2009 (3) TMI 1074 - SC - Indian Laws

Supreme Court upholds Central Electricity Regulatory Commission's tariff revision authority

The Supreme Court affirmed the Central Electricity Regulatory Commission's (CERC) jurisdiction to revise tariffs based on subsequent events, emphasizing ... - Issues Involved:1. Jurisdiction of the Central Electricity Regulatory Commission (CERC) to revise tariff based on subsequent events.2. Applicability of data from the year 2000-2001 for tariff determination.3. Timeliness and procedural compliance in filing tariff revision applications.4. Impact of retrospective salary revisions on tariff determination.5. Relevance of previous tariff orders and principles of res judicata.6. Authority of the Appellate Tribunal to interfere with CERC orders.Detailed Analysis:1. Jurisdiction of the Central Electricity Regulatory Commission (CERC) to Revise Tariff Based on Subsequent Events:The Supreme Court affirmed that the CERC has extensive jurisdiction to frame, amend, and revise tariffs, including the power to make additions or alterations as necessary. The CERC's power is derived from the Electricity Regulation Commissions Act, 1998, and the subsequent regulations. The court noted that the CERC can exercise its jurisdiction suo motu or upon application by a generating company. The inherent jurisdiction of the CERC to correct its own mistakes was also emphasized, indicating that the CERC's powers are not strictly limited by procedural constraints.2. Applicability of Data from the Year 2000-2001 for Tariff Determination:The court discussed the relevance of operational and financial norms, particularly the order dated 21.12.2000, which allowed for adjustments based on actual expenses once available. The normative expenses for the base years 1995-1996 to 1999-2000 were to be used for tariff determination, with a provision for separate petitions for abnormal expenses. The court found that the CERC's approach to using data from 2000-2001 was justified given the unexpected abnormal increase in expenses.3. Timeliness and Procedural Compliance in Filing Tariff Revision Applications:The court highlighted that the applications for tariff determination for the years 1997-1998 to 1999-2000 should have been filed within the relevant period. The delay in filing the application for revision of tariff based on salary arrears paid in 2000-2001 was noted as a significant procedural lapse. The court emphasized that the CERC should not be asked to revisit tariffs after a considerable period, as this would disrupt the settled affairs of stakeholders.4. Impact of Retrospective Salary Revisions on Tariff Determination:The court acknowledged that the retrospective salary revisions, effective from 1st January 1997, were a legitimate part of the operation and maintenance costs. However, it was noted that the generating company should have included these costs in the initial tariff applications or filed for a revision within a reasonable time. The court found the claim for additional costs after five years to be unjustified, as it would unfairly impact current consumers who were not part of the original tariff period.5. Relevance of Previous Tariff Orders and Principles of Res Judicata:The court discussed the principles of res judicata and their applicability to regulatory proceedings. It was noted that while general principles of res judicata might apply, they were not strictly relevant in this case due to the CERC's continuous regulatory jurisdiction. The court also pointed out that the issue of res judicata was not raised before the CERC or the Appellate Tribunal, and thus, could not be considered at this stage.6. Authority of the Appellate Tribunal to Interfere with CERC Orders:The court affirmed that the Appellate Tribunal has wide jurisdiction to review CERC orders, both on factual and legal grounds. The tribunal's role as an expert body was emphasized, and its authority to interfere with CERC decisions was upheld. However, the court found that in this specific case, the tribunal's direction to absorb additional costs in the forthcoming tariff period was incorrect, as it would affect new consumers unfairly.Conclusion:The Supreme Court allowed the appeals, setting aside the Appellate Tribunal's order. The court emphasized the need for timely and procedural compliance in tariff applications and upheld the CERC's extensive regulatory powers. The decision clarified the scope of CERC's jurisdiction and the procedural requirements for tariff revisions, ensuring that regulatory processes are fair and transparent for all stakeholders.