indian railways Facing higher electricity bills
Supreme Court It was ruled last week that the national transport company qualifies as a “consumer” under the Electricity Act. Therefore, while liberalizing power purchase for self-consumption, cross-subsidy surcharges (CSS) and additional surcharges are still required, thus affecting the railway’s operating rate.
This is likely to increase the railway’s power procurement costs. It argued that railways should not be considered traditional consumers because it distributes electricity through its vast operational network. The SC, however, rejected this argument and clarified that the Railways, through open access to electricity, “solely owns its own use” and therefore falls within the definition of consumer under the Electricity Act, 2003.
The order passed by a two-judge bench of Justices Dipankar Datta and Satish Chandra Sharma said: “It is clear that for the reasons stated above, the appellant (Indian Railways) has not passed the requirement of being deemed a distribution licensee under the Act and cannot in any event escape its liability to pay cross-subsidy surcharge and additional surcharge as a consumer of electricity through open access.”
The court directed the National Electricity Distribution Company to calculate and publish a detailed statement of the outstanding CSS and additional surcharge payable by the appellant. It added that the calculation must clearly specify the amount based on the area of supply and the period of use of open access. “The appellant shall be given a reasonable opportunity and time to respond to the above calculations,” it said.
The dispute arose out of the railways’ attempt to procure 100 MW of power for its traction substation in Maharashtra through inter-state open access. The Maharashtra Transmission Corporation’s refusal to connect prompted the Railways to seek a declaration from the Central Electricity Regulatory Commission (CERC) that it is a deemed distribution licensee (DDL) exempt from surcharge.
In 2015, CERC ruled in favor of the railways, but it was challenged by several State Electricity Regulatory Commissions (SERCs) and distribution companies. The Appellate Tribunal for Electricity (APTEL), in its final judgment on February 12, 2024, set aside the CERC order, holding that the Railways were the consumers and not DDL.
Railways has challenged these orders of SC.