Comments on CERC Approach Paper

Summary of the comments and suggestions received on Approach Paper on Terms

and Conditions of Tariff Regulations for the tariff period 1.4.2014 to 31.3.2019
( Ref No. 20/2013/Fin(Vol-I)/Tariff Reg/CERC Date: 25th June’2013)

5.2.1 Station Heat Rate

Whether the existing norms of station heat rate are required to be strengthened?
Alternative methodology for arriving at revised norms, if any, and present level of
station heat rate based on the technological improvement that may also be specified.
What are the important criteria to be considered while specifying norms for station
heat rate? The need for continuation of relaxed norms for specific stations? Changes
required in the existing norms given in Tariff Regulation 2009-14 may be commented
duly supported with authentic data, if any.

Comments/Suggestions

Sr. Name of organization/ Comments/ Suggestions

No. stakeholder
A) Autonomous Bodies (JERCs/SERCs/Other Commissions)
A.1 Uttar Pradesh Electricity The existing norms of station heat rate should be
Regulatory Commission strengthened.
The normative station heat rate should specifically be
provided for all categories of thermal generating stations
including the small capacities upto 50/100 MW.
The normative station heat rate should have specific
mention for indigenous/imported coal use, based on
percentage (%) of use, in view of higher cost of imported
coal and higher calorific value. However, the technical
constraints of blending should also be considered.
A.2 Chhattisgarh State While PLF, Sp Oil and transit loss may remain constant for
Electricity Regulatory the life of the plant, the two major operational parameters
Commission (CSERC) SHR and Auxiliary Consumption should be linked to the
age of the power plant. Further, with fixed SHR, currently
a near linear relation is considered between the GCV and
the specific coal consumption. However, the design SHR
itself depends on coal quality. The compensation curve has
to be accounted for, to arrive at a more scientific and
prudent SHR target. With blending of coal, this has
become more relevant, otherwise plants running on high
quality high cost imported coal will gain unfair advantage
over the plants running on low cost low quality domestic
plants.
B) Government Departments
B.1 Govt. of Odisha (A) The SHR should be fixed as per the average of
actual figures achieved during the first four years

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of the last Control Period or the design value

whichever is lower.
(B) In case of TTPS no relaxation should be allowed,
instead it should be treated at par with other
thermal stations as massive R & M activity has
been carried out.
(C) It should also be viewed in light of the PAT scheme
implement by the generating stations.
B.2 Govt. of Tripura, Dept. A strict audit in respect of gas consumption should vis-à-
of Power vis energy generated should be undertaken for earlier
control period and the norms may be accordingly
strengthened. Therefore, in this regard there is no need to
provide any relaxation because Central Generating
Stations (CGS) take periodical maintenance including
replacement of damage spares.
C) Central Sector (Generators/Transmission Cos./ NLDCs/RLDCs)
C.1 IL & FS Energy The Station Heat Rate should consider the degradation of
heat rate as having a constant heat rate for 25 years is very
difficult scenario to keep up with. In addition, norms may
be introduced for projects using imported coal with lower
calorific value and higher moisture content.
C.2 North Eastern Electric The following important criteria may be considered while
Power Corporation Ltd. specifying norms for station heat rate:
(NEEPCO) 1. Quality of Fuel
2. Operating pattern of machines (part load/full load etc)
3. Ageing of machines
4. Unit size
5. Climatic condition.
In the existing regulation, additional margin of 5% over
the gross station heat rate guaranteed by the OEM is
allowed in case of new gas/liquid fuel base CCGT
stations. The allowable percentage of margin needs to be
increased with the ageing of the machines. This principle
needs to be continued and extended to old and OCGT
stations also, as the heat rate is a crucial parameter which
has substantial impact on tariff. While agreeing the
allowable margin over the gross station heat rate
guaranteed by the OEM, it is required to examine that
whether the guaranteed figure was based on NCV or
GCV. If it was based on NCV, it needs to be suitably
converted. Further, the normative gross station heat rate
may be considered, with allowable margin over the gross
station heat rate guaranteed by the OEM and the average
actual heat rate over the last five years, whichever is lower.
C.3 National Thermal Operating norms should be based on the average
Power Corporation performance of units in the country and not confined to
(NTPC) NTPC stations alone. Further, operating norms should be
based on past performance of units in the country
including State Utilities / IPPs of relevant vintage and

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should factor in operating constraints, like, partial loading

due to erratic load pattern of the beneficiaries and lower
operating load factor due to shortfall of quantity and
quality of fuel which is expected to continue in future.

Further, norms should be capable of achievement on a

consistent basis. actual operating conditions in future is
expected to deteriorate further as compared to the existing
situation, particularly with respect to availability/quality
of coal, addition of substantial capacity from renewable
sources, grid parameters, higher availability of power
from multiple generators, sellers, etc, which is likely to
reduce the PLF of thermal power stations. Besides, unit
gross heat rate also depends up on the following factors:
a. Ageing of Machine: The turbine performance
deteriorates with ageing during the operating cycle of
the plant, which in turn adversely affects the cycle
operating heat rate. The average heat rate deviation
factor for aging, accordingly, is of the order of 1.74%
(39 kCal/kWh) for the 500 MW units commissioned
before 2009 and 2.7% (62 kCal/kWh) for the 200 MW
units. As per NTPC experience, it is possible to recover
only 70% of heat rate deviation after capital overhaul.
The loss shall be as per the average life of the unit.
b. Operating Margin: In real time operation of power
plants, it is not possible to achieve the design heat rate
as deviations occur due to number of parameters
which are uncontrollable, viz., Boiler Efficiency, Super
Heater/ Re-heater Spray, Condenser Back Pressure,
Main Steam / Reheat Steam Temperature, Make-up
water and miscellaneous losses (all losses which are
unaccountable, radiation losses, heat loss due to
leakages, passing, etc and piping losses).
c. Coal Quality: There is an increasing trend in moisture,
ash and decreasing trend in GCV of coal in most of the
stations of NTPC. This deterioration has been observed
to be in the range of up to 389kCal/kg. Boiler
efficiency deterioration on account of the deterioration
in GCV is around 0.3 to 0.4%.
d. Partial Loading Loss: Unit partial loading occur due to
various reasons like grid constraints (high frequency
regime), fuel constraints (fuel shortage, wet coal and
coal quality), equipment problem and other problems
such as water shortage & heavy rains, etc.

NTPC further submitted that the performance of the unit

(Gross HR & APC) in future will depend upon following
factors:

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a. Expected Coal Quality for 2014-19: If we go by the

trend of deterioration in quality of domestic coal since
2010-13 and the projection for the next five years, the
total deterioration is expected to be in the range of
around 10% which means additional decrease in the
operating boiler efficiency by around 0.7% from the
existing levels. Reduction in the boiler efficiency by
around 0.7% will lead to additional unit heat rate loss
of 20 kCal/kWh for the next 5 years period over and
above the operating levels of base period (2009-14).
b. Loss from Ageing of Machine: The average heat rate
deviation factor on account of ageing is of the order of
0.2% per annum which is equivalent to 12.5 kCal/kWh
on average basis for the next 5 year period.
c. Partial Loading Loss: 10% partial loading at the base of
85% would increase the heat rate of the unit 34.5/44.5
kCal/kWh respectively for 500 & 200 MW units.

Considering the actual heat rate achieved and at the base

of 85% DC during the present tariff period and the
predicted deviations due to all the above three factors like
reduction in boiler efficiency (20 kCal/kWh) due to coal
quality degradation, average annual ageing loss (12.5
kCal/kWh) and partial loading (10%) of the units (34.5
kCal/kWh) the anticipated heat rate of 500 MW units
during the start of coming tariff period would be of the
order of:
¾ 500 MW units: 2386 + 20 + 12.5 + 34.5 = 2453
kCal/kWh (8.0% of Design)
¾ 200 MW units: 2425 + 20 + 12.5 + 34.5 = 2492
kCal/kWh (8.5% of Design)
¾ 660 MW units: 2325 + 20 + 12.5 + 22.0 = 2379.5
kCal/kWh (7.8% of Design)

Therefore, existing norms of station heat rate should be

continued in case of 200 MW. In case of 500MW the norms
needs to be set at 2450 kCal/KWh. And in case of 660 MW
units, margin above design should be 8.0% in view of
future scenario as elaborated above.

With regard to the gas based stations, in view of

deterioration in Gas Turbine, WHRB performance
deterioration, performance data of last 5 yrs and projected
partial loading in the coming years, the existing norms of
station heat rate of Anta, Faridabad, Kawas, Gandhar &
Kayamkulam Station should be increased by 25 kCal/kWh
whereas Auraiya station tariff Heat rate should be

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increased by 50 kCal/kWh for Tariff period 2014-19.

C.4 Neyveli Lignite • The generators should continue to be permitted to
Corporation avail the gain resulting from efficient O&M of the
plant and hence no truing up with respect to any
savings in normative values of operational norms
should be imposed on the generator.
• The CERC has fixed relaxed norms for Station Heat
Rate for the old plants after examination in detail
of the various factors affecting the performance of
the Units in these Plants. There is no change from
these conditions even today and hence such
relaxed norms should continue to be considered for
the new tariff period also, though not relaxed
further.
• Justifications in respect of each power station are
furnished below for continuing with the existing
norms for NLC-TPSI, TPSI Expn. & TPSII and
relaxed norms in respect of BTPP.

TPSI:
¾Many of the units have served for more than 50 years
and other units also nearing 50 years of service. During
the service the unit efficiency reduced and hence the
fuel consumption is high.
¾Partial load operation due to the following reasons
leads to higher heat rate
ƒ Bunker choke because of variation in moisture content
of Lignite.
ƒ Low OPLF due to variation in quality of lignite. OPLF
values for the past 5 years are given below.
Year 2008- 2009-10 2010-11 2011-12 2012-
09 13
OPLF 84.83 88.72 85.89 87.98 88.22
ƒ Outages of Mills (Reserve Mill not available) and Slag
Conveyors
ƒ Increase in marcasite content in lignite is also very
much likely. This will cause severe damage to the mills
of the boilers and increased slagging inside the furnace
causing increased loss of generation due to frequent
maintenance of mills and failures of Slag conveyors.
¾Damaged Fills in the cooling towers and choking of
mud in the fills result in reduction in the performance
of cooling towers. This causes increase in the
Circulating water inlet temperature to 410 C as against
the design value of 290 C resulting in reduction of
Condenser vacuum to 650 mm of Hg against the
design value of 700 mm of Hg thus leading to
reduction in load for the same quantity of steam input
and requiring additional lignite consumption. In spite

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of the cost incurred towards renovation of cooling

towers is not being allowed to be capitalized as per the
regulations, TPS-I has carrying out the renovation
under Revenue head to contain Heat Rate.
In spite of the difficulties narrated above, TPS-I is
taking all possible steps to monitor and to contain the
Heat Rate. Hence, continuation of relaxed norms is
needed for plants like TPS-I and it is requested that the
Heat Rate norm is not to be reduced and shall be
retained at the present value of 4000 kCal / kWhr.

TPSI Expn.:
The Commission has fixed 2750 kCal / kWhr as norm for
the Station Heat Rate (SHR) for TPS-I Expansion. Already
our annual weighted average Station heat rate is very close
to the norm (barring the years 2008-’09 / 2012-‘13) as can
be seen from the Station Heat Rates of the previous year’s
tabulated below:-
Gross Station Heat
Year Rate (kCal./kWhr.)

2730
2008-09
2009-10 2742
2010-11 2750
2011-12 2745
2012-13 2737

It is stated that when OPLF of the station is less, the station

heat rate will be higher than the norm. Maintaining the
heat rate below the norms will be difficult in the coming
years because of the following reasons.
¾ The heat rate is hovering around the norms
because of the high OPLF achieved so far. This may
not be the case in the coming years due to aging of
units. Also increases in moisture content during
monsoon seasons do have impact on heat rate.
¾ The presence of marcasite in lignite is a point of
concern. This will cause severe damage to the
beater wheel mills of the boilers and increased
slagging inside the furnace causing increased loss
of generation due to frequent maintenance of mills
and failures of ABGs & Slag conveyors.
So the heat rate norms fixed for TPS-I Expansion may be
maintained as 2750 kCal/kWhr. for the tariff period 2014-
2019.

TPSII:
Ageing of the machines is a contributing factor in

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increasing the heat rate. All the Units in TPS-II have

served for more than one lakh hours. Life Extension
Programme by Phased replacement / rectification of
Critical components in Stage-1Units has been planned
from 2012-‘13. RLA studies are being taken up in the
units of Stage-2 also to monitor the healthiness of the
units and initiate corrective action, if any.
The heat rate is bound to increase due to part load
operation of the units on account of the following.
¾During rainy seasons, it is almost impossible to keep the
units in service as slushy lignite is to be handled and
fed to the boilers. The generation on the units
consequently goes down even below 50% and it is very
difficult to maintain the generation level closer to the
schedule. Also even after the rains recede, due to high
moisture content the performance of the pulverizing
milling system get severely affected, resulting in
operation of the units below the rated capacity.
¾During the year 2012-13, the monsoon failed and
rainfall in the region was at a historically lowest level.
Problem of slushy lignite was not encountered.
However, high sand contamination in the lignite posed
a problem in the quantity of lignite that can be handled
by the lignite conveyor thus lowering the load on the
units.
¾As the boilers are prone to slagging, water lancing
operation is being carried out periodically which is
unique to lignite fired Boilers. During such time, load
on the machine has necessarily to be reduced if on full
load, to facilitate lancing operation. Running of the
units at partial load will contribute for increased heat
rate.
¾The capability of the station is declared after
considering the power consumption of the linked mine
to a predictable extent. As the mining load varies
unprecedentedly, in order to maintain the load as per
schedule it becomes unavoidable to operate the units
below their rated capacity. With the draft Regulation
for Deviation Settlement Mechanism to replace the
existing UI regulations, the problem of low load
operation of the units merely to adhere to the
contracted schedule is bound to increase multifold.
¾The quality of Lignite from the pithead mines varies
from time to time. In order to avoid slagging in the
furnace and boiler furnace instability the generation of
the Unit has to be brought down resulting in operating
the Unit at part load which again has an adverse effect
on the heat rate.
¾Due to the capricious nature of the consistency in

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quantity and quality of the cut face of lignite, problem

of paucity of lignite due to constraints in mining front
may be encountered at any point of time and the
power station may have to operate the units on low
load. Therefore, when lignite mined at MINE-II the
linked Mine is insufficient, TPS-II will have to resort to
transfer from other Mines of NLC. Hence, while fixing
the heat rate norm, considering the capacity of Mine
alone may not be sufficient.
The Station Heat Rate of the previous years are tabulated
below
Gross Heat Rate
kCal/kWhr.
Year
Stage-1 Stage-2

2008-09 2939 2945

2009-10 2916 2893
2010-11 2894 2877
2011-12 2883 2880
2012-13 2875 2871

The performance of the unit at its best may not be a

true indicator of all the parameters at all times. Hence
a heat rate of at least 2930 kCal/kWhr may be
considered keeping in view the ageing factor of the
units and the fact that 4 years have elapsed since fixing
the norm of 2900 Kcal/KWhr.
Further, in the current Tariff period, there is no
provision to transfer the heat saved out of lower level
of oil consumption compared to norms to the heat of
lignite. It is requested that heat rate norm be
considered as a composite figure of the heat of the
primary fuel and the secondary fuel oil and the
Regulations framed accordingly

Barsingsar Thermal Power Plant:

o For BTTP, with CFBC Technology, many teething
problems are still experienced and are being sorted out
after much trials and experiments. Any forced outage
leads a minimum of 5 to 6 days of idle period for
attending works inside the boiler. This impacts SHR
seriously. Hence, Relaxed Norms on Station Heat Rate
may be extended with due considerations for CFBC
Boiler Units.

PAT HEAT RATE NORM NOT TO BE LINKED:

™ BEE fixed the PAT target arbitrarily and there is no

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scientific approach or study. The PAT targets are

fixed based on the extent of deviation of actual
Station Heat Rate from the design Station Heat
Rate. NLC furnished all the reasons and data for
large deviation of operating heat rate from design
heat rate. The operating norms for the Tariff
periods 2004-2009 & 2009-14 have been fixed by
the Commission after thoroughly analyzing all the
data and performance of the NLC owned old
power Stations viz. TPS-I & TPS-II (Stage-1 &
Stage-2).
™ In TPSI Expn., to achieve the target of 2948
kCal/kWhr Net Heat Rate under the PAT scheme
for TPS I Expansion, the plant will have to bring
down the Gross Station Heat Rate to 2696
kCal/kWhr. The Gross Station Heat Rate of the
Station in the best performance year of 2012-‘13
when all the contributing factors were most
favourable for maximizing the output of the units
was 2737 kCal/kWhr.
™ Despite the fact that the plant had achieved 90.23
% PLF during the year 2012-13 the heat rate was
only 2737 kCal/kWhr And even if such a level of
generation is achieved, GSHR reduction by 42
kCal/kWhr is not possible.
™ In TPSII, to achieve the target of 3148 kCal/kWhr
Net Heat Rate under the PAT scheme, TPS II will
have to bring down the Gross Station Heat Rate to
2841 kCal/kWhr. The Gross Station Heat Rate of
the Station in the best performance year of 2012-‘13
when all the contributing factors were most
favourable for maximizing the output of the units
was 2873 kCal/kWhr. With anticipated huge
capacity addition in the region in the next Tariff
Period and the uncertainty in the influencing
factors like monsoon, repetition of the same
performance as in 2012-13 may be next to
impossible. And even if such a level of generation
is achieved, GSHR reduction by 32 kCal/kWhr is
not possible. Also the stringent volume control
measures introduced by the Commission in the
proposed Deviation Settlement Mechanism, there
may be huge quantum of surrender by
beneficiaries which may lead to part load
operation resulting in increase in Auxiliary
Consumption and consequent increase in Net
Station Heat Rate. Hence, the PAT target shall not
be considered for Tariff purposes.

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D) State Sector (Generators /Transmission Cos./Distribution Cos./SEBs/SLDCs)

D.1 Pragati Power For gas based station, due to fuel issue and scheduling
Corporation Ltd issue, station heat rate suffers. Changes should be allowed
for heat rate correction on part load due to non scheduling
& fuel shortage.

D.2 Madhya Pradesh Power As per the prevailing norms SHR for existing stations are
Generation Co Ltd determined based on the past performance data. There is
a need to specify to interpret the past performance data so
as to arrive at achievable SHR. Any additional capital
allowed on account of efficiency improvement should also
be accounted for while deciding the SHR. The procedure
for determination of SHR based on the past performance
data needs to be specified for the reasons that various State
Commissions are fixing the Station Heat Rate by
interpreting past performance data in their own way and
fixing SHR norms which are not achievable.

D.3 Rajasthan Discom Power These norms need to be revised on actual basis.
Procurement. Our proposal is to be specify these norms based on actual
data with certain operating margins with the condition
that saving in cost due to better performance then norms
should be equally shared with the beneficiaries. In a way
moving towards performance based regulation. This has
been adopted by the Commission in respect of secondary
oil consumption in Tariff Regulation 2009.
D.4 Uttar Pradesh Power It has been observed that the CERC (Terms and
Corporation Ltd. Conditions of Tariff) Regulations 2009 does not mention
(UPPCL) any thing about the SHR of TPS where super critical
operation (i.e. operation above 221bar initial steam
pressure) is adopted in case of 660MW units at initial
pressure of steam of 270bar. In the case of super critical
operation of TPS of 660MW the efficiency of TPS increases
from 44% to 46% at super critical State of initial pressure of
steam. Therefore the maximum turbine cycle heat rate will
be lower and the "Minimum Boiler Efficiency" will be
higher. Therefore the maximum design heat rate
(kCal/kWh) for sub-bituminus coal and bituminus
imported coal will be lower for new power station in
comparison to what is provided in Regulation 26(ii) of
CERC (Terms and Conditions of Tariff) Regulations, 2009.
D.5 GRIDCO The SHR should be fixed as per the average of actual
figures achieved during the first four years of the last
Control Period or the design value whichever is lower.
In case of TTPS no relaxation should be allowed, instead it

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should be treated at par with other thermal stations as

massive R & M activity has been carried out.
It should also be viewed in light of the PAT scheme
implemented by the generating stations.
D.6 Government of Punjab, These norms need to be revisited based on actual data
Dept. of Power with certain operating margin with the condition that
saving in cost due to better performance than norms
should be shared with the beneficiaries. This has been
adopted by the Commission in respect of secondary oil
consumption in Tariff Regulations 2009. This will give way
to the Performance Based Regulations (PBR).
D.7 Tripura State Electricity A strict audit in respect of gas consumption vis-à-vis
Corporation Ltd. energy generated should be undertaken for earlier control
period and the norms strengthened accordingly.
Therefore, there is no need to provide any relaxation on
this account as because CGS is taking periodical
maintenance including replacement of damage spare
through infusion of huge expenditure.
D.8 Power Company of For every one percent improvement in the Station Heat
Karnataka Ltd. Rate, certain percentage increase in ROE may be allowed,
subject to the revision of normative Station Heat Rate to
Weightage Average Station Heat Rate i.e., Weightage
Average Station Heat Rate = (normative Station Heat Rate
+ Actual Station Heat Rate) / 2 will be considered as
normative gross station heat rate for tariff computation for
that year.
D.9 Power Trading The present CERC operation norms do not address
Corporation varying quantum of energy generation for coal based TPS
since the operation norms such as Station Heat Rate is
fixed. In the present scenario, Thermal Generating Stations
would need to operate in varying load (Availability Based
Tariff) to harness renewable energy and hydro potential to
the maximum extent and also due to shortage of domestic
coal and high cost of imported coal, which discoms are not
able to bear.
1. Specific issues for introduction of operation norms for
varying load (Availability Based Tariff)
a. Gross Specific Heat Rate (GSHR)
GSHR is the production Turbine Generation (TG)
heat rate and inverse of boiler efficiency. The TG heat
rate increase with decrease in load while the boiler
efficiency is not adversely affected by decrease in
load. Hence, a formula needs to be evolved for
varying GSHR. This has already been done both in
CEA operation norms for varying load (way back in
2000) and by Black & Veatch for 6x660 MW Hirma
TPS.
b. Boiler Efficiency
Boiler Efficiency needs to be adjusted for moisture

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and ash content for which the formula has been

devised in CEA operation norms for varying load
(way back in 2000), which has been incorporated in
REA guidelines for operations of TPSs. Imported coal
from Indonesia has very high moisture content to
bring down boiler efficiency.
c. Heat Rate Degradation
CERC has specified 1.065 Degradation Factor to
arrive at the GSHR based on design heat rate
guaranteed by the TG supplier. The actual heat rate
during operation differs from the guaranteed heat
rate due to following two factors:
• Variation in steam parameters and grid
frequency.
• Variation in operation period (TG heat rate
deteriorates as the operation period increases)
There is a need to allow a fixed small margin for the
first factor and a greater margin for the second factor,
the average of which is 2% as per Black & Veatch
recommendation for Hirma Project, as against 1.065
as per present Regulations. Accordingly, the
Degradation Factor needs to be reviewed so that
Discoms are not burdened. The Degradation Factor
will be higher for combined cycle gas turbine
stations.

d. GCV of coal
GCV is expressed on air dried basis (ADB) or as received
basis (ARB). Present CERC norms specify as fired basis
(AFB), which is different from ADB or ARB. Indonesian
coal is on ARB as GCV for ARB is low in comparison to
that for ADB. Also, CIL may not agree to price the coal on
ARB unless it is made mandatory. Therefore, since boiler
efficiency is related to fired basis, adjustment needs to be
made for ARB or ADB to arrive at GCV on a fired basis.
D.10 Bajaj Energy Pvt. Ltd. The operating norms of CFBC plants based on coal should
also be kept at par with CFBC plants based on lignite fuel
in respect of Station Heat Rate.
D.11 Chhattisgarh State In the CERC (Terms and Conditions of Tariff) Regulation
Power Distribution Co. 2009, Station Heat Rate has not been specified for plants
Ltd. using Super Critical Technology. Hence norms should be
specified for plants on technology basis. The norms for
other plants should further be tightened to increase the
level of efficiency in overall performance of the plant.
D.12 MP Power Management It has been observed that the CERC (Terms and
Company Ltd. Conditions of Tariff) Regulation 2009 does not mention
any thing about the SHR of TPS where super critical
operation is adopted in case of 660MW units and above.
In the case of super critical operation the efficiency will be

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expected to increase at super critical State of initial

pressure of steam. Therefore the maximum turbine cycle
heat rate will be lower and the "Minimum Boiler
Efficiency" will be higher. Therefore the maximum design
heat rate (kCal/kWh) for sub-bituminous coal and
bituminous imported coal will be lower for new power
station in comparison to what is provided in Regulation
26(ii). The norms should further be tightened to increase
the level of efficiency in overall performance of the plant.
D.13 Maharashtra State Power The existing norms of SHR are required to be improved
Generation Co. Ltd. besides sharing the gain/savings on account of heat rate
with the beneficiaries.
D.14 Maharashtra State It is submitted that so far none of the CGS have
Electricity Distribution declared/provided actual SHR of any of the stations in
Co. Ltd. (MSEDCL) any of the filings/reports. There is need for strengthening
the norms for SHR including transparency in
demonstrating actual SHR. CGS make huge profits in
normative SHR and hence there is no need of any
relaxation of norms for any specific stations unless agreed
upon by all beneficiaries/approved by Commission in
extra circumstances. Based on the actual past trend and
balance useful life of assets after considering Renovation &
Modernisation, if any, the Commission may decide
strengthened SHR norms.
D.15 Kerala State Electricity The heat rate norms may be specified based on the
Board (KSEB) performance data collected during the past. However, the
heat rate of the new plant may be fixed considering the
advancement in technology and manufacturers’
specifications.
D.16 Tamil Nadu Generation The relaxed norms allowed for specific stations also need
and Distribution to be tightened from CERC Regulations, 2009 based on
corporation limited actual of the past five years with an upper limit as per
(TANGEDCO) 2009-14 Regulation.
E) Private Sector (Generators/Transcos./Distribution Cos)
E.1 Calcutta Electric Significant part load operation is expected in the
Supply Corporation upcoming years on account of restrictive despatch
Limited (CESC Ltd.) instructions because of inadequate evacuation capacity /
lower demand or poor financial conditions of distribution
licensees or beneficiaries, fuel scarcity and fuel quality
related issues. Such part load operation will have negative
impact on station efficiency, particularly heat rate,
secondary fuel oil consumption and auxiliary energy
consumption. Therefore, Station Heat Rate norm may
kindly be fixed considering at least 8% margin over the
gross station heat rate guaranteed by OEM.
Station Heat Rate would also get deteriorated on account
of installation of equipment, like air cooled compressor
etc. which has become essential for plant operation.
Additional allowance in station heat rate may be given for

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such equipments.
Also appropriate consideration may be given to vintage of
the station while fixing the station heat rate norm. This is
to be done to encourage economic generation from older
power stations, avoiding significant capital investment,
which would have otherwise been required to replace
such generation assets.
E.2 BSES Rajdhani Power SHR being used for billing purpose in MYT 2009-14 is
Ltd. normative and there is already a provision of passing 50%
savings of secondary fuel to the beneficiaries. However,
there is a scope for passing on the benefit for savings of
coal to the beneficiaries. Further, each plant should be
benchmarked on the basis of actual performance in past
three years and, accordingly, the performance level on
year to year basis should be escalated.
E.3 Jaiprakash Power The variable cost should be passed though in tariff on the
Ventures Ltd. basis of actual SHR during the initial phase until the plant
stabilizes and thereafter on the basis of normative SHR. In
the initial phase of stabilizing of Plant (TPS), separate
norms (ideally actuals) should be provided for secondary
fuel consumption and the same should be passed through
in tariff on the same basis as primary fuel.
E.4 BSES Yamuna Power Comments shall be offered once actual data on SHR is
Limited available.
E.5 Association of Power • The approach of the Commission for computation of
Producers (APP) normative heat rate should be continued. However, it
should be based on the performance guarantee tests
results and not on the design heat rate as provided in
the OEM contract in view of the fact that the PG Test
heat rate is achieved by actual operations of the Units
with the actual coal received at site. The design heat
rate is estimated at ideal operating conditions and
therefore the difference with actual heat rate obtained
through PG test cannot be accommodated within the
6.5% margin.
• Operational margin over the design heat rate may be
reviewed and increased from 6.5% to 8%.
• Further, Commission should allow a sliding scale of
SHR to accommodate operation at below 80% PLF.
Commission should also fix a ceiling limit for SHR and
should facilitate planned closure of units having SHR
above that limit.
• Commission may consider introducing Annual Heat
Rate Degradation Factor (AHRDF) to address the issue
of degradation in heat rate over the plant life. The
Commission on advice of CEA could develop a model
for giving correction factor to the design heat rate based
on life expended already.

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• Further, the Commission may suitably define the

stabilization period and the corresponding relaxed
normative heat rate in the forthcoming Tariff
Regulations 2014-19.
• Heat Rate & Aux Power Consumption Norms based on
Unit capacity should be specified for the supercritical
Units.
• It is necessary to continue the relaxed heat rate norms
for specific stations as these capacities are still operation
worthy & may be operating on fuel outside the
designed band. Mechanism needs to be determined for
Heat Rate Compensation due to reasons beyond the
control of Generator, such as non-approval of alternate
coal procurement, non-availability of schedule from
procurers, etc. There should be suitable correction in
Heat rate in case of plants operating on blended coal.
• Coal GCV Degradation Allowance may be provided. It
is an established fact that there is a considerable GCV
difference between received coal and fired coal.
Imported coals exhibit predominant GCV loss during
stocking due to high Volatile Matter content.
• Additional SHR may be allowed if required for
installation of new technologies like Air cooled
condensers etc.
• Based on the current scenario of the operation of the gas
based plants the current norms for relaxation of 5%
over guaranteed heat rate is not adequate and should be
revised to10% at least.
E.6 Bhavnagar Energy Station Heat rate also has an impact on computation of
Company Ltd. energy charges. It is observed that actual Station Heat Rate
is at variance with the guaranteed heat rate provided by
OEM on account of different operating conditions and
variation in quality of fuel.
Computation of Station Heat Rate shall be computed
based on calorific value of fuel "as fired" with specific
tolerance from calorific value of fuel, "as received".
E.7 Torrent Power 1. Operating margin over the design heat rate for Gas-
based power plants needs to be reviewed and the same be
increased from current rate of 5% to 8% due to the
following:
a. Unit/Station Load Factor
b. Capacity degradation of machine
c. Fuel Consumption by Gas heating Facility.
d. Evaporative Cooling.
e. Inlet air cooling
f. Ambient temperature and pressure

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2. Further, the design heat rate criteria may be changed

from 100% MCR to 70% MCR which is based on likely
domestic gas allocation for gas based plants.
E.8 Lanco CERC should consider the deterioration in performance of
the Boiler due to aging and allow higher SHR for old
machines than the present one. Further, special
consideration should be given to the areas of heavy
rainfall and accordingly allowances should be made either
at handling loss level or the Station Heat Rate.
E.9 Alstom India Ltd. There is a need to shift the approach from Plant Heat Rate
to Unit Heat Rate for achieving the overall improvement
goals/performance of individual units. Tariff Regulation
should specify normative unit heat rate in the calculation of
variable cost of generation instead of station heat rate.
Further, Utilities should be mandated for efficiency
improvement. There is a need to review the normative
Station Heat Rate target from 2500 kCal/kWh to 2350
kCal/kWh or better.
Further, Utilities should be incentivized for
committing/achieving efficiencies better than normative
operational Unit Heat Rate. This incentive should be in the
form of an additional fixed cost indexed with the efficiency
improvement. Part of this incentive (50%) should also be
passed on the Utility to its employees as guaranteed benefit
which will encourage better O&M practices.
Further, Plant operating away from the proposed normative
parameters should be provided timeframe (typically 2 to 3
years) to modernize and enhance efficiency. Inability to do
so may result in inefficient capacity being penalized in the
fixed cost of generation suitably.
F) Other Organizations/Institutions/Banks/Investors
F.1 Federation of Indian The existing norm of 1.065 % of Designed Station Heat
Chambers of Rate (SHR) is subject to interpretation because many times
Commerce and the boiler, turbine and other major equipment are supplied
Industry (FICCI) by different OEMs and hence their guaranteed efficiency
parameters also vary. Further plants with same size,
configuration and technology are having different
normative SHR because equipment supplied come from
different manufacturers. In view of above, it is suggested
to notify only the max. Normative SHR for each size of
unit (operating in India) with different technology.
It is also suggested to derive methodology to compensate
the Developers on account of higher Heat rate due to part
load operations. In case of Part load operations,
mechanism needs to be determined for Heat Rate
Compensation due to reasons beyond the control of
generator, such as non-approval of alternate coal
procurement, non-availability of schedule from procurers,

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 Comments on CERC Approach Paper

z etc.,
There should be suitable correction in Heat rate in case of
plants operating on blended coal also In current
regulations, date of commissioning of the units was
considered for the purpose of arriving at normative
operating parameters. In case, Machine was ordered by
the generator based on norms prevailing on that date and
the unit was commissioned in next tariff period, generator
shall be constrained with operating the unit with revised
norms.
Hence the date of placing order on BTG manufacturer may
be considered for the purpose of arriving normative
operating parameters.

Coal GCV Degradation Allowance: It is an established fact

that there is a considerable GCV difference between
received coal and fired coal. Imported coals exhibit
predominant GCV loss during stocking due to high
Volatile Matter content.
G) Individual /Public Group/Any others
G.1 Shri R.B.Sharma The provision of an additional margin of 6.5% over the
gross station heat rate guaranteed by OEM in case of new
coal/lignite based stations is a luxury in the system.
Similarly, an additional margin of 5% over the gross
station heat rate guaranteed by OEM in case of new
gas/liquid fuel base CCGT Stations is also a luxury. This is
enough proof of inbuilt inefficiency in the system. Excuses
are given to perpetuate the inefficient operation and these
excuses are accepted also. It is high time that we should do
away with the practices of these margins for determination
of norms which inculcate the habit for inefficient
operation.

G.2 Shri Arun Kumar Dutta No data is available, however, the working of last 5 years
of station compared with other stations can help in
arriving at the reasonable Station Heat Rate. The fuel being
the most important factor, OEM must specify the optimum
Heat Rate for the station. This may be compared with the
actual SHR achieved to arrive at the truly reasonable SHR.

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