Petition No.9 of 2008
Date of hearing: 24.6.2008
Date of Order: 29-08-2008

      The Commission in its Tariff Order dated September 17, 2007 approved the tariffs for supply of electricity by the Punjab State Electricity Board (Board) to various categories of consumers. The enhanced tariff was made applicable w.e.f. September 01, 2007. The Chief Secretary to Government of Punjab in a letter dated December 03, 2007 conveyed the decision of the Government to neutralize the effect of enhanced tariff to all categories of consumers and to compensate the Board in line with Section 65 of the Electricity Act, 2003 (Act). The Government, was, on January 1, 2008, asked to confirm the payment of amount of subsidy due on this account to the Board to enable the Commission to pass necessary directions in this respect to the Board under Section 65 of the Act. The Board was also requested by the Commission in its letter dated March 10, 2008 to confirm the receipt of subsidy and its credit to its revenue accounts to enable the Commission in proceeding further in the matter.

      The Board issued a Commercial Circular No. 34 of 2008 0n April 16, 2008 allowing refund of the amount charged on account of tariff hike to the consumers for the period from 1st September, 2007 to 31st March, 2008. As per provisions of the Sections 62 and 65 of the Act and Regulation Nos. 53 (1) and (2) of the Punjab State Electricity Regulatory Commission (Conduct of Business) Regulations, 2005, the Commission is the only authority to determine the tariff for supply of electricity by a Distribution Licensee. The Commission also issued directions in para No. 10.17 of the Tariff Order for the year 2005-06 and in a letter dated August 8, 2005 to the Board to seek approval of the Commission before issue of Commercial Circulars involving tariff matters. The Commission after perusing the Circular No. 34 of 2008, noted that the Commercial Circular appears to have been issued by the Board in violation of the relevant provision of the Act, Regulations and directions of the Commission in the matter.

      A notice was issued to the Board under Section 142 of the Act to show cause why action should not be initiated against it for issue of Commercial Circular No. 34 of 2008 in contravention of the provisions of the Act. The Board filed a reply to the notice stating therein that it has not violated any instructions of the Commission in issue of the impugned circular. The Government had paid the amount of the subsidy due inclusive of the amount of enhanced tariff and accordingly consumers were entitled to refund of amount already paid on this account. During the hearing of the petition, the representative of the Board reiterated the same arguments.       The Commission notes that Section 62 of the Act mandates that appropriate Commission shall determine the tariffs including of retail sale of electricity implying therein that any change in the tariff once determined shall be made only by the Commission. Section 64 (6) of the Act further provides that a Tariff Order shall, unless amended or revoked continue to be in force for the period specified in the Tariff Order. The request of the Government to neutralize the effect of enhanced tariff made applicable with effect from September 1, 2007 was pending with the Commission awaiting confirmation of the payment of subsidy due to the Board and the Government. The issue of the Commercial Circular No. 34 of 2008 allowing refund of the amount of enhanced tariff without awaiting the orders of the Commission constitutes a blatant contravention on the part of the Board of the provision of the Act, Rules and Regulations made there under and directions of the Commission. The Commission is of the considered view that penal action under Section 142 of the Act is called for against the Board considering the manner and circumstances in which the impugned circular was issued without the approval of the Commission. As this is the first such contravention, the Commission is inclined to take a lenient view and imposes a token penalty of Rs.10,000/- on the Board for issue of the Commercial Circular No. 34 of 2008.

Sd/-	Sd/-	Sd/-
Satpal Singh Pall	Baljit Bains	Jai Singh Gill
Member	Member	Chairman

Place: Chandigarh
Date: 29-08-2008