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OERC's face-off with ATE puts Odisha govt in a spot of bother

By Nageshwar Patnaik
Bhubaneswar, January 11, 2015

The face-off between the Appellate Tribunal for Electricity (ATE) and the Odisha Electricity Regulatory Commission [OERC] on the issue of non-compliance of the former’s several orders to the latter, to compute Annual Revenue Requirement [ARR] on realistic loss levels for determining power tariff, seems to have put the Naveen Patnaik government in an embarrassing position.

Now the state government is mulling over the option to go the Supreme Court for its intervention.

OERC, the maiden regulatory body for the power sector, 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 before the Supreme Court seeking a stay, which was never granted.

The OERC did not implement the ATE orders pointing out some difficult situations, like the rise in the numbers of consumer from 23 lakh during 2006-07 to 53 lakhs during 2013-14 and most of them are LT and BPL consumers category, sharp decline in High Tension [HT] and Extra High Tension [EHT] industries, tariff hike due to revision of past year ARR to be borne by the existing LT and new consumers.

The Commission estimated that the amounts to be recovered after implementation of ATE orders from the consumers would be approximately Rs 4,200 crore from 2006-07 to 2012-13. “It would be difficult to pass through such a huge amount in one-year tariff”, the OERC had informed the ATE as well as the Apex Court.

The ATE in its last order on November 30 the last year, however, rejected the OERC’s contention saying, “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 Government 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”.

Experts, however, pointed that it is not necessary to re-determine the tariff retrospectively. Secondly, any hike in tariff as a consequence of actual ARR assessment by the OERC need not to be passed on the consumers and others in one year. Even for the coming years, there can be several approaches to meet out the gaps without stiff or no increase in tariff, they pointed out.

Even then, the OERC in total defiance is no mood to implement of the ATE’s order despite no stay from the Apex Court on the ATE’s orders. Now it wants to fire the salvo on the shoulder of the state government, which barely has any role in determination of tariff.

“The state government has no locus standai. The role of the state government only will come after tariff determination by the OERC if it wants to give subsidy. This is 6th consecutive year; the ATE has passed consequential order. The OERC has remained silent and had gone to the Supreme Court where it did not get any relief. This year, it is trying to bring the state government to picture hoping to get some relief,” says Supreme Court lawyer, Hasan Murtaza.

Incidentally, the state government has already clarified that post-privatization, it would not give subsidy under section 65 of the Electricity Act 2003. Prior to privatization, in 1995-96, the state government had given a subsidy of Rs 256 crore.

In contrast, the neighboring states like Andhra Pradesh gave a subsidy of Rs 4066 crore, Bihar Rs 2120 crore, Madhya Pradesh Rs 1538 crore of subsidy for FY 2011-12 and continue to give subsidies to boost up power sector.


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