APPELLATE TRIBUNAL FOR ELECTRICITY

In terms of the Electricity Act, 2003 and as per the salutary observations by Justice Santosh Hegde in West Bengal Electricity Regulatory Commission v. CESC Ltd.[(2002) 8 SCC 715, Para 102] on 03/10/2002 regarding multi-disciplinary expert appellate body, the Appellate Tribunal for Electricity was constituted in the year 2005 to hear appeals against the orders of the adjudicating officer or the Central and State Electricity Regulatory Commissions under the Electricity Act, 2003. The second appeal lies before the Hon’ble Supreme Court on substantial questions of law only. In 2007, the APTEL was designated as the Appellate Tribunal to hear the appeals against the orders of Petroleum and Natural Gas Regulatory Board. Besides regular appellate power, APTEL has a superintending role over regulators in terms of Section 121 of the Electricity Act, 2003 to issue orders, instructions or directions as it may deem fit, to any State or Central Electricity Regulatory Commission for performance of its statutory functions under the Electricity Act, 2003.

The APTEL comprises a Chairperson who has been a Judge of the Supreme Court or Chief Justice of a High Court, one Judicial Member who has been or qualified to be a judge of High Court, two Technical Members who are electricity sector experts and one Technical Member who is an expert from petroleum and natural gas sector. Each bench has at least one Judicial and one Technical Member – creating a very effective combination of legal and industry (technical/financial) expertise. This has been an important factor responsible for effective and expeditious disposal of appeals within the stipulated time frame of 180 days.

The Appellate Tribunal was established at an appropriate time when the liberalisation of electricity industry under the Electricity Act was being implemented. Previously, the electricity activities were generally controlled by an integrated State Electricity Board. The State Electricity Boards have since been re-organised with generation, transmission and distribution of electricity being undertaken by different entities. There are also other significant developments in pursuance of the Electricity Act, 2003 such as de-regulation of generation, encouragement of captive generation, implementation of the concept of Open Access,involvement of substantial number of private generators and private players in other areas, electricity trading being allowed, involvement of Power Exchange, integration of the national grid etc. There has also been establishment of large power generating stations in pursuance of a Competitive Bid Process under Section 63 of the Electricity Act,2003. There has been, therefore, a natural growth of substantial litigations involving complex issues of unprecedented nature. These could not be adjudicated even under the bilateral arbitration because of the overall interest of the consumers, which is to be protected.

In a decade of its functioning, the Tribunal has been called upon to resolve many complex and path-breaking issues which has facilitated the development of the power sector as per the intent of the Electricity Act, 2003. Some important orders and judgements are discussed in the following paragraphs.

In the year 2011, the APTEL initiated suo moto proceeding under Section 121 of the Electricity Act, 2003 on a reference from the Unin Ministry of Power regarding an emerging national crisis due to a number of distribution utilities not filing tariff petitions and the State Commissions failing to make periodic tariff revisions. Some of the distribution utilities did not have financial resources to purchase adequate power to meet the full consumer demand. After hearing all State Commissions, the Tribunal by order dated 11/11/2011 gave practical solution to resolve the political, economical and financial crisis directing all State Commissions to determine retail supply tariff every year and in case the Distribution Companies do not file tariff petition in time, initiate suo moto hearing to determine tariff. This order strengthened the hands of the State Commission to carry out one of their important functions of determination of tariff by initiating suo moto proceeding in case the State distribution company does not file tariff petition in time due to extraneous pressure.

Keeping in mind the state statutory objective to distance the Government from tariff regulation of utilities, the Tribunal was called upon to evaluate the legality of State Government directions to the State Commissions which interfered with the basic function of the Commission regarding determination of tariff without honouring fiscal obligation to pay subsidy upfront (Section 65). In full bench judgment dated 31/01/2011 in Appeal No.4 of 2010 and batch, APTEL held that such policy directions of State Governments under Section 108 of the Electricity Act, 2003, curtailing the powers of the State Commission in the matter of determination of tariff were not binding on the State Commission. This view has since been also held by division benches of the Delhi and the Bombay High Courts.

Open access to the wires of transmission and distribution is an important provision of the Electricity Act, 2003 to provide an option to the consumer to meet its demand from alternate sources and not be hostage to the area distribution company. In Appeal No.38 of 2013 an issue arose whether a consumer was liable to pay cross subsidy surcharge to the distribution company for availing power during the period when the distribution company was unable to supply power and had imposed power cut on the consumer. The Tribunal by its judgment dated 01/08/2014 held that when the distribution company is failing to procure adequate power to meet its obligation to supply power to its consumers, there is no justification in imposing surcharge on the consumers who arrange power from alternate sources through open access. It was decided that surcharge is a compensatory charge and in the present case there is no loss to the distribution company due to the consumer taking power through open access.

In sync with the global consciousness on sustainable development and Indian policy, promotion of renewable sources of generation is one of the functions assigned to the State Commissions. They have power to specify Renewable Purchase Obligation (RPO) in the area of distribution company which they have been specifying without effective enforcement. State Commissions have been relaxing the RPO at the end of the year in business as usual scenario, thereby defeating the purpose of RPO mechanism. APTEL by order dated 20/04/2015 gave directions under section 121 to all State Commissions for strict compliance of the RPO as per their regulations.

The Commissions have to be guided by the Tariff Policy in specifying the terms and conditions of tariff under Section 61 of the Electricity Act. In Appeal 103 of 2012 a question arose whether the tariff policy is binding on the State Commission? The APTEL vide judgment dated 24/03/2015 held that if the Regulatory Commissions have to be independent and transparent bodies, they are expected to frame Regulations independently. They can taken guidance from National Electricity Policy or Tariff policy but are not bound by them. National Electricity Policy and Tariff Policy are merely guiding factors and do not control or limit the jurisdiction of the Appropriate Commission.

In a batch of appeals, certain traders and generators had challenged the vires of Central Commissions Regulations determining trading margin of electricity by way of delegated legislation (regulations). By judgement dated 28/01/2006, the APTEL dismissed the Appeals holding that its jurisdiction was restricted to the limits imposed by the Statute, i.e. the Electricity Act, 2003 APTEL held that the appropriate course of action for the appellants is to proceed by way of judicial review under the Constitution. In view of importance of the question, the matter was referred to a Constitution Bench of Hon’ble Supreme Court.The Constitution Bench upheld the Tribunal’s judgement – reported as [2010 (4) SCC 603].