West Bengal Elect.Regulatory Commn vs Hindalco Industries Ltd.& Ors

WEST BENGAL ELECTRICITY REGULATORY COMMISSION .....APPELLANT(S)

VERSUS

HINDALCO INDUSTRIES LTD. & ORS. ...RESPONDENT(S)

WITH

CIVIL APPEAL NO.3341 OF 2008

JUDGMENT

SURINDER SINGH NIJJAR, J.

1. In these two appeals the appellants are aggrieved by the order

passed by the Appellate Tribunal for Electricity (hereinafter referred to

as `the Tribunal') in Appeal No.3/2007 dated October 31, 2007. The

present Appeal No. 805 of 2008 is at the instance of West Bengal

Electricity Regulatory Commission (hereinafter referred to as `the

Commission'). Appeal No.3341/2008 has been filed by the Calcutta

1 Electricity and Supply Company Limited (hereinafter referred to as

`CESC').

2. We propose to decide the two appeals by this common judgment

as they arise out of the aforesaid common order passed by the

Tribunal.

3. The controversy between the parties revolves around the

methodology, criteria/formula that has to be applied in determining

the wheeling charges in accordance with the applicable Rregulations

framed under the Electricity Act 2003.

4. We may notice here the skeletal facts which are necessary for

the purpose of disposal of these two appeals. HINDALCO Industries

Limited, formerly known as Indian Aluminum Company Limited

(hereinafter referred to as respondent No.1) has an aluminum and

copper products factory at Belurmath in West Bengal within the

distribution licence area of CESC. It had an existing Contract

Demand Agreement for 8.5 MW with CESC drawing power at the

voltage of 33 KV through dedicated lines from the Belurmath receiving

Sub-Station of CESC. For this purpose, respondent No.1 has

installed a 33 KV Sub-Station at its premises. It has a captive power

plant at Hirakud, Orissa. On 31.10.2003 respondents filed an

application under Section 9 and 42 of the Electricity Act, 2003 before 2 the Commission seeking permission for open access to wheel surplus

captive power of an approximately 9 MW from its power plant to its

Belur factory. The distance between the captive power plant at

Hirakud, Orissa and Belurmath plant in West Bengal is about 555

kilometers, out of which 550 kilometers falls within the jurisdiction of

West Bengal State Electricity Board (for short WBSEB), OPTCL and

Eastern Region. We may also notice here that out of these five

kilometers, respondent No.1 had at its own cost put up 2 kilometers

long dedicated transmission line, thus using only 3 kilometers of the

CESC network. Respondent No.1 paid wheeling charges for

transmission of power at the rate of 9.57 paise per unit for 550

kilometers. However, in respect of remaining five kilometers, which

also fall within the State of West Bengal, respondent No.1 has to pay

wheeling charges at the rate of 83.54 paise/kWh as fixed by the

Appellate Commission by its order dated 21.11.2005. In its order

dated 21.11.2005 the Commission had observed as follows:

"26.0 Thereafter, actual of working of open access should follow, naturally depending-upon availability of capacity as laid down in the Regulations on open access. Payments of various charges / fees should follow the provisions of the Regulations dealing with fees, charges and formats. There are still two items on which specific orders from the Commission will be required. The first one concerns the quantum / rate of additional surcharge, while the second one concerns the wheeling charge which will have to be determined by the Commission in terms of Regulation 14.3(b) and Regulation 14.5(b) respectively of the West Bengal Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2005. We have since determined the wheeling charges applicable to CESC Limited for the year 2005-06 based on 3 factors like distribution network cost, units saleable by the distribution licensee to its consumers, units to be wheeled by the open access customer etc. and the same has worked out to 83.54 paise per kWh. This will be revised appropriately, needless to add, by the Commission every year."

5. Aggrieved by the aforesaid order, respondent No.1 challenged

the same before the Tribunal by way of an appeal being Appeal

No.1/2006. The aforesaid appeal was allowed by the Tribunal by its

order dated 11.7.2006. The impugned order of the Commission was

quashed and set aside. The matter was remanded back to the

Commission for a fresh determination of wheeling charges with the

following observations:

"35. It follows that in calculating wheeling charges for the distribution system or associated facilities are to be assessed on applicable distribution network cost, units saleable and units wheeled by all open access customers in the network. The learned counsel for appellant contends that as per CERC (Open Access in Inter-State Transmission) Regulations and WBERC (Terms & Conditions for Open Access -Schedule of Charges, Fees & Formats for Open Access) Regulation, the wheeling charges of the Distributing system should be 0.25 time for short term open access. However, we find from Para 26.0 of the order appealed against, there is no detailed discussion in this respect except holding that 83.54 paisa/kWh shall be the wheeling charges. No particulars been disclosed is the main grievance and Regulations governing wheeling charges have not been applied correctly. The second respondent has stated in its submission that the WBERC determined the wheeling charges in case of WBSEB for 2005-06 at the rate of 56 paisa/kWh and a copy also was filed. In the circumstances with respect to fixation of wheeling charges the matter deserves to be remitted back to WBERC for fresh consideration in the light of the relevant Rules and affording opportunity to appellant. The 4 authority shall take note of the fact that open access within the Distribution area of CESC is applied to a distance of 5 KM and out of 5 KM, 2 KM distance is appellant's dedicated transmission line put up at its costs."

6. Upon remand, the matter was again heard, and decided by the

Commission vide order dated 16.11.2006. By this order the

Commission sought to demonstrate and detail the methodology for

determining the wheeling charges payable by respondent No.1. The

wheeling charges were re-determined by the Commission

at 83.54 paisa per KWH. Again being aggrieved by the aforesaid

order, respondent No.1 impugned the same before the Tribunal by

way of Appeal No.3/2007.

7. We may notice here that in both the matters before the

Tribunal, respondent No.1 had challenged the determination of

wheeling charges for the year 2005-06. Initially, respondent No.1 had

challenged the order passed by the Commission on 21.11.2005 in

Appeal No.1/2006. By order dated 11.7.2006 Appeal No.1/2006 was

allowed and the matter was remanded back to the Commission for

fresh determination of wheeling charges. It was observed that there

was no detailed discussion in the order which would throw light upon

the manner and methodology behind determination of wheeling

charges. The grievance made by respondent No.1 which was noticed

by the Tribunal was that "no particular wheel disclosed is the main

5 grievance and regulation governing wheeling charges have not been

applied correctly."

8. Taking note of the aforesaid observations, the Commission

re-determined the wheeling charges. It is the case of the appellants

herein that wheeling charges had been correctly re-determined on the

basis of the total distribution network cost as mandated under the

Commission (Terms and Conditions for Open Access -Schedule of

Charges, Fees & Formats for Open Access) Regulations, 2005; the

West Bengal Electricity Regulatory Commission (Terms and

Conditions for Open Access) Regulations 2005 as well as the West

Bengal Electricity Regulatory Commissions (Terms and Conditions of

Tariff) Regulations, 2005.

9. It is claimed by the appellants that the formula/

methodology/criteria for determining wheeling charges has to be in

terms of form 1.27 attached to the Tariff Regulations, 2005. In spite

of the clear and categorical statutory provisions contained in the

applicable regulations, the appellants have been wrongly directed by

the Tribunal to re-determine the wheeling charges on the basis of

applicable network of 33 KVW distribution system on which the

electricity is being rolled by respondent No.1. The appellants had laid

considerable emphasis on the submissions that the determination of

wheeling charges based on the interpretation directed by the Tribunal 6 would be ex facie contrary to the scheme contemplated under the

applicable regulations framed under the Electricity Act, 2003

governing determination of wheeling charges. A combined reading of

all the applicable regulations, according to the appellants, leads to the

irresistible conclusion that for determining wheeling charges total

distribution cost of the network and not the voltage-wise cost would

be the determining factor. The interpretation made by the Tribunal, if

accepted, would render the regulation framed by the appellant otiose.

The Tribunal incorrectly understood and interpreted the expressions

applicable distribution network as the distribution network cost

which is to be determined at the relevant voltage level.

10. At this stage we need not decide any of the issues raised by the

appellants as, in our opinion, the appeals have to be allowed on the

short ground that the Tribunal has failed to consider the objection

raised by the appellants with regard to the maintainability of the

appeal filed by respondent No.1, before the Tribunal.

11. Both the appellants had categorically stated before the Tribunal

that respondent No.1 has sought to challenge the wheeling charges

for the year 2005-06 as determined by the Tribunal in the order dated

16.11.2006. During the year 2005-06 not a single unit of energy was

wheeled by respondent No.1 and therefore no wheeling charges were

paid/payable. Therefore, the appeal filed by respondent No.1 herein 7 was at best of an academic interest only, as at the relevant point of

time when Appeal No.03/2007 was filed the wheeling charges for the

year 2006-07 had already been determined. It was also mentioned

that for reasons best known to respondent No.1 herein the wheeling

charges for 2006 were not challenged in the appeal before the

Tribunal. In any event since respondent No.1 had not wheeled any

power during the period 2005-06, it did not have to pay any wheeling

charges in the first place. Thus, the appeal ought to have been

dismissed as having become infructuous. It is emphasised by the

counsel for the appellant that detailed written notes were submitted

before the Tribunal during the course of hearing in Appeal No.3/2007.

Thereafter also written submissions were filed detailing the scope of

the issues before the Tribunal. Copies of these written submissions

have been placed before us as an annexure to the grounds of appeal.

12. The specific submission made by the appellant with regard to

the maintainability of the appeal was an important issue which

needed consideration by the Tribunal. Numerous issues, which have

been raised in these appeals on merits, were also raised before the

Tribunal which seem to have escaped the notice of the Tribunal

rendering its decision vulnerable. In our opinion, it would be in the

interest of justice to remand the matter back to the Tribunal for fresh

consideration of all the issues after taking into consideration the

factual and legal submissions made by the appellant. In view of the 8 above both the appeals succeed and are allowed. The order passed by

the Tribunal is set aside. The appeals are remanded back to the

Tribunal to be decided afresh on merits, in accordance with law

preferably within a period of three months of the receipt of a certified

copy of this order.

13. Appeals are allowed as indicated above with no order as to

costs.

.........................................J. [ B. SUDERSHAN REDDY ]

...........................................J. NEW DELHI; [ SURINDER SINGH NIJJAR ] APRIL 22, 2010.

9