Apex court issues notice to Tata, RInfra on cross-subsidy cess

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Apr 20 2013, 05:36am hrs
The Supreme Court has issued notice to Reliance Infrastructure (RInfra) and Tata Power Company (TPC) on levy of cross-subsidy surcharge on consumers who migrated from the Anil Ambani firm to the latter in Mumbais suburbs.

A bench, headed by Justice SS Nijjar, while admitting the statutory appeals filed by the Hotels and Restaurants Association and TPC, also sought reply from the two distribution licencees and others.

As per an MERC order on cross-subsidy cess, more than 0.3 million consumers in Mumbai have to pay additional charges depending on the category they fall in.

The hotel body has challenged the Appellate Tribunal for Electricity's judgment that upheld the Maharashtra Electricity Regulatory Commissions (MERC) order of July 2011 that allowed the distribution licensee RInfra to recover cross-subsidy surcharge (CSS) from high-power-consuming (mostly commercial) consumers who have switched over to TPC.

MERC held that the cross-subsidy surcharge be payable by the change over consumers to the RInfra to get supply from TPC for using the network of RInfra.

The association, in its petition, stated that its members were under pressure to hike lodging and boarding tariff as they were facing the heat due to the CSS recovery.

According to the hoteliers' body, the CSS recovery had resulted in power bills going up by nearly 24% to 30% and hit the margins of many restaurants, whch is defeating the purpose of 'open access' allowed by the apex court, which was mainly to encourage competition and benefit consumers.

The presence of multiple licensees in the same area benefits the consumers by providing them with the choice of getting electricity supply without any financial burden of cross-subsidy surcharge, TPC said, adding that the competition among the distribution licensees helps improving the quality of power and reducing the cost of the supply.

The tribunal had proceeded on an erroneous basis while upholding the liability to pay cross-subsidy surcharge due to the fact that consumers continued to be the consumers of Rinfra and this finding was based upon an incorrect application of law, the petitioners stated.

Aptel, while upholding MERC's order on December 21 last year, had observed that the state commission is required to look after not only the interest of the consumers, but also the interest of licensees. Therefore, findings and directions given by the state commission, which would promote healthy competition, are perfectly justified.