HON’BLE SRI JUSTICE NAGESH BHEEMAPAKA WRIT PETITION No. 12304 OF 2024

O R D E R:

Petitioner is a private limited company incorporated under the provisions of the Companies Act, 1956. It has established a composite industrial unit (induction furnace and re-rolling) in Survey Nos. 21 to 24 of Gunded Village, Balanagar Mandal, Mahaboobnagar District and are engaged in the manufacture of M.S. Ingots, M.S. Rods, etcetera for which purpose, they obtained a High Tension Service Connection bearing No. MBN-719 from the 3^rd respondent. Petitioner is stated to be availing power at 33 KV voltage level from the 3^rd respondent.

The case of petitioner is that it is a scheduled consumer of the 2^nd respondent distribution company, a deemed licensee under the Provisions of the Electricity Act, 2003 (for short, ‘the Act’). The Scheduled Consumers are those, who avail power from the 2nd respondent source and also from other sources both intra or inter-state purchases by using the Distribution Lines etcetera of the 2nd respondent. Section 42 of the Act obligates the distribution companies like the 2^nd respondent to allow to use open access corridor to its scheduled consumers i.e. to draw power purchased from the third parties through transmission / distribution lines of the 2^nd respondent distribution company. To avail open access facility, the users have to pay the following charges:-

i) Wheeling charges as determined by the 1st respondent ii) Surcharge to meet the requirement of current level of cross subsidy within the area of supply of the distribution company.

iii) Additional surcharge on the wheeling charges as may be specified by the State Commission.

Wheeling charges are determined by the Regulatory Commission in exercise of powers conferred under Section 26 of the Indian Electricity (A.P. Amendment) Act, 1998 and Sections 61 and 62 of the 2003 Act read with A.P.E.R.C (Terms and Conditions for determination of Tariff for Wheeling and Retail Sale of Electricity) Regulation, 2005. Insofar as Cross Subsidy Surcharge is concerned, charges for the levy of said surcharge is to compensate the distribution companies like the 2^nd respondent to replenish the cost of the cross subsidy extended by the distribution companies to particular category or categories of consumers, as Cross Subsidy Surcharge being actual expenditure incurred for extending cross subsidies. Therefore, its quantification depends upon the actual loss incurred by the 2^nd respondent qua the cross subsidies provided to a class of consumers.

As per the 3^rd Proviso to Section 42, the surcharge and cross subsidy shall be reduced in the manner as may be specified by the 1st respondent commission. It shall be the duty of the 1st respondent to see that cross subsidies are reduced.

While so, on 07.02.2015, the 2nd respondent filed A.R.R. (Actual Revenue Requirement) proposals with the 1st respondent. Simultaneously, the 2^nd respondent filed F.P.T. (Filing for Proposed Tariff) along with A.R.R. filings in terms of Regulation No. 4/2005, The 2^nd respondent determined the Cross Subsidy Surcharge sought to be levied by it at 30 paise per unit and 11 paise per unit in respect of 33 KV voltage and 132 KV voltage consumers respectively. In this connection, it is relevant to mention that as per Second Proviso to Section 42 of 2003 Act, the 2^nd respondent alone has to assess and determine the Cross Subsidy Surcharge element for the loss sustained by it qua the expenditure incurred by it in extending the cross subsidies to consumers and the 1st respondent has no role to determine the same at a higher rate sought to be levied by the 2^nd respondent. The proposals were therefore, placed before the State Advisory Committee constituted under Section 27 of 2003 Act, which Committee confirmed the Cross Subsidy Surcharge assessed and determined by the 2^nd respondent distribution company. However, without any authority, the erstwhile Commission passed order dated 27.03.2015 in O.P. No. 76 and 77 of 2015 insofar as