CERC asks Gridco to refund Rs 360 cr to NTPC; Gridco says order unilateral

The spat between maharatna utility NTPC Ltd and Gridco, Odisha's bulk power purchaser cum trader over contentious power billing, shows no sign of subsiding.

The row is over NTPC's alleged illegal declaration of Commercial Operations Date (COD) and unauthorized billing worth Rs 359.69 crore of infirm power as scheduled power from the Stage-II (1320 Mw) of its Barh super thermal power station. Gridco had challenged NTPC's contention in CERC and got a favourable order in September 2017. Later, NTPC moved the Appellate Tribunal for Electricity (ATE). The ATE in  its order pronounced in January 2019, upheld CERC's order, dealing a body blow to NTPC's pleas.

However, the latest order by CERC on March 18 has tilted the balance in NTPC's favour, setting the tone for an even bitter legal face-off.

CERC in the ruling has instructed Gridco to refund the adjusted amount (or Rs 359.69 crore) within seven days of the date of order or be saddled with provisions of late payment surcharge as per the Tariff Regulations. 

“... The amount adjusted towards infirm power shall be applied towards the reduction of capital cost which will have impact in determination of tariff after the COD. The Commission will undertake the exercise at the time of determination of tariff of the generating station. In our view, unilateral action on the part of the respondent Gridco to recover the payments made for scheduled power prior to March 8 2016 cannot be accepted”, the CERC order noted.

NTPC feels Gridco has wrongfully adjusted Rs 360 crore from its running bills post the ATE judgement. “Neither Gridco nor any other beneficiary has right to deduct or adjust any amount until tariff is determined by CERC”, an NTPC source said.

The latest order by CERC has rankled Gridco authorities. “The order is unilateral and based on oral submissions to the Commission by NTPC. The central power generator had illegally billed infirm power as scheduled power. As per DSM (Deviation Settlement Mechanism) Regulations, infirm power can be billed by the Regional Power Committee and not by any generation company. Gridco is entitled to recover the amount from NTPC. We are now going to contest the latest CERC order vigorously in the ATE”, a Gridco official told Business Standard.

“Even after previous orders from CERC and ATE, NTPC did not adjust the amount in its billing. Hence, Gridco was constrained to deduct Rs 360 crore illegally collected by NTPC. Also, Gridco has paid around Rs 25 crore as DSM charges in lieu of infirm power between November 2014 and March 2016”, he added.

As per CERC Tariff Regulations of 2014, a generating unit after its commissioning, has to successfully undergo Trial Run Test at Maximum Continuous Rating (MCR) or Installed Capacity (IC) for 72 hours continuously for declaration of COD for billing to benefeciaries. Prior to commercial operation, the energy injected by the generator has to be billed at infirm power rate and only after declaration of successful CoD by the generator, it can bill the discoms for the scheduled power at electricity tariff.

Gridco accused NTPC of illegally declaring COD of Unit-IV of Stage of its Barh station in Bihar. CERC in its order in September 2017 backed Gridco's case. “Power injected by Respondent No. 1 (NTPC) in respect of the Unit before March 8, 2016 shall be treated as infirm power even though power was scheduled by the beneficiaries during the period.  The revenue earned over and above fuel cost from sale of infirm power from November 15, 2014 to March 7, 2016 shall be adjusted in the capital cost”, the CERC order stated.

NTPC still feels it conformed to the regulatory provisions of CERC while carrying out COD. “The unit achieved more than its target availability during its first year of operation – 83 per cent in 2014-15 and more than 90 per in 2015-16. There has been not a single instance when NTPC has failed to supply power requisitioned by any of the beneficiaries from this unit”, the NTPC source corroborated.

Both the sparring parties are now set for a showdown in the Supreme Court where NTPC has filed a petition, contesting the ATE order of January  25, 2019.