2025 Supreme(Online)(APTEL) 12

APPELLATE TRIBUNAL FOR ELECTRICITY
Seema Gupta, Technical Member (Electricity), Virender Bhat, Judicial Member
Asian Fine Cements Pvt. Ltd – Appellant
Versus
Punjab State Electricity Regulatory Commission – Respondent
APL No. 258 OF 2017

A distribution licensee cannot recover from a new consumer the proportionate cost of a pre-existing electric line, as this is not a "reasonably incurred" expense under Section 46 of the Electricity Act, 2003, and constitutes double recovery if the line's cost is already in the tariff.

Headnote:(A) Electricity Act, 2003 - Sections 43, 46, 142, 146 - Punjab State Electricity Regulatory Commission (PSERC) Supply Code, 2014 - Regulations 9, 9.1, 9.1.1, 9.1.1(a)(ii), 9.2, 9.3 - Supply Code, 2007 - Regulation 9 - Service Connection Charges - A distribution licensee is entitled under Section 46 to recover only expenses “reasonably incurred” in providing any electric line or electrical plant for the purpose of giving that supply - This does not permit recovery of costs for pre-existing lines or infrastructure already recovered through tariff. (Paras 21, 22, 23, 25)

(B) Electricity Supply Code - Interpretation - Regulation 9.1.1(a)(ii) - For consumers at 33 kV and above, expenditure includes cost of individual service line and proportionate cost of common portion of main line “upto the feeding substation” - Where service line emanates directly from the feeding sub-station, applicant bears entire expenditure - The term “feeding substation” is not defined in the Supply Code; a 66 kV grid substation from which a connection is physically released can be the feeding substation even if upstream transformation occurs elsewhere - A 220 kV substation is not the “feeding substation” merely because it transforms voltage, as tracing supply back to generation would lead to an untenable claim for proportionate cost of the entire upstream network. (Paras 14, 18, 20, 24)

(C) Electricity Tariff - Double Recovery - Infrastructure costs already included in the Aggregate Revenue Requirement (ARR) of the distribution licensee and recovered through tariff cannot be levied again from a consumer as service connection charges - Such double recovery is impermissible in a regulated sector. (Para 25)

Facts of the case:
The appellant, a cement grinding plant, applied for a 66 kV electricity connection with a load of 7500 KW / 6500 KVA. The connection was released from the 66 kV sub-station at Focal Point Rajpura. The distribution licensee (PSPCL) demanded, in addition to the full cost of the service line from the Focal Point to the appellant’s premises, a proportionate cost for a pre-existing 66 kV line running from the 220 kV Rajpura substation to the 66 kV Focal Point, and proportionate bay charges, treating the 220 kV substation as the “feeding” or “mother” substation. The State Commission upheld this demand. The appellant challenged this, having paid the disputed amount under protest.

Findings of Court:
The court held that the distribution licensee cannot recover costs for pre-existing infrastructure. The 66 kV Focal Point Rajpura, from which the connection was physically released, was the “feeding substation.” No additional expenditure was incurred on the line from the 220 kV substation to the Focal Point for the appellant’s connection; that line was already existing and its costs were part of the licensee’s ARR, recovered through tariffs. Therefore, the demand for proportionate costs for the upstream infrastructure was impermissible double recovery and not “reasonably incurred” expenses under Section 46 of the Act. The court set aside the State Commission’s order.

Issues: The main issues were (i) whether the “feeding substation” for the appellant’s connection was the 66 kV Focal Point Rajpura or the 220 kV Rajpura substation; (ii) whether the appellant was liable to pay proportionate costs for the pre-existing 66 kV line from the 220 kV substation to the 66 kV Focal Point; and (iii) whether such a demand constituted double recovery.

Ratio Decidendi: The court ruled that the distribution licensee is only entitled under Section 46 of the Electricity Act and Regulation 9.1.1 of the Supply Code to recover expenses “reasonably incurred” for providing a new connection. This does not extend to costs of pre-existing upstream infrastructure that has not been augmented for the consumer. The “feeding substation” is the point from which the connection is physically provided, not an upstream transformation point. Charging a consumer for existing assets already covered by the tariff amounts to impermissible double recovery. Result : Appeal allowed. The impugned order of the State Commission is set aside. The appellant is directed to refund the amount of Rs. 73,87,380/- deposited under protest within one month from the date of the order. The appeal and associated IAs are disposed of accordingly. (Paras 27, 28)

JUDGMENT

(PER HON’BLE MRS. SEEMA GUPTA, TECHNICAL MEMBER - ELECTRICITY)

1. The instant appeal is preferred by the Appellant - Asian Fine Cements Pvt. Ltd challenging the order dated 29.03.2017 (“impugned Order “) passed by the Punjab State Electricity Regulatory Commission (Respondent No1 / PSERC/ State Commission) in Petition No 63 of 2016. By way of the Impugned Order, State Commission has held that though the 66 kV line to the Appellant premises is extended from the nearest 66 kV grid focal point Rajpura, the load of the Appellant is actually fed from 220kV mother substation Rajpura and thus the 66 kV line from 220 kV substation Rajpura to 66 kV substation, Focal Point Rajpura is the common point of line for which Appellant is liable to pay proportionate cost of the line including bay in terms of Regulation 9.1.1 (a) of the Supply Code 2014 (“ Supply Code”) in addition to the full cost of 66 kV service line from Focal point Rajpura to the premises of the Appellant.

2. The facts, in brief, which lead to filing of the instant appeal, are as follows:

Asian Fine Cements Pvt. Ltd. (“Appellant”) has set-up a fine cement grinding plant at Rajpura Road in Patiala. Appellant applied for an electricity connection for the said plant with load of 7500 KW and contract demand (CD) of 6500KVA. The Appellant was granted/released a connection from the 66 kV sub-station Focal Point Rajpura. The Appellant is aggrieved because the Punjab State Power Corporation Ltd (“PSPCL/Respondent No. 2”), vide demand notice dated 18.05.2016, has imposed charges beyond the 66 kV sub-station at Focal Point Rajpura from which the connection was released i.e. proportionate cost for a line from 220 kV Rajpura substation to the 66 kV sub-station at Focal Point Rajpura, though, this line is an existing line and levy of such cost was upheld by State Commission in the Impugned Order.

It is of relevance to note following dates

Aggrieved by the Impugned Order, Appellant filed instant appeal before this Tribunal on 22.04.2017 with following prayers :

“It is, therefore, respectfully prayed that this Appeal may kindly be allowed and following reliefs granted in favour of the Appellant:-

A Quash and set aside the impugned order dated 29.03.2017 being in violation of the regulation 9.1.1(a)(ii) of the Supply Code-2014;

B. Necessary action under section 142 and 146 of the Electricity Act, 2003 may kindly be taken against the PSPCL and its officials for violating the provisions of the Regulation 9.1.1(a)(ii) of the Supply Code-2014 by raising the impugned demand of Rs. 68,02,380/- and Rs. 5,85,000/- in violation of the above said regulation, in the interest of justice.

C. It is, further, prayed that during the pendency of the present petition before this Hon'ble Tribunal the respondent No-2 may kindly be directed to start the work of laying the line as the Appellant has already deposited Rs. 2,42,75,000/- as per estimate prepared by the respondent and Rs. 39,23,000/- as bay charges and further to extend time for.

D. Call for the records of the case from the respondents.

E. Any other relief or order which this Hon'ble Commission may deem fit and proper in the facts and circumstances of the case may also be passed in favour of the Appellant, in the interest of justice.”

Heard Mr Sourav Roy, learned counsel on behalf of Appellant, Mr Sakesh Kumar, learned counsel on behalf of State Commission ( Respondent No 1) and Ms Meenkshi Midha, learned Counsel for PSPCL ( Respondent No 2). Mr Dharamvir Kamal, Additional superintending Engineer of PSPCL also made submissions. Their submissions are summarised below:

Submissions by the Appellant

3. Learned counsel for the Appellant has contended that The Impugned Order ought to be set aside as the Demand Notice is contrary to law as

1) Section 46 of the Act states that a distribution licensee is entitled to charge for supply of electricity expenses which are “reasonably incurred” in providing the electric line or electric plant.

2) Regulation 9.1.1(a)(ii)

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