MERC raps BSES over rebates

Maharashtra Electricity Regulatory Commission (MERC) pulled up BSES for offering rebates to certain categories of consumers while terming the "impugned rebates or discounts constitute a departure from the pre-existing tariff without the commission's approval."

MERC in its order also does not allow BSES to recover these rebate amounts from subscribers and says that: "The burden of past rebates and those, if any, extending uptill fresh determination of the tariff by the commission will have to be borne entirely by BSES, leaving the matter of how to compensate themselves for any loss for BSES to determine."

MERC member Jayant Dev said the order implied that: "BSES will effectively not be allowed to claim the amount or rebates offered by them to certain categories of consumers as a legitimate expenditure while computing their costs."

MERC order also notes that the BSES contention that "...rebates had to be given by BSES to meet unfair competition cannot stand in the absence of statutory support for such rebates."

The order comes on a petition filed before MERC by Tata Power Company ( case no.1 of 2003) alleging wrongful grant of rebates by BSES where TPC had prayed that BSES be directed to recover from its consumers the entire amount that was offered as rebate, either through its periodical bills or otherwise by withdrawing earlier bills and preferring amended bills at authorised tariff rates. This plea has not been allowed by MERC.

The commission has cited both the electricity regulatory commission Act as well as the Electricity Act of 2003 which: "explicitly mandate the safeguarding of the interests of consumers. The Schedule VI adjustment mechanism allowed a downward reduction of charges, albeit in a certain manner in stipulated circumstances."

MERC member Jayant Dev told Business Standard that: "The commission has not found it fit to penalize the consumers (by recovering the rebate amounts offered by BSES)."

TPC has placed before the MERC an order dated 23 May, 2000 passed by the Monopolies and Restrictive Trade Practices Commission (MRTPC) against BSES on a complaint filed by the MIDC Marol Industries Association.

"The documents in that matter showed that BSES were providing a "bulk supplier"s tariff differential rebate" to their industrial and commercial consumers with maximum demand of 1000 kw and above and seeking to link these rebates to TPC's tariff," the TPC petition contended. TPC contended that, in this manner, without the approval of the Commission, BSES are diverting their excess profit to match TPC's rates in a manner not permitted by law," the MERC order states.

"TPC's petition also states that BSES have also approached some of TPC's existing consumers with an offer of "Bulk Supplier's Tariff Differential Rate".

It draws attention to BSES' letter dated 20.2.2001 to Bank of India stating that it would be economically advantageous for the Bank to buy power from BSES while at the same time mentioning that "the tariff for all utilities is governed and regulated by MERC".

BSES further assured the Bank that, in the event of any future change in tariff, the percentage difference in energy charges, which is presently 6% less "than the other Utility" will be maintained and a comparative chart of the charges of BSES and TPC was enclosed. BSES had also written to M/s. Vikas Builders and Hindustan Motors offering them rebates if they opted for power from them," the order notes.