Petition No. 101/MP/2010. Case: Power Grid Corporation of India Limited Vs Bihar State Electricity Board, Patna and Ors.. Central Electricity Regulatory Commission

Case NumberPetition No. 101/MP/2010
CounselFor Appellant: Shri M.G. Ramachandran, Advocate and Ms. Swapna Seshadri, Advocate and For Respondents: Shri S.S. Raju, PGCIL, Shri R.B. Sharma, Advocate for BSEB, JSEB, GRIDCO and BRPL, Shri Sanjay Srivastav, BRPL, Shri Satpal Tomar, BRPL, Shri Deepa Shankar, BRPL, Shri Prashant Dua, BRPL, Shri S. Vallinayagam, TANGEDCO, Shri S. Balaguru, TANGE...
JudgesDr. Pramod Deo, Chairperson, Shri S. Jayaraman, Member, Shri V.S. Verma, Member, Shri M. Deena Dayalan, Member
IssueElectricity Act, 2003 - Sections 56(2), 61, 61(d), 62
Judgement DateJanuary 01, 2013
CourtCentral Electricity Regulatory Commission


1. The petitioner, Power Grid Corporation of India Limited has filed this petition seeking appropriate directions of the Commission to allow the petitioner to bill and recover the additional O & M cost due to increase in employee cost with respect to Board level and below Board level executives and non-executives as an additional component under O & M expense from the respondents as a onetime payment in proportion to their Annual Transmission Charges in the respective years. The petitioner has submitted that the Commission notified the Central Electricity Regulatory Commission (Terms and Condition of Tariff) Regulations, 2004, (hereinafter referred to as "2004 Tariff Regulations) on 26.3.2004 providing for the norms and parameters for tariff determination for the period 1.4.2004 to 31.3.2009. Regulation 56 (iv) of the 2004 Tariff Regulations specified the year-wise normative O&M expenses for the transmission systems in terms of Ckt kms and Bays for the period 2004-09 as under:

The petitioner has submitted that that the above mentioned norms have been arrived at by the Commission on the basis of the O&M expenses of the petitioner for years 1998-99, 1999-2000, 2000-01, 2001-02 and 2002-03. The petitioner has submitted that the norms capture different components such as employee cost, repair and maintenance, insurance, electricity charges, travel, C.C. allocation etc.

2. The petitioner has submitted that consequent to the notification of the norms for the period 2004-09, the Department of Public Enterprises (DPE) issued Office Memorandum Nos. 2(70)/08-DPE(WC) dated 2.4.2009, 9.2.2009 and 26.11.2008 for revision of pay with effect from 1.1.2007 for the Board level and below Board level executives, and non-unionised supervisors in the Central Public Sector Enterprises. The petitioner being a Central Public Sector Enterprise is mandated to follow the DPE as regards the revision of pay. Consequently, the component of employee cost incident on the petitioner has increased for the years 2006-07, 2007-08 and 2008-09 during the tariff period 2004-09. According to the petitioner, the impact of the revision of employee cost has not been factored/considered while arriving at the norms for O&M expenses during the tariff period 2004-09. Moreover, while arriving at the norms for O&M expenses for the tariff period 2004-09, there is no provision for addressing the impact consequent to revision in the scale of pay of the employees which is due with effect from 1.1.2007. The petitioner has submitted that in all its tariff petitions for determination of tariff during 2004-09, the petitioner has raised the issue that the wage revision of its employees is due from 1.1.2007 and the O&M expenses claimed in the transmission charges during 2004-09 period are subject to adjustment due to additional employee cost which becomes payable after the wage revision or alternatively, the increase in the employee cost due to wage revision be allowed as per actual based on the auditor's certificate for such extra employee cost. The petitioner has submitted that the Commission in the respective tariff orders has allowed the petitioner to approach for relief at an appropriate stage in accordance with law.

3. The petitioner has submitted the details of the additional employee cost incurred, excluding the employee incentive, consequent to the pay revision of only the Board level and below Board level executives relating to the transmission and they are as under:-

4. The petitioner has sought indulgence of the Commission to allow the above expenditure to be recovered as an additional component under O&M expense from the Respondents as a onetime payment in proportion to their Annual Transmission charges in respective years by invoking the provisions of Regulations 12 (Power to remove difficulties) and Regulations 13 (Power to Relax) of 2004 Tariff Regulations.

5. Replies to the petition have been filed by UP Power Corporation Limited (UPPCL), Madhya Pradesh Power Trading Company Limited (MPPTCL), Bihar State Electricity Board (BSEB), Haryana Power Purchase Centre (HPPC), Tamil Nadu Electricity Board (TNEB) and BSES Rajdhani Power Limited (BRPL). The petitioner has filed its rejoinders to these replies of the respondents. The replies of the respondents are briefly discussed as under:

(a). UP Power Corporation Limited in its affidavit dated 22.4.2010 has submitted that the employee cost in O&M is about 60% as admitted by the petitioner in Petition No. 67/2003. The average increment of DA is about 3% whereas the employee cost included in O&M increases by 3.66% to 4.42% in case of transmission lines and from 3.28% to 4.25% in case of bay. The balance amount remaining after adjusting increment in DA of 3% is profit/saving to the petitioner. On the basis of the total line length and number of bays in 2002-03, the saving is ` 671.599 lakh. The savings would be more if the actual figures of line length and number of bays are considered upto 2008-09. UPPCL has submitted that the petitioner should be asked to submit the net additional impact due to wage revision from 1.1.2007 after updating figures of length of lines and number of bays upto 2008-09 and after adjusting the saving out of the employee cost from 2004-05 to 2008-09. UPPCL in its affidavit dated 31.1.2012 has further submitted that as per the DPE guidelines, affordability is an important criteria for implementing the pay revision. The DPE guidelines provides for a fitment of 30% of basic pay plus DA @ 68.8% as on 1.1.2007 and the petitioner in its Office Order No. 11/2011 dated 5.4.2011 and Office Order No. 10/2011 dated 5.4.2011 has adopted the same formula and percentage of fitment. If this amount was not affordable from the profit of the petitioner, then the petitioner should have adopted a fitment of 10% or 20% under intimation to DPE. Since the petitioner has implemented the fitments as per guidelines of DPE, it follows that the petitioner can afford the expenditure and the impact of pay revision should not be loaded to the beneficiaries. UPPCL has further submitted that it cannot approach the State Commission for increase in tariff for the period 2004-09 since the tariff for the said period has already been determined, billed and recovered from the consumers. No supplementary demand can be made to consumers with retrospective effect and any increase in tariff can be recovered prospectively. In support of its contention, UPPCL has relied upon the judgment of the Supreme Court dated 3.3.2009 in Civil Appeal No. 1110/2007 and other related appeals. UPPCL has further argued that since the petitioner has not presented any bill in this regard till 24.1.2012 even after two years of the expiry of the 2004-09 tariff period, the same is not recoverable in terms of the limitation imposed by section 56(2) of the Electricity Act, 2003 (the Act). UPPCL has also submitted that in the light of the judgment of the Appellate Tribunal for Electricity in Appeal No. 134 of 2008 and related appeals with regard to water charges of NTPC, inclusion of actual wage hike in O&M cannot be taken in isolation as tariff is a complete package.

(b). Madhya Pradesh Trading Company Limited (MPPTCL) in its affidavit dated 26.5.2010 has submitted that the petition under Regulation 12 of the 2004 Tariff Regulations does not sustain as the Commission is not facing any difficulties in giving effect to the regulations. It has been further submitted that the petition does not call for invoking of the powers under Regulation 13 because the DPE directions regarding revision of pay scale with effect from 1.1.2007 are to be implemented only if the concerned CPSE is in a position to afford that on its own. Further, MPPTCL in its affidavit dated 9.5.2011 has submitted that from analysis of the data submitted by the petitioner in connection with the determination of norms for the tariff period 2009-14, it is evident that the petitioner has collected `141008 lakh as normative O&M expenditure as part of the annual fixed charges against the actual O&M expenditure of ` 120562.20 lakh, resulting in an excess recovery of `20446.44 lakh. When this additional recovery is compared with the additional employee cost of `8933.61 lakh, it is clearly evident that the petitioner has already recovered more than their actual expenses including additional burden of employee cost...

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