The Appellate Tribunal for Electricity (Aptel) has taken exception to the Karnataka Electricity Regulatory Commission’s (KERC) ‘defiance’ of its orders and not letting the state’s power transmission company recover costs, which were allowed to be passed through. In an October 5 order, the Aptel asked KERC chairperson and members to “show cause within four weeks hereof as to why contempt action be not initiated against them for willful defiance and disobedience”.
According to sector watchers, the order is ‘historic’ as this is the first time a contempt notice has been issued by Aptel against any state regulator. The development comes at a time when the central government is tightening its grip on state regulators to ensure power tariffs are increased regularly to address the issue of under recovery faced by state-run distribution companies (discoms). A few experts, however, opined that technically Aptel cannot issue any notice to chairperson and members of a regulator, but only the secretaries of state regulators can be notified.
State-run Karnataka Power Transmission Corporation (KPTCL) had complained that KERC, against Aptel’s 2008 order, had reconciled its accounts for FY01-FY07 to erroneously conclude that the transmission company had net surplus of Rs 314.5 crore in that period. The Aptel had specifically forbidden the “true-up” of KPTCL’s account for the aforementioned period. Aptel’s 2008 order was upheld by Supreme Court in 2018, but was not implemented by KERC.
Earlier, the power ministry had written to Aptel, asking it to direct the state electricity regulators not to create any further ‘regulatory assets’— a jargon for recoverable discom expenses which regulators acknowledge as pass-through costs, but are not immediately built into tariffs. These ‘regulatory assets’ currently stand at more than Rs 1 lakh crore. According to an official estimate, discoms lose `22,000-crore revenue annually as regulators allow inadequate tariff hikes.
By amending the Electricity Act, the Union power ministry is planning to add provisions for the removal of regulators if their judgements do not comply with legal norms. “One of the provisions proposes that if any of the orders of the regulator has not followed the law or is in violation of law, it will be sufficient ground for his removal,” Union power minister RK Singh recently said in an event.