Case: M/S. Sesa Sterlite Ltd Vs. Orissa Electricity Regulatory Comm

5. These facts are in narrow compass and have been narrated succinctly by the Appellate Tribunal in its order. As there is no dispute about the correctness of these facts, we intend to traverse the same therefrom. The Appellant is engaged in the business of production and export of aluminium. The Appellant has set up a 1.25 MTPA capacity aluminium smelter project in a sector specific Special Economic Zone. After getting all necessary approvals for the development of SEZ for manufacture of export of aluminium the appellant set up the aforesaid plant. These approvals include the approval with captive power plant as well. It is also a matter of record that on 27th February, 2009 the Ministry of Commerce and Industry, Government of India issued a notification declaring the unit of the Appellant to be SEZ. It was followed by Notification dated 3rd March, 2010 under Section 49(1) of the SEZ Act. By the said notification, the Central Government of promoting the objects of Special Economic Zone and in terms of powers delegated under the Special Economic Zone Act, introduced a proviso to the provisions of Section 14(b) of the Electricity Act, 2003. By the said introduction, a developer of a Special Economic Zone was declared as a deemed licensee authorized to distribute electricity within the Special Economic zone area. The effect of the aforesaid Notification under section 14(b) of the Electricity Act is that the Appellant became a deemed Distribution Licensee.6. It would be pertinent to mention at this stage that the units of the Appellant are divided into two broad areas. One is Domestic Tariff Area (DTA) where it has established one of its unit. Other unit is VAL-SEZ which is in SEZ (hereinafter referred to as VAL-SEZ Unit). In so far as its unit in DTA is concerned, it draws power from open access and duly phased pays cross subsidy surcharge for this area. There is no dispute to this extent. In the present Appeal, we are concerned with VAL-SEZ which is in SEZ Area where the Appellant is stated as deemed Distribution Licensee for the purpose of Electricity Act by virtue of Notification under Section 14(b) of the Electricity Act.7. For supply of energy to this unit in SEZ Area (VAL-2), the Appellant entered into a PPA on 18th August, 2011 with Sterlite Energy Ltd. which was arrayed as Respondent No.4 in the Appeal. However during the pendency of the Appeal under the scheme of merger approved by the High Court, Sterlite stood merged with the Appellant itself and because of this reason the Respondent No.4 (hereinafter referred to ashas been deleted from the array of parties at the instance of the Appellant.8. Since the supply of power by a Generating Company to Distribution Company is regulated under the provisions of Electricity Act, 2003, the Appellant on 30th August, 2011 filed a petition before the State Commission for approval of the said PPA. Subsequently, the State Commission at the preliminary hearing sought some clarifications with regard to the factual aspects. The Appellant, thereafter filed two amendment petitions. One was on 8th November, 2011 and another was on 27th March, 2012 seeking for the additional prayer requesting the State Commission to grant deemed distribution licence in favour of the Appellant on the strength of the Government of India notification issued dated 3rd March, 2010 with effect from the date of the said notification.9. As already pointed out above, the State Commission rejected this application for grant of deemed Distribution Licensee and subsequently rejected the prayer of the Appellant for approval of PPA also. The State Commission, while doing so held asSince the Application for grant of Distribution License was rejected, State Commission did not consider it necessary to go into the issues relating to the PPA.b. Consequent upon the rejection of the Application for grant of Distribution License, State Commission held that VAL is to be treated as a consumer of WESCO.c. As a result, VAL has to pay cross subsidy surcharge to WESCO for open access drawal of power from SEL.This Order of the State Commission has been upheld by the Appellate Tribunal in Appeal filed by the Appellant.

Reasoning: 21. Before adverting to this central issue, it would be apt to understand conceptually the rationale of payment of such CSS to the Distribution Company, under the scheme of the Electricity Act. The first enactment to govern electricity supply in India was passed in the year 1910 viz. the Electricity Act, 1910. This Act envisaged growth of electricity industry through private licences. It created the legal framework for laying down of wires and other works relating to the supply of electricity. Thereafter, the Electricity (Supply) Act, 1948 mandated the creation of a State Electricity Board. The Board assigned the responsibility of arranging the supply of electricity in the State. It was experienced that over a period of time the performance of State Electricity Boards had deteriorated on account of various factors. Main failure on the part of these Electricity Boards was to take decision on tariffs in independent manner and cross subsidies had reached untenable levels. To address this issue and also to distance governance from determination of tariffs, the Electricity Regulation Commission Act was enacted in the year 1998. This Act created regulatory mechanism. Within few years, it was felt that the three Acts of 1910, 1948 and 1998 which were operating in the field needed to be brought in a new self contained comprehensive legislation with the policy of encouraging private sector participation in generation, transmission and distribution and also the objectives of distancing the regulatory responsibilities from the Government and giving it to the Regulatory Commissions. With these objectives in mind the Electricity Act, 2003 has been enacted. Significant addition is the provisions for newer concepts like power trading and open access. Various features of the 2003 Act which are outlined in the statement of objects and reasons to this Act. Notably, generation is being delicensed and captive generation is being freely permitted. The Act makes provision for private transmission licensees. It now provides open access in transmission from the outset.(2) Open Access and CSS22. Open access implies freedom to procure power from any source. Open access in transmission means freedom to the licensees to procure power from any source. The expressionas been defined in the Act to meannon-discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the AppropriateThe Act mandates that it shall be duty of the transmission utility/licensee to provide non-discriminatory open access to its transmission system to every licensee and generating company. Open access in transmission thus enables the licensees (distribution licensees and traders) and generating companies the right to use the transmission systems without any discrimination. This would facilitate sale of electricity directly to the distribution companies. This would generate competition amongst the sellers and help reduce, gradually, the cost of generation/procurement.23. While open access in transmission implies freedom to the licensee to procure power from any source of his choice, open access in distribution with which we are concerned here, means freedom to the consumer to get supply from any source of his choice. The provision of open access to consumers, ensures right of the consumer to get supply from a person other than the distribution licensee of his area of supply by using the distribution system of such distribution licensee. Unlike in transmission, open access in distribution has not been allowed from the outset primarily because of considerations of cross-subsidies. The law provides that open access in distribution would be allowed by the State Commissions in phases. For this purpose, the State Commissions are required to specify the phases and conditions of introduction of open access.24. However open access can be allowed on payment of a surcharge, to be determined by the State Commission, to take care of the requirements of current level of cross-subsidy and the fixed cost arising out of theobligation to supply. Consequent to the enactment of the Electricity (Amendment) Act, 2003, it has been mandated that the State Commission shall within five years necessarily allow open access to consumers having demand exceeding one megawatt.(3) CSS: Its Rationale25. The issue of open access surcharge is very crucial and implementation of the provision of open access depends on judicious determination of surcharge by the State Commissions. There are two aspects to the concept of surcharge – one, the cross-subsidy surcharge i.e. the surcharge meant to take care of the requirements of current levels of cross-subsidy, and the other, the additional surcharge to meet the fixed cost of the distribution licensee arising out of his obligation to supply. The presumption, normally is that generally the bulk consumers would avail of open access, who also pay at relatively higher rates. As such, their exit would necessarily have adverse effect on the finances of the existing licensee, primarily on two counts – one, on its ability to cross-subsidise the vulnerable sections of society and the other, in terms of recovery of the fixed cost such licensee might have incurred as part of his obligation to supply electricity to that consumer on demand (stranded costs). The mechanism of surcharge is meant to compensate the licensee for both these aspects.26. Through this provision of open access, the law thus balances the right of the consumers to procure power from a source of his choice and the legitimate claims/interests of the existing licensees. Apart from ensuring freedom to the consumers, the provision of open access is expected to encourage competition amongst the suppliers and also to put pressure on the existing utilities to improve their performance in terms of quality and price of supply so as to ensure that the consumers do not go out of their fold to get supply from some other source.27. With this open access policy, the consumer is given a choice to take electricity from any Distribution Licensee. However, at the same time the Act makes provision of surcharge for taking care of current level of cross subsidy. Thus, the State Electricity Regulatory Commissions are authorized to frame open access in distribution in phases with surchargeCurrent level of cross subsidy to be gradually phased out along with cross subsidies; and(b) obligation to supply.Therefore, in the aforesaid circumstances though CSS is payable by the Consumer to the Distribution Licensee of the area in question when it decides not to take supply from that company but to avail it from another distribution licensee. In nutshell, CSS is a compensation to the distribution licensee irrespective of the fact whether its line is used or not, in view of the fact that, but for the open access the consumer would pay tariff applicable for supply which would include an element of cross subsidy surcharge on certain other categories of consumers. What is important is that a consumer situated in an area is bound to contribute to subsidizing a low and consumer if he falls in the category of subsidizing consumer. Once a cross subsidy surcharge is fixed for an area it is liable to be paid and such payment will be used for meeting the current levels of cross subsidy within the area. A fortiorari, even a licensee which purchases electricity for its own consumption either through aor throughld be liable to pay Cross Subsidy Surcharge under the Act. Thus, Cross Subsidy Surcharge, broadly speaking, is the charge payable by a consumer who opt to avail power supply through open access from someone other than such Distribution licensee in whose area it is situated. Such surcharge is meant to compensate such Distribution licensee from the loss of cross subsidy that such Distribution licensee would suffer by reason of the consumer taking supply from someone other than such Distribution licensee.(4) Application of the CSS Principle29. In the present case, admittedly, the Appellant (which happens to be the operator of an SEZ) is situate within the area of supply of WESCO. It is seeking to procure its entire requirement of electricity from Sterlite (an Independent Power Producer(which at the relevant time was a sister concern under the same management) and thereby is seeking to denude WESCO of the Cross Subsidy that WESCO would otherwise have got from it if WESCO were to supply electricity to the Appellant. In order to be liable to pay cross subsidy surcharge to a distribution licensee, it is necessary that such distribution licensee must be a distribution licensee in respect of the area where the consumer is situated and it is not necessary that such consumer should be connected only to such distribution licensee but it would suffice if it is awithin the aforesaid definition.30. Having regard to the aforesaid scheme, in normal course when the Appellant has entered to PPA with Sterlite, another Electricity Generating Company and is purchasing electricity from the said Company it is liable to pay CSS to the WESCO. Admittedly under the PPA, the Appellant is purchasing his electricity from the said generating station and it is consumed by the single integrated unit of the Appellant. The Appellant therefore, qualifies to be aunder Section 2(15) of the Electricity Act. It is also not in dispute that the unit of the Appellant is in the area which is covered by the licenses granted to WESCO as distribution licenses.31. Notwithstanding the above, because of the reason that the area where the unit of Val-SEZ unit of the Appellant is situate is a SEZ area and the Appellant is declared as developer for that area under the SEZ Act, it is the contention of the Appellant that in such a scenario it is not liable to pay any CSS to the WESCO. This submission flows from the fact that there is a notification issued in this behalf under proviso to Section 49 of the SEZ Act and the Appellant itself is treated as a deemed Distribution Licensee as per the provisions of Section 14 of the Electricity Act. On that basis, detailed submissions are made by the Appellant with an attempt to show that it cannot be treated as aunder the Electricity Act when the Appellant itself is deemed to be a licensee. It is further argued that since the supply line of VAL-SEZ is not connected to WESCO and it is getting the electricity directly from Sterlite under the PPA, there is no question of payment of CSS to WESCO at all. Argument of the WESCO that the lines owned by the VAL-SEZ are onlyer Section 2 of the Electricity Act and notbecause of the reason that the duty of the Generator to establish and maintain dedicated transmission lines, is sought to be refuted by arguing that even as per Section 2(72) of the Act Transmission Lines are part of the Distribution System ofIt is argued that it is not even the case of WESCO that the supply line of SEL-VAL is a part of WESCO Distribution System.(5) Factual Aspect of the Electricity Supply to the Appellant:32. In order to appreciate these arguments, it would appropriate to first advert to the factual aspect of the supply of electricity by Sterlite to the Appellant under the PPA. No doubt the Appellant is getting direct supply of electricity from Sterlite. However, question is as to whether, in the process, it is using dedicated transmission lines of WESCO. We may point out at the outset that such an argument was not even raised before the two authorities below. Primarily it was argued that having acquired the status of deemed distribution licensee under the Electricity Act, it cannot be treated as aof other distribution licensee, viz. the WESCO. Even the question of law which is proposed and framed in the grounds of appeal and is already reproduced, does not raise this issue, which is even otherwise factual. Notwithstanding, the Learned Counsel for the WESCO has argued that the transmission line between the Sterlite and the Appellant is not a dedicated transmission line for the followingUnder Section 2(16) of the Electricity Act, 2003, ais an electric supply line fortransmission, which are required for the purpose of connecting electric line or electric plan of a generating station toor theas the case mayThe Transmission Line in question commences from the Generator (Sterlite) and connects to the 400 KV Sub-Station at Sterlite end at Jharsuguda. It does not connect directly to thech is the Appellant.(c) The 400 KV Busbar at the Generator (Sterlite) end is connected to a 200 KV Busbnar at VAL-CGP caters to the VAL - Smelter 1 in the Domestic Tariff Area.(d) The said 400/200 KV sub-station is also connected to the OPTCL Grid (State Transmission Utility) at Budhipadar through 220 KV Bus at VAL – CGP endpurpose of evacuation of Sterlite power to GRIDCO as well as drawal of power by VAL – Smelter – 1.(e) The said 400/220 kv sub-station is also connected to Power Grid Corporation of India (PGCIL) line from which 2 nos of 400 KV Lines emanate for Interstate sale of its Sterlite power through PGCIL Grid.(f) The said 400/220 kv sub-station which is connected through 5 Km of 220 KV line to the 220 KV Bus of switching station at VAL – CGP end. There are 4of 200 KV transmission lines branching out from the said 220 KV switching station to carry power to VAL Smelter-1 Unit of the Appellant which is within the area of the Distribution Licensee (WESCO).(g) The said 400/220 kv sub-station also has 2 nos of 33 KV Tertiary transmission lines from 100/220/33 KV Transformer supplying electricity to Vedanta Township.(h) Three such 400 KV Transmission lines emanating from the 400 KV Busbar at the Sterlite-IPP (Generator end) also happens to Supply power from the sub-station to theload centre (VAL-Smelter-2) in the SEZ area.(i) Hence, the only part of thetransmission line, if at all, is from the Generating Station 9Sterlite – IPP) to such 400 KV Busbar of the 400/220 KV Grid Sub-station.(j) The transmission line that connects the sub-station to the load centre of the Appellant is only aer Section 2(72) of the EP 2003.Following diagram is placed by WESCO to demonstrate this:[pic]34. Though the Appellant endeavoured to counter this position and has given its own diagram that does not lodge the aforesaid factual aspect. Therefore, prima facie we accept the position as explained by the WESCO. Thus we feel that notwithstanding that supply line of SEL-VAL is transmission line, but notThe Appellant cannot run away from the fact that under Section 2(10) of the Electricity Act, it is the duty of the Generating Company (i.e. WESCO) in this case to establish, operate and maintain dedicated transmission lines. Since it is duty bound to establish, operate and maintain these dedicated lines by making huge investment, in order to get into the consumption in the area in question the very necessity of payment of CSS arises by the consumer of Electricity covered by the definition ofunder Section 2(15) of the Act but is not getting supply of that Generator and someone else. We have also to keep in mind the provision of Regulation 27 of OERC (Conditions of Supply Code) Regulation 2004. As per this Regulation thell be the property of the licensee unless otherwise specified in writing. This clause reads asThe entire service line, notwithstanding that whole or portion thereof has been paid for by the consumer, shall be the property of the licensee and shall be maintained by the licensee who shall always have the right to use itthe supply ofenergy to any other person unless the line has been providedve use of the consumer through any arrangement agreed to in writing.Further as per Rule 4 of the Electricity Rule, 2005 the aforesaid line would be deemed to be part of Distribution System ofDistribution System – The distribution system of a distribution licensee in terms of sub-section (19) of section 2 of the Act shall also include electric line, sub-station and electrical plant that are primarily maintainedpurpose of distributing electricity in the area of supply of such distribution licensee notwithstanding that such line, sub- station or electrical plant are high pressure cables or overhead lines or associated with such high pressure cables or overhead lines; or used incidentallyes of transmitting electricity foris defined in Section 2(19) of the Act tomeans the system of wires and associated facilities between the delivery points on the transmission linesng station connection and the point of connection to the installation of theis defined in Section 2(72) tomeans all high pressure cables and overhead lines (not being an essential part of the distribution system of a licensee) transmitting electricity from a generating station to another generating station or a sub-station, together with any step-up and step-down transformers, switch-gear and otherAppellant deemed distribution Licensee: Its effect36. It is now to be seen as to whether the fact that the Appellant is a Developer in SEZ, armed with Notification dated 3rd March, 2010 issued under Proviso to Section 49 of the SEZ Act and it deemed distribution licensee as per Section 14 of the Electricity Act, this would take away the Appellant from the clutches of CSS liability?37. In order to appreciate this argument let us first refer to the certain statutory provisions:Section 49 of the Special Economic Zone Act provides asto modify provisions of this Act or other enactments in relation to Special Economic Zones.(1) the Central Government may, by notification, direct that any of the provision of this Act (other than Section 54 and 56) or any other Central Act or any rules or regulations made thereunder or any notification or Order issued or direction given thereunder (other than the provisions relating to making of the rules or regulations) specified in the notification-(a) shall not apply to a Special Economic Zone or a class of Special Economic Zones or all Special Economic Zones: or(b) shall apply to a Special Economic Zone or a class of Special Economic Zones or all Specials Economic Zones only with such exceptions, modifications and adaptation, as may be specified in the notifications.Likewise Section 14 of the Electricity Act reads asGrant of LicenseThe Appropriate Commission may, on application made to it under section 15, grant any person licence to any person –(a) To transmit electricity as a transmission licensee: or(b) To distribute electricity as a distribution licensee: or(c) To undertake trading in electricity as an electricity trader, in any area which may be specified in the licence:Provided that any person engaged in the business of transmission or supply or electricity under the provisions of the repealed laws or any Act specified in the Schedule on or before the appointed date shall be deemed to be a licensee under this Act for such period as may be stipulated in the licence, clearance or approval granted to him under the repealed laws or such Act specified in the Schedule, and the provisions of the repealed laws or such Act specified in the Schedule in respect of such licence shall apply for a period of one year from the date of commencement of this Act or such earlier period as may be specified, at the request of the licensee, by the Appropriate Commission and thereafter the provisions of this Act shall apply to such business:Provided further that the Central transmission Utilityte Transmission Utility shall be deemed to be a transmission licensee under this Act:Provided also that in case an Appropriate Government transmits electricity or distributes electricity or undertakes trading in electricity, whether before or after the commencement of this Act, such Government shall be deemed to be a licensee under this Act, but shall not be required to obtain a licence under this Act:Provided also that the Damodar Valley Corporation, established under sub-section(1) of section 3 of the Damodar Valley Corporation Act, 1948, shall be deemed to be a licensee under this Act but shall not be required to obtain a licence under this Act and the provisions of the Damodar Valley Corporation Act, 1948, in so far as they are not inconsistent with the provisions of this Act, shall continue to apply to that Corporation:Provided also that the Government Companyny referred to in sub-section (2) of section 131 of this Act and the company or companies created in pursuance of the Acts specified in the Schedule, shall be deemed to be a licensee under this Act.Provided also that the Appropriate Commission may grant a licence to two or more persons for distribution of electricity through their own distribution system within the same area, subject to the conditions that the applicant for grant of licence within the same area, subject to the conditions that the applicant for grant of licence within the same area shall, without prejudice to the other conditions or requirements under this Act, comply with the additional requirements (including the capital adequacy, credit worthiness, or code of conduct) as may be prescribed by the Central Government, and no such applicant who complies with all the requirements for grant of licence, shall be refused grant of licence on the ground that there already exists a licensee in the same areme purpose:Provided also that in a case where a distribution licensee proposes to undertake distribution of electricity for a specified area within his area of supply through another person, that person shall not be required to obtain any separate licence from the concerned State Commission and such distribution licensee shall be responsible for distribution of electricity in his area of supply:Provided also that where a person intends to generate and distribute electricity in a rural area to be notified by the State Government, such person shall not require any licence for such generation and distribution of electricity, but he shall comply with the measures which may be specified by the Authority under section 53:Provided also that a distribution licensee shall not require a licence to undertake trading in electricity.No.528(E). In exercise of the powers conferred by clause(b) of sub-section (1) of section 49 of the Special Economic zones Act, 2005 (28 of 2005), the Central Government hereby notifies that the provisions of clause (b) of section 14 of the Electricity Act, 2003 (36 of 2003), shall apply to all Special Economic Zones notified under sub-section (1) of section 4 of the Special Economic Zones Act, 2005, subject to the following modification, namely:-In clause (b) of section 14 of the Electricity Act, 2003 (36 of 2003), the following proviso shall be inserted,that the Developer of a Special Economic Zone notified under sub section (1) of section 4 of the Special Economic Zones Act, 2005 shall be deemed to be a licenseepurpose of this clause, with effect from the date of notification of such Special Economic Zone.The reading of Section 49 of SEZ Act would reveal that the Central Government has got the authority to direct that any of the provisions of a Central Act and rules and regulations made thereunder would not apply or to declare that some of the provisions of the Central Acts shall apply with exceptions, modifications and adaptation to the Special Economic Zone. So, under the scheme of Special Economic Zone Act, Central Government has to first notify as to what extent the provision of the other Acts are to be made applicable or applicable with modification or not applicablethe Special Economic Zonearea. It is in furtherance thereto, the Government of India, Ministry of Commerce and Industry through its notification dated 21st March, 2012, with regard to power generation in Special Economic Zone, has declared that all the provisions of the Electricity Act, 2003 and Electricity Rule, 2005 shall be applicable to the generation, transmission and distribution of power, whether stand alone or captive power. This notification would clarify that there is no inconsistency between Special Economic Zone Act, 2005 and Electricity Act, 2003.41. No doubt vide Notification dated 3rd March, 2010 Central Government has added an additional proviso to Clause (b) of Section 14 of the Electricity Act viz. the Appellant shall be deemed to be licenseepurpose of the said clause w.e.f. the date of notification of such SEZ. It is on this basis, the argument of the Appellant is that as it is already a deemed Distribution Licensee it need not apply for this license to the said Commission before entering into the PPA and the State Government is bound to grant the License. This contention is negated by the Appellate Tribunal on two grounds which are asThere has to be a harmonious construction of SEZ Act and Electricity Act to give effect to the provisions of both the acts so long as they are not consistent with each other in the opinion of the Tribunal. The provisions of Section 51 of SEZ Act, 2005 are to be considered along with the provisions of Section 49 of the said Act. Accordingly, in view of the provision of the SEZ Act, 2005 and consequent notification by the Ministry of Commerce and Industry, the deemed distribution licensee status as claimed by the Appellant should also be tested through other provisions of the Electricity Act, 2003 and Electricity Rules, 2005, for certifying its validity and converting it into a formal distribution licensee. In fact, the Appellant has submitted to the jurisdiction of the State Commission, by filing a petition before the State Commission seeking for approval of the PPA and also for grant of distribution licence. The Appellate Tribunal, thus queried as to how could the Appellant now question the jurisdiction?(ii) The Appellate Tribunal pointed out that there are none provisos to Section 14(b) of the Electricity Act and another is added in respect of the Appellant vide Notification dated 3rd March, 2010. A reading of these provisos would indicate that some of them confer status of deemed distribution licensee on certain specified entities who are not required to take separate licence from the State Commission under this Act whereas some other provisos merely declare the party as deemed licensee and nothing specified as to whether they are required to obtain the licence or not. However when it is specially provided in proviso 4 and proviso 8 and 2 that the Damodar Valley Corporation and State Government are not required to obtain licence, and other provisos do not confer such privilege, they would be required to obtain licence.Further discussion on this aspect by the Appellate Tribunal is asKeeping this in mind, the statute makers by the notification dated 3.03.2010 have inserted the additional proviso to Section 14(b) of the Electricity Act. Admittedly, the development and operation of the SEZ are two distinct activities. Thus, the jurisdiction of the State Commission to scruitinise the deemed distribution status of the Appellant is well established in view of the Section 49(1) of SEZ, Act, 2005 and the notification of the Central Government dated 21.03.2012. Therefore, the contention of the Appellant that the State Commission dealt with the matter relating to the grant of distribution licence by going beyond its jurisdiction is misplaced.43. It is noticed that the Ministry of Commerce and Industry (Department of SEZ Section) has accorded SEZ status to the Appellant for development and operation and maintenance of sector specific Special Economic Zone for manufacture and export of aluminium on the condition that the Appellant should establish captive generating plant as stipulated in the approval letter of Ministry of Commerce and Industry but it is pointed out the still the plant has not been established for various reasons. If Captive generating plant of 1215 MW had been established as per the condition inside the SEZ area, the question of power purchase from Sterlite Energy Limited under the pretext of distribution licensee status would not have arisen. That apart, the State Commission has framed Orissa Electricity Regulatory Commission (conduct of business) Regulation, 2004 under the powers conferred under Section 181 of the Electricity Act, 2003. The distribution of electricity Licence (Additional requirement of Capital Adequacy, Credit Worthiness and Code of Conduct) Rules, 2005 framed by the Central Government also would apply to the Appellant for distribution licence in addition to the requirements of StateRegulations.45. Section 174 of the Electricity Act provides that the provisions of the Electricity Act shall have to overriding effect notwithstanding anything inconsistent with any other lawtime being in force or in any instrument having effect by virtue of any law other than Electricity Act. That apart, Section 175 also provides that the provisions of the Electricity Act are in addition to and not in derogation of any other lawtime being in force.47. The perusal of the notification dated 03.03.2010 would make it evident that theintention for declaring the developer in SEZ area as deemed distribution licence, is confined only to clause-b of Section 14 of Electricity Act, which deals with the grant of license by the appropriate State Commission to any person for distribution of electricity. The said notification has not curtailed the power of State Commission so far as the applicability of other provisions is concerned. The interpretation of various relevant terms was necessary prior to grant of deemed distribution licence by the State Commission. Therefore, the State Commission rightly acted upon those provisions. As a matter of fact, by the said amendment by inserting another proviso to Section 14(b), the context has not been changed as claimed by the Appellant.49. As correctly indicated by the State Commission, the definition of termas enumerated under Section 2(17) of Electricity Act, 2003, emphasizes upon the distribution licensee to operate and maintain a distribution system and supply of power to the consumers. Considering the definition ofin Section 2(70), the supply here means sale of electricity to consumers. By merely being authorized to operate and maintain a distribution system as a deemed licensee, would not confer the status of distribution licensee to any person. The purpose of such establishment is for supply of power to consumers. Mere fact that the Appellant claims to be a deemed distribution licensee is of no consequence at all since admittedly, the entire power purchased by the Appellant is for its own use and consumption and notpurpose of distribution and supply/sale to consumers.50. An entity which utilizes the entire quantum of electricity for its own consumption and does not have any other consumers, cannot, by such a notification, be deemed to be distribution licensee, even by a legal fiction. By virtue of the legal fiction created by the notification dated 3.03.2010, the Developer of SEZ notified under the SEZ Act, who distributes electricity can be deemed to be a distribution licensee. Thus, this legal fiction cannot go further and make a person who does not distribute electricity to the consumers as to distribution licensee. Therefore there is no merit in the contention of the Appellant.We are in agreement with the aforesaid rationale in the impugned order of the Appellate Tribunal as that is the only manner in which the two Acts can be harmoniously construed. To recapitulate briefly, in the present case no doubt by virtue of the status of a developer in the SEZ area, the Appellant is also treated as deemed Distribution Licensee. However with this, it only gets exemption from specifically applying for licence under Section 14 of the Act. In order to avail further benefits under the Act, the Appellant is also required to show that it is in fact having distribution system and has number of consumers to whom it is supplying the electricity. That is not the case here. For its own plant only, it is getting the electricity from Sterlite Ltd. for which it has entered into PPA. We have to keep in mind the object and scheme of SEZ Act which envisages several units being set up in a SEZ area. This is evident from a collective reading of the various provisions of the SEZ Act viz. Section 2(g)(j)(za)(zc), Section 3, 4, 11, 12, 13 and 15. There can be a Sector Specific SEZ with Several Units i.e. for IT, Mineral Based Industries etc. but instances of single unit SEZ like in the present case of the Appellant may be rare. The Notification dated 03.03.2010 providingof SEZ being deemed as aas issued keeping in view the concept of Multi Unit SEZs and will apply only to such cases in which the Developer is supplying the power to multiple Units in the SEZ. The said Notification will not apply to a Developer like the Appellant who has established the SEZ only for itself.