Electricity Tariff Hike – Appellate Tribunal’s Interim Relief Decision
The recent judgment by the Appellate Tribunal for Electricity has sparked considerable attention in the energy sector. In the case of M/s. KK Ropeways Limited (Operational Creditor) versus the Maharashtra Electricity Regulatory Commission (MERC), the Tribunal granted an interim stay on the tariff hike imposed by MERC. The dispute arose when MERC fixed the appellant’s tariff significantly higher than the estimated average cost of supply, raising concerns about its impact on consumers and the overall competitiveness of the Distribution Licensee.
The Tribunal’s decision was grounded in the clear violation of Section 61(d) of the Electricity Act, 2003, which prioritizes the larger public interest in electricity tariff determinations. This critical factor played a pivotal role in the Tribunal’s assessment of whether to grant interim relief to the Distribution Licensee. The sharp tariff hike, which amounted to Rs. 1.39/kwh above the estimated cost of supply, had the potential to burden consumers with higher electricity costs, and even drive them to opt for other Distribution Licensees operating in Mumbai.
Delving into the legal principles governing the grant or refusal of interlocutory relief, the Tribunal emphasized three core considerations: a prima facie case, the balance of convenience, and the possibility of irreparable injury. The appellant had to satisfy at least two of these conditions conjunctively to be eligible for interim relief. Notably, the Tribunal pointed out that a mere fulfillment of one condition would not suffice to justify the grant of interlocutory relief.
The Tribunal’s analysis also highlighted the violation of the merit order principle by MERC, which involved an improper quantum of power procurement from costlier embedded generation and an insufficient utilization of cheaper imported power. Such a procurement strategy not only rendered the Distribution Licensee uncompetitive but also burdened consumers with a far higher tariff than necessary. The Tribunal advised MERC to consider procuring cheaper power from outside Mumbai to ensure a reasonable and economical tariff for consumers.
Considering its appellate jurisdiction, the Tribunal firmly asserted its authority to revise and correct the proceedings in a cause already instituted. This empowered the Tribunal to interfere with regulatory commission orders, including MERC. The decision underscored the need for the Commission to dispassionately consider all relevant factors while fixing tariffs, ensuring a fair price for consumers and safeguarding their interests.
In conclusion, the Appellate Tribunal’s interim relief decision serves as a significant development in the electricity sector. By staying the tariff schedule for the financial year 2023-24, the Tribunal has provided vital support to the Distribution Licensee’s proposal to procure power from cheaper sources, which not only preserves its competitiveness but also ensures consumer welfare with lower tariffs.
