BHUBANESWAR: In a major victory for Odisha Electricity Regulatory Commission (OERC), the Appellate Tribunal for Electricity in a significant ruling has held that Indian Railways is not a deemed distribution licensee as it does not supply electricity to consumers for a price as per provisions of Electricity Act, 2003.
Disposing of a batch of petitions including the appeal of the Indian Railways against the February 25, 2020 order of OERC, ATE chairperson Justice Ramesh Ranganathan and technical member Sandesh Kumar Sharma pronounced the order on February 12, 2024.
With the ruling, Gridco and four distribution licensees would not have to undergo financial loss of Rs 393 crore annually. “The total financial losses to distribution licensees and Gridco will be approximately Rs 393 crore per annum in the event railways is granted open access as a deemed distribution licensee. The approximate losses include Rs 193 crore per annum loss to Gridco alone towards fixed charges payable for the stranded capacity under long term power purchase agreement (PPAs) with ISGS sources,” OERC sources said.
The losses suffered by distribution licensees will translate into a higher retail cost of electricity, the burden of which would fall on individual consumers which is totally against public interest, the sources added. The dispute arose when railways claimed the status of a deemed distribution licensee as that would result in not being mulcted with additional/cross subsidy surcharge under section 42 of the Electricity Act.
The railways case, in short, was that, if it is allowed to procure electricity directly from generators as deemed distribution licensees, it would be able to reduce the financial burden as it would not be required to pay additional/cross-subsidy surcharge to different distribution licensees in different states of the country. This would enable it to reduce charges on passengers and for transportation of goods.
The OERC held it was not agreeable to declare railways a ‘deemed distribution licensee’ either under the provisions of the Railways Act, 1989 or under Electricity Act, 2003. “The Ministry of Power had declared railways a ‘deemed licensee’ and not a ‘deemed distribution licensee’. It was a ‘deemed licensee’ for the purpose of a transmission license, and not for distribution license,” the OERC order said.
“In the light of the law declared by the Supreme Court, in Sesa Sterlite Limited vs Orissa Electricity Regulatory Commission & Others, (2014) 8 SCC 444, and as Railways consumes the entire electricity supplied to it (either directly or by entities with which it has a jural relationship), it is obligated to pay cross subsidy surcharge/additional surcharge for the electricity sourced by it through open access,” the tribunal held.