SCO
220-221, SECTOR 34-A,
Petition No. 20/2002
Date of order: 23.5.2003
IN
THE MATTER OF Petition filed by
the PSEB for review of the order dated
Present Sri R.S.
Mann, Chairman
Sri
S.K. Sharma, Member
Sri
L.S. Deol, Member
ORDER
This Petition was filed by the Board in October 2002 praying for review
of some of the decisions made by the Commission vide its Tariff Order passed on
September 6, 2002 in respect of ARR and Tariff Application for the financial
year 2002-03 filed by Board. No respondent was named by the Board. The Petition
was admitted for hearing. Also on a request made by the Board, it was ordered
by the Commission vide orders dated
2. Accordingly,
public notice was issued in various leading newspapers on
3. The main issues raised by the Board in the
Review Petition are as under:-
a). As
per agreement entered into by the Board with the Railways, the Board is billed
by the Railways for coal freight at gross value including 15% surcharge at the
loading point. Payment of surcharge is subsequently waived off at the unloading
point by the railways provided the prescribed amount of advance towards freight
payment is maintained by the Board with the Railways for the period. Further as
per Electricity Supply (Annual Accounts) Rules 1985, all expenses are booked at
gross value under appropriate accounting heads and any rebate/cash discount
availed is credited to the account head ‘Miscellaneous Receipts’ under non
tariff income. Accordingly, cost of coal for each thermal stations had been
taken at gross value including 15% surcharge and an amount of Rs. 175 crores towards waived off
surcharge had been included under ‘Miscellaneous Receipts’ for the year 2001-02
in the ARR filed by the Board for the year 2002-03. The details of actual
amount of rebate of Rs. 175 crores
availed by the Board during the year at the three thermal stations are also
attached alongwith Review Petition. The Commission
while passing the Tariff Order for 2002-03 had disallowed the inclusion of 15%
surcharge while determining the fuel cost for each thermal station of the
Board, but had not correspondingly reduced the amount from ‘Miscellaneous
Receipts’ while approving the ‘Miscellaneous Receipts’ at the level of Rs. 462 crores for the year
2002-03. The Commission had arrived at the projection of Rs.
462 crores as ‘Miscellaneous Receipts’ for the year
2002-03 by increasing 10% of the Miscellaneous Receipts’ of Rs.
420 crores earned by the Board in the year 2001-02.
This ‘Miscellaneous Receipt’ projection corresponds to Railway rebate of Rs. 192 crores for the year
2002-03. This has resulted in understatement of approved Revenue Requirement
for the year to the extent of Rs.192 crores and
consequent under recovery of legitimate revenue through tariffs to the same
extent. The Board has, therefore, prayed for review of the computations of
Annual Revenue Requirement
in this regard for the year 2002-03 recoverable through tariffs.
b). The Commission has
approved the station heat rate of 2500 Kcal/KWh for GGSSTP, Ropar
and GHTP, Lehra Mohabbat for working out the coal consumption at Themal Stations in view of the norms fixed by the Govt. of
India for all NTPC Thermal Power Stations. While giving reasons for not being
able to achieve the performance parameters with regard to station heat rate
fixed by the Commission, the Board has prayed to review its decision on
imposition of a stiff operational norm with retrospective effect for the year
2002-03 and instead allow a transition period to undertake planned and
approved investments. The Board has accordingly pleaded for waiver from
achievement of the said norm for the year 2002-03.
c). The Commission in its
Tariff Order approved coal transit loss of 3% with a directive to reduce it in
future. The Board has stated that pilferage during transit covering a distance
of over 1500 KM is the biggest hurdle for the Board in achieving improvement in
transit loss. While giving number of technical and other grounds for not being
able to achieve the norms fixed by the Commission, the Board has prayed for a
waiver from achievement of these norms for the year 2002-03 and has suggested
assignment of time bound achievement plan for the subsequent years by the
Commission.
d). The Board has similarly
prayed for review of the computation regarding generation, purchase of power
and other associated costs.
The objections received by the Commission in response to public notice
are almost covering both ARR and Tariff Application for the year 2003-04 as
well as Review Petition filed by the Board for the year 2002-03. The objectors
have questioned the prayers of the Board on merits of the case.
The Commission has perused the Petition and the objections raised by public in writing and during public hearings.
However, before dealing with the issues raised by the Board on merits, the
Commission considers it necessary to first examine and determine the scope of
review admissible under the Act and other legal provisions. The Commission
notes that as per Section 12 read with Section 23 of the ERC Act. 1998, the
State Commission has the powers as are vested in a civil court under the CPC in
respect of review of its orders. Rule 1 of Order XLVII of CPC, in turn, deals
with limits within which a review is permitted. As per this order, the review
is allowed only on three specific grounds, namely :
a) grounds
arising from the discovery of new and important matter or evidence, which after
the exercise of due diligence, was not within the applicant’s knowledge or
could not be produced by him at the time when the order was passed; or
b) on account of some mistake or error
apparent on the face of record; or
c) for
any other sufficient reason.
The Commission feels that in respect of the prayer of the Board for the
review of the order of the Commission pertaining to the Railway surcharge,
there is error on the face of the record as the amount of surcharge has not
been accounted for in the cost of fuel in the ARR but has been accounted for on
the Revenue side in the ‘Miscellaneous Receipts’ .Prayer of the Board is thus
covered by the provision of CPC determining scope of Review and is thus
allowed. The exact quantum of benefit to be allowed will, however, need to be
linked to the actuals while determining the review of
ARR for the year 2002-03 in the ARR for the financial year 2003-04.
As for the prayer for review of other matters made by the Board, no ground
as mentioned in Order XLVII Rule 1 necessitating review of order of the
Commission is attracted in respect of these issues. The decisions on these
matters were well considered and based on facts. All parties were given due and
full opportunity before passing of order by the Commission and the order of the
Commission on these matters is self contained and well reasoned. Most of the
facts/arguments which are now being taken up by the PSEB were available to the
party before the impugned Tariff Order was passed and in fact all these were used and advanced by
the PSEB.
It is, observed that the Regulations framed by the Commission in this
behalf, provide that the ARR is filed by the Board in advance for the
forthcoming year based on estimates and projections for that year and the
Commission proceeds for evaluation of these estimates and projections based on
available facts and figures. The Commission acts as per its own best judgment
for evaluating these estimates/projections. It is quite possible that actuals may vary considerably from the assumptions,
estimates, projections made at the beginning of the year on account of various
reasons. However, corrections in the Tariff Order need not be made immediately
after variation in actuals with
reference to projection/estimates are noticed. Such variations between actuals and projections etc. can continuously occur during
the whole course of operation of the order. Therefore, more appropriate time
for revision of order on grounds of variance between actuals
and estimates could only be after conclusion of the year. This inference is
also supported by the fact that there is no provision in the ERC Act, 1998 for
changing the tariff more than once in a year except for adjustment of Fuel
Surcharge. Moreover, Regulation 7 (1) of the PSERC Tariff Regulations also
provides that tariff shall not be amended more than once in a financial year.
Moreover, Regulation 3 (7) of the Tariff Regulations provides that the Tariff
allowed in any financial year shall be subject to adjustment in Tariff to be
fixed for the subsequent period if the Commission is satisfied that such
adjustments for excess or shortfall is necessary and is not on account of
reason affordable to the utility/Board.
Accordingly, these issues need not be reconsidered through Review at this
stage but shall be duly considered and decided on merits at the time of
finalization of ARR for the year 2003-04, as these already stand agitated by
the Board in its filings.
The Petition is disposed off accordingly.
( L.S.Deol ) (
S.K. Sharma ) (
R.S. Mann)
Member Member Chairman
Place:
Date 23.5.2003