Petition No.3 of 2002

                                                   (on remand by the Supreme Court)               

                                          Date of Order:   27-05-2009                                                                                                                                                                                      



In the matter of :         Petition (on remand by the Supreme Court) for determination of tariff for the FY 2002-03 applicable to various categories of consumers of the PSEB.




In the matter of :       Punjab State Electricity Board



Present:                   Shri Jai Singh Gill, Chairman

                         Smt. Baljit Bains, Member

                           Shri Satpal Singh Pall, Member 





1.         Hon’ble Supreme Court in its judgement dated 18.8.2008 has remitted the matter in respect of the Commission’s Tariff Order for the year 2002-03 with the direction that the Commission examine the same afresh keeping in view the parameters of Electricity Act 2003 in the light of what has been stated on  specific issues in the said judgement.


2.         The brief facts giving rise to this order are that the Commission passed the Tariff Order for the year 2002-03 on 6.9.2002. Aggrieved thereby, some organizations filed appeals against that order in the Hon’ble High Court of Punjab & Haryana and in its judgement dated 21.11.2003, the Hon’ble Court accepted the appeals, set aside the Commission’s order of 6.9.2002 and remitted the matter to the Commission to be decided afresh in view of the observations made in the judgement and also after eliciting the appropriate information from PSEB wherever required. The Commission was asked to re-determine the tariff within a period of two months from the date of receipt of certified copy of the order.


3.         Some of the appellants before the High Court filed their submissions before the Commission. An application for a certified copy of the order of the High Court was filed on 25.11.2003 and the copy delivered on 6.1.2004 whereafter all concerned parties were called by the Commission for a hearing on 8.1.2004. A letter dated 29.1.2004 was also addressed to the Board seeking further information for the year 2002-03. After the hearing of this case was held on 8.1.2004, the Commission decided to move an application in the High Court for extension in time in fresh determination of tariff for the year 2002-03. However, the case was adjourned sine-die after the Supreme Court of India on  SLPs filed by the Board, stayed the hearing in  pursuance of the remand order passed by the High Court. The Commission also subsequently filed SLPs against the order of the High Court in the Hon’ble Supreme Court. The Apex Court has now given its judgement on 18.8.2008 in the appeals filed both by the Board and the Commission. The case is now being considered in the light of the above mentioned judgement of the Hon’ble Supreme Court.


4.         The Commission notes that the Hon’ble Supreme Court has in the above mentioned judgement gone into the issues raised by the appellants before the High Court and given findings thereon. The Hon’ble Court has not found any infirmity in the manner in which agricultural consumption, transmission & distribution loss and other related issues such as manpower requirement of the Board, investment and rate of return have been determined by the Commission. The Hon’ble Court has also dealt with the issue of cross subsidization in detail and upheld the approach of the Commission in this regard. In conclusion, the Hon’ble Court has been pleased to observe that in respect of material items of cost incurred by the Board, actual expenditure has to be taken into account and not the expenditure that might have been incurred in a “hypothetical ideal situations”.


5.         On the issue of interest on borrowings of the Board, the Supreme Court has directed that the Commission needs to work out the details of such borrowings and determine whether a part of these borrowings had to be affected on account of non-payment of subsidy due to the Board by the State Govt.


6.         On careful consideration of the orders passed by the Hon’ble Supreme Court, the Commission is of the view that there is now no occasion to effect any re-estimation of agricultural consumption, T&D losses and other issues that have been agitated in proceedings before the Hon’ble High Court. It only remains for the Commission to go into the interest cost incurred on the borrowings of the Board and determine whether any part of these borrowings has been necessitated on account of failure by the State Govt. to pay subsidy due to the Board. The Commission notes that these  issues which included payment of agriculture consumption and rural electrification subsidies by the State Govt. had arisen in proceedings before the Appellate Tribunal for Electricity wherein the Tribunal had directed the Commission to give a definite finding on the matter.


7.         In compliance of the orders of the Appellate Tribunal, the Commission had on 13.9.2007 passed a detailed order in this respect. A related issue pertaining to diversion of loans raised for capital investment for revenue expenditure has also been dealt with in the same order. The findings of the Commission in this respect do not impact the Tariff Order of 2002-03 in any manner. In the light of the above position, the Commission is of the view that no further adjudication in respect of interest on borrowings needs to be made. All other issues relating to the Tariff Order of 2002-03 already stands settled and accordingly no revision of the Tariff Order for 2002-03 is called for.




          Sd/-                               Sd/-                                                 Sd/-

(Satpal Singh Pall)             (Baljit Bains)                                    (Jai Singh Gill)

Member                                 Member                                             Chairman


Place:  Chandigarh

Date:  27-05-2009