Information relating to the previous tariff period could not conceivably reflect the “current state of affairs” – Observed by APTEL in a matter challenging the determination of Cross Subsidy Surcharge by the Hon’ble Rajasthan Electricity Regulatory Commission | Ritam Legal Represented M/s Vedanta Limited in the Matter.

The Hon’ble APTEL in the case of Vedanta Limited vs Rajasthan Electricity Regulatory Commission & Ors., has set aside the Order dated 01.12.2016 (“Impugned Order”), passed by the Hon’ble Rajasthan Electricity Regulatory Commission (“RERC”) in Petition No. RERC/817/2016, wherein it failed to calculate the tariff based on the current level of Cross-Subsidy Surcharge (“CSS”) in terms of the mandate under Section 42(2) of the Electricity Act, 2003.

The Impugned Order emanated from the proceedings under Petition No. RERC/817/2016, wherein the distribution licensees of the State of Rajasthan had approached the Hon’ble RERC, under Section 42(2), read with Sections 39 and 40 of the Electricity Act, 2003, praying for determination and approval of CSS for the Control Period for FY 2016-2017. Such a prayer for determination and approval of CSS was made, despite the absence of a tariff order governing the said Control Period. Various stakeholders opposed the said petition on the ground that the CSS for a particular control period cannot be determined in the absence of tariff petition for such control period.

Despite the glaring absence of any corresponding tariff petition and the objections, raised by the stakeholders, the Hon’ble RERC proceeded to compute the rate of CSS for FY 2016 -2017. On this count, the same was challenged in the Appeal.

The Hon’ble APTEL, in its judgment, has recognised that delinking of the process of determination of CSS, with the process of tariff determination, has “vitiated the end result”. While stating that the absence of tariff petition for FY 2016-2017 could not have been glossed over, the Hon’ble APTEL noted that the Hon’ble RERC had erred in assuming that the information qua the previous tariff period can reflect the “current state of affairs”.

In setting aside, the Impugned Order, the Hon’ble APTEL has also dealt with the inputs for the determination of cross-subsidy and recognised that the quantum jump in the rate of CSS is antithetical to the public policy, which envisages “progressive reduction” in cross-subsidy surcharge/CSS.

Ritam Legal appeared on behalf of M/s Vedanta Limited in the captioned matter. The matter was argued by Matrugupta Mishra, Managing Partner, Ritam Legal who was assisted by Ritika Singhal, Senior Associate.

The judgment can accessed below.

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