The Appellate Tribunal for Electricity (APTEL) has set aside Madhya Pradesh Electricity Regulatory Commission’s (MPERC) order upholding the state-owned distribution company’s (DISCOM) move to levy an additional surcharge on the charges on wheeling even for consumers using captive generation and their dedicated transmission lines.

The Tribunal heard five petitions on the issue. Three petitions against the Commission’s order, which were disposed of, belonged to subsidiaries of Ultratech Cement in Madhya Pradesh

However, the Tribunal asked the Commission to reconsider two other petitions where it was not certain that the dedicated transmission lines used by consumers were not reliant on DISCOM’s infrastructure in some form.

One of these petitions was filed by an Ultratech Cement subsidiary, and the other by Prism Cement.

Background

Ultratech Cement owns three manufacturing units — Vikram Cement Works, Dhar Cement Works, and Maihar Cement Works. All the units are fed by captive generation plants (CGPs), some of which are owned by Ultratech.

One of the subsidiaries procures power under captive open access mode from a project with Amplus Sunshine as the majority shareholder.

These three units had filed four petitions challenging the state Commission’s order.

Cement producer Prism Johnson, a cement manufacturer in Satna, Madhya Pradesh, filed the fifth petition. It also procures power under the captive open access route from a generation unit set up by BLA Power. Prism owns 30.46% of the plant and procures more than 51% of the production.

The state DISCOM had demanded payment of an additional surcharge against captive consumption from the cement manufacturers.

The consumers challenged it before the state Commission, which rejected the plea.

The Commission’s orders for the first three appeals of Ultratech were passed in May 2021.

The order under challenge at the Tribunal in the fourth appeal of Ultratech was delivered in November 2021 by the Commission.

The same Commission decided the case of Prism by an order in September 2021.

Tribunal’s analysis

The Tribunal observed no evidence that Ultratech Cement subsidiaries were using the transmission system of the distribution licensee to evacuate power from their CGPs for various manufacturing units.

It meant that a Supreme Court ruling in this regard could be squarely applied to the extant case, the order said.

“The levy and demand by the distribution licensee of additional surcharge on charges on wheeling under section 42(4) of Electricity Act, 2003, cannot be justified or upheld,” the court order said.

The Tribunal said the petitioners’ appeals must succeed, and consequentially the state Commission’s order was being set aside.

Further, the Tribunal said that two petitions, which did not make clear whether consumers were using their transmission infrastructure without being dependent on DISCOM, may stand on a different footing.

“We find some merit in the argument of the respondent that if the dedicated lines connecting the generating stations to the point of own use of the CGPs avail of the transmission/distribution line network or associated facilities, the claim of total exemption from levy of the additional surcharge under section 42(4) may have to be examined afresh in the light of the relevant law,” the order said.

The Tribunal added that while setting aside the order challenged in these two petitions, the matters were being remitted to the state Commission for fresh consideration.

In a recent order, APTEL ordered Tamil Nadu Generation and Distribution Corporation (TANGEDCO) to compensate solar developers for the access power consumed on account of a higher capacity utilization factor.

In another order, the Tribunal set aside Uttar Pradesh Commission’s ruling that cut the tariff for solar developers, which was agreed upon earlier between the suppliers and the procurer. APTEL had called the Commission’s order arbitrary, unjust, and unlawful.

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