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TMI Blog2019 (5) TMI 1984X X X X Extracts X X X X X X X X Extracts X X X X ..... standby charges for aforesaid purchase were factored into the tariff charged from its retail customers. The standby charges to the extent of supply were borne by BSES/REL for optimum supply from TPC when interconnectivity was provided at Borivali point as per the Government order. The dispute arose between TPC and BSES/REL as to whether BSES/REL entitlement to draw 275 MVA from TPC in the case of outage and failure of electricity supply, the charges which were required to be paid were over and above the charges that would be paid for energy actually drawn. The main principles on the basis of which Agreement was to be reached between TPC and BSES/REL were settled. As per clause 2 of the Principles of Agreement, BSES/REL had to pay to TPC for 220 KV interconnection at Borivali at Rs.3.5 crores per month. The parties had agreed to cooperate in order to ensure that Government order dated 19.1.1998 is implemented in the spirit of it. A detailed power supply agreement was to be entered into by 21.4.1998. The agreement could not be executed as consensus with respect to several aspects could not be reached - The power was conferred upon the MERC vide notification dated 27.10.2000 under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Abdul Nazeer For the Appearing Parties : Mr. Gopal Jain, Sr. Adv.,Ms. Ruby Singh Ahuja, Adv.,Ms. Deepti Sarin, Adv.,Mr. Parag Kabadi, Adv.,Mr. S. Doijode, Adv.,Mr. Sanjeet Ranjan, Adv.,Mr. Saurav Kumar, Adv.And Mrs. Manik Karanjawala, AOR , Mr. Manpreet Lamba, Adv.,Ms. Priyal Modi, Adv.,Mr. Ramanuj Kumar, Adv.,M/s Cyril Amarchand Mangaldas,Ms. Ramni Taneja, Adv.,Mr. Anil Shrivastav, AOR And. Mr. Hasan Murtaza, AOR JUDGMENT Arun Mishra, J . 1. The appellant Tata Power Company (in short the TPC ) is a distribution licensee supplying electricity to the entire city of Mumbai, whereas BSES/Reliance Energy Limited (in short REL ) is a distribution licensee supplying electricity only in the suburbs of Mumbai. Prior to 1998, the TPC was the only generator of the electricity supplying electricity to BSES for further supply to BSES customers. The TPC had 108 customers in the entire city of Mumbai. The tariff payable by BSES to TPC included a component of standby charge. The entire standby charges paid by TPC to Maharashtra State Electricity Board (for short the MSEB ) were being recovered by TPC from its customers through its tariff. Due to change in shareholding pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing percentages for the respective years were borne by BSES/REL which in turn were factored into tariff and charged by BSES/REL to its retail customers. 5. Initially, BSES was permitted to set up its generating plant at Dahanu to generate 500 MW (550 MVA approximately). There was a condition that it would achieve interconnection with the supply of TPC at a point known as Borivali Interconnection Point in case there was any outage of BSES generation. It could draw upon the power supplied by the TPC. The charges for such interconnections were to be determined. On 30.5.1992, a notification was issued amending the BSES license. A new clause 7B was introduced for providing aforesaid interconnectivity. Provisions of clause 13A were also amended to authorise the State Government in the event of a dispute to decide the same. On 29.6.1992, a meeting was held between TPC and BSES and it was agreed that interconnection would be provided at Borivali GIS switching station to take care of emergencies in BSES 220 KV system. The TPC already have arrangements with MSEB wherein standby capacity is provided by MSEB to TPC in case of emergencies in TPC system. Standby capacity to BSES may be provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Committee: (i) the generation of TPC and MSEB; (ii) the electricity supplied by TPC on BSES/ REL as a consumer. (iii) TPC s standby supply from MSEB; (iv) Charges paid thereof by TPC; (v) TPC s and BSES/REL s financial position; (vi) That standby was being supplied for the stability of the Greater Mumbai Grid. 8. On 17.12.1997, TPC contended that it was fully capable and willing to supply standby to BSES for its Dahanu plant and TPC should, therefore, be billed only for 275 MVA standby facility for their consumers other than BSES. The Government of Maharashtra issued an order on 19.1.1998, following is the relevant portion of the said order: it has come to the notice of the Government that due to dispute on commercial terms between BSES and TEC, interconnection is not established at Borivali even though technical arrangements are ready. Similarly, additional electricity generated at Dahanu is being sold to the Western Regional Grid through MSEB s Biosar Interconnection. As a result, the government's main objective that electricity generated at Dahanu should be used within the BSES area of supply has not been met and BSES license conditions are v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 KV Borivli is established. (6) The interconnection between MSEB and BSES at Boisar will be opened out. (7) BSES shall use this interconnection at Borivali fully for the standby type of service. (8) Both the parties have agreed to cooperate in order to ensure that the orders of the Government dated 19011998 are implemented in the spirit of it. (9) A detailed Power Supply Agreement on a mutually agreed basis incorporating the above will be executed by 21st of April, 1998 . (emphasis supplied) Though the aforesaid principles of the agreement were entered into between the parties, for one reason or the other, no agreement has been executed between them. 10. The TPC under the Principles of Agreement dated 31.1.1998 was bound to supply standby power as and when required by BSES/REL. Whether the TPC was drawing from MSEB or not is immaterial. The agreement of BSES was with TPC, not with MSEB. The agreement between TPC and BSES was independent than the agreement between TPC and MSEB. 11. Even after providing the standby facility of 275 MVA to BSES/REL, TPC still enjoyed the standby facility of 550 MVA from MSEB. The TPC entitlement to avail 550 MVA standby facil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harge was already made by TPC from its customers as on September 1998. By demanding a sum of Rs.15.125 crores per month from BSES/REL, TPC was attempting to demand an additional sum of approximately Rs.11.625 crores per month from BSES/REL under the guise of standby charges instead of demanding a pro-rata amount of the incremental standby charges of Rs.2 crores. 14. TPC issued notice dated 30.9.1998 under Schedule VI to the Electricity (Supply) Act, 1948 to the Government of Maharashtra proposing revision of its tariff and other matters. It was indicated in the notice that it would pay only Rs.181.5 crores per annum and remaining should be the liability of BSES/REL. It has also been contended on behalf of TPC that other revision in tariff had not been proposed by TPC which would otherwise have needed an increase of 6 percent on all consumers in Mumbai. It served a notice on BSES/REL demanding the aforesaid charges of 35 percent of the component which was purchased by BSES/REL as a consumer. The standby charges used to be paid and otherwise included in the tariff. BSES/REL has received 35 percent of the energy supplied from TPC as a consumer and for the same, TPC was recovering a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2:1 i.e., TPC paying 2/3rd and BSES/REL paying 1/3rd, while Technical Member held BSES/REL should bear 23 percent while TPC should bear approximately 77 percent. 18. In view of the divergence of opinion, the matter was referred to the third Member being Judicial Member, who agreed with the conclusion of the Technical Member that BSES/REL should bear 23 percent of the standby charges. In view of the majority judgment, the APTEL passed an order dated 20.12.2006, acknowledging the majority view of the Judicial Member and the Technical Member and directed that 23 percent of the standby charges for the period in question should be borne by BSES/REL and balance should be borne by TPC and further directed refund of the excess amount that was deposited by BSES/REL pursuant to the interim orders passed. The MERC in the appeal has acknowledged that TPC has withdrawn a sum of Rs.24.75 crores from its customers through electricity tariff and an additional sum of Rs.3.5 crores per month by way of standby charges from BSES/REL did not give credit for the said sum in the computation of standby charges to the extent of 23 percent held to be payable by BSES/REL. The appeal of BSES/REL in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the objects of the Act of 1998, in particular, the mandate of Section 29(3) which is extracted hereunder: 29. Determination of Tariff by State Commission. (3) The State Commission, while determining the tariff under this Act, shall not show undue preference to any consumer of electricity, but may differentiate according to the consumer s load factor, power factor, total consumption of energy during any specified period or the time at which the supply is required or the geographical position of any area, the nature of supply and the purpose for which the supply is required. 20. It was further urged that the prayer was made by BSES/REL before the MERC to fix the standby charges payable by BSES/REL (complainant) to the TPC (respondents). Its liability would be more than Rs.3.5 crores per month. TPC is paying Rs.363 crores as standby charges to MSEB. On principles of parity and proportionality, the BSES/REL should pay for 275 MVA as the quantum of 275 MVA standby is out of the same block of 550 MVA standby facility given by MSEB. The TPC and BSES/REL should share in the ratio of 50:50. The APTEL has not followed the decision of this Court in BSES Ltd. v. Tata Power Co. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made available to consumers. Any generator of electricity has to have some alternate arrangement to fall back upon in the event of its generating machinery coming to a halt. The standby arrangement for 550 MVA made by TPC was for the purpose that in the event its generation fell short for any reason, it will be able to immediately draw the aforesaid quantity of power from MSEB. Similarly, the arrangement entered into by BSES with TPC ensured the former of immediate availability of 275 MVA power in the event of any breakdown or stoppage of generation in its Dahanu generation facility. Heavy investment is required for generation of power. For this kind of a guarantee and availability of power, TPC had to pay charges for the same to MSEB. This payment was in addition to the charges or price which TPC had to pay to MSEB for the actual draw of electrical energy. The same is the case with BSES qua TPC. The charges paid for this kind of an arrangement whereby a fixed quantity of electrical energy was guaranteed to TPC and BSES at their desire, is bound to constitute a component of the price which they (BSES and TPC) would be charging from their consumers towards the cost of the electric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition has undergone a complete change with the enforcement of the Electricity Regulatory Commissions Act, 1998. In view of Section 29 of the Act, the tariff for intra-State transmission of electricity and tariff for supply of electricity in wholesale, bulk or retail has to be determined by the Electricity Regulatory Commission of the State and a licensee cannot by its unilateral action enhance the charges. The provisions of the Act have an overriding effect by virtue of Section 52 of the Act and, therefore, any provisions of the Electricity (Supply) Act, 1948, which are inconsistent with the Act would cease to apply and consequently, the provisions of the Sixth Schedule of the said Act can have no application now. The Sixth Schedule has been made by virtue of Sections 57 and 57A of the Electricity (Supply) Act, 1948 and Section 57A contemplates constitution of a Rating Committee by the State Government to examine the licensee s charges for the supply of electricity. Section 29(6) of the Act specifically lays down that notwithstanding anything contained in Sections 57A and 57B of the Electricity (Supply) Act, 1948, no Rating Committee shall be constituted after the date of the comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early three-and-a-half months has already elapsed. Regulation 101 of the Central Electricity Regulatory Commission provides that the Commission may normally dispose of the petitions finally within six months of admission. The State Commissions are also expected to follow this time limit for disposal of petitions. Since the order made by the High Court is only by way of interim arrangement and the Commission is expected to decide the disputes finally within a short period, we do not consider it proper to interfere with the order made by the High Court in this regard. After the decision of the Commission, the equities can be adjusted and the excess amount paid by any party can be refunded to it along with appropriate interest or can be adjusted in future bills . (emphasis supplied) 21. Learned senior counsel has also urged that actual supply of electricity and charges paid for actual supply are completely different from the guarantee and charges payable for providing such a guarantee/arrangement. It is further urged that generating capacity comes at a cost. The Technical Member therefore wrongly assigns Zero cost for this generating capacity. This is an error apparent in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standby power or not, TPC was bound to supply BSES/REL from its own generation standby power. On approximately 90 percent of the occasions, BSES/REL has utilised standby power of TPC. It has exceeded on some occasions more than 275 MVA and has gone up to above 400 MVA, whereas TPC has drawn standby from MSEB. The Government passed an order on 19.1.1998, considering several factors and determined Rs.3.5 crores per month as standby charges. The payment of standby charges by BSES/REL to TPC was independent of the charges to be paid by TPC to MESB. The determination has been made on the basis of various factors. Basis of 50:50 sharing has been rightly rejected by the MERC as well as by the APTEL. The decision of spinning reserve by the Technical and Judicial Members at zero levels is justified in the facts of the case. The submission made on the basis of Binani Zinc Ltd. v. Kerala State Electricity Board (supra) is not tenable. The total generating capacity of TPC was 1777 MW, whereas that of BSES/REL is 500 MW. It is incorrect that TPC has recovered only 50 percent of standby charges payable to MSEB. The standby charges of Rs.24.75 crores per month i.e., Rs.297 crores per annum were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EL to TPC. The Government of Maharashtra passed an order dated 19.1.1998 whereby stipulating a sum of Rs.3.5 crores per month should be paid by BSES/REL to TPC by way of standby charges. The decision was taken by the Committee inter alia considering the generation by TPC and MSEB. The order was based upon six factors generation of TPC and MSEB; electricity supplied by TPC to BSES/REL as a consumer; TPC s standby supply from MSEB; charges paid for said substandby supply by TPC to MSEB; the financial position of TPC and BSES/REL; and stability of better Mumbai grid. 27. The main principles on the basis of which Agreement was to be reached between TPC and BSES/REL were settled. As per clause 2 of the Principles of Agreement, BSES/REL had to pay to TPC for 220 KV interconnection at Borivali at Rs.3.5 crores per month. The parties had agreed to cooperate in order to ensure that Government order dated 19.1.1998 is implemented in the spirit of it. A detailed power supply agreement was to be entered into by 21.4.1998. The agreement could not be executed as consensus with respect to several aspects could not be reached. The order dated 22.3.2000 has been set aside by the High Court, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers is found to be appropriate and reasonable while working out the percentage of the standby charges to be paid by BSES/REL to TPC for the period in question. 30. This Court in BSES Ltd. v. Tata Power Co. Ltd. (supra) held that the tariff notice dated 30.9.1998 to be illegal and had no legal effect. It was held that the charges paid for this kind of arrangement, whereby a fixed quantity of electrical energy was guaranteed to TPC and BSES/REL at their desire, is bound to constitute a component of the price which they (BSES and TPC) would be charging from their consumers towards the cost of the electrical energy actually consumed by them. This Court also held that the State Government had no 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. It was further observed that Commission to decide the dispute early. A clarificatory order was passed by this Court on 9.1.2004 considering the decision in Binani Zinc Limited (supra) . The petition was filed by TPC for review. On the basis of the decision in Binani Zinc Limited (supra) , the same was dismissed. The MERC has passed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... *** 239. Para 26 of the Supreme Court ruling states, inter alia, that After the decision of the Commission, the equities can be adjusted and the excess amount paid by any party can be refunded to it along with appropriate interest or can be adjusted in future bills. 240. The Commission is of the view that interest should be recovered from all parties to the dispute for the amounts paid short vis- -vis the actual payments due from each party, in accordance with the Commission s computations. The Commission believes that this approach is equitable to all the Parties concerned, and is appropriate in the light of the issues and circumstances of this matter which has been under dispute for such a long time. Hence, the Commission has computed the interest payable by BSES to TPC for delayed payments in FY 199899 and FY 199900, and the interest payable by TPC to BSES on the excess amounts deposited by BSES with TPC for onward payment to MSEB. The Commission has considered the fact that the interest rate on delayed payments to MSEB is 18% for overdue over 6 months. However, in this instance, the payment liabilities as between TPC and BSES have been crystallized only now through thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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