PSERC affirms the stand taken by PSPCL and denies in-principle approval to TSPL for expenditure ‘yet to be incurred’.
In a recent decision dated 21.09.2023 in Petition No. 02 of 2023, the Punjab State Electricity Regulatory Commission (‘PSERC/Commission’) affirmed the submissions of Punjab State Power Corporation Limited (‘PSPCL’) in respect of the mandatory firing of only torrefied biomass pellets in the TSPL plant as per the Revised Biomass Policy dated 08.10.2021 and the Directions issued under the Commission for Air Quality in the National Capital Region and Adjoining Areas, 2021 (‘CAQM Act, 2021’), and disallowed the expenditure ‘yet to be incurred’ by the Generator – Talwandi Sabo Power Limited (‘TSPL’) on modification/retrofitting of its plant for usage of non-torrefied biomass pellets.
Background of the Case
On 17.09.2021, the Commission for Air Quality Management (‘CAQM’) issued the Direction No. 42 which required all coal based Thermal Power Plants (‘TPP’) situated within a radius of 300 kms of Delhi to initiate immediate steps to co-fire biomass-based Pellets. Subsequently, on 08.10.2021, the Ministry of Power issued the Revised Policy for Biomass Co-firing directing coal-based TPPs with ball and tube mills such as TSPL to mandatorily use 5% blend of torrefied biomass pellets with volatile content below 22% along with coal.
In accordance with the same, TSPL had filed the present Petition seeking a declaration that the Direction No. 42 and the Revised Biomass Policy, 2021 constitute a Change in Law event and TSPL is liable to be granted an in principle approval for the expenditure yet to be incurred on account of such Change in Law event.
Submissions and Analysis
The Commission declared the Direction No. 42 under the CAQM Act, 2021, and the Revised Biomass Policy, 2021 constitute a Change in Law event. Further, in terms of the above-mentioned Order, the Commission granted a liberty to TSPL to approach the Commission after finalizing additional infrastructural requirements of the biomass pellet handling system.
In respect of the in-principal approval sought by TSPL in respect of the capital expenditure to be incurred on the modification/retrofitting of its boilers and installation of new coal mills, the Commission disallowed the same. While affirming the submissions of PSPCL, the Commission observed that the plea that the use of ‘torrefied’ in ball & tube mill is not qualified by the word ‘only’ as used in case of ball & race mill, is misconceived.
TSPL sought to apprise the Commission of its projected cost savings on modification/retrofitting of boilers for co-firing non-torrefied biomass pellets. However, resonating with the submissions made by PSPCL, the Commission upheld that while projecting the potential savings, the Petitioner has not considered the cost implication of capacity charges and loss of generation on account of proposed shutdown of the units for carrying out major modifications/ retrofitting in Boilers and replacements of its Coal Mills which are not envisaged/ mandated either by the Direction No. 42 issued by CAQM nor in the MoP Policy documents dated 08.10.2021 and 16.06.2023.
The Commission has correctly observed that the CAQM Direction and the Revised Biomass Policy were issued only after ascertaining the technical feasibility of co-firing a certain percentage of torrefied biomass pellets without the requirement of any modification in the boilers. In these circumstances, the Commission disallowed the prayer for grant of an in-principle approval for expenditure on major modifications/retrofitting in the Boilers and replacing its Coal Mills inasmuch as the same was contrary to the terms of the CAQM Direction read with the Revised Biomass Policy.
Finally, the Commission found the petition to be premature in respect of a few prayers and disposed off the petition while granting a liberty to TSPL to approach the Commission with its proposal for the additional working capital requirements on actual basis upon successful commencement of co-firing.