whether Tata Power Company LimitedDistribution (hereinafter, ‘TPC-D’) is entitled to levy wheeling charges for the power supplied to Hindustan Petroleum Corporation Limited (hereinafter, ‘HPCL’) and wheeling charges for the power sourced from Sai Wardha Power Generation Limited (hereinafter, ‘SWPGL’) through open access. ? 19. We are of the opinion that the judgment of the Tribunal is required to be set aside and that the matter should be remanded back for fresh consideration. Therefore, we are not expressing any opinion on the findings recorded by the Tribunal on interpretation of the provisions of the Electricity Act, 2003. As a matter of fact, the transmission licence issued to TPC-T includes 2×110 kV as part of the transmission system. Therefore, it is not open to TPC-T to contend that 2×110 kV line is a part of the distribution system of TPC-D till the transmission licence is modified. It is essential that the application filed by TPC-T for amendment of its transmission licence is decided first. If the application filed for amendment by TPC-T is allowed and reaches finality, the 2×110 kV lines will not form part of the transmission network. On the other hand, if the application of TPC-T for amendment of its licence is rejected, TPC-D cannot have a case for seeking inclusion of 2×110 kV lines in its distribution system for imposing wheeling charges on HPCL. 20. Therefore, we direct the Commission to decide the application filed by TPC-T for amendment of the transmission licence issued in the year 2014 expeditiously and not later than a period of two months from the date of resumption of work after the lockdown due to Corona Virus is lifted.

2020[4]AdvocatemmmohanApex Court Case Law 3

Non-Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No.2228/2020
(@ Diary No .24669 of2019)
SAI WARDHA POWER GENERATION LIMITED.
…. Appellant(s)
Versus
THE TATA POWER COMPANY LIMITED DISTRIBUTION & ORS.

…. Respondent (s)
W I T H
Civil Appeal No .5049 of2019
J U D G M E N T
L. NAGESWARA RAO, J.

  1. The question that arises for our consideration in these
    Appeals is whether Tata Power Company LimitedDistribution (hereinafter, ‘TPC-D’) is entitled to levy
    wheeling charges for the power supplied to Hindustan
    Petroleum Corporation Limited (hereinafter, ‘HPCL’) and
    wheeling charges for the power sourced from Sai Wardha
    Power Generation Limited (hereinafter, ‘SWPGL’) through
    open access. The Maharashtra Electricity Regulation
    Commission (hereinafter, ‘the Commission’) allowed the
    petition filed by HPCL and held that TPC-D is not entitled to
    1 | P a g e
    levy wheeling charges. Consequently, the Commission
    directed TPC-D to refund the amounts collected from HPCL,
    in the form of wheeling charges. The Appellate Tribunal for
    Electricity allowed the appeal filed by TPC-D and set aside
    the order of the Commission. Aggrieved thereby, the
    SWPGL and HPCL have filed the above Appeals.
  2. Tata Power Company Limited (TPC) was granted an
    integrated licence for supply of electricity under the
    provisions of the Indian Electricity Act, 1910. HPCL has
    been receiving electricity from TPC on its 22 kV distribution
    network since 1955. In 2005, HPCL augmented its oil
    refining facility by installing additional units. HPCL
    requested TPC to supply additional power to feed its load
    requirement of 70 MW on 100 per cent redundancy basis.
    The supply was required to be enhanced to extra high
    voltage (EHV) level. A power supply agreement was
    executed between TPC and HPCL on 20th October, 2005 for
    providing power supply of 110 kV to HPCL’s expansion
    project at Chembur. The actual supply of 70 MW power
    started in the year 2008 after the construction of 2×110 kV
    facility and the requisite regulatory approvals.
    2 | P a g e
  3. In the meanwhile, as per the directions of the
    Commission, TPC trifurcated its assets and segregated
    them into different entities for generation, transmission
    and distribution for the purpose of accounting and tariff
    determination in the year 2006. The Commission
    determined separate tariffs for Tata Power Company
    Limited-Generation, Tata Power Company LimitedTransmission and Tata Power Company Limited-Distribution
    businesses for the first time on 03.10.2006. Thereafter,
    separate tariffs were determined by the Commission for
    Tata Power Company Limited-Generation, Tata Power
    Company Limited-Transmission and Tata Power Company
    Limited-Distribution. While approving the request for
    construction of 2×110 kV lines for power supply of 70 MW
    to HPCL on 16.10.2007, the Commission directed TPC that
    the other consumers in the vicinity may also be supplied
    power from the 2×110 kV distribution lines. By the tariff
    order dated 04.06.2008, the Commission permitted the
    capitalization of the 2×110 kV distribution lines in the
    books of accounts of TPC-D. Undisputedly, HPCL has been
    3 | P a g e
    paying wheeling charges i.e. charges for the right to use of
    the distribution network since 2008.
  4. In the year 2014, TPC filed applications before the
    Commission for grant of transmission licence and
    distribution licence under the Electricity Act, 2003. On
    17.04.2014, a representation was made by TPC classifying
    2×110 kV lines as part of the transmission system and 33
    kV and lower lines as part of the distribution system. The
    Commission granted Transmission Licence No. 1 of 2014 to
    Tata Power Company-Transmission (TPC-T) on 14.08.2014.
    HPCL applied to TPC-D on 04.11.2015 for availing 21.02
    MW short term open access for getting power as a group
    active user from SWPGL which was approved by TPC-D.
    HPCL executed a power purchase agreement with SWPGL
    on 08.07.2016 with partial supply of electricity on open
    access. HPCL sought approval of TPC-D for the use of its
    distribution network.
  5. On 10.10.2016, TPC-T filed an application before the
    Commission for amendment of the transmission licence
    No.1 of 2014. TPC-T stated in the said application that
    inclusion of the 2×110 kV lines in its network is an
    4 | P a g e
    inadvertent error as the lines were always part of the
    distribution system. Thereafter, HPCL filed a petition on
    13.04.2017 before the Commission for a declaration that
    TPC-D was not entitled to levy and collect wheeling charges
    and wheeling losses on the supply of electricity through
    open access on the 110 kV Trombay – HPCL lines 1 and 2
    including the feeder lines. The Commission passed an
    order on 12.03.2018 allowing the petition filed by HPCL
    holding that TPC-D is not entitled to levy wheeling charges.
    The said order was set aside by the Tribunal on 22.03.2018.
    In the meanwhile, the Commission disallowed the
    application filed by the TPC Transmission for modification of
    Transmission Licence No. 1 of 2014 by an order dated
    01.08.2018. The Appellate Tribunal set aside the order of
    the Commission dated 01.08.2018, disallowing the
    application for modification of the transmission license, and
    remanded the matter back for fresh consideration.
  6. The petition filed by HPCL was allowed by the
    Commission by holding that 2×110 kV Trombay – HPCL lines
    are part of the transmission system of TPC-T as per the
    transmission licence issued on 14th August, 2014. As long
    5 | P a g e
    as the lines remained part of the transmission licence, the
    TPC-D cannot claim wheeling charges as a distribution
    licensee. The submission on behalf of the TPC-D that
    2×110 kV lines should be considered as its distribution
    assets was rejected by the Commission on the ground that
    extra high voltage network of 66 kV and above have to be
    treated as part of the transmission network. The
    Commission held that the wheeling charges of TPC-D was
    determined only for 11/22/33 kV lines. On the basis of the
    principle of segregation between HT and EHT levels in
    Maharashtra, the Commission held that EHV feeders
    emanating from the Trombay generating station squarely
    fall within the definition of transmission lines under Section
    2 (72) of the Electricity Act, 2003. The Commission relied
    upon the Central Electricity Authority (Technical Standards
    for Construction of Electrical Plants and Electric Lines)
    Regulations, 2010 (hereafter referred to as the ‘CEA
    Regulations, 2010’) which demarcate distribution and
    transmission boundaries on the basis of voltage levels. As
    per the CEA Regulations 2010, voltage levels from 0.415 kV
    to 33 kV are included under the distribution head and 66
    6 | P a g e
    kV to 765 kV AC and 500 kV DC voltage levels are included
    under transmission head. On the basis of the above
    findings, the Commission allowed the petition filed by HPCL
    and directed TPC-D to refund the amounts collected from
    HPCL on the said count.
  7. The Appellate Tribunal framed two principal issues for
    consideration which are as follows:
    “Issue No.1: Whether the 110 kV HPCL feeders
    are part of the Distribution system of TPC-D or can
    qualify as transmission lines in terms of the
    statutory framework and in the facts of the
    present case?
    Issue No.2: Whether the erroneous
    submission of TPC-T regarding 110 kV HPCL
    feeders in the transmission licence No.1 exempt
    HPCL from payment of wheeling charges?”
  8. By placing reliance on an earlier judgment of the
    Tribunal dated 14.12.2012 in Orissa Power Transmission
    Corporation Limited vs. Orissa Electricity Regulatory
    Commission in Appeal No.30 of 2012, the Tribunal held that
    7 | P a g e
    the 110 kV HPCL feeders from Trombay Generation Station
    Bus-Bar to HPCL installation at its premises for use of
    electricity are an essential part of the TPC Distribution
    system. The Tribunal observed that these feeders from
    their inception were being used for supplying electricity to
    HPCL. The Tribunal was also of the view that an
    arrangement for stepping down electricity at consumers
    installation cannot be treated as a ‘sub-station’ as defined
    in Section 2 (69) of the Electricity Act. Following the
    judgment in OPTCL, the Tribunal observed that there is no
    embargo that the distribution network of a distribution
    licensee cannot include a line of 110 kV voltage level.
    Issue No.2 was also answered in favour of TPC-D. The
    Tribunal declared that 110 kV feeders are integral part of
    the distribution network of TPC-D and that on the basis of
    voltage defined in the CEA Regulations 2010, the status of
    the licence cannot be changed from distribution to
    transmission. The Tribunal directed the Commission to redetermine the wheeling charges at EHT level 110 kV by
    accepting the submission of HPCL that it was made to pay
    higher wheeling charges.
    8 | P a g e
  9. We have heard Mr. Anand K. Ganesan, learned
    counsel for SWPGL, Mr. Varun Pathak, learned counsel for
    HPCL and Mr. Maninder Singh, learned Senior Counsel for
    TPC-D.
  10. TPC-D raised a preliminary objection relating to the
    maintainability of the appeal filed by SWPGL on the ground
    that it lacks locus standi. According to TPC-D, the dispute
    essentially is between HPCL and TPC-D. SWPGL which has
    stopped supplying power to HPCL on 30.09.2017 cannot be
    permitted to challenge the order passed by the
    Commission. HPCL has filed an appeal against the
    judgment of the Tribunal which has to be adjudicated on
    merits. Therefore, we have heard the learned counsel for
    SWPGL as well.
  11. It was contended on behalf of HPCL that 110 kV HPCL
    line is a transmission line. The metering for HPCL is done
    at TPC-D sub-station which is admittedly a transmission
    asset. As a matter of fact, the sale of electricity is
    completed at the TPC-D sub-station. It was argued that on
    9 | P a g e
    behalf of HPCL that a consumer can be connected directly
    to a transmission network. HPCL submitted that the
    judgment of the Tribunal in OPTCL is erroneous. Inclusion of
    2×110 kV lines in the transmission assets by TPC-D is a
    factor that cannot be ignored while deciding the
    entitlement of TPC-D to impose wheeling charges by
    treating the 2×110 kV lines as part of the distribution
    system.
  12. It was submitted on behalf of the SWPGL that there is
    no prohibition or bar in the Electricity Act preventing a
    consumer from being directly connected to the network of
    a transmission licensee. Undisputedly, 2×110 kV Trombay –
    HPCL lines have been declared to be part of transmission
    assets by TPC-T. The plea of inadvertence taken by TPC-D
    has to be rejected in view of availability of abundant
    material. SWPGL referred to the roll out plan of the
    distribution network made by TPC which deals only with
    lines upto 33 kV. According to SWPGL, the capital
    investment plans of distribution network also include only
    11 kV and 33 kV voltage level lines. The learned counsel
    10 | P a g e
    appearing for SWPGL submitted that the order of the APTEL
    is liable to be set aside.
  13. On behalf of the TPC-D, it was argued that trifurcation
    took place in the year 2005 and since then, tariff was being
    determined separately for transmission and distribution.
    HPCL has been paying wheeling charges till 2018. There is
    no doubt that HPCL was receiving electricity from TPC-D’s
    distribution network since 1955. Reliance was placed on
    the tariff order dated 04.06.2008, wherein the Commission
    permitted capitalization of 2×110 kV distribution lines in
    books of accounts of TPC-D. It was argued on behalf of
    TPC-D that no transmission charges have ever been
    demanded or recovered for 110 kV assets. It was
    contended that the application filed for amendment of the
    transmission licence ought to have been decided by the
    Commission before taking up the instant dispute. A
    detailed submission was made on the network roll out plan
    to submit that the plan was qua a broad basis of
    consumers who are connected at 11kV/22kV/33kV and
    lower voltage levels. It was submitted that the network
    rolls out plan was only towards development of network
    11 | P a g e
    backbone which is generally at levels below 33 kV. It was
    further urged on behalf of the TPC-D that the 110 kV lines
    were always treated as a distribution asset and it was only
    due to inadvertence that they were included in the
    transmission license in 2014.
  14. The basis for the order of the Commission dated
    12.03.2018, allowing the petition filed by the HPCL is twofold. Firstly, the Commission held that transmission
    licence was granted to TPC-T on 14.08.2014, in which the
    two110 kV Trombay – HPCL lines were shown as a part of
    TPC-T. The Commission observed that as long as the lines
    remained part of the transmission licence, TPC-D cannot
    claim wheeling charges. The Commission further observed
    that HPCL is directly connected to 110 kV transmission
    system in terms of TPC-T’s transmission licence and not to
    the distribution network of TPC-D. The Commission
    remarked that mere filing of a petition by TPC-T for
    amendment of its transmission licence does not entitle
    TPC-D to levy wheeling charges. The Commission further
    referred to the submission of TPC-D in case No.47 of 2016
    that the assets of TPC-D do not include any part of TPC’s
    12 | P a g e
    transmission network. The submission of TPC-D relating
    to the inadvertent error in showing 2×110 kV lines in the
    transmission network was rejected.
  15. Secondly, the Commission relied upon an E-mail of
    the Maharashtra State Load Despatch Centre (MSLDC)
    dated 11.12.2015 addressed to SWPGL in which it was
    stated that no wheeling charges can be levied on HPCL as
    it was connected at 110 kV level. The Commission referred
    to the CEA Regulations, 2010 and Central Electricity
    Authority’s Manual on Transmission Planning Criteria) 2013
    and Maharashtra Electricity Regulatory Commission
    (Transmission Open Access) Regulations, 2016 to hold that
    all lines up to 33 kV shall be part of the distribution system
    and those above 33 kV form part of transmission lines.
  16. The order of the Commission was set aside by the
    Tribunal. The Tribunal observed that 2×110 kV HPCL feeder
    was being used for supplying electricity since inception and
    hence it is an integral part of TPC-D system. By placing
    reliance on a judgment in OPTCL, the Tribunal held that
    HPCL cannot receive power supply directly from TPC-T.
    13 | P a g e
    The Tribunal further held that there is no embargo on the
    inclusion of the 2×110 kV lines in the distribution network
    and distribution can be undertaken at high voltage levels
    forming high voltage distribution system. While answering
    the second point, the Tribunal held that a consumer can
    directly be connected to the works of a transmission
    licensee. However, in the instant case, HPCL was paying
    wheeling charges from a long time to TPC-D. Hence, the
    2×110 kV lines are part of the distribution system of TPC-D.
    Further, the Technical Regulations framed by the CEA
    defining level of voltage for distribution and transmission
    heads were held to be generic in nature by the Tribunal.
  17. Admittedly, separate licenses for transmission and
    distribution to TPC-T and TPC-D respectively were granted
    in 2014. There is no dispute that TPC-T included the 2×110
    kV lines in its transmission assets. The network roll out
    plan submitted by TPC-D included lines upto 33 kV in its
    distribution network. An application was filed by TPC-T for
    amendment of the licence which is pending before the
    Commission, following the remand by the Tribunal. The
    Tribunal did not advert to the application filed by TPC-T for
    14 | P a g e
    amendment of the transmission licence. The Tribunal also
    did not refer to its order by which it set aside the order of
    the Commission disallowing the application for amendment
    of the transmission license and remanded the matter back
    to the Commission. The Tribunal committed an error in
    ignoring the existing transmission licence of TPC-T before
    coming to a conclusion that 2×110 kV lines are part of the
    distribution network. The Tribunal ought to have directed
    the Commission to adjudicate the application filed by TPC-T
    for amendment of the transmission licence. Thereafter, the
    Tribunal should have decided an appeal, if any, filed
    against the decision of the Commission on the application
    for amendment before taking up the appeal filed by TPC-T
    against the order of Commission dated 12.03.2018. The
    Tribunal stressed on the fact that HPCL was receiving
    power from TPC-D from a very long time for which reason,
    the 2×110 kV lines should form part of the distribution
    system of the TPC-D. The Tribunal was wrong in not taking
    note of the application filed by TPC-T for amendment of its
    transmission licence in which the 2×110 kV lines were
    included in the transmission network. Till the transmission
    15 | P a g e
    licence of TPC-T is not modified, the 2×110 kV lines form
    part of the transmission network of TPC-T. The Tribunal
    could not have held that 2×110 kV lines should be included
    in the distribution system of TPC-D.
  18. The CEA Regulations 2010, the Maharashtra
    Electricity Regulatory Commission (Transmission Open
    Access) Regulations, 2016 and the Maharashtra Electricity
    Regulatory Commission (Distribution Open Access)
    Regulations, 2016 provide for demarcation between the
    transmission and distribution boundaries on the basis of
    voltage. The Tribunal erred in ignoring the said Regulations
    while holding that 2×110 kV lines are part of the
    distribution system.
  19. We are of the opinion that the judgment of the
    Tribunal is required to be set aside and that the matter
    should be remanded back for fresh consideration.
    Therefore, we are not expressing any opinion on the
    findings recorded by the Tribunal on interpretation of the
    provisions of the Electricity Act, 2003. As a matter of fact,
    the transmission licence issued to TPC-T includes 2×110 kV
    16 | P a g e
    lines as part of the transmission system. Therefore, it is not
    open to TPC-T to contend that 2×110 kV line is a part of the
    distribution system of TPC-D till the transmission licence is
    modified. It is essential that the application filed by TPC-T
    for amendment of its transmission licence is decided first.
    If the application filed for amendment by TPC-T is allowed
    and reaches finality, the 2×110 kV lines will not form part
    of the transmission network. On the other hand, if the
    application of TPC-T for amendment of its licence is
    rejected, TPC-D cannot have a case for seeking inclusion of
    2×110 kV lines in its distribution system for imposing
    wheeling charges on HPCL.
  20. Therefore, we direct the Commission to decide the
    application filed by TPC-T for amendment of the
    transmission licence issued in the year 2014 expeditiously
    and not later than a period of two months from the date of
    resumption of work after the lockdown due to Corona Virus
    is lifted. The appeal, if any, filed by the aggrieved party
    shall be decided by the Tribunal within a period of three
    months from the date of filing. Thereafter, the Tribunal
    shall take up Appeal No.84 of 2018.
    17 | P a g e
  21. For the aforementioned reasons, we set aside the
    judgment of the Tribunal and remit Appeal No.84 of 2018 to
    the Tribunal for fresh adjudication.
    …………………………..J.
    [L. NAGESWARA RAO]
    …………………………..J.
    [DEEPAK GUPTA]
    New Delhi,
    April 03, 2020.
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