discussion paper on parallel operation charge - Infraline

1. BACKGROUND
CSEB filed before the Commission its first tariff application for determination of ARR and tariff
under Section 62 of the Electricity Act,2003(the Act) and other miscellaneous and general
charges under Section 45 and 46 of the Act. In addition to revision of the rates of various
services rendered by the Utility, the Utility had proposed to levy stand-by charges on the
Captive Power Plants (CPPs) running in parallel with the CSEB’s Grid at the rate of 7.5% of
demand charges on the installed capacity of the CPP, in view of the benefits enjoyed by the
CPPs running in parallel with grid and the intangible services being rendered by the CSEB.
In its first tariff order, the Commission fixed various miscellaneous and general charges, as
proposed by the Board which were based on the rates then prevailing in MPSEB, which had the
same rates before bifurcation of the erstwhile MPEB, as requisite significant data input was a
constraint. However in case of parallel operation charges, the Commission fixed Rs. 16 per kVA
on the installed capacity of the CPPs, which was less than that of the Board’s proposal.
While disposing off the petition No. 17 of 2005 (M), in the matter of power purchase and related
dispensation in respect of Captive Generating Plants, the Commission passed an order on
06.02.2006 wherein various issues were addressed in light of the provisions of the Act, National
Electricity Policy and Tariff Policy. Keeping in view of the objections of the CPPs, the
Commission reduced the parallel operation charges to 60% of the approved charge i.e., Rs. 10
per kVA per month till the rate was reviewed and revised, if necessary, in the next tariff order on
the basis of a realistic study.
The Urla Industries Association, the petitioner in petition No. 17 of 2005, preferred an appeal
(No. 99 of 2006) before the Hon’ble Appellate Tribunal for Electricity (ATE) against the Order
passed by the Commission.
The directions of the Hon'ble Appellate Tribunal for Electricity in their judgement of 12th
September 2006 passed in appeal no. 99 of 2006 are as follows:
"The contention that no charges at all is payable for parallel operation or transmission
system can not be sustained and such a claim is contrary to factual position. There is no escape
of CPP to pay charges for parallel operation by which the CPP gains while the transmission
system of the second respondent CSEB is affected apart from the admitted fact the
transmission grid is strengthened by the power injected by CPP. However, we make it clear that
in the tariff petition which is pending consideration, the Commission may fix the charges for
parallel operation on the basis of the data, materials and scientific inputs relating to parallel
operation charge already placed by the parties or that may be placed by the parties before the
conclusion of hearing and such exercise shall be carried out by the first respondent Regulatory
Commission independently and without in any manner being influenced by this judgment."
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