Case: TATA POWER COMPANY LTD Vs. ADANI ELECTRICITY MUMBAI LTD

the cost of standby that was applicable in January 1998 i.e., Rs.24.75 crore per month, from its consumers through its tariff, viz. fixed charges and energy charges. This aspect has been dealt with in detail subsequently in this Order. Now, depending on the ratio of sharing of the standby cost determined by the Commission, the consumers of TPC and BSES will have to pay the cost applicable to their respective licensees, in the manner decided by the Commission. *** *** *** 225. The Commission is, however, of the view that the issue of whether the ratio should be applicable on the entire standby component or only on the incremental portion above Rs.24.75 crore, and the recovery of the same from the consumers, is a matter of tariff, which is within the Commissions jurisdiction as held by several Courts, including the High Court judgment on the appeal filed by TPC and BSES on the Commissions Order in the matter of sharing of standby charges. *** *** *** 237. While determining the Annual Revenue Requirement (ARR) of TPC in the separate case before it, the Commission is considering all the payments to be made to or by the respective Parties and the interest and delayed payment charges, and is restating the Clear Profit of BSES and TPC to reflect the true picture, in line with the Commissions decision on the issue of sharing of standby charges. This is being done from FY 1998-99, as the dispute arose during that year. The Commission has drawn from the available reserves and surpluses, wherever required, to ensure that TPC and BSES get their due Reasonable Return on a year-on-year basis, in line with the provisions of Schedule VI. Having ensured that the Clear Profit matches the Reasonable Return on a year-on-year basis, there is no requirement for any additional recovery of any amount from the Parties. The Utilities have to draw from their reserves, as would be elaborated by the Commission, to make the payments as directed by it. *** *** *** 239. Para 26 of the Supreme Court ruling states, inter alia, that After the decision of the Commission, the equities can be adjusted and the excess amount paid by any party can be refunded to it along with appropriate interest or can be adjusted in future bills. 240. The Commission is of the view that interest should be recovered from all parties to the dispute for the amounts paid short vis-à-vis the actual payments due from each party, in accordance with the Commissions computations. The Commission believes that this approach is equitable to all the Parties concerned, and is appropriate in the light of the issues and circumstances of this matter which has been under dispute for such a long time. Hence, the Commission has computed the interest payable by BSES to TPC for delayed payments in FY 1998-99 and FY 1999-00, and the interest payable by TPC to BSES on the excess amounts deposited by aBSES with TPC for onward payment to MSEB. The Commission has considered the fact that the interest rate on delayed payments to MSEB is 18% for overdue over 6 months. However, in this instance, the payment liabilities as between TPC and BSES have been crystallized only now through this Order of the Commission. Moreover, the deposits made by BSES earlier were consequent to Court Orders and were not regular payments. Hence, taking into account the prevailing market interest rates (SBI PLR) in each of these years, the net (simple) interest payable by BSES works out to Rs.8.37 crore, as shown in the table below, which can be adjusted against the refund due to BSES from TPC. 31. The MERC directed sharing of standby charges payable to MSEB between TPC and BSES/REL on the basis of their respective peak load requirements and directed TPC to pay to BSES/REL a sum of Rs.315.30 crores within 15 days. It was also observed that the quantum of standby capacity is related to the larger unit size of the generation in either system. We have no hesitation to accept the majority opinion that standby facility provided by TPC was out of its own generating capacity and 90 percent of the times energy has been drawn by BSES/REL from TPC. Thus, there is no justification for TPC to claim 50:50 percent sharing of the standby charges in the facts of this case on consideration of various factors the decision has been reached. 32. It appears that there was no stay on the order passed by the APTEL by this Court. The plea of non-implementation of the order taken by TPC is not understandable. It was only the bank guarantee which was submitted by TPC, in addition, to deposit of a sum of Rs.227 crores with the Registrar General of this Court. The implementation of the order of the APTEL would mean that the determination made by it has been acted upon and corresponding liability factored into tariff has been passed on the customers and actual consumers and realised from them since there was no such interim stay on implementation of the order. We find force in the submission raised on behalf of BSES/REL that order of APTEL has already been worked out even otherwise it is found to be just and equitable. No case for interference with the same is made out. 33. There is no question of applicability of Article 14 of the Constitution. As a matter of fact, what was agreed in the Principles of Agreement more amount than that has been ordered to be paid on the basis of principles of business equilibrium and other factors as noted above. 34. It may be relevant to mention here that I.A. No.59365 of 2019 and I.A. No. 59356 of 2019 have been filed for substitution of name of Reliance Energy Limited with the agreement of learned counsel for the parties, the name of Adani Electricity Mumbai Limited is substituted as respondent and as appellant in C.A. No. 415/2007 and C.A. No.3229/2007 respectively.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]27. The main principles on the basis of which Agreement was to be reached between TPC and BSES/REL were settled. As per clause 2 of the Principles of Agreement, BSES/REL had to pay to TPC for 220 KV interconnection at Borivali at Rs.3.5 crores per month. The parties had agreed to cooperate in order to ensure that Government order dated 19.1.1998 is implemented in the spirit of it. A detailed power supply agreement was to be entered into by 21.4.1998. The agreement could not be executed as consensus with respect to several aspects could not be reached. The order dated 22.3.2000 has been set aside by the High Court, which order was not interfered with by this Court and the case was remitted for the decision to MERC, which is an expert body. The power was conferred upon the MERC vide notification dated 27.10.2000 under the provision of Section 22(2)(n) of Electricity Regulatory Commission Act, 1998, to adjudicate upon the disputes and differences between licensees and utilities. On 4.12.2000, BSES/REL had filed an application to MERC in respect of sharing of standby charges between BSES/REL and TPC. The prayers were made to regulate action and standby charges levied by them and to fix and determine the standby charges payable by them28. Ultimately, the APTEL by the impugned orders has decided the matter. The Chairman has held that liability to be in proportion of 2:1 tariff, whereas Judicial Member has concurred with the Technical Member when Technical Member differed with the opinion of Chairman, but the fact remains that MERC, as well as the APTEL, concurrently have not accepted the case of the TPC that standby charges should be borne in ratio of 50:50. The decisions of MERC, as well as the Technical and Judicial Members, are found to be correct while terming ratio as 23:77 with respect to BSES/REL and TPC respectively29. In view of the aforesaid facts and circumstances of the case and, in particular, several factors were required to be taken into consideration, on that basis aforesaid figure has been worked out. It has also been considered that electricity used to be purchased by BSES/REL from TPC to the aforesaid extent and the standby charges used to be realised which were factored in the tariff, which liability was ultimately passed on to the retail consumers. Even when the Principles of Agreement have been reached as to standby charges though it was subject to revision basis was fixed which could not have been departed from, it was on consideration of several aspects. The ratio had been appropriately worked out in the most equitable manner by applying the level playing field. Considering the standby charges of Rs.24.75 crores recovered by MSEB from TPC with effect fro 1.10.1996 and as per the Government order and Principles of Agreement Rs.3.5 crores was additionally being available and a difference of standby which was made to increase the liability Rs.24.75 crore per month to Rs.30.25 crores per month. Thus, the decision of the Technical and Judicial Members is found to be appropriate and reasonable while working out the percentage of the standby charges to be paid by BSES/REL to TPC for the period in question31. The MERC directed sharing of standby charges payable to MSEB between TPC and BSES/REL on the basis of their respective peak load requirements and directed TPC to pay to BSES/REL a sum of Rs.315.30 crores within 15 days. It was also observed that the quantum of standby capacity is related to the larger unit size of the generation in either system. We have no hesitation to accept the majority opinion that standby facility provided by TPC was out of its own generating capacity and 90 percent of the times energy has been drawn by BSES/REL from TPC. Thus, there is no justification for TPC to claim 50:50 percent sharing of the standby charges in the facts of this case on consideration of various factors the decision has been reached32. It appears that there was no stay on the order passed by the APTEL by this Court. The plea of non-implementation of the order taken by TPC is not understandable. It was only the bank guarantee which was submitted by TPC, in addition, to deposit of a sum of Rs.227 crores with the Registrar General of this Court. The implementation of the order of the APTEL would mean that the determination made by it has been acted upon and corresponding liability factored into tariff has been passed on the customers and actual consumers and realised from them since there was no such interim stay on implementation of the order. We find force in the submission raised on behalf of BSES/REL that order of APTEL has already been worked out even otherwise it is found to be just and equitable. No case for interference with the same is made out33. There is no question of applicability of Article 14 of the Constitution. As a matter of fact, what was agreed in the Principles of Agreement more amount than that has been ordered to be paid on the basis of principles of business equilibrium and other factors as noted above34. It may be relevant to mention here that I.A. No.59365 of 2019 and I.A. No. 59356 of 2019 have been filed for substitution of name of Reliance Energy Limited with the agreement of learned counsel for the parties, the name of Adani Electricity Mumbai Limited is substituted as respondent and as appellant in C.A. No. 415/2007 and C.A. No.3229/2007 respectively.