The Madras High Court has called for the response of the Tamil Nadu Generation and Distribution Corporation (Tangedco) as well as the Tamil Nadu Electricity Regulation Commission (TNERC) to explain why electricity tariff should not be revised every year. It has also asked the two entities to explain why the corporation should not devise a procedure to make payments to power suppliers strictly on seniority basis without giving room for out-of-turn remittances.
Justice N. Anand Venkatesh had taken up the task of attempting to improve the finances of Tangedco while dealing with a connected writ petition. The judge made it clear he was not trying to interfere with the functioning of either TNERC or Tangedco and the only reason for calling for remarks was to ensure the functioning of the corporation gets more regulated in accordance with the Electricity Act of 2003 and the regulations framed thereunder.
The judge had taken the assistance of senior counsel N.L. Rajah and advocate Rahul Balaji, who appears for various power generation companies in different cases, to ascertain ways and means through which Tangedco could be made into a viable undertaking. The two lawyers submitted an elaborate note to the court, listing out the measures that would have to be taken to cut down on the losses of Tangedco and make it a financially healthy corporation.
They pointed out that Tangedco was supposed to submit a petition for tariff fixation every year before the TNERC. However, its failure to do so for many years had led to TNERC fixing the rates suo motu for some years without submission of the Annual Revenue Requirement (ARR) details by Tangedco. Such suo motu revision was detrimental because of the inability of TNERC to revise the tariffs reasonably and incrementally based on the requirements of the corporation.
Further, such suo motu revision robs the consumers of the opportunity to participate effectively in the tariff revision process due to non-availability of ARR. The TNERC too remains handicapped due to the non-availability of accurate and adequate information. Tangedco had been unable to pay the wind energy and solar energy suppliers because of its inability and stubbornness to act strictly in accordance with the provisions of the Electricity Act, the two lawyers told the court.
They recalled that the TNERC had issued its maiden tariff order in 2003 on the basis of a petition filed by the Tamil Nadu Electricity Board (TNEB) in 2002. Then, the Commission made it clear that the tariff fixed by it would be applicable from March 16, 2003 to March 31, 2004, and that henceforth, TNEB must submit a tariff proposal in December every year, facilitating the commission to take a call on the application within a couple of months thereafter.
However, neither the TNEB nor its subsidiary company Tangedco, which came into existence in 2008, submitted a proposal for a revision of tariff until 2010. There was some regularity for three years thereafter, but again, Tangedco did not file the ARR for 2013-14 and hence, TNERC fixed the tariff suo motu. Then, one of the three members of the commission passed a dissenting order criticising the commission for not taking action against Tangedco.
Thereafter, Tangedco submitted the ARR for 2017-18 and got the tariff revised. After that, a petition was filed only on July 19, 2022 for determination of tariff. The entire history would show that Tangedco had consistently defaulted on its obligation to file the ARR every year, the lawyers said and complained that the details of the number of agricultural service connections that had been metered so far were also not available in the public domain.
Pointing out that the State government claimed there were 21.17 lakh agricultural connections, the advocates said, though it was a political decision to provide power free of cost to all those connections, it was imperative on the part of Tangedco to meter all those connections so that the exact quantum of free units of electricity could be ascertained and accordingly, the government could be asked to compensate the corporation.
Mr. Rajah said there was also a wide gap between the disclosed load and actual load of agricultural pump sets. Such difference had a cascading effect on arriving at the aggregate technical and commercial losses suffered by the corporation. Claiming that the 21.17 lakh agricultural connections were consuming nearly 30,000 million units (16.45% of overall consumption), he said, the government provided an annual subsidy of only ₹4,180 crore to the corporation.
Stating that the subsidy was being given on the basis of tariff fixed in 2014, Mr. Rajah and Mr. Balaji said the real cost of the subsidy to be provided at the present tariff should be close to ₹10,000 crore. The lawyers also complained that Tangedco had not calculated the cost to serve different categories of consumers. Taking note of their submissions, the judge directed TNERC counsel Richardson Wilson and Tangedco counsel Jai Venkatesh to submit their remarks by August 22.
