Arrangements in respect of controlled stations

-1 THE FIRST SCHEDULE. ARRANGEMENTS IN RESPECT OF CONTROLLED STATIONS. PART I. ASSUMPTION OF CONTROL. I. (1) The Board shall by notice in writing to the licensee fix a date (hereafter in this Schedule referred to as the date of control), being the first day of a year of account of the licensee and from such date licensee shall, except where prevented by causes beyond his control, be under obligation- (a) subject to such directions as the Board may from time to time give him, to keep the station at all times in good and substantial repair and condition and ready for use, together with adequate staff for operating, maintaining and controlling the station, and not to make any substantial alterations or renewals in, or remove any essential or substantial part of, the station without the consent in writing of the Board ; (b) to operate the station so as to generate such quantity of electricity with such units of plant at such rates of output and at such times, or to cease to generate electricity during such periods, as the Board may direct ; (c) to carry out as soon as may be practicable such reasonable extensions, alterations or renewals of the station or any part thereof as the Board may from time to time direct ; (d) to supply to the Board all the electricity generated at the station. (2) To enable a licensee to comply with any direction under sub-paragraph (1) requiring extension of the station or any part thereof for purposes of the Board, the Board may, if it considers it expedient and practicable so to do, offer to advance to him a loan upon such terms and conditions as it may deem proper and the licensee may accept the loan from the Board on the terms and conditions offered or may raise a loan from other sources or employ his own funds for the purpose of such extensions : Provided that notwithstanding anything contained in any law or in any mortgage, charge or instrument executed by the licensee, the loan so advanced by the Board and the interest thereon shall be a first charge on the extension and subject to any prior encumbrance shall also be charged on the undertaking and all the revenues of the licensee and no such loan shall be amortised in any way by the licensee : Provided further that if at the date of purchase of the station under this Act, or of the licensee's undertaking under the Jammu and Kashmir Electricity Act, S. 1997, the said principal or any part thereof remains unpaid though due, for redemption, or is not on that date due for redemption, then any sum payable by the purchaser as a percentage on account of compulsory purchase under this Act or the said Act shall be reduced by an amount which bears the same proportion to that sum as the amount of the said principal or part thereof remaining unpaid or not being due for redemption as aforesaid bears to the total of the ordinary, preference and debenture capital of the licensee and the loans advanced by the Board under this sub-paragraph. Explanation.-In this sub-paragraph, the expressions "ordinary capital", "preference capital" and "debenture capital" have the meanings respectively assigned to them in the Sixth Schedule. II. From the date of control the Board shall, except where prevented by causes beyond its control, be under obligation to supply to the licensee and the licensee shall be under obligation to take from the Board, the whole of the electricity required by the licensee for the purposes of his undertaking, except such quantity of electricity as the licensee may for the time being be entitled under paragraph III to purchase from a source other than the Board or as he may be generating in another station, not being a controlled station. III. Unless otherwise agreed between the Board and the licensee, the licensee shall not, where he has received a notice under paragraph I, purchase after the date of control any quantity of electricity from a source other than the Board : Provided that where on the date of the receipt of such notice the licensee is bound under any contract to purchase any quantity of electricity from some other source, he may, for a period not exceeding two years after the date of control or for such further period, if any, as the Board may allow, continue to purchase electricity under the said contract from such other source. IV. The Board shall pay to the licensee, whether or not any electricity is generated at the station, the costs ascertained in accordance with the provisions of the Eighth Schedule. V. The price to be paid by the licensee for electricity supplied by the Board shall be determined in the manner provided in the appropriate part of this Schedule. VI. The points at which electricity to be supplied under this Schedule shall be delivered by the Board and the licensee respectively shall, unless otherwise agreed between the Board and the licensee, be at the generating station, and the pressure of the supplies shall be such as the Board and the licensee may agree. VII. Where any licensee owns more than one controlled station- (a) such of the several controlled stations as are interconnected shall, for the purposes of this Schedule, be deemed to comprise a single controlled station and, unless the subject or context otherwise requires, the provisions of this Schedule shall be construed as if the word "combined" had been inserted before the word "station" or the words "generating station" wherever they occur ; (b) the electricity supplied at the several controlled stations by the licensee to the Board or by the Board to the licensee, shall each respectively be treated as single supplies ; (c) in the application of clause (a) of paragraph XII, the costs of production at each of the several controlled stations shall be separately ascertained, and in the application of clause (c) of the said paragraph- (i) the sum ascertained in accordance with clause (a) of paragraph I of the Eighth Schedule in respect of each of the several controlled stations shall be separately allocated between fixed costs and running costs ; and (ii) the sum of the several fixed costs and the sum of the several running costs shall be the fixed costs and the running costs respectively of the combined station ; (d) in directing the operation of the combined station under clause (b) of sub-paragraph (1) of paragraph I, the Board shall have regard to the nature and capacity of the licensee's transmission system inter-connecting the several controlled stations and to the requirements of the licensee at each of those stations. VIII. In the event of the licensee failing, except where prevented by causes beyond his control, to perform or continue to perform any obligation imposed upon him under this part, the Board may give notice to him in writing that on the first day of the licensee's next succeeding year of the account the generating station will be purchased by the Board, and on such day the Board shall purchase the station at price determined in accordance with the Fourth Schedule, and thereafter- (a) all the provisions of this Schedule except paragraph II and this paragraph shall, in relation to the licensee, cease to have effect ; (b) the Board shall supply the licensee with the electricity required by him under paragraph II at such price and on such conditions as the Board may determine. PART II. PRICE TO BE PAID FOR ELECTRICITY SUPPLIED BY THE BOARD UNDER PART I. IX. There shall be agreed between the Board and the licensee in respect of each month of the licensee's year of account- (a) the maximum capacity of the station, that is to say, the maximum capacity (expressed in kilowatts available for supply to feeders) of such plant and works appertaining to the generation of electricity at the stations as were available for reliable and regular commercial operation on the first day of the month, including the capacity of such plant and works as were temporarily out of commission ; (b) the number and size of units of plant and works forming part of the aforesaid plant and works, which ought properly to be deemed to be standby if the station were not a controlled station ; (c) the standby capacity of the station, that is to say, the number of kilowatts (expressed in kilowatts available for supply to feeders) by which the maximum capacity of the station would be reduced if the standby plant and works referred to in clause (b) were to be left out of account ; (d) the actual effective capacity of the station, that is to say, the number of kilowatts by which the maximum capacity exceeds the standby capacity. X. (1) The licensee shall be entitled to purchase from the station in each month at a price determined under paragraph XIII a number of kilowatts not exceeding the scheduled effective capacity of the station on the first day of that month as determined in sub-paragraph (2). (2) The scheduled effective capacity of the station shall be agreed between the Board and the licensee in respect of each month of the year of account, and shall be computed in the same manner as the actual effective capacity under paragraph IX, except that there shall be left out of account such units of plant and works, if any, forming part of the plant and works referred to in clause (a) of the said paragraph, as the licensee declares to be surplus to his requirements for the time being : Provided that the licensee shall not declare to be surplus to his requirements any such units of plant or works as were installed or were on order at the date of control or which were included in any previous computation of the scheduled effective capacity : Provided further that if as a result of the licensee declaring as surplus to his requirements any units of plant or works, the scheduled effective capacity is in respect of any month computed to be less than the maximum demand of the licensee on the station for the purposes of his own undertaking, then such units of plant or works and all further additional units of plant or works shall thereafter always be deemed to be surplus to the requirements of the licensee as aforesaid unless the Board decides otherwise. XI. Of the kilowatt-hours purchased by the licensee from the Board in each month, a number of kilowatt-hours not exceeding the number which bears the same proportion to the total number purchased as the scheduled effective capacity for the month bears to the maximum demand of the licensee on the Board in that month shall be purchased at a price determined under paragraph XIII ; the balance being purchased at a price determined under paragraph XIV : Provided that if the station is a hydro-electric station or if any unit of a combined station is a hydro-electric unit, the number of kilowatt-hours which the licensee shall be entitled to purchase as aforesaid shall be reduced by such amount, if any, as may be agreed between the Board and the licensee, having regard to the number of kilowatt-hours actually supplied in the month from such hydro-electric station or unit. XII. As soon as practicable after the end of a year of account- (a) there shall be ascertained in respect of that year the cost of production at the station in accordance with the provisions of the Eighth Schedule ; (b) there shall be deducted from the total sum ascertained in respect of that year under clauses (b), (c), (d), (e), and (f) of paragraph I of the Eighth Schedule, such proportion of the charges referred to in the said clauses as are wholly attributable to so much of the plant and works, if any, as has been declared by the licensee under sub-paragraph (2) of paragraph X to be surplus to his requirements, and the balance remaining after such deduction shall for the purpose of this Schedule be referred to as the scheduled overhead charges : Provided that in assessing the said proportion regard shall be had to the period during which any such plant or works were declared to be surplus as aforesaid ; (c) there shall be allocated between fixed costs and running costs in accordance with the provisions of the Ninth Schedule the sum ascertained in respect of that year under clause (a) of paragraph I of the Eighth Schedule and the amount of running costs divided by the number of kilowatt-hours supplied from the station in that year shall for the purposes of this Schedule be referred to as the running charges component ; (d) there shall be ascertained in respect of that year an amount (in this schedule referred to as the scheduled fixed works costs) calculated from the expression, A -- x B C the amount of fixed costs ascertained in respect of the year under clause (c) ; B = the sum of the scheduled effective capacities for each month of that year ; C = the sum of the actual effective capacities for each month of that year. XIII. The licensee shall pay to the Board in respect of each month of the year of account for the electricity purchased under paragraphs X and XI- (a) in respect of kilowatts, an amount equal to one-twelfth of the sum of the scheduled overhead charges and the scheduled fixed works costs ; (b) in respect of kilowatt-hours, a sum found by multiplying the number of kilowatt-hours supplied by the running charges component : Provided that if in any year of account the station for any reason ceases to generate electricity for one thousand hours or more, then for the purposes of ascertaining the running charges component and the scheduled fixed works costs under clauses (c) and (d) respectively of paragraph XII- (i) the said clause (c) shall be construed as if there were substituted for the words "that year" in both places where they occur, the words "the most recent year of account in which the station did not cease to generate electricity for one thousand hours or more" and as if to the said clause the following proviso were added, namely : " provided that so much of the said sum as is represented by the cost of fuel shall be adjusted to take account of the cost which would have been incurred had that fuel been consumed at the average prices prevailing in the actual year of account." (ii) in evaluating the expression contained in the said clause (d) the letter C shall be deemed to be equal to the sum of the actual effective capacity for each month of the most recent year of account in which the station did not cease to generate electricity for one thousand hours or more : Provided further that if in any year of account there exist in the station any units of plant or works which have been declared by the licensee under sub-paragraph (2) of paragraph X to be surplus to his requirements in that year, there shall be added to the running charges component in respect of that year the amount, if any, by which that part of the said component attributable to the cost of fuel is less than ninety per centum of the corresponding part of the running charges component in respect of the year of account immediately proceeding that in which the earliest installed of the said units of plants or works first came into commercial operation in the station, and in ascertaining the corresponding part as aforesaid, the fuel consumed shall be deemed to be of the same average quality and to be consumed at the same average cost per ton as the fuel consumed in the year of account : Provided further that if in respect of any month of the year of account any units of plant or works previously declared by the licensee as aforesaid to be surplus to his requirements are for the first time taken into account in assessing the scheduled effective capacity for that month, then in addition to the payment referred to in clause (a) the licensee shall pay to the Board a sum equal to any sums previously paid by the Board to the licensee on revenue account (in respect of any period prior to the date on which the said units of plant or works came into commission) by way of interest, depreciation, testing and tuning up expenses attributable to the said units of plant or works, and the sum to be paid as aforesaid shall become due in one or more instalments and at such time or times as the Board may direct. XIV. The price payable by the licensee to the Board for all electricity supplied by the Board to him in excess of the quantities referred to in paragraphs X and XI shall be the Grid Tariff. XV. The licensee shall have the right at any time, on giving to the Board prior notice in writing expiring at the end of any year of account, to purchase from the Board at the Grid Tariff the whole of the electricity supplied to him by the Board thereafter : Provided that the Board in those circumstances may make it a condition that the licensee shall, until the date on which the scheduled effective capacity of the station becomes nil, pay to the Board in respect of each month in addition to the Grid Tariff one-twelfth of such proportion as the Board may fix of the annual charges by way of interest and depreciation which would have been payable to the Board in respect of the year of account had the said notice not been given : Provided further that in assessing the scheduled effective capacity for the purposes of the first proviso all units of plant or works which may have been under this Schedule declared or deemed to be surplus to the requirements of the licensee at the date of the expiration of the said notice and all additional units of plant or works shall after that date always be deemed to be surplus to the requirements of the licensee : Provided further that after the expiration of the said notice the licensee shall not be entitled any time to purchase electricity from the Board at the price ascertained under paragraph XIII. PERMANENT CLOSING DOWN OF -4 CONTROLLED ST4TIOS. XVI. The Board may give the licensee not less than six month's notice in writing expiring at the end of any year of account that from the first day of the next succeeding year of account it will not again direct the licensee to generate any electricity in the station, and upon that date (hereinafter in this Schedule referred to as the date of closing down) the station shall be permanently closed down. XVII. From the date of closing down paragraphs I, IV and VIII shall, in relation to the station, cease to have effect, and on receipt of the notice under paragraph XVI the licensee shall have the option (to be exercised by a date not later than three months prior to the date of closing down) either- (a) (i) to sell the station at any time after the date of closing down, and (ii) to purchase the electricity supplied to him by the Board at the Grid Tariff, or (b) (i) to require the Board to purchase the station or at the option of the licensee, the undertaking of the licensee at the date of closing down at a price determined under the Fourth Schedule, and (ii) to purchase the electricity supplied to him by the Board in accordance with the provisions of Part II as modified by paragraph XVIII : Provided that where the station cannot be severed from the distributing system of the licensee or where the severance of the station from the distributing system of the licensee is likely to affect prejudicially the interests of the licensee, the licensee shall be entitled to demand that the Board shall purchase his entire undertaking and on such demand being made the Board shall purchase the entire undertaking of the licensee. Any question arising under the proviso to this paragraph shall be referred to arbitration under section 72. XVIII. Where a licensee exercises his option under paragraph XVII in terms of clause (b) thereof, the Board shall comply with the requirement to purchase the station under sub-clause (i) of that clause, and in applying the provisions of Part II to the purchase by the licensee of electricity supplied to him by the Board,- (a) the station shall, notwithstanding that it has been permanently closed down, be deemed to remain a controlled station in operation but to be such a station which had ceased to generate electricity for one thousand hours or more during each year of account. (b) clause (a) of paragraph IX shall be construed as if the following were substituted therefor, namely :- "(a) the maximum capacity of the station, that is to say, the maximum capacity (expressed in kilowatts available for supply to feeders) of such plant and works appertaining to the generation of electricity at the date of closing down as would have been available for reliable and regular commercial operation on the first day of each month, had the station not been closed down under Part III and had no replacement of any major item of such plant or works been carried out ;" (c) clause (a) of paragraph XII shall be construed as if the following were substituted therefor, namely :- "(a) there shall be ascertained in respect of the year of account such annual charges by way of interest and depreciation attributable to the assets purchased by the Board under Part III as would have resulted from the application of clauses (e) and (f) of paragraph I of the Eighth Schedule had those assets remained in the ownership of the licensee ;" (d) clause (b) of paragraph XII shall be construed as if the reference therein to clauses (b), (c) and (d) of paragraph I of the Eighth Schedule were omitted ; (e) there shall be added to the sum payable by the licensee to the Board under clause (a) of paragraph XIII in each month of the year of account a sum equal to one-twelfth of the amount calculated from the expression- A X B ----- where- C A = that part of the scheduled overhead charges payable by the licensee to the Board in respect of the most recent year of account during which the station did not cease to generate electricity for one thousand hours or more, which relates to the items referred to in clauses (b), (c) and (d) of paragraph I of the Eighth Schedule ; B = the sum of the scheduled effective capacities for each month of the year of account ; C = the sum of the scheduled effective capacities for each month of the most recent year of account aforesaid. PART IV. PURCHASE BY BOARD OF CONTROLLE~~~~~~I~R,~~ NOT TO BE CLOSED DOWN. XIX. Where in respect of any month (and hereinafter in this Schedule referred to as the relevant month), the scheduled effective capacity of the station is computed under paragraph X to be less than one-half of the actual effective capacity of the station, the Board may give to the licensee six month's notice in writing that on the first day of the year of account next following the date of expiration of such notice the station will be purchased by the Board. XX. Notwithstanding anything contained in paragraph X, in computing the scheduled effective capacity for purposes of paragraph XIX there shall be left out of account all such units of plant and works as would not reasonably have been required by the licensee for purposes other than supply to the Board had the station not been a controlled station. XXI. Where a notice under paragraph XIX has been served by the Board on the licensee, the Board shall purchase the station or where a severance of the station from the distributing system of the licensee is not possible or is likely to affect prejudicially the interest of the licensee and the licensee so requires, the entire undertaking of the licensee at the date specified in the notice and at a price determined under the Fourth Schedule. XXII. From the date of purchase of the station or at the option of the licensee the undertaking of the licensee under paragraph XXI the provisions of paragraphs I, IV and VIII shall, in relation to the station, cease to have effect, and the licensee shall be required to purchase the electricity supplied to him by the Board in accordance with the provisions of Part II as modified by paragraph XXIII. XXIII. In applying the provisions of Part II to the purchase by a licensee whose station has been purchased under this part of electricity supplied to him by the Board,- (a) the station shall, notwithstanding that it has been purchased by the Board, be deemed to remain a controlled station ; (b) clause (a) of paragraph XII shall be construed as if the reference therein to the provisions of the Eighth Schedule excluded a reference to clauses (b), (c) and (d) of paragraph I of that Schedule and as if the following proviso were added to the said clause (a), namely :- " Provided that the annual charges to be included in accordance with clauses (e) and (f) of paragraph I of the said Schedule shall be such as would have resulted had the assets purchased by the Board under Part III remained in the ownership of the licensee" ; (c) clause (b) of paragraph XII shall be construed as if the reference therein to clauses (b), (c) and (d) of paragraph I of the Eighth Schedule were omitted ; (d) there shall be added to the sum payable by the licensee to the Board under clause (a) of paragraph XIII in each month of the year of account a sum equal to one-twelfth of the amount calculated from the expression- A X B ----- where- C A = that part of the scheduled overhead charges payable by the licensee to the Board in respect of the last year of account in which the station was in ownership of the licensee which relates to the items referred to in clauses (b), (c) and (d) of paragraph I of the Eighth Schedule ; B = the sum of the scheduled effective capacities for each month of the year of account ; C = the sum of the scheduled effective capacities for each month of the said last year of account.