The order, pronounced on Monday, was to settle the dispute between Indian Railways and Discoms on whether or not the previous is a deemed distribution licensee.
Additionally, whether or not Railways is required to pay extra/ cross-subsidy surcharge to completely different Discoms if it chooses to obtain electrical energy from sources apart from the involved Discom in whose space of provide it’s located.
Railways declare
Discoms from eight states together with Maharashtra, Punjab and Madhya Pradesh had challenged Railways declare of being a deemed distribution licensee.
The event will result in extra prices for Railways in procuring electrical energy to run operations. It was not instantly clear how a lot extra value the transport and logistics behemoth must incur in assembly the extra/ cross subsidy surcharges.
In line with the FY25 expenditure funds, Railways has a funds estimate of ₹23,101.62 crore underneath electrical energy from traction and one other ₹1,941.99 crore underneath electrical energy for non-traction. In FY24, the revised estimate underneath electrical energy from traction stood at ₹20,892.26 crore, whereas that underneath electrical energy for non-traction was ₹1,871.70 crore.
The order
The APTEL order mentioned “It’s held that Indian Railways just isn’t a deemed distribution licensee falling inside the ambit of the third proviso to Part 14 of the Electrical energy Act because it doesn’t distribute/ provide electrical energy (i.e. promote electrical energy to customers for a worth) as required of a distribution licensee underneath the Electrical energy Act; and, even in any other case, as all the electrical energy which it receives from the Grid is totally consumed by it and its constituents, it’s required to pay extra/ cross-subsidy surcharge to completely different distribution licenses underneath Part 42 of the Electrical energy Act, if it chooses to obtain electrical energy from sources apart from the involved distribution licensees inside whose space of provide it’s located.”
In its evaluation, the APTEL mentioned the target to be achieved by Part 42, in imposing cross subsidy surcharge the place a client, inside the space of provide of a Discom, seeks open entry is to compensate the involved Discom for the hostile monetary impression triggered to them as a consequence of a client opting to avail electrical energy by means of a supply apart from the mentioned Discom.
“The exit of a client, from inside its client base, would undoubtedly disable the distribution licensee from recovering part of its fastened value which it was hitherto recovering from the mentioned client. It’s evidently with a view to guard the pursuits of the patron in exercising his selection to obtain electrical energy from any supply he chooses, whereas on the identical time guaranteeing that the distribution licensee doesn’t undergo monetary loss within the course of, that this requirement of fee of extra surcharge/cross subsidy surcharge has been stipulated underneath Sections 42(2) and (4) of the Electrical energy Act,” it added.
Bone of competition
Railways claimed the standing of a deemed distribution licensee as that will outcome of their not having to incur with extra/ cross subsidy surcharge.
Their case was that if they’re held entitled to obtain electrical energy immediately from Gencos as deemed distribution licensees, they might be capable of scale back their monetary burden, which might allow them to cut back the charges being charged on railway passengers and for transportation of products by the Railways.
The Discoms challenged this declare on two counts. First, Indian Railways is merely a client of electrical energy and never a deemed distribution licensee.
Second, even whether it is presumed to be so, it’s nonetheless required to pay extra/ cross-subsidy surcharge to the involved Discom on availing open entry and procuring electrical energy immediately from turbines and others.
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