Appeal No. 199 of 2015. Case: Maharashtra State Power Generating Company Ltd. Vs Maharashtra Electricity Regulatory and Ors.. APTEL (Appellate Tribunal for Electricity)

Case NumberAppeal No. 199 of 2015
CounselFor Appellant(s): Mr. M G Ramachandran Ms. Ranjitha Ramachandran Mr. Shubham Arya Ms. Anushree Bardhan Ms. Poorva Saigal Counsel and For Respondent: Mr. Budy A Ranganadhan Mr. D V Raghu Vamsy Ms. Aditi Sharma for R-1 Mr. G Sai Kumar Mr. Varun Agarwal Ms. Noor Rampal Mr. Aditya Dawan Ms. Himangina Meht, Advs.
JudgesMrs. Ranjana P. Desai, Chairperson and Mr. I.J. Kapoor, Technical Member
IssueElectricity Act, 2003 - Section 111
Judgement DateApril 18, 2017
CourtAPTEL (Appellate Tribunal for Electricity)


Mr. I.J. Kapoor, Technical Member

1. The present Appeal is being filed by Maharashtra State Power Generating Company Ltd. (herein after referred to as the "Appellant") under Section 111 of the Electricity Act, 2003 challenging the Order dated 26.06.2015 ("Impugned Order") passed by the Maharashtra Electricity Regulatory Commission (hereinafter referred to as the "State Commission"), in Case No. 15 of 2015. The present Appeal is concerning about the consideration of Late Payment Surcharge (LPSC), to be paid by the Respondent No. 2, to the Appellant as Non-Tariff Income and reduction of the same from the Aggregate Revenue Requirements of the Appellant. The Appellant has also filed Review Petition with State Commission on the Impugned Order on other aspects different from the issues raised in present appeal.

2. The Appellant, Maharashtra State Power Generating Company Ltd. is a power generating company within meaning Section 2 of the Electricity Act, 2003 in the State of Maharashtra supplying power to Respondent No. 2.

3. The Respondent No.1, Maharashtra Electricity Regulatory Commission is the Regulatory Commission for the State of Maharashtra, exercising jurisdiction and discharging functions in terms of the Electricity Act, 2003.

4. The Respondent No. 2, Maharashtra State Electricity Distribution Co. Ltd. is the distribution licensee in the State of Maharashtra.

5. The Respondents Nos. 3 to 7 are various consumers'' associations and groups in the State of Maharashtra.

6. Brief of Issues raised in the present Appeal:

a) The State Commission on 23.8.2005 notified the Maharashtra Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2005 (herein referred as Tariff Regulations, 2005). These Regulations do not have any provision for deduction of LPSC as non-tariff income for generation business for the purpose of determination of ARR. These regulations also have the provisions for rebate for prompt payment and levy of LPSC @ 1.25% per month if the payment is delayed by Respondent No. 2 beyond a period of 2 months from the date of billing.

b) The Appellant on 01.04.2009 executed Power Purchase Agreement (PPA) with Respondent No. 2 for sale of power from its generating stations. The PPA provides for payment in 60 days'' period by Respondent No. 2 on the bills raised by the Appellant. The PPA has the provisions of rebate for prompt payment and LPSC for delayed payment beyond 60 days @ 1.25% per month.

c) The State Commission on 04.02.2011, issued Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2011 (herein referred as Tariff Regulations, 2011) for determination of tariff of the Appellant. These Regulations describe interest on delayed or deferred payments of bills as non- tariff income. The applicability of these regulations was from 01.04.2011.

d) The State Commission vide order dated 23.08.2011 in a Petition being Case No. 44 of 2011, deferred implementation of Regulations, 2011 till 31.03.2013. This means that Tariff Regulations, 2005 are applicable to the Appellant till 31.03.2013.The applicability of Regulations, 2011 to the Appellant was from 01.04.2013 i.e. from financial year 2013-14.

e) As per provisions of the PPA, the Appellant started raising bills for LPSC on payment defaults by the Respondent No. 2 from 2010-11 onwards. The disputes on billing methodology of LPSC were resolved between the Appellant & the Respondent No. 2 through mutual discussions in 2014. In February, 2015 the Appellant raised revised bills for LPSC for the period from 2009-10 up to January, 2015. The year wise LPSC due from Respondent No. 2 is as below:


LPSC (Rs. Cr.)









2014-15 up to January, 2015


f) The Appellant on 09.01.2015 filed petition being Case No. 15 of 2015 for mid-term performance review for control period 2013-14 to 2015-16. This petition was revised on 13.03.2015 seeking approval of final true-up for 2013-14, provisional true up for 2014-15 and revised ARR and tariff for 2015-16.

g) The State Commission 20.04.2015 in Case No. 201 of 2014 approved revenue gap of Rs. 1197.67 Cr. on account of final true up for year 2012-13 & 2013-14 and provisional true up for 2014-15 for units 4 & 5 of Bhusawal TPS of the Appellant. The recovery of this amount i.e. Rs. 1197.67 Cr. was to be decided by the State Commission in a separate order in Case No. 15 of 2015.

h) The State Commission on 26.06.2015 decided Case No. 15 of 2015 determining tariff for 2015-16, truing up of 2013-14 and provisional true up for 2014-15. The State Commission for the years 2013-14 and 2014-15 up to January, 2015 has considered LPSC amount at para 6 e) above, as non-tariff income. The State Commission also considered Rs. 973.29 Cr. for the period 2010-11 to 2012-13 along with holding cost from 2010-11 to 2015-16 as non-tariff income for adjustment of revenue gap of Rs. 1197.67 Cr. approved in order dated 20.04.2015.

i) The State Commission has also decided other aspects in the Impugned Order dated 26.06.2015. The Appellant has filed Review Petition on 07.08.2015 before the State Commission on certain aspects which are distinct from LPSC adjustment issue as non-tariff income raised in present appeal.

j) Aggrieved by the Impugned Order dated 26.06.2015 passed by the State Commission, the Appellant has preferred the present appeal on the following issues: i. Adjustment of LPSC as non-tariff income with holding costs and without considering adverse financial impact on account of late receipt of the payments from the Respondent No. 2.

ii. Consideration of LPSC for period 2010-11 to 2012-13 as per Regulations, 2011 while the period 2010-11 to 2012-13 is covered under Regulations, 2005.

iii. Consideration of holding cost on LPSC for the period 2010-11 to 2012-13.



The Appellant has raised the following questions of law in the present appeal:

a. Whether the State Commission is right in considering the Late Payment Surcharge amount with holding costs as Non-Tariff Income in an absolute manner without considering the corresponding adverse financial impact to the Appellant?

b. Whether the State Commission is correct in considering the Late Payment Surcharge pertaining to years 2010-11 to 2012-13 as Non-Tariff Income as per Regulations, 2011 when the said years were continued to be governed by Tariff Regulations, 2005 and the said Tariff Regulations, 2005 did not provide for treatment of delayed payment surcharge as Non-Tariff Income?

c. Whether the State Commission in considering late payment surcharge as Non-Tariff Income is right in treating the entire amount of surcharge as income to be adjusted without considering all the financial adverse effect, including in the form of opportunity cost of non-availability of the amount?

8. We have heard at length the learned counsel for the parties and considered carefully their written submissions, arguments put forth during the hearings etc. Gist of the same is discussed hereunder.

9. The learned counsel for the Appellant has made following arguments/submissions for our consideration on the issues raised by it:

a) The State Commission in the Impugned Order failed to appreciate that the LPSC as per PPA is a compensation for delayed payment beyond due date. The cash deficit due to delayed payments results in additional borrowing of money or use of retained earnings by the Appellant which could have been gainfully utilised. This results in adverse financial impacts on the Appellant. Thus, LPSC should not be considered as income of the Appellant to be adjusted...

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