Imposing ban on one particular industry alone from purchasing power through ‘open access’ amounts to irrational discrimination: Electricity Appellate Tribunal

Read Judgement: Srikalahasti Pipes Limited vs. Andhra Pradesh State & Ors

Pankaj Bajpai

New Delhi, August 26, 2021: The Electricity Appellate Tribunal has ruled that the restriction imposed by the Electricity Commission on purchase of power through ‘open access’ only to Ferro Alloys industries and not to other Energy Intensive industries, definitely amounts to discrimination in the absence of any reasonable justification. 

Manjula Chellur, the Chairperson, observed that there is no rationale why other energy intensive industries were allowed to have open access and why only Ferro Alloys industries are left out, when all Energy Intensive industries are to be treated at par with no additional benefit of any nature. 

“The objective behind making a provision of open access, primarily was with a definite motive and intention to develop competition in the power sector by providing open access, so that the consumer of power gets an option to choose from which source he could procure power other than the distribution licensee within whose area the consumer is situated,” added the Tribunal. 

The observation came pursuant to an order passed by the State Commission in respect of miscalculation of cross subsidy charge and blanket ban imposed upon Ferro Alloys industries being an Energy Intensive industry for procuring power from open access.

It was contended that the ban is limited only to Ferro Alloys industries from purchasing power through open access, which is nothing but creating unreasonable differentiation within a Class of industries like PV Ingots, Cell manufacturing units, Polly Silicon industry and Aluminum industries. 

Challenging the ban imposed by the Regulatory Commission, the Appellant solicited the attention of this Tribunal towards the definition of ‘Open Access’ u/s 2(47) of the Electricity Act which defines open access as nondiscriminatory provision.

It was therefore pleaded that there was no rationale in imposing restriction to purchase power from open access only on Ferro Alloys industry and not on other similarly placed industries, which have the same tariff like the Appellant. 

The Appellate Tribunal found that the controversy is with regard to different opinions expressed by the Members of the Bench with reference to Section 42, open access, whether it is an absolute right or whether it is a right which could be subjected to conditions/restrictions. 

The Tribunal further found that the amendment to Electricity Act, 2003 had done away with the option of giving open access prior to elimination of cross subsidy. Therefore, it became mandatory to grant open access by the Commission only on payment of surcharge/wheeling charges. 

A conjoint reading of Section 42 along with amended first and fifth provisos, shows that there should not be any further condition i.e., such open access should not be subjected to the process of approval by the Commission, so that the consumer would exercise its right of open access, added the Tribunal. 

Observing that the Appellant is having the required connection of 17 MVA to enjoy open access, the Tribunal said that it falls within the required range indicated u/s 42. 

Apparently, the Appellant is not claiming any exemption from paying cross subsidy. So also Respondent has not denied open access on account of operational constraints, noted the Tribunal. 

The Appellate Tribunal is surprised to know that the Respondent Commission though opined that several other industries fell in the category of Energy Intensive industry as a whole, the so-called compulsion/restriction/ban concerned was imposed only on Ferro Alloy industries. By such imposition only to Ferro Alloy industry, it is carving out a separate category from Energy Intensive industry as a whole. 

Unless there is rationale behind doing so, which is acceptable not only on facts but also in accordance with law, the said action of the Respondent Commission cannot be appreciated, added the Tribunal. 

The Tribunal further highlighted that the Respondent Commission seems to have imposed the so-called ban/restriction on the ground of incentive or concessional tariff said to have been extended to the Ferro Alloy Industries, without any reasonable classification. 

Accordingly, the Chairperson held that it is the right of the consumer to select the supplier of power, and interference in such right by the State Commission would mean that the consumer is forced to procure power only from the distribution licensee. 

Hence, answering the reference in favour of the Appellant, the Electricity Appellate Tribunal opined that there cannot be a compulsion on the Appellant not to procure power through open access.