Here is a regulator-government tussle that turns the convention on its head. The Delhi government has taken up the cudgels on behalf of the three private power distribution companies (Discoms) operating in the state and asked the regulator not to issue orders reducing tariffs till it gets a go-ahead from the government.
The government has invoked a provision?Section 180?in the reform-oriented Electricity Act 2003 to restrain the regulator, which the latter promptly contested and secured a favourable legal opinion from the Solicitor General of India, Gopal Subramanium. ?The direction contained (in the letter from the state government) not to pass tariff orders unless a go ahead has been given by the state government amounts to placing a fetter on a quasi judicial function. Such a direction is ultra vires and therefore void,? Subramanium opined.
In its May 4 directive to the Delhi Electricity Regulatory Commission (DERC), the government had said a tariff reduction was uncalled for as the quantum of uncontrollable costs of the three discoms were very high in 2009-10. It said under the National Tariff Policy, these costs should be recovered promptly to ensure that future consumers are not burdened with past liabilities.
In separate letters to the three discoms?BRPL, NDPL and BYPL?on May 28, the DERC has rebutted the claim that they had faced ?cash flow constraints? and was in ?precarious financial position?. The regulator noted, citing the discoms? audited books of accounts, that the each of them had reported ?the highest cash profit? in 2009-10.
Armed with the SG’s letter, the DERC has proceeded to place the discoms on the mat even with regard to their stated revenue positions. The discoms have been told to put on record their full audited accounts for the last financial year and the report by rating agency CARE, accusing them of understating their revenue positions in their representation to the commission.
?We had a similar case, with the Mumbai discoms, government and regulators,? CERC chairman Pramod Deo said. In fact, the Forum of Regulators had sought advice from the attorney general of India, Ghoolam Vahanavati in a similar situation. The attorney general’s opinion was in favour of the regulator, saying quite clearly that the government’s advice is in the form of a ?guidance? and not binding on the regulator.
It may be noted that most of state regulatory commission are left high and dry as political powers-that-be almost invariably stymied reforms including ?sustainable tariff setting? and open access to transmission line capacity.
Industry watchers, however, say that the situation is not as cut and dried as stated in the legal opinion. ?Many of the regualtory bodies are manned by former bureaucrats and as such have a pro-government style of working,? said a source. ?For example in the case of the Karnataka government versus state discoms, the government sent a directive stopping discoms from sending power outside the state, the regulators also fell in line,? said the source. For now, however, DERC says it will be issuing new tariff orders soon.