APTEL Asks Regulator to Revisit Cross-Subsidy Surcharge for Open Access Power Projects

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The Appellate Tribunal for Electricity (APTEL) recently ruled that the state regulatory commission should revisit the subject of cross-subsidy surcharge on open access projects in Rajasthan as and when it takes up the tariff determination exercise in the future.

Rajasthan Textile Mills Association, Vedanta, Lord Chloro Alkali, Sunil Healthcare, Synergy Steels, Ambuja Cements, and Ultratech Cement had petitioned APTEL to assess the veracity of the state regulator’s determination of the cross-subsidy surcharge for the financial year (FY) 2016-17.

Background

The petitioners have industrial units located in Rajasthan, having been granted open access within the contract demand drawing electricity through open access, including from power exchanges.


They challenged the state commission for hiking the cross-subsidy surcharge from ₹0.18 (~$0.002)/kWh, ₹0.13 (~$0.001)/kWh, and ₹0.05 (~$0.0006)/kWh for 132 kV consumers, 33 kV consumers, and 11 kV consumers to ₹1.63 (~$0.021)/kWh, ₹1.39 (~$0.017)/kWh, and ₹0.83 (~$0.01)/kWh.

Tribunal’s analysis 

The Tribunal observed that the rates of cross-subsidy surcharge under the previous determination were ₹0.18 (~$0.002)/kWh for 132 kV consumers, ₹0.13 (~$0.001)/kWh for 33 kV consumers, and ₹0.05 (~$0.0006)/kWh for 11 kV consumers.

The Commission passed the tariff order for the control periods (2016-17 and 2017-18) on November 2, 2017. While the petition for tariff order for the next control period beginning FY 2016-17 was awaited, the distribution licensees approached the Commission requesting the determination and approval of the cross-subsidy surcharge.

The distribution licensees are required to provide the Commission with details of existing and proposed cross-subsidy surcharges along with the tariff petition.

But the Commission overlooked the absence of a tariff petition for FY 2016-17. The delayed tariff determination for FY 2015-16 was no reason to relieve the state commission of its responsibility for the timely determination of tariffs for FY 2016-17.

The State Commission should not have accepted the tariff petition unless the distribution licensees provided authenticated and audited data, necessary not only for determining tariff but also the cross-subsidy surcharge.

The tariff petition for 2016-17 was filed along with the petition for 2017-2018. The petition resulted in the tariff order being passed on November 2, 2017. The determination of the cross-subsidy surcharge did not coincide with the tariff determination and resulted in a significant jump in the cross-subsidy surcharge, which was incorrect.

APTEL stated that the rates of cross-subsidy surcharge should not have been tampered with and is unjust, unfair, and violates the prescribed norms and procedures and so it is set aside.

The Tribunal directed the state Commission to revisit the cross-subsidy surcharge when it takes up tariff determination in the future.

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