ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION
Sri
Surinder Pal, Member
Sri. Radha Kishan, Member
R.P.
(SR) No.46 of 2006
In
O.P. No. 1 of 2006
Transmission Corporation of A.P. Ltd., … Petitioner
and
Nil … Respondent
This petition coming on for hearing on 16.09.2006 in the presence of Sri P. Shiva Rao, Advocate, for the petitioner and having stood over for consideration to this day, the Commission delivered the following:
This review petition is filed under Section 94 (f) of the Electricity Act, 2003, read with Clause 49 of the Andhra Pradesh Electricity Regulatory Commission (Business Rules of the Commission) Regulations 1999 (for short ‘the Conduct of Business Regulations’) and the relevant guidelines seeking review of the Commission’s Order dated 23-03-2006 in O.P.No.1 of 2006 on Transmission Tariffs for the First Control Period FY 2006-07 to FY 2008-09, SLDC charges for 2006-07 and to revise the Transmission Charges.
2. The following are the averments made in the petition:
(a) While determining the tariffs, the Commission considered certain cost parameters including capital investments and special appropriations. The parameters considered by the Commission do not capture the realities of the past and requirements for the future and therefore need to be reviewed, which is essential from the point of view of establishing a sustainable transmission business as transmission tariffs are being determined for the First Control Period, 2006-2009.
(b) O & M Costs:
(i) As the O & M expenses are “controllable” in nature during the First Control Period, the substantial reduction in the O & M costs affected by the adjustments made by the Commission is unjust and unsustainable for the operations of the petitioner. It is further submitted that without a sustainable level of O & M expenditure being allowed in the ARR for the licensee, it would not be possible for the petitioner to maintain 99.40% transmission system availability. Since the O & M expenses during the Control Period have been determined on the lower base, the allowance of costs would be detrimental to the proper upkeep of the transmission system.
(ii) In the last three years, there is an increase of 8.28% in costs on actual basis (at gross level), which can never be construed as abnormally high, considering the increase in the network and nature of costs incurred by the petitioner.
(iii) During FY 2005, the petitioner added 22 additional substations and 425 ckt Kms of transmission network. Increased expenses of 8.28% are normal, considering inflation in the costs during the year and additional expenses on account of the increased network. Further, during FY 2005, the petitioner had to incur costs in replacement of certain failed transformers, which resulted in increased costs on plant and machinery. Similarly, the petitioner also put in place CBD gangs for maintenance of the network, which resulted in increased costs on transmission line maintenance. These costs incurred in FY 2005 are normal for the operations of the petitioner and cannot be construed abnormal. In fact the petitioner had judiciously planned for these expenses, which has resulted in improved performance and availability of the system beyond 99%.
(iv) O & M expenses for the FY 2006 (for consideration of Base Year) have increased compared to FY 05, primarily on account of (a) increase in cost of plant and machinery, (b) repairs of transformers, (c) substation maintenance, and (d) transmission lines maintenance.
(v) The APERC (Terms and Conditions for determination of Transmission Tariff) Regulation, 2005 (for short, ‘Regulation No. 5 of 2005’), had recognized in its clause 18.2 the grant / levy of incentives / penalty based on performance parameters, including transmission availability. However, the tariff order has not provided any such benchmark for transmission availability and incentives / penalties therefor. As the petitioner is not allowed any incentive for maintaining availability of the system, which is so important for maintaining reliable supply to the consumers, it is submitted that adequate and appropriate O & M expenses need to be allowed in the ARR for recovery through transmission tariffs.
(vi) A wage revision package has been effected by the petitioner for its staff for implementation from April 1, 2006. Based on the agreement reached, there would be an additional incidence of Rs. 20 Crs per annum.
(vii) The Commission ought to develop the norm for the First Control Period based on the actual expenses incurred during the FY 05-06 (corrected for the normative costs) topped with the wage revision already effected.
(viii)
Considering the above, the Commission should consider the
O&M expenses of Rs. 240.45 Crs (Rs. 220.45 Crs of costs in Base year + Rs.
20 Crs due to wage revision) as O & M Expenses for the Base Year. Employee Cost / Kwh of the energy handled by
the petitioner are competitive when compared with other states like Madhya
Pradesh and
(ix) Excluding the costs of SLDC of Rs.23.89 Crs, the Commission ought to consider Rs. 216.65 Crs for the Base Year O & M costs as against Commission’s determination of Rs.166.38 Crs during the Base Year.
(c) Capital Expenditure :
(i) While the Commission has considered addition of generation capacity to an extent of 2780.80 MW during the First Control Period in determining the transmission tariff, it has not allowed requisite investments as proposed by the petitioner in its filings. The petitioner believes that the Commission has relied on the past trends of investments made by petitioner in pruning down the investments during the Control Period.
(ii) It is submitted that in line with mandate from Government of India to provide Electricity to all by 2012, the transmission system needs to appropriately strengthened to sustain the requirements. Keeping these requirements in view, petitioner has drawn a resource plant to build the transmission system. While the past trends indicate lower investments made by the petitioner it is required to enhance these investments to keep pace with the requisite developments in the sector.
(iii) In order to mitigate the position, the Commission should
(a) approve the capital investments proposed by the petitioner in this Review Petition in their totality to be trued up at the end of Control Period, or alternatively (b) allow the petitioner to true up its ARR and transmission tariff arising out of additional capital investment over and above that has been approved through yearly corrections.
(d) Treatment for Special Appropriation
(i)
Treatment made for special appropriation amounting to Rs.
170.84 Crs, spread over the Control Period, is not appropriate and has not been
accounted for as per the principles laid down by the Commission in its earlier
tariff orders and Regulation No. 5 of 2005.
Such an adjustment of special appropriations has not only curtailed the
transmission ARR for recovery, but also does not depict the correct
transmission charges applicable in the State of
(ii) The Commission ought to have captured the completeness of the accounts, considering the negative variation in the interest costs and positive variation in the capital base and associated returns. This complete capture results in positive special appropriation of Rs. 73.51 Crs (Rs. 179.82 - 106.31 Crs) to be recovered through transmission tariff in place of negative special appropriation of Rs.106.31 crs considered by the Commission.
(iii) As the positive correction for the capital base has not been effected, reduction arising out of the interest costs for the year 2004-05 should not be considered as a negative special appropriation for adjustment in the ARR for the Control Period.
(e) Recognition of Income Tax Liability
(i) Commission has not included any income tax liability while determining the ARR for the First Control Period. As per clause 16 of Regulation No. 5 of 2005, income tax, limited to the tax on return on equity component of the return on capital employed is to be allowed in the ARR.
(ii) The petitioner submitted that it had not filed for income tax as no returns were claimed in the filings. However, since Commission has allowed returns based on the norms determined, the petitioner is liable to pay income tax on the returns. Therefore, in line with the norms specified in Regulation No. 5 of 2005, this cost needs to be accounted for in the ARR and the transmission tariff determined accordingly.
(f) Correction for under- recovery of ARR for the year 2005-06
(i) While 626 MW of third party wheeling capacity is considered in FY 06-07, the capacity at the end of FY 05-06 was at 456 MW. It establishes that during the year 2005-06, the petitioner could have collected charges from 456 MW only (as contested by the petitioner in R.P. No. 6 of 2005 dated 31-10-2005) as against the 700 MW considered by the Commission. This differential capacity of 244 MW has resulted in under-recovery of transmission and SLDC ARR to the extent of Rs.20.27 and 1.20 Crs respectively.
(ii) Despite the orders of Commission on the review petition of the petitioner for the year 2005-06, the under recovered Transmission charges were not trued up by the Commission while finalizing the ARR for the first year of the Control Period i.e., 2006-07. Therefore, the above- mentioned amounts against under-recovery of transmission ARR (along with appropriate carrying cost) ought to be taken into consideration by the Commission and trued up for determining the ARR for the year 2006-07
(g) Recovery mechanism for the Transmission ARR
(i) The Commission ought to account for actual capacity contracted for recovery of the ARR, after discounting for the capacities which are being allowed to transmit / wheel power, but have litigations pending before Hon’ble Supreme Court. In this regard, the Commission ought to provide consistency in its approach.
(ii) When the Commission has not considered revenue to accrue in FY 2003-04 due to pendency of litigations, assumption that the transmission charges would be recoverable from these consumers at present is not in line with its earlier statements in Tariff Order. Since the recovery of the charges from these consumers is subject to decisions and directions from Courts, the petitioner submitted that the capacity of 456 MW, which is under disputes, cannot be taken into consideration of determination of transmission and SLDC charges and recovery of ARR. Such considerations are bound to lead to under-recovery of transmission ARR, to an extent of Rs. 69 Crs during the Control Period. There would also be a loss of about Rs. 1.02 crs on the ARR of SLDC for the year 2006-07.
(h)
Transmission charges for Open Access consumers, where the
entry and exit points are in the area of the same DISCOM.
(i) In para No.118, page 51 of the Transmission Tariffs Order for FY 2006-07, FY 2007-08 and FY 2008-09 it is stated that, the total capacity to be wheeled by the petitioner during the control period is 12036 MW in FY 2006-07, 12402 MW in FY 2007-08 and 15376 MW in FY 2008-09, inclusive of the capacity to be transmitted for persons other than the Distribution Licensees, including Open Access consumers who have exit and entry points within the same distribution companies. At present such capacity is 10 MW. These consumers, by virtue of the wheeling tariff order are not liable to pay the transmission charge. At the same time, such capacity has been included in the transmission capacity for determination of the transmission tariff. These two orders are contradictory.
(ii) Further the transmission system is always used even in case distribution open access transaction happens in the geographical area of one Distribution Licensee at 33 KV level or below, as the source of power is the EHV transmission system in the meshed network. Such transaction uses the transmission system. As such, all open access users have to pay transmission charges and transmission losses in kind to the transmission licensee. In addition to distribution network, the transmission system is also involved, where entry and exit points of the Open Access transaction are in the same DISCOM at voltage levels 33 kV and below. Though the entry point is at 33 / 11 kV level and exit is also at 33 kV / 11 kV level with in the same DISCOM, the energy fed into the distribution network at 33 kV / 11 kV level, is not consumed by the open access consumer, without the involvement of transmission network. In reality the energy pumped by the open access customer at 33 kV or 11 kV level is stepped up and flows in to the EHT system, as no matching load exists on the 33 kV / 11 kV system to absorb such energy. As such these transactions invariably involve transmission system and hence it is appropriate that such consumers pay transmission charges also even though the transaction is within the same DISCOM. The Commission ought to allowed the Transmission & SLDC charges to be collected from the Open Access consumers whose entry and exit points are located within the same DISCOM area as well.
(iii) Having said so, the Commission may consider non-payment of transmission charges for transactions at 33 / 11 kV level within same DISCOM, only if entry and exit points are under the same EHT SS.
(i) Correction to transmission capacity for recovery of transmission and SLDC ARR
Since the Transmission and SLDC charges could not be recovered from third party / open access users during the year 2005-06, it requires that the third party / open access users’ capacity should not be considered for determination of Transmission and SLDC Charges during the First Control Period.
(j) Recovery of Transmission and SLDC charges
PGCIL
determines and recovers Transmission charges per kW of peak demand of its beneficiary
states at the start of the year. In respect of Open Access consumers, the
amount collected is adjusted and passed on the beneficiary states at the end of
the year. In line with the above practice, the petitioner be allowed to recover
the entire Transmission and SLDC charges in the State of
(k) For all the reasons mentioned above, the petitioner requests the Commission to consider and approve the proposed changes in the Tariff Order for the First Control Period to arrive at revised Transmission Charges and pass such order as the Commission may deem fit and proper in the facts and circumstances of the case.
3. Before admitting the petition, notice was ordered to be issued to the petitioner. On 16.09.2006, the Commission heard Sri P.Shiva Rao, the learned counsel for the petitioner, on the maintainability of the said review petition, who submitted that
(a) Certain material submitted by the petitioner along with its filings for the Aggregate Revenue Requirement and application for Tariff for the Control Period 2006-2009 in respect of Transmission of electricity and for the determination of SLDC fees and charges for 2006-07 as per the Regulation No. 5 of 2005 could not be considered by the Commission because of accidental omission. Moreover, consequent upon passing the order on 23.03.2006 in O.P.No. 1 of 2006, certain supervening events have taken place, which necessitate the Commission to review the said order.
(b) The Commission considered several
parameters while arriving at the Transmission and SLDC charges, But some of the
parameters as considered by the Commission did not capture the realities of the
past and requirements for the future. Moreover, while determining costs, the
Commission omitted to take into consideration the principles and guidelines
issued by it in Regulation No. 5 of 2005. It amounts to accidental omission.
Therefore, revision of Transmission charges for the First Control Period based
on the grounds mentioned in detail in the petition filed by the petitioner may
be considered.
(c) The various grounds under which the Commission is requested to consider the review petition are mentioned in detail in the petition. They pertain to O&M Costs, Capital Investment requirements, Treatment of Special Appropriations, Recognition of Income Tax liability, etc. All the instances where the discussions or observations of the Commission did not capture the realities of the past and requirements for the future while determining Transmission and SLDC charges in O.P.No. 1 of 2006 are mentioned in detail under different parameters in the review petition. The Commission has to consider all these grounds even to arrive at the conclusion that there exists no necessity to review its order. Without considering the review petition on merits as stated above, the Commission cannot dismiss the petition summarily and state that the petition is not maintainable.
(d) In the case of Amarjit
Kaur v. Harbhajan Singh and another reported in (2003) 10 SCC 228, it was held
that summary dismissal of a review petition is not justified. The court has to
go into merits and if even after considering it on merits, the authority
concerned comes to a conclusion that there exists no necessity to review its
order, it can dismiss the review petition. In the case of Green View Tea
Industries v. Collector,
(e) Even otherwise, the review petition is maintainable on the ground that there exists ‘sufficient reason’ to entertain the same. In the case of Moran Mar Basselios Chatholicos and another v. Most Rev.Mar Poulose Athanasius and others, reported in AIR 1954 SC 526, the Hon’ble Supreme Court of India held that words “any other sufficient reason” must mean a reason sufficient on grounds, at least analogous to those specified in the rule.
(f) In the case of Raja Shatrunjit (dead) by LRs v. Mohammad Azmat Azim Khan and others reported in AIR 1971 SC 1474 it was observed by the Hon’ble Supreme Court that under Order 47 of the Code of Civil Procedure the principles of review are defined by the Code and the words “any other sufficient reason” in Order 47 of the Code would mean a reason sufficient on grounds analogous to those specified immediately previously in that order. The grounds for review are the discovery of new matters or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or review is asked for on account of some mistake or error apparent on the face of record.
(g) In the case of M/s Jayshree Chemicals Limited v. Orissa Electricity Regulatory Commission and another, the Appellate Tribunal for Electricity in its order passed on 04.04.2006 in Appeal No. 190 of 2005 observed that being a statutory authority and quasi-judicial forum or quasi-legislative body, the Regulatory Commission should consider the grounds advanced in the Review Petition one way or the other and pass a speaking order by recording its reasons for rejection. It is incumbent on the part of the Regulatory Commission to consider the grounds set out in the review petition and pass a speaking order. We would impress upon the Regulatory Commission that being a quasi-judicial statutory authority, as has been held by the Hon’ble Supreme Court, it is incumbent on its part to consider the objections or points raised and pass a speaking order.
(h) Considering all the above, the counsel for the petitioner requested the Commission to admit the review petition and approve the proposed changes in its Tariff Order for the First Control Period and arrive at revised Transmission Charges.
4. The point that arises for consideration is :
“whether the review petition is maintainable”
5. The Counsel for the petitioner laboured hard to contend that certain material placed by the petitioner at the time of tariff filing could not be considered by the Commission because of accidental omission or by mistake, that a petition for review of the order of the Commission is maintainable when by accidental omission or by mistake, certain material placed before it could not be considered, and such accidental omission or mistake is a good ground for entertaining subsequent review petition and proceed to review the order based on such material. Next contention of the counsel for the petitioner is that supervening or subsequent events which happened consequent to passing the order in O.P. No. 1 / 2006 also warrant review of the order dated 23-03-2006. He stated that subsequent to passing of the said order, several events have taken place which neither the petitioner could presume nor the Commission could consider and therefore, revision of transmission charges is necessary, and even otherwise, the various grounds mentioned in the review petition clearly establish that there exists sufficient reasons for review of the order dated 23-03-2006 passed by the Commission in O.P. No. 1 / 2006. He submitted that the Commission cannot summarily dismiss the review petition without considering the grounds set out in it by the petitioner. Lastly, the counsel relied on three judgments rendered by the Hon’ble Supreme Court of India and one by the Appellate Tribunal for Electricity as stated in paragraph 3 (d) to (g) above with regard to the scope of review petition.
6. It is well settled that scope of review is limited and generally a petition for review of an order passed by a judicial or quasi-judicial authority can be entertained by such authority on the following grounds:- .
(i) When there is a mistake committed by it, which is apparent on the face of record;
(ii) When there is an arithmetical mistake;
(iii) When it omitted to take certain material facts or took into consideration certain incorrect figures;
(iv) When a typographical error has crept into the Order; and
(v) for any other sufficient reason.
7. Before adverting to the various contentions raised on behalf of the petitioner, it is necessary to briefly explain the proceedings set in motion which led to passing the order dated 23-03-2006 by the Commission in O.P. No. 1 / 2006. The petitioner submitted filings on 31-12-2005 for its Aggregate Revenue Requirement and the application for Tariff for the control period 2006-09, in respect of Transmission of electricity. For determination of the SLDC fees and charges, it made its filings only for 2006-07 as the Regulation for determination of these charges on a long term basis was yet to be finalized. The petitioner was directed to issue a public notice through publication informing the general public that it had filed its ARR and Tariff proposals and stating that interested persons could file objections / suggestions on the said proposals. Following the public notice, 18 persons / organizations sent their objections / suggestions on the ARR / Tariff proposals of the petitioner. On 21-01-2006, the Commission directed the petitioner to send replies to all the objectors. Notice of public hearing on 14th February 2006, was given to the petitioner and GoAP. All those persons who expressed their desire to be heard in person were also informed the date on which that they would be heard.
8. During the hearing, the Commission heard the representatives of the petitioner and the objectors. The staff of the Commission also made a presentation on the issues and concerns relating to the filings of the petitioner. That apart, the representative of the petitioner also gave its responses on all the objections raised by the objectors and the issues raised by the staff during the hearing. After careful consideration of the material placed by the petitioner along with its filings, objections of the general public and other stakeholders, issues raised by the staff of the Commission, and the response of the petitioner to various issues and concerns expressed during the public hearing as well as the written responses, the Commission issued its order dated 23-03-2006 determining Transmission tariffs for the control period, 2006-07, and SLDC charges for FY 2006-07. After about three months of issuing the said order, the petitioner filed this petition for revising the Transmission charges.
9. The contentions of the petitioner are examined in the light of the above. Ordinarily, there will not be a review of the order at the instance of the parties or affected parties to the order, on the existing facts and contentions that have already been adverted to by the parties, either by way of written objections / suggestions and / or arguments at the time of hearing, when all those aspects have already been considered by the Commission at the time of passing of final order. Even if the contention of the counsel for the petitioner that certain material placed by the petitioner at the time of tariff filing could not be considered by the Commission because of accidental omission or by mistake is a ground for review of an order, such omission or mistake must be striking on mere looking at the record and not require any long drawn-out process of reasoning on points where there may conceivably be more than one options. Hearing the petitioner on merits based on the grounds mentioned in the petition would amount to rehearing the matter for detecting an error in the earlier decision which was passed after elaborate exercise as detailed above. Rehearing the matter and then correcting the same do not fall within the ambit of the review jurisdiction and such a course of action falls under appellate jurisdiction..
10. Even if it is accepted that summary dismissal of a review petition is not justified without going into merits as contended by the counsel for the petitioner, the Commission is of the view that before going into details of the grounds touching on the merits of the case, it is necessary for the Commission to satisfy itself about the maintainability of the review petition. In the case of Datla Chandraiah (died) by LR Vs. Kothalanka Durgavara Prasada Rao and others reported in 2004 (4) ALD 396, it was held that grounds touching merits of matter and those that do not come under the expression ‘error apparent on the face of record’ cannot form basis for review. The Order dated 23-03-2006 was passed by the Commission after consideration of all relevant facts and on appreciation of evidence, both documentary and oral. The Order was issued after a detailed public hearing, with the petitioner also participating actively in the whole process. From the various averments made in the petition and the arguments submitted by the counsel for doing so, it appears that the petitioner is dissatisfied with certain findings of the Commission. In the case of Revenue Divisional Officer & others v. A.Aruna & others reported in (1998) 6 SCC 494, the Supreme Court while comparing Section 17-A of the A.P.Land Grabbing (Prohibition) Act, 1982 with Order 47, Rule 1of the Code of Civil Procedure, discussed the nature and scope of review jurisdiction and observed that the order sought to be reviewed must appear to have resulted in miscarriage of justice and not merely that it might have occasioned dissatisfaction to the parties before a court. In the case of Lily Thomas etc. Vs. Union of India and others reported in AIR 2000 SC 1650, it was held that the power of review can be exercised for correction of mistake, but not to substitute view. In our view, reconsideration of the parameters and findings sought by the petitioners would amount to substituting one view with another and the same is not permitted under law. As mentioned above, the Tariff Order dated 23-03-2006 was passed after appreciation of a number of documents on record and also on consideration of oral evidence of a number of parties including the petitioner herein. The Commission therefore does not agree with the counsel for the petitioner that certain material placed by the petitioner at the time of tariff filing could not be considered by the Commission because of accidental omission or by mistake or that there exists any other sufficient reason for review of the said order, so as to necessitate this Commission to revise the Transmission charges.
11. The proposition in the case
of Raja Shatrunji by his LRs v. Mohammad Azmat Khan and others appears to be
that subsequent change of law is ground for review or not. In the instant case, the contention of the
petitioner’s counsel is that certain material placed by the petitioner at the
time of tariff filing could not be considered by the Commission because of
accidental omission or by mistake, alternately that there exists any other
sufficient reason for review of the order dated 23.03.2006. Therefore, the
aforesaid decision of the Hon’ble Supreme Court is not helpful to the case of
the petitioner. In the case of Amarjit Kaur v. Harbhajan Singh & another,
the Supreme Court had set aside an order summarily rejecting the review
application because it had been passed without expressing any view on the
matter dispute a judgment of the
12. For the reasons mentioned above, the Commission is of the view that the petitioner has failed to make out a case for the maintainability of the petition. In the result, the petition is not admitted as not maintainable.
The
order is corrected and signed on this 26th day of September, 2006
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(R.RADHA KISHEN) |
(SURINDER PAL) |
(K.SWAMINATHAN) |
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MEMBER |
MEMBER |
CHAIRMAN |