Summary of the Judgment
Case Name: Maharashtra State Electricity Distribution Co. Ltd. vs. M/s JSW Steel Ltd. & Anr.
Date: 17 May 2024
Judges: Honorable Justice Abhay S. Oka, Honorable Justice Ujjal Bhuyan
Acts and Sections: Electricity Act, 2003 (Section 62(3))
Introduction
In the case of Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) vs. M/s JSW Steel Ltd. & Anr., the Supreme Court of India was tasked with determining the legality of imposing a reliability charge by MSEDCL on its bulk consumers, specifically focusing on the operations within the Pen Circle area of Maharashtra. This judgment, delivered on 17 May 2024 by Honorable Justice Abhay S. Oka and Honorable Justice Ujjal Bhuyan, provides a critical examination of tariff regulations and the statutory powers vested in the Electricity Regulatory Commission.
Background
The appellant, Maharashtra State Electricity Distribution Co. Ltd., a distribution licensee responsible for the supply and distribution of electricity in Maharashtra, filed a petition with the Maharashtra Electricity Regulatory Commission (MERC) seeking approval to impose a reliability charge. This charge was intended to cover the costs of implementing a Zero Load Shedding (ZLS) scheme in the Pen Circle area. The 1st respondent, M/s JSW Steel Ltd., a significant consumer of electricity and a continuous process industry, contested this charge.
Procedural History
On 20 October 2006, MERC passed a tariff order imposing additional supply charges for uninterrupted power supply to bulk consumers like the 1st respondent. However, on 20 June 2008, MERC rescinded this additional supply charge and directed MSEDCL to refund the collected charges. Subsequently, MSEDCL filed another petition under the Electricity Act, 2003, seeking approval for reliability charges to support ZLS in the Pen Circle area. This petition was approved by MERC on 15 June 2009, leading to the imposition of reliability charges from 16 June 2009 to 31 March 2010.
Tribunal's Findings
The 1st respondent appealed against MERC's order to the Appellate Tribunal for Electricity. The Tribunal set aside the MERC's order, concluding that the 1st respondent, as a continuous process industry, was already paying higher tariffs compared to non-continuous industries. Specifically, the Tribunal noted that from 1 June 2008, continuous process industries were charged at a rate of 4.30 paisa per kWh, increasing to 5.05 paisa per kWh from 1 August 2009, while non-continuous industries were charged at 3.95 paisa per kWh and 4.60 paisa per kWh respectively.
Supreme Court's Analysis
Honorable Justice Abhay S. Oka and Honorable Justice Ujjal Bhuyan undertook a detailed analysis of the submissions and the statutory framework governing the case. The Supreme Court highlighted several key points:
Statutory Basis for Charges: The Court examined Section 62(3) of the Electricity Act, 2003, which empowers MERC to regulate tariffs. However, the Court found no statutory or regulatory basis for the imposition of a reliability charge as argued by the appellant.
Public Hearing and Consent: The appellant contended that the 1st respondent's failure to participate in the public hearing equated to consent for the reliability charge. The Supreme Court dismissed this argument, noting that the Vidharba Industries Association, of which the 1st respondent is a member, had filed objections. Thus, non-participation by the 1st respondent did not imply consent.
Higher Tariff Justification: The Supreme Court upheld the Tribunal's finding that the higher tariffs already paid by the 1st respondent for continuous supply justified their exemption from additional reliability charges.
Right to Appeal: The Court affirmed that under Section 111 of the Electricity Act, 2003, any aggrieved party has the right to appeal against an order of the Commission. The 1st respondent, being directly affected by the reliability charge, was entitled to challenge the MERC's order.
Detailed Examination of the Tribunal's Judgment
The Tribunal's judgment, which the Supreme Court affirmed, highlighted critical points regarding the differential tariffs for continuous and non-continuous industries. The Tribunal emphasized that continuous process industries like the 1st respondent, which are not subject to load-shedding, already pay higher tariffs. This higher tariff compensates the distribution licensee for providing an uninterrupted power supply. The Tribunal noted:
"In paragraph 18 of the impugned judgment, the Tribunal held that the tariff of HT continuous industries, like the 1st respondent, has been fixed at a higher rate than that of the tariff rate applicable for HT non-continuous industries. In the same paragraph, the Tribunal noted the admitted position that effective from 1st June 2008, the continuous industries (on express feeder) were paying tariff of 4.30 paisa per kWh and non-continuous industries (not on express feeder) were paying tariff at the rate of 3.95 paisa per kWh. From 1st August 2009, the rates were increased to 5.05 paisa kWh and 4.60 paisa kWh respectively."
Legal and Regulatory Framework
The Supreme Court examined the legal and regulatory framework governing the imposition of reliability charges. The appellant's reliance on Section 62(3) of the Electricity Act, 2003, was scrutinized, and the Court found no support for the levy of a reliability charge within the statutory provisions or the rules and regulations framed by MERC. The judgment stated:
"The appellant in this appeal is unable to show any basis in the Statute or Statutory rules and regulations to support the levy of a reliability charge. The Tribunal also held that neither Section 62(3) of the 2013 Act nor the Rules and Regulations framed by the Commission support the levy of reliability charge.”
Consideration of Consumer Objections
The issue of consumer objections and participation in the public hearing was also addressed. The appellant's argument that the 1st respondent's non-participation amounted to consent was dismissed by the Court. The Tribunal had found that the Vidharba Industries Association, representing the 1st respondent, had filed objections, which constituted sufficient participation. The Court noted:
"As regards the failure of the 1st respondent to object at the time of the public hearing, the Tribunal recorded a finding of fact that Vidharba Industries Association, of which the 1st respondent is a member, had raised an objection by filing an affidavit. There is no dispute about this factual aspect.”
Conclusion
The Supreme Court found no merit in the appeal filed by MSEDCL and dismissed it, thereby upholding the Tribunal's decision that the reliability charge imposed on the 1st respondent was unjustified. This judgment reinforces the principle that tariff impositions must be grounded in clear statutory authority and regulatory frameworks. It also affirms the rights of consumers to challenge regulatory decisions that directly affect their interests, regardless of their participation in initial public hearings.
The decision is a significant reminder of the need for regulatory commissions to adhere strictly to statutory provisions and ensures that the principles of fairness and legal correctness are upheld in tariff determinations.
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