2016 (7) TMI 1649 - SC - Indian Laws

Levy of fuel surcharge adjustment (FSA) which is collected from the consumers in addition to fixed tariff for consumption of power - HELD THAT - Fuel surcharge is really a surcharge levied to meet increased cost of generation and purchase of electricity and the scope cannot be circumscribed by its nomenclature. Thus the formula in Regulation 45B and the FSA determined by the Commission would take into consideration various factors which result in the increased cost of generation and purchase of electricity. The appellants are directed to make the deposit along with interest; if no other rate is prescribed at the rate of 8 per cent per annum, and other charges for delay, as may be permissible to recover within a period of one month from today - Appeal dismissed.

Summary

Issues Involved:
1. Levy of Fuel Surcharge Adjustment (FSA)
2. Validity of Regulation 45-B under the Act of 1998 and the Act of 2003
3. Discrimination against agricultural sector
4. Inclusion of elements other than fuel cost in FSA
5. Procedural compliance in framing regulations
6. Validity of retrospective regulations

Detailed Analysis:

1. Levy of Fuel Surcharge Adjustment (FSA):
The primary issue revolves around the levy of FSA, which is collected from consumers in addition to the fixed tariff for power consumption. The concept of FSA was introduced by the Andhra Pradesh Electricity Reform Act, 1998, and further governed by the Electricity Act, 2003. The Andhra Pradesh Electricity Regulatory Commission (APERC) was empowered to fix tariffs and determine FSA through regulations.

2. Validity of Regulation 45-B under the Act of 1998 and the Act of 2003:
The appellants argued that Regulation 45-B of the 1999 Regulations, as amended in 2003, was ultra vires the provisions of Section 26(9) of the Act of 1998 and Section 62(4) of the Act of 2003. They contended that only fuel costs should be considered in FSA, excluding other charges. The court held that the Commission has the legislative power to prescribe the fuel surcharge formula, including various factors, and that Regulation 45-B is in consonance with Sections 61 and 62 of the Act of 2003. The formula for FSA is valid and not ultra vires.

3. Discrimination against Agricultural Sector:
The appellants challenged the exclusion of agricultural consumption from FSA, arguing it was discriminatory. The court found that differential treatment is permissible under Section 26(7) of the Act of 1998 and Section 62(3) of the Act of 2003, which allow differentiation based on consumer load factor, power factor, and other factors. The court upheld the exclusion of agricultural consumption from FSA until metering is complete, considering it a valid classification.

4. Inclusion of Elements Other than Fuel Cost in FSA:
The appellants contended that the FSA formula should only account for fuel costs. However, the court referred to previous judgments, including Rohtas Industries Ltd. and Pulak Enterprises, which allowed the inclusion of increased costs of generation and purchase of electricity under FSA. The court held that the formula in Regulation 45-B, which includes elements beyond fuel costs, is valid and in line with statutory provisions.

5. Procedural Compliance in Framing Regulations:
The appellants argued that the amended regulations were void due to non-compliance with Section 181(3) of the Act of 2003, which requires previous publication. The court found that Regulation 9/2004 was previously notified, and no suggestions for changes were received, indicating compliance with the statutory requirement.

6. Validity of Retrospective Regulations:
The appellants claimed that the Regulations of 1999 ceased to have effect after one year from the enactment of the Act of 2003. The court noted that the Commission had framed transitory regulations in 2004, adopting the existing regulations until new ones were notified. The court upheld the continuity and validity of the 1999 Regulations as amended in 2003.

Conclusion:
The court dismissed the appeals, upholding the validity of Regulation 45-B and the FSA determined by the Commission. The appellants were directed to make the required deposits along with interest and other charges within one month, allowing the respondents to take coercive steps for recovery if necessary.