Before the MAHARASHTRA ELECTRICITY … 58 42/Order-42 of 2017-27032018.pdf · Maharashtra State...

Order in Case No. 42 of 2017 of 35

Before the

MAHARASHTRA ELECTRICITY REGULATORY COMMISSION

World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai 400005

Tel. 022 22163964/65/69 Fax 22163976

Email: [email protected]

Website: www.mercindia.org.in / www. merc.gov.in

CASE No. 42 of 2017

Suo moto review of status and requirement of upcoming Generation Projects of

Maharashtra State Power Generation Co. Ltd.

Coram

Shri. Azeez M. Khan, Member

Shri. Deepak Lad, Member

Appearance

For Maharashtra State Power Generation Co. Ltd. Shri Vijay Rathod

For Maharashtra State Electricity Distribution Co. Ltd. Shri Paresh Bhagwat

For Authorised Consumer Representatives Ms. Ashwini Chitnis, Prayas

Ms. Ann Josey, Prayas

Dr. Ashok Pendse, TBIA

ORDER

Date: 27 March, 2018

The Commission initiated proceedings, vide Notice dated 24 March, 2017, to determine the

final Tariff of the new Generating Units of Maharashtra State Power Generation Co. Ltd.

(MSPGCL) and to review the status and requirement of upcoming Units under its PPA with

Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL).

2. In its Order dated 3 March, 2014 in Case No. 54 of 2013, the Commission had approved the

provisional Tariff for MSPGCL’s upcoming Koradi Units 8, 9 and 10, Chandrapur Units 8

and 9 and Parli Unit 8. Vide its letter dated 17 December, 2016, MSPGCL submitted the


Unit-wise actual and expected Commercial Operation Dates (COD) of the following new and

upcoming Units as below:

Table 1 – COD status of new and upcoming Units, submitted by MSPGCL

Sr. No Unit Commercial Operation Date

1. Koradi Unit 8 15 December, 2015

2. Koradi Unit 9 22 November,2016

3. Chandrapur Unit 8 4 June, 2016

4. Chandrapur Unit 9 24 November,2016

5. Parli Unit 8 19 November,2016

6. Koradi Unit 10 31 December, 2016 (expected)

3. Regulation 38.9 of the MYT Regulations, 2015 provides that a Generating Company shall

file a Tariff Petition for determination of the final Tariff of a Generating Unit within 6

months of its COD:

“38.9 The Generating Company shall file the Petition for determination of

final Tariff for new Generating Station within six months from the date of

commercial operation of Generating Unit or Stage or Generating Station as a

whole, as the case may be, based on the audited capital expenditure and

capitalisation as on the date of commercial operation:

Provided that in case of more than one Unit in the Generating Station, such

Petition shall be filed for each Unit as and when such Unit achieves COD and

without waiting for the COD of the entire Station.”

4. In its last MYT Order dated 31 August, 2016 in Case No. 46 of 2016, the Commission

directed MSPGCL to review the financial viability of those Generation Projects which are at

early stages of planning considering the alternative sources and modalities that may be

available to MSEDCL and its demand-supply position, the proposed retirement plan of old

Units and macro-level developments which could have adverse financial implications before

pursuing them further, and to submit its report within 3 months. The Commission also

directed MSPGCL to not take further steps towards such Projects proposed for supply to

MSEDCL which are at the planning stage or in which contracts have not been awarded, till

the Commission takes a view in the matter.

5. In its Orders in Case Nos. 103 of 2010, Case No.71 of 2011 and 78 of 2013, the Commission

had approved 21 upcoming Projects with installed capacity of 11320 MW. Out of these,

Units with capacity of 2000 MW have been in operation, and Projects of 3230 MW capacity

have recently achieved COD.


6. Vide letter dated 29 November, 2016, MSPGCL has submitted the status of new Units which

have achieved COD, and also of future Units which are under active consideration.

7. With regard to upcoming Units with capacity of 6090 MW, in its letter dated 29 November,

2016, MSPGCL has stated that, vide Board Resolution dated 27 January, 2016, it has decided

to construct a 500 MW Solar Power Plant instead of a 3300 MW Thermal Power Station

(TPS) at Dondaicha, Distt. Dhule. Of the remaining, the proposed 2790 MW Uran Gas-based

TPS (GTPS) expansion (1220 MW) is kept in abeyance considering the gas shortage. For

Projects at Nashik and Bhusawal (660 MW each), the decision is pending for State

Transmission Utility (STU) feasibility to bring that power to Mumbai. For Paras Thermal

Power Station (TPS) (1 x 250 MW), decision regarding construction is expected to be taken

after development of the Mahajanwadi Coal Block.

8. In this background, the Commission, vide its Notice dated 27 March, 2017, initiated these

suo moto proceedings for determination of the Final Tariff for the new Units in accordance

with Regulation 12.3 of the MYT Regulations, 2015, and for review of the status and

requirement of upcoming Units. The Commission asked MSPGCL to file its written

submission well before the hearing.

9. In its response dated 17 April, 2017, MSPGCL stated as follows:

9.1. Under Clause 4.1 of the approved PPA between MSPGCL and MSEDCL, the ex-Bus

energy available from the entire generating capacity of MSPGCL, as given in

Schedules 1 and 2, is allotted to MSEDCL. Schedule 1 relates to “Generating Capacity

of MSPGCL covered under this agreement as on 6th

June, 2005” and Schedule 2 is for

“Generating capacity of MSPGCL covered under this agreement after 6th

June 2005”.

9.2. The PPA was amended on 24 December, 2010 and 17 April, 2013 through Addendum

No. 1 and 2, respectively. As per Addendum No. 1, some of the vintage Units were

deleted from Schedule 1 and upcoming Projects (26 Units with total capacity of 15030

MW) were added to Schedule 2.

9.3. As per Addendum No. 2 dated 17 April, 2013, Nashik Units 1 & 2 have been deleted

from Schedule 1, and the capacity for the proposed Paras Unit 5 was reduced from 660

MW to 250 MW in Schedule 2.

9.4. MSPGCL and MSEDCL had approached the Commission for approval of these

Amendments to the original PPA in Case Nos. 103 of 2010 and 71 of 2011 (Review

Petition) (Addendum 1) and Case No. 78 of 2013 (Addendum 2).


9.5. Vide its Orders in those Cases, the Commission accorded approval to the addition of 21

Units (capacity addition of 12000 MW) to the original PPA. Of this 12000 MW

approved capacity addition, 2000 MW capacity (Paras Unit 4 - 250 MW, Parli Unit 7 -

250 MW, Khaperkheda Unit 5 - 500 MW and Bhusawal Units 4 and 5 - 1000 MW (2 x

500 MW)) have already been commissioned and have declared COD by 3 January,

2015. The Capital Cost and final Tariff for these 2000 MW Units has already been

approved by the Commission.

9.6. Meanwhile, in its endeavor to increase the power generating capacity in Maharashtra,

MSPGCL has developed three new super-critical Units at Koradi (Units 8, 9 and 10) of

660 MW each. MSPGCL has also undertaken expansion Projects for capacity addition

at Chandrapur (Units 8 & 9 – 500 MW each) and Parli (Unit 8 – 250 MW).

9.7. The Commission in its MYT Order for the 2nd

Control Period (upto FY 2015-16) dated

3 March, 2014 in Case No. 54 of 2013 had approved a provisional Tariff for Koradi

Units 8, 9 & 10, Chandrapur Units 8 & 9 and Parli Unit 8 from the actual date of COD

till determination of final Tariff. The Commission directed MSPGCL to file a Petition

for determination of their final tariff within 6 months from COD:

“The Commission directs MSPGCL to file the Petitions for determination of final

Tariff for the upcoming Units within 6 months from the date of COD for the

respective Unit. The provisional Tariff approved by the Commission for the

upcoming Units shall be applicable from the actual date of COD till the

determination of final Tariff by the Commission for those respective Units.”

9.8. COD of Koradi Unit 8 was declared on 16 December, 2015. Thus, as per the MYT

Regulations, 2011 or even the MYT Regulations, 2015, MSPGCL was expected to

submit the Petition for final Tariff by June 15, 2016.

9.9. MSPGCL had submitted its response to this directive vide letter dated 29.11.2016,

stating as follows:

i. The future Projects, the current status of Projects in the PPA with MSEDCL

approved by the Commission and which are at early stage of planning is

provided in the Table below:


Table 2 - Status of Generation Projects, as submitted by MSPGCL

ii. Most of the future Projects were envisaged as brownfield Projects taking into

view the resources available at the present locations and also the demand

forecast as per the Central Electricity Authority (CEA)’s 18th

Electric Power

Survey (EPS) Report. As the actual scenario is far removed from the EPS

projections, instead of implementing the Projects as envisaged, MSPGCL has

already decided to keep these Projects in abeyance till FY 2020-21 and thus has

not undertaken further works on these Projects.

iii. After release of the 19th

EPS, the revised projections for FY 2016-17 to FY

2020-21 and projections for FY 2021-22 to FY 2026-27 will be available. Based

on such data, MSPGCL will review the Action Plan for the future Projects.

Particulars Capacity Remarks

Dondaicha Approved vide BR

No 2008/445 dt.19.03.2009 2x660

Approved installation of 500 MW Solar

Power Park at Dondaicha instead of 5 x

660 MW

Approved Expansion Project

vide BR No 2009/502

dt.13.07.2009

3x 660

BR No. 2016/1913 dated

27.01.2016

Solar park

500 MW

Nashik : Replacement Project

Approved vide BR No.2010/670

dt.15.09.2010 1x 660 MW

1. STU is requested to take up feasibility

study to bring electricity island city.

2. Clearance for chimney height from

station commandant Devlali in process.

Paras BR no. 2012/1330

meeting dated 30.05.2012

Decision regarding construction will be

reviewed after development of Mahajan-

wadi coal block

Bhusawal TPS: BR No.

2009/583 date 25 Nov, 2009 1x660 MW

BTPS Project may be decided after STU

feasibility study (Electricity for Load

concentrated area in island city)

Uran: Approved CCCP vide BR

No. 2012/1296 dated 04/05/2012

1220 MW

In view of prevailing gas supply shortage,

MoP, GoI has given directives to keep the

project in abeyance. Accordingly

MSPGCL has suspended the turnkey

contract tendering process.


iv. MSPGCL will apprise the Commission regarding such review, as and when it

will take place, and seek the necessary directives/guidelines of the Commission.

v. As regards retirement of old Units, the Ministry of Power (MoP), Govt. of India

(GoI) in August, 2015, requested CEA to prepare a report on “Replacement of

old and inefficient Units by supercritical Units” for optimum utilization of

scarce natural resources like land, water and coal. In line with the CEA Report,

MSPGCL has decided to retire the following Units, as already submitted in its

last MYT Tariff Petition.

a) Bhusawal Unit 2

b) Parli Unit 3.

c) Koradi Unit 5, after completion of Renovation and Modernisation (R&M)

of Unit 6.

d) Chandrapur Units 1&2.

vi. As regards the remaining old Units (especially 210 MW Units), MSPGCL is

analysing the demand-supply situation in wake of the recent capacity addition of

around 2570 MW so as to chalk out the retirement plan of these Units.

MSPGCL shall apprise the Commission in due course after finalization of such

retirement plan.

9.10. Regarding the ongoing Projects, MSPGCL vide its letter dated 17 December, 2016

had approached the Commission for permission to submit a consolidated Petition

for approval of the capital cost and tariff of all the new Units together after

finalization of their audited accounts. MSPGCL had mentioned the practical

difficulties in filing a Petition for an individual Unit (in case of a TPS with multiple

new Units), most significantly, in segregating the cost and impact of the common

assets on the initial Unit:

“As per MYT regulation, 2015, in case of station having multiple Units, the

petition for individual Unit is to be filed without waiting for the COD for

entire station, however in this regard MSPGCL would like to mention the

practical difficulties in segregation of costs and impact of the common costs

on the initial Unit.

Firstly, the ordering for such Units is done for the station as a whole. Hence

the segregation of some of the costs into different Units is difficult. Also, in

such case as the essential common costs are getting loaded on the initial

Unit, the capital cost for the first Unit gets apparently inflated for the petition

purpose and accordingly gets reflected in AFC for the initial Unit in the first

year. Thus it may not give a true and correct picture regarding cost and tariff


of the project. Also many of the issues pertaining to project are common for

all Units and secondly it would be convenient to have these issues presented

and discussed together for the station as a whole.”

9.11. However, the Commission, vide its Notice dated 24 March, 2017, initiated a suo

moto hearing to review the status of upcoming Projects and capital cost and Tariff

determination of new Units.

9.12. With reference to this Notice, with regard to the upcoming Projects and retirement

of capacity, MSPGCL is considering two issues: capacity addition in lieu of old

Units (replacement plan) and retirement of Units.

9.13. Rationale for Units’ retirement plan

(i) As per guidelines of CEA, the Units of capacity 210 MW or 200 MW which are

completing 25 years of service and are not operating efficiently are to be

considered for retirement and replacement by super-critical Units, based on

techno-economic study (ref. CEA letter dated 07.03.2017).

(ii) Also, as per the draft National Electricity Plan (NEP), retirement of old and

inefficient Units of TPS and replacing them with new and more efficient Units is

one of the major initiatives taken by GoI. The identified Units are planned for

retirement in a phased manner along with the matching capacity addition in the

respective States, so as to have no impact on the power supply position in the

States/country.

(iii)Ministry of Coal, GoI India has formulated a policy on automatic transfer of

Letter of Allotment (LOA)/coal linkage (granted to old plants) to new plants in

case of scrapping of old Units and replacing them with new higher efficiency

super-critical Units. (Illustration: for setting up a new super-critical plant of 1000

MW capacity, at least 500 MW of old capacity is required to be retired, and old

plants can be clubbed together to achieve this). The additional coal required shall

be accorded priority in allocation subject to availability on best-effort basis from

Coal India Ltd. (CIL).

(iv) Considering the above, MSPGCL is planning to consider retirement of 200 MW/

210 MW Units till FY 2029-30 in phased manner after completion of 40 years of

service.


9.14. Rationale for selection of Units for replacement plan

(i) Replacement of Units is proposed on the basis of retirement of 200 MW / 210

MW capacity Units, mainly to avail the benefit of reduction in Variable Cost

due to better plant efficiency and reduction in environmental impacts. With

super-critical capacity replacing sub-critical Units, there is significant

reduction in Variable Cost.

(ii) The replacement of these Units is planned considering expected rate of growth

of demand and grid stability issues. It is also envisaged that there will not be

any significant supply shortfall due to retirement of Units and also there will

not be any significant addition in generation capacity (thermal) till 2022 as

envisaged in the draft NEP.

(iii)Even though MSPGCL has considered the replacement of old Units after

completion of 40 years, it is proposed to consider the age of retirement of old

Units till the declaration of COD of the replacement Unit, whichever is later.

(iv) The replacement these Units is generally planned at existing the locations so

that the existing facilities at these locations can be utilised.

(v) With replacement of Units with higher capacity, there is no significant capacity

addition. Thus, this plan may not affect the Power Purchase Plan of MSEDCL.

(Proposed capacity retirement is of 3705 MW and proposed replacement is

3440 MW, i.e. effective capacity reduction of 265 MW).

9.15. MSPGCL’s Action Plan for upcoming Units for capacity addition or as replacement

Units:


Table 3 - Action Plan proposed by MSPGCL for upcoming and replacement Units

PPA

Status

Upcoming Units Status Status of

Replacement Units

PPA

Approved

Bhusawal Unit 6

(660 MW) (B.R.

No. MSPGCL /

BM-62 / Item -

14 dated

10.12.2009

GoM Approval

GR No. Prakalp-

2010/Pr.Kr.3/Urj

a-4 dated 6th

October 2010)

All clearances available. Tender process put

on hold. The Unit was proposed to be

implemented against the retired Bhusawal

Unit 1 (1 X 50 MW) and Paras Unit 2 (1 X 55

MW). Thus there was withdrawal of 105 MW

capacity against which 660 MW capacity was

to be added. Now it is proposed to implement

the Project as replacement Unit against the

already closed 105 MW capacity and also

already closed 3 X 210 MW Units, namely

Chandrapur Unit 1 & 2, Parli Unit 3. Thus

now it is replacing 660 MW against retired

735 MW. Proposed to resume the tender

process in FY 2017-18 so that Unit will be

available by end of FY 2021-22, with

anticipated Project period of 48 months.

Chandrapur Units 1

& 2: Already

closed.

Parli Unit 3:

Already closed.

PPA

Approved

Nashik Unit6

(660 MW) (B.R.

No. MSPGCL /

BM-76 / Item -

76.13 dated

15.09.2010

GoM Approval

GR No. Prakalp-

2011/Pr.Kr.313/

Urja-4 dated 29th

December 2011)

Aviation clearance is pending, STU to carry

out feasibility study for evacuating the

electricity to island city. As per earlier

proposal this Unit was to be implemented as

replacement Unit against retired Nashik Unit

1 & 2 (2 X125 MW). Thus there was

withdrawal of 250 MW against which 660

MW was to be added. Now it is proposed to

implement this Project as replacement Unit

against the already closed 250 MW capacity

and additionally against 3 X 210 MW Units at

Nashik TPS proposed for closure during FY

2017-18 to FY 2020-21, after completion of

40 years of service. Thus now it is replacing

660 MW against retired/proposed to be

retiring 880 MW. Project implementation to

be started in FY 2018-19 such that Unit

expected to be commissioned in FY 2022-23,

with anticipated Project period of 48 months.

Nashik Units 1 & 2:

already Closed

Nashik Unit 3:

Completes 40 years

in April 2019

Nashik Unit 4:

Completes 40 years

in July 2020

Nashik Unit 5 :

Completes 40 years

in Jan 2021


PPA

Status


Replacement Units

PPA

Approved

Paras Unit 5 (250

MW) (B.R. No.

MSPGCL / BM-

119 / Item - 4

dated

13.06.2012)

Initially it was proposed to add 660 MW at

Paras as extension Unit. However due to non-

availability of water, it was proposed to

reduce the capacity of the Unit to 250 MW.

Now as per the revised National Tariff Policy,

the usage of Sewage Treated Water from

within 50 km. area is mandatory for a

Thermal Units and at Paras water from Akola

Municipal Corporation can be availed for the

new Unit. Also as per MoP, no new Sub-

critical Unit to be erected henceforth.

Therefore MSPGCL is proposing to undertake

this Project as replacement project of 660

MW against 3 X 210 MW Units which are

already retired or are proposed to be retired

during FY 2022-23, namely Bhusawal Units

2&3 and Koradi Unit 5.

Accordingly the Project activities will be

undertaken in FY 2019-20 such that the Unit

will get commissioned during FY 2023-24,

with anticipated Project period of 48 months.

Bhusawal Unit 2:

Presently not in

service. Completes

40 years in August

2019

Koradi Unit 5:

Presently not in

service.

Completes 40 years

in July 2018.

Bhusawal Unit 3:

Presently in service.

Completes 40 years

in May 2022.

PPA

Approved

Uran Expansion

(1220 MW)

Expansion of project is held up due to non-

availability of gas. Important from Power Mix

point of view considering RE capacity

addition. Hence, MSPGCL has proposed to

develop this Project as and when the gas

supply situation improves.

Considering RE

capacity addition

and the technical

advantage of

ramping

up/coasting down

period of Gas

Turbine comparing

to Conventional

Steam Turbine

Uran GTPS

expansion is kept in

abeyance but not

eliminated.


PPA

Status


Replacement Units

PPA

Approved

Dondaicha (5 X

660 MW) -- JV

Project

1. Part of the land to be used for development

of Solar Park (500 MW) and Solar

generation plant.

2. Hence MSPGCL proposes to relinquish

PPA for 3 X 660 MW capacity.

3. Amongst the remaining 2 X 660 MW

capacity, MSPGCL proposes to develop

the Units at a different location near to coal

source such that there will be lower VC

advantage as compared to VC at

Dondaicha.

4. The Project at new location is proposed

after FY 2021-22 such that Units will get

commissioned after FY 2023-24.

Proposed to

relinquish PPA for

3 X 660 MW

capacity

And

Proposed diversions

1. Umred (2 x

660MW)

PPA

Signed but

not

approved

Latur (2 X 660

MW) -- JV

Project

Proposed Project was in land acquisition

stage. Partial land was purchased by

MSPGCL.

Project abandoned

due to non-

availability of fuel

and the land

acquired was

transferred for Solar

PV Project.

PPA

Signed but

not

approved

Dhopave (3 X

660 MW) -- JV

As Per BR dated 23 September, 2015, the

Project closure by taking up the issue with

GoM for cancellation of the Project.

NA

Proposed

future

projects (

as

replaceme

nt Units)

Nashik Unit 7

(660 MW)

Nashik Unit 7 was proposed to be

implemented as replacement project against

210 MW Units proposed for retirement during

FY 2022-23 to FY 2027-28, after completion

of 40 years of service. (Koradi Unit 7 and

Parli Units 4 & 5). This replacement can be

done with due consent from MSEDCL and

approval from MERC. The Project activities

will be undertaken after FY 2021-22 such that

the Unit will get commissioned during FY

2027-28, with anticipated Project period of 48

months.

Koradi Unit 7:

Completes 40 years

in Jan 2023

Parli 4 : Completes

40 years in March

2025

Parli Unit 5 :

Completes 40 years

in Dec 2027


PPA

Status


Replacement Units

Proposed

future

projects

(as

replaceme

nt Units)

Dherand 800

MW

Proposed to be implemented as Replacement

Project against 4 X 210 MW Units proposed

for closure during FY 2024-25 to FY 2029-

30, after completion of 40 years of service

(namely Chandrapur Units 3 and 4 and

Khaperkheda Units 1 and 2).

The Project activities will be undertaken after

FY 2024-25 such that the Unit will get

commissioned during FY 2029-30, with

anticipated Project period of 48 months.

Chandrapur Unit 3 :

Completes 40 years

in May 2025

Chandrapur Unit 4 :

Completes 40 years

in Mar 2026

Khaperkheda Unit 1

:Completes 40

years in Mar 2029

Khaperkheda Unit 2

:Completes 40

years in January,

2030

9.16. In view of the above, MSPGCL proposes retirement of 3705 MW and capacity of

proposed replacement Units of 3440 MW, i.e. effective reduction in capacity of 265

MW.

Table 4 - Units proposed to be removed from PPA

Sr.no Particulars Remarks

1 Approved new Units capacity proposed for

relinquishment Dondaicha 3 X 660 MW

2 Approved new Units capacity proposed at alternate

location

Umred 2 X 660 MW in place

of Dondaicha 2 x 660 MW

3 Unapproved new Units capacity proposed for

removal from PPA

Latur (2 X 660 MW)--JV

Project

Dhopave (3 X 660 MW) -- JV

9.17. Thus, the overall thermal capacity addition proposed by MSPGCL till FY 2029-30

is 1055 MW. Even though MSPGCL has considered replacement of old Units after

completion of 40 years, it is proposed to consider the age of retirement of old Units

till the declaration of COD of the replacement Unit, whichever is later. MSPGCL’s

Action Plan for Units’ retirement is as follows:


Table 5 – MSPGCL’s proposed Action Plan for retirement of Units

Plan for Retirement of Units till FY 2029-30

Unit Capacity

In MW

Date of

Commercial

Operation

Date of

completion

of 40 years

of service

Current status and Proposal

Koradi Unit 5 200 15/07/1978 14/07/2018

Presently not in service. To be

retired after completion of EE R

& M work for Koradi Unit 6.

Nashik Unit 3 210 26/04/1979 25/04/2019 To be retired after completion

of 40 years

Bhusawal Unit 2 210 30/08/1979 29/08/2019

Presently not in service. As per

MSPGCL’s Petition for 3rd

MYT Control Period, this Unit

was proposed for retirement

from April 2016. However the

Unit was kept in service till 10th

February, 2017 as per request

from MSEDCL.


of 40 years

Parli Unit 3 210 10/10/1980 09/10/2020 Already closed


of 40 years

Koradi Unit 6 210 30/03/1982 29/03/2022 To be continued in service as R

& M work undertaken.

Bhusawal Unit 3 210 04/05/1982 03/05/2022 To be retired after completion

of 40 years

Koradi Unit 7 210 13/01/1983 12/01/2023 To be retired after completion

of 40 years

Chandrapur Unit 1 210 15/08/1983 14/08/2023 Already closed

Chandrapur Unit 2 210 11/07/1984 10/07/2024 Already closed

Parli Unit 4 210 26/03/1985 25/03/2025

Presently under Reserve

Shutdown as approved in order

dated. 30.08.2016 in Case

No.46 of 2016

Chandrapur Unit 3 210 03/05/1985 02/05/2025 To be retired after completion

of 40 years

Chandrapur Unit 4 210 08/03/1986 07/03/2026 To be retired after completion

of 40 years

ParliUnit 5 210 31/12/1987 30/12/2027

Presently under Reserve

Shutdown as approved in order

dated. 30.08.2016 in Case

No.46 of 2016


Plan for Retirement of Units till FY 2029-30

Unit Capacity

In MW

Date of

Commercial

Operation

Date of

completion

of 40 years

of service

Current status and Proposal

Khaperkheda Unit 1 210 26/03/1989 25/03/2029 To be retired after completion

of 40 years

Khaperkheda Unit 2 210 08/01/1990 07/01/2030 To be retired after completion

of 40 years

Chandrapur Unit 5 500 22/03/1991 21/03/2031 Completion of 40 years is

beyond FY 2029-30


beyond FY 2029-30


beyond FY 2029-30

Khaperkheda Unit 3 210 31/05/2000 30/05/2040 Completion of 40 years is

beyond FY 2029-30

Khaperkheda Unit 4 210 07/01/2001 06/01/2041 Completion of 40 years is

beyond FY 2029-30

9.18. As per the Action Plan above, MSPGCL is planning to undertake the capacity

addition plan as well as capacity retirement and replacement plan till FY 2029-30.

The Plan was shared with MSEDCL for concurrence and, after consent from

MSEDCL for the proposed amendments, the modified / amended PPA will be

signed. Subsequently, MSPGCL and MSEDCL will approach the Commission for

approval of the amended PPA.

9.19. As regards the capital cost and tariff determination for the new Units,

a. COD of Koradi Unit8 (600MW) was declared on 16 December, 2015, Koradi

Unit 9 (660 MW) on 22 November, 2016 and Koradi Unit 10 (660 MW) on 17

January, 2017.

b. COD of Chandrapur Unit 8 (500MW) was declared on 4 June, 2016 and

Chandrapur Unit 9 (500 MW) on 24 November, 2016.

c. COD of Parli Unit 8 (250 MW) was declared on 19 November, 2016.

9.20. Considering the practical difficulties in filing a Petition for individual Units in

segregating the cost and impact of the common assets on the initial Unit, MSPGCL

had initially planned to submit a consolidated Petition. Therefore, it was in the


process of finalization of the consolidated data, which has resulted in non-

submission of the Petition for Koradi Unit 8 and Chandrapur Unit 8 within the 6

months period specified in Regulation 38.9 of the MYT Regulations, 2015.

9.21. In accordance with the suo moto Notice, MSPGCL has filed a Petition on 17 April,

2017 for approval of capital cost and determination of Tariff for Koradi Unit 8 and

Chandrapur Unit 8, in whose case the period of 6 months from COD has past.

9.22. Further, MSPGCL shall approach the Commission for the approval of capital cost

and tariff for the remaining Units (Koradi Units 9 and 10, Chandrapur Unit 10 and

Parli Unit 8) as an addendum to this Petition within 6 months of the COD of the

respective Units.

10. At the hearing held on 20 April, 2017:

10.1. MSPGCL reiterated its submissions on the following issues through a

presentation:

(i) Status of filing of Petition for approval of Capital Cost and

Determination of Final Tariff for New Units.

(ii) Cancellation of other upcoming Units for which PPA have been

executed and their consequent removal from the approved PPA.

10.2. MSPGCL requested that it may be allowed to file a consolidated Petition for

determination of Station-wise Tariff, since ordering for Koradi Units 8, 9, 10 and

Chandrapur Units 8, 9 was done for the Station as whole and segregation of costs

between different Units is difficult. The common costs would get loaded on the

initial Unit and, therefore, the cost of such Units may get inflated. Moreover,

delay in receipt of equipment at site has caused delay in execution of the Projects,

so it would be difficult to substantiate and apportion the delay Unit-wise. In order

to give a comprensive picture, it is proposing to submit a Station-wise

consolidated Petition for determination of Station-wise tariff. MSPGCL has also

filed a Petition for Koradi Unit 8 and Chandrapur Unit 8 on 17 April, 2017. For

the other Units for which COD has recently been achieved, it is proposing to file a

Petition within six months of their COD.

10.3. To a query on the status of the upcoming Units for which PPA has been approved,

MSPGCL stated that the Commission has approved the PPA for 11590 MW, of

which it has already commissioned 5230 MW. MSPGCL has retired Bhusawal


Unit 2, Parli Unit 3 and Chandrapur Units 1 and 2 and proposes to retire Koradi

Unit 5 after completion of R&M of Unit 6. From the approved PPA, it proposed

to relinquish 3 out of 5 X 660 MW, and the balance 2 X 660 MW of Dondaicha

would be shifted to another location. MSPGCL does not intend to pursue

proposed the Latur and Dhopave Projects. Thus, Dondaicha (3 X 660), Latur and

Dhopave need to be removed from the PPA. The Ministry of Coal has a Policy in

place for transfer of LOA/coal linkage of old plants to new plants in case of

scrapping of such Units and replacing them with new higher efficiency super-

critical Units.

10.4. For the balance capacity of 6360 MW(11590-5230) listed below, MSPGCL is

planning to commission it in a phased manner.

Table 6 - Proposed Plan of MSPGCL

Sr.No Particulars Capacity in MW

a. Uran Expansion Block I and Block II 1220 MW (1x406 MW and 1x814 MW )

b. Bhusawal Unit 6 660 MW (1x 660 MW)

c. Dondaicha (1 to 5 Units) 3300 MW (5x660 MW)

d. Nashik Unit 6 660 (1x660 MW)

e. Paras Unit 5 250 MW (1x250 MW)

10.5. MSPGCL is also planning to retire the remaining old Units, especially the 210

MW Units, after analysing the demand-supply situtation and recent capacity

addition of 2570 MW. MSPGCL is considering retirement of old Units after 40

years, but they may be retired earlier depending upon COD of the upcoming

Units.

10.6. MSEDCL stated that:

a. Vide its letter dated 18 April, 2017, it had requested 3 weeks to study the

matter and submit its reply, since it has receievd MSPGCL’s submission

only on 17.04.2017.

b. The data for the 19th

EPS is under finalisation and, depending upon the load

growth in certain areas, MSEDCL will study the requirement of proposed

Projects and present it in its submission.

10.7. Ms. Ashwini Chitinis, on behalf of Prayas (Energy Group) (‘Prayas’), an

Authorised Consumer Representative, stated that:


a. Prayas appreciates the Commission’s intiative at this stage, when there is

uncertainity about MSEDCL’s demand. MSPGCL’s plan to retire its old Units

after 40 years of operation needs to be concurrent with MSEDCL’s demand

and also take into consideration efficiency and performance of such old Units.

MSPGCL may also have to consider the envirnomental norms notified by

Ministry of Environment and Forests (MoEF), GoI and corresponding capital

expenditure that may be required on its fully depreciated Units.

b. Capacity addition plan of MSPGCL may be looked at in tandem with

MSEDCL’s existing PPA under Sections 62 and 63, Memorandum of

Understanding (MoU) with National Thermal Power Corporation (NTPC) and

the status of contracted capacity under competetive bidding.

c. Since the submission of MSPGCL is not yet received by Prayas, the

Commission may allow a week to send the additional data requirements to

MSPGCL and to respond thereafter.

10.8. Dr. Ashok Pendse, on behalf of Thane-Belapur Industries Association (TBIA), an

Authorised Consumer Representative, stated that:

a. MSPGCL has proposed to operate its Units upto 40 years and gradually

replace its 210 MW Units with 660 MW super-critical Units. Station Heat

Rate (SHR), efficiency, etc. may be considered while doing so. Unit 5 of

Tata Power Co. Ltd. (Generation) (TPC-G) has completed 32 years and

Reliance Infrastructure Ltd. (Generation) (RInfra-G)’s Dahanu TPS has

completed 24 years. Therefore, the Commission may have uniform

guidelines for their operation and further steps.

b. MSPGCL has proposed 660MW at Nashik, whereas MSEDCL is already

having a PPA with an Independent Power Producer (IPP) at Nashik under

Section 63, and it needs to clarified as to whether MSPGCL is proposing to

compete in terms of Tariff with it. In addition, MSEDCL has tied up for 1000

MW with Solar Energy Corporation of India (SECI) at around Rs 4 per unit.

It will, therefore, be necessary to look into the power requirement of

MSEDCL as a whole in these circumstances.

c. The Commission in its MYT Order has approved the Provisional Energy

Charges for upcoming Units of MSPGCL. Based on that approval, the

relevant Unit gets scheduled in the Merit Order Despatch (MOD). However,


at the time of True-up, the Generating Company recovers the difference

between the Provisional and the actual Tariff, which burdens the consumers.

10.9. MSPGCL responded that:

a. The basis of 40 years is the time required for implementation of new Units.

After COD of the new Units, these old Units may even be phased out earlier.

b. As regards the gap between Provisional and final Tariff, the Commission has

revised the Provisional Energy Charges in its MYT Order, and the rates

reflected in the MOD are inclusive of Fuel Adjustment Charge (FAC) as per

the directives of the Commission in its Daily Order in Case No. 125 of 2016.

Hence, these are the actual rates, and there will no gap to be recovered at a

later stage. Truing up will affect only the Annual Fixed Cost (AFC) as the

Commission has approved the provisional AFC at 80% of the Fixed Cost of

the Projects.

c. With regard to the surplus power scenario, MSPGCL commissioning of new

Units will take place over a period of 6 years and the demand postion may

vary substantially. The MoP, in August, 2015, requested CEA to prepare a

report on “Replacement of old and inefficient Units by supercritical Units” for

optimum utilization of scarce natural resources like land, water and coal.

Hence, in coming years, some of the existing 210 MW Units will be replaced

with super-critical Units.

10.10. The Commission noted that MSPGCL has filed its Petition for Capital Cost and

Final Tariff Determination for Koradi Unit 8 and Chandrapur Unit 8 on 17 April,

2017, and that matter will be heard separately. It observed that Koradi Unit 9, 10,

Chandrapur Unit 9 and Parli Unit 8 have achieved COD between November, 2016

to January, 2017. The Commission in the past has determined Capital Cost and

Final Tariff Unit-wise. Although some of the ordering may be done for the Station

as whole, the segregation of costs of Boiler Turbine Generator (BTG) and

Balance of Plant (BOP) may not be difficult. The main intention of the

Regulations requiring submission of a Petition for Capital Cost approval within

six months after COD was to ensure that the final Tariff is determined in time

without increasing the Carrying Cost and Interest During Construction which

ultimately leads to increase in Tariff. Hence, the Commission directed MSPGCL

to file its Petition for Capital Cost and Final Tariff for Koradi Units 9, 10,

Chandrapur Unit 9 and Parli Unit 8 within a month.


10.11. As regards planned /upcoming Units, the Commission directed MSPGCL and

MSEDCL to discuss the matter and submit their proposal within 30 days,

considering the power requirement vis a vis which Units will be required to be

retired or replaced bearing in mind the load centre, transmission availability, etc.

The proposal should be submitted considering the existing MSEDCL PPA under

Sections 62 and 63, MoUs signed with NTPC and the PPA under consideration.

11. In its submission dated 15 May, 2017, Prayas stated as follows:

11.1. Welcome initiative: Power purchase planning is one of the most crucial functions

of a Distribution Company as it accounts for more than 70% of its overall revenue

requirement. Given the possibility of migration, continued high reliance on short-

term market for power procurement, increase in Open Access and rapid reduction

in renewable energy prices, capacity addition by Discoms has become

challenging. MSEDCL is already power surplus and plans to back down

significant capacity (more than 4000 MW) in the next few years. In light of the

seriousness of this issue, the Commission’s decision “to initiate a suo moto

proceeding and hear MSPGCL on the determination of Capital Cost and Final

Tariff for New Units in accordance with the Regulations and cancellation of

certain other upcoming Units and their consequent removal from the PPA.” is a

welcome and much-needed initiative.

11.2. Scope of the review: MSEDCL purchases power from Central, State and private

Generating Stations. Most of the PPAs contracted with private Generators in the

last few years are under Section 63, whereas the capacity tied up with State and

Central sector plants is under Section 62. From MSEDCL’s point of view, its

demand as well as capacity from all these sources needs to be considered in a

holistic way otherwise there would be a danger of not factoring in certain

capacities and their slippages. Hence, this review should not be limited to

MSPGCL but should also include all the capacity that has been contracted by

MSEDCL but is yet to be commissioned. Specifically, the review should cover all

long term power purchase contracts and MoUs of MSEDCL with Central, State or

private Projects.

11.3. Demand assessment: Demand forecasting is the first step of any capacity addition

planning process and, therefore, such review should be based on a sound and

rational estimation of MSEDCL’s demand. In this regard, the following points

need to be considered:


a. Sales migration: More than half of MSEDCL’s sales costs are higher than the

cost of Roof-top Solar PV installations. Figure 1 provided by Prayas shows

this. Considering this and the fact Solar PV prices have been rapidly falling,

one can expect significant sales migration in the next few years. Moreover,

despite the levy of Additional Surcharge, rising tariffs will also increase

Open Access sales and migration due to captive power options.

b. Unreliability and non-applicability of CEA estimates: MSEDCL has always

relied on CEA’s EPS estimates and has avoided undertaking any rigorous,

independent and scientific demand assessment exercise on its own. The CEA

estimates have consistently over-projected demand. There is consistent over-

estimation of peak demand from the 13th

EPS to the 18th

EPS. In the past,

when MSEDCL’s overall demand was growing at a rate much higher than

the rate of its capacity addition, such over-projection did not matter because

the projected capacity was never added to that extent. However, the situation

is starkly different now. MSEDCL has more than 4000 MW of surplus

capacity and a negative growth rate in respect of some of its high-paying

consumers.

The EPS demand estimates include demand from Open Access consumers

and do not have special provisions to account for consumers with Roof-top

Solar installations. Under such circumstances, it would be incorrect to rely on

CEA estimates especially because, with increasing Open Access and captive

consumption, the EPS estimates at State level do not represent the Utility’s

demand anymore. The projected growth rate in each EPS has been high even

though, with the revision of base in each EPS, there is a downward revision

of total demand. Prayas has shown the data till the 18th

EPS. It is quite

possible that the 19th EPS will also show a fall in demand projections due to

revision of base year for projections but would still continue to project a high

growth rate for the future. It is important that MSEDCL should follow the

MYT Regulations and project its demand rather than relying on EPS

estimates.

c. Emerging trends:

i. The draft NEP published by CEA notes that:

“It is expected that the share of non-fossil based installed capacity

(Nuclear + Hydro + Renewable Sources) will increase to 46.8% by the

end of 2021-22 and will further increase to 56.5% by the end of 2026-27

considering capacity addition of 50,025 MW coal based capacity


already under construction and likely to yield benefits during 2017-22

and no coal based capacity addition during 2022-27.”

Further, the study projects Plant Load Factors (PLFs) of 45%-55% for

all the coal-based capacity in the medium and long term. Thus, the

broader trend suggests a shift away from long-term base load contracts.

ii. In a recent development, the Uttar Pradesh Government has cancelled

the bids conducted in 2016 to procure 3800 MW of power from IPPs.

According to media reports, the decision was taken after the MoP and

Uttar Pradesh Power Corporation (UPPCL) observed that adequate

electricity would be available in the State between FY 2017-18 and FY

2021-22.

iii. The recent bids for Solar PV resulted in price discovery of Rs. 2.44 per

Unit for 500 MW of capacity at the Bhadla Solar Park in Rajasthan.

News reports indicate that the winning bid was not an outlier as the other

bids were in a narrow band with a difference of only 1 or 2 paise per

unit. The earlier lower bid discovered was Rs. 2.62 per unit in a bidding

round concluded just a few days before this discovery. Such discoveries

and the falling prices of storage options indicate that Solar is now in a

position to seriously compete with conventional generation sources.

Hence, in terms of choosing least-cost options for power procurement,

any Discom will have to factor in these developments and devise its

plans accordingly.

d. Compliance with MYT Regulations: Regulation 19 of the MYT Regulations,

2015 requires all Distribution Companies to prepare a detailed power

procurement plan. Regulation 19.2 states the following in this regard:

“The power procurement plan of the Distribution Licensee shall comprise

the following:—

a) A quantitative forecast of the unrestricted base load and peak load

for electricity within its area of supply;

b) An estimate of the quantities of electricity supply from the identified

sources of power purchase, including own generation if any;

c) An estimate of availability of power to meet the base load and peak

load requirement:

Provided that such estimate of demand and supply shall be on month-

wise basis in Mega-Watt (MW) as well as expressed in Million Units

(MU);


d) Standards to be maintained with regard to quality and reliability of

supply, in accordance with the relevant Regulations of the

Commission;

e) Measures proposed for energy conservation, energy efficiency, and

Demand Side Management;

f) The requirement for new sources of power procurement, including

augmentation of own generation capacity, if any, and identified new

sources of supply, based on (a) to (e) above;

g) The sources of power, quantities and cost estimates for such

procurement:

Provided that the forecast or estimates contained in the long-term

procurement plan shall be separately stated for peak and off-peak

periods, in terms of quantities of power to be procured (in MU) and

maximum demand (in MW):

Provided further that the forecast or estimates for the Control Period

from FY 2016-17 to FY 2019-20 shall be prepared for each month

over the Control Period:

Provided also that the long-term procurement plan shall be a cost-

effective plan based on available information regarding costs of

various sources of supply.”

e. Considering all the above factors, MSEDCL may be directed to submit

detailed information on the following:

i. Least-cost power procurement plan in accordance with Regulation 19.2.

ii. Demand scenarios considering different assumptions for sales migration

on account of Open Access, Net Metering, and captive consumption.

MSEDCL should also specify the scenario that it considers most

realistic.

iii. Status of all the capacity that is contracted till date by MSEDCL from

different sources such as Central, State and private sectors, including

Renewable Energy (RE) procurement targets as per the Renewable

Purchase Obligation (RPO) Regulations and other RE capacity addition

plans for the next 5 years, if any.

iv. Projections for backing down of thermal capacity over the next 5 years

in light of changes in demand and supply after factoring in new


contracted capacity that is expected to be commissioned during this

period, if any.

11.4. Comments regarding MSPGCL’s presentation: During the hearing held on 20

April, MSPGCLmade a presentation highlighting several issues and its views on

each of them. Following are Prayas’ comments on each of the issues raised by

MSPGCL:

a. Petitions for already commissioned Units: In line with the requirements of the

MYT Regulations and also considering the fact that despatch and backing

down decisions are taken at Unit level, MSPGCL should submit Unit-wise

Petitions for capital cost approval and tariff determination for all the recently

commissioned Units.

b. Retirement age: MSPGCL has proposed a retirement age of 40 years as

against 25 years for its existing capacity. However, such decision cannot be

unilateral and needs to be evaluated with respect to demand-supply situation

of MSEDCL, efficiency and performance of the Units in question, additional

capital expenditure that may be needed to ensure efficient performance and

compliance with new environmental regulations. In this regard, the

commission may direct MSPGCL to submit data and analysis considering the

above factors to justify its proposal. Without undertaking detailed cost-benefit

analysis of such Units considering all the issues above and factoring in

detailed demand assessment of MSEDCL, no permission should be granted to

extend the PPA for such Units.

c. Status of PPA with MSEDCL: In its presentation, MSPGCL has provided a

list of Projects for which PPA has been approved and some for which such

approval is pending. Some of these Units are already commissioned and are

generating. Prayas’ comments on each set of Units are as below:

i. The 6090 MW of capacity for which PPA has been approved but Projects

are yet to be constructed, as in the Table below, should be kept in abeyance

till the present review is completed.

ii. Based on the detailed assessment of MSEDCL’s demand-supply position

and after exploring all the possible alternatives, if the capacity projected in

the Table meets the least-cost planning criteria as per the MYT

Regulations, 2015, then, subject to the findings of the present review


process, that said capacity or part of it, as the case may be, can be

considered for further approval as per due process.

iii. Till such time, MSPGCL should be restrained from undertaking any capital

expenditure on these Projects. If MSPGCL undertakes any capex for these

Projects in the intervening period without explicit approval from the

Commission, it should not be allowed to be passed on to consumers.

iv. The 3300 MW of capacity for which PPA has not been approved should

also be treated similarly, and no capex should be allowed to be undertaken

for any Project preparation activities for these Projects.

Table 7 - Status of MSPGCL Capacity and PPA with MSEDCL, and

remarks of Prayas

Sr.

No

Power Station Unit Capacity (MW) Remarks

1. Parli TPS Unit 7 250 Commissioned and currently

generating Units for which

capital costs have been

approved and tariff has been

determined

2. Paras TPS Unit 4 250

3. Khaperkheda TPS Unit 5 500

4. Bhusawal TPS Unit 4 500


6. Chandrapur TPS Unit 8 500 Capital cost and Tariff needs to

be decided. Separate

proceedings would be intiated

and PEG will submit its

comments accordingly

7. Chandrapur TPS Unit 9 500

8. Parli TPS Unit 8 250

9. Koradi TPS Unit 8 660



Currently generating Projects with

binding PPA

5230

12. Uran GTPS CCPP Block I 406 These PPAs should be kept in

abeyance and no further

expenditure should be allowed

towards these Projects till the

review process is completed

and further directions are issued

by the Commission.

13. Uran GTPS CCPP Block II 814


15. Dondaicha TPS Unit 1 660





20. Nashik TPS Unit 6 660

21. Paras TPS Unit 5 250

Capacity for which PPA has been

approved but cancellation is proposed

6090

22. Latur Coal Based

(2x660 MW) or

Unit-1

&2

1320 These PPAs should NOT be

signed and no expenditure


Sr.

No

Power Station Unit Capacity (MW) Remarks

Gas based (1500

MW) JV project

should be allowed towards any

Projects preparation activities

for these Projects 23. Dhopawe TPS Unit1 to

3

1980

Capacities without approved PPA 3300

12. Vide its letter dated 17 May, 2017, MSPGCL sought time upto 20 June, 2017 for submitting

its proposal, which the Commission gave. Vide letter 17 June, 2017, MSPGCL again sought

additional time of 60 days stating that the issue regarding the status of upcoming Units was

discussed in Maharashtra State Electricity Board Holding Co. Ltd. (MSEBHCL) Board

meeting on 31 May, 2017, and its decision is to be apprised to Government of Maharashtra

(GoM). As the matter is under consideration of GoM, MSPGCL sought another 60 days. The

Commission granted 30 days’ further extension for submission of the details on upcoming

Units.

13. Vide its letter dated 9 November, 2017, MSPGCL stated as follows:

13.1. MSPGCL had earlier submitted the following as its proposed plan for retirement

and replacement of 210 MW Units:

a. Retirement plan: Considering expected service life of 40 years, most of the 210

MW Units were proposed to be retired by FY 2029-30 in phased manner. Only

the Khaperkheda Unit 3& 4 and Koradi Unit 6 were proposed to be kept in

service beyond FY 2029-30.

b. Replacement plan: In line with the initiatives taken by GoI for the retirement of

old and inefficient Units of TPS and replacing them with new and more efficient

Units (with coal linkages retained), it the expansion future Projects under

approved PPA s between MSPGCL and MSEDCL were proposed to be

considered as replacement Projects.

Thus, the plan submitted to the Commission as the proposed plan for the Units under the

approved PPA was as below:


Table 8 - Proposed MSPGCL Plan for commissioning of Units

Upcoming Units as per

approved PPA

Retiring Units and their status, date of completion of 40

years of service

Bhusawal Unit 6

(660 MW)

Bhusawal Unit 1 (1 X 50 MW): Already closed.

Paras Unit 2 (1 X 55 MW): Already closed.

Chandrapur Unit 1 &2 (2 X 210 MW): Already closed.

Parli Unit 3 (1 X 210 MW): Already closed.

Nashik Unit 6

(660 MW)

Nashik Unit 1, 2 (2 x 125 MW): Already Closed

Nashik Unit 3 (210 MW): In service, April 2019

Nashik Unit4 (210 MW): In service, July 2020

Nashik Unit 5 (210 MW): In service, Jan 2021

Paras Unit 5 (250 MW) :

Proposed to enhance

capacity to 660 MW

Bhusawal Unit 2 (210 MW): Not in service, August 2019

Koradi Unit 5 (200 MW): Not in service, July 2018

Bhusawal Unit 3 (210 MW): In service, May 2022.

Uran Expansion

(1220 MW)

Considering RE capacity addition and the technical advantage

of ramping up/coasting down period of Gas Turbine comparing

to Conventional Steam Turbine Uran Gas based expansion is

kept in abeyance but not eliminated.

Dondaicha ( 5 X 660 MW)

-- JV Project

Proposed to relinquish PPA for 3 X 660 MW capacity

And proposed diversions 1. Umred ( 2 x 660MW)

Latur (2 X 660 MW)

-- JV Project

To be deleted as Project abandoned due to non-availability of

fuel and the land acquired was transferred for Solar PV Project.

Dhopave (3 X 660 MW)

-- JVProject To be deleted as Project abandoned

Table 9 - New Units proposed by MSPGCL

New Projects proposed as

replacement Projects Retiring Units and their status

Nashik Unit 7 (660 MW)

Koradi Unit 7 (210 MW): In service, January, 2023

Parli Unit 4 ( 210 MW): Presently Not in service, proposed

for retirement March 2025

Parli Unit 5 ( 210 MW): Not in service, proposed for

retirement in December, 2027

Dherand (800 MW)

Chandrapur Unit 3 ( 210 MW): In service, May, 2025

Chandrapur Unit 4 ( 210 MW): In service, March, 2026

Khaperkheda Unit 1 ( 210 MW): In service, March, 2029

Khaperkheda Unit 2 ( 210 MW): In service, January, 2030


13.2. The Commission, vide Daily Order dated 20 April, 2017, directed MSPGCL and

MSEDCL to discuss the matter and submit their proposal, considering the power

requirement vis-a-vis which Units will be required to be retired or replaced

bearing in mind the load centre, transmission availability, etc.

13.3. Accordingly, the matter was also discussed in the MSEBHCL Board meeting on

31.05.2017. The Energy Minister and Chairman, MSEBHCL directed that the

matter be discussed between the Chairman-cum-Managing Directors (CMDs) of

the three Companies and get the final plan approved by MD, MSEBHCL in

consultation with CMD, MSPGCL, CMD MSEDCL and CMD Maharashtra State

Electricity Transmission Co. Ltd. (MSETCL), and thereafter be submitted to

GoM.

13.4. At the meeting dated 12 June, 2017 held by Principal Secretary (Energy), GoM to

discuss MSPGCL and MSEDCL-related issues, in the context of the proposed

Bhusawal Unit 6 Project, MSPGCL was directed to review the retirement and

replacement plan taking into consideration the demand scenario in Maharashtra

Grid in near future.

13.5. Further, during the Energy Department Review meeting on 22 June, 2017, the

Energy Minister has directed MSPGCL to revise the replacement plan taking into

consideration the comments / inputs of MSEDCL on future demand scenario and

submit it for approval.

13.6. Accordingly the following revised replacement plan is now approved by GoM.

Table 10 - Replacement Plan submitted by MSPGCL after approval of GoM

Sr.

No.

Proposed replacement

Units

Retiring Units and status of the same, date for

completion of 40 years of service PPA status

1 Bhusawal Unit 6 (660

MW)

Bhusawal Unit 2 (210 MW): Not in service, August

2019.Bhusawal Unit 3 (210 MW): In service, May

2022.

Nashik Unit 3 (210 MW) : In service, April 2019

(Retiring capacity 630 MW)

PPA

approved by

MERC


Sr.

No.

Proposed replacement

Units

Retiring Units and status of the same, date for


2

Umred/Koradi ( 2 X

800MW) (Ultra super-

critical technology)

Proposed as

replacement Project of

ultra-super critical

technology with new

Units near the coal

mines to avail the

benefits of lower VC

due to low SHR and

low coal cost.

Nashik Unit 4 (210 MW): In service, July 2020

Nashik Unit 5 (210 MW): In service, Jan, 2021.

Koradi Unit 5 (200 MW): Not in service, July 2018.

Koradi Unit 7 (210 MW): In service, Jan 2023

Parli Unit 4 (210 MW):Not in service, March, 2025

Parli Unit 5 (210 MW): Not in service, Dec, 2027.

Chandrapur Unit 3 (210 MW): In service, May

2025.

Chandrapur Unit 4 (210 MW): In service, March,

2026


PPA will be

amended

and will

approach the

Commission

for

approval.

3

Dherand (1X 800MW)

Proposed as

replacement Project of

ultra-super-critical

technology

Chandrapur Unit 1 & 2 (2 X 210 MW): Already

closed

Parli Unit 3 (210 MW) : Already closed

Khaperkheda Unit 1 ( 210 MW): In service, March

2029

Khaperkheda Unit 2 ( 210 MW): In service, Jan

2030


PPA will be

amended

and will

approach the

Commission

for approval

13.7. Summary of submission:

a. The Dhopave and Latur Projects, on which no progress has been made, are

proposed to be deleted from the PPA.

b. The Uran GTPS expansion plan is to be kept in abeyance till further directions

from GoI, clarity on gas supply scenario and RE integration issues.

c. As regards the other upcoming new / expansion Units under approved PPA

(namely Nashik Unit 6, Paras Unit 5 and Dondaicha Units), there has been

some progress on some of these Projects. Hence, it is proposed to keep these in

abeyance till FY 2021-22, by which time there will be more clarity on actual

demand growth, voltage profile issues, actual RE capacity addition under Solar

Power Mission 2022 and its impact on grid stability, etc.


14. At the hearing held on 19 December, 2017:

14.1. MSPGCL made a presentation highlighting compliance of the following two

directions issued by the Commission:

(i) Status of filing of Petition for approval of Capital Cost and Determination of

Final Tariff for New Units.

(ii) Cancellation of certain upcoming Units for which PPAs have been executed

and their consequent removal from the approved PPA.

14.2. MSPGCL stated that:

i. It has filed its Petition in Case No. 59 of 2017 for approval of Capital Cost and

determination of Final Tariff for the new Koradi Units 8, 9 & 10, Chandrapur

Units 8 & 9 and Parli Unit 8, and the Commission has passed the Order in the

matter on 14 December, 2017. Accordingly, the first direction has been complied

with.

ii. As regards the second direction, the GoM has approved a replacement plan for

MSPGCL’s old 210 MW Units after completion of 40 years of service. The

replacement plan includes commissioning of new Units of equivalent capacity at

the same or different locations after retirement of the old Units. With this, there

would not be any net capacity addition, as envisaged under the NEP.

iii. The Dhopave and Latur Projects, in which there is no progress, are proposed to

be deleted from the PPA.

iv. The Uran expansion Project is to be kept in abeyance till further directions from

the GoI, clarity on the gas supply scenario and RE integration issues.

v. As regards the other upcoming new /expansion Units under the approved PPA,

(namely Nashik Unit 6, Paras Unit 5 and Dondaicha Units), it is proposed to

keep these in abeyance till FY 2021-22, by which time there will be more clarity

on actual demand growth, voltage profile issues, actual RE capacity addition and

its impact on grid stability, etc.

vi. Umred (2 x 800 MW) and Dherand (800 MW) Projects are proposed as

replacement Projects for other old 210 MW Units, and feasibilty of these

Projects is being studied which will be finalised within 2/3 months.


14.3. To a query of the Commission, MSPGCL stated that PPA approval for the

Dondaicha Units (5 x 660 MW) will be utilized for new Generating Units at other

locations.

14.4. The Commission observed that the existing PPA between MSPGCL and MSEDCL

is a Project-specific PPA. New Generating Units cannot be automatically included

in the PPA in place of other Generating Units and MSEDCL has to approach the

Commission for approval of the proposed changes to the PPA. Instead of a

replacement plan, MSPGCL should provide details pertaining to Units under the

PPA on which there is no progress and MSPGCL’s proposal regarding their

continuation/cancellation along with justification.

14.5. MSEDCL stated that it is agreed to the continuation of Bhusawal Unit 6. To a query

of the Commission, MSEDCL stated that it needs 2 more months to review the

necessity of MSPGCL’s other upcoming Units which are listed in the PPA, after

taking into consideration its other PPAs, RE additions and MSEDCL’s demand

projections.

14.6. Dr. Ashok Pendse, on behalf of TBIA, stated that:

i. There is already a power surplus situation in the State and the

Distribution Licensees are required to pay the fixed charges to the

Generating Companies even when the power is not required.

ii. It is the Distribution Licensee which has to decide whether it needs new

Units after the retirement of existing Units.

iii. The Distribution Licensee should ideally first explore the option of

entering into PPAs under Section 63 of the EA, 2003 instead of Section

62 of EA, 2003.

iv. The issue of retirement of Generating Units and continuation of the

PPAs is relevant to other Generating Companies also.

14.7. The Commission observed that, even if MSPGCL and MSEDCL agree to enter into

an agreement under Section 62 of the EA, 2003, MSEDCL needs to show that the

electricity proposed to be procured from MSPGCL is competitive as compared to

other sources.


14.8. Ms. Ann Josey, on behalf of Prayas, stated that the Generating Units where no

construction work has taken place should not be a part of the PPA. If MSPGCL

intends to go ahead with such Units, it should be at MSPGCL’s risk and it should

identify other buyers for the electricity generated from such Units.

14.9. The Commission observed that MSPGCL’s submission does not take into

consideration factors such as projected RE generation, future demand-supply

scenario in the State, MSEDCL’s other PPAs, competitiveness of MSPGCL’s

Units, MSEDCL’s RPO obligations, etc. and proceeds on the premise that new

Units can be installed in place of old Units retired/being retired and the PPA can be

continued with certain amendments for the proposed new Units as well.

14.10. After due deliberation with MSEDCL, MSPGCL needs to carry out a realistic

assessment considering the above issues, and approach the Commission afresh with

its proposal and road-map. The Commission in its final Order would also indicate

any other considerations and modalities based on which MSPGCL would file a

fresh Petition regarding cancellation of certain upcoming Units and their

consequent removal from the PPA.

Commission’s Analysis and Ruling

15. The Commission initiated these proceedings with regard to the following:

a) Determination of capital cost and final Tariff of MSPGCL’s newly

commissioned Generating Units; and

b) Review of the status of upcoming Generation Projects of MSPGCL as per the

PPA signed with MSEDCL, which may include cancellation of some Units and

their consequent removal from the PPA.

16. With regard to (a) above, MSPGCL filed a separate Petition in Case No. 59 of 2017 for

determination of the Capital Cost and Tariff for the new Koradi Unit 8 and

Chandrapur Unit 8 which had been commissioned. Subsequently, MSPGCL added

Koradi Units 9 & 10, Chandrapur Unit 9 and Parli Unit 8 to its Petition. The

Commission has issued its Order in that Case on 14 December, 2017. Thus, that matter

has now been decided. The present proceedings are, therefore, limited to (b) above.

17. In its last MYT Order for MSPGCL in Case No. 46 of 2017, the Commission had stated

as follows:


“7.2.10 …MSPGCL is also directed to review the financial viability of those

Generation Projects which are at early stages of planning considering the

alternative sources and modalities that may be available to MSEDCL and its

demand-supply position, the proposed retirement plan of the old Units and macro-

level developments which could have adverse financial implications before

pursuing them further, and submit its report within 3 months. The Commission will

take a view on all such Projects for supply of power to MSEDCL considering these

factors and the power likely to be available from alternative sources, including

through competitive bidding. The Commission also directs MSPGCL to not take

further steps for such Projects which are in planning for supply of power to

MSEDCL and the contracts have not been awarded, till the Commission takes a

view in the matter.”

The review of the status and requirement of proposed and upcoming Generation

Projects of MSPGCL for supply of power to MSEDCL was initiated in this context.

18. During these proceedings, MSPGCL has submitted the following revised Generating

Unit replacement plan:

Sr.

No.

Proposed

Replacement Units

Retiring Units and their status, date of


1 Bhusawal Unit 6 (660

MW)

Bhusawal Unit 2 (210 MW): Not in service,

August 2019.

Bhusawal Unit 3 (210 MW): In service, May

2022.

Nashik Unit 3 (210 MW) : In service, April 2019


PPA

approved by

Commission

2

Umred/ Koradi (2 x

800 MW) (Ultra

super-critical

technology) –

Proposed as

replacement with new

Units near coal mines

with lower Variable

Cost due to lower

SHR and coal cost.

Nashik Unit 4 (210 MW): In service, July 2020

Nashik Unit 5 (210 MW): In service, Jan. 2021

Koradi Unit 5 (200 MW): Not in service, July

2018.

Koradi Unit 7 (210 MW): In service, Jan 2023

Parli Unit 4 (210 MW): Not in service, March,

2025

Parli Unit 5 (210 MW): Not in service, Dec,

2027.

PPA will be

amended,

MSPGCL

will

approach

Commission

for

approval.


Sr.

No.

Proposed

Replacement Units

Retiring Units and their status, date of


Chandrapur Unit 3 (210 MW): In service, May

2025.

Chandrapur Unit 4 ( 210 MW): In service,

March, 2026


3

Dherand (800 MW)

Proposed as

replacement Project

of ultra-super critical

technology

Chandrapur Unit 1 & 2 (2 X 210 MW): Already

closed

Parli Unit 3 (210 MW) : Already closed

Khaperkheda Unit 1 ( 210 MW): In service,

March 2029

Khaperkheda Unit 2 ( 210 MW): In service, Jan.

2030


PPA will be

amended,

MSPGCL

will

approach

Commission

for approval

19. With regard to the locations of the newly-proposed Projects, while some rationale has

been given in respect of Umred (or Koradi), the proposed Dherand location, which is in

Raigad District, has not been explained considering that it is proposed for replacement

of Units at Khaparkheda, Parli and Chandrapur. (The Commission notes that Tata

Power Co. Ltd. (Generation) had earlier conceived of a Project at Dherand for supply

to Mumbai and for which land was being acquired by Maharashtra Industrial

Development Corporation.)

20. MSPGCL proposes to keep the Uran GTPS expansion in abeyance till further

directions from GoI, clarity on the gas supply scenario and RE integration issues.

MSPGCL has also stated that the Dhopave and Latur Generation Projects, on which no

progress has been made, would be deleted from the PPA. The Commission notes,

however, that the Dhopave and Latur Projects are, in fact, not in the PPA: in its Order

in Case No. 71 of 2011, the Commission had rejected MSPGCL’s proposal to include

them.

21. On the other upcoming Units envisaged under the PPA (Nashik Unit 6, Paras Unit 5

and Dondaicha Units 1 to 5), MSPGCL has stated there has been only ‘some’ progress.

It has proposed to keep these in abeyance till FY 2021-22, by which time it expects more

clarity on actual demand growth, voltage profile issues, actual RE capacity addition

and its impact on grid stability, etc.


22. The Commission notes that CEA’s 19th EPS has recently been published. However, it is

evident from the foregoing that the comprehensive evaluation which was expected from

MSPGCL of the upcoming and other proposed Generation Projects considering all the

relevant factors and including the assessments of the procurer, MSEDCL, has not yet

been undertaken. The replacement plan proposed by MSPGCL and even the

considerations on which some upcoming Projects are proposed to be kept on hold for

the time being are based on the presumption that MSPGCL would continue to supply

MSEDCL from upcoming or newly proposed Units (at the same or other locations)

when its existing Units are retired, and would entirely meet MSEDCL’s additional

future requirements by further additions to MSPGCL’s generation capacity.

23. Irrespective of demand-supply projections, that presumption has no basis and is not

tenable without considering the optimum mix of alternative sources and types of energy

(e.g.. RE power, subject to grid stability considerations) available; the options of

procurement modalities (regulated under Section 62, or competitive bidding under

Section 63 of the EA, 2003) and tie-up periods in terms of the appropriate combination

of long-term and medium-term commitments; and their comparitive cost-effectiveness.

MSEDCL has also stated that it needs more time to review the necessity of MSPGCL’s

upcoming Units listed in the PPA, after taking into consideration its other PPAs, RE

additions and MSEDCL’s demand projections. Hence, while closing the Case for

orders, the Commission had concluded at the last hearing and recorded in its Daily

Order dated 19 December, 2017 as follows:

“7. The Commission observed that, even if MSPGCL and MSEDCL agree to

enter into an agreement under Section 62 of the EA, 2003, MSEDCL needs to

show that the electricity proposed to be procured from MSPGCL is competitive

as compared to other sources.

…9. The Commission observed that MSPGCL’s submission does not take into

consideration factors such as projected RE generation, future demand-supply

scenario in the State, MSEDCL’s other PPAs, competitiveness of MSPGCL’s

Units, MSEDCL’s RPO obligations, etc. and proceeds on the premise that new

Units can be installed in place of old Units retired/being retired and the PPAs

can be continued with certain amendments for the proposed new Units as well.

10. After due deliberation with MSEDCL, MSPGCL needs to carry out a

realistic assessment considering the issues raised above, and approach the

Commission afresh with its proposal and road-map…”


24. MSPGCL shall approach the Commission afresh accordingly. In the meantime, it

shall not take any effective steps in pursuance of the Generation Projects approved

in the PPA or the other Projects now proposed in these proceedings which are at the

planning stage or in respect of which contracts which had not been awarded at the

time of the last MYT Order. Any capital expenditure incurred on these Projects

shall be at MSPGCL’s own risk and cost.

Sd/- Sd/-

(Deepak Lad) (Azeez M. Khan)

Member Member

Before the MAHARASHTRA ELECTRICITY … 58 42/Order-42 of 2017-27032018.pdf · Maharashtra State...

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