High Tension (HT) Connections Finalised After FY 2016-17 Are Eligible For A Rebate: MP High Court

The Madhya Pradesh High Court Indore Bench hold that the effect of provisions of Retail Supply Tariff Order FY 2019-20 regarding rebate on new High Tension connections is retrospective and not prospective and therefore, rebate on new connections and projects for which agreements for availing supply from licensee are finalized during and after the financial year 2016-17 is allowed from the date of connection for the new project.

Background

Every year Madhya Pradesh Electricity Regulatory Commission issues a Retail Supply Tariff Order (for short Tariff Order) for different financial years for the determination of Aggregate Revenue Requirement (ARR) and Retail Supply Tariff for that financial year based on the ARR & Tariff Petition filed by the Distribution Licensees namely Madhya Pradesh Poorv Kshetra Vidyut Vitaran Company Limited (East Discom), Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Limited (West Discom) and Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company Limited (Central Discom), and Madhya Pradesh Power Management Company Limited (MPPMCL). These Tariff Orders apart from other calculating criteria provide applicable rebates on different types of connections, however here we are primarily concerned with the rebate on new HT (high tension) connections. The Madhya Pradesh High Court Indore Bench recently had the opportunity in M/s. S. R. Ferro Alloys v. MPPKVVC to decide whether the effect of provision for rebate under these Tariff Orders would be retrospective or prospective and from which date a beneficary is entitled to claim rebate under such Tariff Order.

Facts

The petitioner has installed an industrial plant for manufacturing Ferro Allows for which it has obtained a fresh connection for the supply of electricity and has entered into a high tension agreement dated 24.02.2018. The petitioner applied for a rebate under the Tariff Order to the respondent company claiming benefits under Retail Order FY 2019-20. The respondent computed the period of rebate to which the petitioner is entitled from 17.08.2019 i.e., from the date when the Tariff Order 2019-2020 came into operation instead from the date of connection and therefore, the petitioner approached the Madhya Pradesh High Court Indore Bench.

Issue

The question before the court was whether the Tariff Order 2019-2020 will have any retrospective effect and whether the new HT connections are entitled to claim the rebate from the date of connection or from the date of Tariff Order came into operation?

Observation

The court considered the relevant Clause HV-3(e) of the Retail Supply Tariff Order for the financial period 2019-2020 which provided for Rebate for new HT connections:

“Rebate for new HT connections : A rebate of Rs.1/Unit or 20% whichever would be less is applicable in energy charges for new connection for the consumption recorded. The rebate shall be allowed upto FY 2021-22 from the date of connection for such new projects for which agreements for availing supply from licensee are finalized during and after FY 2016-17.

Provided that no rebate shall be applicable for connections obtained by virtue of change in ownership in existing connection or by reconnection.

Provided also that new connection on the permanently disconnected premises shall only be eligible for such rebate, if, the application for new service connection on such premises is received not before the expiry of six months from the date of its permanent disconnection.

The consumer availing this rebate shall not be entitled for the rebate of incremental consumption under clause (d) above.”

The court observed that the Tariff Order allows rebates up to the financial year 2021-22 from the date of connection for such new projects for which agreements for availing supply from licensee are finalised during and after financial year 2016-17. Therefore, the date from which the rebate is allowed is from the date of connection for the new project subject to the condition that the agreement is finalised during and after the financial year 2016-17. The plain reading of the clause, in absence of any provision stating that a rebate would be allowed from the date the Tariff Order came into operation, shows that the same is retrospective in nature and is not prospective as it includes therein connections for new projects taken under agreements finalised after the financial year 2016-17. Had it not been the intention of making it retrospective in nature, then the same would not have been made applicable to agreements finalized during and after the financial year 2016-17 and it would have specifically stated that it would be applicable only in respect of agreements finalized on and from the date of the same coming into operation. The court went on to hold that the rebate to be granted to the petitioner under the Tariff Order would be with effect from the date of connection of its new project i.e. 07.03.2018 and not the date of coming into operation of the Tariff Order.

Analysis

The judgement of the court has provided a new financial relief to all the new HT connections finalised after FY 2016-17. The retrospective effect of the Tariff Order 2019-20 will have bigger consequence than what is anticipated as it will pave the way for claiming benefits under the recent Tariff Order. The Tariff Order 2016-17, Tariff Order 2017-18, and Tariff Order 2018-19 provided for a rebate for new connections finalized during FY 2016-17 for new HV 3.1 tariff category connection only if the connection is given to green field projects (Green field project would mean the projects where consumer invests in the construction of new industry/plant from the ground up and there was no prior construction/structure on that particular land.) and the new connections is not obtained by virtue of change in an ownership in existing connection. The Tariff Order 2019-20, Tariff Order 2020-21, Tariff Order 2021-22 and Tariff Order 2022-23 provided for rebates for new connections finalized during and after FY 2016-17 and these tariff orders removed the condition of being a green filed project to claim a rebate. Thus, the present judgement of the Madhya Pradesh High Court Indore Bench which decided the dispute based on the language of relevant clause of the Tariff Order 2019-20 and observed that the Tariff Order would have a retrospective effect has opened the gates for all those new connections who were finalised during or after FY 2016-17 but could not avail the rebate benefit under Tariff Order 2016-17, Tariff Order 2017-18, and Tariff Order 2018-19 merely because they were not green field projects will now be entitled to avail the benefit under the Tariff Order 2019-20, Tariff Order 2020-21, Tariff Order 2021-22 and Tariff Order 2022-23 and they shall get the rebate not from the day when these order came into operation but from the day when the projects entered into agreement for supply with DISCOMS. Thus, the new judgment has opened the gates of claiming rebate for numerous new HT connections and new projects for which agreements for availing supply from licensee are finalized during and after FY 2016-17.