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Tribunal lambasts OERC for insubordination, gives one more chance to rectify

By Our Correspondent  
Bhubaneswar, January 8, 2015

Reforms in power sector in Odisha seem to have hit hurdles with the Appellate Tribunal for Electricity (ATE) rapping the Odisha Electricity Regulatory Commission [OERC] – the maiden regulatory body in the country, for what it called “total lack of judicial approach”.

Incidentally, the Tribunal was so anguished that it just remained short of passing a stricture on the Commission. “Even though we find that there is deliberate violation on the part of the State Commission, we would like to give one more opportunity to the State Commission to comply with our judgments at least now”, the ATE  observed in its recent order.

The State Commission has been refusing to implement the ATE’s directives from 2006-07 to 2014-15, on the pretext that appeals have been filed against the ATE orders in the Supreme Court. But the Apex Court refused to grant any stay on the ATE order. More so, in the course of these proceedings before the ATE, the OERC had filed applications seeking a stay, which was rejected by the Supreme Court, yet the OERC did not implement the ATE orders.

“We have been watching for several years, the unfair conduct of this Commission through its various orders which bent upon violating all our directions given in our every judgment”, the ATE in its November 30th last year order has observed.

The ATE had been maintaining that the State Commission has persistently fixed loss level targets without taking into account the ground realities contrary to its four earlier judgments. “As a result the tariffs based on approved loss levels do not cover even the OERC approved costs forcing the Distribution Companies into financial distress”, it said.

The Reliance Infrastructure managed Nesco, Wesco and Southco had appealed before the ATE that the State Commission has not determined the Annual Revenue Requirement [ARR] on realistic loss levels while determining tariff.

“Sec 61 empowers the State Commission for tariff determination. It is only after the ARR is computed on realistic loss levels that the gap is ascertained that measures to bridge such gap which could be either through retail supply tariff (RST) hike, or decrease in bulk supply tariff (BST), or Governor subsidy or a combination of all measures is worked out. The State Commission never quantified the amount of gap and its queries pertaining to subsidy support from the government which was general in nature”, the ATE observed.

Further, the ATE said even as the State Commission in its order of March 29, 2012 had directed GRIDCO to release remaining assets to Discoms for hypothecation after retaining assets of the value of Rs.250 crore.  “However, GRIDCO did not adhere to the order of the Hon'ble OERC and did not release the balance-hypothecated assets to the Discoms”, it added. 

With regard to the additional expenses incurred, the Tribunal said, “As regards the additional expenses incurred on taking energy audit, the energy audit had been undertaken by the Appellants [Discoms] since the revocation proceedings had been initiated against the Appellants on that ground. Thus, on the one hand the licenses of the Appellants were sought to be revoked on the ground that spot billing was not introduced and not taking full energy audit and on the other hand, when the Appellants introduced the same, the State Commission had chosen to disallow the additional expenditure on these activities. This finding is wrong.” 

Despite the above finding of this Tribunal, the OERC did not permit the cost of energy audit in the ARR of the Discoms and is seeking to capitalize on the Discoms for not carrying out the energy audit.

“Thus, it is crystal clear that the State Commission has violated our directions and refused to pass the consequential orders. In this context, with anguish, we have to observe that the Orissa Commission, over the several years has been deliberately violating our directions in the various judgments”, the ATE remarked.

The Tribunal lambasted the OERC saying that the “Impugned Order (by OERC on ARR of Discoms) rather reflects incompetence, impertinence as well as insubordination indicating that the State Commission’s attitude that it was not inclined to follow the directions issued by the Appellate Tribunal.  This is purely insubordination. We can even condone the inefficiency and advise them for improvement but, not insubordination to the Tribunal”.

The Tribunal, however, has given the Commission one more chance saying, “The matter is remanded to the State Commission to pass consequential orders after hearing the parties, without giving any room for further complaint of violation of our earlier direction. We expect that the State Commission would correct their approach towards the proper path in future without forgetting the maxim “Justice is not only to be done but also seen to be done”.

 

 

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