Deepak Girdhar, Advocate.

15. The following interveners supported the efforts made by HPPC to procure Solar

Power and suggested that the Commission should approve the PPA’s.

a) Sh. B.S. Yadav, Principal Advisor, Policy, Regulatory Affairs & Capacity

Building), National Solar Energy Federation of India, New Delhi.

b) National Solar Energy Federation of India (NSEFI) a) Faridabad Industries

Association.

c) Sh. B. Kumar.

d) Dr. Manish.

e) Sh..Prateek Singh, IIM, Rohtak.

f) Sh. Kushagra Agarwal.

g) Sh. Sandeep Mittal.

h) Sh. B.D. Sharma, Scientist, 3009, Sector 46, Gurgaon.

i) Sh. Karan Singh Pasina, Panipat.

j) Smt. Naina Jain, Student-Socially Active.

k) Sh. Rahul Gulia.

l) Smt Nirmala, Sarpanch, Village Barwa, Bhiwani.

m) Manu Richhoriya, Banker

16. While replying to the objections, HPPC has stated that the

comments/objections are generic and similar in nature. Therefore, HPPC is filing a

common reply A brief summary of the objections and HPPC replies thereto is as

under:

16.1 Objections raised by interveners at para 14 (a to w) and reply of the petitioner

are as under:-

16.1.1 Objection raised - In the hearing held on 2.7.2016 in HERC, it has been gathered that No power will be purchased in Haryana as already about 70 PPAs have been signed, so fixed charges of about 2000 crore are being paid

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whereas installed capacity available with Haryana is 11000 MW against the demand of 7500 MW.

Reply: The submission is generic in nature and in particular, does not relate to solar power purchase. The issue which is being raised has to be decided by the Hon’ble Commission in appropriate proceedings.

16.1.2 Objection raised – Govt. has started erecting solar panels on rooftop of 500 Sq. yard houses and rates of solar power are decreasing so solar power will become more cheaper. Under these circumstances, it is not legal to sign PPA for long term @ Rs 5.00/kwh and Rs.6.44/kwh

Reply: As far as solar rooftop is concerned, DISCOMS have taken prompt steps to move forward towards mission of installation of solar rooftop for which training program for field staff have been arranged and a team under the supervision SE/M&P has been formed for installation of Net meters. HPPC will not be able to meet its RPO requirement through Net metering of Solar Rooftop projects. The procurement of solar power through rooftop projects cannot be compared with procurement of ground mounted solar projects. The two are distinct, both in capacity as well as the ability to meet the RPO obligation.

Further, it is submitted that the tariff of Rs. 6.44/kWh was discovered in the Year 2014-15 through the competitive bidding process initiated by HPPC for procurement of 50 MW. The tariff, at that time, was the most competitive. For the particular Year, the levelised tariff by the Hon’ble Commission was Rs. 7.45/kWh and there being specific directions from the Hon’ble Commission vide order dated 20.11.2013 that HPPC should procure solar power at any price less than the levelised tariff.

The PPAs have been signed with the 4 developers and are ready for commissioning. The tariff that would be applicable to these PPAs would be made effective from the date Hon’ble Commission approves the PPA.

The Generic Levelized tariff (Rs./kwh) for the solar PV for the FY 2014-15 by Central Electricity Regulatory Commission (hereinafter referred to as the ‘Central Commission’) and State Electricity Regulatory Commissions (hereinafter referred to as ‘State Commission’) is tabulated below:

Haryana CERC Rajasthan M.P Punjab TamilNadu U.P Uttarakhand

7.45 7.72 7.5 8.05 7.72 7.01 8.91 6.99

As far as Rs. 5.00/kwh is concerned, the tariff is most competitive and the tariff(Rs./kwh) discovered by different State Discoms for solar power through competitive bidding floated during FY 2015-16 till 31st March 2016 is as follows:-

The documentary proof for the same have already been submitted to HERC.

Further, it is pertinent to point out that the Hon’ble Commission has in another case also approved the PPA executed by the Petitioner with another developer, M/s

Haryana Telangana Punjab Uttrakhand Jharkhand Madhya Pradesh

5.00 5.17 5.09 5.57 5.08 5.05

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Siwana Solar Power Ltd., for 5MW vide letter dated 21.02.2014. The aforesaid solar power developer is being paid tariff at the rate of Rs.6.44/Kwh as per clause 2.1.41 of the said PPA as the present tariff of Rs.6.44/Kwh discovered through the instant competitive bidding process carried out by HPPC was the lowest tariff vide HERC order dated 20.1.2016.

Hence, tariff of Rs. 6.44/kwh during FY 2014-15 and Rs. 5.00/kwh during FY 2015-16 is the most competitive discovered through competitive bidding as per HERC directives and the same is lower than the levelised tariff (Rs. 7.45/kWh) determined by HERC and Rs 7.72 kWh of CERC.

16.1.3 Objection raised- With cheaper Solar panels and Net metering, more capacity will be spare, therefore, it is requested that no PPA for solar or otherwise may be signed. To meet RPO, If REC are costly, signing MOU for a long time is even more costlier.

Reply: As far as solar rooftop is concerned, DISCOMS have taken prompt steps to move forward towards missionary of installation of solar rooftop for which training program for field staff have been arranged and a team under the supervision SE/M&P has been formed for installation of Net meters. HPPC will not be able to meet its RPO requirement through NET metering of Solar Rooftop projects. The procurement of solar power through rooftop projects cannot be compared with procurement of ground mounted solar projects. The two are distinct, both in capacity as well as the ability to meet the RPO obligation.

As far as purchase of REC certificate is concerned, HPPC submits as under:

a) HERC vide its Order dated 20.11.2013 has recommended to purchase Renewable power instead of REC. The abstract of the same is reproduced below:

The Commission is of the view that it is always preferable to purchase renewable

energy because of fact that such generation projects as per the statutes has to be encouraged, rather than to purchase REC wherein the amount paid for purchase of the same goes to the generator without even getting the benefit of power availability. Further because of its distributed nature, RE generation is considered advantageous in terms of reduced cost of transmission network and reduced transmission losses. This advantage becomes considerably enhanced when such RE is generated and consumed locally. Therefore the Discoms in Haryana should prefer to purchase RE generated in Haryana. This is also the spirit behind regulation 64(3) support of which has been sought by the Petitioner.

b) Firstly, it is submitted that the tender for 50 MW solar power was floated by

HPPC in October 2014 and the cost of REC for solar power at that time was Rs 9.30 per kWh.

c) Secondly, the very comparison with REC as an alternate to renewable power

purchase is not correct. REC can only be a fall back if for some reasons Renewable Purchase Obligation is not met. REC is not a long term solution for fulfilling the RPO obligations. Moreover, REC may not be available in future.

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d) Without prejudice to the above purchase of renewable Solar power in the present situation in Haryana is beneficial as compared to REC if the following aspects are considered:

Table-‘A’

The table showing comparison of REC vis-à-vis power procured through

tender clearly proves that the power procured through tender is most competitive.

16.1.4 Objection raised- It is decided that no more PPA should be done till the time the existing PPAs are forgone/power is purchased under Net metering/HPGCL Solar plant starts generation and if still power is required, PPA may be signed after two years.

Reply: HPPC will not be able to meet its RPO requirement through Net metering of Solar Rooftop projects.

Currently, HPGCL proposed solar power capacity is not able to meet Solar RPO targets as on date and HPPC as well as HPGCL have been taking immediate steps to meet solar RPO as soon as possible.

However, HPGCL has offered 10 MW solar power at PTPS, Panipat @ Rs. 4.88/kwh instead of Rs 4.18/kwh excluding the cost of transmission line and land cost. The proposal is under consideration.

New Haryana Solar Policy 2016 & new tariff policy formulated by GOI envisages even more purchase of solar power, thereby more burden on HPPC.

During the bidding process, negotiation was carried out in accordance with Policy notified by Govt. of Haryana. The bidding was done in fair and transparent manner and the objector is raising unnecessary, irrelevant and out of context objections.

Further, it is submitted that HERC vide their order dated 20.11.2013 titled “modification of Renewable Purchase Obligations” states that the DISCOMS/HPPC is able to procure renewable energy power (Solar and Non-Solar) at a Tariff lower than determined by the Commission by way of reverse bidding or otherwise, they may do so.

Purchase of REC Purchase of Solar Power

Total No. of units supplied 100 Total No. of units supplied 100

No. of Units at APPC Price 100 No. of Units at APPC Price

98

APPC Price for FY 2014-15 in Rs./kwh

3.53 APPC Price for FY 2014-15 in Rs./kwh

3.53

Let’s say 2 units of solar unit has to be purchased as REC to fulfil RPO

2 Let’s say 2 units out of 100 units served through solar

2

Cost of REC 3.50 Cost of solar unit/kWh 6.44

APPC rate after adding REC Cost in Rs./kwh

(100x3.53 +2x3.50)/100 =3.60

New APPC rate in Rs./kwh

(98x3.53 + 2x6.44)/100

=3.59

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The argument to cancel old PPAs, does not contain any merit. Moreover, it does not relate to HPPC & the issue which is being raised has to be decided by Hon’ble commission.

16.1.5 Other Objections raised : HPPC vide letter dated 05.08.2014, had submitted that major deviation in NIT from SBD were in respect of Bid Bond and Contract performance guarantee and all others are minor deviations which will be rectified to have the NIT exactly the same as SBD. Accordingly, on the basis of above letter of HPPC, the Commission informed HPPC on 08.08.2014 that since bidding process is already under way, HPPC may proceed with the same. However, later HPPC had not removed those deviations

a) Objection: Permission not sought for negotiation Reply of HPPC

The content of HERC letter dated 8.8.2014 are as under:

On 16.06.2014, the Petitioner sent the communication to the Commission intimating as under:

1. “Subject: NIT for purchase of 50 MW solar & 100 MW non-solar power to meet RPO – approval thereof

It is intimated that HPPC is in the process of floating Two no. NITs for purchase of 50 MW solar & 100 MW non-solar power. The date of opening of tenders has been fixed as 31.7.2014 for solar & 14.8.2014 for non- solar power.

Although NIT is based on the Standard RFP for procurement of power under “Case 1 -RE” Bidding procedure through Tariff based Competitive Bidding Process (As per Guidelines for tariff Based Competitive Bidding Process for Grid Connected Power Projects Based on Renewable Energy Sources” issued by the Govt. of India), however a few changes have been done mainly affiliates have not been allowed, Delivery point is Haryana periphery and tariff to be quoted and evaluated will be at Delivery point, negotiation will be done etc.

It is requested that HERC may furnish its valuable comments, if any, on the NIT latest by 25.6.2014 so that HPPC may proceed further with tender process.”

In the communication-dated 16.06.2014, the Petitioner has also placed on record that negotiations etc. will be done. This was in the context that negotiations will be required to be done for reducing the price as far as possible from the ceiling cost, in the larger interest of the consumers. 2. By communication-dated 25.06.2014, the Commission was pleased to hold as under:

“Subject: NIT for purchase of 50 MW solar & 100 MW non-solar power to meet RPO.

This is with reference to your office memo no. Ch-43/HPPC/SE/C&R-I/PPA-136 dated 16.06.2014 vide which copy NITs for purchase of 50 MW solar & 100 MW non-solar power have been forwarded for comments.

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Before the case is further processed, it is requested to clarify/intimate the following:

A copy of the Standard Bidding Documents for procurement of power under “Case 1-RE” Bidding procedure through Tariff based Competitive Bidding Process for Grid Connected Power Projects Based on Renewable Energy Sources issued by the Government of India be provided.

The deviations made in the NIT with respect to the Standard Bidding Document for procurement of power under “Case 1-RE” issued by the Government of India be tabulated.

The copy of the statute, under which the deviations sought by HPPC from the Standard Bidding Documents issued by the Government of India requires the approval of the Commission, may also be provided.

The above clarification/information be provided within a week from the date of issue of this letter.”

3. Thereafter, by communication-dated 01.07.2014, the Petitioner furnished the deviations from the Standard Bidding Document as per the direction of the Commission with a covering letter as under:

“Subject: NIT for purchase of 50 MW solar & 100 MW non-solar power to meet RPO- approval thereof

This is with reference to your Memo. No. 1124/HERC/PPA/NIT-RE/Tariff dated 25.6.2014 on the subject.

In this regard, Standard Request for Proposal for Procurement of Power Under case1 – RE” Bidding Procedure through tariff Based Competitive Bidding Process (As per Guidelines for tariff Based Competitive Bidding Process for Grid Connected Power Projects based on Renewable Energy Sources”) is enclosed. (Annexure A)

Deviations made in the NIT w.r.t the SBD for procurement of power under “Case 1- re” in tabulated form is enclosed. (Annexure B)

It is submitted that approval of Honorable Commission on the Two Nos. subject cited NITs is required in view of the Clause 3.1.2 of MNRE “Guidelines for Tariff based Competitive Bidding Process for Grid Connected Power Projects Based on Renewable Energy Sources- December 2012” (Annexure C) which states that

“Approval of the Appropriate Commission shall be sought in the event of the deviations from the bidding conditions contained in these guidelines and SBD, following the process described in para 6.9 of these guidelines.”

It is humbly requested that approval may please be granted on the NITs for purchase of 50 MW solar and 100 MW non-solar power.”

4. In response to the above, the Hon’ble Commission by communication-dated 28.07.2014 wrote as under:

“Subject: NIT for purchase of 50 MW solar & 100 MW non-solar power to meet RPO.

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This is with reference to your office memo no. Ch-46/HPPC/SE/C&R-//PPA- dated 25.06.2014.

The Commission has observed that there are many other deviations particularly to Bid Bond, CPG, Payment Security etc. The Standard Bid Document may heave PPA also.

You are requested to submit all deviations made in the NIT with respect to the Standard Bidding Document (SBD) for procurement of power under “Case 1- RE” issued by the Government of India in tabulated form and also the PPA attached with the SBD within a week from the date of issue of this letter.”

5. On 05.08.2014, the Petitioner submitted as under:

“Subject: NIT for purchase of 50 MW solar & 100 MW non-solar power to meet RPO

This is with reference to your memo No. 1535/HERC/PPA/NIT-RE/Tariff dated 28.7.2014 on the subject.

In this regard, it is submitted that major deviation in NIT from SBD in respect of Bid Bond & Contract Performance Guarantee is that of the amount per MW to be paid. All the minor deviations will be rectified to have the NIT exactly the same as that of SBD. All these deviations have been color coded in the comparison done in the tabular form. (Annexure A)


It is humbly submitted that the date of opening of tenders is 22.8.2014 for solar power and 29.8.2014 for non-solar power.


Along with the above letter, the list of deviation was also given. 6. On 08.08.2014, the Hon’ble Commission was pleased to allow the Petitioner to proceed with the Competitive Bidding Process. The letter-dated 08.08.2014, reads as under:

“Subject: NIT for Purchase of 50 MW solar & 100 MW non-solar power to meet RPO – approval thereof.

kindly refer to your memo no Ch-43/HPPC/SE/C&R -I/PPA – 136 dated 16.06.2014 and Ch-46/HPPC/SE/C&R-I/PPA-67 dated 1.07.2014 vide which approval of the Commission was sought to be deviations in the bid documents vis-à-vis the Case – 1 RE Bidding Procedure of the Government of India. The Commission has considered your application/petition and observes that the NIT No. 51 & 52 for inviting competitive bids purchase of 50 MW for Solar Power and 100 MW of Non- Solar (renewable energy) were issued on 16.04.2014 and the approval of the Commission to the deviations were sought on 1.07.2014 i.e. ex post facto.

The Commission observes that the Discoms have not fulfilled their RPO including by way of purchase of REC. Consequently, the accumulated shortfall allowed to be carried forward from FY 2011-12 up to FY 2013-14 (up to December 2013) is about 720.83 Mus and the total RPO target set for FY 2014-15 is 1463.41 Mus. On several

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occasions the Commission has observed that HPPC/HAREDA may invite bids/ reverse bids for purchase of renewable energy in order to meet with the RPO targets and the fact that the bidding process is already under way, HPPC may proceed with the same. Once the bids are opened HPPC shall analyze the same and submit the details to the Commission for its order and approval of the PPA with the successful bidders.

7. After getting concurrence on 8.8.2014 by HERC and ceiling tariff of Rs 7.45/kwh determined by HERC vide order dated 13.8.2014, Technical bids were opened on 22.10.2014 & financial bids on 22.12.2014. Ten nos. bidders had submitted the tenders. Out of them, only Eight Nos. Bidders were found eligible for financial evaluation. Hence, only 23 MW could be tied up against the required capacity of 50 MW.

8. Further, it is submitted that HERC vide their order dated 20.11.2013 titled “modification of Renewable Purchase Obligations” states that the DISCOMS/HPPC is able to procure renewable energy power (Solar and Non-Solar) at a Tariff lower than determined by the Commission by way of reverse bidding or otherwise, they may do so.

However, it is stated that MNRE issued draft guidelines and SBD for purchase of renewable power through competitive bidding in Dec 2012 which were not notified as such. Further, it is pertinent to point out that the Hon’ble Commission has in another case also approved the PPA executed by the Petitioner with another developer, M/s Siwana Solar Power Ltd., for 5MW vide letter dated 21.02.2014. The aforesaid solar power developer is being paid tariff at the rate of Rs.6.44/Kwh as per clause 2.1.41 of the said PPA as the present tariff of Rs.6.44/Kwh discovered through the instant competitive bidding process carried out by HPPC was the lowest tariff vide HERC order dated 20.1.2016.

16.1.6 Objection: NSEFI has raised objection that as per Clause 6.8 of MNRE that order will be placed on the lowest discovered tariff, rest all the offers will be cancelled.

Reply: The tariff as decided by the HERC was the ceiling limit and bidders were to quote any tariff less than that. MNRE adopts bucket filling approach whereas HPPC asked the bidders to match the L-I tariff. Hence, only 23 MW could be tied up against the required capacity of 50 MW. As far as negotiation clause is concerned, HPPC has already conveyed to HERC vide letter 16.6.2014. Thereafter, HERC conveyed its consent vide letter dated 8.8.2014. It is submitted that there is no violation of any guidelines formulated by GoI. As per policy of Govt of Haryana, negotiation was done only after the quoted lowest price was discovered, so that maximum power could be procured at the lowest price discovered in the interest of State consumer. However, it is pertinent to mention here that MNRE issued draft guidelines and SBD for purchase of renewable power through competitive bidding in Dec 2012 which were not notified as such.

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Further, it is submitted that HERC vide their order dated 20.11.2013 titled “modification of Renewable Purchase Obligations” states that the DISCOMS/HPPC is able to procure renewable energy power (Solar and Non-Solar) at a Tariff lower than determined by the Commission by way of reverse bidding or otherwise, they may do so. 16.1.7 Objection raised: As per MNRE guidelines at Clause 6.3, there will be External Expert in Evaluation Committee.

Reply: The Petitioner submits that there has been no violation of the bidding documents in regard to the External Expert in evaluation Committee as per the Guidelines issued by the Ministry of Non-Conventional Energy Sources. The bidding submission date was after the Hon’ble commission has decided the ceiling tariff for Solar power projects at Rs 7.45/kwh in the Order dated 13.8.2014. Similarly, in the Order dated 15.5.2014, the Central Commission has also determined the tariff for Solar power projects at Rs 7.72/kwh. The above decision of the Hon’ble Commission dated 13.8.2014 was required before the bid submissions. The bid submissions date was in fact deferred from time to time till 22.10.2014. The Petitioner submits that the fixation of the above tariff at Rs 7.45/kwh by the Hon’ble Commission and Rs 7.72/kwh by the Central Commission provided the price aligned to the market conditions. The Hon’ble Commission and the Central Commission had determined the above tariff after considering all the relevant facts and taking into account the price which could be the appropriate one, i.e. the ceiling price. Infact, inviting competitive bids in the light of the above tariff determined necessarily means that bidders were to bid keeping the tariff already decided i.e. in a competitive environment to quote lower to the extent they decide.

However, it is pertinent to mention here that MNRE issued draft guidelines and SBD for purchase of renewable power through competitive bidding in Dec 2012 which were not notified as such.

16.1.8 Objection: Networth has been taken as Rs. 2.00 crores instead of Rs.3.50 crores

Reply: The Networth of the Solar Power Developer was reduced to invite the maximum nos. of bidders to have the most competitive rates .Also , in the RFP document issued by Punjab Energy Development Agency( PEDA) for 300 MW solar photo voltaic power projects under phase -1 in March 2012, the net worth had been taken as 2 crores/ MW.

16.1.9 Objection: M/s Neel metal (M/s JBM) has not intimated the location of project. The change of location of land was not permitted in NIT.

Reply: The following clause of NIT states that:

2.8.3. Consents, Clearances and Permits

2.8.3.1. Site Identification and Land Acquisition:

At this stage, the project developer would also provide evidence that the requisite technical criteria have been fulfilled and required land for project development @ 2 Hectares/MW (or as per requirement of the project) is under

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clear possession of the project developer. In this regard the Project developer shall be required to furnish the following documentary evidences:- i. Ownership or lease hold rights (for at least 30 years) in the name of the Project Developer and possession of 100% of the area of land required for the allotted project. ii. Requisite documents from the concerned and competent revenue/registration authority for the acquisition/ownership/vesting of the land in the name of Project Developer and in case private land converted for industrial use. iii. In case of land to be acquired under the Land Acquisition Act 1894 or its equivalent, the Bidder shall submit copy of notification issued for such land under Section 6 of the Land Acquisition Act 1894 or its equivalent. iv. In all other cases, the Bidder shall furnish documentary evidence in the form of certificate by concerned and competent revenue / registration authority for allotment of the land. In case of non-availability of land with the bidder at the time of bidding, an undertaking has to be submitted that the documentary evidence will be produced by the bidder of the availability of land at the time financial closure of the project. The undertaking can be provided in the Format 4.4 (C). v. If the identified generation source is an existing power station, the Bidder shall submit the documentary evidence regarding commissioning of the power station. In case of supply being proposed from an existing power station, the Bidder should submit evidence in the form of a declaration sent to RLDC/SLDC, as the case may be, in support of commercial operation of the power station. vi. If the Bidder is a trading licensee, it shall have executed exclusive power purchase agreement(s) for the quantity of power offered in its Bid and shall provide a copy of the same as part of its Bid. In such a case, the Bidder shall ensure that the entity with whom it has executed the exclusive Power Purchase Agreement (PPA) for supply of power under the bidding process has completed the project preparatory activities as mentioned in this clause.

Note: (i) Change in the location of land from one place to other location is

permitted till the Financial closure (ii) The land should be free from all encumbrances. (iii) The land should neither have been proposed for other purposes &

nor should have been mortgaged.

From the above, it is clear that it was not mandatory for the bidder to possess the land at the time of bid submission and he could even change the location till the Financial closure.

16.1.10 Objection: The following information was to be furnished at the preliminary stage:

a) Site identification and land possession b) The steering committee had conducted the meeting for power purchase. It

had taken the bench mark tariff of HERC as the ceiling limit.

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c) Why levelized tariff of FY 2013-14 has not been taken as ceiling limit while levelized tariff of 2014-15 as ceiling limit has been considered.

Reply: a) Clause 2.8.3 of NIT as reproduced above may be perused. b) All the record namely Minutes of Meeting (MoM) of Steering Committee for Power Planning (SCPP) constituted by Govt of Haryana held on 23.02.2015 wherein lowest tariff i.e. Rs. 6.44/kwh was discovered, which was lower than the HERC levelized tariff of Rs.7.45/kwh, has been submitted to HERC for the kind consideration of the Hon’ble Commission. c) The tariff of Rs.5.70/kwh as determined by the HERC in FY 2013-14 contains two errors. The first one is that it has not taken into account Income tax before arriving at ROE and the second one is that O & M expenses have been taken as Rs 1.1 lac per MW instead of Rs. 11 Lac per MW. Further, it is pointed out that NIT was floated after the levelized tariff (Rs. 7.45/kwh) was determined by HERC for the FY 2014-15 & 2015-16 and tariff was discovered through competitive bidding as Rs 6.44/kwh which is lower than HERC tariff.

16.2 Objections filed by Sh. Subhash, District Court Complex,

Panchkula.

That I have gone through the MNRE guidelines, Petition and interim orders of

the Hon’ble Commission and have following observations and objection:

16.2.1 The HPPC in point no 5 of their petition no PRO 6 submitted that

“Petitioner initiated competitive bidding process as per the Guidelines for Tariff

Based Competitive Bidding Process for Grid-connected Power Projects based

on Renewable Energy Sources issued by the Government of India.” It has been

further stated that “the Standard Request for Proposal for procurement of

power from Renewable Energy Sources notified by the Government of India

under Section 63 of the Electricity Act, 2003 was adopted for the above

purpose.”

Objection: The above statement of HPPC that bidding has been done in

accordance with guidelines and standard request for proposal notified by govt.

of India, later proved to be wrong and accepted by HPPC also as mentioned in

point no. (b) below.

16.2.2 The HPPC in point no. 8 of the petition has mentioned that “Although

NIT is based on the Standard RFP for procurement of power under “Case 1 -

RE” Bidding procedure through Tariff based Competitive Bidding Process (As

per Guidelines for tariff Based Competitive Bidding Process for Grid Connected

Power Projects Based on Renewable Energy Sources” issued by the Govt. of

India), however a few changes have been done mainly affiliates have not been

allowed, Delivery point is Haryana periphery and tariff to be quoted and

evaluated will be at Delivery point, negotiation will be done etc.”

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Objection: The HPPC first said that everything is in accordance with guidelines

and then said that few changes have been done from standards.

16.2.3 The HPPC in point no. 9 has stated that “negotiations will be required to

be done for reducing the price as far as possible from the ceiling cost, in the

larger interest of the consumers.”

Objection: In the petition nowhere it is mentioned that what was the ceiling

cost mentioned in the NIT, from which further reduction was supposed to be

done by negotiating. Because bidders would bid based on ceiling cost

mentioned in the NIT only.

I have to search for the NIT dated April 2014 on the website and found that

Levelised tariff in the NIT was the levelised tariff of HERC i.e. Rs. 5.7/kwh, as

per commission’s order dated 20.11.2013 (clause 2.5.5 of NIT). Whereas, tariff

approved is Rs. 6.44/kwh. Although, Commission later vide order dated

13.08.2014 determined the levelised tariff at Rs. 7.45/kwh for the projects

commissioned during the FY 2014-15 & 2015-16, the same cannot form basis

for merit order prepared on 23.02.2015, in contravention of the rate mentioned

in NIT. Further, MNRE Guidelines, 2012 at clause 5.4 (iii) specified that bids

should contain tariff comprising of escalable components and non-escalable

components. The bids shall be evaluated for the levellised tariffs based on the

components of the tariff quoted by the Bidder.

Further, the ceiling tariff against which bids are to be evaluated should not

contain a general statement but should have been fixed taking into

consideration of all the factors prevalent in state of Haryana and neighboring

states.

Further, MNRE guidelines states that bids should be evaluated against a

benchmark rates to be decided taking into consideration of the prevalent

market conditions. No such rate was fixed. Bidders under the impression of

benchmark rate as Rs. 5.70 never applied for the bid and clandestinely the

higher rate of Rs. 6.44 was settled.

16.2.4 The commission has itself raised various objections on the bidding

process, evaluation committee, negotiation process, contravention of SBD etc.

by interim order dated 11.02.2016:

i) HPPC may explain as to why the proper procedure as mandated by the SBD was not adopted in this regard.

ii) Disclose the composition of Bid evaluation committee and also that the same was constituted in accordance with the SBD.

iii) Whether the Bid evaluation committee consisted of an external expert in the Committee as mandated by the SBD.

iv) Whether the Bid Evaluation Committee certified that the rates quoted by the bidders were aligned to the market conditions. As per the news item

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published in “TheTimes of India” dated 20.01.2016, the Solar price tariff hits new low in Rajasthan i.e. Rs. 4.34 to Rs. 4.63 paisa per unit quoted by Fortum India in one of the six pockets bid out by state run generation utility NTPC in Rajasthan. Also, the latest bids called by HPPC for 150MW solar power have thrown up the rate of Rs.5.00/Kwh.

v) In the present scenario how HPPC can negotiate with the developer at such a high price of Rs. 6.44 per unit without any justification.

vi) Why the HPPC has not followed its own process as mandated in Para 3.1.4 (IV)

vii) Why negotiations were carried out with the bidders in spite of clear instructions in the SBD forbidding the same.

Objection: The above observations of Hon’ble Commission are serious and

warrants out right rejection of proposed PPAs.

16.2.5 It appears that MNRE guidelines regarding bid evaluation committee,

fixation of ceiling tariff aligned to market conditions, negotiation etc. were not

followed.

The negotiation process has been objected by National Solar Energy

Federation of India, also, stating that the same violates the CVC guidelines on

tendering.

Further, Clause 6.8 of MNRE guidelines states that “The Bidder, who has

quoted lowest levellised tariff as per evaluation procedure, shall be considered

for the award. The Evaluation Committee shall have the right to reject all price

bids if the rates quoted are not aligned to the prevailing market prices. “

Further, Clause 6.3 of MNRE guidelines specified that “The Procurer shall

constitute committee for evaluation of the bids (Evaluation Committee) with at

least one member external to the Procurer’s organization and affiliates. The

external member shall have expertise in financial matters / bid evaluation. The

Procurer shall reveal past associations with the external member - directly or

through its affiliates - that could create potential conflict of interest. “

16.2.6 Has HPPC ascertained the fact that the bidders have adequate

land/arrangement to procure requisite land. Location of project was important

clause in NIT (Clause 2.8.3.1) and even change in the location of land from one

place to other location was not permitted.

Clause 3.2(I) of MNRE Guidelines on Tariff based competitive bidding for RE

dated Dec 2012 states that “to ensure serious participation in the bidding

process and timely completion of commencement of supply of power, the

Bidder, in case the supply is proposed from a power station to be set-up,

should be required to submit along with its bid, documents in support of having

completed specific actions for project preparatory activities in respect of matters

mentioned in (i) to (v) below.

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16.2.7 i) Site identification and land acquisition: ……………………..”

Objection: The compliance of above clauses which provides for location of

land be ascertained of all the shortlisted bidders.

16.2.8 That it is normally seen that whenever govt. initiate some scheme, some

unscrupulous elements take advantage by showing that they want to promote

govt. schemes. Like in this case, just to show that RPO obligations are to be

met, PPAs are being undertaken without considering the impact on the people

of Haryana of the same. Other alternatives to fulfill RPO obligations like Roof

Top Solar, Solar on the waste land proposed by Hon’ble CM, Renewable

Energy Certificates (REC) are not being explored. However, either no mind has

been applied by the concerned officers or very cleverly some private players

are being given the benefit.

16.2.9 That taking into consideration of falling Solar Electricity Rate, it is

prudent if purchase of solar electricity is delayed from 1-2 years, till the time

prices stabilizes. An analysis was done for the cost to be incurred, in case

purchase of solar electricity is delayed by two years and one year and for these

period REC are purchased. It has been noticed that for PPA @ Rs. 5/- is

delayed by two years, then net saving is Rs. 1.1 crore and in case the same is

delayed by one year, then net saving is Rs. 0.60 lacs. Similary, it has been

noticed that for PPA @ Rs. 6.44/- is delayed by two years, then net saving is

Rs. 3.34 crore and in case the same is delayed by one year, then net saving is

Rs. 2.84 crore.

16.2.10 Pollution: Most of the photovoltaic penals are made up of silicon

and other toxic metals like mercury, lead and cadmium. Pollution in the

environment can also degrade the quality and efficiency of photovoltaic cells,

New innovative technologies can overcome the worst of these effects.

16.2.11 Inefficiency: Since not all the light from the sun is absorbed by the

solar penals therefore most solar penals have a 40% efficiency rate which

means 60% of the sunlight gets wasted and is not harnessed. New emerging

technologies however have increased the rate of efficiency of solar penals from

40 to 80% and on the downside have increased the cost of solar penals as well.

16.2.12 Reliability: Unlike other renewable energy sources which can also

be operated during night, solar penals prove to be useless which means you

have to depend on the local utility grid to draw power in the night or you can

buy solar batteries to store excess power which you can later utilize in the night

Apart from that, storms or hurricanes also reduce your ability to draw power

during those days.

16.2.13 Installation Area: For home users, a Solar energy installation may

not require huge space as it can be installed on rooftops that can produce

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sufficient energy but for big companies, a large area is required for the system

to be efficient in providing electricity on a constant basis.

HPPC’s Reply:

HPPC has filed a common reply to the objections raised by Sh. Subhash, Panchkula and Sh. Rattan Singh Pannu, Hisar. as under:

16.2.1 and 16.2.2 Same as reply to Objection at Sr. No. 16.1.5

Reply to point 16.2.3: The ceiling limit in the NIT was the levelized tariff determined by HERC for the projects to be commissioned in FY 2014-15 as is evident from the following clause (Definition) of NIT: “Quoted Tariff” shall mean the Quoted Energy Charges, as applicable, quoted by the Bidder as per the prescribed Format 4.7 and shall be construed to be at the Delivery Point as mentioned in its Bid;

The levellized tariff (i.e. Rs7.45/kwh) for Renewable Energy Projects to be commissioned in FY 2014-15 as determined by HERC will be the ceiling limit and the bidder quoting the tariff above that will be allowed only the levellized generic tariff decided by HERC. It can be seen from the above, Rs.5.70/kwh was the levelized tariff for the projects to be commissioned in FY 2013-14 but NIT was floated in the month of October of FY 2014-15.Hence, in NIT No. 51, the ceiling limit is Rs 7.45/kwh i.e. the levelized tariff determined by the Commission for FY 2014-15. Further, MNRE Guidelines, 2012 is about all kind of Renewable Energy sources hence, tariff is comprising of escalable and non-escalable components. But in case of solar power, there is no variable cost in lieu of fuel. Hence, fixed tariff was kept in the NIT. Reply to point 16.2.4 HPPC has filed the written submission dated 9.3.2016 in reply to all the queries of the HERC. The same may please be referred. However, As far as negotiation clause is concerned, HPPC has already conveyed to HERC vide letter 16.6.2014. Thereafter, HERC conveyed its consent vide letter dated 8.8.2014. It is submitted that there is no violation of any guidelines formulated by GoI. As per policy of Govt of Haryana, negotiation was done only after the quoted lowest price was discovered, so that maximum power could be procured at the lowest price discovered in the interest of State consumer.

Reply to point 16.2.5 as per reply to objection at 16.1.9 Reply to point 16.2.6 The allegation is not correct and is denied. The procurement of solar power through rooftop project cannot be compared with procurement of ground mounted solar projects. The two are distinct, both in capacity as well as the ability to meet the RPO obligation. As far as REC is concerned, from the Table-

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‘A’, it is very much proved that the solar power procure through competitive bidding by HPPC is very much competitive/economical as compare to buying REC. Reply to point 16.2.7 As far as REC is concerned, from the Table- ‘A’, it is very much proved that the solar power procure through competitive bidding by HPPC is very much competitive/economical as compare to buying REC.

Reply to point 16.2.8 The facts are not correct. The multi crystalline modules are the most environment friendly technology available to the mankind. Degradation in the modules are caused by separate events. It’s a separate chapter altogether and nothing to do with present proceedings. Moreover, tariff offered in this case is irrespective of degradations. That means tariff is fixed for 25 years and risk of degradation lies with the SPD and hence consumers of Haryana are de risked in that way.

Reply to point 16.2.9 The point raised is totally not correct and out of context.

Reply to point 16.2.10 The point is out of context. However, the consumer is de-risked of any such eventuality and SLDC & DISCOMS take care that consumer gets power all the time at the best possible rates.

Reply to point 16.2.11 Again, the argument made here is totally out of context. It seems that the points made out here to mislead the Honorable commission. The roof top area per KW is either higher or equal as compared to ground mounted solar PV power Plant. Anyhow, land arrangement is the responsibility of the developer in this case and HPPC has nothing to do at all. In view of matter explained on pre-page, from the facts/reply to questionnaire, it is understood that as far as procedure for selection of bidder is concerned, HPPC has done transparent & competitive bidding as per Govt. Instructions/guidelines and discovered the lowest tariff for respective period w.r.t. levelized tariff determined by HERC for FY- 2014-15 & 2015-16. It is also submitted that HERC vide their order dated 20.11.2013 titled “modification of Renewable Purchase Obligations” states that the DISCOMS/HPPC is able to procure renewable energy power (Solar and Non-Solar) at a Tariff lower than determined by the Commission by way of reverse bidding or otherwise, they may do so. Further, it is added that other state DISCOM/Govt. of India is using bucket filling approach wherein various tariff is to be given to solar power developers till the capacity of bucket. However, HPPC has carried out negotiation as per State policy to reduce the tariff in the interest of consumers. Further, it is pertinent to point out that the Hon’ble Commission has in another case also approved the PPA executed by the Petitioner with another developer, M/s Siwana Solar Power Ltd., for 5MW vide letter dated 21.02.2014. The aforesaid solar power developer is being paid tariff at the rate of Rs.6.44/Kwh as per clause 2.1.41 of the said PPA as the present tariff of Rs.6.44/Kwh

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discovered through the instant competitive bidding process carried out by HPPC was the lowest tariff vide HERC order dated 20.1.2016. It is also stated that tariff of Rs 4.34 to Rs 4.63/unit was the bidding rate for solar park for the state of Rajasthan wherein lot of facilities like land on lease, Transmission line, water ,sewerage system and boundary wall are to be provided by State and solar radiation in Rajasthan is much higher than Haryana to get more generation. Moreover, land cost is also high in state of Haryana. It is also submitted as far as buying REC is concerned; it is very much proved that buying REC instead of procuring solar power through competitive bidding is not economical as shown in Table-‘A’. 16.3 Objections filed by Senior Citizens' Council (Regd.), Panchkula. The

objection already raised by the Hon’ble Commission by interim order dated

11.02.2016 is of serious nature. Replies of the DISCOMs on the same should

be sought and made public. The observation of the Commission are as under:

i) HPPC may explain as to why the proper procedure as mandated by the

SBD was not adopted in this regard.

ii) Disclose the composition of Bid evaluation committee and also that the

same was constituted in accordance with the SBD.

16.3.1 Whether the Bid evaluation committee consisted of an external expert in

the Committee as mandated by the SBD.

16.3.2 Whether the Bid Evaluation Committee certified that the rates quoted by

the bidders were aligned to the market conditions. As per the news item

published in “The Times of India” dated 20.01.2016, the Solar price tariff hits

new low in Rajasthan i.e. Rs. 4.34 to Rs. 4.63 paisa per unit quoted by Forum

India in one of the six pockets bid out by state run generation utility NTPC in

Rajasthan. Also, the latest bids called by HPPC for 150MW solar power have

thrown up the rate of Rs. 5.00/Kwh.

16.3.3 In the present scenario how HPPC can negotiate with the developer at

such a high price of Rs. 6.44 per unit without any justification.

16.3.4 Why the HPPC has not followed its own process as mandated in Para

3.1.4 (iv)

16.3.5 Why negotiations were carried out with the bidders in spite of clear

instructions in the SBD forbidding the same.

16.3.6 How the negotiations have been done in the NIT. Were the negotiations

permitted as per CVC guidelines and MNRE guidelines. If not permitted, how

can HPPC undertake negotiations.

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16.3.7 Has HPPC determined any benchmark tariff taking into consideration of

the prevalent market conditions and recorded the same and circulated to the

public so that bidders can know the maximum price they can fetch for their sale

of electricity.

16.3.8 HPPC to show that they communicated to the bidders the firm price i.e.

benchmark tariff, against which the bids are to be evaluated and on the basis of

which bidders have done the bidding. In case that benchmark tariff increased,

then has HPPC issued notice to the public intimating such increase, so that

competition can be increased and more parties can bid.

16.3.9 The HPPC in point no 5 of their petition no PRO 6 submitted that

“Petitioner initiated competitive bidding process as per the Guidelines for Tariff

Based Competitive Bidding Process for Grid-connected Power Projects based

on Renewable Energy Sources issued by the Government of India.” It has been

further stated that “the Standard Request for Proposal for procurement of

power from Renewable Energy Sources notified by the Government of India


purpose.”

In this context, HPPC to show the compliance, because the interim order of the

Hon’ble Commission states otherwise.

16.3.10 It has been gathered that some of the bidders were selected

without even ascertaining that they possess the land. Even the location in

Haryana, where land is available was not provided by the bidders and only after

their selection, the bidders went on in search of land. HPPC to provide

comments on the same.

16.3.11 It has been gathered that private parties are being benefitted by

signing PPA at very high rate of 6.44/- and 5/-, when there is no need of

electricity and electricity is already surplus, on the pretext of fulfilling RPO

obligations. RPO obligations should be meant only for further power to be

purchased, in case of need for the same and not for purchasing power without

need just to fulfill RPO obligations.

RPO obligations should be met from promotion of Rooftop Solar scheme by

giving incentives of Rs. 1.25/ unit instead of 0.25/unit at present.

Further, other alternatives on installing Solar plant on waste land of Govt. be

considered.

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HPPC should prepare projected availability of power from these sources, if

implemented. Without preparing projections for these, a situation may come

where on the one side Haryana will be purchasing costly power from Private

suppliers and on the other PRO obligations will be fulfilled by Rooftop and

Govt. Solar Power plants on waste land.

16.3.12 Purchase of solar electricity should be delayed in view of the

falling market price of solar electricity, till the time it stabilizes, since at present

there is no shortage of power in Haryana.

16.3.13 HPPC should formulate a scheme of fulfilling RPO obligations by

specifying what percentage be met from various means of Renewable power

i.e. rooftop, municipal waste land, educational institution roof top etc.

It would be high appreciated by our members, in case such high cost PPA with

apparent malafide intentions and with grave irregularities are not approved.

16.3.14 HPPC’s Reply

1. The reply to HERC observations raised vide interim order dated 11.2.2016 has already been submitted by HPPC vide letter dated 09.03.2016. Further, action as deemed fit may be taken by the Hon’ble Commission. 2. Negotiations were carried out as per policy of Govt. of Haryana and after taking approval of Hon’ble commission vide their letter dated 08.08.2014 in order to reduce the tariff in the interest of consumer. HPPC submits that the negotiation with the bidders, in the present case did not vitiate the bidding process in any manner and it rather, added value to the Haryana Utilities and the consumer at large. 3. The bench mark tariff was the generic levelized tariff determined by HERC for the FY 2014-15, which was in public domain i.e. @Rs 7.45/kwh. However, HPPC discovered the lowest tariff through competitive biddings @ Rs 6.44/kwh and Rs 5/kwh which is much lower as compared to the levelized tariff determined by the HERC.

Further, it is pertinent to point out that the Hon’ble Commission has in another case also approved the PPA executed by the Petitioner with another developer, M/s Siwana Solar Power Ltd., for 5MW vide letter dated 21.02.2014. The aforesaid solar power developer is being paid tariff at the rate of Rs.6.44/Kwh as per clause 2.1.41 of the said PPA as the present tariff of Rs.6.44/Kwh discovered through the instant competitive bidding process carried out by HPPC was the lowest tariff vide HERC order dated 20.1.2016.

4. Same as reply to point No. 16.2.3 of Sh Subhash as above. 5. Same as reply to Objection at 16.1.5 as above 6. Same as reply to 16.1.9 Objection as above

7. HPPC had initiated purchasing solar power under following

circumstances:

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Section 86 (1)(e) of the Electricity Act, 2003 inter-alia, provides for the function of the State Commission as under:

“promote cogeneration and generation of electricity from renewable sources

of energy by providing suitable measures for connectivity with the grid and

sale of electricity to any person, and also specify, for purchase of electricity

from such sources, a percentage of the total consumption of electricity in the

area of a distribution licensee”

In the Tariff Orders passed by the Hon’ble Commission from time to time, the Haryana Utilities have been mandated to purchase power to meet the Renewable Purchase Obligation. In this regard, the Hon’ble Commission has notified HERC (Terms and Conditions for determination of tariff for Renewable Energy Sources, Renewable Purchase Obligation and Renewable Energy Certificate) Regulation, 2010. The Table below shows the RPO Targets as set by HERC,Targets achieved and shortfall therein in the previous five years:

Renewable Purchase Obligation from the FY 2011-12 to FY 2015-16

Financial year

Energy Consumption (MU)

%age of solar RPO (as a %age of overall RPO)

Energy required to be purchased as per solar RPO (MU)

Energy actually purchased

Shortfall therein ( MU)

2011-12 36075 0.31% 1.69 2.3 -0.69

2012-13 40000 0.05% 20 12.86 7.14

2013-14 41086 0.10% 41.09 10 31

2014-15 45028 0.25% 112.57 10 102.57

2015-16 46731 0.75% 350 127 223

From the above it can be seen that Haryana DISCOMs were finding it hard to meet the RPO targets set by the Hon’ble Commission. Therefore, HPPC filed various petitions from time to time with a prayer for amendment of RE Regulations, 2010 and relaxation or carry forward of Renewable Purchase Obligation (RPO) :

I) Petition dated 8.06.2012 for seeking review / or modification of Renewable Purchase Obligation (RPO). II) Petition dated 19.10.2012 and Supplementary filing dated 25.01.2013 for seeking review and / or modification of the Haryana Electricity Regulatory Commission (Terms and Conditions of Determination of Tariff from Renewable Energy Sources, Renewable Purchase Obligation and Renewable Energy Certificate) Regulations, 2010. III) Petition dated 20.08.2013 for seeking relaxation or carry forward of Renewable

Purchase Obligation (RPO) for FY 2011-12 and FY 2012-13.

Disposing of the above petitions, HERC issued an order dated 20.11.2013. The

abstract of the same is reproduced hereunder:

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It is clarified that the tariff determined by the Commission is the ceiling

tariff. In case the Discoms / HPPC is able to procure renewable energy

(solar and non – solar) at a rate lower than that determined by the

Commission by way of reverse bidding or otherwise, they may do so.

However, the Discoms / HPPC, may not evade their responsibilities of

achieving the RPO specified in the RE Regulations, 2010 for the

respective years on the plea that they are in the process of inviting bids

or merely making a statement that renewable energy is available at a tariff

lower than that determined by the Commission.

Further, HERC vide its order dated 7.5.2015 for true- up for the FY 2013-14,

annual (mid-year) performance review for the FY 2014-15, revised aggregate

revenue requirement of UHBVNL & DHBVNL & distribution & retail supply tariff

for the FY 2015-16 stated as under:

The Commission directs the Discoms to purchase renewable energy as

per RPO targets set for the FY 2015-16 and the shortfall carried forward,

on actual basis, for previous years. In case they can purchase the same at

a tariff lower than determined by this Commission they may do so,

otherwise they must purchase all such power offered to them by the

renewable energy power producers at the tariff determined by this

Commission.

It is pertinent to point out that HPPC did not purchase any power during all

these years in order to avoid the burden on the consumers of the State. Also,

HPPC was reluctant to purchase power citing the reasons that there are not

much resources of renewable energy in Haryana viz Wind energy cannot be

generated, not much hydro potential is available as irrigation system is based

on canals having low head, mostly agriculture land is available.

8. HPPC reply is same as Sr. No. 7 above. 9. It does not relate to HPPC & the issue regarding percentage to be met from various means of Renewable power for fulfilling RPO obligations has to be decided by Hon’ble commission. Suggestion given is to be taken care of by HERC and is not in the purview of HPPC.

16.4 Objections filed by Faridabad Industries Association.

16.4.1 That the Objector wants to clarify here itself that proposed petition has

not mentioned any benefits public/ consumer at large will have if in case their

petition is passed by Hon’ble Commission after doing Balance of Conveniences

from both sides i.e. Generator/ Consumer which consumer had every night to

know as sec 86 of EA act, NTP Policy and under article 14 of Constitution of India like.

a. Copy of Proposed PPA or Prospective terms and conditions of said PPA

should be available to consumer, because all taxes levied by competent

authority; Electricity Duty and any other levies in respect of the energy

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generated by the developer shall be reimbursed by the procurers. With all these

element and added transmission losses and the obligation to make

arrangements for evacuation of power, the total tariff to be paid by DISCOMS

would increase from time to time and shall be burden n the consumers.

b. Petitioner in their petition has not provided any load forecast, including

demand growth, addition of installed capacity, transmission and distribution

capacity etc. to justify the need from procurement of power from SOLAR just

because for sake of compliance and regulation and any policy of Government

DISCOM superficially putting a petition for the approval by Commission will be

against the Principal of Natural Justice and Law of Equity and constitution of

India because in case, Commission passed the petition without data in case

due to bad management of DISCOM or due any unforeseen reasons will

increase in O&M Charges which shall be made part and parcel through mode

of increase in tariff of Tariff proposal of Discoms in future u/s 62 of Electricity

Act will passed on to the Consumers.

16.4.2 In their petition they have not mentioned anywhere when would

Transmission Corridor be available for evacuation of power? Has the Petitioner

booked Transmission Corridor from CTU and STU concerned?

So therefore Petitioner need to also mention in the petition about all these facts

so that a better analysis can be made at large by the Commission.

16.4.3 Judicious mix of both long and short term procurement should be

deployed based on forecast demand and price forecasts.

16.4.4 Before going through Petition of the Petitioner, the Commission should

seek information relating to capital cost of the project, sources of supply etc.

and make it available to the public because we are again reiterating that the

ultimate financial implication shall be recovered from procurer/ consumer

without going into negates who are responsible for the said scenario whether

DISCOM/GENRATOR/DEVELOPER.

16.4.5 Before allowing the said petition of the Petitioner, Hon’ble Commission

need to see the financial principal such as Benchmarking of Capital cost, Dept,

Equity, Loan and Financial Charges, Deprecation, Return on Equity, Intrest on

Working on Capital.

16.4.6 Commission should also seek implement scheduling on experimental

basis as scheduling of Solar Power is at a nascent stage in India and error

margin would be higher +/- 30% during most of the times.

16.4.7 Copies of all PPA or terms and conditions on which prospective PPA is

supposed to be entered between parties whether related to SOLAR POWER,

Gas Power impacting tariff of Haryana or industrial consumer should be liable

to annexed with the Petition otherwise Commission judicial decision can be

based on wrong notion and on normative figures which tantamount to violation

of the basic essence for which Commission was established.

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16.4.8 16.4.8 HPPC’s Reply

1. Justification to purchase Solar power : same as reply at point 7 of para

16.3.14

a) The copy of the proposed PPA was part of NIT for which Hon’ble

commission has already given approval vide letter dated 08.08.2014 & the

same can be made public by HERC.

As far as tariff (Rs 6.44/kwh) is concerned, it is fixed for whole tenure of the

PPA i.e. 25 years and the same is lower than levelized tariff as determined

by HERC.

b) HPPC has carried out competitive bidding as per HERC order dated

20.11.2013 and 07.05.2015 wherein Hon’ble commission states that:

As per HERC order dated 20.11.2013:

It is clarified that the tariff determined by the Commission is the ceiling tariff.

In case the Discoms / HPPC is able to procure renewable energy (solar

and non – solar) at a rate lower than that determined by the Commission by

way of reverse bidding or otherwise, they may do so. However, the

Discoms / HPPC, may not evade their responsibilities of achieving the RPO

specified in the RE Regulations, 2010 for the respective years on the plea

that they are in the process of inviting bids or merely making a statement

that renewable energy is available at a tariff lower than that determined by

the Commission.

As per HERC order dated 07.05.2015:

The Commission directs the Discoms to purchase renewable energy as

per RPO targets set for the FY 2015-16 and the shortfall carried forward, on

actual basis, for previous years. In case they can purchase the same at a

tariff lower than determined by this Commission they may do so, otherwise

they must purchase all such power offered to them by the renewable

energy power producers at the tariff determined by this Commission.

2. As the projects were to be commissioned within the State. Hence,

transmission corridor was not required. Even if the projects had been located

outside the State, the availability of Transmission corridor was the

responsibility of developers.

3. It is reiterated that solar power is purchased to meet RPO targets fixed by

HERC and not under Demand supply scenario.

4. As far as capital cost of the project is concerned, the HERC is well

conversant with the same as it determines the generic tariff every year on

the basis of the same.

5. HERC takes into consideration all the terms like ROE, Interest on loan etc.

while determining the generic tariff every year after considering all the

financial parameters, HERC vide their dated 13.08.2014 determined the

levelized tariff @ Rs 7.45/kwh for the FY 2014-15 and 2015-16. Thereafter,

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HPPC carried out competitive bidding after getting approval from HERC and

discovered lowest tariff @ Rs 6.44/kwh which is lower than the tariff

determined by HERC.

6. The Commission may consider the contention.

7. PPA is already with the Commission for approval.

16.5 Objections filed by Sh. Deepak Girdhar, Advocate.

16.5.1 During last a few years, the technology of harnessing solar energy has

developed a lot. With it the manufacturing price has reasonably reduced. The

solar electricity has become a reasonable option for replacing other

conventional manufacturing sources.

Recently it is a news that our neighboring state of Rajasthan has been

successful to have a solar PPA at a price in between Rs. 3 to Rs. 4 per unit.

Also it is in news that in Maharashtra as well there has been a drastic decline in

PPA rates.

Haryana Electricity Regulatory Commission is under statutory responsibility to

ensure that PPA remain within realistic frame. Solar electricity manufacturing

being a unconventional process of manufacturing electricity, as such it would

be most desirable that the expert opinion with the demonstration in a public

view be arranged, and the experts advise be made public so that the public at

large is not defrauded.

We hope that the power utilities during the bidding process would have already

obtained experts written advice on the subject.

We very humbly bring to your goodself’s kind notice that there being large

number of experts in Haryana and Delhi who can be very conveniently put on

duty to give their export opinion in writing and let the reality of the

manufacturing price be decided for the advantage of public at large.

It is further submitted with concern that a country of few manufacturers and non

manufacturers pool and arrange for bidding price above Rs. 3 per unit while the

manufacturing cost is only between Rs. 3 and Rs. 4 per unit.

If allowed we can send the names of few experts. Otherwise we are sure that

your good self are resourceful enough to appoint experts committee and can

obtain expert advise in within a reasonable time of one to two weeks in a best

interest of public in large.

It is right that solar power can be expensive but compared to other power PPAs

in the country which are below Rs. 4 per unit, then why does the power utilities

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want to do PPA on a higher price. This is when there are already large number

of PPA signed by the utility in the past and the power companies. And the

utilities are paying huge amount to power companies at fix charge every year.

The Hon’ble power minister has given the slogan of one nation, one grid and

one price and Haryana must contribute to this effort. The Hon’ble Commission

should also give directions to Private companies and the utilities that the

average market rates should be at par with other states because cost of solar

energy is at a historic low.

If achieving the RPO is important, then the bidding must be kept at the market

rate. It is further important to note that power in the state of Haryana is surplus.

Instead of accepting the costly high price PPA and paying fix charge it is better

to buy renewable advance certificates.

HPPC’s Reply

16.5.2 Justification to purchase Solar Power: same as reply at para 16.4.8

I. Purchase of solar power is beneficial as compared to RECs as can be seen from the table below:-

However it is pertinent to note that HPPC had floated tender in the month of Oct 2014

and at that time the cost of REC was Rs 9.30/kwh.

16.6 Oral Objections in the hearing:

16.6.1 Ms. Ranjita Mehta, Member, District Legal Service Authority:

In old PPAs an amount of Rs. 2000 Crores is being given as fixed charges.

Rajasthan is doing PPAs @ Rs.4.34 whereas in Haryana at Rs.6.44. This should not

be done and public should not be burdened with heavy bills of electricity by

purchasing power at much higher rates.

Purchase of REC Purchase of Solar Power

Total No. of units supplied 100 Total No. of units supplied 100

No. of Units at APPC Price 100 No. of Units at APPC Price 98

APPC Price for FY 2014-15 in Rs./kwh

3.53 APPC Price for FY 2014-15 in Rs./kwh

3.53

Let’s say 2 units of solar unit has to be purchased as REC to fulfil RPO

2 Let’s say 2 units out of 100 units served through solar

2

Cost of REC in FY 2014-15 3.50 Cost of solar unit/kWh 6.44

APPC rate after adding REC Cost in Rs./kwh

(100x3.53 +2 x 3.50)/100

= 3.60

New APPC rate in Rs./kwh

(98x3.53 + 2x6.44)/100

=3.59

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16.6.2 Sh. Gaurav Chauhan, Gurgaon:

PPAs @ Rs.4.34 are being done in Rajasthan and State Govt. is providing line.

Line charges are being borne by the State. Generators are much in number there. If

all PPAs are scrapped, then whole system will collapse. Land cost in Rajasthan and

MP is very less as compared to Haryana, so PPAs at lower rates are possible there.

16.6.3 Sh.Praveen Atrey,

PPAs at the rate of Rs.6.44 are much higher as compared to other States.

State is giving fixed charges amounting to Rs.2000 crores every year which is a

wastage of public money. All old PPAs be cancelled. Power Minister, GOI is ready to

given power at the rate of Rs.2.06 why Discoms are not purchasing the same from

GOI at such a lower rates and are doing PPAs at much higher rates. He further stated

that on the one hand it is being stated that power is surplus in the state and asked

‘where the surplus power is being utilized’. Public should not be burdened by creating

PPAs at higher rates. Interest of consumers should also be watched.

16.6.4 Mr. Subham, Advocate

PPAs have been signed in compliance with the directions issued by the Hon’ble

Commission. Clear mandate has been given by the Commission to sign the PPAs to

purchase solar power in accordance with Commission’s directions and the same have

been signed at very competitive on lowest discovered tariff. Reply of the Advocate to

the question of Hon’ble Chairman as to how the RPOs gap will be met, was that it will

be done according to the order (for which request has been made) to be issued by the

Commission. This is mandated from MNRE also. It is being done under RPO. The

RPO is going to be 8% in the coming years. One order dated 20.11.2013 has been

passed by the Commission vide which DISCOMs have been empowered to purchase

solar power on lowest tariff discovered based in the reverse tender bidding (one

paragraph of the same was read). Therefore, the Commission cannot flout its own

order.

16.6.5 Mr. Arvind, Jind:

In other States, PPAs are being executed @ Rs.4.35/unit whereas in Haryana it

is being done @ Rs.6.44/unit. Interests of only well-to-do (rich people) are being

watched and the poors are being ignored. Announcement of the Prime Minister is for

making electricity available to the consumers at the lowest tariff. As such, all old

MOUs should be cancelled forthwith. Although our land, water sources etc stand

diverted for the Thermal Plants but the same are lying closed or under-utilised, and we

are getting no benefit out of this. Under the circumstance, the tariff will go up even

from the present Rs.8.44/unit. All actions should be taken keeping the interests of

consumers in view. No new PPA should be approved.

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16.7 Reply of Sh. Nitin Yadav, MD, UHBVNL.

MD, UHBVNL, while replying to the objections raised by various stakeholders

during the public hearing submitted that though the Solar energy is costly, the

Discoms have to make efforts to meet the RPO obligations for the current year and

also the backlog since 2012. He submitted that though it is mandatory for owners of

houses of 500 Sq.yards and above to install Roof top solar power plants, but the

targets are not being achieved even after all efforts. He further pleaded that the rates

were negotiated in accordance with the State Procurement Policy and it will not be

possible to cancel the PPAs. Also, rates of solar energy are different in different areas

due to differences in topography and solar radiations e.g. Andhra Pradesh etc. near

sea, wind energy is cheaper, in HP & J&K hydro project energy is cheaper, in

Rajasthan there are more solar power and Wind power plants. Due to the RPO

obligation the Discoms cannot wait for the rates to fall unless the Commission agrees

for deferment of the RPO obligation. In order to explore the market, the tenders were

first floated for 50 MW with the ceiling rate being the Generic tariff determined by the

Commission and the Utility was able to negotiate a lower rate. Ultimately he prayed

that if the Commission rejects the PPAs entirely, RPO will not be met. He further

submitted that negotiations do take place in bidding and this was done to ensure the

best rate. In this way whatever lowest rate arrived, the electricity was purchased at

that rate. Against the tender for 50 MW, offer for only 23 MW was received.

Subsequently, another tender was floated in which rate of 5.09/unit was achieved

which came down to Rs.5.00/unit after negotiations. So it was a very competitive rate

as compared to other states.

Objections//comments of stakeholders number 15.b to 15.m were received

after the date of Public Hearing i.e. 10.08.2016.

Order of the Commission

17 The Commission has examined the petition filed by HPPC seeking ex-post

facto approval of the PPAs, Comments/objections of the stakeholders/general public,

as well as the replies/additional information filed by HPPC on the observations

conveyed to them.

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The Commission observes that vide the instant petition; the petitioner HPPC has

sought the following reliefs:

1. Adoption of Tariff discovered through transparent bidding process u/s 63 of

the Electricity Act, 2003.

2. Approval of PPA with solar power developers selected by it under the NIT

No. 51 at the said tariff.

18 For adoption of tariff u/s 63, the Commission is required to examine whether

the Tariff of Rs. 6.44 / Unit has been discovered by the petitioner in accordance with

provisions of section 63 of the Electricity Act, 2003.

The guidelines for competitive procurement have been framed under Section 63 of the

Electricity Act, 2003 which states as under:-

“Notwithstanding anything contained in Section 62, the Appropriate Commission shall

adopt the tariff if such tariff has been determined through transparent process of

bidding in accordance with the guidelines (emphasis added) issued by the Central

Government”.

HPPC has sought the approval of the Commission in view of MNRE Guidelines for

Tariff based Competitive Bidding Process for Grid Connected Powers Projects Based

on Renewable Energy Sources, December, 2012.

As per clause 3.1.1 & 3.1.2 of MNRE Guidelines for Grid Connected Powers Projects

Based on Renewable Energy Sources, December, 2012, the approval of the

Appropriate Commission is required in the event of any deviation from the bidding

conditions as approved by the Gol.

Clause 3.1.1 & 3.1.2 of the MNRE Guidelines are reproduced as under:-

3.1.1 The Standard Bid Documents (SBD) shall be prepared and issued by the

Central Government in accordance with these guidelines. The documents for inviting

bids shall be prepared in accordance with these guidelines and SBD. In such cases,

intimation shall be sent by the Procurer to the appropriate Regulatory Commission

about initiation of the bidding process. The approval of the appropriate Regulatory

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Commission shall be obtained unless the bid documents are as per the SBD issued

by the Central Govt.

3.1.2 Approval of the Appropriate Commission shall be sought in the event of the

deviations from the bidding conditions contained in these guidelines and SBD,

following the process described in Para 6.9 of these guidelines.

Clause 6.9 of these guidelines reproduced as under:-

6.9 In case there is any deviation from these guidelines, the same shall only be

with the prior approval of the Appropriate Commission. The Appropriate Commission

shall decide on the modifications to the bid documents within a reasonable time not

exceeding 90 days.

19 While the allocation for Solar Power Project in the present case has admittedly

been done through competitive bidding, the issue arises whether the competitive

bidding was carried out in line with the guidelines issued by the Central Government.

This issue is examined in light of the correspondence exchanged between the

petitioner and the Commission in the matter as given below:-

The petitioner, vide memo no. C43/HPPC/SE/ C&R- 1/PPA-136 dated 16.06.2014

informed the Commission that HPPC is in process of floating two number NITs for

purchase of 50 MW solar and 100 MW non solar power. The date for opening the

tender has been fixed as 31.07.2014 for solar and 14.08.2014 for non solar power.

Petitioner further informed the commission that although the NIT is based on the

standard RFP for procurement of power under “case -1/RE” bidding procedure

through tariff based competitive bidding process (as per the guidelines for Tariff based

competitive bidding process for grid connected power projects based on renewable

energy sources issued by the Government of India), however a few changes have

been done mainly affiliates have not been allowed, delivery point is at Haryana

periphery and tariff to be quoted and evaluated will be at delivery point, negotiation will

be done etc.etc. HPPC had requested that HERC may furnish its valuable comments,

if any on the NIT latest by 25.06.2014 so that HPPC may proceed further with tender

process.

20 The Commission examined the case and directed the petitioner to submit a

copy of the SBD and deviations made in NIT with respect to the SBD vide Memo no

1124 dated 25.6.2014. The information was provided by the petitioner vide diary entry

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no. 761 dated 4.7.2014. Subsequently, the Commission directed the petitioner to list

all deviations made in the NIT with respect to the Standard Bidding Document (SBD)

for procurement of Power under case 1-RE issued by the Govt. of India in a tabulated

form and also to provide the PPA attached with the SBD vide Memo no 1535 dated

28.7.2014. Subsequent to these developments, the petitioner, vide memo no.

C50/HPPC/SE/ C&R- 1/PSA/ SECI dated 05.08.2014 informed the Commission that

“in this regard it is submitted that major deviation in NIT from SBD in respect of

Bid Bond and Contract performance Guarantee is that of the amount per MW to

be paid. All the minor deviations will be rectified to have the NIT exactly the

same as that of SBD. All these deviations have been colour coded in the comparison

done in the tabular form. Also the Standard Bid Document does not contain any PPA”

21 Consequently, the Commission, vide memo no. 1725/ HERC/ Tariff/ NIT/ RE/

2014 dated 08.08.2014 informed the petitioner that “Kindly refer to memo no. Ch-

43/HPPC/SE/C&R-I/PPA-936 dated 16.06.2014 and Ch-46/HPPC/SE/C&R-I/PPA-67

dated 1.07.2014 vide which approval of the Commission was sought to the deviations

in the bid documents vis-à-vis the Case 1 RE Bidding Procedure of the Government of

India. The Commission has considered your application/petition and observes that the

NIT No. 51 & 52 for inviting competitive bids for purchase of 50 MW Solar Power and

100 MW of Non – Solar (renewable energy) were issued on 16.04.2014 and the

approval of the Commission to the deviations were sought on 1.07.2014 i.e. ex post

facto.

The Commission observes that the Discoms have not fulfilled their RPO including by

way of purchase of REC. Consequently, the accumulated shortfall allowed to be

carried forward from FY 2011-12 to FY 2013-14 (up to December 2013) is about

720.83 MUs amd the total RPO target set for FY 2014-15 is 1463.41 MUs. On several

occasions the Commission has observed that HPPC/HAREDA may invite bids/reverse

bids for purchase of renewable energy in order to meet with the RPO targets and the

fact that the bidding process is already under way, HPPC may proceed with the

same. Once the bids are opened HPPC shall analyze the same and submit the

details to the Commission for its order and approval of the PPA with the

successful bidders”.

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22 On examination of the above correspondence exchanged between the

Commission and the petitioner, it is observed that the petitioner submitted a set of

documents (proposed RFP) for perusal of the Commission and also sought approval

of the Commission to certain deviations to the NIT that was based on the standard

RFP for procurement of power under “case -1/RE” bidding procedure through tariff

based competitive bidding process (as per the guidelines for Tariff based competitive

bidding process for grid connected power projects based on renewable energy

sources issued by the Government of India).

23 On examination of the correspondence that has been reproduced at para 1 to

para 6 of the order, it is observed that the Commission has, at no place, approved the

deviations as has been claimed by the petitioner in its reply dated 28.04.2016. The

last communication of the Commission to the petitioner is vide memo no.

1725/HERC/Tariff/NIT/2014 dated 08.08.2014, wherein the Commission had allowed

HPPC to go ahead with the process as it was already underway. The Commission did

not grant approval to the deviations and also directed that once the bids are opened,

the HPPC shall analyze the same and submit the details to the Commission for its

orders and approval of the PPA with the successful bidders. The Commission

observes that this communication can in no way be interpreted as approval to

the deviations to the SBD submitted by the petitioner.

24 Even if for argument sake, the contention of the petitioner that the Memo no.

1725/HERC/Tariff/NIT/2014 dated 08.08.2014, conveyed HERC go ahead to the

process, it is imperative to note that before this communication was issued, the

petitioner, vide memo vide memo no. C50/HPPC/SE/ C&R- 1/PSA/ SECI dated

05.08.2014 informed the Commission that “in this regard it is submitted that major

deviation in NIT from SBD in respect of Bid Bond and Contract performance

Guarantee is that of the amount per MW to be paid. All the minor deviations will be

rectified to have the NIT exactly the same as that of SBD. All these deviations have

been color coded in the comparison done in the tabular form. Also the Standard Bid

Document does not contain any PPA”. A perusal of this communication conveys the

commitment by the petitioner to have the NIT exactly the same as that of SBD except

for the amount per MW to be paid for Bid Bond and Contract performance Guarantee.

Therefore, by no stretch of imagination can it be inferred that the Commission

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had granted its approval to any deviation except that related to the amount per

MW to be paid for Bid Bond and Contract performance Guarantee.

25 The Commission had, vide memo no. 1725/HERC/Tariff/NIT/2014 dated

08.08.2014, had expressly directed the petitioner that “once the bids are opened, the

HPPC shall analyze the same and submit the details to the Commission for its orders

and approval of the PPA with the successful bidders”. Whether the petitioner

complied with the orders of the Commission conveyed to it? The answer to it is

that it definitely did not.

26 The Commission had pointed out certain deviations in the bid documents and

asked the petitioner for its comments. The Petitioner assured the Commission that all

deviations except those related to Bid money and the Contract Performance

Guarantee money would be removed to make the bid documents same as SBD.

When the same commitment has, admittedly not been adhered to, it renders the so

called go ahead of the Commission conveyed vide memo no.

1725/HERC/Tariff/NIT/2014 dated 08.08.2014 null and void. Therefore it is held that

the deviations to the SBD do not have the prior approval of the Commission.

27 In “Babu Verghese & Ors vs Bar Council Of Kerala & Ors on 16 March,

1999”, the Hon’ble Supreme court has held that it is the basic principle of law long

settled that if the manner of doing a particular act is prescribed under any

Statute, the act must be done in that manner or not at all. The origin of this rule is

traceable to the decision in Taylor vs. Taylor (1875) 1 Ch.D 426 which was followed

by Lord Roche in Nazir Ahmad vs. King Emperor 63 Indian Appeals 372 AIR 1936 PC

253 who stated as under :

"Where a power is given to do a certain thing in a certain way, the thing must be done

in that way or not at all."

This rule has since been approved by this Court in Rao Shiv Bahadur Singh & Anr. vs.

State of Vindhya Pradesh 1954 SCR 1098 AIR 1954 SC 322 and again in Deep

Chand vs. State of Rajasthan 1962(1) SCR 662 AIR 1961 SC 1527. These cases

were considered by a Three-Judge Bench of this Court in State of Uttar Pradesh vs.

https://indiankanoon.org/doc/1107594/






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Singhara Singh & Ors. AIR 1964 SC 358 (1964) 1 SCWR 57 and the rule laid down in

Nazir Ahmad's case (supra) was again upheld. This rule has since been applied to the

exercise of jurisdiction by courts and has also been recognised as a salutary principle

of administrative law. “

28 When it is mandated that deviations to the Standard Bid Documents and

Standard guidelines, if any, are to have prior approval of the Commission, it is not

open to the Commission to grant ex-post facto approval. The same interpretation of

this statute was taken by the Hon’ble Appellate tribunal for Electricity in Essar Power

Ltd. V Uttar Pradesh Electricity Regulatory Commission, 2012 ELR (APTEL) 182

wherein it was held as under:-

“The competitive bidding process adopted under the Act must, therefore, meet

the following statutory requirements: (a) Competitive bidding process under

Section 63 must be consistent with the Government of India guidelines. Any

deviation from the standard Request for Proposal (RFP) and model PPA notified

by the Government of India must be approved by the State Commission.

(b) This process must discover competitive tariff in accordance with market

conditions from the successful bid-consistent with the guiding principles under

section 61 of the Act.

(c) If the deviations are permitted by failing to safeguard the consumer interests as

well as to promote competition to ensure efficiency, it will destroy the basic

structure of the guidelines.” …………………

As indicated above, the bid process under Section 63 of the Act is entirely

different from normal procurement of goods through competitive bidding process

which is not governed by specific statutory scheme and guidelines. The bidding

process under Section 63 is wholly based upon the objective of section 61 of the

Act as well as the objectives of the Government of India guidelines. The

Government of India guidelines have been framed to comply with the principles

specified under Section 61 of the Act. The Government of India guidelines

contained the mandate to safeguard the consumer’s interest as well as to

encourage competition, efficiency and economical use of the resources. Let us

quote Section 63 of the Act for better understanding. “63. Determination of tariff by

bidding process.- Notwithstanding anything contained in section 62, the

Appropriate Commission shall adopt the tariff if such tariff has been determined

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through transparent process of bidding in accordance with the guidelines issued

by the Central Government.” 78. Thus the competitive bidding process as

contemplated under Section 63 of the Act must meet the following mandatory

statutory requirements:

(a) Competitive bidding process under Section 63 must be consistent with the

Government of India guidelines and Request for Proposal (RFP) including the

finalized PPA approved by the State Commission

(b) The process must discover competitive tariff in accordance with market

conditions from the successful bid – consistent with the guiding principles under

Section 61 of the Act as well as the Government of India guidelines which strike a

balance between the transparency, fairness, consumer interest and viability.

79. At the risk of repetition, it has to be stated that if these requirements have not

been followed and if the process has failed to safeguard the consumer interest as well

as to promote competition and efficiency by permitting the deviations, it would not only

destroy the basic structure of the guidelines but also would frustrate the objectives of

the Government guidelines.

Hon’ble Appellate Tribunal for Electricity in Appeal no. 70 of 2013 Dated 10th

February, 2015 In the matter of: Wardha Power Company Limited Versus.

Maharashtra Electricity Regulatory and others has held has below:-

“118. The State Commission is required to act consistent with the scheme and

objective of the Section 63 as well as other provisions of the Act, 2003. It is settled law

that when a statute vests power in the authority to be exercised in a particular manner,

then the said authority has to exercise it only in that manner provided in the Statue

and not otherwise. …………………. Under Section 63 there are only two options for

the State Commission:

(a) Either to reject the petition if it finds that the bidding was not as per the statutory

frame work;

Or

(b) To adopt the tariff if it is discovered through transparent process conducted as per

the bidding guidelines.

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29 It is also observed that, apart from the fact that the deviation(s) to the Standard Bid

Documents, the process by which the tariff of Rs. 6.44 per unit has been discovered, suffers

from certain other infirmities also.

As per clause 6.3 of the MNRE Guidelines it is mandated that the procurer shall constitute a

committee for evaluation of the bids (Evaluation Committee), Clause 7.3 provides for the said

Committee to provide a certificate on conformity of the bid process and evaluation as per the

guidelines. Admittedly, the Bid Evaluation Committee was not constituted by the procurer in

the present case as per the guidelines. The bid evaluation committee did not comprise of an

external expert, nor was any effort made to ensure that the rate discovered is in accordance

with the market conditions. The deficiencies in the bid process has also been in the

notice of the Commission and consequently, the Commission, at NP-26 of the file, on

20.1.2016, observed that the whole process followed by the HPPC appears to be in

violation of the Electricity Act, Rules and the guidelines issued by the Central

Government as well as the directions of the Commission and therefore, the

Commission decided that it would not be appropriate to approve the PPA.

30 The tariff discovered by the process by the petitioner is Rs. 6.44 per unit and

the petitioner has sought to justify that the said tariff was in line with the prevailing

market conditions. However, the petitioners have not submitted any document to the

Commission that can demonstrate the fact that an attempt was made by the petitioner

to examine whether the rate quoted by the bidders was in line with the prevailing

market conditions or not before the LOI was issued and the PPA’s were signed. The

petitioner was required to undertake this exercise as part of the Standard Bidding

Guidelines. As held by the Hon’ble Appellate Tribunal “The process must discover

competitive tariff in accordance with market conditions from the successful bid –

consistent with the guiding principles under Section 61 of the Act as well as the

Government of India guidelines which strike a balance between the transparency,

fairness, consumer interest and viability”.

Whether the rate was lower than the benchmark rate is not relevant to the comparison

of the rate with market conditions which is an activity mandated to be carried out

before grant of LOI. It is also observed that the documents submitted to the

Commission carried a benchmark rate of Rs. 5.70 and not Rs. 7.54 per unit.

31 The Commission observes that there are certain deviations that have a

substantive effect on the bidding process and the price discovery thereto. These are

as under :-

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a) Deviations relating to eligibility conditions.

b) Deviations relating to reductions in Bid guarantee amount and Contract

Performance Guarantee.

c) Introduction of Negotiation Process: Ministry of New & Renewable Energy

(MNRE), Government of India (GoI), had issued guidelines for tariff based

competitive bidding process for grid connected power projects and Clause 6.8

of MNRE guidelines states that “The Bidder, who has quoted lowest levellised

tariff as per evaluation procedure, shall be considered for the award. The

Evaluation Committee shall have the right to reject all price bids if the rates

quoted are not aligned to the prevailing market prices. “

d) Deviation relating to the constitution of Evaluation Committee: Clause 6.3 of

MNRE guidelines specified that “The Procurer shall constitute committee for

evaluation of the bids (Evaluation Committee) with at least one member

external to the Procurer’s organization and affiliates. The external member

shall have expertise in financial matters / bid evaluation. The Procurer shall

reveal past associations with the external member - directly or through its

affiliates - that could create potential conflict of interest. “

It is observed that widening the scope of participation of prospective bidders by

relaxing the eligibility conditions and by reducing the Bid guarantee and Contract

Performance Guarantee money may generally lead to better participation but it cannot

be said that the price so discovered would necessarily be on the lower side.

Commission has examined this deviation from the SBD and is of the considered view

that pegging qualifying net worth at a lower level may be counterproductive. In fact,

such dispensation may lead to a situation that a financially weak developer, on the

basis of aggressive bid submitted by them, is awarded the project but may fail to

execute the same or execute the same at a cost higher than assumptions made by

them while submitting his bid. Hence, given their lower net worth such developers

may not be able to absorb the cost slippages vis-à-vis that assumed by them. Further,

introducing a scope of negotiation would be counterproductive and introduce an

element of uncertainty in the whole process which may result in hardening of the offer

price.

32 The petitioner has also sought to introduce another dimension to the instant

petition by claiming that MNRE issued draft guidelines and SBD for purchase of

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renewable power through competitive bidding in Dec 2012 which were not notified as

such. The Commission observes that the petitioner, from the very first stage of the

case has considered the draft guidelines as a template and has sought the approval of

the Commission on the deviations from the said draft guidelines. Therefore, The

Commission holds, at this stage, it is not open to the petitioner to question the validity

of the guidelines.

33 In the surplus power supply scenario in the State, entering into long term PPA’s

just to comply with the RPO obligation on high cost, would have resulted in burdening

the consumers of the state with higher tariff and the same was protested by the

consumers. Therefore the Commission has also considered the views of the general

public who, ultimately, has to bear the financial burden on this account.

34 Accordingly, the Commission observes as under :-

i) The deviations from the Standard Bidding guidelines and Standard Bid

Documents do not have prior approval of the Commission.

ii) No explanation has been given by HPPC as to why the deviations other

than Bid Bond and Contract Performance Guarantee were not rectified

to have the NIT the same as SBD as communicated to the Commission.

iii) There is no assessment/certification by the Bid Evaluation Committee

that the rates quoted by the bidders being aligned to the market

conditions. To the contrary as per the news item published in “The

Times of India” dated 20.01.2016, the Solar tariff hits new low in

Rajasthan i.e. Rs. 4.34 to Rs. 4.63 paisa per unit. Though the price as

claimed by the petitioner is within the ceiling tariff of Rs. 7.45/ kWh fixed

by the Commission, it is almost 30% higher than the price recently

discovered by the petitioner itself as submitted by them in case No.

PRO-9 of 2016 at Rs.5.00/Kwh. Even the Petitioner has mentioned while

replying to the objection filed at para no. 15.1 of this Order that HPGCL

has offered 10 MW solar power at PTPS, Panipat @ Rs. 4.88/kwh

instead of Rs 4.18/kwh excluding the cost of transmission line and land

cost.

iv) The petitioner was already procuring solar power @ Rs. 5.50 per unit

under the JNNSM since June, 2015; the PSA with Solar Energy

Corporation of India (SECI) for this procurement was signed by the

petitioner in 22.8.2014, the date on which it floated the bids at the ceiling

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tariff of Rs. 7.54 per unit. Thus it is apparent that the negotiations have

not been conducted keeping in view the prevalent market rates. This has

led to a situation where the Discoms and the consumers have been

unfairly bound by the PPA’s at a higher rate.

v) The petitioner has been causing delays in submitting its filings to the

Commission. It is observed that after the Commission asked the

Petitioner to go ahead with opening the bids vide letter dated 8.8.2014;

the next filing by the petitioner was after one year i.e 16.7.2015.

Subsequently also, on numerous occasions, the responses have been

tardy, thus leading to delay in processing the case.

vi) The process mandated under the statute has not been adhered to by the

petitioner.

vii) In view of the above, there appears no justification for HPPC to enter

into PPA with the solar project developers at such a high tariff of

Rs. 6.44 per unit. In comparison with the recently discovered price, the

proposed PPA’s would lead to an additional financial burden on the

Electricity Consumers of Haryana. Taking into consideration of surplus

supply scenario in Haryana and falling Solar Electricity Rate, point raised

by some of the stakeholders regarding fulfilling RPO obligations from the

purchase of REC for next two years, till the time prices stabilizes. As per

the calculations provided by stakeholders, this could save an amount of

Rs. 3.34 crore for PPA @ 6.44/- and Rs. 1.1 crore for PPA @ 5/-.

viii) Inspite of existence of statute and regulations regarding procurement of

power, the petitioner signed PPA’s with developers on its own and

without approval of the Commission thereby putting the discoms in a

poor legal position and also tried to impress upon the Commission to

grant ex-post fact approval to the signed PPA’s.

ix) Various members of State Advisory Committee, individual consumers,

consumers association and industry association, during the recently

concluded public hearing on the ARR petition of the Distribution

licensees in the State of Haryana, and also during the public hearing

held in the case on 10.08.2016 objected to the fact that the Discoms are

on the one hand having surplus power and are disposing off the same at

a loss, while on the other hand, they are still signing long-term PPAs

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with the power producers. Hence, the stakeholders had suggested that

no new PPAs should be allowed to be signed at tariff not aligned to the

market and old stranded PPAs ought to be reviewed and cancelled so

that the burden of ‘fixed cost’ of such stranded PPA, on the Consumers

of Haryana, is reined in. The anguish expressed by the consumers

during the hearing is genuine and the same is supported by facts

appearing in the various ARR/Tariff Petitions filed in the Commission by

the Discoms. Hence, the objection of the stakeholders cannot be ignored

as doing so shall aggravate the financial distress of the Discoms and put

avoidable burden on the electricity consumers of Haryana.

x) Additionally, the process of negotiation does not appear to be

transparent. HPPC does not appear to have followed its own process as

mandated in Para 3.1.4 (IV) and violated all Act, Rules and Regulations

in this regard, rather negotiated in a clandestine and haphazard manner

with the developers.

xi) Thus the entire process followed by HPPC appears to be in violation of

the Electricity Act. Rules and the guidelines issued by the Central

Government as well as directions of the Commission.

35 The Commission, before arriving at any conclusion in the matter, thought it

appropriate to examine the situation on the ground and accordingly constituted a

committee of its officers to visit the sites of the four solar power developers with whom

the petitioner has signed the PPA. The said Committee submitted a report after

visiting the site on 06.05.2016 that JBM Solar Pvt. Ltd. has made significant progress

for implementation of 20 MW Solar Power Project allocated to them while M/s Balarch

has completed site fencing after acquiring land for the project on lease basis. It is

therefore clear that the said bidders have altered their financial position based on the

draft PPAs signed with the HPPC and would be in some degree of financial distress in

case the PPA’s are rejected by the Commission. Also, a large amount of funds would

have been raised through borrowings from the banks/and financial institutions and

disallowing the PPA would only add to the NPAs of the banks/financial institutions.

36 In view of the above discussions the Commission has examined the entire

issue threadbare as under:-

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The functions of State Commission is provided in section 86 of the Electricity

Act, 2003 which includes “regulate electricity purchase and procurement process of

the distribution licensees including the price at which electricity shall be procured from

the generating companies..”. Further, section 86(3) of the said Act provides as under:-

(3) In discharge of its functions, the State Commission shall ensure

transparency while exercising its powers and discharging its functions”.

In line with the above mandate, the Commission considered it appropriate to

hold public hearing in the matter. The Commission considered widespread

resentment expressed by the public regarding high cost PPAs being entered into by

HPPC thereby putting additional financial burden on them while others emphasized

the need for procuring environmentally benign power for the Discoms to meet their

RPO.

The Commission, after hearing the parties and perusing the statutes occupying

the field is of the considered view that the powers of the Commission while dealing

petition(s) under section 63 is in a very narrow confine i.e. the Commission can

either adopt the tariff if the same was discovered by a transparent process of

bidding conducted as per the Government of India Guidelines or reject the

petition if the bidding was not found to be as per the statutory

framework/Guidelines.

In the present case there is some confusion created regarding existence of

Standard Bidding Document (SBD). HPPC, in response to the queries of the

Commission did submit SBD and the deviations made by them. However, at a later

stage the said SBD turned out to be a draft which was never finalized and notified by

the MNRE. As far as this Commission is concerned the SBD submitted by HPPC has

been considered as the benchmark. Besides the SBD what does exist is the MNRE

Guidelines for procurement of RE power by competitive bidding.

It is well established that the objective of the competitive bidding is to protect

and balance the interest of all the parties concerned i.e. the distribution licensees, the

bidders and the consumer. In other words, the entire competitive bidding process is

not only to discover the tariff but also to discover the supplier who would be able to

supply the required quantum of power to the procurer in timely manner.

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In the present case, the NIT in question admittedly incorporated quite a few

clauses which impinged upon the very objectives of inviting competitive bidding for

procurement of Solar Power on a long term basis. Further, the statutory requirement

of recommendations of the ‘Evaluation Committee’ on the reasonableness of the tariff

so discovered was never fulfilled. The significance of the recommendations of the

evaluation committee ought not to be diluted. As given the limited number of private

players in the market, the tariff discovered through competitive bidding may not

always be aligned to the market. Thus, the Commission, in the present case, did not

have the benefit of the mandatory report of the evaluation committee.

The Commission is also constrained to take a somewhat liberal view given the

predicament of the petitioner and the bidders in view of the provisions in the National

and Haryana State Policy for Promotion of Solar Power.

As per the Ministry of New & Renewable Energy (MNRE), Government of India

(GoI), Haryana has Solar Potential of 4.56 GWp. As against the said potential as on

March, 2016 only 12 MW has been commissioned in Haryana and another 200 MW

has been allotted under the State Solar Policy. Further, at 3% Solar RPO by the year

2022 about 1300 MW Solar Power is required and if the RPO is scaled up to 8% in

line with the National Tariff Policy, 2016 the Solar Power requirement shall be about

3200 MW including the target of 1600 MW Rooftop capacity. It is therefore evident

that the Solar Power Capacity addition has to be stepped up in the State.

Further, the vision / mission of the Haryana Solar Policy, 2016 is as under:-

A Vision for Power – the Mission therein In an environment where the demand for energy and power is growing rapidly the state seeks to build on renewable energy and be a part of the drive that is taking a firm shape in the entire country. The state is blessed with high solar radiation levels with more than 300days of clear sunlight and seeks to harness the untapped and inexhaustible solar energy potential in the state. The state therefore seeks to: Promote generation of green and clean power Create conditions that would be conducive to the participation of the private as well as public sector in the setting up of solar energy projects in the country. To encourage and promote a feasible Investment environment for the same.

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Spread environmental consciousness among all citizens of the state. Aim for a decentralized and diversified management of the energy sector. To work consistently towards an increase of the share of the renewable solar power. To attain its target of Soar Renewable Purchase Obligation (Solar RPO) which is just 0.25% at present and would be scaled up to at least 8% by 2021-22. To ultimately create a technology driven state with the right ‘energy mix’

Given the position discussed above and the fact that this Commission, on

many occasions, has emphasized the need for procurement of RE Power by the

Discoms as well as taken serious note of shortfall in both Solar as well as Non-Solar

RPO. Hence, to balance the equity on both sides the Commission Orders as under:-

i) In order to restore HPPC and the successful bidders to their initial status,

HPPC shall restore the bank guarantee, if not already done, as well as CPG amount

without any other cost i.e. interest etc.

ii) However, in the case of the successful bidders who have already commissioned

their plants or are nearing completion (more than 80% complete) under the PPA

executed by HPPC, and are willing, may explore the possibilities for arriving at an

equitable and reasonable solution to arrive at a tariff aligned to the prevailing market

conditions subject to the ceiling of the project cost determined by CERC for the FY

2016-17 in accordance with the 6.4 (3) of the National Tariff Policy, 2016 and HERC

RE Regulations in vogue as the projects are likely to be commissioned during FY

2016-17 only. In such an event HPPC, shall submit the outcome arrived at for

the consideration and Order of the Commission, before 30th September, 2016.

iii) In case of successful bidder(s), other than those covered in point no. ii above,

the PPAs are not approved. HPPC, if required, may invite fresh bids after

following the due process prescribed for the purpose and these bidders may be

given preference in the next round of fresh bids to be called by the Power

Utilities in the State. The developer shall be allowed to supply the quantity of

power for which the PPA has already been signed and at the rate allowed to the

successful bidder in that round of procurement of Solar power.

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This order is signed, dated and issued by the Haryana Electricity Regulatory

Commission on 12.09.2016.

Date: 12.09.2016 (M. S. Puri) (Jagjeet Singh)

Place: Panchkula Member Chairman

The Order dated 12.09.2016 in case no. HERC/PRO-6 of 2016 has been signed

by Shri Jagjeet Singh, Hon’ble Chairman, HERC (hereinafter referred to as “the Order”

I express my difference of opinion as per my Dissenting Note attached and approve

the draft PPAs submitted by the Petitioner with four Solar Power Project

Developers selected through competitive bidding.

Date: 4th October, 2016 (M. S. Puri) Place: Panchkula Member

ORDER

In terms of Section 92(3) of the Electricity Act, 2003, I exercise the second / casting

vote vested in me, accordingly the Order of the Chairman shall be the Order of the

Commission.

However, in view of the change in the date of issue of the Order, the date mentioned

at para 36 ii) at page 53 shall read as 20th October, 2016 in place of 30th September,

2016

This order is signed, dated and issued by the Haryana Electricity Regulatory

Commission on 04.10.2016

Date : 04.10.2016 (M. S. Puri) (Jagjeet Singh)

Place: Panchkula Member Chairman

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Dissenting Order in Case No: HERC/PRO-6 of 2016 in the matter of

Petition/application filed by the Haryana Power Purchase Centre (HPPC) for

approval of draft Power Purchase Agreements (PPAs) with four Solar Power

Developers selected through tender NIT No. 51.

The Order dated 12.09.2016 in case no. HERC/PRO-6 of 2016 has been signed

by Shri Jagjeet Singh, Hon’ble Chairman, HERC (hereinafter referred to as “the Order”,

I express my difference of opinion as under:-

1. Para 1 to 12 of the Order

The aforesaid paragraphs provide the background of the case and the

submissions made by the Petitioner, However the complete submission made by the

petitioner in its affidavit dated 09.03.2016 is reproduced below:-

1. The Petitioner, Haryana Power Purchase Centre (hereinafter

referred to as ‘HPPC’) represents the two State Distribution Licensees,

namely, Uttar Haryana Bijli Vitran Nigam Limited and Dakshin Haryana

Bijli Vitran Nigam Limited (hereinafter collectively referred to as

‘Haryana Utilities’) in the purchase of power from Generating

Companies including renewable and non-conventional sources. The

electricity so contracted and/or procured is primarily for maintenance of

electricity supply to the consumers at large in the State of Haryana.

2. HPPC has been undertaking the above power procurement as per

the decision taken on the basis of power requirements and projections to

meet the demands of the consumers in the State of Haryana. The

Haryana Utilities have been placing before the Hon’ble Commission, the

quantum of power contracted/procured in the tariff proceedings.

3. Section 86 (1)(e) of the Electricity Act, 2003 inter-alia, provides for

the function of the State Commission as under:

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“promote cogeneration and generation of electricity from

renewable sources of energy by providing suitable measures for

connectivity with the grid and sale of electricity to any person,

and also specify, for purchase of electricity from such sources, a

percentage of the total consumption of electricity in the area of a

distribution licensee”

4. In the Tariff Orders passed by the Hon’ble Commission from time

to time, the Haryana Utilities have been mandated to purchase power to

meet the Renewable Purchase Obligation. In this regard, the Hon’ble

Commission has notified HERC (Terms and Conditions for determination

of tariff for Renewable Energy Sources, Renewable Purchase Obligation

and Renewable Energy Certificate) Regulation, 2010. The Petitioner

would crave leave to refer to the said Regulation at the time of the

hearing.

5. In accordance with the above and in order to fulfill the Renewable

Purchase Obligation in regard to purchase of power from Solar sources,

the Petitioner initiated competitive bidding process as per the Guidelines

for Tariff Based Competitive Bidding Process for Grid-connected Power

Projects based on Renewable Energy Sources issued by the Government

of India. The Standard Request for Proposal for procurement of power

from Renewable Energy Sources notified by the Government of India


purpose.

6. The Notice inviting tender with the above Standard Documents on

22th April, 2014.

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7. The Petitioner states that at the relevant time, the Hon’ble

Commission had already held hearing on the Petition filed by the Haryana

Utilities in regard to Aggregate Revenue Requirements for the

Distribution and Retail Supply Business under Multi Year Tariff Framework

for the Control Period i.e. Financial Year (FY) 2014-15 to FY 2016-17 and

for the approval of Distribution and Retail Supply tariff for the period FY

2014-15. On 29.05.2014, the Hon’ble Commission decided the Petition

mentioned hereinabove and determined the aggregate revenue

requirement and tariff as mentioned hereinabove. On the aspects of the

procurement of power from the Renewable Energy sources, the Hon’ble

Commission in the said order held as under:

“Renewable Purchase Obligation (RPO)

Section 86 (1) (e) of the Electricity Act, 2003 mandates the

Commission to promote cogeneration and generation of electricity

from renewable sources of energy by providing suitable measures

for connectivity with the grid and sale of electricity to any person,

and also specify, a percentage of the total consumption of

electricity in the area of distribution licensee, for mandatory

purchase of electricity from such sources. In accordance with the

Regulation 64 of HERC (Terms and Conditions for determination of

Tariff for Renewable Energy Sources, Renewable Purchase

Obligation and Renewable energy Certificate) Regulations, 2010

the RPO for FYs 2011-12, 2012-13 and 2013-14 as approved by the

Commission are as under:

Renewable Purchase Obligation for 2011-12, 2012-13 and 2013-

14

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* Solar power purchase obligation is 0.05% & 0.1% of total energy consumption for the financial years 2012-13 & 2013&14 respectively. As per data provided by the State Nodal Agency for FY 2011-12, FY 2012-13 and FY 2013-14 (up to Dec. 2013), the shortfall in meeting the RPO for the aforesaid years has been worked out as under:

Shortfall in meeting RPO (MUs)

The Commission observes that the Discoms have failed to achieve the RPO target set by the Commission. The Discoms have also not purchased any Renewable Energy Certificates (REC) to fulfil their RPO. The Commission vide its order dated 20.11.2013 in case no. HERC/RA-04 of 2012, HERC/RA-08 of 2012, HERC/RA-11 of 2013 &

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HERC/PRO-30 of 2013 allowed the Discoms to carry forward the shortfall, on actual basis, the RPO compliance for FY 2011-12, FY 2012-13 and FY 2013-14 to the next financial year i.e. FY 2014-15 in addition to the RPO for FY 2014-15. The Discoms are directed to submit an action plan as per the Regulation in vogue to meet their RPO shortfall for the previous years and the current year. Theaction plan shall be submitted by the Discoms within a month from the date of this order.

In accordance with the provisions of the draft amended regulations the RPO for the FY 2014-15 is 3.25% of the total energy consumption. The approved RPO for FY 2014-15 is as under:

Renewable Purchase Obligation for FY 2014-15

The volume of energy to be purchased from renewable energy sources as per above table is the total RPO of the distribution licensee for the financial year 2014-15. Therefore, the volume of renewable energy purchase as approved by the Commission as above shall be adjusted against the total RPO of the distribution licensees. Further, RPO of 1163.41 MUs shall be part of total power purchase volume approved by the Commission for FY 2014-15 and set off against the costliest power in the merit order.

The Commission directs the Discoms to purchase renewable energy as per RPO targets set for FY 2014-15 and the shortfall carried forward, on actual basis, for previous years. In case they can purchase the same at a tariff lower than determined by this Commission they may do so, otherwise they must purchase all such power offered to them by the renewable energy power producers at the tariff determined by this Commission. The shortfall in meeting the RPO for the FYs 2011-

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12, 2012-13 and 2013-14 as per details given above shall also be met in the FY 2014-15 in addition to the RPO of FY 2014-15. The Commission has taken a serious note of non-compliance of RPO targets including non purchase of REC to meet RPO. In case no action is taken by the Discoms, the officer concerned shall be held liable for non-compliance and proceeded against u/s Section 142 of the Act.”

Re: Approval of the Hon’ble Commission

8. On 16.06.2014, the Petitioner sent the communication to the

Hon’ble Commission intimating as under:

“Subject: NIT for purchase of 50 MW solar & 100 MW non-solar

power to meet RPO – approval thereof

It is intimated that HPPC is in the process of floating Two no. NITs

for purchase of 50 MW solar & 100 MW non-solar power. The date

of opening of tenders has been fixed as 31.7.2014 for solar &

14.8.2014 for non- solar power.

Although NIT is based on the Standard RFP for procurement of

power under “Case 1 -RE” Bidding procedure through Tariff based

Competitive Bidding Process (As per Guidelines for tariff Based

Competitive Bidding Process for Grid Connected Power Projects

Based on Renewable Energy Sources” issued by the Govt. of India),

however a few changes have been done mainly affiliates have not

been allowed, Delivery point is Haryana periphery and tariff to be

quoted and evaluated will be at Delivery point, negotiation will

be done etc.

It is requested that HERC may furnish its valuable comments, if

any, on the NIT latest by 25.6.2014 so that HPPC may proceed

further with tender process.”

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9. In the communication-dated 16.06.2014, the Petitioner has also

placed on record that negotiations etc. will be done. This was in the

context that negotiations will be required to be done for reducing the

price as far as possible from the ceiling cost, in the larger interest of the

consumers.

10. By communication-dated 25.06.2014, the Hon’ble Commission was

pleased to hold as under:


power to meet RPO.

This is with reference to your office memo no. Ch-

43/HPPC/SE/C&R-I/PPA-136 dated 16.06.2014 vide which copy

NITs for purchase of 50 MW solar & 100 MW non-solar power have

been forwarded for comments.

Before the case is further processed, it is requested to

clarify/intimate the following:

1. A copy of the Standard Bidding Documents for procurement of power under “Case 1-RE” Bidding procedure through Tariff based Competitive Bidding Process for Grid Connected Power Projects Based on Renewable Energy Sources issued by the Government of India be provided.

2. The deviations made in the NIT with respect to the Standard Bidding Document for procurement of power under “Case 1-RE” issued by the Government of India be tabulated.

3. The copy of the statute, under which the deviations sought by HPPC from the Standard Bidding Documents issued by the Government of India requires the approval of the Commission, may also be provided. The above clarification/information be provided within a week

from the date of issue of this letter.”

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11. Thereafter, by communication-dated 01.07.2014, the Petitioner

furnished the deviations from the Standard Document as per the

direction of the Hon’ble Commission with a covering letter as under:


power to meet RPO- approval thereof

This is with reference to your Memo. No. 1124/HERC/PPA/NIT-

RE/Tariff dated 25.6.2014 on the subject.

In this regard.

1. Standard Request for Proposal for Procurement of Power Under case1 – RE” Bidding Procedure through tariff Based Competitive Bidding Process (As per Guidelines for tariff Based Competitive Bidding Process for Grid Connected Power Projects based on Renewable Energy Sources”) is enclosed. (Annexure A)

2. Deviations made in the NIT w.r.t the SBD for procurement of power under “Case1- re” in tabulated form is enclosed. (Annexure B)

3. It is submitted that approval of Honorable Commission on the Two Nos. subject cited NITs is required in view of the Clause 3.1.2 of MNRE “Guidelines for Tariff based

Competitive Bidding Process for Grid Connected Power Projects

Based on Renewable Energy Sources- December 2012”

(Annexure C) which states that

“Approval of the Appropriate Commission shall be sought in the

event of the deviations from the bidding conditions contained

in these guidelines and SBD, following the process described in

para 6.9 of these guidelines.”

It is humbly requested that approval may please be granted on

the NITs for purchase of 50 MW solar and 100 MW non-solar

power.”

12. In response to the above, the Hon’ble Commission by

communication-dated 28.07.2014 wrote as under:


power to meet RPO.

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This is with reference to your office memo no. Ch-

46/HPPC/SE/C&R-//PPA- dated 25.06.2014.

The Commission has observed that there are many other

deviations particularly to Bid Bond, CPG, Payment Security etc.

The Standard Bid Document may heave PPA also.

You are requested to submit all deviations made in the NIT with

respect to the Standard Bidding Document (SBD) for

procurement of power under “Case 1- RE” issued by the

Government of India in tabulated form and also the PPA

attached with the SBD within a week from the date of issue of

this letter.”

13. On 05.08.2014, the Petitioner submitted as under:


power to meet RPO

This is with reference to your memo No. 1535/HERC/PPA/NIT-

RE/Tariff dated 28.7.2014 on the subject.

In this regard, it is submitted that major deviation in NIT from

SBD in respect of Bid Bond & Contract Performance Guarantee is

that of the amount per MW to be paid. All the minor deviations

will be rectified to have the NIT exactly the same as that of SBD.

All these deviations have been color coded in the comparison done

in the tabular form. (Annexure A)


It is humbly submitted that the date of opening of tenders is

22.8.2014 for solar power and 29.8.2014 for non-solar power.


Alongwith the above letter, the list of deviation was also given.

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14. On 08.08.2014, the Hon’ble Commission was pleased to allow the

Petitioner to proceed with the Competitive Bidding Process. The letter-

dated 08.08.2014, reads as under:

“Subject: NIT for Purchase of 50 MW solar & 100 MW non-solar

power to meet RPO – approval thereof.

kindly refer to your memo no Ch-43/HPPC/SE/C&R -I/PPA – 136

dated 16.06.2014 and Ch-46/HPPC/SE/C&R-I/PPA-67 dated

1.07.2014 vide which approval of the Commission was sought to be

deviations in the bid documents vis-à-vis the Case – 1 RE Bidding

Procedure of the Government of India. The Commission has

considered your application/petition and observes that the NIT No.

51 & 52 for inviting competitive bids purchase of 50 MW for Solar

Power and 100 MW of Non- Solar (renewable energy) were issued on

16.04.2014 and the approval of the Commission to the deviations

were sought on 1.07.2014 i.e. ex post facto.

The Commission observes that the Discoms have not fulfilled their

RPO including by way of purchase of REC. Consequently, the

accumulated shortfall allowed to be carried forward from FY 2011-

12 up to FY 2013-14 (up to December 2013) is about 720.83 Mus and

the total RPO target set for FY 2014-15 is 1463.41 Mus. On several

occasions the Commission has observed that HPPC/HAREDA may

invite bids/ reverse bids for purchase of renewable energy in order

to meet with the RPO targets and the fact that the bidding process

is already under way, HPPC may proceed with the same. Once the

bids are opened HPPC shall analyze the same and submit the details

to the Commission for its order and approval of the PPA with the

successful bidders.

This issues with the approval of the Commission.”

15. In the circumstances mentioned above, the Competitive bid

process was with the approval of the Hon’ble Commission, namely that

the bid submission date was 22.10.2014 namely, after the letter dated

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08.08.2014 from the Hon’ble Commission permitting the Petitioner to

proceed with the process.

16. It is respectfully submitted that the relevant date with reference

to which the Hon’ble Commission approval is necessary is the bid

submission date. The issue of Request for Proposal to the interested

parties is a preliminary step in the Competitive Bidding Process. The

Request for Proposal containing the Standard Bid Documents with

deviation was not proceeded with for submission of the bid by the

interested participants till 08.08.2014. The deviations as per the

communication sent by the Petitioner to the Hon’ble Commission till

08.08.2014 were duly incorporated in the bid documents and the

submission of the bid by the participating bidders was on the bid

documents with such deviation.

17. In view of the above, it is respectfully submitted that the

Petitioner had taken the approval of the Hon’ble Commission to proceed

with the Competitive Bidding Process for inviting the bids on 22.10.2014,

such approval having been granted vide communication-dated

08.08.2014. As mentioned above, the bids were submitted on 22.10.2014

and was opened on 22.10.2014.

18. In view of the above, there is no violation on the part of the

Petitioner in regard to taking approval of the Hon’ble Commission on the

bid documents.

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19. Without prejudice to the above, it is also pertinent to mention that

the Hon’ble Commission had already notified the quantum of renewable

purchase obligation for procurement of solar power. The Petitioner was

adopting the Standard Bid documents notified by the Government of

India. The Petitioner had to obtain the views of the participating bidders

in a Pre-bid Conference before finalizing the bid documents. Such pre-

bid conference was held on 05.05.2014. The Petitioner was required to

take an informed decision on the deviations or changes to be made as per

the suggestion of the participating bidders only after such pre-bid

conference. The Petitioner had approached the Hon’ble Commission

immediately thereafter on 16.06.2014.

20. In view of the above, it is respectfully submitted that there was

neither a requirement nor it was practicable for the Petitioner to

approach the Hon’ble Commission in April, 2014 i.e. at the time of issue

of Notice of inviting tender.

Re: NEGOTIATIONS:

21. The Petitioner submits that the negotiation with the bidders, in

the present case did not vitiate the bidding process in any manner and it

rather, added value to the Haryana Utilities and the consumer at large.

At the outset, it may be stated that the Petitioner or any other agency

involved did not undertake negotiation with the bidders in a manner to

ignore a bidder who had given a better price. The lowest bidder, namely,

L1 had quoted a tariff of Rs. 6.44/kwh. In the bidding documents, the

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Petitioner had already disclosed the criteria for evaluation of the bid.

These particularly included the following:

“3.1.4 STEP IV – Successful Bidder(s) Selection

Bids qualifying in Step III shall only be evaluated in this stage

I. The Bidder with the lowest levalized Tariff for 25 years in

its Financial Bid shall be considered as L-I.

II. The price discovered for per unit rate of solar power shall

generally determined based on the rates quoted by the L-1

bidder and the negotiation, if any, held with the lowest

bidder. However, the negotiations could be held with

remaining eligible bidders. In case, the L-1 bidder refuses to

further reduce his offered price and the remaining bidders

come forward to offer a price better than the price offered

by L-1 bidder, then the bidder offering the lowest rate

would become the L-1 bidder. However, in such a situation,

the original L-1 bidder shall be given one more opportunity

to match the discovered price.

III. On determination of the price discovery pursuant to the

above price, a counter offer would be made to all such

eligible bidders, for acceptance of the discovered price.

IV. Form the outcome of the above process, the bidders from

anywhere in India, agreeing to accept the counter-offer of

the discovered price, will be considered and selection will

be done on the following criteria.

i) Solar power Projects in the State of Haryana will be

given first priority.

ii) Thereafter, the bidder offering the maximum capacity

will be given priority.

V. At any step during the selection of Successful Bidder(s) in

accordance with Clauses I to IV above, the HPPC reserves the

right to increase / decrease the Requisitioned Capacity by

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up to ten percent (10%) of the quantum indicated in Clause

2.1.

VI. The Letter(s) of Intent shall be issued to all such Successful

Bidder(s) selected as per the provisions of this Clause 3.1.4.

VII. Each successful Bidder shall unconditionally accept the LoI,

and record on one (1) copy of the LoI, “Accepted

Unconditionally”, under the signature of the authorized

signatory within seven (7) days of issue of LoI.

VIII. If the Successful bidder, to whom the LoI has been issued,

does not fulfil any of the conditions specified in the Clauses

2.9 & 2.12, HPPC reserves the right to annul the award of

the letter of Intent of such successful bidder.

IX. HPPC, in its own discretion, has the right to reject all Bids if

the Single Quoted Tariff is not aligned to the prevailing

market prices.”

In the negotiation, the above criteria was only adopted. There were no

new or additional criteria introduced.

22. The Petitioner respectfully submits that the scheme adopted after

opening of the bid cannot even be termed as negotiation in the sense it is

understood as vitiating the bidding process. Keeping the criteria

prescribed in the bidding document as quoted hereinabove; the Petitioner

had proceeded to call upon all the bidders to match the L1 bid. This was

to reduce the impact of tariff to the consumer at large and at the same

time to fulfill the RPO obligation notified by the Hon’ble Commission. All

the bidders were fully aware of the technical and financial criteria

including the condition that preference would be given to projects within

the State of Haryana and for long-term contracts. The five selected

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bidders with an aggregate capacity of 25 MWs were only those who

matched the bidding criteria and also the L1 quoted price of Rs. 6.44 per

unit.

23. Although five bidders were selected by HPPC for 25MW capacity

initially, PPAs were signed for only 23 MW capacity with four bidders as

one bidder did not fulfill the terms and conditions of bid document

issued by the Petitioner.

24. The Petitioner respectfully submits that the scheme to reduce the

quoted price of others to the lowest quoted price of Rs. 6.44/unit

achieves the object of the Electricity Act, namely, both the promotion of

renewable sources of energy and also reduction in the cost to the

consumers at large and therefore, consistent with the provisions of the

Electricity Act, 2003.

25. It is also reiterated that in the communication dated 16.6.2014,

the Petitioner had placed on record about the negotiation; consistent

with the policy of the Government of Haryana as contained in the

Government order dated 16.6.2014. A copy of the said order dated

16.6.2014 is attached hereto as Annexure A.

Re: EVALUATION COMMITTEE

26. The Petitioner submits that there has been no violation of the

bidding documents in regard to the non-constitution of evaluation

Committee as per the Guidelines issued by the Ministry of Non-

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Conventional Energy Sources. The bidding submission date was after the

Hon’ble commission has decided the ceiling tariff for Solar power

projects at Rs 7.45/kwh in the Order dated 13.8.2014. A copy of the

Order dated 13.8.2014 is attached hereto.(Annexure-B) Similarly, in the

Order dated 15.5.2014, the Central Commission has also determined the

tariff for Solar power projects at Rs 7.72/kwh.(Annexure-C) The above

decision of the Hon’ble Commission dated 13.8.2014 was required before

the bid submissions. The bid submissions date was in fact deferred from

time to time till 22.10.2014.

27. The Petitioner submits that the fixation of the above tariff at Rs

7.45/kwh by the Hon’ble Commission and Rs 7.72/kwh by the Central

Commission provided the price aligned to the market conditions. The

Hon’ble Commission and the Central Commission had determined the

above tariff after considering all the relevant facts and taking into

account the price which could be the appropriate one, i.e. the ceiling

price. In fact, inviting competitive bids in the light of the above tariff

determined necessarily means that bidders were to bid keeping the tariff

already decided i.e. in a competitive environment to quote lower to the

extent they decide.

28. It is also relevant that the solar projects do not have to be

compared with other sources of energy to decide on the quoted price

being aligned to market prices. The commission would be relevant if

power could be procured from different sources. In terms of the RPO

obligation, the power was to be procured only from solar energy sources.

Further, based on the market prices prevalent, the Hon’ble Commission

had decided on Rs 7.45… /unit as the ceiling price.

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29. In the circumstances, the issue of an evaluation Committee

deciding on the prices being aligned to the market forces, will have no

application. Further, the above requirement is in the Guidelines and does

not form part of the Bidding documents, as approved by the Hon’ble

Commission.

30. After the opening of the Bid on 25.10.2015, the following steps

were taken

a) The technical and commercial bids (excluding the price bid-

financial) received from 10 participating bidders were first opened

on 22.10.2014 and was then evaluated by a Committee consisting

of Chief Engineer HPPC, Financial Advisor and Superintending

Engineer, HPPC. 8 out of 10 participating bidders were found to be

responsive.

b) The price bid of the 8 bidders was then opened on 22.12.2014. The

price bids were in the range of Rs. 6.50 to 7.45/kwh.

c) The Steering Committee for Power Planning constituted for

evaluating the purchase of power consisting of Additional Chief

Secretary, Power and Managing Directors of Electricity Utilities

(GENCO, TRANSCO AND TWO DISCOMS), CE/HPPC considered the

price bids and decided on the course of action to be taken in

accordance to the tender terms and conditions.

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31. Further, the Hon’ble Commission has in another case also approved

the PPA executed by the Petitioner with another developer, M/s. Siwana

Solar Power Ltd., for 5MW vide letter dated 21.02.2014.(Annexure-D)

The aforesaid solar power developer is being paid tariff at the rate of

Rs.6.44/Kwh as per clause 2.1.41 of the said PPA. In terms of the above

clause, duly approved by the Hon’ble Commission, the developer was to

be paid the lowest tariff out of (a) the Generic Tariff Orders passed by

the Hon’ble Commission and (b) the lowest tariff quoted and accepted in

the first long terms tender for purchase of solar power by HPPC or

HAREDA till 31.12.2015.

32. The present tariff of Rs.6.44/Kwh discovered through the instant

competitive bidding process carried out by HPPC was the lowest tariff.

The Hon’ble Commission vide order dated 20.01.2016 in Case No.

HERC/PRO-24 of 2015 has also upheld the payment of tariff at

Rs.6.44/Kwh being paid to the aforesaid solar power developer M/s.

Siwana Solar Power Ltd. ( Annexure-E)

33. In the above process and in order to minimize the impact to

consumer at large, as mentioned hereinabove, the L1 bidder was called

upon to reduce the price and the L1 bidder accordingly reduced the price

to Rs. 6.44/kwh. Thereupon, all the other bidders were called upon to

match the lowest price of the L1 bidder.

34. The bidders who did not agree to match the L1 reduced price were

not selected. The Petitioner is filing also herewith a statement of prices

at which the solar power had been procured in other States during the

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relevant time (i.e. before the finalization of selected bidders by the

Petitioner. The statement is marked as Annexure F.

35. A perusal of same would show the price at which the Petitioner

had finalised 23 MW was most reasonable as compared to the others.

36. As mentioned hereinabove, the selection was done strictly with

Clause 3.1.4 of the tender documents.

37. In view of the above, it is respectfully submitted that the Hon’ble

Commission may be pleased to-

a) Approve the Power purchase Agreements entered into between the

Haryana Utilities and the four selected bidders; and

b) Pass such further order or order(s) as may be deemed necessary

and fit in the circumstances of the case.

2. Para 13 to 16 of the Order

The public hearing on the ARR held on 1.03.2016 and 30th May, 2016 including

the discussions in the State Advisory Committee meeting referred to in the order, has

not been presented in an objective manner.

During the public hearings referred to above, Interveners had raised concern on

the high fixed cost being paid by the Disoms due to stranded PPAs. The same issue

was also raised in the last meeting of the State Advisory Committee. The issue of

Standard PPAs pertains to conventional power and has nothing to do with Obligation to

purchase Renewable Power. Therefore, to put the entire matter in a proper

perspective, it is to be noted that procurement of RE power is a Statutory Obligation and

that no RE Power PPAs are stranded and as against the conventional power PPAs

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there is no obligation on the Discoms to pay fixed cost. What is being paid by

HPPC/Discoms is the tariff for actual RE power generated and injected by the RE

Generators in the Haryana Grid. Additionally, what has been attributed to the

Government of Haryana making it mandatory to hold public hearing while formulating

public policies is also entirely out of context. The Haryana Government, in exercise of

the powers conferred on it under section 108 of the Electricity Act, 2003, has not issued

any such directive to this Commission. Further, para no. 14 and 15 pertaining to

objections/comments received from stakeholders/general public is also not

appropriately reflected due to the following reasons:-

The said public proceeding, including inviting objections/suggestions from the

Stakeholders, was clubbed with the public proceedings in case no. HERC/PRO-9 of

2016 in the matter of Petition/application filed by the Haryana Power Purchase Centre

(HPPC) for approval of draft Power Purchase Agreements (PPAs) with 13 Solar Power

Developers selected through Tender. Hence, the objections / comments received from

the Interveners were common to both the cases. Accordingly, I observe as under:-

The objectors listed in the present Order, as evident from the hearing

attendance maintained by the office; most of them were not present in the hearing held

on 10.08.2016. Those who were present, except two or three, had submitted that the

PPAs under consideration ought to be approved for promotion solar power plants in

Haryana. Moreover, a large number of comments, other than those mentioned in the

Order at para 15 were filed requesting the Commission to approve the PPAs under

consideration. A few other Interveners who had urged the Commission to approve the

PPAs are as under:-

Sarpanch Grampanchayat (Mangal Salu)

Jai Prakash (Dongli)

Sanjay Singh (Village Jakhni)

Sarpanch (Dohar Kalan)

Nihal Singh (Kamania, Dt. Mahendragarh)

Suresh Chand, Sarpanch, Jailaf, Narnaul)

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Dalip Singh (Ex Sarpanch, Khatoli Jat)

Manjit, Karota, (Sarpanch, Khatoli Jat)

Rajkumar, (Sarpanch,, Mukendpuhl)

Sushma & 12 others (Bhiwani, Rewari, Narnaul, Ambala, Gurgaon,Mahendragarh)

Sumeet Gupta & eight others (Gurgaon, Rewari, Mewat, Mahendragarh, Panipat)

All the aforesaid persons had no objections and requested the Commission to

approve the PPAs at Rs. 6.44/kWh. These persons had mostly relied on the fact that

setting up more and more solar power plant will help the rural economy and also help in

the betterment of the environment.

It is observed that most of the objections received were subsequent to the

hearing held on 10.08.2016 in the matter and hence, as such, were not deliberated in

the said hearing. Further, the very arguments of these objections built on the premises

that Haryana has signed 70 PPAs and are paying about Rs. 2000 Crore towards fixed

charges without drawing any power are also untenable as the same is in no way

relevant to procurement of RE Power which is a statutory obligation. Further objection

raised are that government has started erecting solar panels on roof top and rates of

solar power is decreasing so solar power will become more cheaper hence it is not legal

to sign PPA for long term at Rs5/kWh and Rs.6.44/kWh. One of the other objections of

that with cheaper solar panels and net-metering, more capacity will be spare, therefore

it is requested that no PPA for solar or otherwise may be signed. As per the RPO

trajectory set by the Commission there have been persistent shortfall in meeting the

RPO (both Solar and Non-Solar) by the Discoms, hence, there is a need for

procurement of such power which is also evident from the reply filed by HPPC that they

will not be able to meet its RPO requirement through net – metering of Solar Rooftop

power projects objection were also received regarding permission not sought for

negotiation, about deviations relating to EMD, CPG in NIT from that of SBD, about

selection of bidders, about absence of external expert in the Evaluation committee as

per MNRE guidelines, about Net-worth taken as Rs.2.0crore instead of Rs3.5 Core in

the SBD, prior approved by the Commission, ceiling limit to be Rs.5.7/kWh and not

22 | P a g e

R7.45/kWh, buying REC instead of solar power through competitive bidding, justification

to purchase solar power etc. Petitioner has filed replies to each of these objections and

I find the replies of the petitioner are in order.

Most of the objections filed by the interveners, as also observed by the Petitioner

in its reply, were of generic nature. Hence, no specific case was made out by the

Interveners based on the process followed by the Petitioner or competiveness of tariff

so discovered that may merit any serious consideration by the Commission while

deciding the present case. The specific issues relating to negotiation, net-worth, prior

approval of the Commission ceiling limit of the tariff, buying REC, and justification to

purchase solar power has been dealt in the subsequent paras of this order.

3. Analysis & My Order

3.1. In paragraph 17 (1) of the Order, it is observed that the Petitioner , HPPC, has

sought the following relief:-

1. Adoption of Tariff discovered through transparent bidding process u/s

63 of the Electricity Act, 2003.

2. Approval of PPAs with solar power developers selected by it under the

NIT No. 51 at the said tariff.

I have perused the Petition / Application filed by HPPC in the present case, the

following is observed:-

i) The first letter dated 16.06.2014 (Ch-43/HPPC/SE/C&R-I/PPA-136) received from the

Petitioner carried a simple request i.e. “It is requested that HERC may furnish its

valuable comments, if any, on the NIT latest by 25.06.2014 so that HPPC may

proceed further with the tender process”. Hence, at that stage, no approval of the

Commission for adoption of tariff or approval of PPAs under the Electricity Act, 2003,

was sought.

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ii) Subsequently, vide Memo No. Ch-46/HPPC/SE/C&R-I/PPA-67 dated 1.07.2014 the

Petitioner prayed that, “It is humbly requested that approval may please be granted

to the NITs for purchase of 50 MW solar and 100 MW non-solar power”.

Admittedly, even at this stage no approval of the Commission for adoption of

tariff or approval of PPAs under the Electricity Act, 2003, was sought by the Petitioner.

iii) Thereafter, the Petitioner vide Memo No. Ch-2/HPPC/SE/C&R-I/PPA-196 dated

16.07.2015 intimated as under:-

“HPPC had floated tender to purchase 50 MW solar power. The Technical bid

was opened on 22.10.2014 & financial bid on 22.12.2014. Ten nos. bidders

submitted the tenders. Out of them, only eight Nos. Bidders were found eligible

for financial evaluation. The negotiations were done with the eligible bidders. As

a result, Rs.6.44/kWh was discovered as the lowest price for which LOI has been

issued to the following Five Nos. bidders for a capacity of 25 MW solar

power…………………………

HPPC has signed PPA with the above bidders except M/s Sudhakar Infratech

Ltd. Accordingly, HPPC seeks approval of PPA from the Hon’ble

Commission” emphasis added.

It is evident from the above that the Petitioner, at this stage, sought approval of

the PPAs and also submitted the requisite fee as required under HERC (Fee)

Regulations, 2005 (1st Amendment, 2013) for approval of four PPAs for procurement of

23 MW power. Hence, even at this stage no prayer was made or “relief sought” u/s

section 63 of the Electricity Act, 2003 as observed in the order.

For the sake of brevity Section 63 of the Act reproduced as under:-

“63. Determination of tariff by bidding process. - Notwithstanding anything

contained in section 62, the Appropriate Commission shall adopt the tariff if such

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tariff has been determined through transparent process of bidding in accordance

with the guideline issued by the Central Government”.

Admittedly, as also recorded at para 32 of the Order the draft guidelines shall be

considered as template, there is no guidelines notified by the Central Government /

MNRE. Hence, the validity of the tendering process cannot be questioned on the basis

of deviations from a non-existing guidelines and SBD and Commission’s approval

thereto. In this context the judgment dated 16th March, 1999 in Babu Verghese & Ors.

Vs. Bar Council of Kerala & Ors has been relied upon in the order i.e. the basic principle

of law long settled that if the manner of doing a particular act is prescribed under any

Statute, the act must be done in that manner or not at all (emphasis supplied) cited

by the Hon’ble Chairman at para 27 of the Order strongly supports my considered view

that absence of ‘Guidelines’ as provided in Section 63 of the Act shall negate any

proceedings under the said section of the Act. Therefore, even if this Commission is

required to proceed u/s 63 of the Act the same, in the absence of ‘Guidelines’ shall be

ultra-virus. This is probably the reason that a few other States either invited reverse bids

considering the tariff determined by the SERC u/s 62 of the Act or opted for Feed in

Tariff (FIT). Similarly, the Petitioner also followed reverse bidding process as per the

directions of the Commission in its Order dated 20.11.2013.

Additionally, as also evident from the reply dated 9th March, 2016 filed by the Ld.

Advocate Shri M.G. Ramachandran, for Petitioner, that the Petitioner has initiated the

tendering process for procurement of solar power in order to fulfill its Solar RPO as

mandated by the HERC RE Regulations as well as various Orders of the Commission

regarding bridging the shortfall in RPO compliance.

In view of the above discussions considering the present petition under Section

63 of the Act, which was not prayed for, and then rejecting the same because the

conditions stipulated therein has not been fulfilled, falls short of merit. Further, as

observed earlier also, in the absence of Guidelines / Standard Bidding Documents

notified by the MNRE/Central Government there are no benchmarks available to point

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out deviations. Hence, the reliance placed on the Hon’ble APTEL’s judgment at para 28

of the Order is not valid as the circumstances in the present case is entirely different

from those dealt by the Hon’ble APTEL in the said case.

The Hon’ble APTEL, in the judgment in Appeal Nos 106 and 107 of 2009,

recognized the fact that the State Commission have been given discretionary powers

either to choose Section 62, 62(1)a to approve the PPA or to direct the distribution

licensees to resort to the competitive bidding process. However, in the present case, the

distribution licensees resorted to competitive bidding by floating the present NIT after

informing the Commission vide its letter dated 1.07.2014 regarding the same. In fact,

the Commission vide its letter dated 8.08.2014 advised them to go ahead with the

tendering process as the same was already in progress. In this letter also the

Commission dwelt at length on the issue of the need to procure RE Power. The relevant

part of the said letter is reproduced below:-

“The Commission observes that the Discoms have not fulfilled their RPO

including by way of purchase of REC. Consequently, the accumulated shortfall

allowed to be carried forward from FY 2011-12 up to FY 2013-14 (up to

December, 2013) is about 720.83 MUs and the total RPO target set for FY

2014-15 is 1463.41 MUs. On several occasions the Commission has observed

that HPPC/HAREDA may invite bids/reverse bids (emphasis supplied) for

purchase of renewable energy to meet with the RPO targets and the fact that

the bidding process is already under way, HPPC may proceed with the same.

Once the bids are opened HPPC shall analyze the same and submit the details

for its order and approval of the PPA with the successful bidders ”.

Thus, after creating enabling provision for inviting bids/reverse bids for

procurement of RE Power, a statutory/quasi-judicial body i.e. this Commission is

estopped from reneging on the same on the plea that the bidding process is not in line

with the provisions of Section 63 of the Act.

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Notwithstanding the above, in case the bidding process was so vitiated, then the

appropriate course of action was to direct the Discoms to abort the bidding process

forthwith and initiate a fresh bidding process at the time when the Petitioner, way

back on 16.06.2014, sought comments from this Commission on the NIT.

3.2. At para 31 (page 46) of the Order, it has been observed that there are certain

deviations that have a substantive effect on the bidding process and the price discovery

thereto. Regarding the deviations relating to eligibility conditions, I observe that the

amount of net worth for eligibility was reduced to Rs. 2 crore to encourage wider

participation to have most competitive rates. The petitioner has also referred to the RFP

document issued by Punjab Energy Development Agency (PEDA) for 300Mw solar

photo voltaic power project under Phase-I in March, 2012 wherein the networth had

been taken as Rs. 2 crore / Mw. It is further observed that the amount of bid guarantee

and the contract performance guarantee were reduced by the Petitioner to have

competitive bids. Considering the submissions of the Petitioner and the absence of any

statutory Guidelines, I find these deviations in order.

3.3 The Order (para 31, page 47) also points out that the bid evaluation committee

was not constituted by the procurer as per the ‘Guidelines’. Regarding this, as per the

details submitted by the Petitioner, technical and commercial bids (excluding financial

bids) were evaluated by a Committee comprising of Chief Engineer (HPPC), Financial

Advisor and Superintending Engineer (HPPC). Additionally, the Steering Committee for

Power Planning (SCPP) constituted for evaluating the purchase of power, consisting of

Additional Chief Secretary (Power), and the Managing Directors of the Haryana Power

Utilities i.e. UHBVN, DHBVN (Discoms), HPGCL (Generation Company), HVPNL

(Transmission Company) and the Chief Engineer (HPPC) considered the prices bids

and decided on the course of action to be taken in accordance to the tender terms and

conditions. As such, in my considered view the procedure adopted by the Petitioner for

technical and financial evaluation was adequate.

3.4 It is further observed at para 31 (page no. 47) of the order that introducing scope

of negotiation would be counter - productive and introduce an element of un-certainty in

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the whole process which may lead to hardening of the offered price I have examined

this issue and observe as under:-

The Hon’ble APTEL in its judgment 6th May,2010 (Appeal No. 44 of 2010)

M.P.Power Trading Co., Ltd. v/s MP Electricity Regulatory Commission & Ors., has held

as under:-

"38. If we go through the entire bidding documents, we can easily conclude that

the negotiation is inherent and in-built in the bidding process. With regard to

the principle relating to negotiation for reduction in prices (emphasis

added), the Supreme Court has held in Food Corporation of India v. Messrs

Kamdhenu Cattle Feed' (1993) 1 SCC 71, as under:-

10. From the above, it is clear that even though the highest tender can claim no

right to have his tender accepted, there being a power while inviting tenders to

reject all the tenders, yet the power to reject all the tenders cannot be exercised

arbitrarily and must depend for its validity on the existence of cogent reasons for

such action. The object of inviting tenders for disposal of a commodity is to

procure the highest price while giving equal opportunity to all the intending

bidders to compete. Procuring the highest price for the commodity is

undoubtedly in public interest since the amount so collected goes to the public

fund.

Accordingly, inadequacy of the price offered in the highest tender would be a

cogent ground for negotiating with the tenderers giving them equal opportunity

to revise their bids with a view to obtain the highest available price. The

inadequacy may be for several reasons known in the commercial field.

Inadequacy of the price quoted in the highest tender would be a question of fact

in each case. Retaining the option to accept the highest tender, in case the

negotiations do not yield a significantly higher offer would be fair to the

tenderers besides protecting the public interest. A procedure wherein resort is

had to negotiations with the tenderers for obtaining a significantly higher bid

28 | P a g e

during the period when the offers in the tenders remain open for acceptance and

rejection of the tenders only in the event of a significant higher bid being

obtained during negotiations would ordinarily satisfy this requirement. This

procedure involves giving due weight to the legitimate expectation of the highest

bidder to have his tender accepted unless outbid by a higher offer, in which case

acceptance of the highest offer within the time the offers remain open would be

a reasonable exercise of power for public good.

39. The above principle has been laid down by the Supreme Court in a case of

sale of food grains where higher price was beneficial for the public good. The

present case relates to the purchase of electricity by the procurer for

consumers for the lower price in the public interest. The ratio decided by

the above decision taking note of public interest squarely applies to the

present case as well (emphasis added)l."

52. The Hon’ble Supreme Court in the case of AIR India Vs Cochin International

Airport (2000) (SC) SCC 617 has held at para (7) that :-

“The award of a contract, whether it is by a private party or by a public body or

the State, is essentially a commercial transaction. In arriving at a commercial

decision considerations which are paramount are commercial considerations.

The State can choose its own method to arrive at a decision. It can fix its

own terms or invitation to tender and that is not open to judicial scrutiny. It

can enter into negotiations before finally deciding to accept one of the

offers made to it (emphasis added). Price need not always be the sole

criterion for awarding a contract. It is free to grant any relaxation for bona fide

reasons, if the tender conditions permit such a relaxation. It may not accept the

offer even though it happens to be the highest or the lowest but the state, its

corporations, instrumentalities and agencies are bound to adhere to the norms,

standards and procedures laid down by them and cannot depart from them

arbitrarily. Though that decision is not amenable to judicial review, the,

29 | P a g e

court can examine the decision-making process and interfere if it is found

vitiated by mala fides, unreasonableness and arbitrariness (emphasis

added). The State, its corporations, instrumentalities and agencies have the

public duty to be fair to all concerned. Even when some defect is found in the

decision-making process the court must exercise its discretionary power under

Article 226 with great caution and should exercise it only in furtherance of public

interest and not merely on the making out of legal point. The court should

always keep the larger public interest in mind in order to decide whether its

intervention is called for or not. Only when it comes to conclusion that

overwhelming public interest requires interference, the court should intervene.”

53. Hon’ble APTEL in the above case at para (38) of its judgment held that

the negotiations are only for reduction of tariff which is in the best interest

of the consumer (emphasis added). Further it was also held that negotiations

are inherent and inbuilt in the bidding process. Hon’ble Supreme Court in its

aforesaid judgment also held that larger public interest should always be

kept in mind (emphasis added). As observed earlier, negotiations held in

the present case were transparent and have resulted in the reduction of

tariff by L-3 bidder though not by the first two bidders. Any purchase of

additional quantum of power at the lower rate than the quoted rate or the rate

quoted by the bidder cannot be held to be contrary to law. On the contrary it is in

the interest of the public. Even clause 3.5.7 authorises the petitioner to increase

or decrease the quantum more than 10% with the approval of the Commission.

54. In the light of the facts noticed as above and the law laid down by Hon’ble

Supreme Court and APTEL, we are of view that the bidding process carried out

by the petitioner and negotiations held are not in violation of either Section 63 of

the Act or the bidding guidelines/bidding conditions.

Examining the present case in view of the above case laws, the moot point, as

held by the Hon’ble Supreme Court, that emerges is whether larger public interest

30 | P a g e

was kept in mind by HPPC while entering into negotiation with the bidders.

Regarding this it is observed that the four successful bidders, in their bids, had

quoted/offered a levelised tariff of Rs.6.50/kWh (Balarch Renewable Energy Pvt. Ltd.),

Rs. 6.90/kWh (Subhash Infraengineers Pvt. Ltd.), Rs. 6.99/kWh to Rs.7.45/kWh (Neel

Metal Product Ltd) and Rs. 7.36/kWh (Ultimate Sun Systems Pvt. Ltd.). It is observed

that the Steering Committee under the Chairmanship of the Additional Chief Secretary,

Haryana Government and the Managing Directors of all the Haryana Power Utilities i.e.

UHBVN, DHBVN (Discoms), HPGCL (Generation Company) and other senior officers

deliberated the issue and modalities of negotiation with eight eligible bidders against

NIT No. 51/CE/HPPC dated 16.04.2014. Accordingly, the negotiations were done, as

also provided in the NIT, and the four bidders mentioned above agreed to offer Solar

Power at Rs.6.44/kWh i.e. the lowest tariff discovered after the negotiations with the

eight successful bidders. As such in my view, the negotiation with bidders, in the

present case did not vitiate the bidding process in any manner and it rather, added

value to the Haryana Utilities and the consumers at large as also claimed by the

petitioner

3.5. It is observed that the lowest price discovered is lower than the ceiling tariff of

Rs.7.45/kWh determined by the Commission as well as the initial levelised tariff quoted

by the eight successful bidders. As far as competiveness of the tariff is concerned the

following rates determined by the SERCs were submitted by the Petitioner:-

Levellised Tariff for FY 2014-15 (Rs./kWh)

Haryana CERC Rajasthan M.P. Punjab Tamil Nadu U.P. Uttarakhand

7.45 7.72 7.50 8.05 7.72 7.01 8.91 6.99

In view of the above, it was submitted by the Petitioner, that the tariff @

6.44/kWh discovered by way of the tendering process was far more competitive than

the tariff determined by the SERCs including Haryana. It is added that this Commission

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while issuing generic tariff Order for the RE Projects for the FY 2014-15 {(Case No.

HERC / PRO - 50 of 2014 (Suo Motu) had categorically observed as under:-

“9.0 The Commission directs the Discoms to purchase renewable energy as

per RPO targets set in the 3rd amendment to the HERC RE Regulations, 2010.

In case they can purchase the same at a tariff lower than determined by

this Commission they may do so, otherwise they must purchase all such

power offered to them by the renewable energy power producers at the

tariff determined by this Commission (emphasis supplied). Further the

Commission is of the view that it is always preferable to purchase renewable

energy because of fact that such generation projects as per the statutes has to

be encouraged, rather than to purchase REC wherein the amount paid for

purchase of the same goes to the generator without even getting the benefit of

power availability. Additionally, because of its distributed nature, RE generation

is considered advantageous in terms of reduced cost of transmission network

and reduced transmission losses. This advantage becomes considerably

enhanced when such RE is generated and consumed locally”.

In view of the above and given the fact that the Petitioner, incompliance of the

Commission’s Order, carried out the tendering process and discovered / negotiated a

tariff considerably lower than that determined by the Commission, it now not open for

the Commission to evaluate the competiveness of the tariff so discovered on the basis

of tariff discovered at a later point of time or in some other State(s).

3.6. I have carefully perused the observations of the order at para 34, quite a few of

the observations has already been dealt by me in the preceding paragraphs. In the

paragraph below, my observations are restricted to some of the additional / relevant

issues brought out in the Order in this paragraph.

Sub para ii) (page no. 48) dwells on deviations from the SBD, deviations other

than Bid Bond and CPG were not rectified. As already observed by me these would

32 | P a g e

have been relevant in case the Petitioner had prayed for adoption of tariff u/s 63 of the

Act. Additionally, reference to HPGCL’s offered price of Rs. 4.88/kWh and

subsequently discovered bid price of Rs. 5.0/- is completely out of context. The

purported tariff of Rs.4.88/- has not been determined/approved by the Commission, as

of now, it is just a proposal that too after considering a much higher CUF of 21% and

without including cost of transmission line and land. Further, it is well known that the

cost of setting up solar power plant is declining; hence, bids price at different points of

time is strictly not comparable. The per unit tariff of solar power being procured from

SECI i.e. Rs.5.50/Unit is also not comparable as the same take into account the Viability

Gap Funding (VGF) available for setting up such projects under Jawahalal Nehru Solar

Mission (JNNSM) of Government of India. Moreover, the PSA is yet to be approved by

this Commission. Additionally, the said tariff is ex- generator(s) bus and hence after

accounting for transmission charges/losses and VGF the landed cost/tariff for the said

power shall work out to higher than Rs. 6.0/Unit.

The observations (para vii) regarding savings of Rs. 3.34 Crore and Rs. 1.1 Crore

attributed to the stakeholders probably quantifying on the basis of fulfilling RPO during

the next two years through REC route is also not true reflection of the facts. The

response of the Petitioner that meeting RPO through purchase of RECs for the next two

years will be marginally higher than procuring solar power under the PPAs under

consideration has not been considered / evaluated. In my considered view also

procuring power @ Rs. 6.44/kWh, is a cheaper option compared to purchasing REC at

Rs. 3.50/kWh if we consider the average price of power procurement of about Rs.

4.0/kWh.

It is observed in the order at sub para x) that “HPPC does not appear to have

followed its own process as mandated in Para 3.1.4 (iv)”. The said clause provides that

solar power projects in the State of Haryana will be given first priority and thereafter, the

bidder offering the maximum capacity will be given the priority. It is observed that the

Solar Power projects of all the four successful bidders are located at different districts of

Haryana. Hence, as per the said clause priority was accordingly given to the projects to

be set up in Haryana. Further, these were the ones who agreed to offer solar power @

6.44/kWh i.e. at the lowest discovered price. Hence, HPPC has not violated any

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provisions of the Electricity Act, Rules and Regulations and has adopted a transparent

bidding process as evident from the submissions made by the Petitioner.

4. In conclusion, I Observe and Order as under:-

4.1. As per the replies submitted by the petitioner in its response to the objections

filed by the Senior Citizens Council & Others, the petitioner has stated that in the tariff

orders passed by the Commission from time to Time, the Haryana Utilities have been

mandated to purchase power to meet the Renewable Purchase Obligation. It is further

stated that Haryana Discoms were finding hard to meet the RPO targets set by the

Commission. HPPC filed various petitions from time to time with prayer for amendment

of RE regulations, 2010 and relaxation or carry forward of RPO as under:-

I) Petition dated 8.06.2012 for seeking review / or modification of Renewable

Purchase Obligation (RPO).

II) Petition dated 19.10.2012 and Supplementary filling dated 25.01.2013 for

seeking review and / or modification of the Haryana Electricity Regulatory

Commission (Terms and Conditions of Determination of Tariff form

Renewable Energy Sources, Renewable Purchase Obligation and Renewable

Energy Certificate) Regulations, 2010.

III) Petition dated 20.08.2013 for seeking relaxation or carry forward of

Renewable Purchase Obligation (RPO) for FY 2011-12 and FY 2012-13.

Disposing of the above petitions, the Commission issued an Order dated

20.112013. The abstract of the same is reproduced hereunder:-

“It is clarified that the tariff determined by the Commission is the ceiling

tariff. In case the Discoms / HPPC is able to procure renewable energy

(solar and non – solar) at a rate lower than that determined by the

Commission by way of reverse bidding or otherwise, they may do so.

However, the Discoms / HPPC, may not evade their responsibilities of

achieving the RPO specified in the RE regulations, 2010 for the

respective years on the plea that they are in the process of inviting bids

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or merely making a statement that renewable energy is available at a

tariff lower than that determined by the Commission”.

Further, the Petitioner in its affidavit 09.03.2016 has also submitted that the

Commission in it is order dated 29.05.2014 regarding approval of Distribution and Retail

supply tariff for the FY 2014-15 had directed to the discoms as under:-

The Commission directs the Discoms to purchase renewable energy as per RPO targets set for FY 2014-15 and the shortfall carried forward, on actual basis, for previous years. In case they can purchase the same at a tariff lower than determined by this Commission they may do so, otherwise they must purchase all such power offered to them by the renewable energy power producers at the tariff determined by this Commission. The shortfall in meeting the RPO for the FYs 2011-12, 2012-13 and 2013-14 as per details given above shall also be met in the FY 2014-15 in addition to the RPO of FY 2014-15. The Commission has taken a serious note of non-compliance of RPO targets including non purchase of REC to meet RPO. In case no action is taken by the Discoms, the officer concerned shall be held liable for non-compliance and proceeded against u/s Section 142 of the Act.”

HPPC, in its submissions, has submitted that they had initiated competitive

bidding process in compliance to the above mentioned directions of the Commission.

4.2. The NIT, in the present case, as already observed by me, was submitted by the

Petitioner to the Commission for comments and the PPAs were subject to approval of

the Commission and the Commission had allowed the Petitioner to ‘go ahead’ with the

tendering process. Further, the tendering process was carried out in compliance with

the Order/directives of this Commission. The tariff, discovered after negotiations was

also competitive and significantly below the tariff determined by this Commission as

well as a few other SERCs for the solar power plants to be commissioned in the FY

2014-15. Additionally, it has been observed in the Order at Para 30 (page no. 46) that

the documents submitted to the Commission carried a benchmark rate of Rs. 5.70 and

not Rs. 7.54 per unit. On this issue I observe that the levellised tariff of HERC @ Rs.

35 | P a g e

5.70/kWh was for the projects commissioned / to be commissioned in the FY 2013-14

as pointed out by the petitioner in his reply to the objections and the same also had a

few computational errors. Further, in the revised (final) NIT No. 51 issued by the

Petitioner it was clearly provided that the levelised tariff determined by the Commission

for the Solar PV Power projects as per HERC RE Regulations, 2010, for the FY 2014-

15 shall be the ceiling tariff. As the levelised tariff determined by the Commission for

the FY 2014-15 was @ Rs. 7.45/Unit the relevant benchmark for inviting the present

tender was rightly considered by the Petitioner @ Rs.7.45/kWh (mentioned as

Rs.7.54/Unit in the Order).

4.3. Admittedly, there are no SBD/Guidelines approved and notified by the

MNRE/Central Government. What does exist is the draft MNRE Guidelines and draft

SBD for procurement of long term RE Power. This probably the reason that the few

other states either invited reverse bids considering the tariff determined by the HERC as

ceiling tariff or opted for feed in tariff (FIT). Similarly the petitioner also followed reverse

bidding process as per the directions of the Commission in its order dated 20.11.2013.

Hence, it is evident that the ibid draft Guidelines / Documents were used by the

Petitioner as a broad framework only. Thus, inviting bids for small capacity Solar Power

Projects quite a few modifications was required as done by the Petitioner. It is observed

that this Commission, vide letter dated 8.08.2014, communicated to the Petitioner

(HPPC) as under:-

“Kindly refer to memo no. Ch-43/HPPC/SE/C&R-I/PPA-136 dated 16.06.2014

and Ch-46/HPPC/SE/C&R-I/PPA-67 dated 1.07.2014 vide which approval of

the Commission was sought to the deviations in the bid documents vis-à-vis

the Case 1 RE Bidding Procedure of the Government of India. The

Commission has considered your application/petition and observes that the

NIT No. 51 & 52 for inviting competitive bids for purchase of 50 MW Solar

Power and 100 MW of Non – Solar (renewable energy) were issued on

16.04.2014 and the approval of the Commission to the deviations were

sought on 1.07.2014 i.e. ex post facto.

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The Commission observes that the Discoms have not fulfilled their RPO

including by way of purchase of REC. Consequently, the accumulated

shortfall allowed to be carried forward from FY 2011-12 to FY 201314 (up to

December 2013) is about 720.83 MUs amd the total RPO target set for FY

2014-15 is 1463.41 MUs. On several occasions the Commission has

observed that HPPC/HAREDA may invite bids/reverse bids for purchase of

renewable energy in order to meet with the RPO targets and the fact that the

bidding process is already under way, HPPC may proceed with the same.

Once the bids are opened HPPC shall analyze the same and submit the

details to the Commission for its order and approval of the PPA with the

successful bidders”.

A plain reading of the Commission’s letter dated 8.08.2014 establishes the fact

that the deviations in the said NIT documents were in the knowledge of the

Commission. Further, the Commission was also concerned about sustained shortfall in

the RPO of the Discoms. Hence, this Commission allowed the Petitioner to proceed with

the tendering process. The intentions, clearly, was not to sit in judgment regarding the

‘deviations’ after opening of the bids.

4.4. While the allocation for Solar Power Project in the present case has already been

done through competitive bidding as per Orders Directions issued by the Commission

from time to time, the issue may arise, whether the competitive bidding was carried out

on the basis of professed norms of completive bidding to reduce the overall cost of

power procurement. This issue has been examined at length and following is

observed:-

1) The Petitioners issued Notice of inviting Tender (NIT) on 17.04.2014 for

procurement of 15Mw solar power to tariff based committee bidding in the,

Newspapers Hindustan Times, Mail Today and Business Standard. The NIT has

been prepared based on the draft SBD of the MNRE with certain modifications to

have wider participation and completive rates. The NIT document consisted of

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all the relevant information such as general instructions to the bidders, project

details, criteria of generation, grid connectivity, qualification requirement,

consents, clearances and permits, bid bond, CPG, Bank Guarantees, Financial

Closure, Commissioning Schedule, Penalty for delay in Commissioning, Penalty

for short fall in generation, rate for excess generation over threshhold capacity

utilization factor (CUF), evaluation criteria etc. The draft power purchase

agreement also made part of the bid document.

2) Petitioner held pre-bid conference on 05.05.2014 to obtain suggestion of the

participating bidders. Around 15 firms participated in the pre bid meeting. The

petitioner received queries from 8 firms regarding terms and conditions of the

NIT. These queries were generally relating to generic tariff, delivery point, CUF,

penalty for less generation etc.

3) After incorporating the comments raised by the bidders during pre bid

conference, the petitioner forwarded the copy of the NIT to the Commission on

16.06.2014 for comments.

4) The Commission vide letter dated 08.08.2014 allowed the petitioner to go ahead

with the bidding process.

5) The revised NIT was issued on 14.08.2014. In the revised (final) NIT No. 51

issued by the petitioner it was clearly provided that the levelised tariff determined

by the Commission for the Solar PV power projects as per HERC RE

Regulations,2010, for the FY 2014-15 shall be the ceiling tariff.

6) The last date of submission of the bids was extended upto 22.10.2014. The bids

were opened on 22.10.2015.

7) The technical and commercial bids (excluding the price bid-financial) received

form 10 participating bidders were first opened on 22.10.2014 and was then

evaluated by a Committee consisting of Chief Engineer HPPC, Financial Advisor

and Superintending Engineer, HPPC. 8 out 10 participating bidders were found

to be responsive.

8) The price bid of the 8 bidders was then opened on 22.12.2014. The price bids

were in the range of Rs. 6.50 to 7.45/kWh.

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9) The Steering Committee for Power Planning constituted for evaluating the

purchase of power consisting of Additional Chef Secretary, Power and Managing

Directors of Electricity Utilities (GENCO, TRANSCO AND DISCOMS), Chief

Engineer /HPPC considered the price bids and decided on the course of action to

be taken in accordance to the tender terms and conditions.

10) Negotiation was held by the above mentioned Steering Committee with the

bidders as per the criteria given in the NIT. After negotiation lowest tariff was

arrived at Rs. 6.44/kWh lower than the L1 quoted price.

11) The five selected bidders with an aggregate capacity of 25Mw were only those

who matched the bidding criteria and also the lowest quoted price of 6.44/kWh

12) Although five bidders were selected by HPPC for 25 MW capacity initially, PPAs

were signed for only 23 MW capacity with 4 bidders as one bidder did not fulfill

the terms and conditions of the bid document issued by the petitioner.

Form the details given above it is clear that the petitioner followed an elaborate

completive bidding process in a transparent manner which is also evident from the fact

that a large number of bidders submitted the bids. The petitioner accordingly discovered

a completive tariff which is significantly below the tariff determined by this Commission

for the FY 2014-15 as well as FY 2015-16. Thus, in my considered view the bidding

process adopted by HPPC meets with the underlying objective of regulation of electricity

purchase and procurement process of distribution licensees on the basis of professed

norm of competitive bidding to reduce the overall cost of procurement of solar power in

the interest of the electricity consumers.

4.5. As the SBD was not in existence, hence, the question of other deviations (which

has not been mentioned in the order) from the SBD does not arise. Further, the order

also refers to the newspaper report dated 20.01.2016 that the Solar tariff hits new low in

Rajasthan i.e. Rs. 4.34 to Rs.4.63/kWh and Rs.5.0/kWh in Haryana in a subsequent

bidding process. I have considered the figures relied upon in the Order and I am of the

view that the Solar tariff obtained in Rajasthan could be very different because of much

better CUF and cheaper land available in Rajasthan more so if the Solar Power Projects

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are located in the Solar Park promoted by the Rajasthan Government. Additionally, the

projects envisaged / bids called at different points of time as in the case of subsequent

bids for 165 MW Solar Power invited in Haryana or the tariff reported sometimes in

January, 2016 in Rajasthan as against the present bids received by HPPC sometimes

in October, 2014 are strictly not comparable as with the passage of time the project cost

has witnessed a sustained decline. Hence, any decision based on such comparison is

futile. As a corollary if we wait for some more time the tariff discovered / offered may

turn out to be lower or higher depending on the market conditions.

In view of the above discussions, I approve the draft PPAs submitted

by the Petitioner with four Solar Power Developers selected through competitive

bidding.

Date: 04th October, 2016 (M. S. Puri)

Place: Panchkula Member