BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION
GANDHINAGAR
Petition No. 1645 of 2017.
In the Matter of:
Petition for approval of Short Term Power Purchase arrangement for sourcing of power to
cater to the demand of Ahmedabad, Gandhinagar and Surat License areas under the
provisions of the Guidelines for Power Procurement by Distribution Licensee issued by the
Commission on 14.8.2013 read with Section 86 (1) (b) of the Electricity Act, 2003.
Petitioner
:
Torrent Power Limited,
“Tapovan”, 600, Tapovan,
Ambawadi, Ahmedabad – 380015.
Represented by
:
Shri Chetan Bundela and Ms. Luna Pal
CORAM:
Shri P. J. Thakkar, Member
Shri K. M. Shringarpure, Member
Shri Anand Kumar, Chairman
Date: 18/04/2017.
ORDER
1) The present Petition is filed by Torrent Power Limited seeking approval for Short-Term
Power Purchase arrangement to cater to the demand of Ahmedabad, Gandhinagar and
Surat license areas.
2) The brief facts of the Petition are as under:
2.1. The Petitioner Torrent Power Limited, a company incorporated under the Companies
Act, 1956, is engaged in the business of generation and distribution of electricity.
2.2. The Petitioner has Long-Term Power Purchase arrangement with AMGEN and SUGEN
to cater to the demand of its consumers of Ahmedabad/Gandhinagar and Surat license
areas.
2.3. The Petitioner has estimated the demand for power and shortfall in available power for
the period from 1st April, 2017 to 30th June, 2017 and has proposed to cater the demand
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by purchasing power through Short-Term bidding process as under:
Period
April 2017 to 30th
April 2017
1st May 2017 to 30th
June 2017
1st
Time Slot
0900 Hours to 2100 Hours
Quantum (MW)
150
0900 Hours to 2100 Hours
200
2.4. The Petitioner published tender notice on 16th February, 2017 for procurement of
power on short term basis through e-tendering and on Reverse Auction basis in two
newspapers, viz. (i) Business Standard (All India Edition) and (ii) Mint (All India
Edition).
2.5. The bidders were required to bid on MSTC’s website www.mstcecommerce.com(DEEP
Portal) and the last date for submission of offers was 18th February, 2017.
2.6. The results of the e-bidding and Reverse Auction as obtained from the MSTC website
are as follows:
Period
Time
Duration
1st April 2017 0900
to 30th April
Hours to
2017
2100
Hours
st
1 May 2017 0900
to 30th June
Hours to
2017
2100
Hours
Successful
Bidder
Source
Quantum(MW)
Adani
APL Mundra
Enterprises
Limited
150
Rate at
GETCO
periphery
(Rs./unit)
2.92
Adani
APL Mundra
Enterprises
Limited
200
2.92
2.7. The Petitioner has submitted Standing Committee Certificate for compliance of MoP
guidelines. Also, the Petitioner has issued the LOA to the successful bidder for
acceptance of bids.
2.8. Based on the above, the Petitioner has requested the Commission to approve the power
purchase arrangement as detailed hereinabove for supply of power during the period
from 1st April 2017 to 30th June 2017 in accordance with provisions of the Guidelines
for Power Procurement by Distribution Licensee issued by the Commission read with
the provisions of Section 86(1)(b) of the Act.
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3) The matter was kept for hearing on 24.03.2017. Shri Chetan Bundela, on behalf of the
Petitioner, reiterated the facts as recorded in para 2 above.
4) We have carefully considered the submissions made by the Petitioner. The Petitioner
has filed the present Petition seeking approval for Power Purchase Arrangement for the
period from 1st April 2017 to 30th June, 2017. We also note that the Petitioner, being a
distribution licensee, has the Universal Service Obligation to ensure electricity supply to
the consumers within the license area as provided under Section 43 of the Electricity
Act, 2003.
4.1. The Petitioner has prayed for approval of procurement of 150 MW day power i.e. from,
9: 00 Hours to 21:00 Hours from 1st April, 2017 to 30th April,2017 and 200 MW power
from 01.05.2017 to 30.06.2017 @ Rs. 2.92 per unit (GETCO periphery) in accordance
with the provisions of the Guidelines for Power Procurement by the Distribution
Licensee issued by the Commission vide Notification No. 2 of 2013 dated 14th August,
2013 read with Section 86(1) (b) of the Electricity Act, 2003. It is necessary to refer the
relevant provisions of Section 86 (1) (b) of the Electricity Act, 2003 and the guidelines
issued by the Commission:
“………......
86. Functions of State Commission, -(1): - The State Commission shall discharge the following function:
............................
(b) regulate electricity purchase and procurement process of distribution licensees
including the price at which electricity shall be procured from the generating
companies of licensees or from other sources through agreements for purchase of
power for distribution and supply within the State;
…………….”
As per the aforesaid provisions, a duty is cast upon the Commission to regulate the
electricity purchase and procurement process of the Distribution Licensee from the
generating companies and other sources.
4.2. Clause 13,14,15 and 16 of the Guidelines for Procurement of Power by Distribution
Licensee dated 14.8.2013 issued by the Commission which are relevant in the present
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petition are reproduced below:
“……..........
13. Where the Distribution Licensee is to procure power on a short-term basis or
there is a shortfall due to any reason whatsoever, or failure in the supply of
electricity from any approved source of supply during the year, for any reason
whatsoever, the licensee may enter in to a short-term arrangement or agreement
for procurement of power through power exchanges or through a transparent
process of open tendering and competitive bidding.
14. In case of procurement of power through competitive bidding, the Distribution
Licensee shall initiate the process for short-term power procurement in accordance
with the Ministry of Power’s Guidelines for Short-Term Procurement of Power by
Distribution Licensees through Tariff based bidding process’ notified by the
Ministry of Power on 15/05/2012 and in force from time to time. As provided in
the MoP Guidelines:
(a) The bid documentation shall be prepared in accordance with the MoP guidelines
and the approval of the GERC shall be obtained unless the bid documents are as per
the standard bid documents issued by the Central Government.
(b) Generally, no deviation shall be allowed from these Guidelines. However, if it is
essential to have the deviation from these Guidelines, the same could be done with
the prior approval of the GERC.
(c) The Procurer(s) shall procure short-term power as per the plan approved by the
GERC or appropriate body as may have been constituted for the purpose by the
GERC. In such case the Distribution Licensees will intimate about the initiation of
the procurement process to the GERC.
(d) In case procurement of short-term power exceeds the approved annual short-term
procurement plan, the Procurer(s) shall obtain prior approval from the GERC or
any appropriate body as may have been constituted for the purpose by the GERC.
15. For procurement on short-term basis, a single-stage bid process by inviting
Request for Proposal (RFP) shall be adopted. Procurer or authorized representative
shall prepare bid document in line with these Guidelines. The Procurer shall publish an
RFP notice in at least two national newspapers and upload the same on company
website to accord it wide publicity. The bidding shall necessarily be by way of
competitive bidding.
16. The PPA shall be signed with the selected bidder(s) consequent to the selection
process.
a. After the conclusion of bid process, the Standing Committee constituted for
evaluation of RFP bids shall provide appropriate certificate on conformity of the bid
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process evaluation to the provisions of the RFP document. The Procurer shall provide a
certificate on the conformity of the bid process to these Guidelines to the GERC.
b. If the quantum of power procured and tariff determined are within the overall
approval granted by the GERC in Annual Revenue Requirement (ARR) of the respective
year, then the same will be considered to have been adopted by the GERC.
In all other cases, the Procurer(s) shall submit a petition to the GERC for adoption of
tariff within two days from the date of signing of PPA. The GERC should communicate
the decision within seven days from the date of submission of petition.
................................”
As per Clause 13 of the aforesaid guidelines, when the Distribution Licensee needs to
procure the power to meet the demand of the consumers on short-term basis, the
Distribution Licensee may do so through energy exchange or through transparent
process of open tendering and competitive bidding.
Clause 14 of the aforesaid Guidelines provides that in case of procurement of power
through competitive bidding, the Distribution Licensee shall initiate the process for
Short-Term Power Procurement in accordance with the Guidelines for Short-Term
Procurement of Power by the Distribution Licensee through tariff based bidding
process notified by the Ministry of Power, Government of India on 15.05.2012. Thus,
the bid document shall be in accordance with MoP guidelines.
Sub-clause (b) of Clause 14 of the aforesaid Guidelines provides that whenever there is
any deviation from these Guidelines, the same could be done with prior approval of the
Commission. Further, sub-clause (c) of Clause 14 of the aforesaid Guidelines provides
that the procurer shall procure the short term power as per the plan approved by the
Commission.
Clause 15 of the said Guidelines provides that for Procurement of Power on short-term
basis a single stage bid process by inviting Request for Proposal (RFP) shall be adopted.
Further, it is also provided that the procurer / distribution licensee shall publish an RFP
notice in at least 2 national newspapers and upload the same on the company’s website
to accord wide publicity. The bidding shall necessarily be carried out by way of
competitive bidding.
Sub-Clause (a) of Clause 16 of the aforesaid Guidelines provides that the Standing
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Committee needs to be constituted for evaluation of RFP bids who shall provide
appropriate certificate on conformity of the bid process evaluation to the provisions of
RFP document and conformity of the bid process to these guidelines to the Commission.
Sub-Clause (b) of Clause 16 of the aforesaid Guidelines provides that if the quantum of
power procured and tariff determined are within the overall approval granted by the
Commission in the Aggregate Revenue Requirement (ARR) of the respective year, then
the same will be considered to have been adopted by the Commission.
4.3. We note that the Petitioner had published the tender notice on 16th February 2017 for
procurement aforesaid quantum of power during the period from April, 2017 to June,
2017 through e-tendering and on Reverse Auction basis in the Business Standard (All
India edition) and Mint (All India edition) newspapers. Thus, the tender notice issued
by the Petitioner in 2 (two) newspapers is in compliance with Clause 15 of the
Guidelines for Procurement of Power issued by the Commission.
4.4. As per the aforesaid Public Notice, it transpires that the bidders have to submit their
offers on MSTC’s website (Deep Portal). The Petitioner has also uploaded the RFP and
draft PPA on their website. The last date for submission of bids was 18th February,
2017.
4.5. We note that the Petitioner has submitted the RFP documents and draft PPA alongwith
the present petition. On verification of the RFP and draft PPA, we observe that Article
5.2.3 of the draft PPA contains the following provisions:
“…….
5.2.3 Liquidated Damages:
(b) In case deviation from Procurer side is more than 20% of contracted energy for
which open access has been allocated on monthly basis, Procurer shall pay
compensation at Rs. 2.00/KWh for the quantum of shortfall in excess of permitted
deviation of 20% in energy off-take.
(c) In case deviation from Seller side is more than 20% of contracted energy for
which open access has been allocated on monthly basis, Seller shall pay compensation
to Procurer at Rs. 2.00/KWh for the quantum of short fall in excess of permitted
deviation of 20% in the energy supplied.
…………..”
4.6. It is observed that the aforesaid Article 5.2.3 of the draft PPA is at variance with the
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provisions of the Guidelines for short-term Procurement of Power by Distribution
Licensees through tariff based bidding process dated 15th May 2012 issued by the
Ministry of Power, Government of India. The relevant clause of the said Guidelines is
reproduced below:
“...…......…
5 (vi) (e) Payment of Liquidated Damages for failure to supply the instructed
Capacity.
In case deviation from Procurer side is more than 15% of contracted energy for
which open access has been allocated on monthly basis, Procurer shall pay
compensation at 20% of Tariff per KWh for the quantum of shortfall in excess of
permitted deviation of 15% while continuing to pay open access charges as per
the contract.
In case deviation from Seller side is more than 15% of contracted energy for which
open access has been allocated on monthly basis, Seller shall pay compensation to
Procurer at 20% of Tariff per KWH for the quantum of shortfall in excess of
permitted deviation of 15% in the energy supplied and pay for the open access
charges to the extent not availed by the Procurer.
…….......….”
4.7. We note that the aforesaid deviations are made in the RFP and PPA documents by the
petitioner without obtaining prior approval of the Commission. The guidelines issued
by the Ministry of Powers as well as the Commission provides that for such deviation,
the petitioner needs to get prior approval of the Commission.
4.8. We note that the aforesaid deviation made by the petitioner in the bid documents
enforces upon the supplier to adhere to the committed quantum of power to the
petitioner otherwise he will have to pay penalty which is much higher than the penalty
specified in the bidding guidelines i.e. 20 % of the agreed tariff which works out as Rs.
0.584 per unit, while penalty proposed in the PPA is Rs. 2.00 per unit. Thus, in case of
failure on the part of seller to supply the energy, the petitioner will need to procure the
power and meet the demand of the consumers from alternate source and cover risk of
higher tariff for procurement of such power. Similarly, in case of failure of the petitioner in
procurement of power more than the 20% of the contracted energy during the month, the
procurer shall pay penalty @ Rs. 2.00 per KWh which is much higher than Rs. 0.584 per
KWh as provided in the guidelines. Since the deviation made by the petitioner binds both
the parties equitably to the committed quantum of power, we are of the view that the same
is in the interest of both the parties and also the consumers. Hence, we decide to approve
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the same.
4.9. We note that the Petitioner has constituted a Standing Committee as per Clause 6 of the
Guidelines issued by the Ministry of Power. As per Clause 11.2 of MoP Guidelines and
Clause 16 (a) of the Guidelines issued by the Commission, the Standing Committee
constituted for evaluation of bids is required to submit appropriate certificate on
conformity of the bid process evaluation according to the provisions of the RFP
document as well as the procurer is required to provide a certificate on the conformity
of the bid process to these guidelines. The relevant provisions of the Guidelines of
Ministry of Power and this Commission read as follows:
“………
11. Contract award and conclusion:
…..
11.2. After the conclusion of bid process, the Standing Committee constituted for
evaluation of RFP bids shall provide appropriate certification on conformity of the
bid process evaluation according to the provisions of the RFP documents. The
Procurer shall provide a certificate on the conformity of the bid process to these
Guidelines to the Appropriate Commission.
…….”
Guidelines of the Commission:
“16 (a). After the conclusion of bid process, the Standing Committee constituted for
evaluation of RFP bids shall provide appropriate certificate on conformity of the
bid process evaluation to the provisions of the RFP document. The Procurer shall
provide a certificate on the conformity of the bid process to these Guidelines to the
GERC.
………………..…”
In compliance to above, we observe that the Petitioner has submitted Standing
Committee Certificate along with the Petition certifying that the bid process evaluation
is done according to the provisions of the RFP documents and the bidding process is in
conformity with the guidelines for Short-Term power procurement issued by the
Ministry of Power vide Notification No. 23/25/2011-R7R dated 30th March, 2016.
Hence, the Petitioner has complied with the aforesaid requirement as required under
the guidelines issued by the MoP as well as this Commission. The relevant portion of the
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Standing Committee Certificate reads as follows:
“………
Standing Committee Certificate
Standing Committee:
(i) Shri Asis Ghosh, Executive Director,
(ii) Shri Nisarg Shah, VP (Commercial)
(iii) Shri Ashok Thakkar GM (Commercial)
Chairman
Member
Member
…….
Bid evaluation:
Total 8 bids were received for requisition 1 and 10 bids were received for
requisition 2. E-reverse auction was conducted on MSTC’s portal on 22nd February,
2017. The successful bidders after e-reverse auction are as under:
Period
Time
Duration
1st April 2017
to 30th April
2017
1st May 2017
to 30th June
2017
0900 Hours
to 2100
Hours
0900 Hours
to 2100
Hours
Successful
Bidder
Source
Adani
APL Mundra
Enterprises
Limited
Adani
APL Mundra
Enterprises
Limited
Quantum(MW)
150
Rate at
GETCO
periphery
(Rs./unit)
2.92
200
2.92
Accordingly, the Committee decided to issue Letter of Award (LOA) to the above
successful bidders.
The Committee hereby certifies that the bid process evaluation is done according
to the provisions of the RFP documents and the bidding process is in conformity
with the guidelines for Short-Term power procurement issued by Ministry of Power
vide Notification No. 23/25/2011-R7R dated 30th March, 2016. Hence, the
Petitioner has complied with the aforesaid requirement as required by the
guidelines issued by MoP as well as this Commission.
………..”
4.10. Based on the above, we decide that the procurement of power is carried out by the
Petitioner in conformity with the Guidelines for Short-Term Procurement of Power by
Distribution Licensee through Tariff based bidding issued by Ministry of Power dated
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30.3.2016 and the Guidelines for Procurement of Power by Distribution Licensee issued
by the Commission vide Notification No. 2 of 2013 dated 14th August 2013.
4.11. We also note that the rate discovered under the competitive bidding process for
procurement of day power i.e. 9:00 Hours to 21: 00 Hours of Rs. 2.92 per unit (GETCO
periphery) for the months of 1st April, 2017 to 30th April, 2017 and 1st May, 2017 to 30th
June, 2017 is lower than proposed procurement of power from TPL – G and SUGEN and
procurement of power from the bilateral arrangement during the FY 2017-18.
4.12. We, therefore, decide to adopt the power purchase arrangement made by the Petitioner
as follows:
Period
Time
Duration
1st April 2017
to 30th April
2017
1st May 2017
to 30th June
2017
0900 Hours
to 2100
Hours
0900 Hours
to 2100
Hours
Successful
Bidder
Source
Adani
APL Mundra
Enterprises
Limited
Adani
APL Mundra
Enterprises
Limited
Quantum(MW)
150
Rate at
GETCO
periphery
(Rs./unit)
2.92
200
2.92
5) With this order, the present petition is disposed of.
6) We order accordingly.
Sd/-
Sd/-
Sd/-
[P. J. THAKKAR]
[K. M. SHRINGARPURE]
[ANAND KUMAR]
Member
Member
Chairman
Place: Gandhinagar.
Date: 18/04/2017.
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