NTPC Limited vs AP Eastern Power Distribution Company Limited & Ors
- Court
- Appellate Tribunal For Electricity
Judgement in Appeal No. 10 of 2018
IN THE APPELLATE TRIBUNAL FOR ELECTRICITY
(Appellate Jurisdiction)
APPEAL No. 10 of 2018
Dated: 29.05.2026
Present: Hon’ble Mr. Virender Bhat, Judicial Member
Hon’ble Mr. Ajay Talegaonkar, Technical Member
IN THE MATTER OF:
NTPC Limited
NTPC Bhawan
Core-7, Scope Complex
7, Institutional Area, Lodhi Road
New Delhi-110 003. …Appellant(s)
Vs.
1. AP Eastern Power Distribution Company Limited
Through its Chairman & Managing Director
Corporate Office, P&T Colony,
Seethammadhara, Visakhapatnam -530 013 - (AP).
2. AP Southern Power Distribution Company Limited
Through its Chairman & Managing Director
Back Side Srinivasa Kalyana,
Mandapam Tiruchhanur Road,
Kesavayana Gunta, Tirupathi - 517 503 (AP).
3. Telangana State Northern Power Distribution Company Limited
(formerly Andhra Pradesh Northern
Power Distribution Company Ltd.)
Through its Chairman & Managing Director
H.No. 2-5-31/2 Vidyut Bhavan,
Nakkalagutta, Hanamkonda,
Warangal - 506 001.
4. Telangana State Southern Power Distribution Company Limited
(formerly Andhra Pradesh Central
Power Distribution Company Ltd.)
Through its Chairman & Managing Director
Page 1 of 25
Judgement in Appeal No. 10 of 2018
Mint Compound, Corporate Office
Hyderabad - 500 063.
5. Tamil Nadu Generation & Distribution Corporation Ltd.
Through its Chairman & Managing Director
144, Anna Salai,
Chennai- 600002.
6. Bangalore Electricity Supply Company Limited
Through its Managing Director
Krishna Rajendra Circle,
Bangalore - 560 001.
7. Mangalore Electricity Supply Company Ltd.
Through its Managing Director,
Corporate Office
Mescom Bhavana,
Bejai Kevai Cross Road
Mangalore-575004.
8. Chamundeshwari Electricity Supply Corporation Ltd.
Through its Managing Director,
CESC, Corporate office, No 29, Ground Floor,
Kaveri Grameena Bank Road,
Vijayanagar 2nd Stage, Mysore - 570017.
9. Gulbarga Electricity Supply Company Ltd.
Through its Managing Director
Main road, Gulbarga -585 102
Karnataka.
10. Hubli Electricity Supply Company Ltd.
Through its Managing Director,
Corporate office,
P.B. Road, Navanagar, Hubli - 580 025.
11. Kerala State Electricity Board Ltd.
Through its Chairman & Managing Director
Vaidyuthi Bhavanam,
Pattom, Thiruvananthapuram - 695 004.
Page 2 of 25
Judgement in Appeal No. 10 of 2018
12. Electricity Department Govt. of Puducherry
Through its Superintending Engineer-I
137, NSC Bose Salai,
Puducherry - 605 001.
13. GRIDCO Limited
Through its Managing Director
Vidyut Bhavan, Janpath,
Bhubaneswar- 751022
14. Central Electricity Regulatory Commission
Through its Secretary,
3rd and 4th Floor, Chandralok Building,
36, Janpath, New Delhi – 110001. …Respondent(s)
Counsel for the Appellant(s) : Mr. Sanjay Sen, Sr. Adv.
Mr. Adarsh Tripathi
Mr. Vikram Singh Baid
Mr. Ajitesh Garg
Counsel for the Respondent(s) : Ms. Anusha Nagarajan for R-5
Mr. Raj Kumar mehta for R-13
JUDGEMENT
PER HON’BLE MR. AJAY TALEGAONKAR, TECHNICAL MEMBER
1. The Present Appeal has been filed by NTPC Limited (NTPC/Appellant)
challenging the Order dated 16.02.2017 passed by the Central Electricity
Regulatory Commission (Respondent No. 14/ CERC/ Central Commission) in
Petition No. 293/GT/2014 wherein the Central Commission had determined the
tariff applicable for the generation and supply of electricity by the Appellant from
its Talcher Super Thermal Power Station, Stage II (Talcher Station - Stage II) for
the period from 1.04.2014 till 31.03.2019.
Page 3 of 25
Judgement in Appeal No. 10 of 2018
Description of the Parties
2. The Appellant, NTPC Limited, is a Government of India enterprise
incorporated under the provisions of the Companies Act, 1956 and is engaged in
the business of generation and sale of electricity.
3. Respondent Nos. 1 to 13 are the beneficiary distribution licensees, electricity
utilities and procurers of power from Talcher Station - Stage II ownwd by the
Appellant.
4. Respondent No. 14, CERC is the Central Commission constituted under
Section 76 of the Electricity Act, 2003 and is vested with powers and functions,
inter alia , relating to regulation of tariff of generating companies owned or
controlled by the Central Government.
Factual Matrix of the Case
5. On 26.06.2009, a Fuel Supply Agreement (FSA) was entered into between
Mahanadi Coalfields Limited (MCL) and the Appellant for supply of 17.3 Million
Tonnes Per Annum (MTPA) of coal to Talcher Super Thermal Power Station,
Stages I and II having a cumulative installed capacity of 3000 MW.
6. On 21.02.2014, the Central Commission notified the Central Electricity
Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 (Tariff
Regulations, 2014) applicable for the tariff period from 01.04.2014 to 31.03.2019.
Pursuant thereto, on 19.08.2014, NTPC filed Petition No. 293/GT/2014 before the
Central Commission seeking determination of tariff for Talcher Station - Stage II
for the tariff period from 01.04.2014 to 31.03.2019.
Page 4 of 25
Judgement in Appeal No. 10 of 2018
7. In the said Petition, NTPC claimed projected additional capitalization, inter
alia , towards installation of Wagon Tippler and associated works under Regulation
14(3)(x) of the Tariff Regulations, 2014. The Appellant claimed an expenditure of
Rs. 112.50 Crores for the year 2016-17 and Rs. 12.50 Crores for the year 2017-
18 towards the said works.
8. During the proceedings before the Central Commission, Record of
Proceedings dated 24.05.2016 was issued seeking certain information,
clarifications and details from the Appellant in relation to the tariff petition.
According to the Appellant, no specific information or justification was sought by
the Central Commission in respect of the Wagon Tippler and associated works
claimed under additional capitalization.
9. On 14.07.2016, the Appellant furnished the information and clarifications
sought by the Central Commission pursuant to the Record of Proceedings dated
24.05.2016.
10. Thereafter, the Central Commission passed the Impugned Order dated
16.02.2017 in Petition No. 293/GT/2014 determining the tariff for Talcher Station
- Stage II for the period 01.04.2014 to 31.03.2019. By the said Order, the Central
Commission disallowed the projected additional capitalization claimed towards
Wagon Tippler and associated works.
11. Aggrieved by the aforesaid disallowance, the Appellant filed Review Petition
No. 14 of 2017 before the Central Commission seeking review of the Order dated
16.02.2017.
Page 5 of 25
Judgement in Appeal No. 10 of 2018
12. The Central Commission, however, dismissed the Review Petition No. 14
of 2017 vide Order dated 31.08.2017 (Review Order).
13. Aggrieved by the Impugned Order, the Appellant has filed the present
Appeal before us challenging the disallowance of additional capitalization towards
Wagon Tippler and associated works.
14. The Appellant has prayed for the following relief before us:
“(i) Allow the appeal and set aside the order dated 16.02.2017 passed
by the Central Commission to the extent challenged in the present
appeal; and
(ii) Pass such other Order(s) and this Hon’ble Tribunal may deem just
and proper.”
Submissions of the Appellant
15. The Appellant submitted that by the Impugned Order, the CERC disallowed
the claim of additional capitalization towards Wagon Tippler and associated works
on the ground that the coal requirement of the generating station could allegedly
be met through the existing arrangement with Mahanadi Coalfields Limited (MCL)
and that no documentary evidence had been placed regarding the phasing out of
Bottom Opening Bottom Releasing (BOBR) wagons.
16. The Appellant contended that the findings recorded in the Impugned Order
are contrary to the prevailing operational realities during the relevant tariff period,
including the persistent nationwide coal shortage, the increasing dependence on
alternate coal sources transported through BOXN wagons and the operational
and safety necessity of installation of Wagon Tipplers. It was further submitted
Page 6 of 25
Judgement in Appeal No. 10 of 2018
that the disallowance is inconsistent with the settled regulatory and judicial
position subsequently recognized by this Tribunal.
17. The Appellant further submitted that although the claim for Wagon Tippler
works was initially raised in the tariff proceedings for the period 2014-19 against
the Impugned Order dated 16.02.2017 in 293/GT/2014, the said works could not
be capitalized during the said tariff period. Consequently, the Appellant projected
the same in Petition No. 441/GT/2020 pertaining to the tariff period 2019-24
before the CERC.
18. It was pointed out that the Commission, by order dated 27.04.2023 in
Petition No. 441/GT/2020, made the said claim subject to the final outcome of the
present Appeal. The Wagon Tippler works were ultimately capitalized in FY 2019-
20 and were accordingly claimed in the truing up petition for the tariff period 2019-
24 along with detailed justifications and supporting documents.
19. The Appellant submitted that the disallowance of additional capitalization
towards Wagon Tippler is founded on an erroneous understanding of the
operational requirements of a thermal generating station. It was contended that
manual unloading of coal from BOXN wagons is unsafe, inefficient, labour
intensive and operationally unsustainable. The requirement for Wagon Tipplers
arose due to persistent shortages in domestic coal supply from linked mines,
increasing dependence on alternate coal sources transported through BOXN
wagons, phasing out of BOBR wagons by Indian Railways and the necessity of
ensuring safe, automated and uninterrupted unloading of coal.
20. The Appellant submitted that manual unloading of BOXN wagons increases
rake cycle time by approximately 8-9 hours, resulting in operational inefficiencies
Page 7 of 25
Judgement in Appeal No. 10 of 2018
and exposure to demurrage charges due to detention of subsequent rakes. It was
further submitted that manual unloading exposes plant personnel to serious
safety and health risks, particularly in coal-laden dusty environments during
monsoon and festive seasons when labour mobilisation becomes difficult. The
Wagon Tipplers constitute an essential component of modern coal handling
infrastructure and facilitate high-volume coal handling, uninterrupted fuel supply,
reduced dependence on manual labour, improved safety standards, compatibility
with modern BOXN wagon configurations, reduction in environmental pollution
through integrated dust suppression systems and long-term operational
efficiency. It was pointed out that after commissioning of the Wagon Tippler in FY
2019-20, loss in station availability on account of coal shortage became nil,
thereby demonstrating its operational significance.
21. The Appellant further submitted that the Commission failed to appreciate
the severe coal shortage situation prevailing during the relevant tariff period. It
was contended that from FY 2010-11 onwards the country witnessed acute coal
shortages which was itself acknowledged by the Commission by prescribing
reduced normative availability norms of 83% for coal-based stations during 2014-
17 instead of the normal 85%. Despite such acknowledgement, the Commission
failed to consider the necessity of Wagon Tipplers arising from dependence on
alternate coal sources transported through BOXN wagons.
22. It was submitted that although the FSA dated 26.06.2009 stipulated annual
contracted quantities of coal for Talcher Super Thermal Power Station, actual coal
receipts from MCL consistently remained below the contracted quantities. The
Appellant contended that the additional information filed before this Tribunal
establishes recurring coal deficits and demonstrates that substantial quantities of
coal had to be procured from alternate sources.
Page 8 of 25
Judgement in Appeal No. 10 of 2018
23. During FY 2010-11 to FY 2013-14, coal shortages were particularly acute,
resulting in significant availability losses. In FY 2010-11, availability losses were
3.11% for Stage-I and 4.03% for Stage-II, while in FY 2012-13, the losses
increased to 7.48% for Stage-I and 8.26% for Stage-II. It was further submitted
that although coal availability marginally improved during FY 2014-15 to FY 2016-
17, dependence on alternate coal sources continued including receipt of
approximately 3.01 MTPA of coal from alternate sources during FY 2014-15.
24. Thereafter, shortages intensified during FY 2017-18 to FY 2019-20 due to
declining receipts from MCL and increasing operational demand. In FY 2019-20,
total coal receipts reduced to 16.50 MTPA, out of which coal received from MCL
was only 14.36 MTPA, resulting in availability losses of 11.98% for Stage-I and
10.26% for Stage-II. On this basis, the Appellant contended that dependence on
alternate coal sources and BOXN wagons had become unavoidable and
installation of Wagon Tipplers was therefore an operational necessity and not a
discretionary expenditure.
25. The Appellant further submitted that the Commission erroneously assumed
that the entire quantity of coal under the FSA dated 26.06.2009 was exclusively
available for Talcher Stage-II whereas the said FSA pertained to the combined
installed capacity of Talcher Stages-I and II aggregating to 3000 MW. It was
further contended that the FSA itself contemplated procurement of coal from
alternate sources in case of shortfall and, therefore, additional infrastructure in
the nature of Wagon Tipplers became necessary due to transportation of coal
through BOXN wagons.
26. The Appellant also submitted that the Commission erred in computing coal
requirement on Gross Calorific Value on “as billed” basis instead of “as received”
Page 9 of 25
Judgement in Appeal No. 10 of 2018
basis in terms of the Tariff Regulations, 2014 thereby underestimating the actual
coal requirement for achieving normative availability.
27. The Appellant further assailed the finding of the Commission that no
documentary evidence had been produced regarding phasing out of BOBR
wagons. It was submitted that the Ministry of Railways, by communication dated
20.07.2004, had itself acknowledged increasing transportation of coal through
BOXN wagons and advised NTPC to plan installation of Wagon Tipplers in
addition to Track Hoppers. The said communication also advised development of
appropriate infrastructure for unloading coal from linked and alternate coalfields.
The Appellant submitted that the Commission never specifically called upon the
Appellant during the original proceedings to produce the said communication or
furnish clarification regarding Wagon Tipplers.
28. Under Regulation 55 of the Conduct of Business Regulations, the CERC
possessed ample power to seek clarifications and additional information.
Reliance was placed on the Record of Proceedings dated 24.05.2016 to contend
that while clarifications were sought regarding other expenditures, no clarification
was sought in relation to Wagon Tipplers.
29. The Appellant further submitted that the Commission, in Review Petition
No. 14/RP/2017 decided on 31.08.2017, rejected reliance upon the Railway
communication on hyper-technical grounds despite the document clearly
substantiating increasing use of BOXN wagons and the operational necessity of
Wagon Tipplers. The Appellant contended that the Commission adopted an
inconsistent approach in the present case as capitalization towards Wagon
Tipplers had been allowed in similarly situated generating stations including
Kahalgaon ST-I (245/2009), Vindhyachal-III (342/GT/2014) and Farakka-I & II
Page 10 of 25
Judgement in Appeal No. 10 of 2018
(222/2009). It was submitted that in those cases the Commission itself recognized
that Wagon Tipplers improve unloading time of coal rakes, enhance operational
flexibility and reduce apprehensions regarding diversion of wagons by Railways.
Having acknowledged the operational necessity of Wagon Tipplers in other
matters, the Commission could not adopt a contradictory approach in the present
case.
30. The Appellant finally submitted that the issue stands covered by the
Judgment dated 01.12.2022 passed by this Tribunal in Appeal No. 311 of 2017
and connected matters wherein this Tribunal recognized that automated
unloading facilities cannot be equated with manual unloading of coal from BOXN
wagons which was held to be highly unsafe. This Tribunal further observed that
Wagon Tipplers constitute the only safe and reliable mechanism for unloading
coal from BOXN wagons and also acknowledged the prevailing nationwide coal
shortage situation during the relevant period.
31. On the aforesaid grounds, the Appellant prayed that the disallowance of
additional capitalization towards Wagon Tippler and associated works be set
aside and the claim be allowed.
Submissions of the Respondent No. 5 - TANGEDCO
32. TANGEDCO submitted that from the order dated 29.03.2023 passed by the
CERC in the true-up proceedings for the control period 2014-19 in Petition No.
392/GT/2020, it appears that no expenditure under the said head was actually
claimed during the relevant tariff period. It was further pointed out that in the
subsequent tariff proceedings for the control period 2019-24 in Petition No.
441/GT/2020, the Appellant claimed projected additional capital expenditure of
INR 116 Crores towards Wagon Tipplers and associated infrastructure.
Page 11 of 25
Judgement in Appeal No. 10 of 2018
Accordingly, TANGEDCO contended that the question of allowing such
expenditure for the period 2014-19 does not arise.
33. TANGEDCO submitted that the CERC assessed the coal requirement of
the generating station on the basis of normative Plant Availability Factor of 85%,
Station Heat Rate of 2375 kCal/kWh and Gross Calorific Value (GCV) of coal of
3127.66 kCal/kg in the absence of “as received” GCV data furnished by the
Appellant.
34. It was further submitted that in the review order dated 31.08.2017 passed
in Review Petition No. 14/RP/2017, the CERC specifically rejected the Appellant’s
contention that coal received from MCL had to be apportioned between Stage-I
and Stage-II and held that the Appellant failed to establish any actual shortfall in
MCL coal supply even after such apportionment. TANGEDCO submitted that the
Appellant’s plea regarding replacement of BOBR wagons by BOXN wagons was
also found unsubstantiated by the CERC. Reliance was only placed on a letter
dated 20.07.2004 issued by the Ministry of Railways recommending use of
Wagon Tipplers despite the fact that no such expenditure had been claimed
during the tariff period 2004-09.
35. It was also contended that the data furnished by the Appellant itself did not
establish any correlation between alleged coal shortage and plant availability. As
per the chart annexed to the Additional Affidavit dated 02.12.2024, plant
availability had reduced in several periods despite higher receipt of MCL coal
thereby negating the Appellant’s contention that alternate coal procurement and
Wagon Tipplers were necessary to maintain availability.
Page 12 of 25
Judgement in Appeal No. 10 of 2018
36. TANGEDCO also submitted that the Appellant failed to furnish material
particulars regarding procurement of coal from alternate sources, including details
of procurement, quantum, source of coal and contemporaneous justification
necessitating such procurement. In the absence of such material, the Appellant
failed to establish any actual coal shortage, operational necessity for modification
of the coal handling system or any nexus between the alleged shortage and
installation of Wagon Tipplers.
Submissions of the Respondent No. 13- GRIDCO
37. GRIDCO submitted that the claim of NTPC for additional capitalization of
Rs.125 Crore towards Wagon Tippler and associated works was rightly rejected
for want of proper justification and documentary evidence.
38. It was submitted that the burden of proving the claim lay upon NTPC in
terms of Section 101 of the Indian Evidence Act, 1872 and such burden could not
be shifted upon the Commission. The mere filing of projected expenditure under
the Tariff Regulations did not absolve NTPC from substantiating its claim through
documentary evidence.
39. GRIDCO further submitted that NTPC had failed to furnish any
documentary evidence before the Commission in support of its contention that
Indian Railways was phasing out BOBR wagons and replacing them with BOXN
wagons thereby necessitating installation of Wagon Tipplers. Even in the review
proceedings, NTPC relied only upon a letter dated 20.07.2004 issued by the
Ministry of Railways. The Commission rightly held in the review order dated
31.08.2017 that the said letter did not support NTPC’s case since it indicated that
coal was already being transported through BOXN wagons and did not establish
any proposed phasing out of BOBR wagons.
Page 13 of 25
Judgement in Appeal No. 10 of 2018
40. It was also pointed out that despite the said letter being of the year 2004,
NTPC never raised any claim for Wagon Tipplers during the tariff periods 2004-
09 and 2009-14. Reliance is placed upon the judgment of this Tribunal dated
10.02.2015 in Power Grid Corporation of India Limited vs. Central Electricity
Regulatory Commission & Ors., Appeal No. 13 of 2014 , wherein it was held
that assertions made in affidavits cannot be accepted in tariff proceedings in the
absence of documentary or supporting evidence.
41. GRIDCO further contended that the pro- rata share of coal in 14.5 MTPA for
TSTPS Stage-I (1000 MW) is 4.83 MTPA and TSTPS Stage-II (2000MV) is 9.67
MTPA. At 85% availability, the annual coal requirement for Stage-II of the
generating station works out to 8.22 MTPA which is well below the quantum of
coal of 9.67 MTPA received by the generating station and quantum of coal
required as per FSA i.e., 11.53 MTPA.
42. The operating performance data of the generating station clearly
demonstrated absence of coal shortage. The average Plant Availability Factor
during FY 2011-12 and FY 2013-14 remained above 85%, while the lower
availability in FY 2012-13 (82.88%) was attributable to environmental issues and
not coal shortage. Hence, NTPC failed to establish that installation of Wagon
Tipplers was operationally necessary.
43. GRIDCO also submitted that NTPC’s reliance upon the judgment dated
01.12.2022 passed by this Tribunal in Appeal No. 311 of 2017 was misplaced.
The said judgment merely recognized Wagon Tipplers as a safe and efficient
mechanism for unloading coal from BOXN wagons but did not lay down that
Wagon Tipplers are mandatorily required in every generating station.
Page 14 of 25
Judgement in Appeal No. 10 of 2018
44. It was further submitted that pursuant to the order dated 05.11.2024 passed
by this Tribunal directing NTPC to furnish details regarding shortage of coal prior
to commissioning of Wagon Tipplers, NTPC filed an affidavit dated 02.12.2024.
However, instead of providing concrete data regarding coal shortage, the affidavit
primarily emphasized the general advantages and significance of Wagon
Tipplers.
45. In Para 3 (a) to (c) of the Affidavit dated 02.12.2024 NTPC has contended
that “post commissioning of wagon tipplers in 2019-20, the loss in station
availability due to coal shortage was nil”. However, from the past Operating
Performance it is noticed that the Generating Station has not faced Coal
Shortages and Average PAF during the past years (2011-12 and 2013-14) is
above 85% except in 2012-13 (82.88%) which is attributable to Environmental
issues rather than Coal Shortage.
46. Vide Annexure A of the Affidavit dated 02.12.2024, NTPC has furnished
Data from 2010-11 to 2023-24 in a Tabular Form showing receipt of Coal from
MCL Mines and Alternate Sources, contending that with the use of Wagon
Tipplers % loss in Station Availability due to Coal Shortages was reduced to Zero.
The said Tabular Statement shows that the Average Receipt of Coal from MCL
Mines during the period 2014-19 was 16.46 MTPA.
47. The Pro-rata Share of above received Coal for TSTPS Stage-II (2000 MW)
is 10.97 MTPA. At 85% Availability, Annual Coal Requirement for Stage-II of the
Generating Station works out to 9.32 MTPA which is below the quantum of Coal
received (10.97 MTPA) by the Generating Station.
Page 15 of 25
Judgement in Appeal No. 10 of 2018
48. Moreover, in terms of CERC Tariff Regulations, 2014 and as observed by
the Commission in Para 49 of the impugned Order dated 16.02.2017, with the
Data furnished by NTPC considering 85% Availability, Station Heat Rate of 2375
kCal/kWh and As Fired GCV of Coal of 3127.66 kCal/kg (in the absence of As
received GCV), Annual Requirement of Coal for the Generating Station is found
to be 11.29 MTPA. Even if 100% availability is considered, the Annual Coal
Requirement of the Generating Station would be 13.28 MTPA (approx.). The
above Annual Coal Requirement is much lower than the Year-wise Coal procured
by NTPC from MCL Mines during 2014-19 period.
49. It is submitted that in the present Case NTPC has failed to justify the
requirement of Wagon Tippler for the subject Generating Station and thus based
on the above, the Appeal is devoid of any merit and is liable to be dismissed.
Analysis and Conclusions
50. We note from the copy of the tariff petition filed by NTPC in CERC, which is
available as part of our records, NTPC had submitted following justification in
Form-9A:
“At present MCL is not able to meet the supply of coal upto FSA quantity (14.5 MT
coal is being received in place of FSA quantity of 17.5 MT). Extra coal requirement
is being met by Import Coal as well as for other domestic sources, for which TSTPS
remains dependant of Railways through BOBR wagons. However, Railways is
planning to phase out BOBR rakes and use only BOXN wagon Rakes and handling
of BOXN rakes at track hoppers take very long time involving large no. of manual
labours apart from causing widespread dust pollution. Hence to handle the BOXN
rakes at station in an efficient and envoirnment friendly manner Wagon Tippler along
with associated track, conveyor, crusher etc. is essentialy required. Further, due to
delay in unloading of BOXN type Indian Railways wagons, total receipt of coal at
station shall further reduce, hence Hon'ble Commission may please allow
Capitalisation of the same under Regulations 14(3) (x).”
Page 16 of 25
Judgement in Appeal No. 10 of 2018
51. In the Impugned Order, the CERC had rejected the claim with following
observations on the above justification:
(i) No documentary evidence submitted by the NTPC to support the
claim that BOBR wagons will be phased out, and
(ii) The estimated coal requirement of 11.29 MTPA (at 85% availability)
and 13.28 MTPA (with 100% availability) is lower than actual
availability of 14.5 MTPA
52. The gist of NTPC’s submission is that the Tariff Regulations, 2014 had no
mandatory requirement of submitting documentary evidence; and CERC should
have excercised specific powers to call for information under its Conduct of
Business Regulations 1999. Further, CERC has fact finding and inquisitional
powers flowing from the Electricty Act, 2003 (“the Act”), and could have sought
specific information before rejecting the claim. NTPC has relied on several
authorities to contend that CERC had powers to seek specific information.
53. It may be worthwhile to see if the requirement of documentary evidence
flows from the Regulations. The Regulation 14(3) of Tariff Regulations 2014 on
the issue of additional capitalization is reproduced below:
“14. Additional Capitalisation and De-capitalisation:
…
(3) The capital expenditure, in respect of existing generating station or the
transmission system including communication system, incurred or projected to be
incurred on the following counts after the cut-off date, may be admitted by the
Commission, subject to prudence check:
(i) Liabilities to meet award of arbitration or for compliance of the order or decree of
a court of law;
(ii) Change in law or compliance of any existing law;
(iii) Any expenses to be incurred on account of need for higher security and safety
of the plant as advised or directed by appropriate Government Agencies or statutory
authorities responsible for national security/internal security;
Page 17 of 25
Judgement in Appeal No. 10 of 2018
(iv) Deferred works relating to ash pond or ash handling system in the original scope
of work;
(v) Any liability for works executed prior to the cut-off date, after prudence check of
the details of such undischarged liability, total estimated cost of package, reasons
for such withholding of payment and release of such payments etc.;
(vi) Any liability for works admitted by the Commission after the cut-off date to the
extent of discharge of such liabilities by actual payments;
(vii) Any additional capital expenditure which has become necessary for efficient
operation of generating station other than coal/lignite based stations or transmission
system as the case may be. The claim shall be substantiated with the technical
justification duly supported by the documentary evidence like test results carried out
by an independent agency in case of deterioration of assets, report of an
independent agency in case of damage caused by natural calamities, obsolescence
of technology, up-gradation of capacity for the technical reason such as increase in
fault level;
(viii) In case of hydro generating stations, any expenditure which has become
necessary on account of damage caused by natural calamities (but not due to
flooding of power house attributable to the negligence of the generating company)
and due to geological reasons after adjusting the proceeds from any insurance
scheme, and expenditure incurred due to any additional work which has become
necessary for successful and efficient plant operation;
(ix) In case of transmission system, any additional expenditure on items such as
relays, control and instrumentation, computer system, power line carrier
communication, DC batteries, replacement due to obsolescence of technology,
replacement of switchyard equipment due to increase of fault level, tower
strengthening, communication equipment, emergency restoration system, insulators
cleaning infrastructure, replacement of porcelain insulator with polymer insulators,
replacement of damaged equipment not covered by insurance and any other
expenditure which has become necessary for successful and efficient operation of
transmission system; and
(x) Any capital expenditure found justified after prudence check necessitated on
account of modifications required or done in fuel receiving system arising due to non-
materialisation of coal supply corresponding to full coal linkage in respect of thermal
generating station as result of circumstances not within the control of the generating
station:
Provided that any expenditure on acquiring the minor items or the assets including
tools and tackles, furniture, air-conditioners, voltage stabilizers, refrigerators,
coolers, computers, fans, washing machines, heat convectors, mattresses, carpets
etc. brought after the cut-off date shall not be considered for additional capitalization
for determination of tariff w.e.f. 1.4.2014:
Provided further that any capital expenditure other than that of the nature specified
above in (i) to (iv) in case of coal/lignite based station shall be met out of
compensation allowance:
Page 18 of 25
Judgement in Appeal No. 10 of 2018
Provided also that if any expenditure has been claimed under Renovation and
Modernisation (R&M), repairs and maintenance under O&M expenses and
Compensation Allowance, same expenditure cannot be claimed under this
regulation.”
(Emphasis supplied)
54. It may be seen from the above extract that CERC has specified requirement
of submission of the documentary evidence only in respect of item (vii) regarding
additional capitalization for efficiency improvement that too not in case of
coal/lignite-based stations and transmission systems. On the other hand, in the
item (x) which covers the investment in question, no specific requirement of
submission of documentary evidence has been mentioned. We note that some of
the forms attached to the Tariff Regulations, 2014 for submission of information
in tariff petitions also mention submission of documentary evidence, though no
such requirement has been mentioned in relevant Form 9A (“Year wise statement
of Additional Capitalization after COD”).
55. The tariff determination for the Talcher Station- Stage II was being
undertaken by the CERC under Section 79(1) (a) of the Act, which confers it
powers “ to regulate the tariff of the generating companies owned or controlled
by the Central Government ”. It is a well-settled principle of law that where a
statute confers substantive jurisdiction or regulatory authority upon a statutory
body, it impliedly grants all such incidental and ancillary powers as are
reasonably necessary to make the exercise of that jurisdiction fully effective;
provided that without such implied powers, the statutory provision would
become unworkable or ineffectual. [ITO v. M.K. Mohd. Kunhi, (1969) 71 ITR
815; Union of India v. Paras Laminates (P) Ltd., (1990) 4 SCC 453] .
Therefore, in the absence of any requirement under the Tariff Regulations, 2014
for submission of specific documentary evidence, if the CERC considered such
evidence necessary to take a judicious decision, it had powers to specifically
Page 19 of 25
Judgement in Appeal No. 10 of 2018
direct the NTPC to furnish the same. Admittedly, no such direction to seek
clarification or additional information was issued by the CERC on the issue of
additional capitalization for wagon tippler and associated works; though a
direction was issued as part of Record of Proceeding date 24.05.2016 in respect
of certain other issues relevant to tariff determination. In this background, we are
of the opinion that the claim of the Appellant-Petitioner NTPC could not have been
rejected on the ground of non-submission of documentary evidence.
56. In the Review Order, CERC has relied on the Section 101 of the Evidence
Act to fault NTPC for non-submission of the documentary evidence. This
contention has also been advanced by GRIDCO in its submissions.
57. The Electricity Regulatory Commissions are statutory expert bodies
exercising quasi-judicial and regulatory functions under the Act. Section 94 of the
Act confers upon the Appropriate Commission certain powers of a civil court,
including the power to receive evidence on affidavit, summon and enforce
attendance, and require production of documents. The proceedings before the
Commission are therefore not required to conform to the strict framework of a
conventional civil trial. The Hon’ble Supreme Court in PTC India Ltd. v.
CERC (2010) 4 SCC 603 recognized the specialized regulatory character of the
Commission, and in Energy Watchdog v. CERC, (2017) 14 SCC 80 reiterated
the Commission’s role as an expert statutory authority under the Act.
58. In view of the statutory framework and the settled principles governing
quasi-judicial proceedings, it follows that proceedings before the Commission are
not strictly bound by the technical rules of evidence embodied in the Indian
Evidence Act, unless such requirement is expressly incorporated by the
governing statute.
Page 20 of 25
Judgement in Appeal No. 10 of 2018
59. We note that in the review petition filed by NTPC, a letter dated 20.07.2004
from Ministry of railways was enclosed. In the Review Order, CERC continued to
hold original finding on the ground of non-submission of documentary evidence.
However, it also examined the aforesaid letter of Ministry of Railways and found
that the letter does not support claim of the NTPC as (i) the letter shows that even
in 2004, coal was being transported through BOXN wagons and (ii) the
capitalization for wagon tippler in 2014-19 period was after much efflux of time
based on 2004 letter.
60. We are unable to persuade ourselves to agree with the rationale adopted
by CERC in the review order for not giving any credence to the letter of the
Ministry of Railways. It is well known that BOXN wagons can be unloaded by
other means also, including manually. The fact, however, remains that methods
other than wagon tippler are highly unsafe and inefficient way of unloading the
coal from BOXN wagons (APTEL judgment dated 01.12.2022 in NTPC vs.
CERC & Ors, Appeal No. 25 of 2017 and batch) . Therefore, prior existence of
BOXN wagons does not necessarily mean that wagon tippler and associated
facilities should not be developed at a later point, just to handle the fuel in an
efficient manner.
61. However, in our opinion, the Appellant-Petitioner had not furnished a clearly
articulated justification in support of its claim. A party to any proceeding ought not
to remain complacent regarding the outcome and must place on record a proper
and cogent rationale for the relief sought. Such rationale should, as far as
possible, anticipate potential objections from the opposing parties as well as
issues that may reasonably arise in the mind of the adjudicatory forum.
Page 21 of 25
Judgement in Appeal No. 10 of 2018
62. In regard to the second ground for rejection of claim, we note that in the
review petition, NTPC had claimed error on the part of CERC to assume that the
14.5 MTPA coal availability was with respect to Talcher Station - Stage II. It was
contended that FSA is for combined requirement of both stage-I and stage-II
and that the aforesaid availability was for both stages taken together. In the
Review Order, CERC revisited this aspect. It was calculated that when pro-rated
to the Installed capacity (1000 MW for stage I and 2000 MW for Stage II), the
coal availability for Talcher Station - Stage II works out to be 9.67 MTPA. In the
Review Order, CERC concluded that there was no coal shortage as pro-rata
coal availability for Talcher Station - Stage II (9.67 MTPA) is more than coal
requirement at 85% availability (8.22 MTPA). Similar argument has been given
by GRIDCO based on average availability of coal from designated source MCL
during 2014-19; contending that pro-rated average coal availability for Talcher
Station- Stage II during this period was 10.97 MTPA as against requirement of
8.22 MTPA at 85% availability (worked out by CERC in Review Order).
63. It is interesting to note that in the Review Order, CERC mentions
requirement of coal at 85% availability as 8.22 MTPA as compared to 11.29
MTPA mentioned in the Impugned Order. Further, the coal requirement at 100
% availability which was mentioned as 13.28 MTPA in the Impugned Order, has
not been calculated in the Review Order. A close look reveals that in the Review
Order, the requirement of coal has been estimated based on the “as billed” GCV
of 4095.15 kcal/kg whereas in the Impugned order it was estimated based on
“as fired” GCV of 3127.66 kcal/kg (in the absence of as received GCV). The
only explanation in the Review Order as to why the GCV used for calculation
was changed from “as received” to “as billed” is that for pit head stations, there
will not be any difference in these two values.
Page 22 of 25
Judgement in Appeal No. 10 of 2018
64. In our view, there is fundamental error in the reasoning given by CERC.
The Form 15 (“Details/Information to be Submitted in respect of Fuel for
Computation of Energy Charges”) which was submitted by the NTPC as part of
the original Tariff Petition clearly shows that about 14% to 16% imported coal
was used in January to March 2014. It is not very common for domestic coal
supplied to the power stations to have even “as billed” GCV of 4000 kcal/kg or
more. The Form 15 giving data from January 2014 to March 2014 shows “as
billed” GCV of domestic coal ranging from 3763 to 3821 kcal/kg and that of
imported coal ranging from 5583 to 5964 kcal/kg. Therefore, it is clear that the
high “as billed” GCV exceeding 4000 kcal/kg adopted by the CERC in the
Review Order is weighted average after blending of imported coal with domestic
coal. It was also not noticed by CERC that, in paragraphs 75 to 77 of the
Impugned Order, the “as billed” GCV of 4095 kcal/kg was adopted for
computation of the energy charge after applying the correction factor of
(1 − Total Moisture )/(1 − Inherent Moisture ) . After such correction, the effective
GCV ordinarily gets reduced. Further, with imported coal being used, which
essentially requires transportation of coal from the port of unloading to the
power station, the presumption that in the pit head station, coal transportation
takes place for a short distance and hence there would not be any difference
between “as billed” and “as received” GCV, does not hold good.
65. TANGEDCO and GRIDCO have mainly supported the rationale given by
CERC for rejecting the claim. In addition, it has been contended by TANGEDCO
that the expenditure was never incurred by NTPC during control period of 2014-
19 since the same was capitalized in next tariff period. It was clarified by the
Appellant during the hearing that since the claim was rejected by the CERC in the
Impugned Order (for the control period 2014-19), it had claimed the same in next
control period, which was allowed by CERC subject to judgement of this Appeal.
Page 23 of 25
Judgement in Appeal No. 10 of 2018
66. TANGEDCO has also mentioned that NTPC failed to submit information
about procurement of domestic and imported coal. This does not appear to be
correct as NTPC had furnished information in Form 15 about domestic and
imported coal for a limited period, as required under Tariff Notification, 2014.
67. We have perused this Tribunal’s judgement in Power Grid Corporation of
India Limited vs. Central Electricity Regulatory Commission & Ors., Appeal
No. 13 of 2014, which has been relied upon by GRIDCO to support its contention
that in the tariff proceedings, mere assertions or averments unsupported by
documentary evidence cannot be accepted by the Commission. We find that the
facts of the present case are different from that in Appeal No. 13 of 2014. In
PGCIL vs. CERC & Ors., Appeal No. 13 of 2014 , the Commission had, in the
first instance, directed PGCIL to file affidavit explaining the delay. It was only after
examining the contents of the affidavit that CERC had allowed part of the
expenditure, while disallowing the remaining in the absence of proper justification
backed by documentary evidence. In the case in hand, CERC had not directed
NTPC to file affidavit on the aspect of additional capitalisation for wagon tippler
and associated work.
68. In view of our analysis in the preceding paragraphs, we conclude that CERC
has erred in rejecting the claim without seeking requisite information and
documents, in the absence of specific provision in the Tariff Regulations, 2014.
Therefore, there is a case for remanding the matter to CERC. The CERC may
consider issuing appropriate directions to NTPC for furnishing the requisite
information, so as to satisfy itself regarding the necessity of investment in the
wagon tippler and associated items during the relevant period, and to undertake
prudence check thereof, if considered necessary. Needless to mention that all the
Page 24 of 25
Judgement in Appeal No. 10 of 2018
affected beneficiaries shall also be given opportunity to respond to the justification
and documents submitted by NTPC in support of its claim.
ORDER
For the foregoing reasons as stated above, we are of the considered view that
the captioned Appeal No. 10 of 2018 has merit and is allowed.
The Impugned Order dated 16.02.2017 passed by the Central Commission in
Petition No. 293/GT/2014 to the extent it disallows the claim of additional
capitalization towards Wagon Tippler and associated works is set aside.
The matter is remanded to the Central Commission for fresh consideration of the
Appellant’s claim in accordance with law and after affording opportunity of hearing
to all concerned parties.
The Captioned Appeal and pending IAs, if any, are disposed of in the above terms.
th
PRONOUNCED IN THE OPEN COURT ON THIS 29 DAY OF MAY, 2026.
(Ajay Talegaonkar)
(Virender Bhat)
Judicial Member
REPORTABLE / NON-REPORTABLE
Technical Member
kns/mkj/kks
Page 25 of 25