INDIA BUSINESS WORLD - AUGUST (16^th - 31^st) 2007
The Month that was ...

CENTRAL ELECTRICITY REGULATORY COMMISSION GRID CHARGES RIGHT, RULES SC

THE Supreme Court has ruled that the Central Electricity Regulatory Commission is empowered to impose Availability Based Tariff (ABT) and Unscheduled Interchange (UI)to maintain discipline in the grid system.

A bench comprising Justice HK Sema and Justice LS Panta said, "the application of Availability Based Tariff and imposition of Unscheduled Interchange (UI) charges are essential part of the Functions of the Central Commission under Section 79(1)(h) of the Electricity Act, 2003".

"As per the Scheme of the Electricity Act, 2003, the Central Commission has the plenary power to regulate the grid, particularly in the context of the grid being integrated and connected across the region comprising of more than one state. The state grid cannot be isolated and can be seen as independent from the region" said Justice Sema writing the verdict.

The court said that the maintenance of grid discipline envisaged under the grid code is regulated by the mechanism of ABT and UI charges. There is no basis to contend that unless something is a part of tariff the Central Commission cannot exercise powers and functions. The ABT and UI charges are commercial mechanism to control the utilities in scheduling, dispatch and drawl and the UI charges are tariff or charges payable for deviations, court said.

It dismissed the appeal of Central Power Distribution Co. & Ohters. The appellants had challenged the order of the commission passed on July 4, 2005 which had ordered the application of ABT to Simhadri SPTS thermal station of the national thermal power corporation (NTPC) with effect from December 1, 2005.

The appeal had said that the application of Availability Based Tariff (ABT) in relation to Unscheduled Interchange (UI) charges, which otherwise is not a component of tariff in terms of Regulation 15 of the Central Electricity Regulatory Commission (terms and conditions of tariff) Regulations, 2004 was liable to be held as beyond the jurisdiction of the commission.

The appellants had come to the apex court after their petition was dismissed by the Appellate Tribunal for Electricity (Appellate Jurisdiction).

The apex court said that ABT was to ensure discipline in the integrated system and was being introduced station wise. It was Central Commission alone who has the jurisdiction particularly in regard to generating stations of NTPC, which is a central government, owned and controlled generating company, said court.

The unscheduled interchange of power (UI charges) contemplated under the proposed ABT scheme is payable depending upon what is deviated from the schedule and subject to the grid conditions at that point of time.

This element was introduced to bring about discipline in the system.

The present problem in grid system necessitates ABT system, noted the court.

Under this system UI charges will be payable, if:

1. A generator generates more than the schedule, thereby increasing the frequency;
2. A generator generates less than the schedule, thereby decreasing the frequency;
3. A beneficiary overdraws power, thereby decreasing the frequency;
4. A beneficiary under draws power, thereby increasing the frequency.