B. S. A. SWAMY, J.

( 1 ) THE A. P. Electricity Regulatory commission by its order dated 8th february, 2002 in O. P. No. 1 of 1999 directed the H. T. Consumers with Captive Power plants (CPP) running in parallel with A. P. TRANSCO s Grid to pay grid support charges at 50% of the prevailing Demand charges for H. T. Consumers on the difference between the total capacity of CPP in KVA and the Contracted Maximum demand (CMD) in KVA with the licensee and all other sources of supply. In case of cpps exporting firm power to A. P. TRANSCO, the capacity, which is dedicated to such export, will also be additionally subtracted from the CPP capacity. Questioning the said order of the commission, the H. T. Consumers with cpps running in parallel with the a. P. TRANSCO Grid (hereinafter referred as cpps ), who are the appellants herein, filed these appeals before this Court under section 39 of the Electricity Reform Act, 1998 (hereinafter referred as reforms Act ). Sri K. Gopal Choudary addressing the arguments in these batch of appeals raised various grounds.

( 2 ) BEFORE considering the various issue that arise for consideration, we should keep in mind that in the beginning of 1990s the government of India decided to give up the monopoly enjoyed by governmental organisations with regard to generation distribution and supply of electricity and decided to invite private investments in the electricity sector to meet the ever-increasing demand for power in the country and to bridge the gap between rapidly growing demand for electricity and supply in the context of paucity of resources at their command. As considerable time is likely to take place in establishing the power projects and the shortage of power is so acute, the secretary, Ministry of Power, Government of India addressed D. O. No. 6/1/tariff/ captive Power/95, dated 09-10-1995 to all the Chief Secretaries to encourage cogeneration plants in the country (ie) industries to establish their own CPPs by pooling up their resources, by offering some incentives.

( 3 ) FOLLOWING the directions given by the ministry of Power, the Government issued g. O. Ms. No. 150, Energy (Power-I) department, dated 15-11-1995 permitting the industrial consumers to install captive generation sets subject to the conditions specified therein. This G. O. seemed to have been issued approving the action of the then state Electricity Board under Section 44 of the Indian Electricity (Supply) Act, 1948. Subsequently the Ministry of Power in its resolution No. A-40/95-IPC-I, dated 6th november, 1996 requested all the State governments to accord high priority for setting up of CPPs by the industries in their states and also encourage absorption of the available surplus power to be generated in a captive power plant in the State grid at a remunerative tariff, with the combined objectives of promoting better utilisation of previous energy resources in the industrial activities and creation of additional power generation capacity in the system itself.

( 4 ) AS per para 2 of the resolution, a cogeneration facility was defined as one, which simultaneously produces two or more forms of useful energy such as electric power and steam, electric power and shaft (mechanical) power etc. Cogeneration facilities due to their ability to utilise the available energy in more than one form, use significantly less fuel input to produce electricity, steam, shaft power or other forms of energy than would be needed to produce them separately. Thus by achieving higher efficiency, cogeneration facilities can make a significant contribution to energy conservation.

( 5 ) AS per para 3 of the resolution, the objectives underlying the policy is to achieve dual higher efficiency in fuel use in the industry as well as the availability of surplus electricity to the State grid, by combining power and heat generation for industrial use.

( 6 ) UNDER para 4 of the resolution it was proposed that the industry having cogeneration potential would be all

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