CASE No. 167 of Coram. Shri. Azeez M. Khan, Member Shri. Deepak Lad, Member. Maharashtra State Electricity Distribution Co. Ltd.

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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. 167 of 2016 In the matter of Petition of Maha Cold Storage Association for review of Multi-Year Tariff Order dated in Case No. 48 of 2016 with regard to tariff of Pre-Cooling and Cold Storage Units for Agricultural Products Coram Shri. Azeez M. Khan, Member Shri. Deepak Lad, Member Maha Cold Storage Association Maharashtra State Electricity Distribution Co. Ltd....Petitioner...Respondent Appearance For Petitioner: For Respondent: Shri. Tushar Parakh (Rep) Shri. Satish Chavan (Rep) ORDER Dated: 30 August, Maha Cold Storage Association, c/o Ecofresh Cold Storage and Warehousing Pvt. Ltd., S. No. 143, Vadgaon Dhayari, Sinhagad Road, Pune, has filed a Petition on 16 December, 2016 citing Regulations 85(a), 95 and 96 of the MERC (Conduct of Business) Regulations, The Petition seeks review of the Multi-Year Tariff (MYT) Order dated 3 November, 2016 in Case No. 48 of 2016 with regard to the tariff of Pre-Cooling and Cold Storage units for agricultural products for electricity supply by the Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL). Order in Case No. 167 of 2016 Page 1 of 7

2 2. The Association s prayers are as follows: A. It is our humble request Hon ble Commission to favourably consider and; 1. A correction and rationalization in the steep hike approved in-line with the philosophy of special tariff category for the Pre-cooling and Cold Storage Units 2. Keeping the LT (IV) C tariff of order 48 of 2016 unchanged while correcting the wide disparity in total energy charge observed in HT and LT connection. Pls note most cold storages running on HT connections fall in 11KV and 22 KV supply voltage where the hike is the steepest 3. Re-adjust the year-on-year (effect 1 st April 2017,2018,2019) absolute energy charges keeping reasonable hike of 3-5% post rationalization and correction of steep hike approved effective 1-November-2016 B. To admit the petition under section 94(1)(f) of the Electricity Act 2003 read with Regulation 85 (a), 95 & 96 of MERC (Conduct of Business) Regulations 2004 C. The Hon. Commission has jurisdiction to hear, adjust & decide the review petition. 3. The Petition states as follows: 3.1 The Commission has determined the retail tariff, wheeling charges, cross-subsidy surcharge and additional surcharge vide its MYT Order dated 3 November, 2016 effective from 1 November, The Association is grateful to the Commission for continuing to accord special tariff applicability to Pre-Cooling and Cold Storage units and encouraging the Cold Storage industry in Maharashtra. However, there is steep rise in the energy tariff in percentage terms and a disparity in the increase between HT and LT connections for the same activity, i.e. Agriculture - Others. 3.3 In the impugned MYT Order, the energy rates for almost all categories have been reduced except for Agriculture -Others which are subjected to an increase. In fact, the HT-Agriculture - Others category has been subjected to a steep tariff increase. This category has been singled out while all other categories are enjoying the benefits of surplus power, which is evident from reduction in their energy charges. 3.4 The steep increase in the energy rate appears to be a typographical error. The Commission may have it verified and rectify the mistake, if any, in the impugned MYT Order. However, if the increase in tariff is intentional, the Commission may consider the following issues: Order in Case No. 167 of 2016 Page 2 of 7

3 a. The intention behind a separate tariff category of Agriculture Others at par with Agriculture energy rates was to promote the Cold Storage industry in Maharashtra. However, the steep increase proposed by MSEDCL and approved by the Commission goes against the very intention to promote the Cold Storage industry storing Agricultural products (processed or otherwise). b. The Cold Storage industry is a hugely capital-intensive one at the start and with a very slow rate of return. As such, it cannot be equated with any other industry or commercial service and needs protection from external shocks for survival. c. During the public hearing at Pune on 20 July, 2016, the Association had highlighted that the Commission had introduced a new category for Pre-Cooling and Cold Storage units on 1 June, 2015 at rates 30% higher than for Agricultural Pumpsets. This point has been missed while arriving at the MYT for this category. 3.5 While the steep increase is only in the Agriculture - Others tariff category, the disparity in energy rates between LT-Agriculture - Others and HT-Agriculture - Others is also very high. There should be a level playing field in terms of cost incurred for storage in order to be competitive. The disparity in investments made by Cold Storage owners and MSEDCL for new LT or HT connections should be taken into consideration while devising the energy tariffs. 3.6 The year on year rise of 3-5% in the MYT effective from April, 2017, April, 2018 and April, 2019 is acceptable, but the base rise effective from 1 November, 2016 should first be rationalized and thereafter the year on year absolute energy tariff may be appropriately adjusted within the 3-5% range. 3.7 Since the impugned MYT Order is effective from 1 November, 2016, electricity bills for the month of November have been prepared and dispatched by MSEDCL based on the energy charges in the MYT Order. MSEDCL may be directed to appropriately adjust the extra payments made, if any, without individual consumers having to make separate applications. 4. In it Reply dated 21 March, 2017, MSEDCL stated that: 4.1 The Association has not given any sufficient reason for review or substantiated any mistake or error in the impugned MYT Order. It has also not cited any new and important matter or evidence which was not within its knowledge or could not be produced by him at the time when the Order was passed. Order in Case No. 167 of 2016 Page 3 of 7

4 4.2 The Commission has determined the tariff for different categories after following due regulatory process. The present review Petition is nothing but an appeal in the garb of review. Therefore, it ought to be dismissed as not maintainable. 5. At the hearing held on 23 March, 2017: 5.1 The Association stated that: a. Cold Storages for Agricultural products are categorized under the Agriculture - Others category. In the MYT Order dated 3 November, 2016, HT Agriculture - other category has been subjected to a very large tariff increase for FY b. In the MYT Order, the base energy charges for almost all categories have been reduced except for HT Agriculture - Others, which have increased by 25%. If all other charges are considered, the increase is by 42%. Generally, tariff increase exceeding 15 to 20% is not allowed as it is considered as a tariff shock. Such a large tariff increase in the Agriculture - Others category might be a typographical error as the energy charges for all other categories have been reduced. c. This tariff increase is also against the philosophy of incentivizing the agricultural Cold Storage industry which helps in avoiding wastage of food. Cold Storages are very capital intensive with a longer period for returns, and also power intensive. They cannot function without external support such as low electricity tariff. At the public hearing held at Pune, the Association had opposed the tariff increase proposed by MSEDCL. d. Further, there is a discrepancy in the tariff increase for HT and LT Cold Storages. HT Cold Storages have been subjected to a large tariff increase whereas the tariff of LT Cold Storages has been increased moderately by 4 to 5%. This anomaly needs to be corrected by reducing the tariff of HT Cold Storages for FY , and thereafter applying a year on year increase of 3 to 4% in the remaining Control Period. e. Although the Commission has categorised Cold Storages for Agricultural products - processed or otherwise under the Agriculture - Others category, MSEDCL s field officers are denying the benefit of this category to agricultural Cold Storages on account of lack of clarity on what are agricultural products. Hence, the Commission may clarify the applicability of Agricultural Cold Storages as food and agricultural products - processed or otherwise. Order in Case No. 167 of 2016 Page 4 of 7

5 5.2 MSEDCL stated that the Association has failed to show any error in the MYT Order, and hence the review Petition needs to be rejected as not maintainable. 5.3 MSEDCL agreed to resolve the issue of applicability of tariff category for Agriculture Cold Storages in discussion with the Association. Commission s Analysis and Ruling 6. 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 the Petition of the Maha Cold Storage Association has to be evaluated accordingly. 7. The main contention of the Association is that, in the impugned MYT Order, the Commission has reduced the energy charges of most other categories but increased them steeply for the HT - Agriculture - Others sub-category, which is also in contrast to the similar sub-category at the LT level. The Association has sought that, whether this is due to a typographical error or otherwise, it be corrected. 8. In fact, there is no error in the tariff approved for the HT - Agriculture - Others sub-category of HT V(B). The following considerations underlie the tariff increase for this sub-category: 8.1 Although the average tariff increase for the HT - Agriculture category for FY was 3.70%, the sub-category of HT- Agriculture - Others is higher since it was created for the first time in the impugned MYT Order by bifurcating the erstwhile HT V - Agriculture category into two separate subcategories, one for Pumpsets and the other for certain Pre-Cooling plants and Cold Storages, etc., as was already the case at the LT level. A distinction was Order in Case No. 167 of 2016 Page 5 of 7

6 intended between these two entirely different sets of activities, with a higher tariff for the latter. The Order states as follows: 8.16 Need for creation of new Categories for HT Agriculture - Others and LT Ports MSEDCL s submission In its previous MYT Order, the Commission has created an Agriculture Metered Others LT category, whose Energy Charges were Rs per kwh higher than that of the Agriculture Metered Pumpsets category. However, on similar principles, the Commission has not created a separate HT category for Agriculture consumers for activities other than pumping. The Commission may do so, with a tariff slightly higher than the HT Agricultural pumpsets category Commission s Ruling The Commission has accepted MSEDCL s proposal for creation of a new category of HT Agriculture Others, with tariff slightly higher than for HT Agriculture Pumpsets, considering the logic advanced by MSEDCL. Its coverage and tariff related details have been provided in the Tariff Schedule. 8.2 Since this separate tariff sub-category was created for the first time, its tariff cannot be compared with the earlier tariff of the combined category. In fact, when a similar bifurcation was done at the LT level in the previous MYT Order dated 26 June, 2015, the tariff increase for the new LT- Agriculture - Others sub-category was also higher as compared to the earlier combined tariff, and there was also a significant difference in the tariffs of the two new sub-categories. As the Association itself has pointed out, the subsequent increase in the LT sub-category tariff has not been significant. On similar principles, the tariff increase for HT Agriculture Others in the remaining years of the Control Period till FY is moderate, at 3 to 4%. 8.3 It may also be noted that, at both the LT (in both Orders) and HT (in the impugned MYT Order) levels, the Agriculture Others tariff is significantly higher than tariff of the other sub-category (Pumpsets). 8.4 Further, on the same principle as in the earlier MYT Order of 2015, in the impugned 2016 MYT Order also Cold Storages have been covered under two different categories, viz. (i) Cold Storages for Agricultural Products (processed or otherwise) under Agriculture - Others, and (ii) other Cold Storages under Industry. The tariffs of these categories for FY are as follows: Order in Case No. 167 of 2016 Page 6 of 7

7 Wheeling Charges Supply Voltage Level (Rs. / kwh) 66 kv and above NIL 33 kv kv or 11 kv 0.82 PLUS Demand/Fixed Charge and Energy Charge (for all Supply Voltage Levels) Consumer Category Demand Charge (Rs/kVA/month) Energy Charge (Rs/kWh) HT V (A): HT Agriculture Pumpsets HT V (A): HT Agriculture Others HT I (A): Industry - General It will be see that the tariff for Cold Storages for Agricultural Products under HT-Agriculture Others is less than 50% of the tariff for other Cold Storages under the HT-Industry category. Thus, in the impugned MYT Order, the Commission has continued to give weightage to Cold Storages for agricultural products. 9. Considering the foregoing, the Association s claim for review of the impugned MYT Order has no merit, and does not satisfy the requirements for review. The Petition of Maha Cold Storage Association in Case No. 167 of 2016 stands disposed of accordingly. Sd/- (Deepak Lad) Member Sd/- (Azeez M. Khan) Member Order in Case No. 167 of 2016 Page 7 of 7