IN THE APPELLATE TRIBUNAL FOR ELECTRICITY AT NEW DELHI APPELLATE JURISDICTION APPEAL NO. 537 OF 2023 IN THE MATTER OF: NTPC Limited Appellant Versus Central Electricity Regulatory Commission & Ors. ... Respondents INDEX Sr.No] articular | Pe. Nos. Reply on behalf of Respondent No. 18 / Tata Power 1 Delhi Distribution Limited (erstwhile North Delhi 1-44 Power Limited) along with supporting Affidavit. Tata Power Delhi Distribution Limited (TPDDL) Respondent No. 18 natnlanen Advocates for Respondent No. 18 / TPDDL. 12, Aradhana Enclave, 2" Floor R.K. Puram Sector-13, New Delhi ~ 110066. Mobile No, 9650244399 Email- kunal@reglawchambers.com Through New Delhi 1y_.09.20231 IN THE APPELLATE TRIBUNAL FOR ELECTRICITY AT NEW DELHI APPELLATE JURISDICTION APPEAL NO. 537 OF 2023 IN THE MATTER OF: NTPC Limited . Appellant ‘Versus Central Electricity Regulatory Commission & Ors. ...Respondents REPLY ON BEHALF OF RESPONDENT NO. 18 / TATA POWER DELHI DISTRIBUTION LIMITED The answering Respondent No.18, Tata Power Delhi Distribution Limited (“TPDDL/R-18”) (erstwhile North Delhi Power Limited), most respectfully submits as under: I 1 T. SCOPE OF CHALLENGE IN THE APPEAL, ‘The present Appeal is against the Order dated 29.03.2023 passed by the Hon’ble Central Electricity Regulatory Commission (Ld. Commission/R-1) in Petition No. 442/GT/2020 (Impugned Order) and pertains to the Appellan/NTPC’s Kahalgaon Super Thermal Power Station, Stage -II (KSTPC-II). The challenge/grievance of the Appellant in the present Appeal is limited to: i) Disallowance of claim for installation of Chlorine dioxide (C102); (ii) Disallowance of claim for online coal analyser; and (iii) Disallowance of claim for Gross Station Heat Rate LD. COMMISSION’S — DISALLOWANCE —OF APPEALLANT’S CLAIMS. The reasons for disallowance of above claims by the Ld. Commission are briefly stated as under:(a) b) L Disallowance of claim for installation of Chlorine dioxide (C102) - The Ld. Commission has disallowed the Appellant’s claim fof Rs, 1510 lakhs] for projected additional capital expenditure towards replacement of chlorine system with chlorine dioxide (C102) (@ paras 46 to 48 of the Impugned Order], inter-alia, on the ground that i, the letter dated 23.9.2013 issued by the Directorate of Factories, Industrial Safety & Health, Government of Kamataka (“the GoK letter”) and the Office Memorandum dated 28.03.2014 issued by the State Pollution Control Board, Odisha (“Odisha OM”) pertains to site of Kudgi Super Thermal Power station in Karnataka and the Darlipali Thermal Power plant in Odisha and cannot be termed as change in law for Kahalgaon — I (@ para 48 of the Impugned Order]; ii, there is no specific direction/ advice from government authorities for replacement of chlorine dozing system with C102 towards safety and security of station (@ para 48 of the Impugned Order], Disallowance of claim for online coal analyser ~ The Ld. Commission has disallowed the Appellant’s claim [of Rs, 570 lakhs] claimed as projected additional capital expenditure towards Online Coal Analyzer for FY 2021-22 (@ paras 43 t0 45 of the Impugned Order}, inter-alia, on the ground that i, the generating station of the Appellant is located within 500 kms of the coal source and no justification for the need of online coal analyser has been provided (@ para 45 of the Impugned Order];TIL. 3 The Appellant has failed to substantiate that the coal received by it had ash content of more than 34% /@ para 45 of the Impugned Order}: The Appellant was already in the process of installing FGD and De-NOx systems, pursuant to OM dated 21.05.2020 and thus claim for Online Coal Analyser cannot be allowed (@ para 45 of the Impugned Order]; (c) Disallowance of Gross Station Heat Rate: The Ld. Commission has disallowed the Appellant’s GSHR claim for 2471.31 kCal/KWh and considered GSHR of 2373.98 kCaV/kWh /@ paras 80 to 84 of the Impugned Order], inter- alia, on the ground that: i. The Tariff Regulations 2019 provide that where the boiler efficiency is lower than 86% for the subbituminous Indian coal, the same (i.e. 86%) shall be considered for computation of station heat rate, In the present case the boiler efficiency claimed by the Appellant was 82.73% (for Unit- & II) and 82.385% (for unit IMD). Accordingly, GSHR of 2373.98 kCaV/kWh was considered applying the boiler efficiency of 86% (as mandated in the Tariff Regulations 2019). SUBMISSIONS BY TPDDL/R-18 A. Preliminary Submissions At the outset, it is TPDDL/R-18’s humble submission that the conclusion and findings in the Impugned Order in respect of the heads/claims under challenge are correct and, as such, warrant no interference.Y Itis submitted that in essence the Appellant’s case for permitting its Claims is premised on: (invoking change in law under Section 26(1)(b) in respect of claim regarding C102 and online coal analyser, and also Section 26(1)(d) in respect of C102 only. (ii) pleading dispensation for failing to comply with the 86% boiler efficiency Target availability in respect of claim for GSHR. It is submitted that the test for sustaining a claim for additional capitalization under Section 26(1)(b) and (d) is that: (a) there should be a specific direction or advice from any Governmental or statutory authorities; (b) such direction/advice, binding as law, should be in regard to the need for higher security and safety; and (c) the same should be conceming the generating station for which claim for additional capitalization beyond original scope is made. Absence of any of the above conditions is fatal to the claim. This is so because not all or any expenses (towards additional capitalization or otherwise) can be allowed as a pass through as that would have a direct bearing on the tariff, eventually burdening the ultimate consumers of electricity. Further, as regards claims based on change in law the quintessential requirement is that there should be a change in law prior to the cut- off date and such change in law should have led to incurrence of cost for which claim is being sought. There has to be a causal relationship between change in law and expense. An expense incurred de-hors change in law will not get covered under change in law claim.10. 0 il 5 In so far as failure to meet the prescribed threshold of boiler efficiency is concemed, it is submitted that no power, as may be vested under the statue or otherwise, should be exercised that would render any express provision of the statute/regulations otiose. There can be no cavil that: (i) exercise of discretion, if permitted by law, must not be arbitrary, must be exercised reasonably and with circumspection, consistent with justice, equity and good conscience, always in keeping with the given facts and circumstances of a case. (ii) moreover, such power cannot be exercised in a manner so as to nullify specific provisions of the law (in this case Tariff Regulations 2019) and render them otiose or completely redundant. Itis settled Jaw that the Ld. Commission while conducting the Tariff Determination proceedings is bound by the Regulations formulated by it and cannot deviate from the same, Reliance in this regard is placed on the judgment passed by the Hon’ble Supreme Court of India in the matter of PTC India Ltd. v. CERC; (2010) 4 SCC 603 B. Claim wise Submission. The Ld. Commission has correctly disallowed the Appellant's Claim of Additional Capital Expenditure towards replacement of Chlorine System with C102. In the present case, undisputedly, there is no advisory or directive by any authority specifically for replacement of chlorine system with C102 as part of safety and security of the KSTPS-II station. None of12. 14, (a) 15. 6 the letters (ie. those issued by the State Pollution Control Board, Odisha and the Government of Karnataka) referred to by the Petitioner pertain to KSTSP-II station. The letter dated 23.09.2013 issued by the Government of Kamataka, on which reliance has been placed by the Appellant, pertains to a different site of the Appellant. The said letter(s), in no manner, can be termed as a change in law event or for compliance with any existing law in respect of KSTPS- II generating station warranting the additional capitalization of the expenditure. In fact at paragraph 7.12 of page 11 of the Appeal, the Appellant itself states that letter dated 23.09.2013 of Government of Kamataka has been issued to the Appellant for its Kudgi Super Thermal Power Project. Itis submitted that since the replacement of chlorination system with C102 system at the station is not directly on account of policy/Law or direction of Central or State Government, no claim can lie under Regulation 29(1)(d) of the 2019 Tariff Regulations. The Ld. Commi: ion has rightly disallowed the Appellant’s Claim for Additional Capex towards Online Coal Analyser. Itis undisputed that: (i) the KSTPS-Iat is a pit head station with the coal source being less than 500 km away; and (ii) whereas the MOEF&CC Notification dated 26.08.2015 applies to coal based thermal plants located at a distance of 500 km & above from the coal source.16, 17. 18, 19. ny) 4 Since the condition given in MOEF&CC Notification dated 26.08.2015 is not met, the additional capital expenditure claim of the Appellant is ex-facie not maintainable. Additionally, the said claim is not tenable for the reasons, rightly observed by the Ld. Commission, that the Appellant has failed to substantiate or justify the actual requirement for the coal analyser, as the Appellant has not provided any documentary evidence in regard to the coal received by it having ash content of more than 34% which would necessitate the requirement of the coal analyser. It is submitted that not having substantiated the requirement of the coal analyser, the cost of the same cannot be passed on to the beneficiaries. Inany case such a claim for additional capital expenditure for online coal analyser is barred as Appellant, as observed by the Ld. Commission, is in the process of installing FGD and De-NOx systems. It is noteworthy that the MOEF&CC notification dated 21.05.2020 allows the usage of coal, without any stipulation as to ask content for thermal plants, subject to certain measures including setting up technology solutions for emission norms etc. Thus, no claim is made out under Regulation 26(1)(b) of the 2019 Tariff Regulations. The Ld. Commission has correctly considered the minimum Boiler Efficiency at 86% and the resultant GSHR at 2373.98 kCal/kWh.20. ea ers 23, & It is submitted that Appellant has claimed the GSHR of 2471.31 kCal/kWh, based on the claimed boiler efficiency of 82.73% (for Units I and Il) and 82.385% (for Unit IIT) which is contrary to the Regulation 49(C)(b)(i) of the Tariff Regulations 2019. ‘The Regulation 49(C)(b)(i) of the Tariff Regulations 2019, without any reservation/exemption, provides that where the boiler efficiency is lower than 86% for the subbituminous Indian coal, the same (i.e 86%) shall be considered for computation of state heat rate. The relevant Regulation 49(C)(b)(i) is extracted hereunder: “49(C)(b(i) For Coal-based and lignite-fired Thermal Generating Stations: 1.05 X Design Heat Rate (kCal/kWh) Provided also that where the boiler efficiency is lower than 86% for Subbituminous Indian coal and 89% for bituminous imported coal, the same shall be considered as 86% and 89% for Sub-bituminous Indian coal and bituminous imported coal respectively, for computation of station heat rate Since the boiler efficiency claimed by the Appellant was less than 86%, the Ld. Commission, as mandated by the Tariff Regulations 2019, rightly considered GSHR of 2373.98 kCal/kWh applying the boiler efficiency of 86%. Thus, the Appellants’ claim is liable to be disallowed. Itis submitted that TPDDL/R-18 denies and disputes all allegations, averments and contentions in the Appeal. Nothing contained in the Appeal, which has not been specifically dealt with in the present Reply, be deemed to have been admitted by TPDDL/R-18 merely for want of traverse and be taken to be specifically denied. TPDDL/R-18 reserves its right to file a detailed reply, if required.4 24. _ In view of the above contentions, it is submitted that the present Appeal lacks merit, in law and on facts, and the relief claimed by the Appellant ought not to be allowed. Accordingly, it is respectfully prayed that this Hon’ble Tribunal may be pleased to dismiss the present Appeal. Tata Power Dethi Dist ANURAG BANSAL ‘Addnl, GM-Corporate Legal Tata Power Delhi Distribution Ltd, NDPL House, Hudson Lines Kingsway Camp, Delhi-11 ution Limited espondent No. 18 Through ea eee RegLaw Chambers Advocates for Respondent No.18 New Delhi [409.2023 VERIFICATION I, Anurag Bansal, s/o Mr. P.C. Bansal, aged about 47 years, working with Tata Power Delhi Distribution Limited (TPDDL) ice., the Respondent No. 18, having its Office at NDPL House, Hudson Lane, Kingsway Camp, North Delhi — 110009 do hereby verify that the contents of the Reply are true to my knowledge derived from official record and on legal advice and that I have not suppressed any material facts. Tata Power vampiteacon es Respondent No. 18 New Delhi ANURAG BANSAL Addnl. GM-Corporate Legal \4_.09.2023[o IN THE APPELLATE TRIBUNAL FOR ELECTRICITY AT NEW DELHI APPELLATE JURISDICTION APPEAL NO. 537 OF 2023 IN THE MATTER OF: NTPC Limited ... Appellant Versus Central Electricity Regulatory Commission & Ors. ... Respondents. AFFIDAVIT I, Mr. Anurag Bansal, s/o Mr. P.C. Bansal, aged about 47 years, working with Tata Power Delhi Distribution Limited (TPDDL) ie., the Respondent No. 18, having its Office at NDPL House, Hudson Lane, Kingsway Camp, North Delhi — 110009, presently in New Delhi, do hereby solemnly affirm and state as under: 1. Lam the Authorized Signatory of the Respondent No. 18 Company, Tata Power Delhi Distribution Limited, and am fully conversant with the facts and circumstances of the case. I have been duly authorized and am therefore competent to affirm this Affidavit. 2. I say that I have perused the accompanying Reply and have understood the contents thereof and the same has been drafted under my instructions. I say that the contents of paragraphs __ to __ of the accompanying Reply are based on the information available with Respondent No. 18 in the normal course of business and the contents of paragraphs _ to __ of the accompanying Reply are based on the advice of legal counsel and believed by me to be true. I say that the contents of the accompanying Reply are true and correct to the best of my knowledge and belief and nothing false has been stated therein. EPO!/l VERIFICATION I, the deponent above-named, do hereby verify the contents of the above A ffidavit to be true to the best of my knowledge, no part of it is false and nothing material has been concealed therefrom. Verified at New Delhi on this 4. day of September, 2023. PONENT ANURAG BANSAL