ANDHRA PRADESH ELECTRICITY

REGULATORY COMMISSION
11-4-660, 4th & 5th Floors, Singareni Bhavan, Red Hills, Hyderabad-500 004.

ORDER
IN THE MATTER OF
Determination of Tariff / Power Purchase Price (Variable Cost or Single Part Tariff) for the period
from 01-04-2009 to 31-03-2014 in respect of the New and Renewable Sources of Energy in the
State of Andhra Pradesh covered by the Commission Order Dated 20-03-2004.

In case of O.P. No. 5 /2009

FOR

PURCHASE OF POWER FROM NEW AND RENEWABLE SOURCES OF ENERGY COVERED

BY THE COMMISSION ORDER DATED 20-03-2004

Date 31st March, 2009.

 ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION
11-4-660, 4th & 5th Floors, Singareni Bhavan, Red Hills, Hyderabad.
Dated: 31-03-2009
Present
A. Raghotham Rao, Chairman
R. Radha Kishen, Member
C.R. Sekhar Reddy, Member
O.P.No.5 of 2009
ORDER
By Order dated 20th March 2004, the Commission had determined the tariff for Purchase of Electrical
Energy generated by Non-Conventional Energy Projects in the State of Andhra Pradesh by the
Transmission Corporation of Andhra Pradesh Limited (APTRANSCO) in case of R.P.No. 84/2003 in
O.P.No. 1075/2000.
This Order covered the following projects, which were then classified as NCE Projects, the
nomenclature of which has subsequently been changed as NRE Projects.
I. Bagasse based Co-generation Projects
II. Biomass based Power Projects
III. Industrial Waste to Energy Projects
IV. Mini hydel projects.
V. Municipal Waste to Energy Projects
VI. Wind Electricity Generating Projects
In the above-mentioned Order, the Commission had determined the tariffs for these projects on the
following lines.
I. Bagasse based Co-generation 1. Fixed cost from 1st year of operation to 10th year of
Projects operation.
2. Variable cost tariff from Financial Year (FY) 2004-05 to
2008-09.
II. Biomass based Power 1. Fixed cost from 1st year of operation to 10th year of
Projects. operation.
2. 2. Variable cost tariff from Financial Year 2004-05 to
2008-09.
III. Industrial Waste to Energy The Commission authorized purchase of energy from
Projects Industrial Waste to Energy Projects at the rates permitted
for purchase of power from Biomass Power Projects.
IV Mini Hydel Projects. Tariff from 1st year of operation to 10th year.
V Municipal Waste to Energy Single part tariff ranging from Rs.3.37 to 3.81 per unit was
Projects fixed for the FY years from 2004-05 to 2008-09.
 VI Wind Electricity Generating Single part tariff of Rs. 3.37 with effect from 01-04-2004
Plants to31-03-2009, to be reviewed after 31-03-2009

As seen above, the single part tariff as well as variable tariff was determined by the Commission
upto 31-03-2009 only.
4. Therefore, there is an urgent necessity to determine the Variable Cost tariff in respect of Bagasse
based (Co-generation) Projects and Biomass based projects (including Industrial Waste), since no
tariff rate structure is available in the 20th March 2004 Order for the purchase of power from these
sources by the AP DISCOMS w.e.f 01-04-2009 onwards.
5. Similarly, the tariff in respect of Municipal Waste to Energy Projects applicable from 01-04-2009
also needs to be determined by the Commission.
6. Further, in the case of Wind based projects, since the rate of Rs. 3.37 was determined in the 20 th
March 2004 Order upto 31-03-2009, with a clear observation that the same shall be reviewed after
31-03-2009, there is an urgent need to conduct a review and to fix the tariff for the Wind based
projects to be applied from 01-04-2009 onwards.
7. In the above circumstances, there is an urgent necessity on the part of APERC to determine the
single part/variable tariff for the period w.e.f 01-04-2009, in respect of Bagasse based Co-generation
Projects and Biomass based Power Projects (including Industrial Waste based power Projects),
Municipal Waste to Energy projects and Wind Electricity Projects, as otherwise, a void or vacuum
would occur and the DISCOMs would not be in a position to buy power from such units w.e.f 01-04-
2009 in the absence of a tariff rate structure in terms of Commissions Order dated 20-03-2004.
8. Towards the above end, the Commission issued Public notice in O.P. No. 5/2009 (Suo-Motu)
inviting proposals/comments/objections and suggestions from all the stakeholders, interested parties
including but not limited to all Developers/ Associations/AP Discoms, Non-conventional Energy
Development Corporation of Andhra Pradesh Limited (NEDCAP), Ministry of New and Renewable
Energy (MNRE), Government of Andhra Pradesh (GoAP), Indian Renewable Energy Development
Agency (IREDA), Irrigation (CAD) and the general public, to submit on or before 21-02-2009 by
drawing their attention to the consultative paper hosted in the official website of the Commission.
9. Pursuant to the above notice, the Commission received responses from NEDCAP, Andhra
Pradesh Power Co-ordination Committee (APPCC) on behalf of 4 Discoms, Small Hydro Power
Developers Association (SHPDA), The South Indian Sugar Mills Association Ltd. (SISMA), and
Peoples Monitoring Group on Electricity Regulation, various NRE developers and members of the
general public. A public hearing was held in the Court Hall of the APERC on 28-02-2009 at which
several stakeholders have presented their views before the Commission.
10. After detailed examination of the issues having a bearing on tariff determination and the
objections, suggestions and the oral and written submissions made by the parties, the Commission
hereby determines the tariff as indicated below.
11. BAGASSE (CO-GENERATION) BASED PROJECTS: In view of the nature of the exercise for
fixation of tariff as mentioned in above paras, the need for revisiting the various parameters towards
fixation of variable cost does not arise except in respect of cost of fuel, which changes with time.
While determining the appropriate cost of fuel, it is observed that there is a wide variation of fuel cost
proposed ranging from Rs. 800/MT (NEDCAP) to Rs.2,225/MT (SISMA). In this context, the
Commission would like to go by the rate proposed by the APPCC in as much as the rate of Rs.
800/MT proposed by the NEDCAP is without any basis while APPCC has arrived at the price of Rs.
950/MT based on heat equivalence value of SCCL which is also in line with the methodology
adopted by the APERC in the earlier order dated 20-03-2004. Accordingly, the Commission hereby
accepts Rs. 950/MT as the appropriate fuel cost for determination of variable cost. The Commission
using the above parameters (viz., Station Heat Rate (SHR) 3,700 K.cal/Kwh, Gross Calorific
Value (GCV) 2300 K.cal/Kg., Fuel Cost Rs.950/MT and Fuel Cost Escalation 5% per
annum) hereby determines the Variable Cost for the following years as hereunder:
Financial Year Variable Cost Rs./unit
2009-10 1.68
2010-11 1.76
2011-12 1.85
2012-13 1.94
2013-14 2.04
12. BIOMASS BASED PROJECTS: In the case of these units also, in view of the nature of the
exercise for fixation of tariff as mentioned in above paras, the need for revisiting the various
parameters towards fixation of variable cost does not arise except in respect of the cost of fuel,
which changes with time. As regards the determination of the appropriate cost of fuel, there is a wide
variation of fuel cost proposed by various stake holders ranging from Rs. 1,520 /MT (suggested by
APPCC) to 2,200/MT (suggested by M/s. Velagapudi Power Generation Ltd., and M/s. Suryateja
Power Projects Pvt. Ltd). In these circumstances, the Commission hereby determines Rs. 2000/MT
as the appropriate fuel cost for determination of variable cost. The Commission using the above
parameters (viz., Station Heat Rate (SHR) 3,700 K.cal/Kwh, Gross Calorific Value (GCV) 3200
K.cal/Kg., Fuel Cost Rs.2000/MT and Fuel Cost Escalation 5% per annum) hereby determines
the variable costs for the following years as hereunder:
Financial Year Variable Cost Rs./unit
2009-10 2.54
2010-11 2.67
2011-12 2.80
2012-13 2.94
2013-14 3.09
13. INDUSTRIAL WASTE BASED PROJECTS: In keeping with the tariff determination principle laid
down for Industrial Waste based projects in the
20-03-2004 Order, viz. that the rate for purchase of energy from Industrial Waste based Projects will
be on par with the rates determined for Biomass based projects, the rates for Industrial Waste based
power Projects will be as below:
Financial
Year Variable Cost Rs./unit
2009-10 2.54
 2010-11 2.67
2011-12 2.80
2012-13 2.94
2013-14 3.09
14. MINI HYDEL PROJECTS: Since the tariff for Mini Hydel Projects has been fixed in the 20-03-
2004 Order from 1st year of operation to 10th year of operation there is no need to make a
determination w.e.f 01-04-2009. The issues raised regarding this sector will be addressed separately
by the Commission in due course.
15. MUNICIPAL WASTE TO ENERGY BASED PROJECTS: In the Order dated 20-03-2004, the
Commission determined the tariff for Municipal Waste to Energy Projects ranging from Rs.3.37 to
Rs.3.81 /Kwh for the period from 01-04-2004 to
31-03-2009. The developers viz. M/s. Shriram Energy Systems Ltd., and M/s. Selco International
Ltd., sought a tariff of Rs. 5.50/Kwh and Rs. 6.50/Kwh respectively.
AP DISCOMs wanted the price to be pegged at Rs. 3.81 per unit. The Commission, having
considered the views of all the stake holders in this regard, hereby fixes the tariff as follows, based
on a 10% escalation at the beginning of the new control period and 5% annually (based on the base
figure of Rs.2.25 which was the base figure in the 20.3.2004 Order) thereafter from 2010-11 to 2013-
14:
Financial Year Fixed Cost Rs./Unit
2009-10 4.04
2010-11 4.15
2011-12 4.26
2012-13 4.37
2013-14 4.48

16. WIND BASED POWER PROJECTS: In the Order dated 20-03-2004, the Commission
determined the tariff for Wind based Power Projects as Rs.3.37 /Kwh for the period from 01-04-2004
to 31-03-2009, with an observation that the tariff would be reviewed after 31-03-2009. The matter is
accordingly reviewed as hereunder: During the Public Hearing, the APPCC proposed that Rs.
3.37/Kwh be continued subject to the fixed cost revision after project completion of ten (10) years.
NEDCAP proposed that the existing tariff of Rs. 3.37/Kwh is needed to be continued for
20 years period. The Commission after considering the views of all the stakeholders hereby decides
to continue the tariff of Rs. 3.37/Kwh for the Wind based Power Projects for the five-year period from
01-04-2009 to 31-03-2014.
17. This Order shall be applicable for purchase of electricity during the Control Period from 01-04-
2009 to 31-03-2014 and is subject to the following:
The final order of the Honble Supreme Court in Appeals pending before it against the order of
the Honble ATE dated 02-06-2006.
 The tariff rates determined in this Order are without prejudice to the tariff rates to which the
developers are entitled in terms of the order of the Honble ATE dated 02-06-2006 subject to
the appellate orders of the Honble Supreme Court.
This order is for determining the Variable /Single part tariff beyond 31.3.2009 wherever the
20.3.2004 order has determined the same upto 31.3.2009, with other terms and conditions
remaining unmodified.
This order is signed by the Andhra Pradesh Electricity Regulatory Commission on this 31st day of
March 2009

Sd/- Sd/- Sd/-

(C.R. SEKHAR REDDY) (R.RADHA KISHEN) (A.RAGHOTHAM
RAO)
MEMBER MEMBER CHAIRMAN