CASE No. 114 of Coram Shri. Azeez M. Khan, Member Shri. Deepak Lad, Member. Maha Cold Storage Association

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1 Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai Tel /65/69 Fax Website: CASE No. 114 of 2015 In the matter of Petition of Maha Cold Storage Association for review of Tariff Schedule applicable to Pre-Cooling Plants and Cold Storage Units in Order dated in Case No. 121 of 2014, and related issues & CASE No. 119 of 2015 Petition of Navi Mumbai Cold Storage Owners Welfare Association for review of Tariff Schedule applicable to Pre-Cooling Plants and Cold Storage Units in Order dated in Case No. 121 of 2014, and related issues Coram Shri. Azeez M. Khan, Member Shri. Deepak Lad, Member Maha Cold Storage Association Petitioners Navi Mumbai Cold Storage Owners Welfare Association V/s. Maharashtra State Electricity Distribution Co. Ltd. Respondent Appearance For Petitioners: (Case 114/2015) (Case 119/2015) For Respondent: Shri. Tushar D. Parakh Shri. H.B.Tripathi Shri. S.V. Bapat, Chief Engineer (TRC) Order in Case No. 114 & 119 of 2015 Page 1 of 9

2 ORDER Dated: 6 December, The following Cold Storage Associations have filed Petitions seeking review of the Multi-Year Tariff (MYT) Order dated 26 June, 2015 in Case No. 121 of 2014 with reference to the tariff applicable to pre-cooling and cold storage units in the area of the Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL): Case No. Petitioner Location Date of Petition 114 of 2015 Maha Cold Storage Association C/o Ecofresh Cold Storage & Warehousing Pvt.Ltd, Survey No.143,Vadgaon Dhayari, Pune August, of 2015 Navi Mumbai Cold Storage Owners Welfare Association 620/621, Commodity Exchange Building, Plot No.2, 3 & 4, Sector 19,Vashi, Navi Mumbai August, The prayers of Maha Cold Storage Association (Case No. 114 of 2015) are as follows: 1. It is our request to Hon ble MERC to issue rectification and kindly reproduce line from LT IV (C) tariff category which reads as Pre cooling plants and cold storage units for Agriculture Products processed or otherwise in the applicability of H.T. Agricultural tariff as indicated above. 2. The term Agricultural products (Processed or Otherwise) may kindly be specified by Hon ble MERC in detail to facilitate the tariff applicability to all the eligible Pre-cooling plants and cold storage units to facilitate MSEDCL to determine the correct applicability of the tariff to the specified agriculture products. 3. The Hon ble MERC is requested to consider favourably that the allied load which is incidental to the main activity of the Pre-cooling and cold storage units and issue instruction on the lines of what the Hon ble Electricity Commission, Orissa has rightly decided by allowing a reasonable percentage of the entire load of the Cold Storage for allied activities. 4. The Hon ble MERC is requested to consider application of Day & Night tariff to the Pre-cooling plant and cold storage units of Agriculture product which is in fact for the mutual benefit and may not affect MSEDCL as far as its revenues is concerned. Order in Case No. 114 & 119 of 2015 Page 2 of 9

3 5. To admit the petition under section 94(I)(f) of the Electricity Act 2003 read with Regulations 85(a), 95 & 96 of MERC (Conduct of Business) Regulations, The Hon. Commission has jurisdiction to hear, adjust & decide the review petition. The prayers of the Navi Mumbai Cold Storage Owners Welfare Association (Case No. 119 of 2015) are similar except for some re-wording of clause 1, which reads as follows: 1. It is our request to Hon ble MERC to issue rectification and kindly include the words processed or otherwise in the applicability of H.T. Agricultural tariff as indicated above. The issue in these Petitions being identical, the Commission heard them together, as agreed to by the parties. 3. The common issues as stated in these Petitions are as below: 3.1. The following observations/suggestions are made, without which MSEDCL is likely to interpret otherwise and the pre-cooling plant and cold storage industries may be victimized Tariff for Cold Storages i. In its 2015 MYT Order, the Commission decided to treat cold storages under two categories: (a) Cold storage for agricultural products - processed or otherwise, covered under Agriculture Others category and (b) Cold storage for all other purposes, to be covered under Industry category. ii. iii. The 2015 MYT Order states that the detailed scope of tariff applicability and associated terms and conditions for cold storages is specified in the Tariff Schedule. However, the above definitions are not reflected correctly in the Tariff Schedule. In the applicability of LT-Agriculture Metered - Other category, it is mentioned that it is applicable to pre-cooling plants and cold storage units for Agriculture Products processed or otherwise. However, in the applicability of HT Agriculture category, it is mentioned that this category is applicable to pre-cooling plants and cold storage units of Agriculture produce. The words Order in Case No. 114 & 119 of 2015 Page 3 of 9

4 processed or otherwise is missing from the applicability of HT Agriculture category. iv. The Commission may, therefore, correct the applicability of HT Agriculture category Agricultural Produce to be specified in Schedule: i. The term agricultural produce (processed or otherwise) is a wide term which embraces many agro products. In order to enable MSEDCL to apply the tariff applicable to pre-cooling plants and cold storage units for agricultural produce (processed or otherwise), a list of agro items needs to be annexed with the Tariff Schedule to avoid any complication in implementation. ii. In this regard, the definition of agricultural produce and articles of agricultural produce as specified in different schedules by the Department of Agriculture, Government of India, and the contents of the Agricultural Produce (Grading and Marking) Act, 1937 (as amended from time to time) may be taken cognizance of Allied Activities: i. The agro-based cold storages have some allied activities like drying, grading, sorting, packaging etc. for making the produce suitable and neat for storage and preservation purpose. The load of these allied activities is normally in the range of 5 to 10% of the total electricity load. On many occasions, MSEDCL treats these allied activities as industrial activity and applies the Industry tariff to the entire cold storage. ii. Applying the Industry tariff to the entire agro-based cold storage is not justifiable as these allied activities are part of the cold storage activity itself. This concept is accepted by the Orissa Electricity Regulatory Commission (OERC). OERC has decided that upto 20 % of all allied activities should be allowed to be part of cold storage activity, and the tariff should be applied accordingly Day and night tariff to cold storages: i. At present, day and night tariff is not applicable to pre-cooling plants and cold storage units of agricultural products. It may be noted that, on the one hand, subsidy is considered for these units for their substantial contribution to the Order in Case No. 114 & 119 of 2015 Page 4 of 9

5 economy and, on the other hand they, are denied day and night tariff from which MSEDCL benefits by way of relief in peak demand. ii. iii. Considering the power situation, MSEDCL should encourage the application of day and night tariff to a wider range of consumers, which is intended to save power and avoid new generation of power to a certain extent. In pre-cooling and cold storage for agricultural products, once a desired temperature is reached and maintained, the power supply is shut for some specified period. If day and night tariff is allowed to these Units, the power closure period can be shifted to peak hours, which will provide relief in system demand. 4. In its Reply dated 1 February, 2016, MSEDCL has stated as follows: 4.1 The Petitioners have not given sufficient ground to review the 2015 MYT Order. They have neither substantiated any mistake or error apparent on the record committed by the Commission, nor have they pointed out any new and important matter or evidence which was not within their knowledge or could not be produced by them at the time when the direction, decision or Order was passed. 4.2 The Petitioners have requested rectification in the applicability of HT Agriculture category tariff; specifying the term Agricultural Products (processed or otherwise) in detail; allowing a reasonable percentage of the entire load for allied activities in cold storage; and application of Time-of-Day (ToD) tariffs for pre-cooling plants and cold storage units. All these issues are of a clarificatory nature. Further, the matters of tariff for allied activities in cold storage and consideration of ToD tariff for pre-cooling plants and cold storage units are beyond the purview of review under Regulation 85 of the MERC (Conduct of Business) Regulations, Therefore, these Review Petitions are not maintainable and need to be dismissed. 4.3 The grounds for review raised by the Petitioners are generic in nature and no specific case is elaborated with supporting documentary evidence. These are not grounds for review but are suggestions relating to tariffs and tariff categorisation. The Petitioners can approach the Commission with these issues during the public consultation process of the next tariff determination proceedings, which are due in a short time. 5. At the hearing on 23 February, 2016, the Petitioners stated that, over the years, the tariff categorisation of cold storages has been evolved through various representations and deliberations in tariff proceedings. They stated that their prayer regarding correction in the tariff applicability of the HT Agriculture category to include agriculture products Order in Case No. 114 & 119 of 2015 Page 5 of 9

6 processed or otherwise, as in the case of LT, has been addressed by the Commission in its Order dated 29 January, 2016 in Case No. 121 of Hence, the Petitioners are pressing for the other reliefs sought in their Petitions, i.e. applicability of ToD Tariff to agricultural cold storages, specifying the list of agriculture products and allowing the same tariff for the allied activities in the premises of the cold storages. The Commission could restrict the allowable load of such allied activities to a certain percentage. The Petitioners also mentioned that MSEDCL is treating such allied activities as unauthorized use and carrying out assessments under Section 126 of the EA, During the hearing, MSEDCL regretted not factoring the Commission s Order dated 29 January, 2016 in its Reply dated 1 February, It submitted that other issues in the Petitioners prayers may be dealt with in next the tariff proceedings. The Commission enquired about the arbitrary booking of cases by MSEDCL under Section 126. MSEDCL stated that assessments under Section 126 are based on field observations and the judgment of assessing officers. The Commission asked MSEDCL to submit details of cases relating to booking of lighting load in cold storage premises as unauthorized load, referred to by the Petitioners during the hearing, within a week. 7. In its response dated 3 March, 2016, MSEDCL stated that it has followed up with the Petitioners to furnish details of sample cases along with necessary documents in respect of the alleged misuse of power under Section 126 of the EA, However, no details have been provided, and hence MSEDCL is not able to submit the requisite details. Commission s Analysis and Ruling 8. Regulation 85(a) of the Commission s Conduct of Business Regulations, 2004 specifies as follows: Review of decisions, directions, and orders: 85. (a) Any person aggrieved by a direction, decision or order of the Commission, from which (i) no appeal has been preferred or (ii) from which no appeal is allowed, may, upon the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the direction, decision or order was passed or on account of some mistake or error apparent from the face of the record, or for any other sufficient reasons, may apply for a review of such order, within forty-five (45) days of the date of the direction, decision or order, as the case may be, to the Commission. Thus, the ambit of review is limited, and these review Petitions have to be evaluated accordingly. Order in Case No. 114 & 119 of 2015 Page 6 of 9

7 9. As mentioned by the Petitioners during the hearing, their prayer for correction in the applicability of the HT-Agriculture tariff category to include agriculture products processed or otherwise, as in the case of the corresponding LT category, has been addressed by the Commission in its Order dated 29 January, 2016 in Case No. 121 of 2015 as follows: the Commission finds a similar and unintended discrepancy between another entry in the Tariff applicability of HT V: HT-Agriculture category and the corresponding LT category in the Approved Tariff Schedule regarding precooling and cold storage units. Para of the impugned Order states that the Commission has decided to broaden the existing tariff treatment of cold storages and to consider them in two categories, namely (a) Cold Storages for Agriculture Products; processed or otherwise and (b) Cold Storages for other purposes. While the tariff of Agriculture Others (Metered) category shall be applicable for Cold Storages for Agriculture Products, the latter would be covered under the Industry instead of the Commercial category as at present. This is correctly reflected in the applicability of the LT IV (C): LT Agriculture Metered Others category in the Approved Schedule, but not in the corresponding HT category. The relevant entry in the HT V: HT-Agriculture category is accordingly corrected to read as follows: i) For pre-cooling plants & cold storage units for Agriculture Products processed or otherwise; 10. As regards the treatment of electricity consumption of allied activities as part of the main activity of cold storage, with some limit in terms of a percentage of the total consumption if necessary, the Commission notes that, in its 2015 MYT Order, in order to simplify the energy metering and billing procedure and to take into account the allied activities which are essentially required to support the core activity, the Commission allowed the consumption of such activities in industrial premises to be treated at par with the power consumption for the core industrial activity. The Commission also applied a similar principle to Hatcheries. The relevant paras. read as follows: The Commission is of the view that office premises or administrative building, or canteen facilities, or R&D or laboratory facilities, or any other such units situated within the same industrial premises are essentially catering to the requirement of the host industry. In order also to simplify energy metering and billing procedures, the Commission has decided to treat the power consumption of all such activities within the industrial premises on par with the power consumption for the core industrial activity for the purposes of application of tariff category. No distinction has been made in Order in Case No. 114 & 119 of 2015 Page 7 of 9

8 respect of R&D or other laboratory facilities or for any other administrative unit for the purpose of tariff applicability, so long as such unit is located within the same industrial premises However, this will not apply in case such administrative blocks, office premises, R&D laboratory are located outside the industrial premises and are fed through separate power supply connection The Commission has considered the submissions made by M/s. Venkateshwara Hatcheries Ltd., who also appeared and was heard at the Public Hearing at Pune For the reasons set out above, the Commission is of the view that all the utilities, administrative block units and R&D centre/testing laboratory located within the premises of the hatcheries/poultry would be covered under the parent category, i.e the tariff applicable for hatcheries/poultry (HT-V Agriculture). Such units situated outside these premises will continue to be covered under the Commercial category. The latest MYT Order dated 3 November, 2016 in Case No. 48 of 2016 has some similar provisions. While it is not possible to list all possible cases, the general principle underlying the above dispensations i.e. that allied activities which are a part and parcel of, and are subordinate and cater to the core activity in the same premises, may be charged the same tariff is applicable to other cases also, and the Licensee is expected to exercise its judgment accordingly. 11. The Petitioners have not explained how their prayer for extending the ToD tariff dispensation to pre-cooling and cold storage units for agricultural products meets the requirements for review of the 2015 MYT Order, and the Commission is of the view that it does not. This issue was also raised in the recent MYT proceedings in respect of MSEDCL, and the Commission has not accepted it. It may also be borne in mind that the application of the ToD tariff to a particular activity is generally based on whether or not it is applicable to the parent tariff category or sub-category. 12. As regards the suggestion for a full listing of agricultural produce, considering the Schedules applicable under the Agricultural Produce (Grading and Marking) Act, 1937 or other such material, the Commission is of the view that this is impractical, and that such listings vary depending on the different purposes of the respective statutes or orders. The Licensee is expected to interpret the terms used in the applicability clauses of the Tariff Orders depending on their context or in the sense of their ordinary usage unless illustrations or further specifics have been provided. The consumer grievance redressal mechanism is available to resolve difference on this account with the Licensee, and the Commission for generic clarification where necessary. Order in Case No. 114 & 119 of 2015 Page 8 of 9

9 The Petitions of M/s Maha Cold Storage Association and M/s Navi Mumbai Cold Storage Owners Welfare Association in Case Nos.114 and 119 of 2015, respectively, stand disposed of accordingly. sd/- (Deepak Lad) Member sd/- (Azeez M. Khan) Member Order in Case No. 114 & 119 of 2015 Page 9 of 9