Dismissed
Apl No 175 of 2016 of M/s. Vedanta Limited v. Odhisa Electricity Regulatory Commission.& Ors.
APTELApl No 175 of 2016
Case brief
from the order text
What is this about?
M/s. Vedanta Limited Versus Odhisa…
What the court decided
AI extract
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
Judgement in Appeal No. 175 of 2016
IN THE APPELLATE TRIBUNAL FOR ELECTRICITY (Appellate Jurisdiction)
Appeal No. 175 of 2016
Dated: 30th May, 2024
Present: Hon’ble Mr. Sandesh Kumar Sharma, Technical Member Hon’ble Mr. Virender Bhat, Judicial Member
In the matter of:
M/s. Vedanta Limited 1st Floor, Fortune Tower, Chandrashekharpur, Bhubaneshwar, Odhisa – 751023. …Appellant(s)
Vs.
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Department of Energy, Govt. of Odhisa, Bhubaneshwar, Odhisa – 751001.
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| Counsel for the Respondent(s) | : | Mr. G. Umapathy, Sr. Adv. Mr. Rutwik Panda Mr. Anshu Malik Ms. Nikhar Berry for R-1/OERC |
|---|---|---|
| Mr. Raj Kumar Mehta Mr. Abhishek Upadhyay Ms. Himanshi Andley Mr. E. P. Singh for R-2&4/ WESCO and SOUTHCO |
||
| Mr. Arunav Patnaik Ms. Mahima Sinha Mr. Shikhar Saha Ms. Bhabna Das Mr. Karun Pahwa Ms. Kanika Singh for R-5/SGoO |
JUDGEMENT
PER HON’BLE MR. SANDESH KUMAR SHARMA, TECHNICAL MEMBER
Parties
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Factual Matrix
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2003, thus, GRIDCO plays the role of an Aggregator or Trader on behalf of the DISCOMs, also admitted by the State Commission in its order dated 21.03.2016 in Case No. 54 of 2015, in the matter of approval of Aggregate Revenue Requirement and determination of Bulk Supply Price of GRIDCO for the FY 201617, further, the State Commission vide its Order dated 21.03.2016 has determined the ARR, wheeling and Retail Supply tariff for the FY 2016-17 in the application filed by NESCO, WESCO, SOUTHCO and CESU in Case No. 57, 58, 59 and 60 of 2015.
Submissions of the Appellant
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Charges) Regulations, 2006 instead of the Amended National Tariff Policy, 2016; and
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and whether such a course of action could at all was justified in the eyes of law, further, in doing so, the State Commission categorically held that it was applying the formula for computation of CSS as per Clause 8.5.1 of the amended Tariff Policy, 2016, which did not mandate application of “Avoided Cost Method” while computing CSS, as such, this is completely contrary to the statutory principle laid down under the 2006 OA Regulations, mandating “Avoided Cost Method” to be applied qua computation of CSS.
“52. We shall now turn to Issue ‘B’. It reads thus:
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B) Whether in view of the decisions, the decision of the Hon’ble Supreme Court in PTC India Limited V. Central Electricity Commission (2010) 4 SCC and RVK Energy Private Limited V. Central Power Distribution Co. of Andhra Pradesh Limited (2007 ELR (APTEL) 1222):
(i) A Tariff policy framed under Section 3 of the Electricity Act, 2003 can override Regulations framed under Section 61 read with Section 178/181 of the Electricity Act, 2003?
(ii) The Regulations notified by the State Commission under Section 181 of the Electricity Act can specify any different methodology or formula for calculation of cross subsidy surcharge?
We have already extensively referred to the Constitution Bench judgment in P.T.C. India Ltd. We have held that judgment of this Tribunal in R.V.K. Energy is not applicable to the present case. P.T.C. India Ltd. has clarified the legal position. At the cost of repetition we may state that Regulations framed under Sections 178 and 181 of the said Act have a primacy over the orders passed by the Regulatory Commissions in discharge of their functions enumerated in Section 61 read with 62, 79 and 86 of the said Act because they are framed under the authority of subordinate legislation. Hence, National Electricity Policy and Tariff Policy framed under Section 3 of the said Act cannot override Regulations
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framed under Section 61 read with Sections 178/181 of the said Act. Ideally, National Electricity Policy, Tariff Policy and the Regulations are expected to be in tune with the provisions of the said Act. Regulations notified by the State Commission under Section 181 of the said Act can specify methodology or formula for calculation of cross-subsidy surcharge which is different from the one mentioned in the Tariff Policy. But it must be in consonance with the provisions of the said Act. Further, if the State Commission is specifying a different formula than that stipulated in the Tariff Policy, it should give reason for adopting a different formula and why the formula given in the Tariff Policy was not adopted in the context of the tariff determination of the concerned distribution licensee.”
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Legislation cannot be ignored as they have possessed of the requisite force of law, the statutory provisions or law shall prevail over any policy document, the relevant extract of the said judgment is set-out hereinbelow:
“37. On the question of law, learned counsel submitted that the right to appeal under Section 111 in respect of an adjudicatory/administrative order cannot be defeated by colouring the decision as a regulation. In this connection learned counsel submitted that the rules/regulations framed by the executive under an Act are the law whereas regulations made by the statutory authority itself are not the regulations under which it functions, but the regulation-making itself is its function. In the former case, it is possible to argue that the authority which is the creature of the statute cannot question the vires of the statute, in the latter case, the authority is not the creature of the regulation framed by itself, hence the sanctity given to the former is far greater than the sanctity given to the latter.”
“31. We have considered the rival submissions. On such consideration, the Commission agrees with the views of the Objectors
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that the formula as contained in the Regulations has to be followed for determination of the CSS as the Regulations which are in force have not been changed as per new National Tariff Policy, 2016. As held by the Hon’ble APTEL, Regulations being statutory in nature override the changed Policy till they are amended. Therefore, the Commission proceeds to determine the CSS in the present petition based on the formula provided in Tariff Regulations, 2014.”
“ 12. … … … The powers of this Court are no doubt very wide and they are intended to be and will always be exercised in the interest of justice. But that is not to say that an order can be made by this Court which is inconsistent with the fundamental rights guaranteed by Part III of the Constitution. An order which this Court can make in order to do complete justice between the parties, must not only be consistent
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with the fundamental rights guaranteed by the Constitution, but it cannot even be inconsistent with the substantive provisions of the relevant statutory laws. ... ... ...
13. In this connection, it may be pertinent to point out that the wide powers which are given to this Court for doing complete justice between the parties, can be used by this Court, for instance, in adding parties to the proceedings pending before it, or in admitting additional evidence, or in remanding the case, or in allowing a new point to be taken for the first time. It is plain that in exercising these and similar other powers, this Court would not be bound by the relevant provisions of procedure if it is satisfied that a departure from the said procedure is necessary to do complete justice between the parties .“
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State Commission to work out a methodology for computation of CSS per the NTP, 2016 in its forthcoming orders i.e., prospective orders, the relevant portion of the said order is extracted hereinbelow:
“ 12. (c) (v) In view of the facts and circumstances of the case, we are of the considered opinion that it is the responsibility of the State Commission to follow the provisions of NTP for computation of CSS as envisaged therein. The State Commission is hereby directed to work out some methodology so that the computation of component ‘C’ could be carried out by it as per the provisions of NTP in its forthcoming orders on OA charges. ”
“34. While exercising its power of review so far as alterations or amendment of a tariff is concerned, the Central Commission stricto senso does not exercise a power akin to Section 114 of the Code of Civil Procedure or Order 47 Rule 1 thereof. Its jurisdiction, in that sense, as submitted by Mr. Gupta, for the aforementioned purposes would not be barred in terms of Order 2 Rule 2 of the Code of Civil Procedure or the principles analogous thereto.
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35. Revision of a tariff must be distinguished from a review of a tariff order. Whereas Regulation 92 of the 1999 Regulations provides for revision of tariff. Regulations 110 to 117 also provide for extensive power to be exercised by the Central Commission in regard to the proceedings before it.
36. Having regard to the nature of jurisdiction of the Central Commission in a case of this nature, we are of the opinion that even principles of res judicata will have no application.
38. The Central Commission, as indicated hereinbefore, has a plenary power. Its inherent jurisdiction is saved. Having regard to the diverse nature of jurisdiction, it may for one purpose entertain an application so as to correct its own mistake but in relation to another function its jurisdiction may be limited. The provisions of the 1998 Act do not put any restriction on the Central Commission in the matter of exercise of such a jurisdiction. It is empowered to lay down its own procedure.
40. Regulations 92 and 94, in our opinion, do not restrict the power of the Central Commission to make additions or alterations in the tariff. Making of a tariff is a continuous process. It can be amended or
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altered by the Central Commission, if any occasion arises therefor. The said power can be exercised not only on application filed by the generating companies but by the Commission also on its own notion. ”
(i) Judgment dated 13.01.2009 passed in Appeal No. 133 of 2007 titled Delhi Transco Limited v. Delhi Electricity Regulatory Commission & Ors., wherein it held as follows:
“15. It is not disputed by the counsel appearing before us that each assessment year of a tariff order gives rise to a fresh cause of action and can be challenged separately. It is also accepted at the bar that the principles of res judicata will not apply to the facts of this case.
17. Although the appellant did not challenge the earlier tariff orders it did oppose the proposition that was adopted by the Commission
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namely that the appellant should be denied the right to recover its revenue requirement to the extent of the past receivables. The appellant has been asking the Commission to transfer the 80% of the past receivables to it. In fact the accounts position of the appellant reflects the factual position namely that the past receivables have not been received by it and these accounts have not been held to be incorrect or flawed by the Commission. It cannot be said that the appellant has accepted the Commission's method in this regard for such an unduly long time that following the principles in the judgments mentioned above the appellant can be non-suited on the ground that it is challenging a settled position of fact or law. The view taken by the Commission that past receivable, not received by the appellant, be deemed to have been received by the appellant borders absurdity. Since each tariff order is distinct and separate the appellant would be fully justified in approaching this Tribunal to challenge the impugned order vis a vis the year 2006-07.”
(ii) Judgment dated 29.04.2016 passed in Appeal Nos. 185 of 2013 and 264 of 2013 titled as Bhaskar Shrachi Alloys Ltd. v. CERC & Anr., wherein this Hon’ble Tribunal rejected the plea of the Appellants as regards applicability of principle of res judicata in the case of tariff determination. The relevant portion of the said order is set-out hereinbelow:
“ 11.6) We have gone through the fact and circumstances of the matters before us in these appeals and also gone through the
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principle of res adjudicata and estoppel, as provided under Civil Procedure Code and the authorities cited on these points. In view of the above, we do not find any perversity or infirmity in the findings recorded by the Central Commission on these issues. The contentions raised on behalf of the appellants on these issues have no merits and are liable to be spurned. The learned Central Commission while passing the Impugned Order has considered all the contentions raised in these appeals and addressed them in a just, proper and legal way. The Central Commission has allowed the said claims of additional capitalization on proper justification on being satisfied with the material and data supplied by DVC before the Central Commission. The learned Central Commission has complied with the judgment of this Appellate Tribunal in the same spirit in which this Appellate Tribunal pronounced the said judgment on the said aspects of the issues involved in these appeals. Hence, all these three issues (A), (B) and (C) are decided against the appellant. ”
Submission of the Respondent No. 1, OERC
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a) Consider the facts and circumstances mentioned by the Objector.
b) Direct that the calculation of Cross Subsidy Surcharge to be done as per the formula laid down in the National Tariff Policy and the approved Tariff orders of the Hon’ble Commission. c) Direct that the Energy Charge Corresponding to a Load Factor of 100% may only be used in the determination of tariff or “T” component.
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d) Direct that the “C” component should be the cost of procurement of power by GRIDCO from the top 5% at the margin excluding liquid based generation and renewable power. e) Kindly allow to file our revised objection along with our calculation for determination of open access charges once the power procurement price of GRIDCO from various generators and Retail Supply Tariff order for FY 2016-17 is approved by the Hon’ble Commission.
f) Ensure that the Cross Subsidy Surcharge is progressively reduced and lay down a roadmap for the same.
g) Provide an opportunity to the Objector to be heard in person prior to the finalization of the decision in the matter. The Objector believes that such an approach would provide a fair treatment to all the stakeholders and eliminate the need for a review or clarification.”
“9. The Open Access Charges (Transmission/ Wheeling Charges, Surcharge and Additional Surcharge applicable to open access customers for use of Intra- state transmission/ distribution system) under the provisions of the Act were first fixed by the Commission for 2008- 09 in its order dated 29.03.2008 in Case No. 66, 67, 68 & 69 of 2006. The detailed procedures and methodologies for computation of surcharge for different consumer categories had
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been elaborately described in the said order. Subsequently, the Commission has passed several orders for succeeding years on Open Access Charges applicable to open access customers for use of Intra- State transmission/ distribution system basing on the same principle. In the meantime, Ministry of Power on 28.01.2016 has notified the new Tariff Policy. The Commission is also to be guided by the same Policy. The Commission, therefore, has adopted the consistently the same principle for calculating wheeling Charges, Surcharge and Additional Surcharge applicable to open access customers for use of IntraState transmission/ distribution system for the current year i.e FY 2016-17.
10. We have certain uniqueness in the structural and functional aspects of power sector in the State. DISCOM utilities purchase power from GRIDCO where all the PPAs of the Generators have been assigned. The GRIDCO has been declared as ‘State Designated Agency’ to procure power from the Generators to meet the requirements of the State. Therefore, GRIDCO purchases both high cost thermal power and also low cost hydro power and supplies this pooled power to the DISCOM utilities at bulk supply price fixed by the Commission. GRIDCO also discharges the obligation for purchase of Renewable Energy for the consumers of the DISCOMs. Accordingly, GRIDCO becomes a virtual generator for DISCOM utilities. The bulk supply price of GRIDCO is the unique power purchase price of DISCOMs without any differentiation of low or high cost marginal Transmission Utility (OPTCL) for transmitting power in its EHT
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network to be delivered at inter- connection points with the DISCOMs. Hence, for our purpose cost of power purchase by DISCOM utilities is sum of BSP of respective DISCOM utility and transmission charges.
-------
12. The Commission now adopts ‘C’ in the formula equal to BSP of respective DISCOMs as followed in the earlier years and as explained in the preceding paragraphs. Similarly ‘T’ is the tariff at 100% load factor including demand charges for the respective voltage level. The Wheeling charges ‘D’ is as determined from the distribution cost approved for the FY 2016-17 and ‘L’ is presently 8% at HT level whereas for EHT there is no requirement of incorporation since it has already been accounted for in the Bulk Supply Price of the DISCOM utilities.”
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as VAL SEZ) has attained finality by virtue of the Supreme Court Judgment dated 25.04.2014 passed in Civil Appeal No. 5479 of 2013 (2014 (8) SCC, 444) titled M/s SESA Sterlite Ltd. V/s the State Commission and ors., wherein the Supreme Court has held that SESA (erstwhile VAL SEZ) is a consumer of WESCO and thus liable to pay the cross subsidy surcharge, also held as under:-
24. However open access can be allowed on payment of a surcharge, to be determined by the State Commission, to take care of the requirements of current level of cross-subsidy and the fixed cost arising out of the licensee’s obligation to supply.”
“10 We may State here that a conjoint reading of section 61 (g) of the Electricity Act and Paragraph- 8.3 (2) of the National Tariff Policy makes it clear that it does not provide for any category of consumers and it is also an admitted fact that there is no methodology provided for computing cross-subsidy. Such computation may be the average cost of supply or cost of supply voltage wise or cost of supply to various consumer categories.
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At present the State Commission is guided by the notion of subsidy by average cost of supply for the State as a whole, which has been recommended by the Forum of Regulator (FOR) and, in our considered opinion also, the same is a practical solution, at least in the present context of the Indian Power Sector.”
“11. At last, we may make it very clear that computation of surcharge is totally different from computation of tariff and Regulation- 7.3 (c), as it stood prior to amendment and as it stands at present, is only applicable to surcharge and surcharge is only levied on wheeling consumers.
“8.5 Cross-subsidy surcharge and additional surcharge for open
access
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8.5.1 National Electricity Policy lays down that the amount of CSS and the additional surcharge to be levied from consumers who are permitted open access should not be so onerous that it eliminates competition which is intended to be fostered in generation and supply of power directly to the consumers through open access.
A consumer who is permitted open access will have to make payment to the generator, the transmission licensee whose transmission systems are used, distribution utility for the wheeling charges and, in addition, the CSS. The computation of cross subsidy surcharge, therefore, needs to be done in a manner that while it compensates the distribution licensee, it does not constrain introduction of competition through open access. A consumer would avail of open access only if the payment of all the charges leads to a benefit to him. While the interest of distribution licensee needs to be protected it would be essential that this provision of the Act, which requires open access to be introduced in a time-bound manner, is used to bring about competition in the larger interest of consumers.
SERCs may calculate the cost of supply of electricity by the distribution licensee to consumers of the applicable class as aggregate of (a) per unit weighted average cost of power purchase including meeting the Renewable Purchase Obligation; (b) transmission and distribution losses applicable to the relevant
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voltage level and commercial losses allowed by the SERC; (c) transmission, distribution and wheeling charges up to the relevant voltage level; and (d) per unit cost of carrying regulatory assets, if applicable.
Surcharge formula:
S= T – [C/ (1-L/100) + D+ R]
Where
S is the surcharge
T is the tariff payable by the relevant category of consumers, including reflecting the Renewable Purchase Obligation
C is the per unit weighted average cost of power purchase by the Licensee, including meeting the Renewable Purchase Obligation
D is the aggregate of transmission, distribution and wheeling charge applicable to the relevant voltage level
L is the aggregate of transmission, distribution and commercial losses, expressed as a percentage applicable to the relevant voltage level
R is the per unit cost of carrying regulatory assets.
Above formula may not work for all distribution licensees, particularly for those having power deficit, the State Regulatory
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Commissions, while keeping the overall objectives of the Electricity Act in view, may review and vary the same taking into consideration the different circumstances prevailing in
the area of distribution licensee.
Provided that the surcharge shall not exceed 20% of the tariff applicable to the category of the consumers seeking open access.”
“A. COMPONENT OF “T” OF THE SURCHARGE FORMULA.
The Hon’ble Tribunal on the issue of Component “T” has held as follows; “We have heard the learned counsel appearing for the Appellant and the learned counsel appearing for the Respondents and also gone through the RST order for FY 2014-15 and after considering the same we are in agreement to the methodology adopted by the State Commission for calculation of component ‘T’ which was also being done on similar principles in earlier orders which were accepted by all the concerned. We also observe that as per the formula for CSS in NTP there is no such specific requirement of load factor for calculation of component ‘T’ and hence it is left to the State Commission to interpret and deal accordingly the same to meet the requirement of provisions envisaged in the Act and NTP. Accordingly,
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we do not see any legal infirmity in the decision of the State Commission on this count also.
B. Progressive reduction of CSS.
The State Commission reduces the CSS in a progressive manner. The relevant finding on this is at para 14, page 44 of the Impugned Order. For ready reference, the same is quoted herein;
“14. As per mandate of the Electricity Act, 2003 under Section 42 the cross subsidy surcharge is to be reduced progressively. The Commission is authorized to evolve a methodology for such reduction. Basing on the suggestions during the hearing in the last year so also in the current proceeding, the Commission have considered the reduction in cross subsidy in past years. The cross subsidy surcharge has been reduced by the Commission from 70% level in 2015- 2016 of the computed value (based on the formula prescribed in the tariff Policy and now termed as levied surcharge) to 65% this year.
TABLE -6
Leviable Surcharge, Wheeling Charge & Transmission Charge for Open access consumer 1MW & above for FY 2016-17
| Name of | Cross Subsidy | Wheeling | Transmission Charges |
|---|---|---|---|
| the | Surcharge (P/U) | Charges P/U | for Short Term Open |
| licensee | applicable to | access Customer | |
| HT consumers | (applicable for HT & | ||
| Only | EHT consumers) | ||
| EHT HT |
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| CESU | 143.58 | 95.58 | 53.18 | Rs. 1500/MW/ day or Rs. 62.5/MWh |
|---|---|---|---|---|
| NESCO | 126.03 | 65.82 | 69.61 | Rs. 1500/MW/day or |
| Utility | Rs. 62.5/MWh. | |||
| WESCO | 126.68 | 83.45 | 43.58 | Rs. 1500/MW/day or |
| Utility | Rs. 62.5/ MWh. | |||
| SOUTHC | 191.03 | 141.02 | 62.63 | Rs. 1500/MW/day or |
| O Utility |
Rs. 62.5/MWh. |
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to be calculated, further, the views of the State Commission have already been mentioned in the order dated 29.03.2008, the relevant extract of Para-39 of the said Order is reproduced below:
“The fixation of the surcharge need to be realistic so that the extent of compensation available to the DISCOMs do not reduce drastically so as to affect their financial viability and, at the same time, give a signal to the enterprising consumers that they can source their power from generators and other licensees for optimizing their efficiency.”
Slab rate of energy charges for HT & EHT consumers (Paise/Unit)
| Load Factor (%) | HT | EHT |
|---|---|---|
| =<60% | 525 p/u | 520 p/u |
| >60% | 420 p/u | 415u |
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“7 (c) (iii)
For the purpose of computing Cross-subsidy payable by a certain category of consumer, the difference between average cost-to-serve all consumers of the State taken together and average tariff applicable to such consumers shall be considered.”
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different components. The cross subsidy surcharge is payable for loss of cross subsidy to the DISCOM.
In Re: Formula of FSA and its vires:
22. In the backdrop of the aforesaid provisions, we now advert to the first submission whether Regulation 45-B is ultra vires to the provisions of Section 26 (9) of the Act of 1998 or Sections 61 and 62 (4) of the Act of 2003. Regulation 45-B deals with the determination of fuel surcharge. ‘Fuel surcharge’ has not been defined in the Act of 1998 or the Act of 2003. The Commission has the power under Section 26 (2) to prescribe the terms and conditions for determination of the licensee’s revenue and tariffs. Section 26 (9) enables the Commission to vary fuel surcharge which is to be determined as per the formula prescribed by Regulation. Thus the commission has been given the legislative power to prescribe the fuel surcharge formula by way of making Regulation and to include such factors as it considers appropriate for determination of fuel surcharge. Under Section 61 of the Act of 2003 the Commission has the power to specify the terms and conditions for determination of tariff. It is pertinent to note that under the Act of 2003 Commission has adjudicatory, legislative as well as advisory powers. It has to consider under section 61 (b) commercial principles in regards to the generation, transmission, distribution and supply of electricity. Under Section 61 (d) the Commission has to frame the conditions with
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regard to safeguarding of consumers’ interest and at the same time, recovery of the cost of electricity in a reasonable manner.”
Submission of the Respondent No. 5, Govt. Orissa
“Cross-subsidy surcharge shall be computed by the licensee as the difference between (1) the tariff applicable to relevant category of consumers and (2) the cost of the distribution licensee to supply electricity to the consumers of the applicable class, and the same shall be submitted for necessary approval of the Commission.”
“Surcharge formula:
S= T –[C/ (1-L/100) + D]+R
Where S is the surcharge
T is the tariff payable by the relevant category of consumers, including reflecting the Renewable Purchase Obligation
C is the per unit weighted average cost of power purchase by the Licensee, including meeting the Renewable Purchase Obligation D is the aggregate of transmission, distribution and wheeling charge applicable to the relevant voltage level “
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R is the per unit cost of carrying regulatory assets
“The Commission now adopts ‘C’ in the formula equal to BSP of respective DISCOMs as followed in the earlier years and as explained in the preceding paragraphs. Similarly ‘T’ is the tariff at 100% load factor including demand charges for the respective voltage level. The wheeling charges ‘D’ is as determined from the distribution cost approved for the FY 2016-17 and ‘L’ is presently 8% at HT level whereas for EHT there is no requirement of incorporation since it has already been accounted for in the Bulk Supply Price of the DISCOM utilities.”
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component ‘C’ while calculating Cross Subsidy Surcharge since 2009, the same methodology has been used since then and the Appellant had not raised any protest and had been making payments as per the Cross Subsidy Surcharge determined by the Commission, therefore, the instant Appeal is barred by estoppel.
“From the above it is clear that the State Commission has passed the order in accordance with relevant provisions of the Act and the OA Regulations and has adopted the principle for considering BSP for the purpose of determination of cost of supply by the Discom. The reasoning given by the State Commission is just and reasonable, does not call for our interference.
It is observed that the State Commission has been adopting the same principle for determination of OA charges for subsequent years as adopted in the order dated 29.3.2008 for the purpose of calculation of CSS after considering the relevant provisions of the OA Regulations. It is also observed that the same was done keeping in view the functional and structural scenario of Odisha power sector. Thus the order dated 29.3.2008 became the principal order for the State
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Commission to determine the OA charges. The stakeholders also accepted the said order and were making requisite payments. The Appellant was also making the payments of CSS based on the said order. Based on the Impugned Order, the Appellant has also accepted to make payment of CSS in MoM. Looking at all aspects of the case we are of the opinion that as of now we do not find merit in interfering with the Impugned Order. Further, it is significant to note that the State Commission after evaluation of the oral, documentary and other relevant materials available on file and by assigning valid and cogent reasons in the Impugned Order has rightly dismissed the claim of the Appellant, hence interference of this Tribunal does not call for.”
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“Surcharge formula:
S = T – [ C (1+ L / 100) + D ]
Where S is the surcharge
T is the Tariff payable by the relevant category of consumers;
C is the Weighted average cost of power purchase of top 5% at the margin excluding liquid fuel based generation and renewable power D is the Wheeling charge
L is the system Losses for the applicable voltage level, expressed as a percentage”
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5% at the margin of the power purchased by GRIDCO has already been rejected by this Tribunal.
“The State Commission is hereby directed to work out some methodology so that the computation of component ‘C’ could be carried out by it as per the provisions of NTP in its forthcoming orders on OA charges . ”
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while arriving at the tariff for 100 % load factor, the average of energy charges for consumption up to 60% and consumption beyond 60% would be considered, accordingly, the applicable energy charges would be Rs. 4.79 / kwh and not Rs. 4.15 /kwh as considered by the Appellant.
Observation and Conclusion
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“From the above it is clear that the State Commission has passed the order in accordance with relevant provisions of the Act and the OA Regulations and has adopted the principle for considering BSP for the purpose of determination of cost of supply by the Discom. The reasoning given by the State Commission is just and reasonable, does not call for our interference.
It is observed that the State Commission has been adopting the same principle for determination of OA charges for subsequent years as adopted in the order dated 29.3.2008 for the purpose of calculation of
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CSS after considering the relevant provisions of the OA Regulations. It is also observed that the same was done keeping in view the functional and structural scenario of Odisha power sector. Thus the order dated 29.3.2008 became the principal order for the State Commission to determine the OA charges. The stakeholders also accepted the said order and were making requisite payments. The Appellant was also making the payments of CSS based on the said order. Based on the Impugned Order, the Appellant has also accepted to make payment of CSS in MoM. Looking at all aspects of the case we are of the opinion that as of now we do not find merit in interfering with the Impugned Order. Further, it is significant to note that the State Commission after evaluation of the oral, documentary and other relevant materials available on file and by assigning valid and cogent reasons in the Impugned Order has rightly dismissed the claim of the Appellant, hence interference of this Tribunal does not call for.”
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on records the following issues that arises for our consideration are as follows:-
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“11. In this connection, the formula for computation of surcharge prescribed in the tariff policy in para 8.5.1 is quoted
as under:
Surcharge formula:
S = T – [C (1+ L / 100) + D]
Where
S is the surcharge
T is the Tariff payable by the relevant category of consumers;
C is the Weighted average cost of power purchase of top 5% at the margin excluding liquid fuel based generation and renewable power
D is the Wheeling charge
L is the system Losses for the applicable voltage level, expressed as a percentage
Now we adopt the same principle as in the past laid out in the Tariff Policy for determination of cross-subsidy surcharge considering the uniqueness of the power sector of the State in structural and functional area as follows: T = applicable tariff for EHT and HT consumers at 100% load factor
C = Power Purchase cost plus transmission & SLDC charge payable by DISCOMs.
Since Odisha follows single buyer model, the power is purchased from different generators first and then pooled at
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GRIDCO end. The same power is resold to DISCOMs at a price called Bulk Supply Price as approved by the Commission and includes the intra-State transmission loss. This is the power purchase cost of DISCOMs. In addition to that DISCOMs are to pay transmission charges to OPTCL and SLDC charges for the power purchased by them.
L = loss at HT 8% (assumed) since EHT loss is already in the BSP.
D = Wheeling charge levied by DISCOMs for power handled in HT = Distribution cost of DISCOMs/ Input units at HT
12. The wheeling charge is determined in pursuance to our Regulation which prescribes the adoption of same methodology as transmission for determination of the same. Since we have been following postage stamp method for determination of transmission charges we adopt the same for the determination of wheeling charge in the above formula considering only HT units handled by the system.
13.For the year 2014-15, the Commission have approved the following Bulk Supply Price in respect of four distribution companies.
1. CESU 265.00 per KWH
2. NESCO 280.00 per KWH
3. WESCO 286.00 per KWH
4. SOUTHCO 185.00 per KWH
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In addition to that DISCOMs are to pay transmission charge @ 25 paise / Unit and SLDC charge as determined the Commission for the current year. All these constitute power purchase cost (C) of the DISCOMs.
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The State Commission while referring to the formula provided in NTP for CSS, adopting similar principle as followed by it in earlier years and based on peculiar situation of the State power sector which follows single buyer model has calculated the component ‘C’ considering power purchase cost of Discom which includes BSP, transmission & SLDC charge payable by Discom.
The State Commission has considered the component ‘T’ as applicable tariff for EHT and HT consumers at 100% load factor for computation of CSS.
ii. Now let us analyze the provisions of the NTP. The relevant extract is reproduced herein below:
“8.5.1 ................................. .
Accordingly, when open access is allowed the surcharge for the purpose of sections 38,39,40 and sub-section 2 of section 42 would be computed as the difference between (i) the tariff applicable to the relevant category of consumers and (ii) the cost of the distribution licensee to supply electricity to the consumers of the applicable class. In case of a consumer opting for open access, the distribution
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licensee could be in a position to discontinue purchase of power at the margin in the merit order. Accordingly, the cost of supply to the consumer for this purpose may be computed
as the aggregate of (a) the weighted average of power purchase costs (inclusive of fixed and variable charges) of top 5% power at the margin, excluding liquid fuel based generation, in the merit order approved by the SERC adjusted for average loss compensation of the relevant voltage level and (b) the distribution charges determined on the principles as laid down for intra-state transmission charges. Surcharge formula:
S = T – [ C (1+ L / 100) + D ]
Where
S is the surcharge
T is the Tariff payable by the relevant category of consumers;
C is the Weighted average cost of power purchase of top 5% at the margin excluding liquid fuel based generation and renewable power
D is the Wheeling charge
L is the system Losses for the applicable voltage level, expressed as a percentage
The cross-subsidy surcharge should be brought downprogressively and, as far as possible, at a linear rate to a maximum of 20% of its opening level by the year 2010-11.”
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As per NTP surcharge is the difference between the tariff applicable to the relevant category of consumers (‘T’) and the cost of the distribution licensee to supply electricity to the consumers of the applicable class (‘[ C (1+ L / 100) + D ]’). The cost of supply to the consumer consists of three components namely ‘C’, ‘D’ & ‘L’. The component ‘C’ is to be calculated based on weighted average cost of power purchase of top 5% at the margin excluding liquid fuel based generation and renewable power. The component ‘D’ is the wheeling charge and the component ‘L’ is the system Losses for the applicable voltage level.
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“4 (2) Surcharge
(ii) Avoided cost method shall be used to determine the cost of supply of electricity to consumers of the applicable class.
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to relevant category of consumers and (2) the cost of the distribution licensee to supply electricity to the consumers of the applicable class”
From the above it can be seen that for arriving at the cost of supply to the applicable class of consumers the State Commission has adopted the principle of avoided cost. The cost of supply would comprise of weighted marginal cost of power purchase (fixed plus variable costs) from marginal sources of supply plus applicable transmission and wheeling charges. Further, CSS to be computed as the difference between the tariff applicable to relevant category of consumers and the cost of the distribution licensee to supply electricity to the consumers of the applicable class.
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forms second part of the NTP formula i.e. cost of the distribution licensee to supply electricity to the consumers of applicable class.
“8. The Open Access Charges (Transmission / wheeling Charges, Surcharge and Additional Surcharge applicable to open access customers for use of Intra-state transmission/ distribution system) under the provisions of the Act were first fixed by the Commission for 2008-09 in its order dated 29.03.2008 in Case No. 66, 67, 68 & 69 of 2006. The detailed procedures and methodologies for computation of surcharge for different consumer categories have been elaborately described in the said order. Subsequently, the Commission has passed many orders for different years on Open Access Charges applicable to open access customers for use of Intra-state transmission/ distribution system based on the same principle. The Commission have also adopted the
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same principle for calculating wheeling Charges, Surcharge and Additional Surcharge applicable to open access customers for use of Intra-state transmission/ distribution system for the current year i.e. FY 2014-15”
From the above it can be seen that State Commission has adopted the principles for determination of OA charges as done vide its order dated 29.3.2008.
viii. Now it is important for us to consider the order dated 29.3.2008. The relevant extract from the order is reproduced herein below: “In the matter of: Approval of Open Access Charges (Transmission/wheeling Charges, Surcharge and Additional Surcharge applicable to open access customers for use of Intra-state transmission/ distribution system ) in accordance with Section 39 and 42 of the Electricity Act, 2003 read with the provisions of Chapter II (Charges for Open Access) of OERC (Determination of Open Access Charges) Regulations, 2006.
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12. In Orissa, the single-buyer model prevails, with GRIDCO as the sole supplier to the DISTCOs. Differential Bulk Supply price is fixed for four distribution utilities of the state. This has become necessary to maintain a uniform retail tariff through out the State. Power is procured by the DISTCOs at bulk supply prices as they purchase their entire requirement from GRIDCO at present. However, where GRIDCO cannot
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meet their demand, DISTCOs have the liberty, of purchasing power from CGPs and other sources in addition to the purchase of power from GRIDCO. Such a situation or stage is yet to take place as GRIDCO is meeting their full demand at present. Therefore, for the purpose of determination of cost of supply by the distribution utility we shall be considering the rate at which each distribution company purchases power form the GRIDCO.
From the above it is clear that the State Commission has passed the order in accordance with relevant provisions of the Act and the OA Regulations and has adopted the principle for considering BSP for the purpose of determination of cost of supply by the Discom. The reasoning given by the State Commission is just and reasonable, does not call for our interference.
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Impugned Order, the Appellant has also accepted to make payment of CSS in MoM. Looking at all aspects of the case we are of the opinion that as of now we do not find merit in interfering with the Impugned Order. Further, it is significant to note that the State Commission after evaluation of the oral, documentary and other relevant materials available on file and by assigning valid and cogent reasons in the Impugned Order has rightly dismissed the claim of the Appellant, hence interference of this Tribunal does not call for.”
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Discoms is concerned, it follows single buyer model whereby GRIDCO procures power on behalf of all the Discoms as an intermediary Trader and supplies the bundled power at bundled price to the Discoms, as such the component ‘C’ is calculated considering power purchase cost of Discom which is nothing but the BSP including transmission & SLDC charge payable by Discom.
CHAPTER-II
Charges for Open Access
4. Open Access Charges. - Open Access Customers shall pay the following charges for the use of the intra-State transmission/ distribution system which shall be regulated as follows :
(1) Transmission/Wheeling Charges - (i) Open access customers connected to the intra-State transmission/ distribution systems shall pay the transmission and wheeling charges as applicable to the appropriate licensees, as the Commission may determine from time to time.
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(2) Surcharge - (i) Surcharge to be levied on open access customers under Section 42(2) of the Act, shall be determined by the Commission keeping in view the loss of cross-subsidy from these customers opting to take supply from a person other than the incumbent distribution licensee.
(ii) Avoided cost method shall be used to determine the cost of
supply of electricity to consumers of the applicable class.
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(b) Since, it will avoid purchase of power from marginal sources of supply, the weighted marginal cost of power purchase (fixed plus variable costs) from such sources would be considered as avoided cost of power purchase. (c) To that avoided cost, other charges viz, applicable transmission and wheeling charges will be added to arrive at the cost of supply.
(iv) Cross-subsidy surcharge shall be computed by the licensee as the difference between (1) the tariff applicable to relevant category of consumers and (2) the cost of the distribution licensee to supply electricity to the consumers of the applicable class, and the same shall be submitted for necessary approval of the Commission.
(v) The amount of such surcharge shall be utilised to meet the current level of cross-subsidy paid by the category of consumers applicable to electricity supply of open access customers and shall be paid to the distribution licensee of area of supply where the premises of the customer availing open access is located.
(vi) The surcharge and cross-subsidy shall be progressively reduced and eliminated in the manner as the Commission may lay down for reduction and elimination of cross-subsidies in its regulations or revised tariff order issued from time to time
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keeping in view the Long-Term Tariff Strategy and the Business Plan approved by the Commission. (vii) Surcharge should be calculated by the licensees and approved by the Commission.
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DISCOMs as the power purchase cost for calculation of Cross Subsidy Surcharge and this method of calculation was adopted by the Commission since 2008.
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contention of the Appellant that doctrine of “ Res Judicata ” does not apply in the instant case is misconceived and rejected.
ORDER
For the foregoing reasons as stated above, we are of the considered view that the captioned Appeal No. 175 of 2016 is dismissed as devoid of merit.
PRONOUNCED IN THE OPEN COURT ON THIS 30th DAY OF MAY, 2024.
(Virender Bhat) Judicial Member
(Sandesh Kumar Sharma)
Technical Member
pr/mkj
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W.P No. 8409 of 2011
2 provisions across 2 enactments
M/s. Vedanta Limited
The Secretary Odhisa Electricity Regulatory Commission
Authorised Officer WESCO Utility
Authorised Officer NESCO Utility
Authorised Officer SOUTHCO Utility
Principal Secretary to Government Department of Energy Govt. of Odhisa
Sandesh Kumar Sharma
Virender Bhat
As recorded by the court registry
An appeal before a tribunal against an order of a statutory authority.
Judgements on the same questions, provisions and authorities, from every court