The Tamil Nadu Electricity Regulatory Commission (TNERC) has asked the Tamil Nadu Generation and Distribution Company (TANGEDCO) to pay for the unutilized banked energy to Arulmozhi Spinning Mills Private Limited.

The state regulator directed TANGEDCO to pay ₹814,213 (~$11,122) for 280,763 unutilized banked units as of March 31, 2012, along with a monthly interest rate of 1% from the due date.

The Commission noted that the payment for unutilized energy and cross-subsidy surcharge collection were two different issues and can not be linked together. The Commission stated that it was not fair on the part of TANGEDCO to withhold payment for unutilized banked energy on the grounds of non-payment of cross-subsidy surcharge. The Commission asked TANGEDCO to release the amount with interest within 30 days.

Background

Arulmozhi Spinning Mills had filed a petition in May 2014 requesting the Commission to direct TANGEDCO to pay for the unutilized banked energy without insisting on 51% utilization of the power generated for captive consumption. The petitioner’s unit at Tuticorin uses the energy generated from its windmill located at Tirunelveli.

During 2011-12 there was an acute shortage of power, and TANGEDCO implemented frequent load shedding. Further, because of peak hour restrictions and power holidays declared by TANGEDCO and due to frequent power cuts, the petitioner could not obtain 51% of the total power generated. Though the petitioner’s windmill generated power, it could not utilize the power due to frequent load shedding.

In a similar order issued previously, the Commission had stated that the unutilized captive banked power was to be purchased by the TANGEDCO at 75% of the standard purchase rate.

Arulmozhi Spinning Mills had written in its petition that from 2008 onwards, TANGEDCO had been facing a severe shortage of power. The government of Tamil Nadu had issued directions imposing restrictions on the consumption of power by high tension power consumers. These directions set a power cut of 40% on high tension industrial and commercial consumers.

Arulmozhi Spinning Mills noted that there remained large quantities of unutilized energy in the banking account even after banking.

Accordingly, in subsequent order, the Commission decided that such unutilized banked energy was eligible for encashment at 75% during regular occasions and 100% during the period when restrictions were in place.

Later, TANGEDCO issued a letter to Arulmozhi Spinning Mills stating that the unutilized banking invoices for the period 2011-12 would not be processed since it had not consumed 51% of the annual generation and was liable to pay cross-subsidy surcharge.

The state DISCOM further noted that the restrictions and control measures might not restrict the captive users to consume their wind captive power. Therefore, the wind energy generator is eligible for encashing the unutilized energy at the end of the banking period, at just 75% of the relevant tariff during 2012-13.

It added that the wind generator’s captive user had obtained the dedicated feeder on December 17, 2012. So, the wind generator is eligible for encashing the unutilized energy at the end of the banking period at 75% of the relevant tariff from 2013-14 onwards per the Commission’s previous order.

The government issued a notification on February 27, 2009, waiving the levy of cross-subsidy surcharge. The order read as follows:

“Because of the prevailing shortages, the government has taken the step of permitting private power producers in the state to avail of open access to sell tradable surplus power generated by them to any high-tension consumers. It has also been decided to waive off cross-subsidy surcharge temporarily.”

TANGEDCO argued that the cross-subsidy surcharge was waived off only for third party users and it was not waived for those captive users who were liable to pay the surcharge. So, the petitioner’s contention that this was applicable for captive users was misleading.

In its analysis, the Commission noted that TANGEDCO’s point that cross-subsidy surcharge should be collected before releasing payment for surplus energy available at the end of the year was not valid. The regulator said that the payment for the unutilized banked power and collection of cross-subsidy surcharge were two different issues which cannot be interlinked.

Further, the Commission directed TANGEDCO to pay for the unutilized banked energy along with the interest rate of 1% per month within a month.

Recently, TNERC ordered TANGEDCO to pay wind generators ₹6.69 million (~$91,586) along with interest at 1% per month toward delayed payments for the supply of wind power. The Commission received petitions from White House, a textile manufacturer, and exporter, and the Tamil Nadu Gears and Shafts Corporation that owns 3.5 MW and 0.5 MW of wind projects in the state, respectively.

Earlier, TNERC had directed TANGEDCO to make payments to two wind generators claiming interest dues against the power supplied and banked.