Power distributor gets relief from apex court

The Supreme Court today stayed Maharashtra Electricity Regulatory Commission's (MERC) order asking the state-owned power distribution utility MSEDCL to refund the charges it collected under supply line charges (SLC) head, from consumers.

It may be recalled that earlier while approving MSEDCL's annual revenue requirement (ARR) for 2006-07. MERC had asked MSEDCL to stop the practice of levying SLC and refund the amount to consumers.

However, due to non-implementation of the order pulling up the power utility, MERC asked, MSEDCL to pay a fine of Rs 2 lakh for non-compliance of the regulator's order.

The MSEDCL charges SLC to consumers if the power utility has to create additional infrastructure for supplying power to the consumer concerned like putting up a sub-station or erecting a transformer or bringing a low tension (LT) line to the area.

However, ruling against this practice MERC said, this is an unfair practice to penalise one particular customer. Instead MSEDCL should include whatever expenditure they might have to make for creating consumer specific infrastructure in its total capital expenditure and should recover it through tariff from next year¿s ARR.

However, MSEDCL's contention was that if we implement the order then there will be a tariff hike of at least 10 paisa across the board as MSEDCL has created infrastructure worth around Rs 400 crore through SLC, said a senior official from MSEDCL.

Elaborating on his point, he said, "If MSEDCL creates an additional infrastructure for a large complex in the satellite town of Mumbai like Thane, Vashi or Virar, why should a consumer in some remote village of the state should pay for it by way of tariff hike".

Besides, the power regulator's order would have created a liquidity crunch for the cash-strapped power utility which is a loss-making firm.

As we would have been forced to spend during one financial year and recover it over the next financial year as tariff, he pointed out.

The MSEDCL challenged the MERC's order in the appellate tribunal for electricity (ATE). However, refusing to entertain MSEDCL's plea, ATE asked MSEDCL to file review petition before MERC, observing that the commission was very well in its right to pass such order.

Finally MSEDCL decided to approach the apex court and got the temporary relief by way of stay.