The Karnataka Electricity Regulatory Commission (KERC) recently ruled that the 36 MW Harapanahahlli wind project was a captive power project, and 14 captive users procured power from the project for the financial year (FY) 2018-19.

The Commission also directed the Gulbarga Electricity Supply Company (GESCOM) to refund ₹4.92 million (~$65,511) to UltraTech Cement, ₹2.77 million (~$36,883) to Karanja Industries (HKHT-5), and ₹1.64 million (~$21,837) to Karanja Industries (KHT-6) collected towards cross-subsidy surcharge, additional surcharge, and the differential electricity tax within two months.

Green Infra Wind Power Generation, Karanja Industries (HKHT-5), Karanja Industries (HKT-6), and UltraTech Cement had filed a petition requesting the Commission to declare the Harapanahalli wind project as a captive power project. They had also requested the Commission to direct the distribution company (DISCOM) to return the amount collected towards cross-subsidy surcharge, additional surcharge, and electricity tax.

Background

Green Infra Wind Power Generation is a company that owns and operates four wind-based renewable power projects, including the 36 MW Harapanahalli power project. Power from the project was consumed by 14 captive users during FY 2018-19.

The petitioners argued that GESCOM had wrongfully levied a cross-subsidy surcharge, additional surcharge, and electricity tax on the captive consumers, even though the captive users fulfilled the requirements of a captive generating project.

Further, the petitioners added that the DISCOM had calculated the number of captive users as 23 for FY 2018-19, whereas the actual number was 14. Further, the correct equity share capital with voting rights held by the group captive consumers was 28.07%.

On August 01, 2016,  the Karnataka Power Transmission Corporation executed the wheeling and banking agreement with the captive generator and the DISCOMs, including GESCOM, within whose jurisdiction the captive users were situated.

GESCOM argued that by considering the data furnished by the petitioner, it was clear that the energy consumption by Ultratech Cement, Karanja Industries (HKT-5), and Karanja Industries (HKT-6) was not in proportion to their equity, and such variance exceeded the permissible limit of 10%. Thus, the petition was likely to be dismissed.

Commission’s analysis

The Commission said that as per the Electricity Rules, 2005, for a captive power project, 26% of the ownership should be held by the captive users, and the captive users should consume at least 51% of the electricity generated from the project in proportion to their shareholding in the power project.

The Commission observed that out of 3,518,000 total equity shares issued, 28.07% of total equity shares, i.e., 987,600 equity shares, were held by 14 consumers of green Infra Wind Power Generation.

“The percentage of shares held by the consumers is more than 26%, as mandated under Rule 3 of the Electricity Rules, 2005. Also, Karanja Industries and UltraTech Cement hold 10.94% and 12.15% equity shares out of the total 9,87,600 equity shares held by 14 consumers,” the Commission added.

Also, the Commission stated that the Harapanahalli captive project generated 90.6 million units during FY 2018-19, and the total energy wheeled by 14 consumers was 78.22 million units which accounted for 86.32% of the total energy generated.

Thus, the consumers had consumed more than 51% of the total energy generated by the 36 MW wind power project at Harapanahalli during FY 2018-19. Thus, the project can be termed as a captive power project.

Further, KERC directed GESCOM to refund the amount collected as cross-subsidy surcharge, additional surcharge, and electricity tax within two months.

Last October, KERC rejected a petition submitted by a wind power company seeking captive power project status for the financial year (FY) 2017-18.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.