By Nageshwar Patnaik in Bhubaneswar, March 4, 2015 :

Three Distribution Companies [Discoms] will move to the Appellate Tribunal for Electricity [ATE] challenging the Odisha Electricity Regulatory Commission (OERC) order revoking licenses of three power distribution companies [Discoms

Discoms are mulling over various steps to challenge the OERC order including judicial redressal.
“We are concerned on revocation of our license by OERC. We have always complied with statutory and regulatory requirements as a licensee. We will approach Hon’ble Appellate Tribunal for Electricity [ATE] for redressal”, three Discoms said in a statement.

The OERC has appointed state-owned Grid Corporation of Odisha (Gridco’s) 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.

The OERC order said the GRIDCO CMD will function under the supervision and control of the state principal secretary to the department of energy as far as the administration of the distribution utilities is concerned.

The regulator has attributed defiance of its orders on improvement in power supply efficiency by three Discoms as the major reason for revocation of the license.

Among other reasons cited by the OERC include failure of Reliance Infra owned Discoms to invest in improving distribution infrastructure. Instead, the company was seeking frequent upward revision of tariff without caring for reduction of aggregate technical and commercial (AT&C) losses, the regulator added.

“The Discoms did not invest anything from their own funds to improve infrastructure, which forced the Commission to revoke their license,” the state energy principal secretary, Suresh Chandra Mohapatra, said.

Mohapatra further added that though the Discoms worked for 15 years, the improvement was not satisfactory. “They were unable to bring down the AT & C losses, which stayed at 40% in contrast to Delhi and Mumbai where the loss was only 15-20%”, he remarked.

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.

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.