BHANDARDARA HYDRO ELECTRIC PROJECT - IImercindia.org.in/pdf/17_Order_dt_10_04_2006_CN_01 of 2005.pdf · Purchase of Power from Bhandardara Hydro Electric Project (Phase II) Dr Pramod

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BHANDARDARA HYDRO ELECTRICPROJECT - II

ORDER ON TARIFF DETERMINATION FOR BHEP II

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Contents

A1: ORDER.............................................................................................................................................6

A2: OVERVIEW .....................................................................................................................................7

BACKGROUND ..............................................................................................................................................7TARIFF PROPOSAL IN PETITION .....................................................................................................................8TECHNICAL VALIDATION SESSION ..............................................................................................................10CLARIFICATIONS SOUGHT AND REPLIES .......................................................................................................10PUBLIC HEARING PROCESS .........................................................................................................................11APPOINTMENT OF TECHNICAL CONSULTANT ...............................................................................................11ORGANISATION OF THE DETAILED ORDER ...................................................................................................12

A3: COMMENTS AND SUGGESTIONS RECEIVED DURING PUBLIC HEARING PROCESSAND COMMISSION RULING ...................................................................................................................13

Project Cost ..........................................................................................................................................13Design Energy of the Project .................................................................................................................14Proposed R&M Cost .............................................................................................................................16BHEP II as a Peaking Plant ..................................................................................................................16Tariff.....................................................................................................................................................17

A4: COMMISSION’S DECISION ON TARIFF AND TARIFF RELATED ISSUES.........................20

INTRODUCTION...........................................................................................................................................20TARIFF PRINCIPLES.....................................................................................................................................20APPROACH & METHODOLOGY ....................................................................................................................21

Capacity (in MW) of the project.............................................................................................................21Energy generation at different heights of Nilwande Dam........................................................................21

BASIS OF TARIFF AND ITS PERIOD ................................................................................................................23COMMISSION DETERMINED TARIFF RATES FOR BHEP II..............................................................................25APPLICABILITY OF THE ORDER ....................................................................................................................26

A5: APPENDIX – A...............................................................................................................................27

UPSET PRICE CALCULATION FOR BHEP STAGE II ........................................................................................27

A6: APPENDIX – B...............................................................................................................................28

PRICE SCHEDULE FOR BHEP II BID ............................................................................................................28

A7: APPENDIX – C...............................................................................................................................29

TECHNICAL VALIDATION SESSION: RECORD OF PROCEEDINGS .....................................................................29

A8: APPENDIX – D...............................................................................................................................33

PUBLIC HEARING PROCESS: RECORD OF PROCEEDING .................................................................................33Dodson-Lindblom Hydro Power Pvt. Ltd. (DLHPPL) ............................................................................34PRAYAS................................................................................................................................................35Maharashtra State Electricity Distribution Company Ltd. (MSEDCL)....................................................35Government of Maharashtra Water Resource Department (GOMWRD) .................................................36

A9: APPENDIX – E...............................................................................................................................37

WORKING TABLE FOR POWER GENERATED AT BHEP II WITHOUT NILWANDE DAM AS PER SUBMISSION DATED13TH JANUARY, 2006...................................................................................................................................37WORKING TABLE FOR POWER GENERATED AT BHEP II WITH NILWANDE DAM BUILT UP TO 610 / 613 M ASPER SUBMISSION DATED 13TH JANUARY, 2006 .............................................................................................38WORKING TABLE FOR POWER GENERATED AT BHEP II WITH NILWANDE DAM BUILT UP TO 648 M AS PERSUBMISSION DATED 13TH JANUARY, 2006....................................................................................................39


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A10: APPENDIX – F...............................................................................................................................40

WORKING TABLE FOR POWER GENERATED AT BHEP II WITHOUT NILWANDE DAM AS PER SUBMISSION DATED2ND MARCH, 2006.......................................................................................................................................40

A11: APPENDIX G - REPORT FROM COMMISSION’S TECHNICAL EXPERT............................42

Ref:GOMWRD letter dated 02-Mar-2006; DLH letter dated 24-01-2006................................................42General.................................................................................................................................................42

A12: APPENDIX H - SHP TARIFF AS PER ORDER ON DETERMINATION OF TARIFF FOR SHPPROJECTS WITHIN MAHARASHTRA DATED 9TH NOVEMBER, 2005..............................................45

Table of Figures

Table 1.1: Proposed Tariff..................................................................................................... 9


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ABBREVIATIONS

BEST – Brihan Mumbai Electricity Supply and Transport Undertaking

BHEP II – Bhandardara Hydro Electric Project II

CERC - Central Electricity Regulatory Commission

CFL – Carbon Fluorescent Lamps

CUF – Capacity Utilization Factor

DLHPPL- M/s Dodson Lindblom Hydro Power Private Limited

DSM – Demand Side Management

GoM - Government of Maharashtra

GOMID/ GOMWRD - Government of Maharashtra Irrigation Department / Government ofMaharashtra Water Resource Department

IDC – Interest During Construction

kWh – Kilo Watt Hour

MERC – Maharashtra Electricity Regulatory Commission

MSEB – Maharashtra State Electricity Board

MSEDCL - Maharashtra State Electricity Distribution Company Limited

MW - Mega Watt

O&M – Operation & Maintenance


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PPA – Power Purchase Agreement

R&M – Repairs & Maintenance

REL – Reliance Energy Limited

SHP – Small Hydro Plant

TPC – Tata Power Company

WPI – Wholesale Price Index


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A1: ORDERBefore the

MAHARASHTRA ELECTRICITY REGULATORY COMMISSIONWorld Trade Centre, Centre No.1, 13th floor, Cuffe Parade, Mumbai 400 005.

Tel. No. 022 22163964/65/69 – Fax 022 22163976

E-mail [email protected]

Website: www.mercindia.org.in

Case No. 1 of 2005

In the matter ofPurchase of Power from Bhandardara Hydro Electric Project (Phase II)

Dr Pramod Deo, ChairmanShri A. Velayutham, MemberShri S.B. Kulkarni, Member

Dated:10th April, 2006

ORDER

The Maharashtra Electricity Regulatory Commission, in exercise of powers vested in it underSection 86 (1) (a) and (b) read with Section 62(1) of the Electricity Act 2003, and all otherpowers enabling it in this behalf, determines the tariff and related dispensation for thepurchase of power by the Distribution Licensees in the State of Maharashtra from the BHEPII.

mailto:[email protected]

http://www.mercindia.org.in


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A2: OVERVIEW

Background

2.1 BHEP II is a 34 MW hydropower facility built at the Randha pickup weir on the riverPravara located about 12 km downstream from Bhanardara - I hydropower facility.The tail race water of Bhandardara II is led to the river Pravara upto Ozar Weir. FromOzar weir, the water is taken for irrigation through two canals having a total capacityof 1,045 cusecs. The facility is presently operated manually and there are operators onshift at all times. The station is operated on the water released from Bhandardara – Iand the sluices of Bhandardara dam.

2.2 The BHEP II hydro project was commissioned in May 1999. The water releases are tobe coordinated from Bhandardara I which is base load station. BHEP II is presentlyoperating at partial load of 14 to 18 MW as the downstream canals are not capable ofcarrying the full discharge of 2,700 cusecs required for full capacity operation. Theaverage generation from BHEP II over the last three years is 33.35 MU.

2.3 The plant has been designed as peaking power station to operate for three hours eachduring the morning and evening peak taking into consideration downstream NilwandeDam which is expected to act as balance storage between BHEP II and downstreamirrigation requirements. However, the construction of Nilwande Dam has beendelayed due to shortage of funds and as a result capacity of BHEP II is not beingutilised fully.

2.4 Government of Maharashtra decided to offer the plant on advance lease, operate andtransfer basis to a private entrepreneur for a period of 30 years. It is stated in thesubmission of MSEB that the amount received from the successful bidder aftertransfer of BHEP II will be utilized by GOMID for raising the Nilwande Dam uptoRL 610m/ 613m.

2.5 Subsequently, based on two alternatives available, GOMID estimated the cost ofproject to be Rs 92 crores and called for offers from qualified bidders. The details areenclosed in Appendix A. The bidders were given two options for the bidding:

(a) An upfront payment of Rs 92 crores.

(b) Rs 60 crore upfront and additional instalments of Rs 262.70 Crore during thelease period of 30 years such that the NPV of all the payments is Rs 92 crores.The Schedule is enclosed in Appendix B.

2.6 The bids were invited by GOMID in November 2003 through wide publicity innewspapers. Though six bidders had purchased the bid documents, only one bidder,M/s Dodson Lindblom Hydro Power Private Limited (DLHPPL), submitted the finalbid. The bid was based on option II and the same was accepted by the Government ofMaharashtra in December 2004.

2.7 DLHPPL intends to sell the energy from BHEP -II to MSEB by entering into a PPA.


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2.8 Subsequently, MSEB filed the petition for approval of generation tariff for the BHEPII Project on 24-03-2005.

Tariff Proposal in Petition

2.9 MSEB in its petition has proposed tariffs for BHEP II as per the guidelines of theCentral Electricity Regulatory Commission (CERC) – Terms & Conditions of TariffRegulation 2004, for 30 years BOT period and at the end of the BOT period, theabsolute ownership of the project shall stand transferred to GOMID free of cost. Thebroad features of the proposal are as follows:

(a) Project Capital cost is estimated at Rs 77.16 Crore. The breakup is furnishedbelow.

(i) Rs 60 Crore towards upfront payment to GOMWRD

(ii) Rs 10 Crore towards Repair & Up gradation expenses as per costestimates done by M/s DLHPPL

(iii) Rs 2.0 Crore towards Engineering & Testing expenses

(iv) Rs 1.0 Crore towards Sponsor Development Costs

(v) Rs 2.0 Crore towards Other Development Costs

(vi) Rs 2.16 Crore towards Financing Costs (2% of loan amount)

(b) In addition to the upfront payment, additional payments are required to bemade to GOMID from 3rd year until 30th year. These annual payments are inaddition to the O & M expenses and included in the computation of AnnualFixed Charges.

(c) Debt-equity ratio has been considered at 70:30. Debt is Rs 54.01 Crore, to befunded by Banks/ FIs at long term interest rate of 11% for the entire debtrepayment period of 12 years and Equity is Rs 23.15 Crore, to be brought bythe Developers in Indian Rupees.

(d) The return on equity has been considered at 14% post tax.

(e) Depreciation has been calculated based on Straight Line Method over theuseful life of assets as per the CERC Tariff Regulations. The lease period of30 years has been considered for recovery of 90% of the asset value. Thepetition has also included the Advance Against Depreciation.

(f) Design Energy is considered to be the quantum of energy, which could begenerated, in a 90% dependable year with 95% installed capacity of thegenerating station. Depending on the height of Nilwande Dam, the followingdesign energy has been proposed for various stages in the Petition:


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(i) Before Nilwande Dam is built (present) – 34.2 MU

(ii) Nilwande Dam upto height of 610 m/ 613 m – 41.38 MU

(iii) Nilwande Dam upto height of 648 m – 35.58 MU

(g) Auxiliary consumption is considered at 0.7% and transformation loss isconsidered at 0.5%.

(h) O&M expense has been considered to be 1.5% of capital cost starting from2001 and with an escalation of 4% every year. As per GOMID, capitalexpenditure without IDC upto March 2001 is Rs 97.0664 Crore. Hence the O& M expenses for 2000-01 is Rs 145.60 lakhs and the same has been escalated@ 4% to arrive at the O & M expenses of Rs 177.144 Lakhs in 2005-06.

(i) Working capital norms have been considered at 2 months of receivable, 1% ofthe Capital cost as spares for first year with 6% annual escalation and onemonth O&M expenses. The interest on working capital is considered at SBIPLR rate of 10.25%.

(j) Water Royalty charges have been considered at 5 paise per unit with an annualescalation of 5%, maintenance charge is considered as 5 paise per unitescalating by WPI, and lease rent has been considered at Rs 1000/- per MWper year escalated by WPI.

(k) All the taxes and insurance are reimbursable at actuals.

(l) The tariff as per the petition based on the above mentioned assumptions is asgiven in Table 1.1below:

Table 1.1: Proposed Tariff

Year 1 2 3 4 5 6 7 8 9 10Tariff (Rs/Unit) 4.93 4.78 3.98 3.86 3.80 3.69 3.63 4.07 3.94 3.81




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Technical Validation Session

2.10 A technical validation session was held on 10th May 2005, which was attended by (i)Deputy Secretary of GoM and representatives of GoMWRD, (ii) CE (CP) and EE (G)Maharashtra State Electricity Board, (iii) MD, VP and Directors of DLHPPL, (iv)Deputy Manager and Senior Officer of REL, (v) representatives of REDAM, (vi)Chairman of Snens Hydel Pvt. Ltd., (vii) Counsel Gaurav Joshi and Advocate (Little& Co) Alpana Dhoke, (viii) Manager of BHEP II, (ix) ED and VP of VHPL, (x)representative of BEST, (xi) representatives from TPC, (xii) representatives fromCRISIL, (xiii) representatives from PRAYAS, (xiv) representatives of MACCIA and(xv) PricewaterhouseCoopers (Consultants to Commission).

2.11 Several issues were deliberated in the technical validation session covering issuesrelated to capacity utilization factors, dependable year and installed capacity proposedto be considered for tariff calculation, risks associated with the BHEP II, applicabilityof CERC regulation to BHEP II, water royalty charges, evacuation facilities and costsharing of the same, capital cost of the project and methodology for tariffdetermination. The Record of Proceedings of the technical validation session isenclosed as Appendix C.

Clarifications sought and replies

2.12 Subsequent to the technical validation session the Commission issued a letter toMSEB seeking additional information/ clarifications. Copy of the letter was marked toall the stakeholders including GOMID. GOMID responded to the queries in its letterdated May 19, 2005.

2.13 In response to the technical validation session and the Commission’s queries datedMay 17, 2005, MSEB replied to the queries vide letter dated May 27, 2005. FurtherMaharashtra State Distribution Company Limited responded to certain queries madeduring the technical validation session vide letter dated June 13, 2005.

2.14 In a communication dated July 2, 2005 GOMID intimated to the Commission that thedepartment had incorrectly intimated to the Commission in its letter dated May 19,2005 that BHEP II is handed over to MSEB for operation and maintenance in March2003. GOMID’s letter submitted that the project is not yet handed over to MSEB andis being operated and maintained by GOMID till date.

2.15 The Commission noted the correction and sought additional information andclarification from GOMID on August 2, 2005 with copies marked to MaharashtraState Electricity Distribution Company Ltd and DLHPPL. GOMID and DLHPPLresponded to the queries on August 12, 2005.


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Public Hearing Process

2.16 It was found that in the submission of GOMID that the detail information sought bythe Commission regarding audited capital cost was only partially provided byGOMID. However, considering that the information on many issues were available,and to save time, the Commission decided to issue the filings for public comments.The Commission thereafter published the filings on 23rd August, 2005 and invitedcomments and suggestions from all the stakeholders. The comments/ suggestionswere to be submitted to the Commission by 23rd September 2005. Thereafter PublicHearing was held on 27th September 2005 at the World Trade Centre, Mumbai.

2.17 Apart from GOMID itself, written or oral submissions, or both, were made during thispublic process, amongst others, by representatives of Prayas, DLHPPL, VHPL,MSEB and WAT-ERE-SOURCE Technologies. Names of individuals / organizationswho filed written comments/suggestions, and / or made oral submissions and otherswho were present at the Public Hearing are annexed in Appendix D.

Appointment of Technical Consultant

2.18 On analysis of the technical details submitted by MSEB in its petition includingmatters like proposed additional R&M costs, energy generation at various stages ofthe construction of the Nilwande Dam, power output at various stages of theNilwande dam, it was found that the subject required detailed technical study. For thispurpose the Commission appointed Mr VVRK Rao, ex-CEA chairman and hydroexpert to carry out the technical analysis. After analysing the information alreadysubmitted to the Commission, Mr VVRK Rao, met the representatives of GOMID onJanuary 20, 2006 at the Commission’s office.

2.19 After the discussions the technical consultant submitted a preliminary report to theCommission on his findings and sought additional technical information fromGOMID. On the technical consultant’s request Commission asked for additionalinformation to be furnished by GOMID vide letter dated 20th January 2006.

2.20 GOMID submitted the required information to the Commission on 2nd March, 2006.

2.21 The technical consultant submitted is final report on the issues related to hydrology ofBHEP II for different phases of the construction of Nilwande Dam on 22nd March,2006.

2.22 After considering all the material submissions, objections, comments and suggestionsmade to it, and deliberations at various stages, the Commission has determined thetariff as follows through this Order.


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Organisation of the Detailed Order

2.23 This ‘Detailed Order’ of the Commission regarding the generation tariff from theBHEP II is broadly divided into three parts.

2.24 The first Section of the ‘Detailed Order’ consists of the Overview. It covers thebackground, tariff proposal in the petition, details of technical validation session anddetails of public hearing process for the petition on tariff determination forprocurement of power from BHEP II in the State of Maharashtra.

2.25 The second Section of the ‘Detailed Order’ lists out the various objections, commentsand suggestions submitted by the Objectors in writing as well as in person during thepublic hearings before the Commission, and the ruling of the Commission on each ofthe broad issues raised during the public consultation process.

2.26 The third Section of the ‘Detailed Order’ comprises the Commission’s analysis and itsapproach for tariff determination. This Section examines and analyses the variousissues involved in tariff determination, and Commission’s reasoning for determinationof the tariff rate and the structure. This section also provides for the applicability ofthe Order.


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A3: COMMENTS AND SUGGESTIONS RECEIVED DURINGPUBLIC HEARING PROCESS AND COMMISSIONRULING

3.1 On publication of the public notice inviting comments and or objections on the issuesinvolved, the Commission received various objections and these were also heard inperson during the public hearing at Mumbai on 27th September 2005. The objectionshave been broadly grouped issue-wise for the sake of convenience, and theCommission’s ruling on each of these points are discussed below.

Project Cost

3.2 Mr Rajadhyaksha presented the case of DLHPPL and pointed out that DLHPPL hasbid an amount of Rs 60 Crore upfront and a further total of Rs 262.70 crore in yearlyinstalments so that the NPV of all payments would be Rs 92 Crore. Further, DLIsubmitted that Commission had received some erroneous information from varioussources and further clarified that the per MW cost of Rs 9.96 crore worked out by M/sCRISIL was not correct as they had considered an aggregate of all the payments for30 years in absolute terms. However, if the NPV of all future payments areconsidered, the per MW cost stands at Rs 3.14 crore.

3.3 PRAYAS pointed out that the high capital cost of the project is also on account ofCommitment charges to FIs (2% of loan), consultant & legal fees (2% of upfrontpayment), performance bank guarantee (3% of upfront payment). These other costsadd upto 12% of upfront payment of the capital cost (Rs 60 crore).

3.4 Further, PRAYAS also proposed that mass CFL scheme is the most viable alternativeas the energy benefits would be 18 times the annual cost to be paid to Bhandardaraproject over next 30 years. In addition, the mass CFL scheme has huge employmentpotential. The Commission pointed out that the peak deficit shall remain inspite of theDSM measures and additional generation would be required to meet the same. Theobjector agreed with Commission’s contention that few stations would be required formeeting the peak demand. The Commission also enquired whether PRAYAS couldprovide suggestions in the matter of tariff of peaking power. In reply PRAYAS statedthat for short term peaking power could be as high as Rs 5/- per unit and also pointedout that this (Bhandardara II) is a case of long-term power purchase.

3.5 Mr Mulla, a representative from Maharashtra State Electricity Distribution CompanyLimited (MSEDCL), expressed that that the capital cost of Rs 92 crore for the projectwas outcome of bidding process and therefore there is nothing to comment on thesame. The Commission enquired whether the bidding was for power project or for thehydro project. Mr Mulla submitted that only the power project cost was taken in thebid. The Commission also asked whether the bidding process would absolve thecompany of its responsibility, more so when there was only one bidder and there wasno price discovery as such.


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3.6 Mr Kulkarni, representative for GOMID, expressed that the cost of Rs 92 crore for theproject was reasonable and was outcome of a transparent competitive bidding process.The Commission observed that it seems that the objective of GOMID was to optimisetheir gains through the bidding process at the cost of the power utility. TheCommission enquired what would happen in case the developer was not given theprice comfort and thus finally the plant is not handed over to this bidder (DLHPPL).Mr Kulkarni submitted that the department would look for alternative and again gothrough the bid route. He also pointed out that in that case the bid value could behigher.

3.7 Further, the Commission also enquired whether it is appropriate to account for theentire expense in respect of power plant or a part of the expense should also bebooked against irrigation expense. Mr Kulkarni submitted that the price of Rs 92 croredid not include any irrigation component at all.

Commission’s Analysis and Observations

3.8 GOMID has submitted that due competitive bidding procedure was followed for saleof the project. The Commission has observed that the selection criteria was based onthe highest bid for the project based on the minimum price set by GOMID and not oncompetitive bidding for the end tariff. Moreover only one bidder, namely DLHPPLhad finally submitted its bid.

3.9 Further, GOMID has submitted various project costs viz. the estimation for the bidprice (Rs 92 Cr.), the project completion cost in 1999 (Rs 93.28 Cr.), the project costas per audited accounts of 2001 (Rs 97.01 Cr.) and the audited project cost in 2005(Rs 104.57 Cr.). The final project cost of Rs 93.28 Cr was submitted by GOMID on2nd March, 2006.

3.10 The Commission observes that the audited project cost of Rs 104.57 Crores as on year2005 is significantly higher than the completed project cost of Rs 93.28 Crores. TheCommission has not received adequate information on the nature of additionalexpenses made during this period, which has added onto the capital cost. Capital costhas major impact on generation tariff. Thus in the two scenarios mentioned above thetariff determined by either methods will be significantly different from each other.

Design Energy of the Project

3.11 Mr Rajadhyaksha presented the case of DLHPPL and pointed out that due toinadequacies, the plant has only generated an average of 27.28 MU as against designgeneration of 36 MU over last six years despite availability of water. He also statedthat whereas in case of Bhandardara I the availability have been 99.9% when waterwas available, the same figure stands at 50% in case of BHEP II.


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3.12 The station may generate the optimal output once the Nilwande Dam reaches a heightof 613 m. Until then, the lower generating capacity of BHEP II will lead to lowerCapacity Utilization Factor.

3.13 The design energy submitted by GOMID is also varying in their various submissionsfor the existing scenario.

3.14 The design energy associated with this project is likely to undergo significant changedue to increase in the height of Nilwande Dam. As per GOMID submission theproject will have three phases i.e. the pre-Nilwande Dam phase and the post Nilwandedam phases when the dam height will be 613 meters and subsequently 648 meters.

(a) The current phase i.e. before the height of Nilwande Dam reaches 613 meters-As per the submissions of GOMID, the actual energy generation in last fouryears have been varying from year to year and has not been consistent. Theaverage generation for the period between FY 02 and FY 04 has been 33.35MU (refer Appendix D). Thus, the energy generated in this phase is 33.35MU.GOMID has projected a power output of 18.78 MW till the Nilwande damreaches a height of 613 m. According to the Commission’s technicalconsultant, in this phase, the annual energy potential in a 90% dependable yearcould be taken as 34.1 MU and the project would operate as run of the riverproject with periods of shut down dictated by the irrigation requirements. Thetechnical consultant has also clarified that without Nilwande dam, BHEP IIcannot be operated for peaking.

(b) The next phase is when Nilwande Dam’s height reaches 613 m - As perGOMID the energy to be generated in this phase is 49.651 MU with a poweroutput of 37.50 MW (refer Appendix E); as per BHEP II tariff petitionsubmitted by MSEB the projected energy generation is 41.38 MU and asprojected by Commission’s technical consultant, the projected energygeneration would be 43.4 MU (refer Appendix F). The technical consultanthas also clarified that this phase of development, with re-regulation pondageavailable at Nilwande, it would be possible to operate BHEP II for peaking.However, there is no firm schedule for the completion of Nilwande Dam up toheight of 613 m within a given time frame.

(c) The last phase when the height of Nilwande dam is raised till 648 meters -Similarly the energy to be generated in the third phase as projected byGOMID is 42.04 with a power output between 26.4 MW to 34.5 MW (referAppendix E), as projected in the petition submitted by MSEB the projectedenergy generation would be 35.58 MU and as projected by Commission’stechnical consultant, it is 36.26 MU in a 90% dependable year (refer AppendixF). At the same time the Commission has no clarity on the period by which theheight of the dam would be raised till 648 meters.


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3.15 It is observed that in case of BHEP II, the energy generation and the power output,both of the parameters are dependent on the height of the proposed Nilwande dam.The projected energy output has a significant impact on tariff determination process.Lack of clarity on the projected dates of construction of Nilwande dam makes itdifficult to project the energy generation, power output and projected tariff to thedesired level of accuracy.

Proposed R&M Cost

3.16 Mr Rajadhyaksha presented the case of DLHPPL and pointed out that DLHPPL hadretained an independent expert to make complete inspection of the plant anddetermined that the plant needs significant repair and refurbishment to improveavailability of the plant. The estimate of repairs and refurbishment was approximatelyRs 10 crore.

3.17 PRAYAS observed that the proposal has stated exorbitantly high R & M cost of Rs 10crore, which amounts to 17% of Rs 60 crore (the amount to be paid upfront).

3.18 Maharashtra State Electricity Distribution Company Limited (MSEDCL) submittedthat Commission’s decision on the additional expense of Rs 10 crore would beacceptable to the company.

3.19 The Commission also asked the GOMID representative to comment on the Rs 10crore additional cost asked for by the developer. Mr Kulkarni stated that a detailedreply has already been submitted vide letter dated 12 August 2005. He clarified that atpresent additional expense of Rs 10 crores is not required but cannot comment on anyrequirement that may arise after four to five years. Mr Kulkarni also informed that atpresent there were no problems in running the machines at full load and it had beentested recently. DLHPPL expressed that Rs 10 crores was required to increase theavailability at Bhandardara II to 99% from the existing 50% (approximately).


3.20 The Commission observes that while DLHPPL has strongly pitched for the additionalexpense of Rs 10 Crores, PRAYAS has argued against it. MSEDCL has remainedsilent on the issue. GOMID has stated that at present the expense is not required. TheCommission finds merit in accepting the stand taken by GOMID and thus it isassumed that in the next four to five years the expense is not required.

BHEP II as a Peaking Plant

3.21 In the technical validation session it was stated that the project has been built as apeaking station for life but at present it is being operated as a base load station.

3.22 PRAYAS submitted that BHEP II has not been used as a peaking plant as Nilwandedam would be completed only by 2007. The coming two years would be most crucialfor MSEB particularly from peaking power point of view.


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3.23 Mr Mulla, a representative from Maharashtra State Electricity Distribution CompanyLimited (MSEDCL), submitted that MSEDCL would need to purchase peaking poweras there is a significant deficit during the peak time. Further, it was submitted that thethere has been no identical proposal for long-term peak power purchase with any ofthe SEB’s / utilities in India. He also submitted that the current peak power cost wasaround Rs 3.45 – Rs 3.50 per unit.

3.24 Further, the Commission also observed that there were no CERC norms for thepeaking power.


3.25 As regards ‘peaking tariff’ or differential tariff for peak/off-peak supply, theCommission notes that as per Clause 6.2(1) of the recently notified National TariffPolicy, the Appropriate Commission is required to introduce differential rates of fixedcharges for peak and off-peak hours for better management of load. Accordingly, theCommission will have to establish methodology for determination of peaking tariff ortime of the day tariff for purchase of power by utilities taking into consideration their‘base load’ demand and ‘peaking demand requirements.

3.26 However, at present, BHEP II can only operate as run of the river plant with thegeneration dependent on release of water for irrigation purpose. So, as per the currentgeneration BHEP II cannot be treated as a peaking station. Once Nilwande damreaches the height of 613 m, the re-regulation of discharge would be possible forirrigation needs and hence the power generation during the periods of release of lessthan 34 cumecs would be possible by utilizing the pondage available at Randha Weir.It would also be possible to operate the BHEP II for peaking.

3.27 Though GOMID has indicated that construction of Nilwande dam upto the height of613 m would be done in 3 years, no definite time frame has been made available.Therefore, the Commission is of the view that it is not justified to treat the project as apeaking plant under the existing circumstances.

Tariff

3.28 Mr Rajadhyaksha presented the case of DLHPPL and pointed out that the tariffproposed starts at Rs 3.05 per unit and escalates at 5% per year upto 12th year, staysconstant for 5 years and then escalates at 4% per year until it reaches Rs 8.69 per unit.In case CERC norms are followed, the first year tariff works out to be Rs 5.25 per unitwhich goes down to Rs 2.50 per unit until 11th year and steadily increases to about Rs9.35 per unit in 30th year. He pointed out that the proposed tariff is back loaded andthe rate proposed would be affordable to MSEB and at the same time enable thedeveloper to ensure payments to GOMID, paying operating expenses and meetingdebt-service obligations.


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3.29 Further, DLI also submitted that the tariff comparisons for Nathpa-Jhakri, Uri,Chamera and Rangit cited by CRISIL was not appropriate and cannot be comparedwith BHEP II as these projects are located in Himalayas with perpetual flowing riversand have has capacity in hundreds of MW with PLF in excess of 60%.

3.30 PRAYAS observed that the DLHPPL has proposed extremely high tariff i.e. thelevelised tariff over 30 years is Rs 4.36 per unit. PRAYAS also pointed out that theproposed repairs and maintenance cost of Rs 10 crore amounts to 17% of Rs 60 crore(the amount to be paid upfront). Further, they also pointed out that no comparisonwith alternatives have been considered for the project. The comparison of the projectshould be with a peak power provider or a peak power reliever like Agriculturalfeeder segregation, open cycle gas turbines, mass scale DSM scheme using CFLs.

3.31 PRAYAS also raised the issue of obligation of MSEB to purchase power from BHEPII and submitted that MSEB is under no obligation to purchase power from BHEP IIas stated in para 3.5.13 of the bidding document and therefore it should not be mademandatory for MSEB to procure power from BHEP – II. The promoter is free to sellthe same to any trader or in the market.


3.32 The Commission notes that, during Phase-I of its operation (i.e. when height ofNilawande dam is below 610/613 M) the project (BHEP-II) can essentially beoperated as ‘run of the river’ hydel project and hence energy benefit that project canoffer are linked to irrigation releases. The peaking benefits of hydel project can onlybe exploited only after height of Nilawande dam reaches 613 M, (i.e. during Phase-IIand subsequent phases and re-regulation pondage is available. The overall energygeneration would still be constrained by availability of water, releases for irrigationpurposes and operational philosophy thereof, however, it would be possible to exploitthe capacity benefit (or peaking benefit) upto installed capacity of the hydel stationBHEP-II with the help of re-regulation pondage during Phase-II and subsequentphases of the project.

3.33 Under the circumstances, the Commission is of the view that determination of tarifffor a period of thirty years will involve significant assumptions on the various issuesrelated to time frame for completion of various phases of Nilwande dam likeprojected energy generation, power output etc. The Commission notes that the projectis under operation since its commissioning in 1999. The generation from the project islimited to the extent of 14 to 18 MW due to above cited constraints. The full potentialof the project can only be harnessed when height of Nilawande dam is raised upto 613M, which is intended to be carried out by GOMID. The timeframe of 3 years toachieve the same, as indicated by GOMID is only indicative and there is no firmcommitment to that extent.


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3.34 The existing petition by MSEDCL to procure power from BHEP-II does notspecifically seek to determine tariff for ‘peaking’ supply, neither MSEDCL hasfurnished its ‘peak load’ requirement to that effect. In order to determine ‘peak tariff’for procurement of power from BHEP-II to meet ‘peak demand’ of MSEDCL, peakdemand profile will have to be ascertained at the time when BHEP-II would be readyto supply ‘peak power’ and timeframe for the same is uncertain. It could be anytimebeyond three years after transfer of project from GOMID to private developer.

3.35 Under the circumstances, it would neither be fair to off-taker (MSEDCL) nor todeveloper of BHEP-II, if ‘peaking tariff’ for the said project is determined at thisstage. At the same time, it should be open to project developer and off-taker toapproach for tariff determination, as and when, the nature of the project changes andthe project is capable to deliver the ‘peaking benefit’ as envisaged.

3.36 Accordingly, the Commission finds that the current characteristics of the project issimilar to that of a Small Hydro Power (SHP) project in the following ways:

(a) The projected power output in the current phase is 18.78 MWs. The poweroutput will change, as submitted by GOMID only with the height of Nilwandedam reaching 613 m.

(b) In the GoMID ‘State Hydel Policy for Development of Small Hydro PowerProjects through Private Sector Participation’ dated 15th September, 2005, ithas been stated that the policy is applicable to hydropower projects up to 25MW installed capacity. Further, as per the SHP order dated 9th November,2005, approved by the Commission the tariff has been made applicable forprojects upto an installed capacity of 25 MWs.

(c) Considering the above the Commission finds merit in treating the project assimilar to a Small Hydro Power project, for the purpose of applicability oftariff, till the height of Nilwande dam is raised to 610/613 meters.


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A4: COMMISSION’S DECISION ON TARIFF AND TARIFFRELATED ISSUES

Introduction

4.1 Under the provisions of the Electricity Act (EA) 2003, electricity tariffs, powerpurchase agreements and provisions regarding wheeling, banking, distribution andtransmission loss charges, and related dispensation are within the exclusivejurisdiction of the Commission. The Commission not only has to balance the interestof the consumers and producers, but is also mandated by the Act with theresponsibility of promotion of investment in electricity industry.

4.2 Under Section 62(1) of EA 2003, the Appropriate Commission is empowered todetermine the Tariff in accordance with the provisions of the Act for supply ofelectricity by a generating company to a distribution Licensee, and for transmissionand wheeling of electricity. Further, Section 86(1)(b) states that –

The State Commission shall discharge following functions, namely regulateelectricity purchase and procurement process of distribution licensees including theprice at which electricity shall be procured from the generating companies orlicensees or from other sources through agreements for purchase of power fordistribution and supply within the State.

4.3 The Commission has earlier issued an Order dated November 9, 2005 (in Case No.25of 2004) in the matter of ‘Determination of Tariff for Small Hydel Power (SHP)Projects within Maharashtra’. The Order is applicable for supply of electricity fromall small hydro projects (upto 25MW) to the Distribution Licensees in the State ofMaharashtra. The Order is applicable only to those small hydro projects developed inMaharashtra and commissioned in the State, and intended for sale of electricity toDistribution Licensees within Maharashtra.

Tariff Principles

4.4 The Commission has generally been guided by the prudent practices of tariffdetermination, which it has consistently used since its first major Tariff Order (2000).The Electricity Act 2003 also requires the Commission to be guided by the principlesprovided in section 61 of the Electricity Act and the National Electricity and TariffPolicies. The tariff principles followed by the Commission in the determination oftariff are as follows:

(a) Consistency in principles and its application;

(b) Minimise regulatory uncertainty;

(c) Uniform principles for tariff setting;

(d) Transparency and compliance of regulatory procedures;


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(e) Recovery of cost of electricity in a reasonable manner;

(f) Promotion of investment in electricity industry.

Approach & Methodology

Capacity (in MW) of the project

4.5 As submitted by GOMID, the height of Nilwande dam plays an important role on thegenerating capacity of the hydro power plant. The different phases of the Nilwandedam project are as follows:

(a) Phase I – This phase is the existing scenario i.e the dam does not exist.

(b) Phase II - In this phase the height of the dam will reach to 610m/613m.

(c) Phase III - In this phase the height of the dam will be raised to 648 m/650 m.

4.6 MSEB in its petition dated March 24, 2005 (on proposal for purchase of power fromBHEP II) has stated that BHEP II is a 1 x 34 MW project. Also in the same petitionMSEB has stated that at present the unit will have to be operated at 14 to 18 MWgenerating capacity.

4.7 GOMID has submitted in its letter dated 13th January, 2006 that at present NilwandeDam is not constructed and with restricted discharge the power output in every monthof the year would be 18781.44 kW.

4.8 Commission’s technical consultant in his report has stated that without Nilwandedam, BHEP II cannot be operated for peaking though pondage is available at Randhaweir.

4.9 GOMID has submitted that in Phase II the turbine output of BHEP II will be 37504kW in all the months of the year. The Commission’s technical consultant has statedthat in this phase of development, with the re-regulation pondage available atNilwande, it would be possible to operate BHEP II for peaking.

4.10 GOMID has submitted that the power output of BHEP II in phase III of the NilwandeDam project would be varying between 26467 kW and 34580 kW in different monthsof the year. According to the Commission’s technical consultant, the peakingcapability in this phase would reduce during periods of high tail water level when thewater level in Nilwande is high and the head available for power generation fallsbelow design head.

Energy generation at different heights of Nilwande Dam

4.11 The design energy at different phases is different as the increase in height of the damwill affect the storage level as well as the tail water level.


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4.12 GOMID has submitted that in phase I the design energy would be 33.35 MUs (theaverage of generation of past three years). In this phase the generation is the lowest.As per the analysis of the Commission’s technical consultant:

Quote:

Without Nilwande dam, BHEP II cannot be operated for peaking though Pondage isavailable at Randha weir. This constraint is in on account of the fact that there is nore-regulating pondage at the irrigation weir to even out pulsating peaking releases.Further, whenever releases available for power generation are less than 34 cum, thesame cannot be utilized for power generation for BHEP II since this is the lower limitof turbine operation range. Accordingly in pre Nilwande phase, BHEP II will operateas run of the river project and the generation will depend on the irrigation dischargesand there would be periods of power house closure on account the reasons beyond thecontrol of the project operator.

The annual energy potential of BHEP II in a 90% dependable could be taken as 34.1MU and the project would operate as ROR project with periods of shut down dictatedby the irrigation requirements.

Unquote

4.13 In phase II, the design energy proposed by GOMID is 49.65 MUs as against 43.4MUs as assessed by the Commission’s technical consultant. In this phase thegeneration is highest. As per the analysis of the Commission’s technical consultant:

Quote:

In this phase of development, with the re-regulation pondage available at Nilwande, itwould be possible to operate BHEP II for peaking. The pre Nilwande constraint inoperation of BHEP II during periods of flows lower than 34 cumec would no longerbe applicable. Power generation would be possible even during the periods of releaseof less than 34 cumec, by utilizing the pondage available at Randha Weir. However,during the periods when no waters are to be released from Bhandardara, BHEP IIwould not be in a position to generate power. This situation is on account of theirrigation cycle and utilization of waters primarily for irrigation.

The annual energy generation from BHEP II in post Nilwande (+613m) phase wouldbe 43.4 MU. Peaking benefit to the extent of 34 MW would be available exceptduring periods of no irrigation releases from Bhandaradara.

Unquote

4.14 In phase III, the design energy proposed by GOMID is 42.04 MUs. The report ofCommission’s technical consultant states the following

Quote:


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GOMWRD carried out integrated operation studies for Bhandaradara and Nilwandedams together and took into account the irrigation requirements downstream atNilwande and Ozhar weir. These studies had considered the 90% dependable yearinflows into Bhandardara reservoir as 292 MCM. The energy generation from BHEPII had been assessed taking into account the impact of higher tail water level onaccount of Nilwande. In these studies the power potential of BHEP II has beenassessed as 40.78 MU for 90% dependable year (2000-01). In the studies, the initialwater level in Bhandardara reservoir was taken as 714.3 m (42 MCM gross storage)and the final level at the end of the year was shown as 698 m (8 MCM gross storage).Thus there was an additional utilization of 34 MCM from the carry over storage. Theenergy assessments in the studies would need to be corrected for the additionalutilization of carry over waters from previous year. The energy generation on accountof this additional water is 4.52 MU (taking approx. 0.133 MU for 1 MCM ofreleases). If this correction is taken into account the 90% dependable potential forBhandardara would be 36.26 MU.

DLH has assessed the potential for this phase as 34.8 MU. Correcting for theefficiency 83% to 84.6%, the power potential would work out 35.4 MU. Thedifference between the two energy assessments could be on account of the differencein assumptions made by DLH. The tail water level in GOMWRD studies would beappropriate as they take into account the integrated operation of the all thedevelopments in the river basin and also consider irrigation releases at Nilwande andOzhar.

In this phase (post Nilwande +648m) of development, as per GOMWRD studies, theenergy generation would be possible for 263 days i.e. 72% of the time.

Unquote

Basis of Tariff and its period

4.15 The extant Petition of MSEDCL for procurement of power from BHEP-II on longterm basis will be governed by Regulation 24 of MERC (Terms and Conditions ofTariff Regulations) 2005 notified on 23rd August 2005. The relevant extract of thesaid Regulations is as under:

24.1 Every agreement or arrangement for long-term power procurement by aDistribution Licensee from a Generating Company or Licensee or from othersource of supply entered into after the date of notification of these Regulationsshall come into effect only with the prior approval of the Commission:

4.16 Further, the Commission will have to not only determine Tariff in accordance withTerms and Conditions for Generation Tariff as stipulated under Part E of the TariffRegulations but also verify its conformity with the long term procurement plan of theUtility. The long term plan of the Utility should include base load and peak loaddemand forecast.


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4.17 In this context, the Commission notes that MSEDCL has neither furnished its longterm power procurement plan nor provided details of ‘peak load’ demand requirementfor which it proposes to procure power from said project (BHEP-II) on long termbasis.

4.18 Further, as elaborated under earlier paragraphs, the nature of project is intended tochange over the period as the height of Nilawande Dam is raised upto 613M and withthat ‘design energy’ of the project would also undergo change. The re-regulationpondage would offer flexibility to exploit the full potential of the project upto itsinstalled plant capacity thereby offering ‘capacity benefit’ (or peaking benefit).However, until that is achieved, the project would be constrained to be operated as‘run of the river’ small capacity hydel generation project (14 MW to 18 MW) limitedby water releases for irrigation cycle requirements.

4.19 The Commission has not received any definite time frame regarding completion ofconstruction of Nilwande dam to the heights of 613 meters or 648 meters. The designenergy of the project varies with height of the Nilwande dam. The time frame forbuilding of the dam is uncertain and thus the design energy for future years isuncertain. Therefore, Commission is of the view that determination of tariff inaccordance with the Tariff Regulations for a period of thirty years will involvesignificant assumptions on the parameters that are related to time frame forcompletion of various phases of Nilwande dam like projected energy generation andpower output.

4.20 In view of above complexities associated with evolutionary project scheme,determination of tariff for long term (for period of say 30 years), as per MERC (termsand Conditions for Tariff) Regulations 2005, at this stage will not be appropriate. Atthe same time, the Commission notes that this is a unique case, where the project hasbeen operating for past six years and has been generating energy approx 33 MU to 35MU with capacity generation of around 14 to 18 MW, similar to any other small hydelgeneration project. Thus, it is certain that, until height of Nilwande dam reaches 613M, the project can continue to generate at capacity of 14 MW to 18 MW, even thoughinstalled capacity of the project is 34 MW and energy generation shall be constrainedby water releases to meet irrigation cycle requirements and cannot be regulated as perpower generation requirement.

4.21 Recently, the Commission has issued an order on tariff for small hydro project ofcapacity less than 25 MW, where the Commission had taken a stand that a case-by-case evaluation of similar project can be avoided and a common tariff can beawarded. The Commission is of the opinion that the above approach can be applied toBHEP II under the following grounds:

(a) The Commission cannot set tariffs to recover the cost at which asset is beingsold by one owner to another. In a regulated business, the asset valuationshould follow the investor expectation guided by the tariff and regulatoryregime, but the tariff cannot follow the sale price to keep up the investor’sexpectation. Indeed, the market valuation of various companies changeseveryday, but those values are not considered by the Commission in


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determining tariffs. Moreover, in this case, only one bidder had participated inthe bidding process, hence the outcome cannot be considered to have beentested for competitiveness.

(b) Further, as submitted by GOMID, the project, at present, is indeed capable ofgenerating less than 25 MW, though in future, it is expected to generate highercapacity with the increase of the height of the Nilwande dam and the capitalexpenditure for the same is to be incurred by the irrigation department.

(c) A hydropower project is a combination of civil structures such as storagereservoir where applicable, water conductor system, adequate facility fordischarge of tailrace water and electro mechanical equipments. The actualinstalled capacity of the plant will be limited by the inadequacy of any of thesecomponents irrespective of the rated capacity of the electro mechanicalequipments. It will therefore not be correct to consider only the machine ratingas the installed capacity.

(d) The projected power output, provided by GOMID, in the current phase is18.78 MWs. In the GoM ‘State Hydel Policy for Development Of SmallHydro Power Projects through Private Sector Participation’ the Governmenthas stated that the policy is applicable to hydropower projects up to 25 MWinstalled capacity. As submitted by GOMID, the power output from theproject will increase beyond 25 MW only after the height of Nilwande Damreaches 613 meters. Also in the Order for Determination of Tariff for SHPProjects within Maharashtra dated 9th November, 2005 of the Commission theapproved tariff has been made applicable for projects upto an installedcapacity of 25 MWs.

4.22 Considering the above the Commission finds merit in treating the project as similar toa Small Hydro Power project till the height of Nilwande dam is raised till 610/613meters.

4.23 Therefore till the Nilwande dam height is raised till 610/613 meters, the Commissionapproves the SHP tariff (as provided in order on Determination of Tariff for SHPProjects within Maharashtra dated 9th November, 2005) for this project from the dateof approval of this order. The tariff applicable on the date of approval of this ordershall be as per the first year of the SHP tariff.

4.24 The above Tariff shall be applicable for BHEP-II during phase-I of the project (i.e.until height of Nilwande dam reaches 610 M). Further, the developer can approachthe Commission for revision of tariff once the dam height is raised till 610 m / 613m.

Commission Determined Tariff Rates for BHEP II

4.25 Based on the Order on Determination of Tariff for SHP Projects within Maharashtradated 9th November, 2005, Commission has adopted the SHP tariffs for BHEP II. TheSHP tariff as approved by the Commission in Determination of Tariff for SHPProjects within Maharashtra dated 9th November, 2005 is provided in Annexure H.


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Applicability of the Order

4.26 The Order shall be applicable for supply of electricity from Bhandardara HydroElectric Project II to the Distribution Licensees in the State of Maharashtra till theNilwande dam height is raised till 610/613 meters.

With this Order, the Commission disposes the Petition.

Sd/- Sd/- Sd/-(S. B. Kulkarni) (A. Velayutham) (Dr. Pramod Deo)Member, MERC Member, MERC Chairman, MERC

(Malini Shankar)Secretary, MERC


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A5: APPENDIX – A

Reserve price Calculation for BHEP Stage II

Alternative I

Assumption: Reserve price = Actual construction cost – depreciation + establishment charges

Year of Commissioning = May 1999

Expenditure on the project works upto March 2003 = 8457.750 Lakhs

Less Depreciation @ 3.4 %/ year for 4 years = 1150.254 Lakhs

Depreciated Value of Works = 7307.496 Lakhs

Add Establishment Charges (Actual) = 1580.350 Lakhs

Reserve Price = 8887.846 Lakhs

Say Rs = 89.000 Crores

Alternative II

Assumption: First Revised Administratively Approved Cost of project is indexed

The revised estimated cost based on price level of 85-86 = Rs 3336.72 Lakhs

Index for 85-86 = 133

Index for 2002-03 = 447

Indexed Cost = 3336.72 x 447/133 = 11214.390 Lakhs

Less Depreciation @ 3.4% / year for 4 years = 1525.157 Lakhs

Reserve Price = 9689.233 Lakhs

Say Rs = 97 Crores

Reserve Price

Alternative I = 89 Crore

Alternative II = 97 Crore

Based on the alternatives reserve price is finalised as Rs 92.00 Crores


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A6: APPENDIX – B

Price Schedule for BHEP II Bid

APPENDIX 1

PRICE SCHEDULE

Year Amount Due(Rs Lakhs) Year Amount Due (Rs

Lakhs) Year Amount Due (RsLakhs)

OnAgreement 60 11 100 21 1720

2 0 12 300 22 2000

3 50 13 300 23 2000

4 50 14 300 24 2000

5 75 15 300 25 2000

6 75 16 300 26 2000

7 100 17 1200 27 2000

8 100 18 1700 28 2000

9 100 19 1700 29 2000

10 100 20 1700 30 0

Total (Rs in Lakhs) 32270


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A7: APPENDIX – C

Technical Validation Session: Record of Proceedings

DATE OF HEARING: 10th May, 2005

CASE NO. : 1 0f 2005

MATTER : Procurement of power by MSEB from Bhandardara Hydroelectric Project (Phase II)

7.1 The list of participants in the public hearing were as follows:

Participants who attended the Technical Validation Session held on 10th May, 2005 at VistaHall of World Trade Centre are as follows:

Sr No Name Designation Organisation

1. R K Shardul Manager Crisil2. Deshpande K S Chairman Sne s Hydel Pvt Ltd3. V M Kulkarni Dy Secretary GoM4. A A Inamdar Dy Engg Gom WRD5. Anant D Sant Sect Engr Gom WRD6. Raman N Lunawat Manager SHPL7. S L Sahare CE (CP) MSEB8. L N Ambekar EE (G) MSEB9. S A Nikalje Sub Eng (G) MSEB10. P N Holkar Sect Engr Gom WRD11. Hari Natarajan Dy Manager REL12. Rasike Gokhale Sr Officer REL13. S P Nathan REDAM14. Gaurav Joshi Counsel for MSEB Little & Co15. Alpana Dhake Advocate Little & Co16. K S Jayaprakash Exe Eng MSEB17. Prashant Pansikar Comm Off DLHPPL18. Shyam Vaidya MD DLHPPL19. Prem Paunikar Director DLHPPL20. Balraj Varma VP DLHPPL21. Uday Samant Director DLHPPL22. M N Ramachandra ED VHPL23. Bhavin Sheth VP VHPL24. M R Dharsakar Supdt BEST25. Shantanu Dixit Prayas26. B K Bhojani Asst Eng Gom WRD


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27. P S Pandya Sr Consultant REL28. Subhash Gupta Dy EE MSEB29. Anupam Ray Consultant PwC30. Tushar Sud Consultant PwC31. Sambit Basu Consultant PwC32. Muddar Jt. Secretary ID33. Pathak SE ID34. Datar EE ID35. Vyas AE ID36. J D Kulkarni AGM TPC37. P K Anvekar TPC38. A Gondhalekar TPC39. Prashant Mehera CMW

40. Ramesh Pawar Chairman EnergyMACCIACommittee

7.2 Number of issues was raised regarding the bidding process for this project and itsconsequence on the tariff. GOMID has allocated this project to M/S Dodson-Lindblom Hydro Power Pvt Ltd at a cost of Rs 60 crores upfront payment and annualpayment as per the schedule provided in the bidding document. Initially the otherrespondents felt that this amount was taken by GOMID in order to construct theNilwande dam, which essentially is an irrigation project. GOMID clarified that theamount stated as base charge was the depreciated cost of initial investment. Theparticipants in the hearing requested GOMID to provide the details of initial costcalculations. GOMID agreed to provide the details.

7.3 GOMID also stated that the reserved price of the project has nothing to do withirrigation and is purely for power project. The project was offered to MSEB on leaserent but they refused. Thereafter it was put up on bid.

7.4 It was stated that the project has been built as a peaking station for life but at present itis being operated as a base load station. The Chairman enquired about the total timeperiod expected, for it to be operated as a peaking station. It was replied that in ayear’s time the project would be operated a peaking station.

7.5 The Chairman enquired MSEB on their preference about choice of front loaded orback loaded tariff. Mr Sahare (CE CP) of MSEB did not opt for any option andsubmitted that the Commission may take a view on the matter.

7.6 Member MERC stated that today’s environment calls for clear demarcation ofexpenses between irrigation and power.


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7.7 One of the objectors stated that it is unfair to expect that the entire cost purchase ofthe project shall be a pass through. The objector questioned that whether the entirecost would be a pass through even if this project would have been sold at a very highcost say Rs 500 Crores instead of Rs 92 Crores. Representative of M/S DodsonLindblom stated that a threshold level was fixed in the bidding so that no oneundercuts this value. The representative of GOMID informed that the two options ofprice in the Bid Document was set taking into account the depreciated value of theassets and also stated that the amount quoted by the winning bidder is not very highfrom the minimum price set in the Bid Document. Thus the bidding process in thiscase is not adding much to the final feed in tariff.

7.8 It was noted in the meeting that the tariff petition on Bhandardara Hydro Electricproject was submitted by MSEB against a general convention of submission of suchpetitions by the generators itself. The Chairman also stated that the MSEB proposal isincomplete.

7.9 M/S Dodson-Lindblom Hydro Power Pvt Ltd explained that at present the generatingstation is being run as a base load station. However as soon as the height of theNilwande dam reaches 610/ 613 meters it will be in a position to operate as a peakingstation. The developers also stated that after the height of the dam is increased furtherto 648 meters, at times due to backwater, the generating station will not be in aposition to generate electricity and therefore the total energy generation will reduce.GOMID officials, although agreed to the issue of backwater, did not agree to the pointof view of the developer that the energy generated will reduce when the height of thedam reaches 648 meters.

7.10 Crisil Infrastructure Advisory had submitted on behalf of MSEB that the capital costof the project was Rs 322.70 Crore over a period of 30 years and additional Rs 16.8crore was to be incurred for completion of project. The per MW cost worked out to beRs 9.96 crore/MW, which was on higher side. The participants did not agree to thebasis of computation of capital cost on aggregate basis and argued that the net presentvalue of the investment be considered for the capital cost.

7.11 MSEB opined that the possibility of pegging the cost of power at avoided cost may beexplored. The Commission advised the licensee to provide their views onmethodology of calculating avoided cost.

7.12 One of the objectors also expressed its doubt on the irrigation department’smethodology of allocation of expenses between activities related to irrigation andthose related to power. CEA’s methodology of apportionment was referred to in thiscase. Representative of Prayas stated that this high cost of project actually arevaluation of the project cost which is similar to that of revaluation of the assets inOrissa. Chairman pointed out that this can not be considered as revaluation of assetsand is rather a value addition.

7.13 Mr Kulkarni sought explanation from M/S Dodson-Lindblom Hydro Power Pvt Ltdregarding the necessity of spending Rs 10 Crores on the project as repair andupgradation cost.


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7.14 Prayas also requested for the feasibility report on Bhandardara project as prepared byGOMID. They also stated that if avoided cost method is proposed to be used fordetermination of tariff then a discussion paper on the subject should be circulated.

7.15 PwC enquired whether the bid document is available for study. They also enquired thebasis of arriving at the renovation expenses of Rs 50 lakhs and 100 lakhs for 11th and21st year respectively.

7.16 It was stated that the following documents are required to be submitted

(a) Copy of the bidding document,

(b) Working of the tariff,

(c) Basis of arriving at the value of Rs 92 Crores and

(d) Details of the depreciated cost as worked out by GOMID.

7.17 The Chairman enquired about time period by which the documents can be submitted.It was agreed upon that the documents would be submitted within a period of oneweek.


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A8: APPENDIX – D

Public Hearing Process: Record of Proceeding

DATE OF HEARING : 27th Sep, 2005

CASE NO. : 1 of 2005

MATTER : Procurement of power by MSEB from Bhandardara Hydro electricProject (Phase II)

8.1 The list of participants in the public hearing were as follows:

Participants who attended the Public Hearing held on 27th September, 2005 at Vista Hall ofWorld Trade Centre are as follows:


1. Vikram Rajadhyaksh CEO DLHPPL2. PS Paunnikar Director DLHPPL3. David Hetzler Bis Dev DLHPPL4. Shyam Vaidya MD DLHPPL5. Rakesh Kothari Asst Mgr (Sys) DLHPPL6. Prakash Tharade Manager A/C DLHPPL7. SK Mulani Asst CE (E) GoM8. GH Khatti CE GoMWRD9. VM Kulkarni Dy Secretary GoMWRD10. SK Ghanekar Under Secretary GoMWRD11. AD Sant Section Engineer GoMWRD12. Subhash Gupta Dy EE MSEDCL13. Ambekar LN EE MSPGCL14. JV Agavekar EE MSEDCL15. DD Ulangikar SE MSEDCL16. KS Jaiprakash EE MSEB (Holding)17. RA Mulla TD MSEB (Holding)18. VK Bhojani AE GoMWRD19. AA Inamdar Dy Engineer GoMWRD20. DK Datar EE GoMWRD21. DS Dahedar Dy Engineer GoMWRD22. ST Pathak SE GoMWRD23. N. Abhyankar Prayas24. Sardul RK Manager Crisil25. B Sheshan Head Power Crisil26. Rasika Gokhale S Off REL27. V.H. Wagle Manager TPC


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28. AD Mahajan S Mgr SICOM29. M.N. Bapat Tech. Expert SICOM30. Tushar Sud Consultant PwC31. Sambit Basu Consultant PwC32. Jogendra Behera Consultant PwC33. Anupam Ray Consultant PwC

Dodson-Lindblom Hydro Power Pvt. Ltd. (DLHPPL)

8.2 Mr Rajadhyaksha presented the case of DLHPPL and made following observations:

(a) DLHPPL bid an amount of Rs 60 Crore upfront and a further total of Rs262.70 crore in yearly instalments so that the NPV of all payments would beRs 92 Crore.

(b) DLHPPL had retained an independent expert to make complete inspection ofthe plant and determined that plant needs significant repair and refurbishmentto improve availability of the plant. The estimate of repairs and refurbishmentwas approximately Rs 10 crore. Due to inadequacies, the plant has onlygenerated an average of 27.28 MU as against design generation of 36 MU overlast six years despite of availability of water. He also stated that whereas incase of Bhandardara I the availability have been 99.9% when water wasavailable, the same figure stands at 50% in case of Bhandardara II.

(c) The tariff proposed by DLI starts at Rs 3.05 per unit and escalates at 5% peryear upto 12th year, stays constant for 5 years and then escalates at 4% peryear until it reaches Rs 8.69 per unit. In case CERC norms are followed, thefirst year tariff works out to be Rs 5.25 per unit which goes down to Rs 2.50per unit until 11th year and steadily increases to about Rs 9.35 per unit in 30th

year. He pointed out that the proposed tariff is back loaded and the rateproposed would be affordable to MSEB and at the same time enable thedeveloper to ensure payments to GOMWRD, paying operating expenses andmeeting debt-service obligations.

8.3 DLI submitted that Commission had received some erroneous information fromvarious sources and further clarified that the per MW cost of Rs 9.96 crore worked outby M/s CRISIL was not correct as they had considered an aggregate of all thepayments for 30 years in absolute terms. However, if the NPV of all future paymentsare considered, the per MW cost stands at Rs 3.14 crore.

8.4 DLI also submitted that the tariff comparisons for Nathpa-Jhakri, Uri, Chamera andRangit cited by CRISIL was not appropriate as these projects are located inHimalayas with perpetual flowing rivers and have capacity in hundreds of MW withPLF in excess of 60%.


Page 35 of 45

PRAYAS

8.5 PRAYAS submitted that BHEP II has not been used as a peaking plant as Nilwandedam would be completed only by 2007. The coming two years would be most crucialfor MSEB particularly from peaking power point of view.

8.6 PRAYAS observed that the proposal has the following lacunae:(a) Extremely high tariff: The levelised tariff over 30 years is Rs 4.36 per unit.(b) Exorbitantly high R & M cost: The proposed repairs and maintenance cost of

Rs 10 crore amounts to 17% of Rs 60 crore (the amount to be paid upfront).(c) Other factors: The high capital cost of the project is also on account of

Commitment charges to FIs (2% of loan), consultant & legal fees (2% ofupfront payment), performance bank guarantee (3% of upfront payment).These other costs add upto 12% of upfront payment of the capital cost (Rs 60crore).

(d) No comparison with alternatives have been considered for the project. Thecomparison of the project should be with an alternate source of peak power ora peak power reliever like Agricultural feeder segregation, open cycle gasturbines, mass scale DSM scheme using CFLs. That is comparing cost ofsaving incremental power requirement during the peak period against the costof providing incremental power from the Bhandardhara project.

8.7 PRAYAS proposed that mass CFL scheme is the most viable alternative as the energybenefits would be 18 times the annual cost to be paid to Bhandardara project overnext 30 years. In addition, the mass CFL scheme has huge employment potential. TheCommission pointed out that the peak deficit shall remain inspite of the DSMmeasures and additional generation would be required to meet the same. The objectoragreed with Commission’s contention that few stations would be required for meetingthe peak demand. The Commission also enquired whether PRAYAS could providesuggestions in the matter of tariff of peaking power. In reply PRAYAS stated that forshort term peaking power could be as high as Rs 5/- per unit and also pointed out thatthis (Bhandardara II) is a case of long term power purchase.

8.8 PRAYAS also raised the issue of obligation of MSEB to purchase power fromBhandardara and submitted that MSEB is under no obligation to purchase power fromBhandardara II as stated in para 3.5.13 of the bidding document and therefore itshould not be made mandatory for MSEB to procure power from BHEP – II. Thepromoter is free to sell the same to any trader or in the market. But maintained thatwhether the need for Bhandardhara II as peaking station is justified at such high costas it won’t be available for the next two years when need for peaking power is high.

Maharashtra State Electricity Distribution Company Ltd. (MSEDCL)

8.9 Mr Mulla submitted that MSEDCL would need to purchase peak power as there issignificant deficit during the peak time.

8.10 It was submitted that there has been no identical proposal for long term peak powerpurchase with any of the SEB’s / utilities in India.


Page 36 of 45

8.11 Mr Mulla submitted that the capital cost of Rs 92 crore for the project was outcome ofbidding process and therefore MSEDCL has nothing to comment on the same.However, he submitted that Commission’s decision on the additional expense of Rs10 crore would be acceptable to the company and also that the tariff determined bythe Commission would be acceptable to the company. The Commission enquiredwhether the bidding was for power project or for the hydro project. Mr Mullasubmitted that it was only the power project cost which was taken in the bid. TheCommission also asked whether the bidding process would absolve the company ofits responsibility, more so when there was only one bidder and there was no pricediscovery as such.

8.12 The Commission also observed that there were no CERC norms for peaking power.

8.13 Mr Mulla submitted that the current peak power cost was around Rs 3.45 – Rs 3.50per unit, which is much higher than the proposed rates.

Government of Maharashtra Water Resource Department (GOMWRD)

8.14 Mr Kulkarni, representative for GOMWRD, expressed that the cost of Rs 92 crore forthe project was reasonable and was outcome of a transparent competitive biddingprocess. The Commission observed that it seems that the objective of GOMWRD wasto optimise their gains through the bidding process at the cost of the power utility, andalso expressed doubt whether the bidding process can be truly considered competitivewhen only one bidder responded.

8.15 The Commission enquired what would happen in case the developer was not giventhe price comfort and thus finally the plant is not handed over to this bidder(DLHPPL). Mr Kulkarni submitted that the department would look for alternative andagain go through the bid route. He also pointed out that in that case the bid valuecould be higher.

8.16 The Commission also asked the GOMWRD representative to comment on the Rs 10crore additional cost asked for by the developer. Mr Kulkarni stated that a detailedreply has already been submitted vide letter dated 12 August 2005. He clarified that atpresent additional expense of Rs 10 Crores is not required but cannot comment on anyrequirement that may arise after four to five years. Mr Kulkarni also informed that atpresent there were no problems in running the machines at full load and it had beentested recently. DLHPPL expressed that Rs 10 crore was required to increase theavailability at Bhandardara II to 99% from the existing 50% (approximately).

8.17 The Commission enquired whether it is appropriate to account for the entire expensein respect of power plant or a part of the expense should also be booked againstirrigation expense. Mr Kulkarni submitted that the price of Rs 92 crore did not includeany irrigation component at all. To a pointed query from the Commission on therelease of water for power generation without linking irrigation needs, Shri Kulkarnireplied that after completion of Nilwande Dam Project, the Bhandardara - II shall beused for power generation exclusively based on water availability.

37

A9: APPENDIX – E

Working Table for Power Generated at BHEP II without Nilwande Dam as per Submission Dated 13th

January, 2006

Sr.No.

Month

Qty. released inMm3 from poweroutlet (26days/month)

Per Day qtyof waterreleased inMm3

Average levelin pick-up weir

AverageT.W.L.in M

Grossheadin M

Dischargein(m3/sec.)

Overallefficiencyof plant

Poweroutput inKW

GenerationHrs.

DailyGenerationin Mus.

MonthlyGenerationin Mus.

1 2 3 4 5 6 7 9 10 11 12 13 141 June 22.431 0.863 667.72 610.34 57.38 43.4 76.80% 18781.44 5.52 0.104 2.696

2 July 34.25 1.317 667.72 610.34 57.38 43.4 76.80% 18781.44 8.43 0.158 4.117

3 Aug. 38.96 1.498 667.72 610.34 57.38 43.4 76.80% 18781.44 9.59 0.180 4.683

4 Sept. 36.812 1.416 667.72 610.34 57.38 43.4 76.80% 18781.44 9.06 0.170 4.425

5 Oct. 28.33 1.090 667.72 610.34 57.38 43.4 76.80% 18781.44 6.97 0.131 3.406

6 Nov. 31.675 1.218 667.72 610.34 57.38 43.4 76.80% 18781.44 7.80 0.146 3.808

7 Dec. 29.009 1.116 667.72 610.34 57.38 43.4 76.80% 18781.44 7.14 0.134 3.487

8 Jan. 31.44 1.209 667.72 610.34 57.38 43.4 76.80% 18781.44 7.74 0.145 3.779

9 Feb. 27.667 1.064 667.72 610.34 57.38 43.4 76.80% 18781.44 6.81 0.128 3.326

10 Mar. 27.667 1.064 667.72 610.34 57.38 43.4 76.80% 18781.44 6.81 0.128 3.326

11 April 27.667 1.064 667.72 610.34 57.38 43.4 76.80% 18781.44 6.81 0.128 3.326

12 May 32.026 1.232 667.72 610.34 57.38 43.4 76.80% 18781.44 7.88 0.148 3.850 367.934 44.229


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Working Table for Power Generated at BHEP II with Nilwande Dam Built up to 610 / 613 m as per SubmissionDated 13th January, 2006

Sr.No. Month Qty.released inMm3 frompower outlet(26days/month)


Averagelevel inpick-upweir

AverageT.W.L.in M

Grossheadin M

Dischargein(m3/sec.)

OverallEfficiency=

Turbineoutputin KW

GenerationHrs.

DailyGenerationin Mus.

MonthlyGenerationin Mus.

1 2 3 4 5 6 7 9 12 13 141 June 22.431 0.863 667.72 610.34 57.38 77.2 0.863 37504 3.10 0.116 3.027

2 July 34.25 1.317 667.72 610.34 57.38 77.2 0.863 37504 4.74 0.178 4.622

3 Aug. 38.96 1.498 667.72 610.34 57.38 77.2 0.863 37504 5.39 0.202 5.257

4 Sept. 36.812 1.416 667.72 610.34 57.38 77.2 0.863 37504 5.09 0.191 4.968

5 Oct. 28.33 1.090 667.72 610.34 57.38 77.2 0.863 37504 3.92 0.147 3.823

6 Nov. 31.675 1.218 667.72 610.34 57.38 77.2 0.863 37504 4.38 0.164 4.274

7 Dec. 29.009 1.116 667.72 610.34 57.38 77.2 0.863 37504 4.01 0.151 3.915

8 Jan. 31.44 1.209 667.72 610.34 57.38 77.2 0.863 37504 4.35 0.163 4.243

9 Feb. 27.667 1.064 667.72 610.34 57.38 77.2 0.863 37504 3.83 0.144 3.734

10 Mar. 27.667 1.064 667.72 610.34 57.38 77.2 0.863 37504 3.83 0.144 3.734

11 April 27.667 1.064 667.72 610.34 57.38 77.2 0.863 37504 3.83 0.144 3.734

12 May 32.026 1.232 667.72 610.34 57.38 77.2 0.863 37504 4.43 0.166 4.322 367.934 49.651


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Working Table for Power Generated at BHEP II with Nilwande Dam Built up to 648 m as per SubmissionDated 13th January, 2006

SNo

Month Qty. released inMm3 from poweroutlet (26days/month)


Averagelevel inpick-upweir

AverageT.W.L.in M

Grossheadin M

Discharge in(m3/sec.)

OverallEfficiency =

Poweroutput inKW

Generation Hrs.

DailyGeneration in Mus.

MonthlyGeneration in Mus.

1 2 3 4 5 6 7 9 10 11 12 13 141 June 22.431 0.863 667.72 613.94 53.78 77.2 0.846 34490 3.10 0.107 2.784

2 July 34.25 1.317 667.72 617.31 50.41 77.2 0.846 32328.7 4.74 0.153 3.984

3 Aug. 38.96 1.498 667.72 621.30 46.42 73.5 0.846 28343.1 5.66 0.161 4.173

4 Sept. 36.812 1.416 667.72 623.47 44.25 72 0.846 26466.7 5.46 0.145 3.759

5 Oct. 28.33 1.090 667.72 623.36 44.36 72 0.846 26532.5 4.20 0.112 2.900

6 Nov. 31.675 1.218 667.72 621.55 46.17 73.2 0.846 28075.4 4.62 0.130 3.375

7 Dec. 29.009 1.116 667.72 619.13 48.59 76 0.846 30677.2 4.08 0.125 3.253

8 Jan. 31.44 1.209 667.72 616.23 51.49 77.2 0.846 33021.3 4.35 0.144 3.736

9 Feb. 27.667 1.064 667.72 614.67 53.05 77.2 0.846 34021.8 3.83 0.130 3.387

10 Mar. 27.667 1.064 667.72 615.67 52.05 77.2 0.846 33380.5 3.83 0.128 3.323

11 April 27.667 1.064 667.72 614.74 52.98 77.2 0.846 33976.9 3.83 0.130 3.382

12 May 32.026 1.232 667.72 613.80 53.92 77.2 0.846 34579.7 4.43 0.153 3.985 367.934 42.040


Page 40 of 45

A10: APPENDIX – F

Working Table for Power Generated at BHEP II without Nilwande Dam as per Submission Dated 2nd March,2006

90% Dependable yield(1972-73) 90% Dependable yield(2000-01) Average of 90% Dependable yieldMonth

CapacityEnergyGenerated

No. ofHours

No. ofdays Capacity

EnergyGenerated

No. ofHours

No. ofdays Capacity

EnergyGenerated

No. ofHours

No. ofdays

1 2 3 4 5 6 7 8 9 10 11 12 13June (1-15) 38.23 0.73 3.2 6 35.40 2.26 4.2 15 36.82 1.49 3.71 10.50June (16-30) 36.56 1.69 3.1 15 34.01 1.15 3.1 11 35.28 1.42 3.07 13.00July (1-15) 29.28 3.78 8.6 15 29.59 2.17 4.9 15 29.43 2.98 6.75 15.00July (16-31) 28.07 2.38 5.6 15 29.93 1.29 3.1 14 29.00 1.83 4.36 14.50August (1-15) 28.28 2.32 5.5 15 26.61 4.76 11.9 15 27.44 3.54 8.71 15.00August (16-31) 28.53 2.07 4.8 15 26.29 2.33 5.9 15 27.41 2.20 5.38 15.00September (1-15) 29.62 0.83 3.1 9 27.54 0.56 3.4 6 28.58 0.70 3.26 7.50September (16-30) 28.26 1.32 3.1 15 27.82 0.07 2.3 1 28.04 0.69 2.73 8.00October (1-15) 26.55 2.41 6.0 15 28.64 0.55 3.2 6 27.60 1.48 4.62 10.50October (16-31) 24.30 2.38 6.5 15 29.07 0.47 3.2 5 26.68 1.42 4.87 10.00November (1-15) 21.31 2.36 7.4 15 29.04 2.20 5.0 15 25.18 2.28 6.21 15.00November (16-30) 23.36 2.59 7.4 15 29.18 3.25 7.4 15 26.27 2.92 7.40 15.00December (1-15) 24.09 0.58 3.0 8 27.25 2.05 5.0 15 25.67 1.31 4.01 11.50December (16-31) 24.69 0.06 2.4 1 30.39 3.37 7.4 15 27.54 1.72 4.92 8.00January (1-15) 22.12 2.43 7.3 15 28.42 2.13 5.0 15 25.27 2.28 6.16 15.00January (16-31) 23.24 3.06 8.8 15 26.31 2.91 7.4 15 24.78 2.98 8.07 15.00February (1-15) 23.32 0.03 1.4 1 27.69 3.05 7.3 15 25.51 1.54 4.39 8.00February (16-28) 25.61 0.04 1.4 1 29.08 0.69 3.4 7 27.35 0.36 2.42 4.00March (1-15) 28.48 1.75 4.1 15 33.24 1.64 3.3 15 30.86 1.69 3.69 15.00


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90% Dependable yield(1972-73) 90% Dependable yield(2000-01) Average of 90% Dependable yieldMonth

CapacityEnergyGenerated

No. ofHours

No. ofdays Capacity

EnergyGenerated

No. ofHours

No. ofdays Capacity

EnergyGenerated

No. ofHours

No. ofdays

1 2 3 4 5 6 7 8 9 10 11 12 13March (16-31) 28.34 0.11 4.0 1 33.11 0.09 2.7 1 30.72 0.10 3.36 1.00April (1-15) 31.67 1.93 4.1 15 37.48 1.81 3.2 15 34.58 1.87 3.64 15.00April (16-30) 31.53 0.11 3.3 1 37.48 0.09 2.3 1 34.50 0.10 2.84 1.00May (1-15) 33.80 2.00 3.9 15 37.48 1.86 3.3 15 35.64 1.93 3.62 15.00May (16-31) 38.23 0.06 1.5 1 37.48 0.04 1.0 1 37.86 0.05 1.27 1.00

Total 36.99 254.00 40.78 263.00 38.88 258.50

42

A11: APPENDIX G - REPORT FROM COMMISSION’STECHNICAL EXPERT

Note on BHEP II

Ref:GOMWRD letter dated 02-Mar-2006; DLH letter dated 24-01-2006.

General

The Government of Maharashtra and M/s DLH had furnished studies in response todiscussions held in Jan, 06 at Mumbai with the MERC. The studies have been reviewed toarrive at the energy generation from BHEP II in a 90% dependable year in the differentphases of Pravara river basin development.

The Government of Maharashtra had analyzed the runoff data at Bhandardara Dam from1976 to 2004 to arrive at the 90%, 50% and 75% dependable yields. As per these studies,2000-01 (June to May) with a total inflow of 292 MCM and 1972-73 with total annual inflowof 322 MCM are considered as 90% dependable years. As per assessment of DLH, 2000-01constitutes 90% dependable year based on discharge data from 1965 to 2004.

Considering that year 2000-01 has a lesser inflow, the assessment of power benefits fromBHEP II project in a 90% year based on the studies for 2000-01 would be in order.

M/s DLH had furnished the detailed daily working tables for 90% dependable year in the preNilwande phase. They had also carried out studies post Nilwande corresponding to the damconstruction to level of +613m and FRL +648m for 50%, 75% & 90% dependable years.These studies were carried out considering the historical daily outflows from Bhandardaraand flow from the free catchment at Randha weir. The inflows from free catchment betweenBhandardara dam and Randha weir has been assessed taking into account the ratio ofcatchment area and rainfall.

During the discussions held in Jan 06 at Commission’s office, working table studies onmonthly basis in pre Nilwande and post Nilwande (+613 m/ 648 m) were furnished byGovernment of Maharashtra. The working table studies (on fortnightly basis) now(March,06) furnished by GoM are for post Nilwande Dam for FRL +648 m for 50%, 75%and 90% dependable years. In all these studies, inflows from free catchment betweenBhandarda dam and Randha weir have been considered as 20% of flows at BhandardaraDam.

The power potential of the project in 90% dependable year in the various phases of basindevelopment (pre and post Nilwande) are discussed in the following

Pre – Nilwande Phase:

In the studies furnished by GOMWRD for pre - Nilwande phase, the power potential of theproject in 90% dependable year was assessed as 44 MU. These studies did not take intoaccount the minimum discharge limitations of the TG set of BHEP II. The working tables as


Page 43 of 45

indicated in the foot note would not represent the correct situation and cannot be consideredfor determination of power potential of BHEP II in the pre - Nilwande stage.

The studies of M/s DLH were done considering the actual daily releases from Bhandardaradam during 2000-01. In these studies, the lower discharge limit (34 cumec) for turbineoperation at BHEP II has been taken into account. On this basis, the power potential of theproject in 90% dependable year has been assessed as 33.5 MU. In these studies, the overallefficiency of 83% has been adopted, while as per information furnished by GOMWRD, theoverall efficiency should be 84.6%. correcting for lower efficiency, the energy benefit fromBHEP II in a 90% year would be 34.1 MU.

Without Nilwande dam, BHEP II cannot be operated for peaking though Pondage is availableat Randha weir. This constraint is in on account of the fact that there is no re-regulatingpondage at the irrigation weir to even out pulsating peaking releases. Further, t wheneverreleases available for power generation are less than 34 cum, the same cannot be utilized forpower generation for BHEP II since this is the lower limit of turbine operation range..Accordingly in pre Nilwande phase, BHEP II will operate as run of the river project and thegeneration will depend on the irrigation discharges and there would be periods of powerhouse closure on account the reasons beyond the control of the project operator.

The annual energy potential of BHEP II in a 90% dependable could be taken as 34.1 MU andthe project would operate as ROR project with periods of shut down dictated by the irrigationrequirements.

Post-Nilwande Dam (+613 m)

The studies of GOMWRD furnished in Jan 2006 indicated the energy generation in 90%dependable year as 49.6 MU. In this study the total water utilized for power generation hasbeen indicated as about 368 mcm. It would appear that this has been arrived at based onearlier analysis in which 90% dependable flows at Bhandardara were taken as average of theflows for 1972-73 and 2000-01.

M/s DLH in their studies assessed the potential at 42.8 MU in 90% dependable yearconsidering the historical outflows from Bhandaradara dam and additional inflow of 61MCMfrom free catchment at randha weir. The overall efficiency in this study is taken as 83%.Correcting for the efficiency to 84.6%, the energy generation would be 43.4 MU.

In this phase of development, with the re-regulation pondage available at Nilwande,it wouldbe possible to operate BHEP II for peaking. The pre Nilwande constraint in operation ofBHEP II during periods of flows lower than 34 cumec would no longer be applicable. Powergeneration would be possible even during the periods of release of less than 34 cume, byutilizing the pondage available at Randha Weir. However, during the periods when no watersare to be released from Bhandardara, BHEP II would not be in a position to generate power.This situation is on account of the irrigation cycle and utilization of waters primarily forirrigation.

The annual energy generation from BHEP II in post Nilwande (+613m) phase would be 43.4MU. Peaking benefit to the extent of 34 MW would be available except during periods of noirrigation releases from Bhandaradara.


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Post - Nilwande Dam (+648 m)

GOMWRD carried out integrated operation studies for Bhandaradara nd Nilwande damstogether and took into account the irrigation requirements downstream at Nilwande andOzhar weir. These studies had considered the 90% dependable year inflows into Bhandardarareservoir as 292 MCM. The energy generation from BHEP II had been assessed taking intoaccount the impact of higher tail water level on account of Nilwande. In these studies thepower potential of BHEP II has been assessed as 40.78 MU for 90% dependable year (2000-01). In the studies, the initial water level in Bhandardara reservoir was taken as 714.3 m (42MCM gross storage) and the final level at the end of the year was shown as 698 m (8 MCMgross storage). Thus there was an additional utilization of 34 MCM from the carry overstorage. The energy assessments in the studies would need to be corrected for the additionalutilization of carry over waters from previous year. The energy generation on account of thisadditional water is 4.52 MU (taking approx. 0.133 MU for 1 MCM of releases). If thiscorrection is taken into account the 90% dependable potential for Bhandardara would be36.26 MU.

DLH has assessed the potential for this phase as 34.8 MU. Correcting for the efficiency 83%to 84.6%, the power potential would work out 35.4 MU. The difference between the twoenergy assessments could be on account of the difference in assumptions made by DLH. Thetail water level in GOMWRD studies would be appropriate as they take into account theintegrated operation of the all the developments in the river basin and also consider irrigationreleases at Nilwande and Ozar.

In this phase (post Nilwande +648m) of development, as per GOMWRD studies, the energygeneration would be possible for 263 days i.e. 72% of the time. The peaking capability wouldhowever, reduce during periods of high TWL when the water level in Nilwnde is high andthe head available for power generation falls below design head.

BHEP II is a component of the integrated development of the water resource of Pravara basinprimarily for irrigation. The operation of the plant would therefore have to follow theirrigation pattern. There would be periods of no generation of power at BHEP II on accountof irrigation dependent operation of the storage reservoirs. This is beyond the control of theplant operator.


Page 45 of 45

A12: APPENDIX H - SHP TARIFF AS PER ORDER ONDETERMINATION OF TARIFF FOR SHP PROJECTSWITHIN MAHARASHTRA DATED 9TH NOVEMBER,2005

Year 1 2 3 4 5 6 7 8 9 10

Tariff (Rs/Unit) 82.84 2.87 2.902 2.9311 2.9612 2.9913 3.02 3.05 3.08 3.11

Year 11 12 13 14 15 16 17 18 19 20

Tariff (Rs/Unit) 3.11 3.11 3.11 3.11 3.11 3.14 3.17 3.20 3.23 3.26

Documents

BHANDARDARA HYDRO ELECTRIC PROJECT - IImercindia.org.in/pdf/17_Order_dt_10_04_2006_CN_01 of 2005.pdf · Purchase of Power from Bhandardara Hydro Electric Project (Phase II) Dr Pramod