New Delhi, Oct. 3: What started as a case involving electricity tariff hike in Calcutta resulted in an all-India order today.
In a 101-page judgment, the Supreme Court gave powers to state electricity regulatory commissions to fix tariff on consumption and also upheld the right of consumers to challenge an increase if it is “unreasonable”.
Justices N. Santosh Hegde, B.N. Agrawal and B.P. Singh set aside a Calcutta High Court order that had allowed CESC Ltd to increase tariff by 17.5 per cent. The May 14 order of the high court, which set aside an award by the West Bengal Electricity Regulatory Commission, was a relief to the loss-making utility.
In its verdict, the three-judge bench said appeals against the order of the state commissions should go to the Central Electricity Regulatory Commission.
The judgment paves the way for significant power reforms in the country. More important, it would force a clampdown on unreasonable subsidies that state governments tend to give to various sections, especially farmers, who form a major vote bank. The court said the state government or the Union government should shoulder the burden of providing power subsidies to these sectors.
A couple of days ago, Tamil Nadu chief minister Jayalalithaa had called for an increase in electricity/power price and said she would refer the proposal to the state electricity regulatory commission.
The apex court ruled that tariff for 2002-2003 would be fixed by the Bengal commission as per “procedure laid down in the Electricity Regulatory Commission Act, 1998”, nullifying Calcutta High Court’s ruling that the 1948 Act had relevance.
The apex court said: “There was no material available for the high court to arrive at a proper tariff as contemplated by the 1998 Act and the high court could not have fixed an ad hoc tariff in the manner in which it was done for the year 2002-03. We think it appropriate that the same should be set aside.”
The bench said state commissions could pass interim orders and also hear complaints of consumers. On the right of consumers, the judges said appeals against the order of a state commission would lie before the Central commission, which also has a “judicial member”.
The court said that on technical and factual matters, courts of law could apply restraint and the commission, consisting of judicial and technical members, would go into the technicalities. It is not for the courts to fix tariff, which involves technical analysis of various factors like costs, working capital and transmission and distribution losses.
The regulatory commissions were also empowered to assess a company’s capability to control transmission and distribution losses. The court refused to entertain an argument that such losses were beyond the control of CESC. It said the company itself had admitted that transmission and distribution losses were not because of power theft alone. .
The court said it was left to the commission to fix transmission and distribution losses for the coming years based on “material available before it, while determining the tariff for the year 2002-03”.
The apex court, however, allowed CESC to claim a transmission and distribution loss of 19 per cent, which is 2.2 per cent more than what was allowed by the Bengal commission.