AP Biomass Energy Generators Hopes For Relief Rise After APTEL Order

By Soumya Duggal/ Updated On Tue, Mar 15th, 2022

Highlights :

Faulting the methodology and the seeming ‘outsourcing’ of the technical studies needed to KPMG, APTEL has asked for a response within 45 days from APERC

AP Biomass Energy Generators Hopes For Relief Rise After APTEL Order

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The Appellate Tribunal for Electricity (APTEL) has recently given its verdict with regards to four appeals against the Tariff Orders passed by the Andhra Pradesh Electricity Regulatory Commission (APERC) in May and July 2014.

The appeals made by Biomass Energy Developers Association &Ors and South Indian Sugar Mills Association &Ors, which were all filed against the May 2014 order, as well as those by Southern Power Distribution Company of Andhra Pradesh Ltd. & Anr., which were filed as cross appeals against the July 2014 order, were all heard together as the issues addressed by them were common and related to fixed and variable cost for biomass- and bagasse-based power plants in Andhra Pradesh and Telangana.

In the course of the hearing, APTEL noted that some of the specific studies cited in the previous orders of APERC—Central Electricity Authority’s (CEA) report; Central Electricity Regulatory Commission’s (CERC) report; report prepared by KPMG at CERC’s behest— had been carried out for standardising certain technical parameters which form the basis for Tariff determination, only one report demonstrated a detailed Technical Study for the solar plants situated in Andhra Pradesh & Telangana. Thus, APTEL found the CEA Report to be “more technically correct and relevant” to examine the various issues raised in these appeals.

Since the state commissions (APERC and TSERC) had relied on other studies, despite the CEA report providing clear recommendations, in order to fix variable and fixed costs as part of tariff determination, common issues pertaining to both were considered together by APTEL. After analysing the facts of the matter, the tribunal arrived at certain conclusions which are summarised below:

1. Variable Cost Issues for Biomass based Plants:

Station Heat Rate (SHR) is to be 4500 kCal/kWh as per the CEA report’s findings, which the state commissioned ignored.
Auxiliary consumption is to be 10%, as opposed to 12% mentioned in the appellants’ pleas.
Gross Calorific Value of Fuel (GCV) is to be 3300 kCal/kg as per the CEA report’s findings, which the state commissioned ignored.
Revised Fuel Cost is to be issued by APERC on the basis of actual market purchase price, composition of fuel mix and related parameters after considering afresh the detailed submissions made by the Appellant which require “reasonable consideration”.
It was strongly felt by APTEL that APERC should relook the matter and formulate revised fuel cost escalation index.

2. Fixed Cost Issue for Bagasse based Plants:

APTEL directed APERC to review the fuel cost of Bagasse considering the submissions of the Appellants regarding the prevailing market price of bagasse and the landed market cost of fuel, as available, for the coal-based generating stations.

3. Fixed Cost Issue

Plant Load Factor is to be at 80%.
Auxiliary consumption is to be at 10%.
Operation & Maintenance Expenses and escalation are to be as decided in APERC’s order passed in July 2014 in opposition to the appellants’ appeal against the same.

In addition to the above ruling, the tribunal added, “We also direct the State Commissions (APSERC and TSERC) to initiate a study at the earliest for determining the normative parameters for Biomass and Bagasse based Power Plants under their jurisdiction and located in the State of Andhra Pradesh and Telangana and frame Tariff Regulation as per directions given…”

“The appeals are allowed in part…The State Commission shall pass consequential order within 45 days of communication of this judgment. In view of the disposal of the Appeals, the relief sought in pending IAs, if any, do not survive for consideration and accordingly stand disposed of. No order as to costs,” said APTEL.