M/S. Sesa Sterlite Ltd vs Orissa Electricity Regulatory Comm & ...

3. To put it in nutshell, the case of the Appellant is that it has its unit in Special Economic Zone (SEZ) and it is a Developer in the said SEZ area. It is not drawing or utilizing any electricity from the Distribution Licensee viz. WESCO for its unit namely VALE-SEZ. In fact, the Appellant had entered into a Power Purchase Agreement (PPA) dated 18th August, 2011 with M/s. Sterlite Energy Ltd. The Appellant had filed application for getting approval of the said PPA. However the Odisha State Commission, instead of granting the approval, rejected the said PPA and directed the Appellant to pay CSS to WESCO holding the Appellant to be a ‘Consumer’.

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 as ‘Sterlite’) has 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.

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.

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 surcharge for:

33. Following diagram is placed by WESCO to demonstrate this:

44. Having regard to the aforesaid factual and legal aspects and keeping in mind the purpose for which CSS is payable, as explained in detail in the earlier part of this judgment, we are of the view that on the facts of this case it is not possible for the Appellant to avoid payment of CSS to WESCO. We, therefore, do not find any merit in this Appeal which is accordingly dismissed.