Chhattisgarh State Electricity Regulatory Commission · The petitioner M/s Jindal Steel & Power Ltd. ... requirement of power at its steel plant, coal mines, ... ownership since the

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a

Petition No. 74 of 2013(D) In the matter of

Petition under section 86(1)(f) and 86(1)(k) of the Electricity Act, 2003

read with rule 3 of the Electricity Act, 2005, Electricity (Removal of Difficulty)

fourth order, 2005 and Regulations 33(6)(b)(i) & 33(7) of the CSERC

(Connectivity & Intra-State Open Access) Regulations, 2011.

M/s Jindal Power & Steel Ltd. …. Petitioner Vs. (i) Chhattisgarh State Power Distribution

Co. Ltd., Daganiya, Raipur (C.G.)

(ii) Chief Electrical Inspector, Raipur …. Respondents

Present: Narayan Singh, Chairman

Vinod Shrivastava, Member

ORDER

(Passed on 13/10/2014)

1. The petitioner M/s Jindal Steel & Power Ltd. (M/s JSPL) is a steel manufacturing

industry situated in Raigarh District, Chhattisgarh. To run his industry, the

petitioner has setup a captive generating plant of capacity 347.7 MW. The

petitioner has filed this petition against Chhattisgarh State Power Distribution Co.

Ltd. (CSPDCL) and the Chief Electrical Inspector (CEI) in connection with

declaration of its captive status and other related matters for the FY 2006-07.

2. According to the petition, the Commission has decided that the petitioner could

not qualify as captive generating plant under Rule 3 of 2005 Rules for the year

2006-07 vide order dated 12.07.2013 in P.No. 43/2009(M). Being aggrieved, the

petitioner filed an appeal before the Hon’ble Appellate Tribunal for Electricity

(Hon’ble Tribunal).

3. The Hon’ble Tribunal vide its order dated 23.09.2013 in appeal No. 217 of 2013

and No. 224 of 2013 remanded back the matter to the Commission to decide

afresh the matter uninfluenced by any observation made earlier by the

Commission in the impugned orders. The Hon’ble Tribunal has also given liberty

to the petitioner to raise the issues regarding captive status and errors in

computation of cross subsidy surcharge. Accordingly, the petitioner has filed this

petition.

Chhattisgarh State Electricity Regulatory Commission Shanti Nagar, Irrigation Colony, Raipur - 492 001 (C.G.)

Ph. 0771-4048788, Fax: 4073553 Website: www.cserc.gov.in, E-mail: [email protected]

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4. The petitioner has prayed for the following relief from the Commission:-

(a) To hold that the petitioner is a captive generating plant, which is

supplying power for captive use in the FY 2006-07, by considering the

following:

(i) Deduction of 100 MW of power supplied by the petitioner to the

distribution company CSPDCL from net generation, which is

mentioned in Rule 3 of the Electricity Rules, 2005, as per the order

dated 06.02.2006 passed in P. No. 17/2005(M).

(ii) Deduction of 90 MW of power supplied by the petitioner to the

distribution company of the O.P. Jindal Industrial Park, from net

generation, for calculating the 51% captive consumption criterion,

which is mentioned in Rule 3 of the Electricity Rule, 2005.

(iii) The power supplied to the housing colony of the petitioner, as part

of captive use, in the light of the Electricity (Removal of Difficulty)

Fourth Order, 2005.

(b) To hold that the petitioner is not at all liable to pay any cross subsidy

surcharge for the power supplied for captive use in the FY 2006-07.

(c) To hold that the petitioner is not at all liable to pay any cross subsidy

surcharge for the power supplied to the Nalwa in the light of the

Electricity (Removal of Difficulties) Second Order, 2005.

5. The petitioner in its petition has made submissions that apart from its steel

manufacturing unit, the petitioner also operates a captive coal mines at Village

Gare along with a coal washery near the captive coal mines. The coal so

extracted from the mine is used by the petitioner in its steel plant after washing

the same at the coal washery. The coal reject so obtained is used by the

petitioner for generation of power at its captive generating plant. The power

generated in its captive generating station is used by the petitioner to make the

requirement of power at its steel plant, coal mines, coal washery and township /

housing colonies. These all establishes are supplied power through the dedicated

220 KV line.

6. The petitioner has been granted distribution license on 29.09.2005 by the

Commission in an area name OP Jindal Industrial Park situated at Village

Punjipatra and Tumidih in Raigarh Distt. is supplying electricity to the consumers

out of the surplus power generated at its captive power plant through dedicated

220 KV transmission line owned by the petitioner.

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7. The respondent in the instant petition is Chhattisgarh State Power Distribution

Co. Ltd. (CSPDCL) is the State Distribution Utility in the State of Chhattisgarh in

the area where the petitioner and its different establishes is situated.

8. The respondent No. 2 is the Chief Electrical Inspector (CEI), who has submitted

report vide letter dated 08.02.2013 regarding captive status of CPP for the FY

2006-07 before the Commission. The said report indicates the power

consumption for non captive establishments by the petitioner from its captive

power plant for the said period.

9. The Petitioner submits that it executed a memorandum of Understanding (MOU)

dated 07.01.2005 with the Government of Chhattisgarh for setting up of steel

plant along with a captive generating plant. The total size of the steel plant of

the Petitioner as envisaged under the MOU dated 23.10.2002 was 1.25 MTPA,

while the total capacity of the captive Generating Plant was 99 MW.

10. The Petitioner submits that it received a letter dated 06.03.2012 from the

Hon'ble Commission wherein it was intimated to the Petitioner that it is liable to

pay Cross Subsidy Surcharge since it had not complied with the consumption

requirements as per the Electricity Rules 2005.

11. Pursuant to the above letter, the Petitioner wrote a letter dated 21.03.2012

intimating that the Petitioner has supplied power from its captive power plant to

the township and coal mines, along with the steel plant. The township and coal

mines being part of the same company qualified as a captive user.

12. Based upon the above two letters, the Hon'ble Commission conducted a hearing

on 07.09.2012. After hearing the parties, the Hon'ble Commission passed on

order dated 18.06.2013, wherein, with regard to the Petitioner, the following has

been observed:

"5. Power plant mentioned in para 2 i.e. M/s Jindal Steel & Power Ltd., (M/s

JSPL) has replied to the notice served vide letter no. JSPL/EPS/F-33A/2012

dated 21.03.2012. In this reply M/s JSPL has only clarified about energy

used through dedicated network and not about captive consumption. M/s

JSPL has submitted that energy is used through dedicated network in its

own township and coal mines through its own transmission line of 220 KV.

During the hearing on 07.09.2012, M/s JSPL submitted that it stands on its

written submission. Subsequently CEI vide submission no. 2146 dated

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08.02.2013 have revised its initial submission submitted vide letter 1067

dated 04.10.2010.

In the revised submission also M/s JSPL did not qualify as a captive

generating plant (CGP) for the year 2006-07 within the meaning of the

definition of captive generating plant as per sub-section (8) of Section 2 of

the Electricity Act, 2003 read with Rule 3 of the Electricity Rules, 2005.

Also supply of energy (622.151 MU) by captive generating plant for non-captive

use at Nalwa within the State is to be treated as supply of power by CGP to

consumer. In this case cross-subsidy is payable by non-captive user (consumer).

As a result of the above, the Petitioner became liable to pay Cross Subsidy

Surcharge for the power supplied by it towards captive consumption in the FY

2006-07.

13. The Petitioner submits that the above order was on a wrong appreciation of facts

since the purported non-compliance of the Rule 3 of the Electricity Rules, 2005

were on account of facts which were completely beyond the control of the

Petitioner, and were as result of agreements/commitments which were entered

by the Petitioner prior to the coming into force of the Electricity Rule, 2005.

14. Aggrieved by the above findings of the order dated 18.06.2013, the Petitioner

filed an appeal before the Hon'ble Appellate Tribunal for Electricity, numbered as

Appeal No. 224 of 2013. The Hon'ble Tribunal, after hearing the Petitioner, set

aside the order dated 18.06.2013 and remanded the matter back to this Hon'ble

Commission for a fresh adjudication on merits. Therefore, in compliance of the

said order, the Petitioner is filling the present petition.

15. It is also pertinent to mention herein that pursuant to the filing of the above

appeal, the Petitioner also filed an application for clarification before this Hon'ble

Commission, numbers as Petition No. 58 of 2013 (M), with regard to the above

mentioned earlier order dated 18.06.2013. The said clarification petition was

listed before this Hon'ble Commission 06.09.2013 wherein the same was

admitted. Pursuant to the admission of the clarification petition, the Petitioner

obtained certain documents through the Right to Information Act 2005, with

regard to the captive consumption details from the Respondent No. 2. Before

proceeding further, the Petitioner states that the above clarification petition

needs to be disposed of in the light of the aforementioned order dated

23.09.2013 of the Hon'ble Appellate Tribunal for Electricity.

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16. It is submitted that the Petitioner was held as a non captive power plant for the

FY 2006-07 since the earlier order dated 18.06.2013 was passed by this

Commission by not deducting the power supplied by the Petitioner under certain

agreements which were prior to the enactment of the Electricity Rules, 2005,

which rules came into force only on 08.06.2005. At this juncture, the Petitioner

extracts the following from the said Rules.

17. The Petitioner submits that it complies with the requirement of a minimum 26%

ownership since the Captive Generating Plant is wholly owned by the Petitioner.

As regards the other criterion of a minimum 51% consumption, it is submitted

that the Petitioner was not able to fulfill the same in the FY 2006-07 on account

of the following two scenarios:

Scenario I

(i) The Petitioner on 01.08.2002 executed a Power Purchase Agreement with

the erstwhile Chhattisgarh State Electricity Board (hereinafter 'CSEB') for

supply of 70 MW of power for a period 10 years. The Petitioner had also

executed another PPA with the CSEB dated 15.07.1999 for sale of surplus

power of 30 MW, and such PPA also had a provision for self wheeling of

power for captive use for 5 MW which was to be supplied to the steel

plant of the Petitioner at Raigarh and Raipur by paying wheeling charges

and capacity charges to the CSEB.

(ii) It is evident from the above PPA dated 01.08.2002 that the same was a

back-to-back arrangement between the Petitioner, Chhattisgarh State

Electricity Board and the Gujrat Electricity Board. The same was executed

since before the advent of the Electricity Act, 2003, the Petitioner could

not have sold power to any third party outside the State of Chhattisgarh

directly. The same had to be routed through the Chhattisgarh State

Electricity Board.

Scenario II

(i) The Petitioner submits that the Government of Chhattisgarh issued a

Captive Power Policy dated 12.07.2002. The relevant portions of the said

policy with regard to the establishment of CPP's in the state of

Chhattisgarh are given below:

"7. Those industrialists who have already established captive power plant

after due permission and who also have permission for third party sale

under the previous policy then such permission shall continue till the

expiry of the power purchase agreement.

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8. Chhattisgarh State Electricity Board would not be under any obligation

to buy electricity produced by captive power plant but when required,

Chhattisgarh State Electricity Board shall have the first right to purchase

such electricity. Rate of purchase of power shall be based on rates at

which power from other sources are available.

..................

20. Cancellation of Permission –

In case of violation of the guidelines/directions issued by the state

government or conditions prescribed in the sanction accorded by the

Chhattisgarh State Electricity Board to the captive power plant owner/

industrialist with regard to establishment of the captive power plant or in

case of violation of any terms and conditions of the agreement signed

between CSEB and captive power plant owner consumer, the permission

granted for establishment of such captive power plant may be revoked

and action will be taken as per law.

(underline supplied)

(ii) The Petitioner further submits that apart from the above two PPAs for 100

MW executed with the CSEB, there was another commitment/agreement

to supply upto 90 MW of power to the Jindal Steel and Power Limited

distribution licensee. The Petitioner, apart from running the steel and

power plants, also owns a distribution business in the O.P. Jindal

Industrial Area, which is located in the villages of Punjipatra and Tumidih

in Raigarh, Chhattisgarh.

(iii) The brief facts relating to the grant of distribution license and the

commitment to supply power are as follows:

• On 28.12.2001, the Petitioner gave a proposal to the Government of

Chhattisgarh for establishing an industrial estate, pursuant to the

industrial policy of the State Government. The Petitioner also applied

for supplying power to the said industrial estate. On 09.04.2002, the

Petitioner sent a communication to the Government of Chhattisgarh,

wherein the Petitioner referred to the similar proposals made to the

government of Chhattisgarh. The Petitioner further requested the

Government of Chhattisgarh to grant early permissions for setting up

an industrial estate and for sale of power to the units set up in the said

estate.

• The Petitioner received a letter dated 26.04.2002 from the Commerce

and Industry Department, Government of Chhattisgarh wherein

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direction were given for preparing and executing a Memorandum of

Understanding so as to enable the Petitioner in constructing an

Industrial park. The letter also stated that certain steps were being

taken to grant permission to the Petitioner for selling electricity to the

units to be set up in the industrial estate, including laying of

transmission lines.

• The Petitioner sent a letter to the Government of Chhattisgarh

requesting for grant of permission under Section 28 of the Indian

Electricity Act, 1910 for sale of power to the proposed unit in the

industrial estate from the captive power plant. The Petitioner also

sought permission to lay distribution and transmission lines.

In the month of September 2002, the Petitioner submitted a

project report for setting up of an industrial estate. Through the

development of the industrial estate the Petitioner promised

uninterrupted supply of power at a reasonable price to the various

industrial consumers.

• The Petitioner executed a Memorandum of Understanding (MOU) with

the Chhattisgarh State Industrial Development Corporation on

23.10.2002, for development of an industrial estate, in Raigarh district,

as per the provisions of an Industrial Policy 2001-06 of the State of

Chhattisgarh. In the said MOU, Article 4 envisages that the Petitioner

has to draw power transmission lines from either the existing Captive

Generation Plant or from an Independent Power Plant of M/s Jindal

Power Limited. The MOU in the said Article further envisage direct

sourcing of power to the said industrial park. Article 11 of the said

MOU further binds the Petitioner for taking all the necessary steps in

order to implement the said MOU since the same will contribute to the

development and socio-economic growth of Raigarh District.

• The Petitioner received a letter dated 29.01.2003 from the

Chhattisgarh Government wherein a 'No Objection' was issued for

supply of power to the industrial estate of the Petitioner. Clause 8 of

the said letter further directs the Petitioner to ensure compliance of

instructions issued by the Government of Chhattisgarh. The said letter

was a detailed letter of permission complete with all the conditions.

The CSEB issued a letter to the Petitioner on 31.05.2003 wherein

permission for laying of 220 KV lines to the industrial estate was

granted. Based on the various permissions from the Government of

Chhattisgarh and the CSEB, the Petitioner set up the industrial estate

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and also laid the transmission lines and distribution network for

supplying power to the units in the estate. The Petitioner further

invited entrepreneurs to set units in the estate. Pursuant to the same

several entrepreneurs set up their units in the industrial estate while

several others started taking effective steps for setting up the units.

Thereafter, the Chhattisgarh government issued another letter dated

28.02.2004 wherein the advent of the Electricity Act, 2003 was

acknowledged and the Petitioner was directed to submit an application

for grant of distribution license. Accordingly vide letters dated

15.09.2004 and 25.01.2005, the Petitioner applied to the Hon'ble

Commission for grant of a distribution license to supply power in the

industrial estate/park.

• The Petitioner started supplying power to the units which had already

come up in the industrial estate based on the Government of

Chhattisgarh permissions dated 23.10.2002, 29.01.2003 and

28.02.2004 and the permission dated 31.05.2003 accorded by CSEB.

18. The Commission issued an order dated 29.09.2005, in Petition No. 3 of 2005, in

which the Petitioner was granted a distribution license under Section 14 of the

Electricity Act, 2003, for carrying out distribution functions in the industrial park

of the Petitioner. At present there are about 30 number of HT consumers to

whom the Petitioner supplies power around 100 MW through a 220 KV

transmission line from Jindal Power Limited to O P Jindal Industrial Park.

19. The Petitioner submitted that the order dated 18.06.2013, which has since been

set aside, was passed by relying upon the afore mentioned clauses of the

Electricity Rules, 2005, without appreciating the fact that the above

PPA/commitments with the CSEB, and with the O.P. Jindal Industrial Area, which

existed much prior to the coming into force of the said Rules. The Petitioner

could not have terminated the said commitments so as to limit its generation for

complying with the 51% consumption criteria.

20. From the above it can be clearly averred that in both the cases/scenarios of the

Petitioner supplying power to the industrial estate/park and to the CSEB, the

same was done in pursuance to the commitments/understanding/ agreements

the Petitioner had with the Government of Chhattisgarh prior to the date of

promulgation of the Electricity Rules, 2005. In the case of the distribution

business of the Petitioner, it is submitted that the commitment of the Petitioner

was to supply power either from its captive power plant in Raigarh or through

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the power of M/s Jindal Power Limited. However, the power plant of M/s Jindal

Power Limited only commissioned in the month of December, 2007 and it was

left for the Petitioner to supply power to the Petitioner's distribution division

situated in the industrial park/estate.

21. It is submitted that the petitioner was thus prevented from complying with the

requirements of the Electricity Rules, 2005 on account of the prior commitments.

Since the petitioner had commitments / agreements with the distribution

licensees, the said petitioner could not have terminated the said agreements /

commitments, since the same would have involved huge risks. The petitioner’s

investment / projects are based upon the MoUs executed with the Government

of Chhattisgarh, and going back on the same could have risked the petitioner

into financial / operational unavailability.

22. It is submitted that under the Electricity Rules, 2005, the net generation,

excluding auxiliary consumption, is taken for calculating the 51% criterion. In the

event the captive use of a captive generating plant reduces, the generator can

always lower its generation so as to not fall foul of the 51% rule. However, on

account of the prior commitments / agreements to supply power to the

distribution licensees, the petitioner had to generate a surplus of 198 MW out of

the total installed capacity, as on 01.04.2006, of 333 MW at all times of the term

of the agreements. Therefore, with the captive consumption of the petitioner in

the FY 2006-07 pegged at 757 MUs, the petitioner could not at all have fulfilled

the 51% criteria with such excess generation. The only way the petitioner could

have complied with the said rules was by increasing the captive consumption,

however, the petitioner could not have increased the power demand of its steel

plant since it was still under the construction stage. The capacity of steel plant

increased gradually over the years. Hence, the petitioner was prevented from

complying with the 51% Rule on account of reasons which were clearly ‘beyond

its control’.

23. The petitioner cannot be penalized on account of the fact that it adhered to the

commitments which were made to the Chhattisgarh Government prior to the

coming into force of the Electricity Rules, 2005. Even the Electricity Act, 2003

which was in force much prior to the said Rules, did not have a word with

respect to the said eligibility criteria of a minimum 51%. Therefore, even after

the said Act came into force, the petitioner could not have possibly had any idea

about the insertion of such an eligibility criterion in the Rules. Therefore, the

petitioner could not have envisaged any problem in adhering to such a condition.

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24. Further, the Commission knew of the existence of the commitment of the

petitioner to supply power from the captive generating plant to the industrial

estate where the petitioner has been granted distribution license. The order

dated 29.09.2005 passed in P.No. 03 of 2005 wherein the distribution license

was granted to the petitioner, at several places mentions the said commitment to

supply power from the captive generating plant. In this context, certain extracts

of the said order are culled out herein below:-

“…………………..

The proposal is to supply to JIP 400 MVA (300 MW) of electricity on full

implementation of the industrial park for which 120 MVA (90 MW) is proposed to

be supplied from the existing captive power plant at Raigarh and 280 MVA (210

MW) from the proposed 1000 MW capacity power plant being put up by the

applicant company in the same district…………..

5…………

In para 4 of the MoU, which is important, JSPL was allowed to directly sell power

to the industrial units in the proposed industrial estate. Para 4 reads as under:-

“JSPL shall be allowed to draw power transmission line(s) from its existing

captive power plant situated at Raigarh or from the proposed independent power

plant of Jindal Power Limited, to the proposed industrial estate and to directly

sell power to the industrial units set up in the proposed industrial Estate, as per

provisions of the Power Policy of the Government of Chhattisgarh on terms and

conditions to be mutually agreed between the entrepreneurs and JSPL.”

Subsequently, the Energy Department of the GoC issued a letter on 29.1.2003

bearing No. 437/IR_G_Y#cIR/2003 (A-10) conveying the Government’s no

objection to supply of power by JSPL, from their captive power plant, to

industries which may be set up in their private industrial estate proposed in

Raigarh District …………..

On 31.5.2003, the CSEB granted permission/no objection (A-11) to the company

for laying transmission and distribution lines for supply of power to prospective

units in the proposed industrial estate from its captive power plant on the basis

of the application made by the company on 12.2.2003 to the Board.”

Therefore, the Commission very well knew of the said commitment of the

petitioner to supply power to the OP Jindal Industrial Park from the captive

power plant, and such power supply has to be considered while deciding captive

status of the petitioner for the FY 2006-07.

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25. This Commission have to invoke its ‘regulatory’ powers envisaged under Section

86 of the Electricity Act, 2003 and exclude the agreements / commitments of the

petitioner in supplying power to the distribution licensees, while calculating the

net generation from the captive power plant of the petitioner. This Commission

should use its regulatory power in order to find out a solution to the said issue

when there is no fault of the petitioner since it is only implementing the

understanding it has with the State Govt.

26. The petitioner submits that the observations made in the order dated

18.06.2013, which was set aside by the Hon’ble Appellate Tribunal, entailed

payment of cross subsidy surcharge to the distribution licensee, CSPDCL, when

such licensee was the beneficiary of the PPA the petitioner had with the erstwhile

CSEB. The petitioner submits that it is not proper for a distribution licensee on

one hand consume electricity from the power plant of the petitioner and on the

other hand collect cross subsidy surcharge when the said surcharge has been

levied owing to the commitments the petitioner had with the said licensee. The

Respondent No. 2 CEI, based upon who’s report this Commission initiated the

proceedings which culminated in the passage of the order dated 18.06.2013,

should have considered the PPA executed by the petitioner with the CSEB/

CSPDCL.

27. It is submitted that the petitioner also sent a letter to the CSEB dated

25.04.2006 with regard to the reduction in quantum of the power contracted

since there was a reduction in the surplus power. However, the CSEB replied to

the same, vide a letter No. 02-02/ACE-I, rejecting the petitioner’s request for

reduction in quantum on the ground that the tow long term PPA’s dated

15.07.2009 and 01.08.2002 are for a period of 10 years and are required to

continue as per the provisions of the said agreements till their expiry.

Thus the petitioner tried reducing the quantum, however, the said request was

denied by the CSEB, and since it is a bilateral agreement the petitioner could not

have either reduced the contract quantum or terminated the same since it could

have entailed other financial implications.

28. At this juncture, the petitioner craves leave to refer to an order passed by the

Commission dated 06.02.2006, in P.No. 17 of 2005(M), which was filed by

certain captive power producers for regulation of purchase of power by the

CSEB:

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Every new CPP shall declare and submit to the Chief Electrical Inspector, the

CSEB / licensee to whose grid it is connected and to this Commission, the date of

its commercial operation. This is required so that monitoring as above is

facilitated.

17. Effective date and applicability to subsisting PPAs: This order shall

come into operation on the 1st Mach, 2006, for facility of operation. This,

however, in so far as it relates to purchase of power by the CSEB, will not apply

to the subsisting power purchase agreements under which the Board is already

procuring power, in other words, the agreement is already operational till its

validity.

29. From the above, it is clear that the implementation of the above order, which,

inter alia, envisages submissions of necessary details to the respondent No. 2,

CEI by the captive generating plants for deciding their captive status, is

exempted for PPAs executed with the CSEB which are subsisting. The PPA of the

petitioner with the CSEB was subsisting and valid during the FY 2006-07.

Therefore, as per the above order of this Commission, the power of around 100

MW has to be excluded while calculating the net generation for meeting the 51%

criterion. The above order was passed on 06.02.2006 i.e. before the start date of

the FY 2006-07 and the petitioner, keeping in mind the said order, continued to

honor its commitments to the CSEB.

30. The petitioner was thus adhering to the prevalent electricity regulatory

mechanism in the State of Chhattisgarh, and was discharging its commitments to

the CSEB as per the said mechanism. The above order was passed to set out the

regulatory mechanism post promulgation of the Electricity Rules, 2005. The

petitioner cannot be penalized for acting in consonance with a previous order of

this Commission.

31. In the event of quantum of power supplied to the distribution licensees is

deducted / removed from the total generation of the captive power plant, then

the petitioner complies with the 51% eligibility criterion for the FY 2006-07.

32. One other issues which is raised by the petitioner in the present petition is the

fact that this Commission passed the earlier order dated 18.06.2013 without

considering the housing colony of the petitioner company as captive user. The

same has already been settled / considered in the Electricity (Removal of

Difficulty) Fourth Order, 2005, wherein it has been clarified that supply of

electricity by the generating company to the housing colonies of the operating

staff shall be deemed to be an integral part of the activity of generating

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electricity. This Commission in the light of the same has to consider the said

supply of power to the housing colonies as captive use.

33. It is however pertinent to mention that Chief Engineer, Commercial of the CSEB

wrote a letter, numbered as 02-02/SE/II, to the Chief Engineer (BR) wherein it

was communicated that the power supply of the petitioner from the 33 KV line

be disconnected since the same is meant for the township / housing of the

workers employed with the power station in the light of the above

Electricity(Removal of Difficulty) Fourth Order, 2005, wherein it was envisaged

that for supplying power to the housing colonies of the operating staff of the

power station no license is required by the petitioner.

34. Before proceeding to the grounds of the present petition, the petitioner submits

that in the order dated 18.06.2013, which has since been set aside, in paragraph

No. 5, on page number 5, in a table in the remarks column, it has been

mentioned that 622.51 MUs were supplied by the petitioner to Jindal Park,

Nalwa. The petitioner submits that Jindal Park and Nalwa are two separate

entities and the power sourced to both the said destinations cannot be clubbed

together. Jindal park is the distribution area where the petitioner distributes

electricity as a distribution licensee, while Nalwa is a sister concern of the

petitioner and gets power from the erstwhile Chhattisgarh State Electricity Board

(the distribution arm of the CSEB has now been unbundled into CSPDCL), vide a

letter dated 09.08.2002. Further, the power sources to the OP Jindal Park cannot

at all be subjected to any imposition of cross subsidy surcharge since the said

power is sourced to a distribution licensee.

35. Further, it is pertinent to mention herein that the power supplied to Nalwa by the

petitioner under Section 43A of the Electricity Act, 1948 is exempted from

payment of cross subsidy surcharge as per the Electricity (Removal of

Difficulties) Second Order, 2005, dated 08.06.2005. The relevant portion of the

said order is quoted herein below:-

“2. Exemption from payment of surcharge on the sale or

supply of electricity – No surcharge would be required to be paid, in

terms of sub section (2) of Section 42 of the Act on the electricity being

sold by the generating companies with consent of the competent

government under clause (c) of sub section (1) of Section 43A of the

Electricity Act, 1948 (now repealed by the Act), and on the electricity

being supplied by the distribution licensee on the authorization by the

State Government under section 27 of the Indian Electricity Act, 1910

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(now repealed by the Act) till the current validity of such consent or

authorizations.”

Relevant portion of the Section 43A of the Electricity Supply Act, 1948 is setout

herein below:

“43-A. TERMS, CONDITIONS AND TARIFF FOR OF ELECTRICITY

BY GENERATING COMPANY

(1) A Generating Company may enter into a contract for the sale of

electricity generated by it-

(a) With the Board constituted for the State or any of the States in

which a generating station owned or operated by the company is

located;

(b) With the Board constituted for any other State in which it is

carrying on its activities in pursuance of sub-section (3) of Sec. 15-

A; and

(c) With any other person with consent of the competent Government

or Governments.”

The aforementioned permission dated 09.08.2002 to the petitioner to supply to

Nalwa was accorded by the Board of the CSEB, which was a wholly owned

government entity. Hence, the petitioner has been supplying power to Nalwa

under the said permission accorded in consonance with Section 43A (1) (c) of

the Electricity Supply Act, 1948. Therefore, any actions of the respondents to

subject the petitioner to payment of any cross subsidy surcharge for the power

supplied to Nalwa would be against the above order.

36. It is pertinent to mention herein that as a result of the earlier order dated

18.06.2013, which was set aside by the Hon’ble Appellate Tribunal, the

Respondent No. 1 CSPDCL proceeded to issue a letter dated 20.08.2013 wherein

a demand towards imposition of cross subsidy surcharge to the tune of Rs.

47,94,04,080/- (Rupees Forty seven crores ninety four lakhs four thousand and

eighty) was raised on the petitioner for the power consumed by the steel plant

and the housing colonies, in the FY 2006-07.

37. The petitioner submits that the above letter has now become illegal and without

jurisdiction / authority of law since the order dated 18.06.2013, based upon

which the above demand letter was issued, has itself been set aside by the

Hon’ble Appellate Tribunal for Electricity vide an order dated 23.09.2013. The

Page 15 of 27

respondent No. 1, therefore, can neither act in furtherance of the said letters nor

can take any coercive / other actions. The said letter / demand made by the

Respondent No. 1 need to be quashed / set aside.

38. Respondent No. 1 CSPDCL has made the following submission on the petition:-

(a) The Hon'ble Tribunal has set aside the order of the Commission dated

18.06.2013 in suo motu Petition No. 14 of 2014 and remanded the matter

back to the State Commission for fresh consideration. Thus it is only suo

motu petition No. 14 of 2012 that is restored for fresh consideration so far

as it concerns the Petitioner. The parties were only given liberty by the

Hon'ble Tribunal to raise issues and make submissions in that petition –

i.e. Petition No. 14 of 2012.

There cannot be multiple petitions open on the same subject and in

respect of the same issue. Accordingly, Petition No. 58 of 2013 does not

survive (being a petition for clarification of the order dated 18.06.2013

which stands set aside) and must accordingly be closed as in fructuous.

The Commission may consider separating the Petitioner's case from the

Petition No. 14 of 2013 (which dealt also with the cases of others which

are not affected by the Hon'ble Tribunal's order) and take this Petition No.

74/2013 as the Petition to be proceeded with in pursuance of the remand

by the Hon'ble Tribunal.

(b) The capacity of the generating plant is 893 MW at the relevant time as on

1.04.2006. That is contrary to the averment in paragraph 20 wherein the

capacity is stated to be 333 MW and it is also contrary to the report of the

CEI which mentions 347 MW.

(c) The Petitioner's generating plant cannot be considered as a captive

generating plant for the purposes of the Act. There is no provision in the

Rules for any such consideration or relaxation on such or any other

grounds. This issue is settled by the decision of the Hon'ble Tribunal in

Godavari Power's case wherein the Hon'ble Tribunal has so held and

upheld the decision of the Commission to that effect.

The averments in paragraph 16 are effectively denied on admission that

the Petitioner's power plant did not ever, and could not ever have,

qualified as a captive generating plant for the purposes of EA 2003 in

terms of Rule 3 of the Electricity Rules 2005 or otherwise for 2006-07.

(d) Non qualification of the Petitioner's power plant as a captive generating

plant in terms of Rule 3 for the purposes of the EA 2003 cannot be any

Page 16 of 27

stretch of imagination be considered as penalizing the Petitioner as

contended in para 17 or otherwise. The non-qualification results from not

meeting the requirements for being considered as a captive generating

plant. There is no discretion available to any authority with regard to the

application of Rule 3 in terms thereof.

(e) The knowledge of the Commission of the position of the Rules as does not

affect the application or Rule 3, and the contentions in para 18 are

untenable. The distribution license was granted upon the application of

the Petitioner for such a license, and it was for the petitioner to

understand the consequences and obligations arising there from.

(f) The contention in para 19 and Ground X that the Commission has, or can

exercise, any regulatory power allegedly under section 86 to over ride any

act contrary to statutory rules is wholly misconceived. It is not for the

Commission to find out a solution as sought or otherwise; it is for the

Petitioner to understand and accept that the Petitioner's power plant is

not a captive generating plant for the purposes of the Act in terms of the

Statutory provisions in Rule 3.

(g) The averments in paragraph 20 and Ground XI are wholly misconceived.

It cannot be said that the licensee was a beneficiary of any PPA. The

licensee has not consumed any power from the Petitioner. The cross

subsidy surcharge is payable in respect of the consumption by the

Petitioner and other consumers of the Petitioner's power.

(h) The effect of para 17 of the order dated 06.02.2006 is only that the PPAs

subsisting as on that date would not be subject to the provisions of

competitive bidding as set out in para 9 of that order. It is

incomprehensible as to how the inference urged by the Petitioner is

tenable.

(i) The 4th Removal of Difficulties order is not applicable to the Petitioner's

township. The Respondent is given to understand that the residents of the

township/housing colony are not restricted only to operating staff of the

generating station. There are other residents unconnected to the

generating station and there also appear to be commercial and other

establishments within. The supply of electricity to such a township without

a license is an offence.

(j) Insofar as the claim that the electricity consumed by any of the residents

of such township/colony is captive consumption, it is submitted that the

consumption by the residents is not free. It cannot be said that the

Page 17 of 27

consumption by the residents for their own use is consumption by the

Petitioner.

(k) The permission for the supply to Nalwa was certainly not u/s 43-A of the

ESA 1948. The CSEB was never an authority for permission u/s 43-A(1)(c)

of the ESA 1948 and the contentions of the Petitioner in this respect are

misleading and untenable.

(l) The Petitioner is not entitled to be considered as a captive generating

plant for 2006-07 on any of the please and grounds urged in the Petition

or otherwise and the Petitioner is also not entitled to any other relief.

Analysis and Decision

39. To determine captive status of various power plants including the petitioner M/s

JSPL, this Commission has registered a Suo Motu P.No. 14/2012(M) and order

was passed on 18.06.2013 whereby their captive status has been decided for the

year 2006-07.. In the above order based on the records and various submissions

made by the petitioner and respondents as the total consumption with respect to

net generation of electricity by the petitioner was 35.38%, M/s JSPL could not

qualify as a captive generating plant for the year 2006-07 within the meaning of

the definition of captive generating plant as per sub section 8(2) of the Electricity

Act, 2003 read with Rule 3 of the Electricity Rules, 2005.

40. Aggrieved with the findings of the Commission, the petitioner M/s JSPL

preferred an appeal before the Hon’ble Appellate Tribunal for Electricity, which

was registered as appeal No. 217/2013 and 224/2013. Hon’ble Tribunal in its

order dated 23.09.2013 had set aside Commission’s order and remanded back

the matter to the State Commission with following directions:

“The State Commission is directed to consider the submissions relating to these

issues to be made by all the parties concerned on merits and decide the issues

afresh, uninfluenced by any of the observations made earlier by the State

Commission in the impugned orders.”

41. For fresh adjudication of the dispute, petitioner M/s JSPL filed a petition before

this Commission under section 86(1)(f) and 86(1)(k) of the Electricity Act, 2003

read with Rule 3 of the Electricity Rules, 2005, Electricity (Removal of Difficulty)

Fourth Order,2005 and Regulations 33(6)(b)(i) and 33(7) of the CSERC

(Connectivity and Intra-State Open Access) Regulations, 2011. The above

petition was registered as P.No. 74/2013(D).

Page 18 of 27

42. In the meantime, after issuance of this Commission’s order dated 18.06.2013 in

Suo Motu P.No. 14/2012(M), the petitioner M/s JSPL filed another petition as

“an application for clarification and for issuance of appropriate directions under

regulation 44 of the CSERC (Conduct of Business) Regulations 2009 pursuant to

the order dated 18.06.2013 passed in P.No. 14/2012(M)”. The above application

was registered by the Commission as P.No. 58/2013(M) with CSPDCL and Chief

Electrical Inspector (CEI), Government of Chhattisgarh (GoCG) as respondents.

43. After registration of P.No. 74/2013(D), Respondent No. 1 CSPDCL sought

clarification that the issues incorporated in P. No. 58/2013(M) and P.No.

74/2013(D) are identical in nature, therefore, they cannot proceed

simultaneously as it may create ambiguity in deciding the matter and requested

the Commission to merge one petition into the another and to go ahead further.

After considering the request of the CSPDCL, the Commission decided to merge

P.No. 58/2013(M) into P.No. 74/2013(D) and accordingly the petition have

proceeded further.

44. Going into the details of the petition, reply filed by the respondent and argument

advanced during the proceeding held on different dates. The brief of the case is

summarized as under:-

(A) M/s JSPL is an integrated steel plant situated in Raigarh Dist.,

Chhattisgarh State. The petitioner M/s JSPL has also installed generating

plant having capacity 347.7 MW for captive use. Electricity so generated

by generating plant is utilized by the petitioner for various purposes. As

per the information made available by CEI, GoCG on generation and

consumption of electricity by the petitioner during the year 2006-07 is

summarized as below:-

Total generation 2225.55 MU

Auxiliary consumption 232.643 MU

Net generation 1992.91 MU

Captive consumption in the steel plant at Raigarh and Raipur.

758.62 MU

Percentage consumption w.r.t. net generation 38%

Power supplied to their sister concern M/s Nalwa and to the coal mines

30.35 MU

Power supplied to colony 3.37 MU

Power supplied to CSPDCL 622.94 MU

Power supplied to OP Jindal Industrial Park 577.63 MU

Page 19 of 27

(B) According to petitioner, power supplied to their sister concern M/s Nalwa

and to the housing colonies of the petitioner, permission was granted by

the Appropriate Authorities under the prevailing Rules & Regulations

subject to the condition that any change at the later stage, the permission

will be amended accordingly.

45. After analysis of various submissions made by the petitioner and respondents,

following points needs to be deliberated to reach at a conclusion:-

(a) It is noted that the status of the petitioner's power plant for the year

2006-07 was decided on the basis of information furnished by CEI, GoCG

on generation and consumption of electricity of the power generated from

power plants operating in the State.

(b) The petitioner has requested the Commission to consider the following

points while deciding the captive status for FY 2006-07:-

(i) The capacity of the power plant was designed keeping in view with

phase wise requirement of their captive activities. eg.

manufacturing of steel, mines activities, etc. An agreement (PPA)

was executed with CSEB (now CSPDCL) prior to enactment of the

Electricity Act, 2003 for sale of 100 MW power. As the PPA was

executed prior to enactment of the Electricity Act, 2003 and the

Electricity Rules, 2005, the same should be excluded from the net

generation for determining the captive status.

(ii) M/s JSPL had established OP Jindal Industrial Park prior to

enactment of the Electricity Act, 2003 and the Electricity Rules,

2005 with the permission from the State Govt. and has also

obtained distribution license from the State Commission on

29.11.2005 under the commitment that surplus power would be

supplied to the Industrial park for distribution business. This should

also be excluded while determining the captive status.

(iii) Power supply to its colonies / township and to their sister concern

M/s Nalwa was undertaken for which these permission from the

Competent Authority, therefore, power supplied to these premises

should not be treated as power supplied to non captive use in light

of the Electricity (Removal of Difficulty) Fourth and Second Order

respectively.

(c) From the above prayer of the petitioner, in nutshell, it can be said that

petitioner wants to exclude supply of electricity to distribution licensee of

Page 20 of 27

the area (CSPDCL) and OP Jindal Industrial Park, for determination of its

captive status and also to consider supply of electricity to his colonies /

township and to his sister concern M/s Nalwa as captive consumption.

46. Let us analyze, above points one by one to reach at the conclusion:

(a) Relevant portion of the Electricity Act, 2003 and Electricity Rules, 2005 are

as under:

Section 2(8):“ Captive generating plant” means a power plant set up by

any person to generate electricity primarily for his own use and includes a

power plant set up by any co-operative society or association of persons

for generating electricity primarily for use of members of such cooperative

society or association;”

Section 2 (70) "supply", in relation to electricity, means the sale of

electricity to a licensee or consumer;

Rule 3 of the Electricity Rules, 2005

(1) No power plant shall qualify as a ‘captive generating plant’ under

section 9 read with clause (8) of section 2 of the Act unless-

(a) in case of a power plant -

(i) not less than twenty six percent of the ownership is held by the

captive user(s), and

(ii) not less than fifty one percent of the aggregate electricity

generated in such plant, determined on an annual basis, is

consumed for the captive use:

Provided that in case of power plant set up by registered

cooperative society, the conditions mentioned under paragraphs at (i) and

(ii) above shall Provided further that in case of association of persons, the

captive user(s) shall hold not less than twenty six percent of the

ownership of the plant in aggregate and such captive user(s) shall

consume not less than fifty one percent of the electricity generated,

determined on an annual basis, in proportion to their shares in ownership

of the power plant within a variation not exceeding ten percent;

(b) in case of a generating station owned by a company formed as

special purpose vehicle for such generating station, a unit or units of such

generating station identified for captive use and not the entire generating

station satisfy (s) the conditions contained in paragraphs (i) and (ii) of

sub-clause (a) above including -

Page 21 of 27

Explanation :-

(1) The electricity required to be consumed by captive users shall be

determined with reference to such generating unit or units in aggregate

identified for captive use and not with reference to generating station as a

whole; and

(2) the equity shares to be held by the captive user(s) in the generating

station shall not be less than twenty six per cent of the proportionate of

the equity of the company related to the generating unit or units identified

as the captive generating plant.

(2) It shall be the obligation of the captive users to ensure that the consumption

by the Captive Users at the percentages mentioned in sub-clauses (a) and (b) of

sub-rule (1) above is maintained and in case the minimum percentage of captive

use is not complied with in any year, the entire electricity generated shall be

treated as if it is a supply of electricity by a generating company.

Explanation.- (1) For the purpose of this rule.-

a. “Annual Basis” shall be determined based on a financial year;

b. “Captive User” shall mean the end user of the electricity

generated in a Captive Generating Plant and the term

“Captive Use” shall be construed accordingly;

c. “Ownership” in relation to a generating station or power plant

set up by a company or any other body corporate shall

mean the equity share capital with voting rights. In other

cases ownership shall mean proprietary interest and control

over the generating station or power plant;

d. “Special Purpose Vehicle” shall mean a legal entity owning,

operating and maintaining a generating station and with no

other business or activity to be engaged in by the legal

entity

(b) Hon’ble Tribunal in its judgment dated 18.02.2013 in Appeal No. 33/2012

in the matter of M/s Godawari Power & Ispat Ltd. has adjudicated the

case which is similar in nature and held that Rule 3 of the Electricity Rules,

2005 specifically prescribes two conditions which are to be satisfied by the

captive power plant. If any one of those conditions is not fulfilled, the

captive power plant will lose its status and become a generating plant.

and the State Commission does not have any powers to relax the

provisions of the Electricity Act, 2003.

Page 22 of 27

(c) Petitioner in its submission has invited the Commission’s attention towards

para 17 of the order dated 06.02.2006 in P. No. 17/2005, whereby he

wants to establish that their exist agreement with CSEB/CSPDCL for

supply of 100 MW power, therefore, it should be excluded from the net

generation while determining the captive status. For brevity , para 17 of

the above order is as follows:-

“17. Effective date and applicability to subsisting PPAs: This order shall

come into operation on the 1st Mach, 2006, for facility of operation. This,

however, in so far as it relates to purchase of power by the CSEB, will not

apply to the subsisting power purchase agreements under which the

Board is already procuring power, in other words, the agreement is

already operational till its validity. All new power purchase agreements

including such of the existing agreements which are not yet operational

and supply of power to the Board has not commenced under such

agreement, shall now be in compliance with this order. This order will be

reviewed after a period of three years, in February 2009.”

In this regard, it should be noted that the above order was issued in the

matter of power purchase and related dispensation in respect of captive

generating plant and effect of para 17 is only that the subsisting PPA's

would not be reviewed and the tariff and other terms and conditions as

set out in PPA would continue till the term of PPA.

Rule 3 of the Electricity Rules, 2005 specifically prescribes the condition to

be satisfied by the power plant to be qualified as captive generating plant.

Therefore, a power plant can qualify as captive power plant only when it

satisfies both the condition i.e. holding 26% of the ownership and

consumption of more than 51% of the electricity generated.

(d) It may be apposite to note that as per the Act and Rules, 2005 "supply"

and "captive use" are entirely distinct nature of electricity consumption.

According to the Act, the power supplied by JSPL to CSEB(CSPDCL) from

its captive generating plant is "supply". Secondly, JSPL had executed PPA

of 100 MW (70 MW and 30 MW) with CSEB to sell its surplus power from

its captive generating plant. In Para 7 of the PPA executed by JSPL with

CSEB , it is clearly mentioned that the company may feed electricity

generated at captive generating plant in surplus after meeting its

requirement. Thirdly, JSPL had contracted to supply 100 MW power to

CSEB. The data provided by CEI reveals that in the year 2006-07 ,JSPL

had supplied 622.94 MU to CSEB from its captive generating plant, which

Page 23 of 27

corresponds to 71.11 % load factor only. So it is incorrect on the part of

JSPL to submit that as it had earlier commitment to supply power to CSEB

of 100 MW ,it could not maintain status of power plant as captive

generating plant. In fact JSPL power plant, after meeting its industrial

power requirement had supplied surplus energy available to CSEB and

other users. Similarly power supplied to Industrial park is also a "supply"

of power to distribution licensee.

47. So far as supply of electricity to State Electricity Board is concern JSPL had fed

only surplus energy available with them after their captive use. In the case of

supply of electricity to OP Jindal Industrial Park situated in village Tamnar and

Punjipatra of Raigarh Distt., , the supply has been made to the JSPL distribution

licensee consumers by the petitioner from their surplus energy available from

their captive generating plant. A captive generating plant by its definition, is

primarily established for own use.

48. Clause 3(1) (b) of the Electricity Rules, 2005 prescribes as under :

"(b) in case of a generating station owned by a company formed as special

purpose vehicle for such generating station, a unit or units of such generating

station identified for captive use and not the entire generating station satisfy (s)

the conditions contained in paragraphs (i) and (ii) of sub-clause (a) above

including -

Explanation :-

(1) The electricity required to be consumed by captive users shall be determined

with reference to such generating unit or units in aggregate identified for captive

use and not with reference to generating station as a whole; and

(2) the equity shares to be held by the captive user(s) in the generating station

shall not be less than twenty six per cent of the proportionate of the equity of

the company related to the generating unit or units identified as the captive

generating plant.

Illustration: In a generating station with two units of 50 MW each namely Units A

and B, one unit of 50 MW namely Unit A may be identified as the Captive

Generating Plant. The captive users shall hold not less than thirteen percent of

the equity shares in the company (being the twenty six percent proportionate to

Unit A of 50 MW) and not less than fifty one percent of the electricity generated

in Unit A determined on an annual basis is to be consumed by the captive users.

Page 24 of 27

49. The Rules, 2005 prescribes that a power plant can identify a unit or units of such

power plants for captive use. Alternatively, a power plant can identify any unit or

units of its power plant as captive generating plant. In such cases when any

unit(s) has been identified for captive use then electricity consumed by captive

users shall be with reference to unit or units in aggregate identified for captive

use and not with reference to power station as whole. M/s JSPL had not

identified any unit or units for captive use in advance. It has also not identified

any unit or units for sale of power to Electricity Board and distribution business in

OP Jindal park. After the completion of financial year, JSPL is urging to exclude

the supply to licensee(CSEB and JSPL(D)) in computation of captive

consumption. So the submission made by the petitioner in this regard cannot be

accepted.

50. The issue of consumption of power in housing colonies of an petitioner needs to

be examined under the provisions of the Act. Section 2(30) of the Act defines a

generating station.

(30) "generating station" or "station", means any station for generating

electricity, including any building and plant with step-up transformer, switch-

gear, switch yard, cables or other appurtenant equipment, if any, used for that

purpose and the site thereof; a site intended to be used for a generating station,

and any building used for housing the operating staff of a generating

station, and where electricity is generated by water-power, includes penstocks,

head and tail works, main and regulating reservoirs, dams and other hydraulic

works, but does not in any case include any sub-station;

51. The Act, considers building used for housing operating staff of a generating

station as a generating station. Further The Electricity (Removal of Difficulty)

Fourth Order, 2005 specifies as under:-

“Supply of electricity by the generating companies to the housing

colonies of its operating staff: The supply of electricity by a generating

company to the housing colonies of, or township housing, the operating

staff of its generating station will be deemed to be an integral part of its

activity of generating electricity and the generating company shall not be

required to obtain license under this Act for such supply of electricity.”

Removal of Difficulty order further clarifies that the generating company is not

required any distribution licence for supply of electricity in the colony or township

meant for operating staff of its generating station because it is deemed to be an

integral part of its activity of generation of electricity.

Page 25 of 27

Section 2(8) of the defines captive generating plant.

(8) "Captive generating plant" means a power plant set up by any person to

generate electricity primarily for his own use and includes a power plant set up

by any co-operative society or association of persons for generating electricity

primarily for use of members of such co-operative society or association;.

Technically speaking there is no difference between power unit or units of

captive generating plant and generating station. The difference between captive

generating plant and generating plant is that while captive generating plant is set

up primarily for his own use a generating station is established to supply

electricity or sell electricity. An industrial unit setting up a captive generating

plant is also a station for generating electricity, and includes any building and

plant with step-up transformer, switch-gear, switch yard, cables or other

appurtenant equipment, if any, used for that purpose and the site thereof; a site

intended to be used for a generating station, and any building used for housing

the operating staff of a generating station . So housing colonies of operating

staff of an industrial unit can also be an integral part of a industrial unit which

has also set up a captive generating plant. An industrial unit which has set up a

captive generating plant i.e. a power plant for his own use can feed electricity to

housing colonies of operating staff of whole industrial unit including its captive

generating plant. Accordingly, supply of power by JSPL to its housing colony is

exempted from payment of any cross-subsidy surcharge.

52. The petitioner has supplied power to its sister concern M/s Nalwa through

dedicated line and it is stated that this supply is affected under due permission

from the authorities i.e. the State Govt. and the distribution licensee under

section 43(a) of the ESA, 1948. The Electricity (Removal of Difficulty) Second

Order, 2005 is as under:-

“Exemption from payment of surcharge on the sale or supply of electricity –

No surcharge would be required to be paid, in terms of sub-section (2) of

section 42 of the Act on the electricity being sold by the generating

companies with consent of the competent government under clause (c) of

sub-section(1) of section 43 A of the Electricity Act, 1948 (now repealed by

the Act) and on the electricity being supplied by the distribution licensee on

the authorization by the State Government under section 27 of the Indian

Electricity Act, 1910 (now repealed by the Act), till the current validity of

such consent or authorizations.”

Distribution Licensee (CSEB/CSPDCL) vide its letter No. 1170 dated 09.08.2002

granted permission for supply of power to coal washery of M/s JSPL and to M/s

Page 26 of 27

Nalwa Sponge Iron Pvt. Ltd. From their existing power plant at Raigarh. Relevant

para of the letter dated 09.08.2002 is as follows:-

“Further, the aforesaid permission shall not relieve you from the obligation

to comply with the provisions of prevailing Acts and rules i.e. Electricity

Act, 1910, Indian Electricity Rules, 1956 and also the Electricity (Supply)

Act, 1948 and also in future as amended from time to time or any other

statutory laws or by-laws made thereafter which may become applicable.”

The Energy Department, Govt. of Chhattisgarh vide notification No. 2401 dated

06.06.2003 granted permission to M/s JSPL for supply of 2 MW electricity to its

sister concern M/s Nalwa. As per para 3 of the GoCG notification dated

06.06.2003, it is compulsory for M/s JSPL to follow the rules as stated in CSEB

letter No. 1170 dated 09.08.2002.

On perusal of the letters issued by the GoCG and CSEB, distribution licensee of

the area, it is stated that permission is granted under the prevailing rules and

regulations applicable in supply of electricity to M/s Nalwa and if there is any

change in the Electricity Act the same will be made applicable. After

incorporation of the Electricity Act, 2003, supply of electricity to a consumer is

permitted only under certain condition for which permission from Competent

Authority is required, which petitioner has not ensured. In the instant case, it is

not established that M/s Nalwa is receiving electricity from its captive power

plant as captive consumer therefore the petitioner contention that because

authorities have already given permission to supply electricity to M/s Nalwa from

its captive power plant prior to enactment of Electricity Act, 2003 no more

permission is required from any authority is also not accepted.

53. So far supply electricity to coal mines and coal washery is concern, because its

ownership is vested with the petitioner, therefore electricity supplied is covered

under own consumption. The CSPDCL may obtain information from appropriate

entities and segregate electricity consumed by coal mines of JSPL from the total

of 30.35 MU consumed by Nalwa and coal mines and thereafter recompute own

industrial consumption of JSPL.

54. To sum up, Rule 3 of the Electricity Rule, 2005 specifically prescribes that two

conditions are mandatory and are to be satisfied by the power plant to be

qualified as captive power plant, if any one of this condition is not fulfilled the

captive power plant will lose its captive status and become generating plant. In

the instant petition, petitioner could not satisfied one of the condition of the Rule

3 viz consumption of 51% of the gross electricity generated by its power plant

Page 27 of 27

for captive use during the year 2006-07. Therefore, the power generated from its

power plant shall be treated as if it is a supply of electricity to a generating

company as per Rule 3(2) of the Electricity Rules, 2005.Hon’ble Tribunal in its

judgment dated 18.02.2013 in appeal No. 33/2012 in the matter of M/s

Godawari Power & Ispat Ltd. has very categorically clarified that the Commission

does not have any power to relax the requirement of consumption of not less

than 51% of the electricity generated from the appellant’s power plant for

captive use.

55. In view of the above findings following orders are passed:-

(a) Supply of electricity to distribution licensee of the area (CSPDCL) will not

be excluded from the net generation of electricity from the power plant

for determination of its captive status for the year 2006-07.

(b) Supply of electricity to OP Jindal Industrial Park – distribution license

business of petitioner also will not be excluded from the net generation of

electricity from the power plant for determination of its captive status for

the year 2006-07.

(c) Cross-subsidy shall not be levied on power supplied to colony / township

of the petitioner

(d) Electricity supply to petitioner’s sister concern M/s Nalwa will be treated as

supply of electricity by a generator to a consumer and not as a captive

consumption.

(e) As coal mines and coal washery establishment are wholly owned by the

petitioner therefore, electricity such supplied is treated as own

consumption.

(f) No cross subsidy surcharge will be levied on supply of electricity to

distribution licensee i.e. CSPDCL and JSPL(D) for OP Jindal Industrial Park.

However, cross subsidy surcharge shall be applicable according to the

Electricity Act, 2003 read with Electricity Rules, 2005 on balance quantum

of energy used for industrial consumption.

56. We order accordingly.

Sd/-

(Vinod Shrivastava) Member

Sd/- (Narayan Singh)

Chairman