Specialized formulae for generating stations under ten years old prevail over general recovery provisions in tariff regulations.

In brief

The question

1. Whether the recovery of Annual Fixed Charges for generating stations in operation for less than ten years is governed by the specific formula in Regulation 30(c)(i) or the general pro-rata provision in Regulation 30(a) of the MYT Regulations, 2012?

The court held

The Tribunal partly allowed the appeal. It held that for Issue 1, the recovery of Annual Fixed Charges for DCRTPP and RGTPP must be calculated strictly under the specific formula of Regulation 30(c)(i) rather than Regulation 30(a); the matter was remanded to the State Commission for re-calculation

It also directed

For Issue 2, it held that the turbine failure did not constitute Force Majeure, and the Commission’s refusal to relax the PAF was upheld

The Impugned Order was set aside only to the extent of the calculation methodology for plants under 10 years of operation

01Facts

The Appellant (HPGCL) filed a petition for True-up of FY 2014-15 and tariff determination for FY 2016-17. The State Commission (HERC), via orders dated 31.03.2016 and 29.06.2016, directed the Appellant to refund ₹64.45 Crore on account of excess recovery of fixed charges

p. 3

The Commission calculated the recoverable capacity charges for the DCRTPP and RGTPP plants (both less than 10 years old) on a pro-rata basis under Regulation 30(a) because their actual availability (78% and 76.34% respectively) was below the normative 85%

p. 8

HPGCL challenged this, arguing that Regulation 30(c)(i) provided a specific formula for plants under 10 years old and that the shortfall for RGTPP Unit-II was due to a turbine failure constituting 'Force Majeure'

p. 4, 17

02Issues

i.1. Whether the recovery of Annual Fixed Charges for generating stations in operation for less than ten years is governed by the specific formula in Regulation 30(c)(i) or the general pro-rata provision in Regulation 30(a) of the MYT Regulations, 2012?

p. 7 / para 13

ii.2. Whether the equipment failure (turbine/rotor damage) at RGTPP Unit-II qualifies as a 'Force Majeure' event, warranting a relaxation of the Plant Availability Factor (PAF) for truing up fixed costs?

p. 17 / para 29

03Law Applied

The Tribunal applied the principles of statutory interpretation, specifically the maxim generalia specialibus non derogant, which holds that a special provision prevails over a general one

p. 10

It interpreted Regulation 30 of the HERC MYT Regulations, 2012, noting that 30(a) is a general provision for recovery of fixed charges while 30(c)(i) is a specific provision for plants less than 10 years old

pp. 8-9

Regarding Force Majeure, the Tribunal applied Regulation 3.23(vi) of the MYT Regulations, 2012, and the principle of "prudent utility practices," distinguishing controllable operational risks from uncontrollable external events

p. 17, 23

04Reasoning

Regarding Issue 1, the Tribunal found that Regulation 30(c)(i) was a deliberate, distinct category for younger plants, mirroring CERC Regulations, intended to balance incentives for new generators

pp. 11-12

It rejected the Commission's view that 30(c)(i) was a mere "aberration," ruling that every word of a statute must be given effect and a special provision cannot be rendered otiose by a general one

p. 10, 16

Mathematical evaluation showed that the proviso to 30(c)(i) prevents "50% recovery at zero availability," thus harmonizing it with 30(a)

p. 15

Regarding Issue 2, the Tribunal held that equipment failure is a "controllable parameter" under Regulation 8.3(b)

p. 19, 23

Since the RGTPP units had a history of low PLF since commissioning due to design/maintenance issues, the turbine failure was an operational risk, not a Force Majeure event like a natural calamity or statutory embargo. The generator bears the risk of its commercial choice of OEM and equipment quality

pp. 22-23