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C.R. Sukumar

HYDERABAD, April 19

RAIN Calcining Ltd (RCL), the Visakhaptanam-based Rs 300-crore producer of calcined petroleum coke and power, has won a year-old legal battle against the Andhra Pradesh Electricity Regulatory Commission (APERC) challenging the hike in wheeling charges payable by the company to the AP Transmission Corporation (APTransco).

This win would mean an immediate savings of up to Rs 36 crore per annum for the company.

According to RCL officials, the AP High Court has upheld the company's contention for restoring the wheeling charges in terms of earlier agreement entered into with the APTransco.

The court decided to set aside the APERC order to levy extra wheeling charges in supersession of the definitive agreements entered into by 50-odd private power producers with APTransco.

"The implementation of AP High Court orders, delivered on Friday, are expected to result in RCL saving an amount of up to Rs 3 crore per month and Rs 36 crore per annum," the officials told Business Line.

According to the RCL officials, APERC order was to levy charges of 50 paise per Kwh of wheeled energy `in cash' and compensation for system losses at 28.4 per cent of the wheeled energy `in kind' as against the specified percentages of wheeled energy contracted by the company with APTransco.

The officials said the APERC order, in effect, resulted in the company having to pay an additional cost of Re1 per Kwh of wheeled energy from April 1, 2002. In view of the adverse impact of the APERC order, the company filed an appeal in the High Court for quashing the order of the APERC on wheeling charges payable to AP Transco.

Prior to the APERC order on wheeling charges, the commission prohibited the power producing companies from making third-party sales.

The effect of this order was that RCL would have to sell its surplus power to APTransco at its prices, which were much lower than the prevailing tariff rate. Apart from questioning the APERC order to hike wheeling charges, the company had also contested the order which prohibited private power producers from making third-party sales. Following this, the court had granted an interim stay on the APERC order.

Power is a by-product of RCL generated from the flue gases evolved during the calcination process. The company currently has a capacity of 49.5 MW. According to senior RCL officials, the hike in wheeling charges was estimated to result in an additional burden of Rs 3 crore per month on the company, which would directly impact its profitability.

The company had initially entered into a modified power wheeling and purchase agreement (MPWPA) with APTransco, the erstwhile State electricity board, in 1994. This agreement was valid for a period of 30 years from the date of commercial operations - June 2028.

In terms of this agreement, RCL was required to pay wheeling charges in kind at a rate of 15 per cent for 132 KVA customers, 17.5 per cent for 33 KVA customers and 20 per cent for 11KVA customers.

However, APERC hiked the wheeling charges payable by the private generators transmitting power through the grid. The move of APERC was stated to be part of its efforts to rationalise tariff. The new wheeling charges came into effect from April 1, 2002.

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