The determination of Cross-Subsidy Surcharge (CSS) can be made separately from tariff determination, based on the prevailing tariff rates as per Regulation 90 of the Rajasthan Tariff Regulations, 2014.

JUDGMENT :

ABHAY S. OKA, J.

FACTUAL ASPECT

1. These are the statutory appeals under Section 125 of the Electricity Act, 2003 (for short, ‘the 2003 Act’) against a common judgment delivered by the Appellate Tribunal for Electricity (for short, ‘the APTEL’) in a group of appeals. The issue involved in these appeals relates to the determination of the Cross-Subsidy Surcharges (for short, ‘the CSS’) by the Rajasthan Electricity Regulatory Commission (for short, ‘the State Commission’). The determination was made under Section 42 (2) of the 2003 Act. The present appellants were the respondents before the APTEL. The respondents (appellants before the APTEL) are the industries/industrial units located in various parts of the State of Rajasthan, running their operations by availing their supply of electricity from connectivity through the State grid at EHT levels of 132/33/11 KV voltage. These industrial units were granted open access within the contract demand for drawing electricity through such open access, including from power exchanges. These industrial units (appellants before the APTEL) were aggrieved by the determination of the CSS made applicable from 1st December 2016 by the order passed on 1st December 2016 by the State Commission. Being aggrieved by the said order of the State Commission, the industrial units preferred statutory appeals before the APTEL. By the impugned judgment, the order of the State Commission was set aside. However, the APTEL clarified that the State Commission will be within its jurisdiction to undertake the process of revisiting the subject of the CSS vis-à-vis distribution licensees operating in the State of Rajasthan as and when it takes up the exercise of tariff determination in future in accordance with law.

2. The 2003 Act introduced the concept of open access, enabling the consumers/end users to procure electricity from sources other than the distribution licensees of the area where the premises of such end use are situated. Earlier, electricity was generally procured only from distribution licensees.

3. There was a significant amount of cross-subsidisation of certain categories of consumers by other categories of consumers. The consumers benefitting from the subsidy include agricultural consumers, low-end domestic consumers and public works. They are known as subsidised consumers. The consumers paying for the subsidy include industrial consumers, commercial consumers, and high-end domestic consumers, and they are known as subsidising consumers. Allowing open access users to source electricity from sources other than distribution licensees benefited such subsidising consumers and would become a burden on the distribution licensee. The reason is that such customers stopped taking electricity from the distribution licensees, thereby reducing the distribution licensees’ funds to subsidise the subsidised consumers. The CSS is, in a sense, compensation to the distribution licensees for being deprived of the subsidisation prevalent in the retail supply tariff. The CSS is a statutory charge payable by the consumers who decide to source electricity through open access from sources other than the distribution licensee of the area.

4. In exercise of the powers under Section 61 read with Section 181 of the 2003 Act, the State Commission notified the Rajasthan Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulations, 2014 (for short, ‘the Rajasthan Tariff Regulations, 2014’). Regulation 89 thereof deals with the cross-subsidy. Regulation 90 provides a formula for determining the CSS payable by the consumer opting for open access.

5. The State Commission determined the tariff for the Financial Year (FY) 2015-2016 by the tariff order dated 22nd September 2016. On 20th July 2016, the distribution licensees approached the State Commission by a petition praying for determination of the CSS under Section 42 (2) read with Sections 39 and 40 of the 2003 Act. While dealing with the