Maximum demand charges during restricted supply upheld as a valid part of the two-part tariff system.

Restricted supply under Section 22-B lawfully overrides the supply contract during shortages, and Regulation 46 validly preserves liability for maximum demand charges on the actual demand availed while waiving minimum charges after the prescribed period. Demand charges are treated as part of the two-part tariff to cover standing and capital costs, not as a charge for actual monthly consumption alone, and the regulation is not arbitrary merely because an unusual interruption period has been specially adjusted. The proviso to Regulation 46 is therefore valid and the levy of maximum demand charges during restricted supply is sustained.

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Issues: Whether the proviso to Regulation 46 of the Orissa State Electricity Board (General Conditions of Supply) Regulations, 1981 was arbitrary or unreasonable in permitting levy of maximum demand charges during a period of restricted supply imposed under Section 22-B of the Indian Electricity Act, 1910.

Analysis: The order under Section 22-B lawfully overrides the supply contract during shortages and the Board is then bound to supply only within the restriction imposed. Regulation 46, read with the two-part tariff system, relieves the consumer of minimum charges when restrictions exceed the prescribed period, but continues the liability to pay demand charges on the basis of the actual maximum demand availed during the restricted period together with actual energy consumption charges. The Court held that demand charges are not a charge for actual monthly consumption alone but are meant to cover the standing and capital cost of keeping supply capacity available, and the consumer is not made to pay for more maximum demand than he actually avails. The High Court's reasoning proceeded on an exceptional interruption period which had already been specially adjusted, and a regulation cannot be invalidated by reference to an unusual instance when its general operation is otherwise rational.

Conclusion: The proviso to Regulation 46 is valid and is neither arbitrary nor unreasonable; the levy of maximum demand charges during restricted supply is sustained.

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