Case No. 26 of Shri. V.P. Raja, Chairman Shri. Vijay L. Sonavane, Member

Transcription

1 Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION World Trade Centre, Centre No.1, 13 th Floor, Cuffe Parade, Mumbai Tel /65/69 Fax Website: / Case No. 26 of 2011 In the matter of the Petition filed by Reliance Industries Ltd., seeking variation, alteration, modification or amendment as well as review of the provisions of the MERC (Renewable Purchase Obligation, its Compliance and Implementation of REC Framework) Regulations, Shri. V.P. Raja, Chairman Shri. Vijay L. Sonavane, Member Reliance Industries Ltd. Address: Group Manufacturing Services, Reliance Co-operative Park, Building No-7, A-Wing, First Floor, Thane-Belapur Road, Ghansoli, Navi Mumbai Maharashtra Energy Development Agency Address: 2 nd Floor, MHADA Commercial Complex, Opp. Tridal Nagar, Yerwada, Pune Petitioner..Respondent Present during the hearing: For the Petitioner: Shri. S. C. Gupte, Advocate Shri. G.S. Vishnumurthy, Sr. Vice President Shri. S. S. Bhagwat, Institute of Chemical Technology (Formerly UDCT) MERC_[Case No. 26 of 2011] Page 1 of 9

2 For the Respondent (MEDA): For Finolex Industries: Dr. J. V. Torane, General Manager. Shri. R. Swaminathan. ORDER Date: 22 March, 2013 M/s. Reliance Industries Ltd. ( the Petitioner ) submitted a Petition, under affidavit, before the Commission on 22 July 2010 (removed deficiency on 11 February, 2011) under Regulation 85 of MERC (Conduct of Business) Regulations, 2004 and Regulation 19 of MERC (Renewable Purchase Obligation, its Compliance and Implementation of REC Framework) Regulations, 2010, seeking variation, alteration, modification or amendment as well as review of the provisions of the MERC (Renewable Purchase Obligation, its Compliance and Implementation of REC framework) Regulations, The prayers of the Petitioner are as follows: a. To vary, alter, modify or amend the following Regulations of the said Regulations viz., Regulations no. 4 and 7 so as to treat all co-generators (irrespective of any fuel used) at par with Renewable Sources of Energy by including all co-generators as eligible RE sources in Regulation no.4 and by including the minimum quantum of purchase from such co-generators in Regulation No.7 and making suitable consequential amendments to the said Regulations. b. The Petitioners pray for a personal hearing in the matter. 3. The Petitioner in its Petition submitted as follows; 3.1 The Commission in exercise of powers conferred under Sections 61, 66, 86(1)(e) and 181 of the Electricity Act, 2003 made the MERC (Renewable Purchase Obligation, its Compliance and implementation of REC framework) Regulations, 2010 [hereinafter MERC_[Case No. 26 of 2011] Page 2 of 9

3 referred to as MERC (RPO REC) Regulations, 2010 ]. The Petitioner is presenting its application under Regulation 85 of the MERC (Conduct of Business) Regulations, 2004, inter alia, for review as well as variation, alteration, modification or amendment of the provisions of the MERC (RPO REC) Regulations, The Petitioner is in the business of producing petrochemicals and has captive power plants at all major sites in the State, fulfilling the energy requirement of their industries through captive power plants. In these power plants, which are based on liquid fuel or gas, heat is generated as a bi-product or industrial waste and is harnessed for further power and steam generation and other industrial use. The Petitioner has installed Heat Recovery System Generator (HRSG) which recovers the heat from exhausts of the gas turbines and the same heat is used for the industrial purposes and running steam turbines which are in-turn used for further power generation. 3.3 Co-generation is a process which means generation of more than one form of energy (including electricity) from a single source of energy. It is not specific to any particular source. Electricity Act clearly recognizes the importance of encouraging industrial co-generation process in an effective manner to save energy. The co-generation based on fossil fuel has tremendous scope and significant contribution to the benefit of the environment by way of curtailing emissions and hence needs to be encouraged. The co-generation have thermal efficiency in excess of 70% compared to conventional power plants having efficiency of 30 to 40% or combined cycle power plants having thermal efficiency of 50 to 55%. This is an extremely efficient way of meeting power and steam requirements of industries with fuel saving capabilities of the order of 20 to 25%. 3.4 The Petitioner s plant, being the co-generation plant, is accordingly under the provision of the Act, entitled to be treated at par with renewable sources of energy and to be promoted by providing suitable measures for connectivity with the grid and sale of electricity to any person and by specifying for purchase of electricity from such plants, a percentage of total consumption of electricity in the area of distribution licensees. 3.5 Hon ble Appellate Tribunal for Electricity (APTEL) in Appeal no. 57 of 2009 in the matter of the Century Rayon v/s MERC and Ors. passed a detailed Judgment, inter alia, laying down the duties of the SERC in the matter of promotion of co-generation and generation of electricity from the renewable energy sources by providing various suitable measures under the Section 86(1)(e) of EA MERC_[Case No. 26 of 2011] Page 3 of 9

4 3.6 In line with the law as enunciated by the Hon. APTEL, the MERC (RPO-REC) Regulations, 2010 so far do not treat the co-generators of electricity (irrespective of the fuel used for such co-generation) at par with the renewable energy sources and do not promote such co-generators of electricity in the like manner as in the case of Renewable Energy sources in the said Regulations. Therefore, the relevant Regulations require modification, variation and alteration or amendment. 4. Based on the above submissions made by the Petitioner, the Commission vide notice dated 6 April 2011 scheduled an admissibility hearing in this matter on 25 April First Hearing: 5. During the hearing, Shri. Suresh Gupte, Advocate High Court and Shri. G. S. Vishnumurthy, Sr. Vice President appeared on behalf of the Petitioner. No one was present on behalf of the Respondent. The Counsel for the Petitioner submitted that the present Petition has been filed for the review of MERC (RPO REC) Regulations, 2010 under Regulation 19 of the said Regulations and Regulation 85 of the MERC (Conduct of Business) Regulations, To support his argument, he relied upon the Order passed by Hon ble APTEL in Appeal No. 57 of 2009, which is generic in nature and applicable to all. Further, the Petitioner invited the attention of the Commission towards relevant provisions in National Electricity Policy, CERC Regulations, West Bengal Electricity Regulatory Commission s Notification dated 25 March, 2008 etc. After hearing the representatives of the Petitioner, the Commission directed the Petitioner to submit the statistical information regarding number of grid connected fossil fuel based co-generation projects and grid connected captive co-generation plants in the Maharashtra State along with technical details such as installed capacity, total generation, captive power consumption and number of units exported etc., to the Commission within five weeks from the date of hearing and to serve the copy of the same on the Respondent. 6. In line with the above directives, the Petitioner vide letter dated 6 June 2011 submitted the requisite information to the Commission which are as under:- a) The list of 39 Nos. of grid connected fossil fuel based captive cogeneration power plants in the Maharashtra State. MERC_[Case No. 26 of 2011] Page 4 of 9

5 b) The total generation capacity of MW. c) Estimated possible generation considering of 330 days operation of about MUs. d) Assessed potential for exportable units 25% of the generation) of about MUs/Year. 7. In the mean time M/s. Century Rayon vide letter dated 7 June 2011 and M/s. Finolex Industries Ltd. vide letter dated 7 June 2011 (affidavit filed vide letter dated 19 July, 2011), M/s. Welspun Maxsteel Ltd. vide letter dated 8 June 2011 and M/s. Captive Power Producers Association vide letter dated 12 July 2011, submitted their intervention applications in the present case. In brief, the intervention applications make the following points; a) Fossil fuel based co-generation projects have tremendous scope and significant contribution to the benefit of environment by way of curtailing emissions and hence needs to be encouraged. The Co-generation plants have much higher thermal efficiency compared to conventional power plants having efficiency of 30 to 40%. b) Hon ble APTEL vide Judgment dated 26 April, 2010 in Appeal No. 57 of 2009 provided that the intention of legislation under Section 86 (1)(e) of EA 2003, is to promote co-generation in the industries irrespective of fossil fuel used and not co-generation from renewable energy sources alone. Under the scheme of the Act, both renewable source of energy and co-generation power plant, are equally entitled to be promoted by State Commission through the suitable methods and suitable directions. c) The National Electricity Policy, 2005 and Tariff Policy, 2006 also encourage co-generation projects as much as non- conventional energy sources. West Bengal Electricity Regulatory Commission vide its WBERC (Cogeneration and Generation of Electricity from Renewable Sources of Energy) Regulations, 2008 provided licensee wise minimum quantum of electricity to be purchased from co-generation and renewable sources of energy. Rajasthan Electricity Regulatory MERC_[Case No. 26 of 2011] Page 5 of 9

6 Commission has categorized co-generation as RE without reference to the fuel used for such co-generation. d) In view of all above benefits of co-generation projects, the interveners pray to the Commission to vary, alter, modify or amend the Regulations No. 4 and 7 of MERC (RPO-REC) Regulations, 2010 so as to treat all cogenerators as eligible RE sources in Regulation No. 4 and by including the minimum quantum of purchase from such co-generations in Regulation No. 7 of MERC (RPO REC) Regulations, MEDA vide letter dated 7 June 2011 submitted its comments on the Petition filed by the Petitioner to the Commission on 8 June 2011, which are as under; 8.1 Regulation no. 4 of the MERC (Renewable Purchase Obligation, its Compliance and implementation of REC Framework) Regulations, 2010 specifies that, 4.1 For the purpose of this Regulation, energy generation from all types of renewable energy sources as recognized or approved by the MNRE, shall be considered: Provided that any new technology could be qualified as renewable, only after the State Commission has approved the technology based on the approval of the MNRE. Therefore, before variation, alteration, modification or amendment as well as review of the provisions no. 4 of the MERC (RPO-REC) Regulations, 2010, the Petitioner needs to get the approval from the Ministry of New and Renewable Energy (MNRE) for fossil fuel based co-generation sources as a RE source. 8.2 As regards the amendment of Regulation 7 of the MERC (RPO-REC) Regulations, 2010, it is submitted that, the amendment issue comes after approval of fossil fuel based co-generation source as RE source and hence question does not arise at this stage. Second Hearing: 9. The second hearing in this matter was held on 8 June 2011 in the office of the Commission. Shri. Suresh Gupte, Advocate High Court, Shri. G.S. Vishnumurthy, Sr. MERC_[Case No. 26 of 2011] Page 6 of 9

7 Vice President appeared on behalf of the Petitioner. Dr. J.V. Torane, General Manager appeared on behalf of the Respondent (MEDA). 9.1 During the hearing, the Commission allowed the intervention applications of M/s. Century Rayon and M/s. Finolex Industries Ltd. The Counsel for Petitioner submitted the technical details of the grid connected fossil fuel based captive co-generation plants in the state of Maharashtra. In the submissions, it has been mentioned that out of 98 captive cogeneration plants, only 39 Plants are fossil fuel based. Further, the total installed Capacity is of MW with a total estimated energy generation of about MUs at an average basis of one year operation. Further, there are about existing 13 grid connected captive power plants, approximately 25% of the installed capacity of 250 MW with 2012 MUs of energy is being injected into the grid. 9.2 The Petitioner further submitted that with respect to the co-generation plant the Commission may consider the second part of the Hon ble ATE Judgment since, these plants provide many benefits to the public at large and also it protects the environment. The Petitioner requested the Commission to treat this plant at par with RE resources. 9.3 MEDA submitted that before variation, alteration, modification or amendment as well as review of the provisions under Regulation 4 of the MERC (RPO-REC) Regulations, 2010, is considered, the Petitioner needs to obtain the approval from the Ministry of New and Renewable Energy (MNRE) for fossil fuel based cogeneration source as a RE source. 9.4 The Commission expressed the desire to promote fossil fuel based cogeneration at par with the Renewable Energy and observed that it is a policy matter and the decision will be taken at an appropriate time. The Commission further observed that the Order passed by the Hon. APTEL in Appeal No. 57 of 2009 is generic in nature. Further, both the co-generation and renewable energy sources are different from each other and should not block the investment climate in the State and should promote the growth of renewable energy. The Commission enquired as to whether the plants of the Petitioner are covered under the Energy Conservation Act, 2001 and whether they get rewarded under the Energy Efficiency Scheme. Further, regarding the Waste Heat Recovery (WHR) the Commission advised the Petitioner to appoint 2 Experts of the UDCT for the analysis, since the chemical process plant recovers the waste heat as a common practice. MERC_[Case No. 26 of 2011] Page 7 of 9

8 9.5 During the hearing, the Commission observed that the technical data provided by the Petitioner is inadequate and therefore directed the Petitioner to check out the BEEs website regarding issuance of Energy Saving Certificates and also directed to contact Institutes like Indian Institute of Science (IISc), Bangalore to obtain a baseline data regarding the Specific Energy Consumption. Further, the Commission directed the Petitioner to compile the relevant data and submit it to the Commission. Third Hearing: 10. The third hearing in this matter was held on 31 October 2011 in the office of the Commission. Shri. Suresh Gupte, Advocate High Court, Shri. G. S. Vishnumurthy and Shri. Manish Pradhan appeared on behalf of the Petitioner. Shri. P. D.Vaidya and Shri. S. S. Bhagwat of Institute of Chemical Technology (ICT), Mumbai consultant appointed by the Petitioner was present. Shri. R. Swaminathan of Finolex Industries Ltd. appeared as Intervener During the hearing, Shri. S.S. Bhagwat made a presentation on co-generation of electrical and thermal energy and explained the background of co-generation, types of cogeneration cycles and co-generation technologies After hearing the parties, the Commission observed that, the methodology for promoting fossil fuel based co-generation need to be formulated and alternative methodology (like BEE PAT scheme) for encouraging such co-generation should also be given consideration. The Commission directed the Petitioner to prepare a draft policy paper on Fossil fuel based co-generation projects. Furthermore, the Commission directed the Petitioner to request Forum of Regulators (FoR) to include the same as Agenda item in FoR meeting and also directed to send a copy of the same to the Commission. 11. Pursuant to the Commission s above directives, the Petitioner vide its letter dated 6 July 2012 submitted the Draft policy for the promotion of the fossil fuel based cogeneration power plants and subsequently made a presentation in this matter to the Commission on 15 October, The Commission in its Order dated 20 December, 2012 in Case No. 1 of 2012 in the matter of Petition filed by M/s. Finolex Industries Ltd., Pune for interim fixation of MERC_[Case No. 26 of 2011] Page 8 of 9

9 power procurement price for purchase of power from Fossil-fuel based Captive Cogeneration power plant of the Petitioner located at Ratnagiri, held as follows:- 8. The Commission is of the view that a similar case was filed before the Commission by M/s. Lloyds Metals & Energy Ltd. (Case No. 56 of 2011) seeking determination of tariff for supply of electricity from Industrial waste heat recovery cogeneration power plant of 30 MW capacity at Ghugus, Dist. Chandrapur of Maharashtra to the Distribution licensees in Maharashtra ; fixation of purchase obligation for electricity produced from waste heat recovery based co-generation power plant in the State under Section 86 (1) (e) of Electricity Act, 2003; accord approval to a certain levellised tariff etc. The Commission had passed an Order dated 29th December, 2011 in the aforesaid petition of M/s. Lloyds Metals & Energy Ltd., from which an appeal (Appeal No.53 of 2012) was preferred before the Hon ble Appellate Tribunal for Electricity by M/s. Lloyds Metals & Energy Ltd..In view of the pendency of the said appeal, the Commission is not able to apply the conclusions reached in the said Order dated 29th December, 2011 to the present case. Hence, the Commission deems it fit to dispose of this case with the liberty to the Petitioner to file an appropriate petition/application after the final disposal of the aforesaid Appeal No.53 of 2012 by the Hon ble Appellate Tribunal for Electricity. The above Order also applies to the present case. Accordingly, Case No. 26 of 2011 stands disposed of with the liberty to the Petitioner to file an appropriate Petition/application after the final disposal of the aforesaid Appeal No.53 of 2012 by the Hon ble Appellate Tribunal for Electricity. Sd/- (Vijay L. Sonavane) Member Sd/- (V. P. Raja) Chairman MERC_[Case No. 26 of 2011] Page 9 of 9