2003 (10) TMI 636 - SC - Indian Laws

Supreme Court Upholds MERC's Tariff Jurisdiction & Approval Requirement for Electricity Charges

B.S.E.S. LTD. Versus TATA POWER CO. LTD. & ORS.

The Supreme Court affirmed that the Maharashtra Electricity Regulatory Commission (MERC) has exclusive jurisdiction over determining tariffs and related ... Whether dispute regarding sharing of standby charges for providing 275 MVA standby facility to BSES by TPC is not an issue of tariff, but is a dispute relating to sharing or apportionment of the charges being paid by TPC to MSEB for providing the former with a standby facility of 550 MVA and, therefore, it does not come within the purview of the Commission under Sub-section (1) of Section 22 of the Act? Issues Involved:1. Jurisdiction of the Maharashtra Electricity Regulatory Commission (MERC) under the Electricity Regulatory Commissions Act, 1998.2. Determination and sharing of standby charges between TPC and BSES.3. Validity and effect of notices and orders issued by TPC, MSEB, and the Maharashtra Government.4. Interim arrangements and directions provided by the High Court during the pendency of the proceedings.Detailed Analysis:Jurisdiction of the Maharashtra Electricity Regulatory Commission (MERC):The primary issue was whether the dispute regarding the sharing of standby charges falls within the jurisdiction of the MERC under Section 22 of the Electricity Regulatory Commissions Act, 1998. The court held that the determination or quantification of the amount payable for standby arrangements constitutes a component of the price for wholesale or bulk supply of electricity. Therefore, it falls within the expression 'determine the tariff for electricity, wholesale, bulk, grid or retail' under Section 22(1)(a) and 'regulate power purchase' under Section 22(1)(c) of the Act. The court emphasized that the MERC has exclusive power to determine tariffs, and any changes in tariffs must be approved by the Commission.Determination and Sharing of Standby Charges:The court noted that the standby facility was essential for every generator of electricity, and TPC had to pay MSEB for the 550 MVA standby facility. BSES, in turn, was provided a 275 MVA standby facility by TPC. The dispute arose regarding the charges BSES had to pay TPC for this facility. The court found that the determination of these charges is essentially related to tariff determination, which falls under the jurisdiction of the MERC. The court also noted that both TPC and MSEB had historically treated standby charges as a matter of tariff.Validity and Effect of Notices and Orders:The court rejected TPC's contention that the enhanced charges for standby facilities became effective by operation of law after the expiry of the notice period under the Electricity (Supply) Act, 1948. The court held that the legal position changed with the enforcement of the Electricity Regulatory Commissions Act, 1998, which requires that any tariff changes must be approved by the MERC. Consequently, any unilateral action to enhance charges without MERC's approval was invalid.Interim Arrangements and Directions by the High Court:The High Court had directed BSES to pay 50% of the standby charges that TPC pays to MSEB during the pendency of the proceedings before the MERC. The Supreme Court upheld this interim arrangement, noting that interim orders are made on a prima facie basis and that the MERC should decide the dispute expeditiously. The court also directed that any excess amount paid could be adjusted or refunded with interest after the final decision by the MERC.Conclusion:The Supreme Court dismissed the appeals and directed the MERC to decide the dispute expeditiously, preferably within three months. The court emphasized that the MERC has exclusive jurisdiction to determine tariffs and related charges, and any changes in tariffs must be approved by the Commission. The interim arrangement ordered by the High Court was upheld, with directions for adjustments based on the final decision of the MERC.