SCO NO. 220-221,
SECTOR 34-A,
Petition No. 5 of 2004.
Date of hearing :
Date of order : 12.4.2004.
In the matter of : Application for passing on the burden of servicing of 8.5% tax free Punjab Government Special Bonds (with year wise liability) to the consumers through ARR of the next financial year 2004-05 and subsequent years.
AND
In the matter of : Punjab State Electricity Board.
Present: Sh. R.S.Mann, Chairman.
Sh. L.S.Deol, Member
For the PSEB: Sh. H.C. Sood, EIC/ Commercial
Sh. B.D.Bansal, Director/ Sales
Sh. V.K.Shanan, Dy.Director/ Sales
ORDER:
The petition of the Board was heard on
2. The Commission noted that finalization of ARR and Tariff Application of the Board for the year 2004-05 may take time in view of the latest application of the Board requesting for withdrawal of the same as well as mandatory provisions of the Act requiring the transmission utility to be separated from the trading activities presently being undertaken by the Board. The Commission further noted that the main plausible purpose of clubbing this petition with the ARR was that the matter involved the question of passing on the burden to the consumers. The issue has, however, already been debated in great detail in the report of the Expert Group. The Expert Group has considered all the related aspects and the practicability of the same. The Group has also noted that the regulatory authorities were unlikely to agree to build in a cushion in future tariffs to allow for payment of past dues. Besides any such effort could be challenged by consumers in judicial courts since they could legitimately object to being made to pay for covering past inefficiencies of the SEBs. In view of these consideration, the Group has clearly recommended that it would be appropriate for the State Government to take on the liability of the SEBs and to discharge it in future from general revenues. Even if it is felt that future consumers of electricity should bear the burden of clearing past dues, it has been considered better by the Expert Group that the State Government may achieve the outcome by levying a duty on electricity. This aspect has been recommended on the ground that this would not require ratification by the regulator and would also be immune from legal challenge. The Group has further stated that part of the burden should be borne by CPSUs as is normal for creditors dealing with bankrupt debtors.
3. The
Commission has considered and agrees with the above views expressed by the
Expert Group. It is not appropriate for
the Commission to pass on this burden to general consumers through ARR. This is so as the ARR is for specific period
and these burdens are for the period not covered under the period of ARR. Adding these costs to ARR will mean burdening
the consumers for past inefficiencies of the Board or covering the accumulated
losses of the Board. Moreover, the
consumer is not really concerned with the specific structure being adopted for supply of power and
will not be willing to accept substantial additional tariff without any
improvement in quality of power. Such an action can easily be challenged in the
court of law and is not likely to stand judicial scrutiny. As such, the course
of action suggested by the Expert Group that the State Government may take this
liability and discharge it in future from general revenues is most appropriate.
The Government can also consider imposing electricity duty for the purpose. In
view of above and the clear recommendations of the Expert Group, the Commission
does not consider it appropriate that these costs be added in the ARR of the
Board or the consumers be loaded on this account. The Petition is, therefore, dismissed.
Sd/-
Sd/-
(L.S.Deol) (R.S.Mann)
Member Chairman
Place :
Dated: 12.4.2004