JUDGMENT :

ABHAY S. OKA, J.

INTRODUCTION

1. These appeals arise out of the decisions of the Appellate Tribunal for Electricity (for short ‘the Appellate Tribunal’) constituted under Section 110 of the Electricity Act, 2003 (for short ‘the Electricity Act’). The appeals before the Appellate Tribunal arose out of the orders fixing tariffs passed by the Orissa Electricity Regulatory Commission (for short ‘the Commission’) which is constituted in accordance with Section 82 of the Electricity Act. Under sub-section (1) of Section 62 of the Electricity Act, the Commission is under an obligation to determine the tariff for the supply of electricity by a generating company to a distribution licensee, tariff for transmission of electricity, tariff for wheeling of electricity and tariff for retail sale of electricity. For exercising powers under Section 62 of the Electricity Act, the Commission is required to pass orders determining the annual revenue requirements (ARR) of various licensees. In fact, under Section 26(4) of the Orissa State Electricity Reforms Act, 1995, every licensee is required to provide to the Commission, full details of calculations of aggregate revenue likely to be earned during the ensuing financial year. While deciding the tariff, the Commission has to seek guidance from the principles incorporated in Section 61 of the Electricity Act.

2. As per Section 12 of the Electricity Act, no person is entitled to transmit, distribute or undertake trading in electricity unless he is authorized to do so in accordance with a license issued under Section 14. A perusal of Section 14 shows that on an application made in accordance with Section 15, the Commission is empowered to grant licenses to (a) transmit electricity, (b) distribute electricity and (c) undertake trading in electricity. The persons to whom licenses of these three categories are issued, are known as transmission licensees, distribution licensees and electricity traders, respectively.

3. In the present case, we are concerned with different entities. The first is the GRIDCO Ltd. (for short ‘GRIDCO’) which is a Government of Orissa Undertaking. Prior to coming into force of the Electricity Act, GRIDCO carried on the business of transmission, bulk supply of electricity and other related activities. Under sub-section (1) of Section 39 of the Electricity Act, the State Government is empowered to notify the State Electricity Board constituted under sub-section (1) of Section 5 of the Electricity (Supply) Act, 1948 or a Government Company as the State Transmission Utility. The first proviso to sub-section (1) lays down that the State Transmission Utility shall not engage in the business of trading in electricity. Prior to the commencement of the Electricity Act, GRIDCO was a bulk supply transmission licensee. However, as per the first proviso to Section 39, GRIDCO was no longer entitled to carry on both the supply and transmission of electricity. After coming into force of the Electricity Act, the State Government, by exercising power under sub-section (4) of Section 131 of the Electricity Act, came out with a scheme known as the Orissa Electricity Reform (Transfer of Transmission and Related Activities) Scheme, 2005. Before coming into force of the said scheme, the Orissa Power Transmission Corporation Ltd. Bhubaneswar (OPTCL), was incorporated on 29th March 2004. It is a State Government company established to carry on the business of transmission of electricity within the State of Orissa. As per the scheme, with effect from 1st April 2005, the erstwhile transmission business of GRIDCO with all the assets and liabilities was transferred to and vested with OPTCL. We may note here that on 10th June 2005, OPTCL was notified as the State Transmission Utility under Section 39 of the Electricity Act. By virtue of the second proviso to Section 14 of the Electricity Act, OPTCL became a deemed transmission licensee. The business of bulk supply of electricity continued to vest