Tuesday 15 September 2015

Brief note – Status on the regulatory environment as regards ‘changeover’ / ‘switchover’ of distribution licensee by a consumer

Brief note – Status on the regulatory environment as regards ‘changeover’ / ‘switchover’ of distribution licensee by a consumer


1.    State Commission in  case No.151 of 2011  vide  order dated 22.8.2012  while   granted relief to RInfra had imposed  following restrictions on Tata Power:

(i) From the date of the order changeover will be allowed from RInfra to Tata Power only for the residential consumers having an average consumption less than 300 units per month for next 12 months and after that the   Commission will review the position and decide for future.

2.  Aggrieved by the  order dated 22.8.2012, both Tata Power and RInfra had filed Appeal No. 246 of 2012 and 229 of 2012 respectively. Appellate Tribunal passed the order dated 28 November 2014.

3.    Para 73 and 79 deals with the matter of Mumbai International Airport (MIAL) and the Tribunal has observed as follows: 
“Para 73 – “In fact, such a restriction has denied other consumers from exercising their choice of supplier guaranteed by the Act. One of such consumer viz., Mumbai International Airport Limited (MIAL) has filed I.A. No. 395 and 396 of 2014 seeking impleadment and directions in the present Appeal and has submitted that the directions given by the State Commission takes away the choice given to MIAL as a consumer under Section 43 of the Electricity Act to take supply from either of the licensees.”
Para 79 – “As regards IA 395 and 396 of 2014 filed by Mumbai International Airport, we do not want to give any specific finding and we direct Mumbai International Airport to file a petition before the State Commission and the State Commission will decide the Appeal No. 246 of 2012 & IA Nos. 401 & 402 of 2012 and 71, 245, 439 & 442 of 2013 & IA No. 139 of 2014 AND Appeal no. 229 of 2012 & IA No. 368 of 2012 issue as per law, keeping in view the findings given in this order.”

Present note is based on order passed in Appeal No. 246 of 2012 and 229 of 2012 on  28 November 2014.

1907   Tata Power allowed supply to Other licensees and bulk consumers of Factories and Railways whose annual consumption was not less than 500,000 units (which were generally HT consumers), and also supply to such consumers for lighting provided the lighting consumption did not exceed 20% of the total annual consumption only by agreement with existing licensees.
1930   BSES was given distribution license for suburban areas. The company was subsequently acquired by Reliance Energy Limited and is now known as Reliance Infrastructure Limited (RIL). 
1934   Licenses were amended to incorporate further restriction that Tata's cannot supply energy to any consumer other than the licensees within their respective areas except with the written consent of Government which is to be given after consulting the existing licensees. 
1964   Restrictions imposed on Tata Power were removed and were allowed to supply power to high end consumers only (more than 1000 kva in Mumbai suburban area) and to other licensees in bulk and the other distribution licensees were obliged to supply in retail.
2002   RIL filed petition (No.14 of 2002) before the State Commission under Section 22 of the Electricity Regulatory Commission's Act 1998 for restraining Tata Power from supplying electricity to the consumers having contracted demand less than 1000 kVA in the area of supply of RIL.
2003   State Commission passed Order dt 03.07.2003 and observed that Tata Power is entitled to supply energy "for all purposes including supply to other licensees for their own purposes and in bulk". However, in its order the State Commission restrained Tata Power from offering new connection to any consumers with energy requirement below 1000 kVA.
2005   Both parties filed separate Appeals before Appellate Tribunal (RIL - No.31 of 2005 and Tata Power - No.43 of 2005).
2006   The Tribunal by the judgment dated 22.5.2006 disposed of both Appeals by setting aside the order of the State  Commission dated 3.7.2003 holding that the Tata Power under its license was entitled to supply energy only in bulk to other licensees and it was not entitled to supply in retail to the consumers irrespective of their demand.
Against this judgment of the Tribunal, the Appeals were filed by Tata Power and others before the Hon'ble Supreme Court.
2008   Hon'ble Supreme Court held that there is nothing in the erstwhile TPC licenses which restricts the supply of electricity to consumers whose maximum demand is less   than 1000 KVA and Tata Power is entitled to supply electricity directly to consumers whose maximum demand is less than 1000 KVA apart from its entitlement of supplying electricity to other licensees for their own purpose and in bulk.
Subsequently, as per the Hon'ble Supreme Court's judgment as well as the Capital Investment approval guidelines, 2005 laid down by the Maharashtra Commission, Tata Power submitted a Network Rollout Plan of Rs. 1,062 Crores to the State Commission, in which it proposed a network roll out for the period FY 2009-10 to FY 2011-12 based on the load growth in the ward, land availability, spare capacity and outlet availability from   corresponding 220 kV Receiving Sub Stations
2009   The State Commission in its Order dated 15.06.2009 in Case No. 113 of 2008 rejected Tata Power’s proposal of network rollout investment plan and directed "exploring" the use of the wires of other distribution licensees.
In pursuance of this order, Tata Power made a request to RIL seeking permission for use of its network to supply power to consumers who sought power from Tata Power.
RIL through its letter dated 30.7.2009 offered no objection to the Tata Power for use of its distribution system to supply electricity to the consumers in the common license area.
Tata Power further filed a Petition (no. 50 of 2009) before the State Commission requesting it to lay down the operating procedure for the consumers who wanted to receive supply from the Tata Power while being connected to the distribution network of the RIL.
By an interim order dated 15.10.2009, State Commission held that the changeover consumers shall be consumers of the Tata Power and would be liable to pay wheeling charges for RIL network as determined by the Commission.
2011   RIL filed petition before State Commission (No.151 of 2011). State Commission by its order dated 22.8.2012 imposed following restrictions on Tata Power:
i.     From the date of the order, changeover will be allowed from RIL to Tata Power only for the residential consumers having an average consumption less than 300 units per month for next 12 months and after that the   Commission will review the position and decide for future.

ii.   Tata Power can switchover existing changeover consumers and only residential consumers having an average consumption less than 300 months, in the identified 11 clusters.
2012   Both, Tata Power and RIL have filed Appeal (No. 246 of 2012 and 229 of 2012 respectively) against the State Commission order dated 22.8.2012.

Tata Power and RIL appeal filed with the Appelate Tribunal (No. 246 of 2012 and 229 of 2012 respectively)
Appellate Tribunal passed the order dated 28 November 2014 allowing Appeal No. 246 of 2012 with certain directions and disposing of Appeal No. 229 of 2012 with certain directions to the State Commission for formation of procedure for changeover of consumers. The finding of the Appellate tribunal is as follows:
“80. Summary of our findings
i.      It is not established conclusively that Tata Power was intentionally trying to create a road block to avert changeover of certain categories of consumers and indulging in cherry picking of changeover consumers. If the State Commission had received complaints about refusal of Tata Power to changeover from low end consumers, it should have conducted an investigation under Section 128 of the Act and upon receipt of the investigation report, it could have taken corrective action or action against Tata Power after following the procedure laid down under Section 128. Tata Power has since revised its application form for   changeover/new connection. Tata Power is directed to keep record of the category wise applications received for changeover (0-300 Units residential may be a separate category) applications rejected with reason for rejection (category-wise), category wise changeover allowed and post the same on its website quarterly. Tata Power is also directed to give a public notice regarding documents required for changeover application clearly indicating that PAN is not mandatory

ii.     It is correct that the Tata Power has not laid down LT network to switch over the residential consumers who were availing supply from Tata Power on the network of RIL and who were in the vicinity of the network laid down by Tata Power. This in our opinion cannot be cherry picking as it has been done in the interest of the consumers and is also in line with the decision of the State Commission in its order dated 15.6.2009 in case No. 113 of 2008. Therefore, it is in the interest of consumers of Tata Power and RIL that the changeover consumers of Tata Power continue to get supply from Tata Power on the RIL, even if a 33/22 kV sub-station of Tata Power is available in the vicinity. It will also be convenient and economical for the consumer to changeover back to RIL in case RIL's tariff becomes more attractive in future.

iii.    In view of the practical difficulties in laying down parallel network in Mumbai as pointed out by Tata Power we have given some directions under paragraphs 58 to 61 regarding restricting the Roll out Plan of the Tata Power only to the areas where laying down of parallel network will improve the reliability of supply and benefit the consumers and directions for continuation of changeover arrangement irrespective of category or consumption of consumers, commissioning of network where a substantial expenditure has been incurred by Tata Power in laying down new network on the directions of the State Commission, consumers who had already switched over to Tata Power, laying down network for providing new connection, changeover and switch over protocol, change in license conditions of the licensees, etc. However, there shall be no restriction on any licensee to lay network for supply to new connections. The State Commission   is also directed to decide the detailed protocol for switchover and changeover after hearing all concerned.

iv.   The State Commission has powers to give directions if it comes to its notice that a licensee is laying down network selectively to connect the high end consumers ignoring the low end consumers and violating the terms and conditions of the license. However, such directions have to be given after following the procedures as per law.

v.    Directions given to Tata Power by the State Commission in the impugned order are set aside.

vi.   It is perfectly legal for the consumers to changeover from one licensee to another using the network of one of the licensees and, therefore, there is no illegality in continuation of the directions of the State Commission in the order dated 15.9.2009 regarding changeover to Tata Power using RIL's network. However, RIL is entitled to charge from changeover consumers wheeling charges and other compensatory charges including the cross subsidy charges as decided by the State Commission from time to time as per law. The State Commission is also directed to lay down a detailed changeover protocol after hearing the concerned parties.

vii.  We have given the above findings in view of the circumstances of the case where difficulties are being experienced in laying distribution network by the parallel licensee namely, Tata Power to provide connectivity to all consumers in  the licensed area common to RIL and in the ultimate interest of the consumers.

viii. Para 73 and 79 deals with the matter of Mumbai International Airport (MIAL) and the Tribunal has observed as follows: 
Para 73 - In fact, such a restriction has denied other consumers from exercising their choice of supplier guaranteed by the Act. One of such consumer viz., Mumbai International Airport Limited (MIAL) has filed I.A. No. 395 and 396 of 2014 seeking impleadment and directions in the present Appeal and has submitted that the directions given by the State Commission takes away the choice given to MIAL as a consumer under Section 43 of the Electricity Act to take supply from either of the licensees.
Para 79 - As regards IA 395 and 396 of 2014 filed by Mumbai International Airport, we do not want to give any specific finding and we direct Mumbai International Airport to file a petition before the State Commission and the State Commission will decide the Appeal No. 246 of 2012 & IA Nos. 401 & 402 of 2012 and 71, 245, 439 & 442 of 2013 & IA No. 139 of 2014 AND Appeal no. 229 of 2012 & IA No. 368 of 2012 issue as per law, keeping in view the findings given in this order.”
Link of the full order passed by Appellate Tribunal is as follows: 




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