SEKAR REPORTER

Court News from Madras High Court

W.P.No.9783 of 2012 and M.P.No.1 of 2012 N.ANAND VENKATESH, J. It is made clear that this Court is not attempting to interfere with the functioning of either TNERC or TANGEDCO and the only reason why this Court had undertaken this exercise is to ensure that the process and procedures are put in place and the functioning gets more regulated in accordance with the Electricity Act and the regulations that have been brought into force.  In order to make some headway in this process, this Court is inclined to keep this Writ Petition as a continuing mandamus so that there will be regular follow up on the developments that takes place.           8.Post this Writ Petition under the caption ‘for filing status report’ on 22.08.2022 at 2.15 p.m.           04.08.2022

by ·

W.P.No.9783 of 2012

and

M.P.No.1 of 2012

 

N.ANAND VENKATESH, J.

          Pursuant to the earlier order passed by this Court on 28.07.2022, the matter was taken up for hearing today and this Court had the  advantage of hearing Mr.N.L.Rajah, Mr.Rahul Balaji and also Mr.Richardson Wilson appearing on behalf of TNERC.

 

2.This Court requested Mr.N.L.Rajah, learned Senior Counsel to assist this Court in order to  guide TANGEDCO to become a viable undertaking.  Accordingly, a note was submitted by Mr.N.L.Rajah, who was assisted by Mr.Rahul Balaji.

 

3.The note captures totally five areas, which will have to be properly strengthened and regularised in order to ensure that the tariff fixation takes place on a regular basis  and TANGEDCO  cuts down its losses and the TANGEDCO turns around and become financially healthy  to run its operations.  For proper appreciation, the areas identified in the note are extracted hereunder:

Electricity tariff fixation :

 

  1. A) The Distribution Licensee in the State of Tamil Nadu (i.e., TANGEDCO has consistently failed to file the Petition for Tariff fixation every year so as the Hon’ble TNERC to determine the Tariff every year, despite the Hon’ble APTEL vide its Order dated 11.11.2011 passed in O.P.No.1 of 2011 that Tariff determination is conducted year to year. This direction of the APTEL has been consistently flouted.

 

The result of such failure on the part of the TANGEDCO is that in some years, the Hon’ble TNERC had to Suo Moto fix the Tariff without the submission of the ARR (Annual Revenue Requirement) by TANGEDCO. This has resulted in the inability of TANGEDCO to raise tariffs reasonably and incrementally.

 

Further, a Suo Moto exercise by the Hon’ble TNERC without TANGEDCO uploading the ARR robs the consumer of adequate information and disables him from participating effectively in the tariff fixation exercise. The Hon’ble TNERC also does not have adequate and accurate information to arrive at a reasonable tariff. As a result, informed public participation in the regulatory tariff process is greatly reduced. TANGEDCO has been unable to pay wind energy suppliers as also solar energy suppliers on account of its own inability and stubbornness to act in line with the provisions of the Electricity Act, 2003.

 

The Hon’ble TNERC issued its maiden Tariff Order under Section 29 of the Electricity Regulatory Commission Act 1998, on 15.03.2003 based on the Petition filed by the then TNEB on 25.09.2002.  In Para 7.2 of the Order dated 15.03.2003, the Hon’ble TNERC directed:

 

“The Commission thus rules that the revised tariff would be applicable from 16th March 2003 to 31st March 2004, and till such further time as the TNEB does not approach the Commission for tariff revision. The Commission also directs that, henceforth, the TNEB should submit a Tariff proposal for any financial year by the end of December of the previous financial year. In other words, the Commission expects the TNEB to submit a tariff revision proposal for FY 2004-05 before the end of December 2003, in case the TNEB desires to revise the tariffs for FY 2004-05.”

 

However, TANGEDCO did not approach the Hon’ble TNERC for revision of retail tariff till January 2010 when it filed T.P.No.1 of 2010. Pursuant to the Petition filed by TANGEDCO, the Hon’ble TNERC published its second Tariff Order on 31.07.2010, which came into effect on 01.08.2010.

 

TANGEDCO thereafter filed its application before the Hon’ble TNERC on 17.11.2011 for preliminary true-up and approval of Aggregate Revenue Requirement (ARR) for the year 2010-11 and approval of ARR for the year 2011-12 and 2012-13 under Multi Year Tariff and also applied for tariff revision with effect from 01.04.2012 or earlier.

 

The above Petition was admitted and hosted by the Hon’ble TNERC on its website on 25.11.2011 and registered as T.P.No.1 of 2011. The Hon’ble TNERC passed its third Tariff Order on 30.03.2012 and this Order was directed to come into effect from 01.04.2012.

 

The Hon’ble TNERC thereafter passed its fourth Tariff Order in T.P. No. 1 of 2013 on 20.06.2013 and this Tariff Order was directed to come into effect from 21.06.2013.

In the meantime, since TANGEDCO did not file the ARR and Tariff fixation Petition for 2014-15 before the Hon’ble TNERC within the prescribed deadline, the Hon’ble TNERC initiated Suo Moto proceedings for tariff determination on the basis of information available with it. Some data was also subsequently hosted on the website of TANGEDCO. The Hon’ble TNERC thereafter passed its fifth Tariff Order in Order No.9 of 2014 on 11.12.2014 and this Tariff Order was directed to come into effect from 12.12.2014. One of the three members of the Hon’ble TNERC passed a separate and detailed dissenting Order disagreeing and disapproving the impugned Tariff Order passed by the other two members. The dissenting Order had set out the procedural lapses, procedural irregularity and the failure on the part of the Hon’ble TNERC to take action against TANGEDCO for its continued disobedience and defiance to the directives of the Hon’ble TNERC.

 

TANGEDCO thereafter submitted before the Hon’ble TNERC that ARR for the FY 2017-18 should have been filed before 30.11.2016. Since the Government of Tamil Nadu decided to join the UDAY scheme, TANGEDCO filed a Petition before the Hon’ble TNERC in M.P.No.31 of 2016 seeking time extension upto 31.01.2017, as the participation in UDAY will have direct impact on the profitability of TANGEDCO. The Hon’ble TNERC granted the request of TANGEDCO. The MoU under UDAY scheme was entered into between the Gol, GoTN and TANGEDCO on 09.01.2017 Taking into account the consequent financial impact, the Petition was filed before the Hon’ble TNERC on 27.01.2017 and admitted on 31.01.2017 vide T.P. No.1 of 2017. Thereafter, the sixth Tariff Order in T.P.No. 1 of 2017 was passed on 11.11.2017

 

Thereafter, only now on 19.07.2022, TANGEDCO has filed its Petition for determination of Tariff and the same is said to have been numbered as T.P. No. 1 of 2022.

 

TANGEDCO, under the applicable regulations is required to submit its ARR every year to TNERC. However, the last ARR filed was in 2017.  Hon’ble TNERC’s Regulations require ARRS to be filed every year even when no application for determination of Tariff is made. This is because even if the distribution licensee does not file an application for fixation of Tariff, the Hon’ble TNERC can Suo Moto take up a revision of Tariff exercise that would be supported by sufficient facts which will enable the Hon’ble TNERC to fix the Tariff in an accurate and acceptable manner. It is relevant to note that most states do file ARRS even if they do not file Tariff fixation Petitions.

 

However, TANGEDCO has consistently defaulted in the same. There is therefore a clear case for better data governance by TANGEDCO. Storing data in open formats would enhance transparency and accountability while encouraging public engagement.

 

  1. B) According to the Electricity Act, 2003, all meters including agricultural and hut service connections should be metered. The process of metering new agricultural meters began in 2017. The State claims that it has totally 21.17 Lakhs agricultural service connections (as on March 31st 2019). From 2017, TANGEDCO started metering these connections. However, statistics of how many agricultural connections have been metered till date is not available. Again, by demanding metering of agricultural connections it is not to be understood that agriculturalists must be charged. This is a political decision for the State to make. But as a first step, at least the process of metering the said 21 Lakhs and odd connections must be completed.

 

Since the subsidy to be paid by the State Government is reckoned on the basis of the free units consumed, unless the State has details of the units consumed by various classes of consumers, the subsidy can never be accurate and will result in TANGEDCO consistently receiving lesser than what they are entitled to, thereby leading to financial distress. There was also a program of segregating and installing agricultural feeders in each district but that has also not progressed substantially.

 

There is a wide gap between the disclosed load and actual load of pump-sets.  This is why TANGEDCO has come out with a scheme of regularizing the connection with extra load up to 15 HP.  This has a cascading effect on arriving at the Aggregate Technical and Commercial losses.

 

  • The State claims to have about 21.17 agricultural connections.
  • Approximately 30,000 million units are consumed annually, which is 16.45% share in overall consumption.
  • The State Government provides a subsidy of 4,180 crores annually.
  • However, since the subsidy is given on the basis fixed in 2014, the real cost of providing the subsidy at the rates today are close to Rs 10,000 Crores.
  • Tiruvannamalai District has the highest number of agricultural connections-1.86 Lakhs.
  • Thanjavur Thiruvarur and Nagapattinam – being the key districts of the Cauvery delta have about 1.06 Lakhs connections collectively.
  • Western districts have around 30% of the total connections.

 

  1. C) TANGEDCO has not calculated the cost to serve various categories of consumers. According to the National Electricity Policy (NEP), the starting point of Tariff fixation is to arrive at the cost to serve each category of consumer. On the basis of the same, the licensee is permitted to charge Tariff for that category which can be 5% above or below the cost to serve that category of consumers. If it is less than the cost to serve then the State can come forward to subsidize that class of consumers. Without that essential information, the subsidy given by the State can never be fixed accurately and will lead to heavy losses for TANGEDCO.

 

  1. D) The balance sheet of TANGEDCO is not uploaded to its website every year. Only the balance sheet of 2020 has been published.

 

  1. E) Calculation of transmission and distribution losses. There are generally two types of losses in transmission and distribution lines:
  2. i) Technical losses
  3. ii) Commercial losses

 

TANGEDCO has not calculated technical losses and commercial losses separately. Technical losses include and are dependent upon electrical load, type and size of conductor, length of line etc. This is not being done by TANGEDCO

 

Commercial losses arise on account of improper imposition of tariff. Commercial losses are also on account of faulty meter reading, defective meter and error in meter reading, billing of customer energy consumption, financial constraints and estimating unmetered supply of energy as well as energy thefts To put it briefly, the main causes of commercial losses are:

  1. i) Power theft
  2. ii) Metering inaccuracies

iii) Unmetered losses for small loads

  1. iv) Unmetered supply
  2. v) Error in meter reading
  3. vi) Billing problems

 

Methods to reduce technical losses:

  1. i) Converting LV line to HV line.
  2. ii) Large commercial/industrial consumers to get direct line from feeder.

iii) Adopting High-Voltage distribution service for agricultural customer.

  1. iv) Adopting aerial bundle conductor (ABC) to minimize faults in lines.
  2. v) Reduce number of transformers.
  3. vi) Utilize feeder on its average capacity.

vii) Replacement of old conductor/cables.

viii) Feeder renovation/improvement program.

  1. ix) Industrial/Urban focus program.
  2. x) Strictly follow preventive maintenance program.

 

Methods to reduce Commercial losses:

  1. i) Making and mapping/ date of distribution line.
  2. ii) Implementation of energy audit teams.

iii) Mitigating power theft by power theft checking raids.

  1. iv) Replacement of faulty/sluggish energy meter.
  2. v) Bill collection facility.
  3. vi) Reduce debit areas of sub-divisions.

vii) Watch dog effect on users.

vill) Loss reduction programs.

 

4.The learned Senior Counsel also addressed yet another important area of concern, namely, transparency in the payments made to the power suppliers.  Several suggestions have been made in the note and an attempt has been made to evolve a procedure to clear the outstanding bills based on the principle of seniority and to prevent out of turn payments.

 

5.Mr.Jaivenkatesh, learned Standing Counsel appearing on behalf of TANGEDCO submitted that TANGEDCO will submit a status report on the note that has been circulated today and all the details will be provided.

 

6.Mr.Richardson Wilson, learned Standing Counsel appearing on behalf of TNERC submitted that the Commission will seriously consider the suggestions made in the note and will file a status report before this Court.

 

7.It is made clear that this Court is not attempting to interfere with the functioning of either TNERC or TANGEDCO and the only reason why this Court had undertaken this exercise is to ensure that the process and procedures are put in place and the functioning gets more regulated in accordance with the Electricity Act and the regulations that have been brought into force.  In order to make some headway in this process, this Court is inclined to keep this Writ Petition as a continuing mandamus so that there will be regular follow up on the developments that takes place.

 

8.Post this Writ Petition under the caption ‘for filing status report’ on 22.08.2022 at 2.15 p.m.

04.08.2022

sli

Note: Registry is directed to carry out the necessary amendment as per the order dated 28.07.2022.
N.ANAND VENKATESH, J.

 

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W.P.No.9783 of 2012

and

M.P.No.1 of 2012

 

 

 

 

 

 

 

 

 

 

 

 

04.08.2022

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