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TMI Blog2003 (10) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.12.2001 of Maharashtra Electricity Regulatory Commission (for short 'the Commission'). 2. The Tata Power Company Ltd. (for short 'TPC') is a generating company within the meaning of Sub-section 4A of Section 2 and a bulk licensee within the meaning of Sub-section (3) of Section 2 of the Electricity (Supply) Act, 1948. An agreement was arrived at between Maharashtra State Electricity Board (for short 'MSEB') and TPC in or about March, 1985, whereby TPC was provided 300 MVA standby facility from MSEB and it was further agreed that in view of the growing requirement of the city of Bombay, the said standby facility would stand enhanced by a quantum of 50 MVA per year. This standby facility increased to 550 MVA by the year 1990 and payment for the same was to be made irrespective of the fact whether electricity was drawn or not and if electricity was drawn, actual payment for the same was to be made over and above the standby charges. In the year 1990, it was agreed that the annual increase in the standby facility would no longer be operational and henceforth TPC would be entitled to avail of and pay for the standby facility of only 550 MVA. This agreement w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75 crores to ₹ 30 crores per month with effect from 1.12.1998. The TPC then gave a notice dated 30.9.1998 to BSES of its intention to enhance the charges for the standby facility of 275 MVA provided by it from ₹ 3.5 crores per month to ₹ 15.125 crores per month with effect from 1.12.1998. The notices were given under the third proviso to para 1 of Sixth Schedule to Electricity (Supply) Act, 1948, which lays down that licensee shall not enhance the charges for the supply of electricity until after the expiry of a notice in writing of not less than sixty clear days of its intention to so enhance the charges. On account of the notice given by TPC for increasing charges of standby supply of 275 MVA, a dispute arose and a meeting was convened on 4.3.1999, wherein the Deputy Chief Minister, Government of Maharashtra and representatives of both the sides were present. The Deputy Chief Minister though advised both the parties to settle the issue amicably between themselves without referring to the Government but at the same time issued certain directions, namely, BSES should share ₹ 9 crores out of ₹ 22 crores additional standby charges levied by MSEB upon TPC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges for standby facility of 275 MVA provided to it by TPC and the petition was registered as Case No. 7 of 2000. On 5.12,2000, the Government of Maharashtra informed TPC and BSES that its earlier order dated 223.2000 is being put on hold till the decision of the Commission is given. 7. After considering the submissions made by the representatives for the parties, the Commission decided the petition filed by BSES by the order dated 7.12.2001. The main part of the order was written by two Members of the Commission who directed as under: 1. BSES shall make payment of ₹ 77.06 crores together with interest thereon at the rate then applicable with effect from 1.4,2000 to TPC within four weeks from the date of the order for the year 1999-2000. While making, payments due credit shall be made for the amounts paid by them. 2. The TPC shall, in turn, pay the balance amount remaining out of ₹ 363 crores due as standby charges together with interest due thereon at the rate then, applicable to MSEB for the year 1999-2000 within a week thereafter and close the matter so far as the year 1999-2000 is concerned. 3. Based on the principles outlined in the order, calculation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emaining 20 per cent of amount of arrears shall be paid by TPC to MSEB. The question of interest on the amount of arrears has been left open to be considered by the Commission. 10. The TPC in its appeal has assailed the order of the High Court in remitting the matter back to the Commission for de novo consideration. Shri F.S. Nariman, learned senior counsel for TPC has submitted that the dispute regarding sharing of standby charges for providing 275 MVA standby facility to BSES by TPC is not an issue of tariff, but is a dispute relating to sharing or apportionment of the charges being paid by TPC to MSEB for providing the former with a standby facility of 550 MVA and, therefore, it does not come within the purview of the Commission under Sub-section (1) of Section 22 of the Act. It has been urged that under the terms of the licence granted by the Government to BSES and as amended in 1992, the Government continues to have the jurisdiction to decide any kind of dispute. The Maharashtra Government had decided the dispute vide order dated 22.3.2000 and when the powers under Section 22(2)(n) of the Act were conferred upon the Commission on 27.10.2000, there was no existing dispute be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings back to the Commission for de novo consideration is perfectly justified and calls for no interference. 12. In order to appreciate the contention raised by the learned counsel for the parties, it is necessary to briefly examine the provisions of the Act. The rapidly growing demand for energy brought about by economic liberalization has created enormous problems. To overcome these problems and other issues facing the power sector, the Government of India organized two Conferences of Chief Ministers to discuss the whole gamut of issues in the power sector and the outcome of these meetings was the adoption of the Common Minimum National Action Plan for Power. Under this action plan it was considered necessary to create a Regulatory Commission as a step to arrest deteriorating condition of the State Electricity Boards and to make plans for the future developments. The Administrative Staff College, Hyderabad to whom the Ministry of Power assigned the task of studying the restructuring needs of the system, strongly recommended the creation of independent Electricity Commissions, both at the center and the States to give effect to the aforesaid recommendations. The Electric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be, in a State (hereinafter referred to as the tariff), shall be subject to the provisions of this Act and the tariff shall be determined by the State Commission of that State in accordance with the provisions of this Act. [Provided that in State or Union territories where Joint Electricity Regulatory Commission has been constituted, such Joint Electricity Regulatory Commission shall determine different tariff for each of the participating States or Union territories.] (2) The State Commission shall determine by regulations the terms and conditions for the fixation to tariff, and in doing so, shall be guided by the following, namely:- (a) the principles and their applications provided in sections 46, 57 and 57A of the Electricity (Supply) Act 1948 (54 of 1948) and the Sixth Schedule thereto; (b) in the case of the Board or its successor entities, the principles under Section 59 of the Electricity (Supply) Act, 1948 (54 of 1948); (c) that the tariff progressively reflects the cost of supply of electricity at an adequate and improving level of efficiency; (d) the factors which would encourage efficiency:, economical use of the resources, good performance, optimum inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Any generating company proposing to enter into any agreement for supply of electricity between the generating company and any buying party shall get the approval of the Commission for the tariff before entering into such contracts. 78. Utilities, who are required to get their tariff approved by the Commission, shall evolve tariff proposals based on the terms and conditions as may be notified by the Commission and shall submit the same for approval, in accordance with the procedure prescribed by the Commission. 79. All petitions for approval of tariff (generation, transmission, distribution and supply) and terms and conditions of supply shall be made strictly in accordance with regulations and procedures as may be prescribed by the Commission and shall also be in conformity with the requirements relating to petitions as prescribed in Chapter II of these Regulations. 80. The Commission may approve the proposed tariff on such stipulations as may be considered appropriate and as may be specified in the Order. 82. The utilities concerned shall publish the tariff as approved by the Commission in the manner as may be prescribed. The tariff so published shall be in force fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commission is an offence which is punishable under Section 45 of the Act. The provisions of the Act and Regulations show that the Commission has the exclusive power to determine the tariff. The tariff approved by the Commission is final and binding and it is not permissible for the licensee, utility or any one else to charge a different tariff. 17. There is a sound logic for conferment of such a power on the Electricity Regulatory Commission. Hitherto the supply of electricity was being made by only one body, namely, State Electricity Boards which being an instrumentality of the State and functioning under the control of the State Government were not likely to enhance the tariff in an exorbitant or arbitrary manner. In fact, Electricity Boards of many States in the country were running on huge losses. The Electricity Regulatory Commissions Act, 1998 has been enacted to enhance the generation of electricity and improve efficiency by bringing in private operators. If a licensee (who may be private operator) after getting the licence for supply of electricity in a particular area increases the tariff arbitrarily, the consumers will have no option but to pay the same. In order to gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under Section 22 of the Act. This legal position is also reflected by Section 29 of the Act which confers an overriding power and clearly lays down that notwithstanding anything contained in any other law the tariff for supply of electricity, wholesale, bulk or retail shall be subject to the provisions of the Act and shall be determined by the State Commission. This clearly ousts the jurisdiction of any other authority to determine the tariff. It may be noted here that the Act came into force on 25.4.1998 and Maharashtra Electricity Regulatory Commission was formed on 5.8.1999. Therefore, it is not possible to accept the contention of Shri Nariman that the State Government had the authority or jurisdiction on 22.3.2000 to determine or quantify the charges which BSES had to pay to TPC under the terms of the license granted to the former as this was subsequent to the formation of the Maharashtra Electricity Regulatory Commission. 19. Shri Nariman has submitted that TPC gave a notice on 30.9.1998 of their intention to enhance the charges of standby facility provided to BSES from ₹ 3.5 crores to ₹ 15.125 crores per month and this notice having been given under Sixth Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to enter into such an exercise under Section 22 of the Act. The submission proceeds on an assumption that the dispute relates to sharing of standby charges. In fact, the whole case of BSES is that they are under no obligation to share the charges which are being paid by TPC to MSEB for providing them with standby facility. It may be noted that the standby facility of 300 MVA was provided to TPC in the year 1985 which gradually rose to 550 MVA in the year 1990. The licence of BSES was amended in 1992 whereunder for the first time it was provided that they should interlink with the system of TPC and ultimately their systems were interlinked on 14.2.1998 in pursuance of the order passed by the Government of Maharashtra on 19.1.1998. The question of payment of standby charges by BSES to TPC has, therefore, arisen for the first time in 1998 which is almost 13 years after TPC started paying standby charges to MSEB. In substance, the dispute is what should be paid by BSES to TPC for the standby facility provided by it. The strict and narrow interpretation sought to be placed by the learned counsel so as to oust the jurisdiction of the Commission cannot be accepted us it will defeat th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out. 22. The contention of Shri Nariman that in view of the language used in the order dated 5.12.2000, the Government's earlier order dated 22.3.2000 stood revived after the decision of the Commission, has hardly any merit. If such a contention is accepted, it would lead to queer results as after the decision of the Commission two conflicting and contrary orders viz., the order of the State Government dated 22.3.2000 and the order of the Commission would come into force. This can never be the intention of the State Government. The effect of the order dated 5.12.2000 was that the earlier order dated 22.3.2000 would no longer be operative and the decision of the Commission would govern the situation. Even otherwise as discussed earlier, after the enforcement of the Act it is the Commission which has the jurisdiction to decide the controversy and not the State Government. 23. Several reasons have been given by the High Court for remitting the matter to the Commission for a de novo consideration. The Commission devised a formula for determination of the charges for standby facility which was to be paid by BSES to TPC. Both the sides complained before the High Court tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrangement made by the High Court, whereby it has been directed to pay 50 per cent of the standby charges that are payable by TPC to MSEB for its standby facility of 550 MVA. Shri Kapil Sibal, learned senior counsel for BSES, has submitted that the State Government had, on the basis of the recommendation made by the Committee, passed an order on 19.1.1998 directing BSES to pay ₹ 3.5 crores per month to TPC when the liability of TPC to MSEB was ₹ 24.75 crores per month. This shows that the State Government did not apportion the liability of BSES as half of that of TPC. He has also submitted that TPC sells 35 per cent of the power generated by it to BSES and consequently a portion of this burden of ₹ 24,75 crores which TPC is liable to pay to MSEB is passed on by it to the consumers of BSES. Therefore, BSES cannot be saddled with liability to pay half of the amount only on the ground that it has been provided with a standby facility of 275 MVA which is half of the standby facility provided by MSEB to TPC. Learned counsel has also submitted that at best there can be some kind of a sharing on the amount which TPC has to pay to MSEB over and above ₹ 24.75 crore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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