Ref : ER/Press/‘04/AECrate.23/sam-dG

CERS pleads HC to quash GERC power tariff order

Consumer Education and Research Society (CERS), Ahmedabad filed an appeal in the Gujarat High Court praying that the Gujarat Electricity Regulatory Commission (GERC)’s Tariff Order dated 5 September 2002 be quashed, set aside or modified. The GERC had issued the order in response to the Ahmedabad Electricity Company (AEC)’s application for a raise in the tariff. The High Court admitted the CERS application on 16 March 2004.

CERS named the AEC, the Gujarat Electricity Board (GEB), Government of Gujarat, Coal India Limited (CIL), Indian Railways, Gas Authority of India Limited (GAIL) and the GERC as respondents in the case.

CERS contended that, while issuing the order, the GERC had failed to consider the guiding factors such as efficiency of the AEC, economical use of resources, good performance, optimum investments, safeguarding the interest of consumers and the AEC’s failure to conduct its business on commercial principles.

The AEC failed to optimise the gains on its investments and consumers could not be expected to pay for its inefficiency, unproductiveness and extravagance, the CERS application said and added that the essential elements of the consumer cause and the regulatory approach were missing in the GERC’s order. The AEC admitted in its submission that the coal delivered by the railways ran short of 6 to 8 per cent. CERS contended that the financial burden caused by coal theft in transit should not be passed on to consumers and the regulatory authority ought to have fixed the tariff excluding the cost of undelivered coal.

The AEC had a plant at Vatva which was generating electricity at very low cost due to use of gas as fuel. GAIL supplied the gas through pipeline to the Vatva plant. GAIL stopped the supply of gas to AEC as the pipeline got corroded. Consequently, the AEC closed the plant which was capable of generating electricity at low cost. The Vatva plant is lying idle now. The consumers are paying a heavy price for electricity due to AEC’s inaction to take up the matter with GAIL, CERS explained.

CERS had raised the question of the AEC importing lower quality coal at higher prices, but the GERC had remained silent in this question while issuing the order, CERS submitted.

Over a period of time, the AEC has been able to reduce the transmission and distribution (T & D ) losses by 1.2 per cent. It has brought down T & D loss from 17.4 per cent to 16.2 per cent. CERS told the HC that the T & D losses should have been around 13 per cent. If the utility did not manage its affairs most efficiently, economically and on business principles, should the consumers pay for it? asked CERS.

The AEC has made a commitment that it would bring down T & D losses by another 1 per cent in one year, but it achieved a meagre 0.19 per cent reduction in T & D losses. The GERC, instead of taking any action on the lines of Orissa’s Electricity Regulatory Authority or Maharashtra Electricity Regulatory Authority, allowed the AEC to continue to recover the cost from consumers, CERS said.

The AEC had appointed the Electrical Research Development Association (ERDA), Vadodara, to carry out energy audit of the AEC plant for 1999-2000. The AEC could have saved Rs. 467.85 lakh with the implementation of measures suggested by the ERDA. But the GERC did not call upon the AEC why it had not followed the measures suggested by the ERDA, said CERS in its application.

Date : 05/05/2004
Place : Ahmedabad

Pritee Shah
Editor
INSIGHT - The Consumer Magazine

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CONSUMER EDUCATION AND RESEARCH SOCIETY
“Suraksha Sankool”, Thaltej, Sarkhej-Gandhinagar Highway, Ahmedabad- 380 054 (INDIA)
Phone: 079-27489945-46 Fax: 079-27489947
E-mail: cerc@wilnetonline.net
Web Site: http://www.cercindia.org
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