IMPORTANT POINT
Fixation of tariff is legislative in character.

Headnote:(A) Electricity – Surcharge – Import – Surcharge is basically over and above main levy and is in form of additional charge – It may carry different contours as per provisions of an enactment and different methodology for its determination – Nomenclature given to levy as fuel surcharge is really a surcharge levied to meet increased cost of generation and purchase of electricity – Nature of surcharge has to be considered as per intendment in which it has been used in the enactment. (Para 17 and 20)
       (B) Electricity Act, 2003 – Section 62(4) – Andhra Pradesh Electricity Reform Act, 1998 – Section 26(9) – Andhra Pradesh Electricity Regulatory Commission (Conduct of Business) Regulations, 1999 – Regulation 45-B – Levy of Fuel Surcharge Adjustment – State Electricity Regulatory Commission has been given legislative power to prescribe fuel surcharge formula by way of making regulation and to include such factors as it considers appropriate for determination of fuel surcharge – Fuel surcharge formula in Regulation 45-B is in consonance with factors provided under Sections 61 and 62 of Act of 2003 and also provisions contained in Section 26 of Act of 1998 – Fixation is as per law laid down by Apex Court and statutory guidelines given under Section 61 of Act of 2003 are binding upon State Electricity Regulatory Commission and tariff has to be fixed in compliance thereof – There is no violation of provisions of Section 61 of Act of 2003 – FSA regulations are in compliance of statutory directives given in Section 61. (Paras 18 and 19)
       (C) Electricity Act, 2003 – Section 62(4) – Andhra Pradesh Electricity Reform Act, 1998 – Section 26(9) – Andhra Pradesh Electricity Regulatory Commission (Conduct of Business) Regulations, 1999 – Regulation 45-B – Calculation of Fuel Surcharge – Fuel surcharge has to be calculated strictly within framework of formula provided in tariff notification – Fuel surcharge is a part of tariff but fixing rates of consumption charges or guaranteed charges or fixed charges or delayed payment surcharge and fixing rates of fuel surcharge do not stand on a par – State Electricity Regulatory Commission has not at all transgressed its limits while carving out formula – There is no violation of statutory provisions while enacting Regulation 45B in year 2003. (Paras 21 and 22)
       (D) Electricity – Calculation of Tariff – Scope of interference in judicial review in such matters reserved for expert bodies is limited – Court cannot substitute its opinion – Fixation of tariff like price fixation is legislative in character – Functions of State Electricity Regulatory Commission are adjudicatory, advisory and legislative. (Paras 23, 24 and 30)
       Facts of Case:
       Question involved in present case is with respect to levy of fuel surcharge adjustment which is collected from consumers in addition to fixed tariff for consumption of power. Concept of FSA was brought in by Andhra Pradesh Electricity Reform Act, 1998. Earlier the Electricity Board used to collect fuel cost adjustment. Under section 3(1) of Act of 1998, Andhra Pradesh Electricity Regulatory Commission has been established bestowed with power to grant licences and fix tariff for supply of power.
       Findings of Court:
       Challenge made by appellants is unworthy of acceptance. Fuel surcharge is really a surcharge levied to meet increased cost of generation and purchase of electricity and the scope cannot be circumscribed by its nomenclature. Thus formula in Regulation 45B and the FSA determined by Commission would take into consideration various factors which result in increased cost of generation and purchase of electricity.
       Result – Appeals dismissed.

JUDGMENT :

Arun Mishra, J.

1. Delay condoned in filing SLPs.

2. Leave granted.

3. The question involved in the present case is with respect to levy of fuel surcharge adjustment (in short ‘FSA’) which is collected from the consumers in addition to fixed tariff for consumption of power. The concept of FSA was brought in by the Andhra Pradesh Electricity Reform Act, 1998 (hereinafter referred to as ‘the Act of 1998’). Earlier the Electricity Board used to collect fuel cost adjustment. Under section 3(1) of the Act of 1998, Andhra Pradesh Electricity Regulatory Commission has been established bestowed with the power to grant licences and fix tariff for supply of power. Section 26(9) of the Act lays down that no tariff or part of tariff required to be determined under sub-section (6) of section 29 may be amended more frequently than once in any financial year ordinarily except in respect of any changes expressly permitted under the terms of any fuel surcharge formula prescribed by the regulations.

4. The Government of India enacted the Electricity Act, 2003 (hereinafter referred to as “the Act of 2003”) to consider the laws of trading of power for the purpose of making it consumer-friendly and to create better environment for development of power industry, at the same time protecting the rights of the consumers. Section 62(3) of the Act of 2003 prohibits preference to any consumer of electricity but may differentiate according to the consumer’s load factor and other aspects permissible under the aforesaid provision. Section 62(4) of the Act of 2003 is pari materia to section 26(9) of the Act of 1998. By virtue of the power conferred under sections 9(2) and 54(2) of the Act of 1998, the A.P. Electricity Regulatory Commission (hereinafter referred to as “the Commission”) has framed the Andhra Pradesh Electricity Regulatory Commission (Conduct of Business) Regulations, 1999 (hereinafter referred to as “the Regulations of 1999”). The Commission has framed Regulation No.8 dated 28.8.2000 called Andhra Pradesh Electricity Regulatory Commission (Conduct of Business) First Amendment Regulations, 2000. By virtue of the aforesaid First Amendment Regulations, provisions contained in the chapter on tariff were incorporated by way of Regulation 45-A specifying expected revenue from charges and tariff proposals and under Regulation 45-B fuel surcharge adjustment formula was prescribed. Regulation 45C was also inserted providing for subsidies as the State Government may consider appropriate. Regulation 45-B was further amended by way of reforms called the Andhra Pradesh Electricity Regulatory Commission (Conduct of Business) Amendment Regulations, 1 of 2003. They came into force w.e.f. 1.4.2003. The amended Regulation 45-B provided a formula for working out the FSA. Condition No.1 also mentioned that FSA will be distributed among all categories of consumers that existed in the quarter. However the consumption by the agricultural sector will be excluded till the Commission is satisfied that metering of agricultural consumption is complete, as may be notified from Tariff orders from time to time. As per section 61 of the Act of 2003, the Commission has to be guided by the aforesaid provisions. As the Central Government had not framed the national electricity policy or interim policy, as such Regulation No.9 of 2004 was notified by the A.P. Electricity Regulatory Commission. The Commission made the transitory Regulations in exercise of the power conferred under section 181 read with section 61 of the Act of 2003 called the A.P. Electricity Regulatory Commission (Transitory Provisions for Determination of Tariff) Regulations, 2004 (in short “Regulations of 2004”). They came into force w.e.f. 10.6.2004. It was specified that the Regulations of 1999 as amended from time to time under the provisions of the Act of 1998 shall continue to apply as regulations under the Electricity Act, 2003 and remain in force till appropriate new regulations are notified by th

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2016 Supreme(SC) 509

IMPORTANT POINTFixation of tariff is legislative in character.

Cases Referred (12)

IMPORTANT POINT
Fixation of tariff is legislative in character.