Appellate Tribunal for Electricity: In an appeal filed, where the Appellant-Distribution Licensee complained of high aggregate revenue requirement (‘ARR’) fixed by the MERC and sought interim stay on the tariff hike by the Maharashtra Electricity Regulatory Commission (‘MERC’), Ramesh Ranganathan J. and Sandesh Kumar Sharma, Technical Member granted interim stay on the impugned order of the MERC.
The MERC fixed the appellant’ tariff at Rs. 8.42/kwh whereas the estimated average cost of supply was Rs. 7.03/kwh. This increase of tariff by Rs. 1.39/kwh along with other factors burdened the consumers with higher tariff and may result in flight of the appellant’s consumers to other Distribution Licensees operating in Mumbai. The instant application filed by the appellant sought ex-parte ad-interim stay on tariff schedule for financial year 2023-24 and ARR approved by MERC in judgment dated 31-03-2022.
The Tribunal relied on a catena of cases to recount that the grant or refusal of interlocutory relief is covered by three principles:
1. Whether the Appellant made out a prima facie case,
2. Whether the balance of convenience was in their favour; and
3. Whether the appellant would suffer irreparable injury.
As per Tribunal, with the first condition as a sine quo non, at least two conditions should have been satisfied by the appellant conjunctively, and a mere proof of fulfilment of one of the three conditions did not entitle them to the grant of interlocutory relief in their favour.
The Tribunal noted that the abnormal hike in the tariff would render the appellant uncompetitive and showed concern with the prima facie effect of hike on the consumers in Mumbai. The Tribunal pointed out that the hike was in violation of Section 61 (d) of the Electricity Act and against the larger public interest, which is one of the critical factors to be taken into consideration in deciding whether to grant interim relief. On the second issue, the Tribunal referred to U.P. Power Corpn. Ltd. v. NTPC Ltd., (2009) 6 SCC 235, wherein the Supreme Court observed that the jurisdiction of the Appellate Tribunal is wide; it is also an expert tribunal and, thus, it can interfere with the finding of the Central Commission both on fact as also on law; and both the Central Commission as also the Appellate Tribunal are expert bodies. Therefore, the Tribunal held that what applies to the Central Commission would undoubtedly apply to the MERC also. On the question of whether the MERC has power to fix a tariff higher than that proposed by the licensee, the Tribunal relied on Amausi Industries Association v. Uttar Pradesh Electricity Regulatory Commission, 2013 SCC OnLine APTEL 138 wherein, it was clarified that the Commission was not bound by the proposals of the licensee underestimating a cost item. The Commission has a duty to consider various factors before fixing a tariff higher than the one sought by the licensee. However, in Bangalore Electricity Supply Company Limited v. Karnataka Electricity Regulatory Commission, Appeal No. 15 of 2008 dated 09.10.2009, it was held that “it is not for the Commission to assume day to day duties and responsibilities of the appellant as it is the appellant alone who has to ensure power supply and who should estimate the requirement of power.”
The Tribunal analysed the facts of the instant matter and remarked that “By first fixing the quantum of procurement of power from the costlier embedded generation, and only the balance from cheaper imported power, MERC has not only violated the merit order principle, but has also forced consumers of the appellant to pay a far higher tariff than they would otherwise have been required to pay or, in the alternative, to migrate to the other distribution licensees.” It further suggested that “ought to have considered procurement of cheaper power from outside Mumbai to the maximum extent technically possible, and provided for procurement of only the balance from the embedded generation subject, of course, to the technical minimum of “must run”, thereby ensuring utilization of minimum embedded generation and the remaining power from cheaper sources outside Mumbai.”
Further, the Tribunal perused Section 111(1) of the Electricity Act, 2003 which states that any person aggrieved, among others, by an order made by the Appropriate Commission (which would include the MERC) under this Act may prefer an appeal to the Appellate Tribunal for Electricity; and concluded that the power exercised by the Tribunal to interfere with the orders of the regulatory Commission including MERC, is an appellate power. The Tribunal reiterated that the essential criterion of appellate jurisdiction is that it revises and corrects the proceedings in a cause already instituted and does not create that cause.
The Tribunal observed that the Commission before fixing the tariff than that proposed by the licensee should dispassionately take into consideration all relevant factors which contribute to the determination of fair price. It ultimately viewed that permitting procurement of cheaper power would have resulted in a reasonable and economical tariff being imposed on consumers in Mumbai.
The Tribunal advised MERC that in discharging its obligations under Section 61(d) of the Electricity Act of safeguarding consumer interests, and on application of the merit principle should have first ascertained the quantum of cheaper power which can be imported from outside Mumbai, and should have permitted the appellant to procure such power, subject to procurement of the minimum quantum required to be obtained from embedded generating units operating on a must run situation or the technical minimum.
Therefore, the Tribunal said that the cost of power procurement from Appellant at Rs.7.30 / Kwh and 7.44 / Kwh, is far higher than the cost of power from outside Mumbai sources and thus the Appellant was not amiss in proposing to procure power from cheaper sources as that would not only ensure its competitiveness but also serve the interests of its consumers by way of a lower tariff.
Also, the Tribunal opined that MERC has not been able to show any rational basis on which it had allocated the available transmission corridor among the three distribution licensees of Mumbai City. Therefore, the Tribunal, prima facie, was of the view that even if the entire quantum of energy sought to be imported by the Appellant from outside Mumbai had been allowed by MERC, further spare transmission capacity, in terms of MUs for import of power into Mumbai Region, would still have been available. Thus, permitting procurement of cheaper power from outside Mumbai to the maximum extent possible, while at the same time ensuring minimum embedded generation (though far costlier) to be kept under reserve as secure power to meet the contingency conditions on the directions of the SLDC, would have resulted in a reasonable and economical tariff being imposed on consumers in Mumbai.
The Tribunal was satisfied that the balance of convenience lied in favour of the appellant who would suffer irreparable injury in the absence of interim relief in the instant matter, while the MERC would not suffer any substantial prejudice. The Tribunal was cautious enough not to set aside the impugned order and remand the same back to MERC but granted interim stay on tariff schedule of 2023-24 approved in judgment dated 31-03-2023.
[Tata Power Company Ltd. v. Maharashtra Electricity Regulatory Commission, 2023 SCC OnLine APTEL 23, Order dated 13-07-2023]
Advocates who appeared in this case :
Counsel for petitioner: Senior Advocate C.S. Vaidyanathan, Senior Advocate Basava. P. Patil, Advocate Shri Venkatesh, Advocate Ashutosh Srivastava, Advocate Bharath Gangadharan, Advocate Shivam Kumar, Advocate Nihal Bharadwaj, Advocate Aashwyn Singh;
Counsel for respondents: Senior Advocate Ramji Srinivasan, Advocate Arijit Maitra, Advocate Pratiti Rungta.
