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Home News Power Sector News CERC order on Sasan UMPP - Reliance may lose tariff benefit

CERC order on Sasan UMPP - Reliance may lose tariff benefit

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CERCThe Central Electricity Regulatory Commission (CERC) has said the first 660-Mw unit of Reliance Power's 3,960-Mw Sasan ultra mega power project (UMPP) could not achieve its "full load" in March 2013 and rejected the company's plea to appoint an independent technical committee to look into the readiness of that unit.

The regulator has said the company had enough time to achieve full load but its failure led to a delay in commissioning date. "We do not find any requirement to constitute a committee as suggested by the petitioner (Reliance Power's Sasan Power Ltd) in view of our finding that the unit-3 (first unit of the Sasan project) of the generating station was unable to achieve its full load on March 31, 2013," the CERC order said.

Reacting to the order, Reliance Power said in a statement it would take appropriate legal steps, including filing an appeal with the appellate tribunal.

Sasan Power has been claiming March 30, 2013, as the commissioning date for the power plant. If March 30 is taken as the basis for commissioning date, the first year of operation for the plant would be 2012-13, during which it gets a rate of about 70 paise a unit (kilowatt per hour). The same rate continues for the second year, but from the third year onwards, this rises, giving the company more than 70 per cent increased revenue. The third year gets pushed ahead if 2012-13 is not considered the first year.

The company was supposed to sell power for the first two financial years at 70 paise a unit and then at the levelised tariff of Rs 1.19 a unit. As the CERC order has come in August 2014, SPL would now have to sell power at 70 paise for another two years. This would take away the benefits Reliance Power was looking at after two years of operations at Sasan. The company refused to share information on the quantum of loss.

The latest order follows another CERC directive passed in June last year which was challenged by Reliance Power at the Appellate Tribunal for Electricity (Aptel). The tribunal had then directed the regulator to pass a fresh order on the matter.

"The commissioning date declaration on the basis of the certificate of independent engineer issued on March 30, 2013, was not in line with the provisions of PPA (power-purchase agreement)," CERC said in its August 8 order on the matter relating to commissioning of the Sasan project's first unit.

When contacted, a Reliance Power spokesperson said: "Reliance Power is examining CERC's order on WRLDC's (the Western Regional Load Despatch Centre's) petition and would take appropriate legal steps, including filing an appeal in Aptel."

The regulator took up the matter on a petition filed by WRLDC, part of state-owned Power Grid Corp. According to the PPA provisions, a commissioning date cannot be declared unless the results of the performance test show that the unit-tested capacity is not less than 95 per cent of its contracted capacity on the effective date.

In the past year, Reliance Power started operations of another three units at Sasan project, taking that plant's total operating capacity to 2,640 Mw.

The company also achieved boiler light-up of a fifth unit and hopes to put the remaining two units into operations before the end of current financial year.

According to CERC, even for declaring a de-rated capacity, the concurrence of all the procurers is essential.

The order said: "Admittedly, the generating company (Sasan Power) and the procurers both stand to benefit from it, but such declaration of commissioning date against the established norms and PPA provisions can't be allowed because it makes a mockery of the established system.

"Therefore, the certificate issued by the independent engineer on March 31, 2013, declaring the commissioning date at a lower capacity of 101.38 Mw is not in order and so cannot be sustained."

According to CERC, Sasan Power had given the declaration for 600 Mw consecutively for four days. "It was admitted by the learned senior counsel for Sasan Power that on account of lack of clarity, the company had given declaration of 600 Mw... However, it has subsequently given the correct schedule. So, there is no intention of mis-declaration of capacity by Sasan Power Ltd," the order said.

CERC has also ruled that electricity scheduled for the period from March 31, 2013, to August 15, 2013, would be treated as infirm power.

"Since, we have held that the unit of the generating station has failed to qualify the performance test for 95 per cent of the contracted capacity, which is a pre-requisite for declaration of the commercial operation in terms of the PPA provisions, the power injected during this period shall be treated as infirm power," the order said.

Meanwhile, CERC called for a report on difficulties faced by load despatch centres in dealing with performance testing of power generating units. This suggestion can have larger implication for other ultra mega power projects.

"We direct the NLDC (National Load Despatch Centre) and RLDCs (Regional Load Despatch Centres) to submit report in consultation with CEA (Central Electricity Authority), which shall include specific difficulties experienced by RLDCs in dealing with performance testing and commercial operation of the generating stations that are not governed by the tariff regulations of the Commission.

Source- Business standard


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