Summary
BSES Rajdhani and BSES Yamuna, Delhi distribution licensees, appealed APTEL's affirmation of DERC's true-up of FY 2008-09 and 2009-10. In truing up, DERC had changed methodologies on collection efficiency, depreciation on consumer-funded assets, salaries of FR/SR employees and fringe benefit tax. It had also refused interest the licensees paid on consumer security deposits still held by DPCL, and computed theft-enforcement sales from the money recovered after Lok Adalat settlements. The Supreme Court allowed the appeals. A tariff order under Section 64 of the Electricity Act, 2003 is quasi-judicial and binding unless amended under Section 64(6) or set aside on appeal. Truing up only reconciles actual figures with projections; it cannot rethink the original methodology. Interest on the deposits is a legitimate expense, and energy assessed under Section 126 must be counted as sales.
Issues
- Whether the appeals under Section 125 of the Electricity Act, 2003 raised substantial questions of law.
- Whether a State Commission can change the methodology of the original multi-year tariff determination at the stage of truing up.
- Whether interest paid by distribution licensees on consumer security deposits retained by the government holding company is an allowable expense.
- Whether energy assessed for theft or unauthorised use under Section 126 must be treated as sales despite monetary discounts in Lok Adalat settlements.
Provisions considered
- Section 125 read with Section 100 CPC, Electricity Act, 2003An appeal lies only on a substantial question of law, tested by whether it directly and substantially affects the parties' rights; such questions were framed on all six issues. (¶¶ 26, 27, 29, 30, 36)
- Sections 61, 62 and 64(6), Electricity Act, 2003A tariff order is quasi-judicial and binding unless amended or revoked under Section 64(6) within its currency or set aside on appeal; re-determination at true-up after the period would be retrospective amendment. (¶¶ 45, 48, 51, 55)
- Section 47(4), Electricity Act, 2003Licensees must pay interest on consumer security deposits even though DPCL never transferred the principal; this interest is a legitimate expense in the ARR. (¶¶ 68, 71, 72)
- Section 126, Electricity Act, 2003Energy assessed for unauthorised use is deemed consumed and must be counted as sales in full, irrespective of rupee discounts given in settlements. (¶¶ 74, 76, 79, 80)
Held
- Truing up is the adjustment of actual amounts against the projections in the ARR; it is not an opportunity for the Commission to rethink de novo the principles, premises and methodology of the original tariff determination. (¶¶ 52, 53)
- Revising a tariff already determined under the guise of prudence check and true-up amounts to amending the tariff order, permissible only under Section 64(6) within the period of the order; the true-up findings changing methodology on collection efficiency (LPSC financing cost), depreciation on consumer-funded assets, FR/SR employee salaries and fringe benefit tax were set aside. (¶¶ 55, 58, 60, 63, 65, 66, 67)
- Interest paid by the licensees on consumer security deposits retained by DPCL must be allowed; if the deposit and interest are later recovered, the excess benefit will pass to consumers, so there is no double benefit. (¶¶ 71, 72)
- Where the law deems assessed energy to be consumed, the fiction must be carried to its logical end; assessed energy in enforcement cases is to be treated as sales, with carrying costs. (¶¶ 79, 80)
Result
Appeals allowed; the orders of DERC and APTEL set aside to the extent indicated, with directions to DERC to allow the consequential impact; parties to bear their own costs.