JUDGMENT
H.L. Bajaj, Member (T)
1. This appeal by Grid Corporation of Orissa (GRIDCO in short) challenges the orders dated August 20, 2005 and July 22, 2006 passed by the Orissa Electricity Regulatory Commission (OERC or the Commission in short) in case No. 13 of 2005 and in review petition case No. 51 of 2006 respectively. The facts of the case leading to the present appeal are given below in brief:
2. Grid Corporation of Orissa Ltd. (GRIDCO) is presently engaged in the business of purchase, trading and bulk sale of power to the distribution companies in the state of Orissa including the first respondent, Southern Electricity Supply Company of Orissa Ltd. (SOUTHCO), which had been granted distribution license by OERC under the provision of Orissa Electricity Reform Act, 1995 as retail supply licensee in the Southern part of the state of Orissa.
3. East Coast Railway is a bulk consumer of electricity of the distribution companies in Orissa and draws electricity at 132 kV at 14 traction Sub-stations for trains hauled by electric locomotives.
4. Dispute arose between the Bulk Supply Licensee GRIDCO and the distribution company SOUTHCO on the issue of metering at Rambha Traction Sub-station and Jeypore- Machhkund Traction Sub-station because GRIDCO billed SOUTHCO as per meter provided at their (GRIDCO) Grid Sub- stations and not at the Rambha Traction Sub-station which is 26 kms away from the GRIDCO Sub-station. OERC vide its order dated August 20, 2005 in case No. 13 of 2005 arising out of the petition filed by SOUTHCO against GRIDCO, directed that GRIDCO should prefer Bulk Supply Tariff Bills (BSTB) to SOUTHCO in respect of Rambha Traction considering the meter reading at Rambha Traction Point. OERC vide its order dated July 22, 2006 in case No. 51 of 2006 regarding the review petition of GRIDCO against SOUTHCO, dismissed the review petition. Hence the present appeal.
5. Mr. Mehta, learned Counsel for the appellant contended before us that the metering to the EHT consumers has been done at the GRIDCO sub-station end as per the Grid Code and that accordingly the consumption of EHT consumers of SOUTHCO is incorporated in the Bulk Supply Tariff Bill based on the meter data installed at the Grid sub-station of GRIDCO. He contended that the Commission has wrongly relied upon their discussions held on February 04, 2003 with the Railway authorities for providing metering arrangement at traction Sub- station as per the requirement of Railways at their cost.
6. He submitted that GRIDCO has provided metering at their Sub-stations to measure the consumption of Traction Points and that the same practice has been followed not only in case of Railways but also in case of EHT consumers having dedicated lines.
7. Mr. Mehta further contended that during the February 04, 2003 discussions the Transmission Planning Wing of GRIDCO merely acted as a contractor who executed deposit works of Railways at Rambha and that for the change for commercial metering point, Railways has to discuss the change of metering point with SOUTHCO who have Bulk Supply Agreement with them.He assertedthatGRIDCO cannot discuss commercial aspects directly with Railways who is the consumer of SOUTHCO. He further stated that GRIDCO cannot enter into agreement with any consumer other than the four distribution companies.
8. Learned Counsel submitted that GRIDCO is no way involved with the transmission loss which occurs in the dedicated lines meant for Railway use with which SOUTHCO does business for its profit and that it is unjust on behalf of the OERC to make GRIDCO responsible to bear this transmission loss. He further submitted that whereas OERC contends that GRIDCO does not loose anything towards transmission loss and the same is allowed recovery in tariff, OERC is not allowing actual loss of 4.5% for FY 2005-06 and has brought it down to 4% on the plea that higher loss has occurred due to inefficiency of the GRIDCO and the same cannot be considered by the Commission.
9. Learned Counsel further submitted that the transmission lines constructed under the ownership of Railways are being maintained by GRIDCO as it is looking after the maintenance of all transmission lines having capacity of more than 33 kV. He said that as per the impugned order of the Commission the transmission loss caused due to the business of SOUTHCO in the dedicated lines will have to be absorbed by GRIDCO which will raise profit of SOUTHCO.
10. Per contra Ms Anjali Chandurkar, learned Counsel for the respondent SOUTHCO stated that GRIDCO had agreed to install all the equipment of GRIDCO inside the Railways Sub- station premises including the meter in the control room of Railway Traction sub-station as contained in the note of discussions held on February 04, 2003 between GRIDCO and Railways.
11. She stated that it is an admitted position that prior to the distribution business being taken over by SOUTHCO from the erstwhile Orissa State Electricity Board (OSEB), various agreements were entered into between the Railways and OSEB and the metering was done at Traction Point. She stated that Railways, in their submission dated September 24, 2007, before this Tribunal have categorically stated that the existing metering at consumer premises was commissioned in 1983, and is available since then and that this is not in dispute. However, after 1999 when SOUTHCO took over the distribution business, metering was unilaterally changed by GRIDCO and was done at two points (Jaynagar Grid Sub-Station and Machhkund Grid Sub-station). As in the case of Rambha Traction Point, there was a difference in the units metered at the aforesaid two grid Sub-stations and the said six traction points for the period April to October, 2003 and November 2004 to January, 2007. She stated that the difference in the energy units as aforesaid between the meter readings recorded at the Grid Sub-station and the Traction Point continues even today and is substantial.
12. Learned Counsel contended that the billing is required to be done at the consumers premises and not at the Grid Sub- station. Insofar as bill in respect of supply made at Rambha Traction was concerned, the relevant period was October 2003 to February, 2005 and insofar as Jaypore Traction was concerned, the bill raised was for the period April, 2003 to October, 2003 and November, 2004 to February, 2005. The bills in respect of the aforesaid were raised on the basis of meter reading done at GRIDCO Sub-station and not at the Railway Traction Point where the supply was made.
13. Learned Counsel submitted that there is no infirmity in the decision of impugned order of the Commission and it has rightly held that there is an agreement between the Railways and GRIDCO which provides for location of the meter inside the Railway Traction sub-station as per minutes of meeting dated February 4, 2003. In this regard OERC has referred to the Grid Code prevailing at that time. The Grid Code which was applicable to the Transmission and Bulk Supply Licensee, inter alia, contained connection conditions which were required to be complied with by any user of the transmission system. “User” was defined in the Grid Code as a person who uses the transmission system and who must comply with the provisions of the Grid Code. Insofar as EHT consumers were concerned, Clause 5.5.4 which specified the connection point for CPPs and Bulk Power Consumers reads as follows:
5.5.4CCPs & Bulk Power Consumers Voltage may be 220/132/33 kV or as agreed with the licensee. Sub-stations are owned by CPPs and Bulk Power Consumers. The connection point shall be the feeder gantry on their premises. The metering point shall be at the licensee’s substation or as agreed with the licensee.
14. She stated that the Clause 5.5.4 clearly provided that the metering point shall be as agreed with the licensee and that there was an arrangement between OSEB/GRIDCO and Railways since 1983 and they were accordingly being billed on the basis of meter reading at consumer premises and that similar provision is in the Orissa (Grid Code) Regulations, 2006 applicable with effect from April 01, 2006. She drew our attention to the relevant extract given below:
4.15(4) CCPs & Bulk Power Consumers Voltage may be 220/132/33 kV or as agreed with the Transmission Licensee. CCPs and Bulk Power Consumers own sub-stations. The connection point shall be the feeder gantry on their premises. The metering point shall be at the licensee’s sub-station or as agreed with the transmission licensee.
15. She submitted that the contention of the GRIDCO that the minutes of meeting dated February 4, 2003 cannot be termed as an agreement between the parties is untenable as a plain perusal of the said minutes of the meeting shows that there is an agreement between the parties for metering at the traction point. The Grid Code clearly provides for connection conditions between the transmission and bulk licensee and an EHT consumer. GRIDCO thus cannot contend that Railways are consumers of SOUTHCO and that GRIDCO cannot discuss commercial aspects with Railways. Grid Code also provides for execution of a Connection Agreement between a transmission licensee such as GRIDCO and EHT consumer such as Railways. In fact, the OERC Distribution (Conditions of Supply) Code, 2004 as also the Supply Code which preceded the Supply Code of 2004 contain various provisions which related to EHT consumers taking supply directly from the transmission licensee, such as GRIDCO. Now the transmission business which was originally a part of GRIDCO vests in Orissa Power Transmission Corporation Ltd. (OPTCL). She drew our attention to the following provisions of the OERC Regulations, 2004.
2. (1) In these Regulations, unless the context otherwise requires:
…(t) “extra high tension consumer” means a consumer who obtains supply from the licensee at Extra High Voltage”. “Chapter III Power Supply:
11 (iii) The licensee shall forward the application for supply at EHT to the transmission licensee within three days of its receipts for its further processing in terms of provisions in the Grid Code. The licensee shall obtain the final reply regarding feasibility from the transmission licensee and communicate the same to the applicant within one month receipt of application”.
Chapter IV Apparatus on Consumer Premises:
32…In case a high tension or extra high tension consumer is directly connected to a Transmission Licensee’s sub-station, the Distribution Licensee shall obtain concurrence of Transmission Licensee before giving approval as above….
56 (4) In case of a feeder directly taken to the consumer’s premises for his exclusive use from the licensee’s sub-station or from the transmission licensee, the metering arrangement shall be done at the consumer’s premises or, at the licensee’s sub-station itself. When the metering arrangements are installed in the consumer’s premises, the position of the service cut-outs or circuit breakers and meters shall be so fixed as to permit easy access to the employees of the licensee at any time. All EHT & HT consumers shall provide independent entry to the meter or metering cubicle. All efforts should be made to ensure unobstructed access to the meter by a representative of the licensee.
16. She asserted that the above said provisions clearly show that while GRIDCO would be bound by the Supply Code, also the metering arrangement would be at the consumer’s premises.SOUTHCO in compliance with the Orissa Distribution(Planning & Operation) Code,1998 has been providing tariff metering at the point of interconnection. Our attention was drawn to Clause 4.8.2 of the said Code relevant part of which is extracted below:
4.8. Metering (Tariff/Commercial)
4.8.2.1 Tariff metering shall be provided at each point of interconnection between distribution system and transmission system in accordance with Grid Code and Connection Agreement
17. She stated that the said code defines in Clause 2.1 (m) a “Connection Point/Interconnection” to mean a point at which a user of electrical system is connected to the licensee’s distribution system. Thus, tariff billing is required to be done at the consumer’s premises which is the Point of Interconnection/Supply.
18. Learned Counsel stated that in view of the above, SOUTHCO has demonstrated that the provisions of the Supply Code apply to GRIDCO insofar as HT consumers are concerned, GRIDCO has wrongly alleged that the provisions of Supply Code are not applicable to GRIDCO.
19. She submitted that reliance on Clause 1.1 of the definition of “Connection” in Bulk Supply Agreement entered into between GRIDCO and SOUTHCO is also misplaced. Connection in case of EHT consumers has been defined to mean each point of interconnection between the transmission system and EHT consumers equipment being either at an incoming feeder gantry or terminal at the relevant EHT consumer’s premises or at outgoing feeder gantry of the relevant Sub-station for the purposes of Clause 7 and 9 of the Agreement. The said clause further merely states that the “connections” existing at the time of execution of the Bulk Supply Agreement during the year 1999 are indicated on the attached geographic map and schematic diagram and that it nowhere states that the business is based on the interconnection point which is only at the outgoing feeder gantry of relevant Sub-station. She stated that this submission of GRIDCO is contrary to established practice/arrangement/agreement when GRIDCO/OSEB were billing EHT consumers prior to SOUTHCO taking over the distribution business at traction point. She submitted that this submission, inter-alia, ignores the fact that the overall tariff exercise while determining the tariff of GRIDCO and SOUTHCO considers the relevant Railway Traction Point as a point of supply to arrive at the transmission loss and allow the same to GRIDCO.
20. She further submitted that difference in the units measured between Grid Sub-Station Meter and Traction Point meter is the transmission loss which ought not to be borne by the consumers. The Commission at the time of the approval of the Annual Revenue Requirement of a licensee factors in such transmission loss which according to the Commission ought not to be borne by the consumers. Such transmission loss, in the present case, is anyway being borne by the consumers such as Railways through tariff as power purchase cost of SOUTHCO includes this loss and, therefore, forms part of ARR. Taking payment for the differential units as aforesaid would amount to once again bearing the transmission loss which is already a pass through to the tariff provided to GRIDCO by the OERC.
21. She asserted that the Commission while approving the ARR of SOUTHCO, does not take into account the transmission losses. The point of purchase from Transco and delivery to the EHT consumers is to take place at the same metering point. The sale of EHT consumers carried a stamp of zero loss and that this has been followed by OERC since 1999 i.e. from the day of operation of the SOUTHCO in respect of Retail Supply Tariff (RST) orders for the periods 1999 to date. She drew our attention to the relevant part of one such order of the OERC in the RST order dated March 23, 2007 for FY 2007-08 extracted below:
5.21.7 While computing the overall distribution loss in the business plan, sale to EHT, HT and LT were together taken into consideration. In Orissa, generation, transmission and distribution activities have been separated in the post reform era. Special mention need to be made that, trading including bulk supply have been separated from transmission in terms of Section 39 of The Electricity Act, 2003. Transmission lines act only as the carrier of power from generating sources to the DISTCOs. Energy input to the DISTCOs is measured at GRID Sub-stations and at metering points of the EHT consumers. Thus, for EHT users DISTCOs point of purchase from Transco and delivery to the consumer is supposed to take place at the same metering point. Thus, any sale at EHT by DISTCOs carries a stamp of zero loss. Distribution loss in respect of NESCO, SOUTHCO and CESU has been calculated excluding sale at EHT level as indicated below as the variation is more than 10%.
22. She stated that the total transmission losses including the transmission loss for the EHT consumers are allowed in the ARR of GRIDCO since 1999 in respect of Bulk Supply Tariff Orders of GRIDCO for the periods 1999 to 2007-08. She drew our attention to the relevant para in one such Bulk Supply Price (BSP) order in the case No. 42 of 2006 dated for FY 200708 extracted below:
6.3 Computation of Transmission Loss.
6.3.1 After examining the transmission loss figures of different months for 2005-06 as submitted by the licensee, the Commission approves it at 4% of energy transmitted for 2006-
07. The details of calculations of transmission loss are furnished in the tariff order for OPTCL for the year 2006-07.
6.3.2 GRIDCO shall purchase power from the generator and at inter-state point from outside sources while OPTCL will bill the customers at the delivery point. There would be a gap between the units treated as lost on account of delivery to the customers on the normative basis approved by the Commission and the actual figure. It will be desirable that existing practice of billing on the basis of actual loss shall be followed and final adjustment shall be carried out at the end of FY 2006-07 between GRIDCO and OPTCL, GRIDCO shall give credit to OPTCL for the units deemed to have been lost on account of export of power, if any.
23. Learned Counsel cited the case No. 36 of 2005, in the matter of suo moto proceeding to address the transmission constraints, where OERC held the following in their order dated July 26, 2006:
28 Those EHT feeders constitute as part and parcel of the EHT transmission line which has to be built, owned and operated by the OPTCL to ensure the optimal utilization of the generation and transmission asset. To avoid delay in construction by the transmission licensee, the prospective consumer can construct a line on behalf of OPTCL and hand over the same to OPTCL perpetually and in such an instance, the OPTCL shall be entitled only to the supervision charge of 6% of the gross estimate. The point of interface between OPTCL and the distribution licensee shall be the point of interconnection at the EHT consumer premises. Following the remunerative norms any expenditure incurred by the prospective consumer on behalf of OPTCL can be reimbursed by OPTCL through energy bill to be served by the concerned DISTCOs through mutual agreement.
24. She submitted that the contention of GRIDCO that the charges for power supplied to various traction points could be recovered from Railways by SOUTHCO, and that no prejudice would be caused is incorrect inasmuch as the Railways being consumers of SOUTHCO, prejudice would be caused to the Railways by such illegal action of GRIDCO.
25. Representatives of Railways submitted that East Coast Railway is no where connected with the present billing dispute and dispute is to be settled between GRIDCO and SOUTHCO as the metering dispute is on bulk supply business and trading only. The existing metering system i.e. at consumer premises (Railway traction substation) may be followed as this system is in vogue for last 25 years in Orissa state and also logically correct.
26. Railway representatives requested that the supply authorities should give uninterrupted power supply to Railway traction sub stations as interruption of power supply will cause detention of trains enroute. The power supply feeding arrangement is under the control of GRIDCO but not under the Railway’s control. Therefore, dispute pertaining to Machhkund traction is purely related to the bulk supply licensee GRIDCO and distribution licensee SOUTHCO and is not at all related to Railways.
27. Our attention has also been drawn to the OERC (Conditions of Supply) Code, 2004, the Grid Code and the provisions of Orissa Distribution Planning and Operation Code, 1998. The appellant has relied on Clause 56 (4) of OERC (Conditions of Supply) Code, 2004, wherein it has been inter alia stated that “the metering arrangements shall be done at the consumers premises or at the licensee’s Sub-station itself….
28. Here it will be pertinent to refer to the following paras extracted from the OERC order dated August 20, 2005:
12. After having gone through the written and oral submissions advanced by both the parties during the course of the public hearing, the Commission finally orders as follows:
(i) Clause 56 (4) of OERC (Condition of Supply) Code, 2004 envisages that “in case of a feeder directly taken to the consumer’s premises for his exclusive use from the licensees’ sub-station or from the transmission licensee, metering arrangement shall be done at the consumer’s premises or, at the licensee’s sub-station itself….
(ii) The relevant extract from GRID Code is reproduced below:
5.5.4 CPPs & Bulk Power Consumers Voltage may be 220/132/33 kV or as agreed with the licensee. Sub-stations are owned by CPPs and Bulk Power Consumers. The Connection Point shall be the feeder gantry on their premises. The metering point shall be at the licensee’s sub-station or as agreed with the licensee.
(iii) In this connection, the relevant portion of the minutes of discussion held between Divisional Engineer Electricity, Visakhapatnam and the Chief Engineer (TP), Bhubaneswar on February 04, 2003 is quoted below:
discussion was held regarding providing metering arrangements at Solari, Rambha and Kaipadar-Road inside the tractin sub-stations premises of Railway. Not withstanding of what contained in Railways earlier letter it was agreed as follows.
(iv) Meter can be installed in the control room of Railway Traction Sub-station.
13. The agreement reached between GRIDCO and Railways are with the provisions of OERC (Condition of Supply) Code as well as the Grid Code with regard to installation of metering at the premises of an EHT consumer.
14. Strangely enough, GRIDCO intends now to wriggle out of the said understanding/agreement on the ground that the same is in conflict with the extant Grid Code. An extract of the Bulk Supply Agreement between GRIDCO and the distribution licensee with regard to metering is given below:
6.1 The parties acknowledge and accept that they are bound by the Regulations including the Grid Code. The parties shall conduct their respective businesses in accordance with the terms of the same.
6.2 Subject to Clause 6.1, the parties shall co-ordinate with each other on a regular basis in order to resolve all operational issues, including connection, metering, load shedding and other day to day matters and for the said purpose shall form such co-ordination committees consisting of such officers as the parties may mutually agree.
15. To buttress up the case, SOUTHCO has quoted the provisions of Orissa Distribution Planning and Operation Code, 1998.
4.8.2 Metering (Tariff/Commercial)
4.8.2.1 Tariff metering shall be provided at each point of interconnectionbetween distributionsystem and transmission system in accordance with Grid Code and Agreement.
4.8.2.2 Tariff metering at Connection Point between user system and distribution system shall be governed by provisions in the Agreement.
16. In terms of the Bulk Supply Agreement between GRIDCO and DISTCO, the parties are bound by the Grid Code and the Orissa Distribution Planning Operation Code as well as the OERC (Conditions of Supply) Code 1998/2004. The Supply Code provides that the consumers shall observe and abide by all the terms and conditions stipulated therein to the extent they are applicable to them. As indicated earlier, metering in case of a Bulk Supply Consumer has to be done at the consumer’s premises or at the licensee’s Sub-station itself. An agreement has been reached between the consumer and GRIDCO for provision of meters inside the Railway Traction Sub- station Grid Code provides that the location of metering has to be agreed between the parties. As GRIDCO and Railway Traction had given consent for location of meter according to Grid Code, the point of metering shall be the metering inside the Railway Traction sub- station. The Commission therefore, direct that GRIDCO should prefer BST bill to SOUTHCO in respect of Rambha Traction, considering the meter reading of traction supply at Rambha Traction Point. Likewise claims for individual traction points under Jayanagar-Machhkund transmission shall be on the basis of meter reading at respective traction Sub-station.
17. The Commission further directs that BST bill raised on the Rambha Supply Traction Point may be suitably revised. However, the Commission does not agree to the levy of surcharge on GRIDCO for any revision as requested by the distribution licensee. Similar rectification of bills should be done in respect of Railway Traction Point under Jeypore Electrical Division for Machhkund Railway Traction Points in Jeypore for the months of April, 2003 to October, 2003 and November, 2004 to February, 2005. This disposes off the matter.
29. From the above quoted paras from the Commission’s impugned order it is clear that the metering arrangement could have been done either at the consumers premises or at the licensee’s Sub-station itself and that there has been an agreement between the Railways and the GRIDCO to make metering arrangements at the Traction Sub-station.
30. In fact the issue in this appeal lies in a narrow compass: Distribution Licensee SOUTHCO supplies power to Railways at 132 kV at various traction points. SOUTHCO sources its power requirement from GRIDCO who owns various Sub-stations and transmissions lines. There are separate feeders supplying power to Railways which are owned and operated by GRIDCO. Metering is being done both at the GRIDCO Sub-stations and at the Railway Traction Supply Points. Due to transmission loss of the intervening 132 kV lines, there is bound to be difference in the meter readings at the two ends. Crux of the issue is as to who should pay for these losses in the 132 kV transmission feeders supplying power for Railway Traction. The Commission has rightly observed that it is a wellestablished fact that distribution licensee’s accountability is only for the loss in the distribution system and not for loss in the transmission lines, at 132 kV in this case. Anyway, the cost of transmission losses is passed on to the distribution licensee in his power purchase cost and eventually gets recovered from the end user.
31. The Commission in its order has clarified that the entire transmission system loss including the losses arising out of the Railway transmission feeders are being allowed to GRIDCO. In case, contention of the GRIDCO is accepted and billing to SOUTHCO is done on the basis of metering at the Grid Sub- station, then there will be duplication of the transmission loss allowed in the Railway feeders. It is, therefore, not logical at all to bill the distribution company on the basis of the meter readings at the GRID Sub-stations.
32. During the hearing, the learned Counsel for the appellant has contended that the actual losses are not being allowed to them. Whereas it is for the Commission to satisfy itself as to whether or not actual losses should be allowed but we make it clear that while working out the losses in the transmission system, losses in the Railway transmission feeders must also be taken into account by the Commission if not being taken into account presently as alleged by the appellant.
33. In view of the aforesaid analysis and discussions, we find no justification for interfering with the Commission’s order and, therefore, in the result, the appeal is dismissed but with no order as to cost.