In December, 2002, the Commission received a letter dated nil from Shri P.K.Gupta, Advocate acting on behalf of some private parties who are running Rice Mills. In the letter, it was stated that the parties had originally filed a representation with the PSERC and since no action had been taken by the Commission in this regard, they preferred C.W.P.No.19371 of 2002 in the Hon’ble Punjab and Haryana High Court. The C.W.P. was disposed of by the Hon’ble High Court vide their order dated 9.12.2002 by which the Hon’ble Court directed the Commission to decide the original representation of the parties within 4 months.
In the original representation, the parties had raised the following points:-
The parties numbering 7 in all are running Rice Mills which had been declared as seasonal industries by the Punjab State Electricity Board. By according the character of seasonal industry to the Rice Mills which run for a limited period and not for the whole year, it was intended that such industries should be given some relief in the tariff charges as compared to other industries which run for the whole year.
In actual practice, the industries which run for the whole year are required to pay minimum energy consumption charges @ Rs.135/KW/PM, whereas the seasonal industries to which category the representing parties belong, are required to pay minimum energy consumption charges @ Rs.370/KW/PM during the season they are actually running subject to a minimum of 4-1/2 months in a year.
An industry which runs for the whole year is thus required to pay minimum energy consumption charges of Rs.135x12= Rs.1620/KW. On the other hand, if the seasonal industry runs for the whole year, it is required to pay @ Rs.370/KW/PM for 9 months and Rs.135/KW/PM for 3 months making an aggregate of Rs.3735/KW for the full year as minimum consumption charges which is in excess of Rs.2115/KW as compared to the amount paid by the industry running for the entire year. Similarly, if the seasonal industry runs for 4-1/2 months, it is required to pay a minimum sum of Rs.1665/KW(Rs.370x4-1/2 months) while a general industry running for the whole year will pay for the same period only a sum of Rs.1620/- (Rs.135x4-1/2 months), showing thereby that seasonal industry pay Rs.45/KW extra.
It is therefore clear that seasonal industries are being discriminated against in as much as they are being charged much higher consumption charges whereas actually they should be given preferential treatment by charging less than what is to be paid by the general industries running for the entire year. A prayer was thus made that instead of charging Rs.370/KW/PM as Minimum Monthly Charges from the seasonal industries, they should be charged only @ Rs.135/KW/PM as Minimum Monthly Charges like all other industries running for the whole year.
Upon being asked for their views, the PSEB submitted the following main points:-
Rice Mills are indeed treated as seasonal industries on the basis of Regulations framed by the PSEB. The MMC fixed for seasonal industries by the PSEB was further approved by the PSERC vide its Tariff Order dated September 6, 2002. However, it is not correct to say that by treating seasonal industry as a separate category as compared to the general industry, the intention of the PSEB is to pass on some benefit or concession to the seasonal industry which does not run for the whole year.
Rs.135/KW/PM charged from the general industries and Rs.370/KW/PM charged from the seasonal industries are not the energy charges but are actually Monthly Minimum Charges (MMC). The tariff for energy is altogether a different charge and this tariff is the same for the general industry and seasonal industry, i.e. 329 paise/unit for M.S. and 342 paise/unit for L.S.categories applicable for the year 2002-03.
The concept of MMC has a rational basis. As per condition of supply clause No.27, minimum charges are required to be paid by all the consumers to cover fixed charges incurred by the PSEB for affording supply and are on account of depreciation, general reserve, interest, salaries and wages and other fixed expenses. These charges are payable in return for the readiness of the Board to supply energy to every consumer as per the connected load. The MMC for any category of consumers is determined by reference to a particular formula. The most important aspect is that MMC is not reflective of tariff to be charged for energy consumed but is actually chargeable in place of actual energy consumption charges, if the total consumption of power of a consumer in a particular month is less than the particular figure represented by MMC. In other words, if actual consumption of a consumer in a particular month is more than the MMC figure, he will not be charged any M! MC but he will be charged actual charged actual consumption @ tariff fixed for energy consumption which is 329 paise/unit for MS and 342 paise/unit for LS categories for all kinds of industries i.e. seasonal as well as general industries running for the whole year.
There is full justification for having higher MMC for seasonal industry as compared to general industry running for the whole year. Rice Milling industry operates at its peak capacity during part of the year when the paddy crop is processed after harvesting. This character of demand i.e. availing of supply only during a particular part of the year requires that the PSEB should purchase power only during the consumption months. Such power purchases require higher tariff/costs as compared to supply which is to be made available round the year. As per the connected load, PSEB is obliged to supply power at all costs to the seasonal industry. The seasonal industry tariffs have therefore been designed so as to recover the fixed costs associated with the operations of the Board primarily during the seasonal period. The seasonal industry thus has to pay in terms of MMC which is determined on the basis of fixed cost per unit and its utilization factor. The util! ization factor of the Seasonal Industry during the seasonal period is 0.4 as compared to 0.2 for General Industry (Requiring power throughout the year). Because of high utilization factor, the MMC determined for Seasonal Industry is higher as compared to General Industry. It may be reiterated once again that MMC and the energy consumption charges are two entirely different things and MMC is payable in place of the energy tariff only if the actual consumption during a particular month falls below a certain level and if the actual consumption is more than this figure, no MMC is payable and only energy consumption tariff is charged.
Thus, the two categories of seasonal industry and general industry are not comparable and these cannot be equated for purposes of MMC. Of course, the energy consumption tariff is the same for both these categories of industry. There is, thus, no discrimination of any kind being practised against the seasonal industry.
The parties who have made the representation alongwith their counsel were given a hearing on 18-2-2003. It was explained to the learned counsel that PSEB were charging MMC under a log standing practice which was endorsed by the Commission through their Tariff Order dated September 6, 2002. The Commission functions under the provisions contained in the Electricity Regulatory Commissions Act, 1998 and various Regulations framed by the Commission. In the matter of tariff fixation, a set procedure is followed. Before the beginning of the year, PSEB files their estimates for the Annual Revenue Requirement and proposals for tariff adjustments. The Commission notifies the public about these proposals inviting objections from all concerned. Thereafter, public hearings are conducted giving every opportunity to the objectors to present their view point. Considering all the objections and all other available evidence, the Commission determines the ARR for the w! hole year and makes its order with regard to all aspects of tariff fixation for the year. Thus, a completely transparent procedure is followed by the Commission for its entire exercise of tariff determination. Specifically, for the year 2002-03, objections against the MMC filed by different individuals/groups of consumers were duly considered and the Commission decided not to interfere with the rate of MMC for different consumer categories already in vogue. However, it was stated by the Commission in the Tariff Order that in its next Tariff Order, the Commission will make a review of this particular item. It was further explained to the learned counsel for the parties that as per Regulation 7(1) of the Punjab State Electricity Regulatory Commission Tariff Regulations, 2002, tariff once fixed for the year by the Regulatory Commission cannot be amended/modified except with regard to fuel surcharge adjustments. On the basis of any representation, the Commission does not seem t! o have any power to amend or modify its Tariff Order. Any amendment/mo dification could be done by the Commission only on the basis of a review petition. Of course, under Section 27 of the Electricity Regulatory Commission Act, 1998, there is a provision for filing an appeal in the Hon’ble High Court against the Tariff Order passed by the Commission.
In the light of the above, the learned counsel was asked to explain the legal provisions under which the Commission could grant the relief requested by the parties in this case. The learned counsel for the parties requested for time to present his view point on this subject. While granting this request, the Commission further informed the learned counsel that the process for fixation of tariff for the next year commencing from 1st April, 2003 had already started and if the parties in this matter liked they could file their objections to any of the proposals of the PSEB including the rate of MMC for seasonal industries. Even though the last date for filing objections was already over, as a special consideration, the learned counsel was informed that the parties in this matter were at liberty to file their objections within one week. The learned counsel for the parties thereafter filed objection with the Commission highlighting their grievance which shal! l be considered/taken note of by the Commission along with other objections while deciding the Tariff Application filed by the PSEB for the year 2003-04.
When the matter was again taken up on March 10, 2003, the learned counsel for the parties stated that he was unable to quote any legal provisions under which the Commission could modify its own Tariff Order on the basis of representation. The learned counsel stated that he was concerned only with the question that a discriminatory treatment was being accorded to the Rice Shellers which was against law and Constitution and thus they were entitled to immediate relief.
The Commission has minutely perused the provisions of the ERC Act, 1998 and also all the provisions contained in the Punjab State Electricity Regulatory Commission Tariff Regulations, 2002. The clear position seems to be that there is no power vested in the Commission to modify its own Tariff Order for a particular year except through a review petition. This position seems to be in conformity with the facts that the Tariff Order of the Commission has validity generally for one year only and the Tariff Order is passed after following a transparent procedure as indicated above. Furthermore, all consumers are at liberty to file objections against the continuation of any provisions in the Tariff Order in the next year. However, if the grievance of a particular party against the Tariff Order is so acute that it feels that grave injury or injustice would be done if it was required to wait for the new Tariff Order for the next year, the aggrieved party is at liberty to invoke the ! jurisdiction of the Hon’ble High Court through an appeal.
In view of the position stated above, the Commission is in no position to grant any relief to the parties on the basis of their representation. The Commission is of course duty bound to consider the whole matter including the objections if any filed by these parties while determining the tariff in all its aspects for the next year.