BEFORE THE UTTAR PRADESH ELECTRICITY REGULATORY COMMISSION Quorum ShriDesh Deepak Verma, Chairman Smt. Meenakshi Singh, Member Shri I. B. Pandey, Member In the matter of Investigate and to take appropriate action against M/s Torrent and further to cancel the license of DVVNL. Individual(s): whose attendance is required. Petitioner Shri Rama Shankar Awasthi, Village Rithari, Post Kurara, Distt. Hamirpur and persent residence 301- Surabhi Deluxe Apartment, 6/7 Dali Bagh, Lucknow. Respondents Versus 1. Chairman and Managing Director, Uttar Pradesh Power Corporation Ltd., Shakti Bhawan, 14 Ashok Marg, Lucknow. 2. Managing Director, Dakshinanchal Vidyut Vitran Nigam Ltd., Urja Bhawan, 220 KV Sub-station, Agra. 3. M/s Torrent Power Limited, Torrent House, Suresh Plaza Market, M.G. Road, Agra (UP) The following were present: 1. Shri R. P. Prasad, Superintending Engineer, UPPCL 2. ShriAmarjeet Sigh Rakhra, Advocate, Counsel for UPPCL 3. Shri Rama Shankar Awasthi, Petitioner 4. PrafulThakkar, General Manager, Legal 5. Shri Harish Kundu, Manager, Legal, Torrent Power Ltd. Page 1 of 9
ORDER (Hearing on 03.02.2014) The instant petition has been filed by Shri Rama Shankar Awasthi under Sections 128 and 129 of the Electricity Act, 2003 read with Sections 26 and 27 of U.P. Electricity Reforms Act, 1999 for investigation of agreement dated 18.05.2009 and supplementary agreement dated 17.03.2010 purportedly entered into between U.P. Power Corporation Limited/ Dakshinanchal Vidyut Vitran Nigam Limited and Torrent Power Limited whereby the U.P. Power Corporation Limited / Dakshinanchal Vidyut Vitran Nigam Limited for distribution and supply of electrical energy in Agra city by Torrent Power Limited. It is alleged that by the said agreement and supplementary agreement the U.P. Power Corporation Limited / Dakshinanchal Vidyut Vitran Nigam Limited had transferred the entire assets of the urban area of Agra to Torrent Power Limited without prior approval of the Commission under as required under Section 17 of the Electricity Act, 2003. The petitioner further prayed to take appropriate action against the U.P. Power Corporation Limited and to investigate and cancel the license of Dakshinanchal Vidyut Vitran Nigam Limited in respect to urban area of Agra City. Brief History: The legislative history of the electricity industry in the State of U.P. is stated that prior to 1999, the authority to generation, transmission and distribution of electrical energy vested in U.P. State Electricity Board, a statutory body constituted under Section 5 of Electricity (Supply) Act, 1948. The U.P. State Electricity Board was under a statutory obligation to function with an objective of larger public welfare and interest instead of vertical profit motive. The Government of U.P. unbundled the U.P. State Electricity Board into three separate Corporations vide U.P. Electricity Reforms Transfer Scheme, 2000 notified under Section 23 of U.P. Electricity Reforms Act, 1999. The function of generation of U.P. State Electricity Board along with its assets, obligations etc. was transferred to U.P. Jal Vidyut Vitran Nigam Limited and U.P. Thermal Power Generation Limited. The U.P. Power Corporation Limited was assigned the function of transmission and distribution of electrical energy in the State of U.P. with a further objective that the Page 2 of 9
function of distribution shall further be transferred to other companies, which would be constituted only for distribution and supply. The U.P. State Electricity Board for all practical purposes thus ceased to function. Its duties, power, assets etc. stood transferred to the U.P. Jal Vidyut Vitran Nigam Limited, U.P. Thermal Power Generation Limited and U.P. Power Corporation Limited. The responsibility for setting of tariff and looking after the interest of the electricity industry was distanced from the State Government and was given to the Commission. The Commission was constituted to control and monitor functioning of Licensee. Submissions by the Petitioner: The U.P. Power Corporation Limited was granted license on 04.10.2000. The Central Legislature enacted Electricity Act, 2003 and by virtue of Section 185 of Electricity Act, 2003 the Indian Electricity Act, 1910, Electricity (Supply) Act, 1948 and Electricity Regulatory Commission Act, 1998 have been repealed in their entirety. In terms of Section 185 (3) of the Act, 2003, U.P. Electricity Reforms Act, 1999 specified in the Schedule, not inconsistent therewith shall apply to the States in which such enactments are applicable. In second round of unbundling, four distribution companies namely, (i) Dakshinanchal Vidyut Vitran Nigam Limited; (ii) Madhyanchal Vidyut Vitran Nigam Limited; (iii) Purvanchal Vidyut Vitran Nigam Limited and (iv) Paschimanchal Vidyut Vitran Nigam Limited were incorporated in 2003. In second round of unbundling, distribution and supply of electrical energy stood transferred to these four companies vide U.P. Power Sector Reforms (Transfer of Distribution Undertakings) Scheme, 2003 notified on 12.08.2003. The Distribution Companies are successors of U.P. Power Corporation Limited. The U.P. Power Corporation Limited thus ceases to be a Licensee. By virtue of proviso of Section 82 (1) of the Electricity Act, 2003 the Commission constituted under U.P. Electricity Reforms Act, 1999 continued to function for the purpose of Electricity Act, 2003. Under the Electricity Act, 2003 transmission, distribution and trading of electricity became licensed activities. Section 12 of Electricity Act, 2003 creates a complete bar for any person engaging in transmission, distribution and trading of electricity without a license under Section 14 of the Act, 2003. In exercise of power conferred by Section 3 of Electricity Act, 2003 the Central Government notified Page 3 of 9
the National Electricity Policy dated 12.02.2005 and Tariff Policy dated 06.01.2006. Section 17 of the Electricity Act, 2003 provides that any agreement relating to any transaction specified in sub-section (1) or (3) of Section 17 of Electricity Act, 2003 shall be void unless the same is made without prior approval of the Commission. Section 42 of Electricity Act, 2003 makes out explicit provisions delineating duties of licensee to develop and maintain an efficient, coordinated and economical system in his area of supply. In order to discharge its universal obligation to supply electricity on request to the consumers' premises as envisaged in Section 43 of Electricity Act, 2003, the licensee has a binding duty imposed by Section 42 (1) of Electricity Act, 2003 to develop and maintain an efficient, coordinated and economical distribution system in his area of supply. Under Section 43 of Electricity Act, 2003, a duty is imposed upon the Licensee to supply electricity on request. Section 49 of Electricity Act, 2003 provides that no agreement can be made for the purpose of supply and purchase of electricity by any person whosoever, where access has been granted to certain consumers, without the prior approval of the Commission. Section 61 of Electricity Act, 2003 makes provision for specification of determination of terms and conditions of tariff by the Commission and Section 62 of Electricity Act, 2003 enables the Commission to determine the electricity tariff or the charges for consumption of electricity. Section 63 of Electricity Act, 2003 provides procedure for determination of electricity tariff. The Dakshinanchal Vidyut Vitran Nigam Limited has been granted license under Section 14 of the Electricity Act, 2003 on 21.01.2010 for distribution of electricity in the area notified in the U.P. Power Sector Reforms (Transfer of Distribution Undertakings) Scheme, 2003 including Agra City. The petitioner alleged that by virtue of agreement dated 18.05.2009 and supplementary agreement dated 17.03.2010, U.P. Power Corporation Limited / Dakshinanchal Vidyut Vitran Nigam Limited has given permission to M/s Torrent Power Limited to operate and, maintain the distribution system and supply electricity to the consumers of urban area of Agra with the permission to make investment thereof. He further alleged that the U.P. Power Corporation Limited / Dakshinanchal Vidyut Vitran Nigam Limited have transferred the assets of the urban area of Agra without prior approval of the Page 4 of 9
Commission. The prior approval of Commission is mandatory vide Section 17 of the Act, 2003. The petitioner further submitted that the franchisee of urban area is not permissible under Section 13 of the Electricity Act, 2003. It is alleged that U.P. Power Corporation Limited / Dakshinanchal Vidyut Vitran Nigam Limited transferred the utility of the Licensee without prior approval of the Commission. It is alleged that by virtue of agreement and supplementary agreement, the Dakshinanchal Vidyut Vitran Nigam Limited has absolved itself from the statutory duty under Section 43 of Electricity Act, 2003, which is not permissible under law. The U.P. Power Corporation Limited / Dakshinanchal Vidyut Vitran Nigam Limited and Torrent Power Limited has entered into an agreement and supplementary agreement de-hors the Section 49 of Electricity Act, 2003. The petitioner contended that under the agreement and supplementary agreement, the Torrent Power Limited has been authorized to collect the payments of energy consumed from the customers, grant new connection to the prospective consumers and recover fee for the same in its own name. The petitioner further stated that under Section 62 of Electricity Act, 2003, in the matter of framing of tariff, the final authority lay with Commission and no person has any authority to decide the rate for supply of electricity to franchisee. In the present case, U.P. Power Corporation Limited / Dakshinanchal Vidyut Vitran Nigam Limited and Torrent Power Limited on their own fixed schedule of annualized input rates and such action of U.P. Power Corporation Limited/ Dakshinanchal Vidyut Vitran Nigam Limited is amounting to willful and deliberate violation of tariff orders passed by the Commission in exercise of power under Section 62 of Electricity Act of 2003. The petitioner alleged that neither the schedule of annualized input rates has been approved by the Commission nor the Commission has fixed bulk supply tariff for Torrent Power Limited and as such fixing of schedule of annualized input rates, which has not been approved by the Commission is illegal. The petitioner placed reliance upon earlier order dated 05.09.2006 passed by the Uttar Pradesh Electricity Regulatory Commission restraining appointment of CESS as input based franchisee by the Madhyanchal Vidyut Vitran Nigam Limited. Page 5 of 9
During the course of arguments, the learned counsel of Torrent also submitted that all these issues have been discussed in the Appeal No. 239, 240, 241, 243 of 2012 & Appeal No. 11, 12 and 160 of 2013 before the Hon ble Aptel and the Hon ble Aptel has decided these issues. The Commission finds that Aptel in its order dated 18.11.2013 in above appeals has directed:- In view of our findings, these Appeals are partly allowed. The State Commission is directed to pass the consequential orders in the light of our finding referred to above, after hearing the parties. Thus, it is clear that the Hon ble APTEL has not given its final findings in the Appeal mentioned on several points raised above. In fact, the Hon ble APTEL has directed this Commission to pass the consequential orders in which the findings of the Hon ble APTEL be kept in mind. In view of this, the Commission decides to proceed further in the present petition. A. The Commission directs DVVNL to explain that under which provisions of Electricity Act 2003, it has entered into an agreement with M/s Torrent Power Ltd. for distribution of electricity in the urban area of Agra when DVVNL itself was not a Distribution Licensee. B. The Commission directs Dakshinanchal Vidyut Vitran Nigam Limited to explain the reasons whether the transfer of assets is in accordance with the Electricity Act 2003. C. The Commission finds that:- (i) DVVNL has supplied 1905 MU at the input points to M/s Torrent Power Ltd. at the rates below the bulk supply tariff rates decided by the Commission. (ii) DVVNL supplied power above 1905 MU at the input points to M/s Torrent Power Ltd. in contravention to the agreement under which this power has to be procured from other sources under the regulatory frame work. Neither the Dakshinanchal Page 6 of 9
Vidyut Vitran Nigam Limited nor Torrent Power Limited has ever approached to the Commission for procurement of expected energy shortfall. The Commission directs DVVNL to explain why power was supplied to M/s Torrent Power Ltd. below the bulk supply tariff rates fixed by the Commission and to reply why the power above 1905 MU was supplied to M/s Torrent Power Ltd. at the same rates and in contravention to the agreement without any regulatory approval. D. The Commission further directs DVVNL to explain that why this advantage of supplying power below the bulk supply tariff rates fixed by the Commission to M/s Torrent Power Ltd. should not be recovered from M/s Torrent Power Ltd and shared with other consumers of the Discom. E. The respondents shall also file their response along with relevant material and facts on the following facets: (1) The Dakshinanchal Vidyut Vitran Nigam Limited shall provide total number of units supplied to Torrent Power Limited on monthly basis with effect from 31.03.2010/ 01.04.2010. (2) The Dakshinanchal Vidyut Vitran Nigam Limited shall provide rate of 1905 MUs energy supplied to the Torrent Power Limited. (3) The Dakshinanchal Vidyut Vitran Nigam Limited shall also provide rate of energy over and above of 1905 MUs energy. (4) The Dakshinanchal Vidyut Vitran Nigam Limited shall file specific affidavit under whose authority and what rate excess energy was supplied to the Torrent Power Limited. Page 7 of 9
(5) The Dakshinanchal Vidyut Vitran Nigam Limited shall also provide details of extra charges levied for additional energy drawl by the Torrent Power Limited. (6) The Torrent Power Limited shall provide total consumption of electricity on yearly basis with effect from 31.03.2010/ 01.04.2010. (7) The Torrent Power Limited shall provide details of power purchase from other sources. (8) The Torrent Power Limited shall also provide details of cross subsidy surcharge and wheeling charges. (9) The Torrent Power Limited shall provide yearly line losses with effect from 31.03.2010/ 01.04.2010. (10) The Dakshinanchal Vidyut Vitran Nigam Limited and Torrent Power Limited shall also provide details of the line losses. (11) The Dakshinanchal Vidyut Vitran Nigam Limited and Torrent Power Limited shall provide details of the total number of theft cases booked, total realization of compounding charges, total number of FIRs lodged against the consumers, realization of assessment amount, total realization of electricity duty, total realization of security amount, total realization of system loading charges, recovery of service connection charges and other miscellaneous charges recovered, if any. (12) The Dakshinanchal Vidyut Vitran Nigam Limited shall provide total number of energy supplied in the month of March 2010 and total recovery of amount against March 2010 by the Dakshinanchal Vidyut Vitran Nigam Limited and Torrent Power Limited. Page 8 of 9
(13) The Dakshinanchal Vidyut Vitran Nigam Limited shall also provide as to whether total recoverable amount for the month of March 2010 was transferred or not and specify the amount and date of payment. The matter is very old and, therefore, Dakshinanchal Vidyut Vitran Nigam Limited and Torrent Power Limited may file their reply within a period of three weeks and one week thereafter is allowed to the petitioner to file replica, if any. (I. B. Pandey) (Meenakshi Singh) (Desh Deepak Verma) Member Member Chairman Dated: 12.05.2014 Page 9 of 9