By Bizodisha Bureau, Bhubaneswar, March 9, 2015 :

The Appellate Tribunal for Electricity [ATE] on Monday fixed March 24 to take up the case relating to revocation of license of Anil Ambani-led Reliance Infra [R-Infra] controlled three power distribution companies [Discoms] along with the detailed replies of the Odisha Electricity Regulatory Commission (OERC) and state-owned Grid Corporation of Odisha (Gridco).

Three Discoms – Nesco, Southco and Wesco, on Thursday had challenged the OERD’s order revoking their linceses for power distribution business before the ATE saying that the order “is illegal”.

In an unprecedented step, the OERC on Wednesday had revoked licenses of these companies for allegedly disobeying its orders on improvement in power supply efficiency.

The ATE had issued notices to OERC and Gridco to put forth their replies on the issue. Both the regulatory body and utility had sought time for two weeks to furnish detailed reply. Accordingly, the ATE has asked them to appear before it on March 24 with their detailed response to the notice.

The OERC has appointed chairman-cum-managing director [CMD] as administrator of the three [Discoms] NESCO, WESCO and SOUTHCO which transmits power to northern, eastern and southern areas of the state.

In 2005 the state government had revoked the license of the three Discoms, who then challenged it and moved the Central Electricity Regulatory Commission (CERC) and the Supreme Court.

The Discoms had pointed out that they had implemented the OERC’s order but the State Commission has persistently fixed loss level targets without taking into account the ground realities. The ATE in its four earlier judgments had rapped the OERC saying that the lacked  judicial approach.

“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 Discoms had appealed before the ATE that the State Commission has not determined the Annual Revenue Requirement [ARR] on realistic loss levels while determining tariff.

As performance of the companies never improved, the OERC had lodged a suo motu case against them along with a show cause notice asking why their license should not be revoked.

Interestingly the OERC in May 12, 2011 had disposed a case regarding suspension of license to three Discoms saying, “ …suspension and revocation are extreme steps which are to be taken only when there is a complete inability on part of the licensee to discharge the function, duties or perform the duties imposed on it and that in would not be proper to suspend the license at such a stage”.

The Commission also offered the state government to buy out the stake of R-Infra or come out with a clear plan of action as to whether Gridco along with employee trustee as 49% stakeholder would like to take over the management. Besides, the OERC had issued 24 directives to the Discoms for compliance of the same and quarterly review by it.

R-Infra managed Discoms in their reply to the suo motto proceedings initiated by the OERC said, “The Hon’ble Commission is yet to start the review of the progress stipulated in the Order, on various progress reports submitted by the Licensee from time to time, to conclude for the further proceedings”.

The revocation of the license by the OERC is all set to trigger another round of protracted legal battle which is bound to have adverse impact on the ongoing reforms in power sector, observers said.