before the maharashtra electricity … 58 42/order-110 of 2017-28112017.pdf · merc order – case...

MERC Order – Case No. 110 of 2017 of 15

Before the

MAHARASHTRA ELECTRICITY REGULATORY COMMISSION

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

Tel. 022 22163964/65/69 Fax 22163976

Email: [email protected]

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

CASE No. 110 of 2017

In the matter of

Petition of Mumbai International Airport Pvt. Ltd. for clarification regarding

applicability of Power Factor Incentive to Open Access consumption

Coram

Shri. Anand B. Kulkarni, Chairperson

Shri. Azeez M. Khan, Member

Shri. Deepak Lad, Member

Mumbai International Airport Pvt. Ltd. ...Petitioner

Vs

The Tata Power Co. Ltd. (Distribution) ...Respondent

Appearance

For Petitioner: Shri. S. R. Nargolkar (Adv)

For Respondent: Smt. Swati Mehendale (Rep.)

ORDER

Dated: 28 November, 2017

Mumbai International Airport Pvt. Ltd. (MIAL) has filed a Petition dated 4 July, 2017

citing Section 86 (1) (k) of the Electricity Act (EA), 2003 read with Regulation 37 of the

MERC (Distribution Open Access) Regulations (‘DOA Regulations’), 2016 for clarification

regarding the applicability of Power Factor Incentive to the Open Access power

consumption of HT consumers.

2. The prayers of MIAL are as follows:-

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


a) Allow the present petition and clarify that the Petitioner is entitled for the power

factor incentive on the monthly electricity bill, excluding taxes and duties, for

Open Access consumption as well;

b) Direct the Respondent to provide power factor incentive to the Petitioner, in its

capacity as a consumer of the Respondent as well as in its capacity as an open

access consumer, retrospectively from November, 2015, along with Delayed

Payment Charge (DPC) and interest at such rates at which the Respondent is

charging DPC and interest for the delayed payments of the bill amount by the

consumers of the Respondent;...“

3. The Petition states as follows:

3.1. As operator of the Mumbai Airport, MIAL provides requisite aviation infrastructure

and requires continuous and non-fluctuating power supply to provide seamless and

efficient services and facilities to the airlines and travelers, thereby incurring

substantial expenses on procurement of power. Tata Power Co. Ltd. (Distribution)

(TPC-D)is supplying electricity to MIAL from 01.11.2009.

3.2. The services provided by MIAL are public utility services, and the management of

aerodromes is an essential service under the Essential Services Maintenance Act,

1968. Mumbai Airport is the major transport interchange in India and a catalyst for

economic growth and facilitator of commerce and industry on a national, regional

and local scale.

3.3. MIAL is incurring a large proportion of its expenditure on the procurement of power

in order to provide seamless service to the consumers. As such, non-grant of Power

Factor Incentive on charges for Open Access will gravely prejudice MIAL.

3.4. MIAL meets a portion of its power supply requirement as a consumer of TPC-D and

the remaining power requirement is fulfilled through an Electricity Trader

independently through Open Access Trader. The Trader and TPC-D raise separate

monthly bills based on the consumption of MIAL.

3.5. TPC-D raises its electricity bill as per the tariff rate approved by this Commission,

which also includes Wheeling Charges, Regulatory Asset Charges (RAC), Cross-

Subsidy Surcharge (CSS) and Electricity Duty on the Open Access consumption

units.

3.6. In the last Multi-Year Tariff (MYT) Order dated October 21, 2016 in Case No. 47 of

2016 for TPC-D, the Commission held as follows:

“Power Factor Incentive


Applicable for HT-I :Industry, HT II - Commercial, HT-IV : PWW, HT V-

Railways, Metro & Monorail, HT-VI: Public Services [ HT VI (A) and HT VI

(B)], HT VII - Temporary Supply, LT II: Non-Residential/Commercial [LT II

(B), LT II (C)] (for Contract Demand/Sanctioned Load above 20 kW), LT III

(B): Industry above 20 kW, LT IV- PWW, LT VII (B) – Temporary Supply

(Others) , and LT IX : Public Service [LT IX (A) and LT IX (B)].

Whenever the average Power Factor is more than 0.95, an incentive shall be

given at the rate of the following percentages of the amount of the monthly

electricity bill, excluding Taxes and Duties:

Sr. No. Range of Power Factor

Power Factor

Level Incentive

1 0.951 to 0.954 0.95 0%

2 0.955 to 0.964 0.96 1%

3 0.965 to 0.974 0.97 2%

4 0.975 to 0.984 0.98 3%

5 0.985 to 0.994 0.99 5%

6 0.995 to 1.000 1 7%

Note: Power Factor shall be measured/computed upto 3 decimals, after

universal rounding off. ”

3.7. Thus, the Power Factor Incentive is to be given as per the above Table, excluding

taxes and duties. However, it is not being given to MIAL by TPC-D for the power

availed through Open Access from Traders.

3.8. TPC-D has been providing Power Factor Incentive for the electricity consumption of

MIAL as a consumer of TPC-D. While levying charges for Open Access

consumption, including RAC, Wheeling Charges, CSS, etc., TPC-D has failed to

provide Power Factor Incentive with respect to the same, which is in derogation of

the MYT Order and of the Judgment of the Appellate Tribunal for Electricity

(APTELE), and is also at variance with the settled law on this aspect.

3.9. In its Judgment dated 14.11.2013 in Appeal No. 231 of 2012 (Jindal Stainless

Limited Vs. Dakshin Haryana Bijli Vitran Nigam and Haryana Electricity Regulatory

Commission), the APTEL inter alia addressed the issue of payment of CSS payable

by an Open Access consumer. It held that the CSS is required to be treated as part of

the electricity charges and to be factored in while deciding on the rebate admissible

for the Power Factor.

3.10. CSS has been held to form a part of sale of power. Accordingly, the Rebate should be

allowed on the cross-subsidy as well. There is thus no occasion for TPC-D to differ

from this settled position and deny the benefit of the Power Factor Incentive to

MIAL.


3.11. The entire purpose of the Power Factor Incentive is to encourage consumers to

improve their Power Factor and maintain it at a high level in order to reduce losses.

If Power Factor Incentive is not given, this purpose would be lost and there will be

no incentive to the consumer to maintain a high Power Factor.

3.12. The APTEL has held in its Judgment as under:

“33. ....It is to be noted that current drawn an lower power factor also

cause excessive voltage drop which would further increase the system losses.

Thus, it is proved that lower power factor causes higher system losses and

loss to the distribution licensee. The very purpose of providing higher power

factor incentive is to encourage the consumers to improve their power factor

by providing shunt compensation and bring it as close as possible to unity so

that the system losses are reduced to the minimum. This is a pure technical

and engineering principle and it does not distinguish as to whether the power

has been drawn from the licensee or on availing the ‘open access’.

34. The above analysis would show that very purpose to provide higher

power factor rebate is to encourage the consumer to maintain high power

factor and to minimize the system losses. Any loss before the meter installed

at consumer’s premises is on account of the distribution licensee. In order to

reduce these losses, the State Commission has incentivized high power factor

based on pure technical and engineering principle. It has nothing to do with

the source of power. Accordingly, power factor rebate is payable to the

consumer who also avails open access.

...39. We have carefully considered the submissions of the parties on this

issue. High Power Factor reduces the system loss and vice-versa. This is

purely a technical and engineering principle. It has universal application

irrespective of source of power. If a consumer procures power from other

sources through open access at high power factor, the system loss would be

less as in the case of his drawal of power from the distribution licensees.”

3.13. From a perusal of the relevant paragraphs of the APTEL Order, it may be noted that

the principle of Power Factor Incentive has been arrived at on the basis of a purely

technical and engineering principle and the source of power has no significance

whatsoever. It is therefore clear that the Power Factor Incentive would be applicable

to the power procured through Open Access as well, and its denial would be

prejudicial to the interest of MIAL.

3.14. While arriving at this conclusion, APTEL has relied upon Regulation 3 of the

Haryana Electricity Regulatory Commission (HERC) (Electricity Code), 2004, which

provides for recovery of electricity charges from consumers. Similar provisions are

stipulated in the MERC (Electricity Supply Code and Other Conditions of Supply)

Regulations, 2005 (‘Supply Code’). The relevant Regulation relating to recovery of

electricity charges is reproduced below:


“3. Recovery of Charges

3.1 The Distribution Licensee is authorized to recover charges for the

supply of electricity from any person requiring such supply in accordance

with the provisions of the Act and these Regulations.

3.2 The charges that a Distribution Licensee is authorized to recover

under these Regulations include-

…b) charges for electricity supplied by the Distribution Licensee in

accordance with Regulation 3.4 below.

…3.4 Charges for Electricity Supplied

3.4.1 The Distribution Licensee is authorized to recover charges for

electricity supplied in accordance with such tariffs as may be fixed

from time to time by the Commission:

Provided that in case of distribution of electricity in the same area by

two or more Distribution Licensees, the Commission may fix only the

maximum ceiling of tariff for retail sale of electricity.

3.4.2 The Distribution Licensee is also authorized to recover such

surcharge and charges for wheeling as may be specified under the

provisions of sub-section (2) and subsection (3) of Section 42 of the

Act and such additional surcharge as may be specified under the

provisions of sub-section (4) of Section 42 of the Act.

…3.4.5 In addition to the charges fixed by the Commission, consumers

shall be required to pay all taxes, duties and other statutory charges

as may be required under any law for the time being in force.”

3.15. In light of the APTEL Judgment and the Commission’s Supply Code, MIAL is

entitled to claim Power Factor Incentive from TPC-D even in its capacity as an Open

Access consumer. The grant of Incentive is in line with the view taken by the APTEL

in this regard, and there is no reason for any deviation from it.

3.16. Till April, 2017, TPC-D had been providing Power Factor Incentive on RAC.

However, since May, 2017, TPC-D has stopped providing such Incentive.

3.17. Hence, TPC-D may be directed to provide Power Factor Incentive on the power

consumed by MIAL as its consumer as well as in MIAL’s capacity as an Open

Access consumer, retrospectively from November, 2015; and the issue of providing

such Incentive on the Open Access Charges by TPC-D may be clarified accordingly.

4. In its Reply dated 16.9.2017, TPC-D stated as follows:


4.1. MIAL is a consumer of TPC-D with a Contract Demand of 13.30 MW. It is also

procuring power through Open Access for part of its demand.

4.2. As a partial Open Access consumer, MIAL has an independent Power Purchase

Agreement (PPA) with a Generator / Trader for part of its requirement. In line with

the DOA Regulations, 2016, MIAL is scheduling Open Access power through

Availability-based Tariff (ABT) metering arrangement in 15 minute time blocks as

per its own estimates for its own use.

4.3. Distribution Licensees also have direct contracts with Generators for supply of

power, which is also scheduled on 15 minutes time block basis, considering their

own estimates and the demand of their direct consumers. Although the Distribution

Licensees aggregate all the demands from Open Access consumers to arrive at their

final schedule submitted to the Maharashtra State Load Despatch Centre (MSLDC),

there is no responsibility on them for estimation of the requirements of such

consumers or even for the quality or cost of power procured by them.

4.4. The billing for MIAL for its consumption from TPC-D and the usage of its

distribution network for Open Access is carried out by TPC-D as per the relevant

Regulations and Orders of the Commission.

4.5. In its Petition, MIAL has sought application of Power Factor Incentive on the billing

related to its Open Access consumption.

4.6. In this regard, the DOA Regulations, 2016 specify the components of billing by

Distribution Licensees to an Open Access Consumer as follows:

“14. Billing

14.1. The bill for use of the Distribution System for wheeling of electricity

in its network shall be raised by the Distribution Licensee on the entity to

whom the Open Access is granted, and shall indicate the following:

(i) Wheeling Charges;

(ii) Cross-Subsidy Surcharge;

(iii) Additional Surcharge on the charges for wheeling;

(iv) MSLDC fees and charges.

Provided that, if the Distribution Licensee schedules power for the Open

Access Consumer, Generating Company or Licensee, as the case may be,

the MSLDC fees and charges payable by the Licensee shall be shared by

them in the ratio of scheduled demand of Open Access sought to the total

demand of the Distribution Licensee on a pro-rata basis for Long-term and

Medium-term Open Access;


Provided further that the scheduling and other operating charges, as may

be applicable, shall be levied by the Distribution Licensee on the Short-

term Open Access Consumer, Generating Station or Licensee at the rate

approved for Short-term Open Access by the Commission in its Order

determining MSLDC Fees and Charges;

Provided also that any specific methodology for charging MSLDC fees

and charges as may be approved by the Commission from time to time

through separate Order or other Regulations shall be applicable.

(v) Transmission Charges:

Provided that a Partial Open Access Consumer, Generating Station or

Licensee, as the case may be, shall pay the Transmission Charges to the

Distribution Licensee instead of the Transmission Licensee for using a

transmission network;

(vi) Any other charges, surcharge or other sum recoverable from the

Consumer under the Act or any Regulation or Orders of the Commission.”

4.7. Thus, the billing for Open Access consumers does not include Power Factor

Incentive / Penalty to Open Access consumers of a Distribution Licensee.

4.8. However, the DOA Regulations, 2016 provide for application of Reactive Energy

Charges to Open Access consumers:

“21. Reactive Energy Charge

21.1. The methodology for payment for the reactive energy charges by

an Open Access Consumer, Generating Station or Licensee with load

of 5 MW or more shall be in accordance with the State Grid Code and

the Regulations of the Commission governing Multi-Year Tariff or

relevant orders of the Commission.

21.2. The reactive energy charges in respect of Open Access

Consumers with load less than 5 MW shall be calculated on Power

Factor basis as may be specified in relevant orders of the

Commission.

21.3. The reactive energy charges in respect of Renewable Energy

Generating Stations shall be in accordance with the charges

approved by the Commission in its relevant Tariff Orders.”

4.9. Thus, the Power Factor of the Open Access consumer is to be utilized to arrive at the

Reactive Energy Charges payable by it. While the methodology has been specified,

the applicable Reactive Energy Charges have not been specified by the Commission

in its Tariff Orders.


4.10. Although Reactive Energy Charges and Power Factor Incentive / Penalty are

dependent on the Power Factor, the applicability of the charges is different. While

the Power Factor Incentive / Penalty is payable to / by a consumer of the Distribution

Licensee irrespective of the voltage of the system (i.e. irrespective of whether the

Power Factor at a particular time is helping the system or not), Reactive Energy

Charges are dependent on the voltage. If the reactive energy drawal is at a time when

the system voltage is high, it has to be incentivized; when the system voltage is low,

it has to be penalized. This is clear from Regulation 67 of the MERC (Multi Year

Tariff) Regulations (‘MYT Regulations’), 2015 which specifies that Transmission

System Users or Distribution Licensees shall be subjected to a incentive /

disincentive to be compensated / levied by the MSLDC for maintaining the reactive

energy balance in the transmission system:

“67 Reactive Power Charges

67.1 A Generating Station shall inject/absorb the reactive power in to the

grid on the basis of machine capability as per the directions of MSLDC.

67.2 Reactive power exchange, only if made as per the directions of MSLDC,

for the applicable duration (injection or absorption) shall be compensated/

levied by the MSLDC to the Generating Station at rate of 12.00 paise/RkVAh

for FY 2016-17 escalated at 0.50 paise/RkVAh annually in subsequent Years

of the Control Period, unless otherwise revised by the Commission.

67.3 The Transmission System Users shall be subjected to the following

Incentive/Disincentive to be compensated/ levied by the MSLDC for

maintaining the reactive power balance in the transmission system:

”

Hence, in line with the DOA Regulations, 2016, Reactive Energy Charges are

applicable to Open Access Consumers and not Power Factor Incentive / Penalty.

4.11. MIAL has referred to the APTEL Judgment in Appeal No. 231 of 2012, which is in

the context of the HERC Open Access Regulations. In that matter, the consumer did

not have a meter which recorded and stored the voltage in 15 minutes time block,


and hence APTEL held that it was not possible to allocate the Reactive Energy

consumption for arriving at the Reactive Energy Charges:

“22. The meter dose not record and store the voltage in 15 minute's time

blocks. It is true that with the availability of kVAh and kWh in 15 minute's

time blocks, the reactive power consumption can be easily computed for each

time block using the formula kVArh = Sqrt (kVA2 - kWh

2)

23. But, in the absence of corresponding voltage for each time slot, it would

not be possible to allocate the reactive power consumption for the purpose of

reactive energy charges.”

4.12. However, in the case of MIAL, the appropriate ABT meters have been installed in

line with the relevant Regulations / Orders of the Commission, and are capable of

recording reactive energy and voltage on 15 minute basis. Accordingly, Reactive

Energy Charges can be computed and applied to MIAL. Hence, the APTEL ruling

cannot be generalised and applied to the case of MIAL.

4.13. While there is no dispute that, as observed by APTEL, technically, the Power Factor

maintained by a consumer benefits the network, but only when voltages are lower

than the permissible level. Otherwise, it is detrimental to the system as consumers

experience high voltages, and is also detrimental to electrical equipment. Further, the

Open Access consumer gets the direct benefit of reduction in cost of power purchase

through reduction in the quantum of power required; while, in the case of consumers

of the Distribution Licensee, it reduces the overall power purchase cost of the

Licensee, and hence the benefit is passed on to its consumers. In the case of an Open

Access consumer, only that benefit should be passed on which is caused by the

consumer, and hence, the Reactive Energy Charges. Passing on an additional benefit

to Open Access consumers is not justified and will result in further burdening the

consumers of the Distribution Licensees.

4.14. In fact, in the case of change-over consumers, who are akin to Open Access

consumers as per the APTEL Judgment in Appeal No. 331 of 2013, TPC-D, as a

Supply Licensee, is providing the Power Factor Incentive / Penalty. In other words,

the Wheeling Licensee is not paying the Power Factor Incentive / Penalty to the

change-over consumers for usage of its network. A similar principle has been

followed for Open Access consumers.

4.15. Considering the above, the position is summarized as follows:

a) Open Access and Supply from a Distribution Licensee are two distinct options

of power procurement separately defined under Sections 42 and 43 of the EA,

2003. The mechanism, procedure, tariff and charges payable under each option

is governed by different Regulations. Each option has its own set of charges,


benefits, incentives and penalties which cannot be intermingled and overlapped.

That would disturb the regulatory balance and should not be entertained.

b) The components of billing for an Open Access consumer as per the DOA

Regulations do not provide for Power Factor Incentive or Penalty on Open

Access consumption, but provide for Reactive Energy Charges. Open Access

consumers are procuring power through ABT metering and scheduling

mechanism. Hence, 15 minute-wise records are available for recording the

reactive energy, which can be used for levying Reactive Energy Charges to the

Open Access consumers once they are determined by the Commission.

c) The tariff components applicable to consumers of TPC-D are also applicable to

partial Open Access consumers, but limited to the consumption of power

procured from TPC-D.

5. At the hearing held on 19.9.2017:

5.1. MIAL stated that

a. TPC-D has been providing Power Factor Incentive for the electricity consumption of

MIAL as a consumer of TPC-D, but not with respect to its Open Access

consumption, inclusive of RAC, Wheeling Charges, CSS, etc.

b. MIAL is relying on APTEL’s Judgment dated 14.11.2013 in Appeal No. 231 of

2012. The very purpose of providing Power Factor Incentive is to encourage

consumers to improve their Power Factor by providing shunt compensation and

bring it as close as possible to unity so that system losses are reduced to the

minimum. APTEL in its Judgment has also recorded that Power Factor rebate is also

payable to a consumer who avails Open Access. If a consumer procures power from

other sources through Open Access at a high Power Factor, the system loss would

also be less, as in the case of his drawal of power from the Distribution Licensee.

c. CSS payable by an Open Access consumer is a part of the consumer’s bill and,

therefore, the Power Factor Incentive would also be applicable on it. Accordingly,

the rebate should be allowed on the CSS as well.

d. The list of various charges in Clause 14.1 of the DOA Regulations, 2016 is not an

exhaustive list. Power Factor Incentive should be applied on the entire bill, excluding

taxes and duties.

5.2. TPC-D stated that


a. In case of change-over consumers, which is akin to Open Access, the Supply

Licensee (TPC-D) is providing the Power Factor Incentive, whereas in the present

case of Open Access, MIAL is demanding Power Factor Incentive from TPC-D as

the Wheeling Licensee.

b. Power Factor Incentive or Penalty is payable to or by a consumer irrespective of

voltage of the system, whereas Reactive Energy Charges are dependent on the

voltage of the system.

c. As regards the Judgment of APTEL in Appeal No. 231 of 2012, the consumer in that

matter did not have a meter which records and stores RkVA component of power in

15 minute time blocks. Hence, it was not possible to allocate the Reactive Energy

consumption for arriving at the Reactive Energy Charges. However, in the present

case, TPC-D can record the consumption of MIAL in 15 minute time blocks.

d. The views of other Distribution Licensees also need to be considered.

5.3. The Commission asked whether, in the event that Reactive Energy Charge is made

applicable, Power Factor Incentive would be applicable.

6. In its Rejoinder dated 20.9.2017, MIAL stated as follows:

6.1. TPC-D has sought to differentiate between consumers who are eligible for Power

Factor Incentive based on the “source of power” i.e., between its direct consumers and

Open Access consumers. Such differentiation between consumers is in blatant

violation of the APTEL Order which has categorically held that the purpose of

providing Power Factor rebate is to encourage the consumer to maintain high Power

Factor and to minimize the system losses. To reduce these losses, the State

Commission incentivized high Power Factor based on purely technical and

engineering principles which have nothing to do with the source of power. APTEL,

therefore, allowed for Power Factor Rebate to consumers who avail Open Access as

well.

6.2. Without prejudice to its arguments and contentions in the Petition, MIAL’s paragraph-

wise response to TPC-D’s Reply is as follows.

6.2.1. Although the DOA Regulations, 2016 specify the component of “billing” of Open

Access consumers for the use of the distribution system for wheeling of electricity,

this cannot be read in isolation from the MYT Order. The MYT Order confirms the

rates to be collected by the Distribution Licensee from the consumers. It specifically

covers Power Factor Incentive which is applicable on the amount of the monthly

electricity bill (excluding taxes and duties) whenever the average Power Factor level is


more than 0.95. TPC-D has ignored the fact that the MYT Order has not limited the

applicability of Power Factor Incentive to direct consumers of the Distribution

Licensee and has not discriminated against any type of consumer. Further, the MYT

Order explicitly stipulates that the Power Factor Incentive shall be applicable on

“monthly electricity bills”, which would include charges towards power procured

through Open Access as well. As per Regulation 21.2 of the DOA Regulations, the

reactive energy charges for Open Access Consumers with load below 5 MW are

calculated on Power Factor basis. Admittedly, MIAL’s average load is below 5 MW,

and hence it ought to be calculated on the basis of Power Factor, for which the specific

methodology has already been set out in the MYT Order. Thus, Regulation 21.2

merely sets out the basis for computing the Reactive Energy Charges and in no manner

affects the Power Factor Incentive criteria, the applicability of which is clearly set out

in the MYT Order. As regards TPC-D’s contention based on Regulation 67 of the

MYT Regulations, 2015 that Reactive Energy Charges are only applicable to Open

Access Consumers and not Power Factor Incentive, APTEL has dealt with this in

detail:

“…payment has to be made to the beneficiary when it draws reactive power

during the period of voltage being higher than 103% of the rated voltage or

he returns reactive power, when voltage is lower than 97% of the rated

voltage. Further, it was held that while the reactive energy charges deal with

debit and credit based on injection or drawal of reactive power at particular

interval when the supply voltage is above 103% or below 97% of the rated

voltage, whereas the active power flow is right throughout the day

irrespective of the period of threshold limits of the supply voltage. Hence, the

methodology adopted by the State Commission is without application of

mind. Hence, the conclusion by the State Commission cannot be held to be

valid.”

Thus, it is clear that Reactive Energy Charges are applicable only on the ‘drawal’ of

reactive energy, which in the case of MIAL is nil. As MIAL is only consuming active

power, Reactive Energy Charges are not applicable to it. Further, APTEL has clearly

indicated that the methodology adopted was itself incorrect and without any

application of mind, and hence has held it to be invalid in that matter. Thus, TPC-D’s

contention is baseless as Reactive Energy Charges are not relevant to MIAL, and in

any case have nothing to do with the applicability of the Power Factor Incentive to it.

6.2.2. MIAL denies that there is any additional benefit, as alleged, that MIAL (in its capacity

as an Open Access Consumer) would receive, thereby burdening the direct consumers

of TPC-D. In fact, as held in the APTEL Judgment, providing Power Factor Incentive

would encourage consumers to maintain the Power Factor at a level so as to minimize

system losses, which would benefit consumers across the State.

6.3. Open Access and change-over are two different methods of power purchase by

consumers which are dealt with in separate Regulations. In case of change-over


consumers, the Supplier collects all charges, i.e. Supply + Network, from the

consumers, as a result of which they are liable to pay the Power Factor Incentive

also. However, in case of an Open Access consumer, the Supplier/Trader is not

collecting network charges from the consumer. These charges are collected by the

Wheeling Licensee, TPC-D in this case, as per the MYT Order. Accordingly, since it

is a component of the “monthly electricity bill” raised by the Distribution Licensee,

TPC-D is liable to provide such Power Factor Incentive to MIAL.

Commission’s Analysis and Ruling

7. The last MYT Order for TPC-D stipulates as follows with regard to Power

Factor Incentive:

“Power Factor Incentive

Applicable for HT-I : Industry, HT II - Commercial, HT-IV : PWW, HT V-

Railways, Metro & Monorail, HT-VI: Public Services [ HT VI (A) and HT

VI (B)], HT VII - Temporary Supply, LT II: Non-Residential/Commercial

[LT II (B), LT II (C)] (for Contract Demand/Sanctioned Load above 20

kW), LT III (B): Industry above 20 kW, LT IV- PWW, LT VII (B) –

Temporary Supply (Others) , and LT IX : Public Service [LT IX (A) and LT

IX (B)].

Whenever the average Power Factor is more than 0.95, an incentive shall

be given at the rate of the following percentages of the amount of the

monthly electricity bill, excluding Taxes and Duties:

Sr no. Range of Power Factor

Power Factor

Level Incentive

1 0.951 to 0.954 0.95 0%

2 0.955 to 0.964 0.96 1%

3 0.965 to 0.974 0.97 2%

4 0.975 to 0.984 0.98 3%

5 0.985 to 0.994 0.99 5%

6 0.995 to 1.000 1 7%

Note: Power Factor shall be measured/computed upto 3 decimals, after

universal rounding off. ”

8. Power Factor Incentive / Penalty has been provided in the electricity tariffs of

TPC-D and other Distribution Licensees since long to encourage consumers to

improve their Power Factor by providing shunt compensation and bring it as

close as possible to unity so that system losses are reduced. Lower Power Factor

causes higher system losses and consequent loss to the Distribution Licensee.


9. Although Open Access consumers source part or all of their power requirement

from sources other than their Distribution Licensees, they use the distribution

system of the Licensees for wheeling of this power and, hence, also contribute to

system losses (unless they are independently connected to a Generator and

physically isolated from the rest of the Licensee’s network). If they have no

incentive to maintain a high Power Factor, the onus on the Distribution

Licensees to take corrective measures to compensate for the variation in Power

Factor of such consumers will be correspondingly greater. Moreover, Power

Factor improvement can best be achieved if such measures are implemented at

the consumer level. On this principle, the Power Factor Incentive / Penalty

provided in the MYT Order for consumers sourcing power from TPC-D is

equally applicable to the Open Access power sourced by such consumer, who

also contribute by way of Wheeling / Transmission Charges and Losses, CSS,

and Additional Surcharge, if any.

10. This is also consistent with the Judgment dated 14.11.2013 in Appeal No. 231 of

2012 in which APTEL held as follows:

“56. Summary of the findings:-

…II. The very purpose to provide higher power factor rebate is to

encourage the consumer to maintain high power factor and to minimize the

system losses. Any loss before the meter installed at consumer’s premises is

on account of the distribution licensee. In order to reduce these losses, the

State Commission has incentivized high power factor based on pure

technical and engineering principle. It has nothing to do with the source of

power. Accordingly, power factor rebate is payable to the consumer who

also avails open access.

III. As per clause 2(19) of the Supply Code, the surcharge referred to in

Regulation 3 is the Cross Subsidy Surcharge payable by Open Access

consumer is a part of SoP charges and, therefore, the incentive on power

factor would also be applicable on this amount. The Respondent till date

has been recovering penalty on the low power factor and penalty for

exceeding contract demand on the sale of power including Cross Subsidy

Surcharge from embedded open access consumers. The licensee cannot

probate and approbate at the same time. Therefore, the State Commission

now cannot permit the utility, the Respondent to use different yardstick to

the consumer while giving rebate and recovering MDI penalty, when both

are to be charged on sale of power. Therefore, this treatment is contrary to

the commercial principles.”

11. The list of charges specified in Regulation 14 of the DOA Regulations, 2016 has

been cited by TPC-D. However, that is not an exhaustive list of the charges

leviable while billing Open Access consumers, as will be seen from Regulation

14.1(v) (quoted earlier in this Order).


12. With reference to Regulation 21 of the DOA Regulations, 2016, TPC-D has

raised the issue of levying a Reactive Energy Charge on Open Access

consumers. As present, in the MYT Orders in respect of TPC-D and other

Distribution Licensees, the Commission has not determined any Reactive

Energy Charge. In its forthcoming Mid-Term Review Petition, TPC-D is at

liberty to propose such determination.

13. In view of the foregoing, the Commission directs TPC-D to provide Power

Factor Incentive (or levy Power Factor Penalty, as the case may be,) to MIAL

and other similarly placed consumers on the charges it levies on the power

sourced by them through Open Access. For past periods, these may be adjusted

in the ensuing bills of MIAL and other such Open Access consumers, along with

applicable interest.

The Petition of M/s Mumbai International Airport Ltd. in Case No. 110 of 2017 stands

disposed of accordingly.

Sd/- Sd/- Sd/-

(Deepak Lad) (Azeez M. Khan) (Anand B. Kulkarni)

Member Member Chairperson

before the maharashtra electricity … 58 42/order-110 of 2017-28112017.pdf · merc order – case...

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