Case Note & Summary
The Supreme Court of India heard a batch of appeals concerning the levy of wheeling charges and grid support charges by the Transmission Corporation of Andhra Pradesh Limited (AP TRANSCO). The first batch of appeals challenged the Andhra Pradesh Electricity Regulatory Commission's (APERC) order dated 24.3.2002, which fixed wheeling charges at 50 paise per Kwh and a system loss factor of 28.4% for energy transmitted through AP TRANSCO's network. The second batch challenged the Commission's order dated 8.2.2002, which levied grid support charges at 50% of prevailing demand charges on the differential between Captive Power Plant (CPP) capacity and Contracted Maximum Demand (CMD). The third batch of appeals, concerning the continuation of incentives for wheeling charges granted under Government Orders of 1997-1998, was dependent on the outcome of the first batch. The High Court had set aside both orders of the Commission. The Supreme Court, after examining the facts and legal provisions, held that the Commission was competent to determine wheeling charges and grid support charges under the Andhra Pradesh Electricity Reforms Act, 1998. The Court noted that the wheeling charges were necessary to cover technical and commercial losses, and grid support charges were justified as CPPs running in parallel with the grid derive significant benefits, such as backup power during outages and load transfer during tripping. The Court found that the High Court had erred in interfering with the Commission's orders, as the Commission had acted within its powers and after due consideration of objections. Consequently, the Supreme Court allowed the appeals of AP TRANSCO and APERC, setting aside the High Court's judgment and restoring the Commission's orders. The third batch of appeals was also allowed in terms of the first batch.
Headnote
A) Electricity Law - Wheeling Charges - Levy by Transmission Licensee - Andhra Pradesh Electricity Reforms Act, 1998, Sections 26, 15 - The Commission determined wheeling charges at 50 paise per Kwh and system loss factor of 28.4% for energy transmitted through AP TRANSCO's network. The High Court set aside the order. The Supreme Court held that the Commission had the power to determine wheeling charges and the High Court erred in interfering. (Paras 1-7) B) Electricity Law - Grid Support Charges - Levy on HT Consumers with Captive Power Plants - Andhra Pradesh Electricity Reforms Act, 1998, Section 26 - The Commission levied grid support charges at 50% of prevailing demand charges on the differential of CPP capacity and CMD. The High Court set aside the order. The Supreme Court held that grid support charges are valid and necessary to compensate for the benefits derived by CPPs from the grid. (Paras 12-14) C) Electricity Law - Incentives for Wheeling Charges - Continuation of Government Orders - Andhra Pradesh Electricity Reforms Act, 1998 - The third batch of appeals concerned whether incentives granted under Government Orders of 1997-1998 should continue. The Supreme Court held that the outcome depends on the first batch. (Para 1)
Issue of Consideration
Whether the Andhra Pradesh Electricity Regulatory Commission (APERC) was competent to levy wheeling charges and grid support charges, and whether the High Court was correct in setting aside the Commission's orders dated 24.3.2002 and 8.2.2002.
Final Decision
The Supreme Court allowed the appeals, set aside the High Court's judgment dated 18.4.2003, and restored the Commission's orders dated 24.3.2002 and 8.2.2002. The third batch of appeals was also allowed in terms of the first batch.
Law Points
- Wheeling charges
- Grid support charges
- Tariff determination
- Regulatory commission's power
- Open access
- Captive power plant
- System losses
- Technical losses
- Commercial losses
- AT&C losses
- Parallel grid support
- Demand charges
- Contracted maximum demand
- Deration of demand
- Incentive schemes
- Government orders
- Reforms Act
- 1998
- Electricity (Supply) Act
- 1948
- Andhra Pradesh Electricity Reforms Act
- Section 26
- Section 15
- License conditions
- Aggregate revenue requirement
- Tariff proposal
- Commission's order
- High Court's judgment
- Appeal
- Supreme Court
