HARYANA ELECTRICITY REGULATORY COMMISSION
S.C.O 180, SECTOR 5, PANCHKULA 134 109, HARYANA

CASE NO. In HERC/Sectt.Legal – 28 B

Date of hearing:  28.6.2002

Date of Order: 11.07.2002

Amendment in Haryana Electricity Regulatory Commission (Tariff ) Regulations 1999.

 ORDER

1)     According to Section 26 (5) of the Haryana Electricity Reform Act 1997, every Licensee shall provide to the Commission at least 3 months before the ensuing financial year full details of its calculation for that financial year of the expected aggregate revenue from charges and such further information as the Commission may reasonably require to assess the Licensee’s calculations. Further the Commission is required to notify the Licensee the approved calculation of expected revenue from charges within ninety days from the date on which the Licensee has furnished all the information that the Commission requires.

2)     Section 3 (5) of HERC (Tariff) Regulations, 1999 notified by the Commission reads as under:-

                        “Within 7 days after the Commission has notified the Licensee that it has received all necessary information, the Licensee shall arrange for publication of a notice of its tariff application in accordance with Section 26 (6) of the Act and send copies to the Commission Advisory Committee and relevant local authorities in accordance with Chapter II of the Conduct of Business Regulations. The notice shall include a general description of the tariff amendment being applied for and its effect on the typical residential consumer’s bill, and an invitation to submit written comments and objections to the tariff application to the Commission within 30 days. The Licensee shall also post the notification in each of its offices.”

3)     Experience has shown that the Licensee does not file the complete information as prescribed in the Tariff Regulations and ARR & Tariff Guidelines. So after the preliminary review of the ARR and Tariff application filed by the Licensee, the Commission has to ask for missing/additional information from the Licensee for proper analysis of the ARR and tariff application. The Licensee also takes time to provide the supplementary information. The process takes considerable time before the information filed by the Licensee can be considered as reasonably complete for publication of notice by the Licensee as per Para 3 (5) of the Tariff Regulations. The public notice to be issued by the Licensee includes an invitation to the public and interested parties to submit comments and objections on the tariff application to the Commission within 30 days. After receiving comments and objections the Commission holds public hearings on the ARR and tariff proposals of the Licensee.

4)     The entire process consumes a lot of time leaving very little time for the Commission to consider the comments and objections received from the public and interested parties and reply thereto from the Licensee, to hold public hearings, to receive supplementary information from the Licensee arising from the points raised in the public hearings and to process the voluminous information and finally to issue orders on the ARR and tariff application. It is, therefore, proposed to revise the existing Tariff Regulations. Section 3 (5) of the Tariff Regulations is proposed to be revised as under:-

            “Within 7 days after making the application for Annual Revenue Requirement/change in the current tariff, the Licensee shall arrange for publication of a notice containing brief summary of its proposed Annual Revenue Requirement and/or Tariff application at least in two daily newspapers having wide circulation in the area of supply. The notice shall include a summary of the proposed tariff amendment along with its effect on a typical small, average and large consumer in each tariff class and an invitation to consumers and other interested organizations to file written comments/objections on the proposed Annual Revenue Requirement and/or the proposed Tariff application to the Commission within 30 days of the date of first publication of the notice. The objections shall be filed with the Commission alongwith an affidavit in Form 2 of the Commission’s (Conduct of Business) Regulations.

The Licensee shall make available the following documents for public consultation during office hours on any working day at its Headquarters and at all field offices of SE (Operations) of Distribution and Retail Supply Licensee.

1.     A copy of the ARR filing of the Licensee.

2.     A copy of the tariff application of the Licensee, if applicable.

A copy of these documents shall also be made available at cost to the public on request alongwith relevant supplementary information as and when available.”

5)     Accordingly public notice was issued in The Tribune of 1.6.2002 and Dainik Jagran of 1.6.2002 inviting comments/objections from the consumers and other interested parties on the proposed amendment to the Tariff Regulations so as to reach the Commission on or before 14^th June 2002.

6)     The public hearing to consider the objections / comments was fixed for 28^th June 2002 in the Commission’s office at 11.00 AM.

7)     Haryana Vidyut Prasaran Nigam Ltd. (hereinafter referred to as HVPNL) which at present hold both Transmission & Bulk Supply licence as well as Distribution & Retail Supply licence submitted their comments / objections on 17^th June 2002 after the expiry of the date fixed for filing comments / objections. No comments/objections were received from any other person / organization.

8)     On 28^th June 2002 at 11.00 AM, the Commission took up the hearing as scheduled. The Commission first took up the application filed by HVPNL for condonation of delay in filing the comments / objections on the proposed amendment in the HERC (Tariff ) Regulation 1999.

9)     On behalf of the HVPNL, it was stated that the last date of filing objection was 14^th June 2002 (15^th and 16^th June being Saturday and Sunday when the office was closed). HVPNL filed the comments on June 17^th 2002 which was the next working day after 14^th June 2002. No other reasons have been pleaded in the application for condonation. At the hearing, it was generally stated by the HVPNL that the case had to go through a number of stages before the approval of authorities of HVPNL could be obtained and comments could be filed with the Commission only thereafter.

10)   Although the Commission remained unconvinced about the reasons of delay put forward by HVPNL, considering that HVPNL was the sole objector and there was delay of one working day only, the Commission decided to condone the delay in filing the comments/objections by HVPNL

11)   Briefly, the HVPNL has mentioned the following points in its comments/objections:-

i.              Although, the Licensee endeavours to file the ARR & Tariff application strictly in line with the general guidelines prescribed under the HERC (Tariff) Regulations, 1999, the information required to be filed with the application is normally so voluminous and based on supporting data which is available only after certain time gap. For example, the availability of the audited Balance Sheet of the Licensee for the previous year is dependent on the procedures involved. Similarly, the compilation of the accounting data for the current year is normally in a gap of minimum three months. Therefore, the minimum time required to acquire this information needs to be appreciated.

ii.           The very purpose of publication of the proposed ARR and Tariff filing in abridged form is to inform the public at large and other stake holders about the estimated performance parameters of the Licensee based on the actual for the first six months of the current year in comparison to this year’s approved ARR and proposals for the ensuing year. This information is not of much importance to the public as till that time they are not aware about the view of the Commission. Therefore, the efforts put in by the stakeholder to formulate their view on the data furnished by the Licensee are not of much importance unless they know the preliminary viewpoint of the Commission and the likely impact of the Tariff which would be payable by them.

iii.          Once the Commission has applied its mind on the application filed by the Licensee, it can come out with the proposed ARR and Tariff order and thereafter it should be published for the information of the stakeholders. Thus, it would be more useful and help the public in contributing their valuable comments and suggestions on the proposed order. This would also save on the double exercise of inviting public objections and cut short the resultant delay.

iv.           In this regard HVPNL referred to the provisions in the Draft Electricity Bill, 2001, as introduced in the Lok Sabha in August 2001. Section 64 of the said Bill deals with the procedure for tariff order. Sub sections (1) (2) & (3) of this section are relevant for the purpose and these have been reproduced by HVPNL for reference:

64.    (1) An application for determination of tariff under section 62 shall be made by a generating company or the Licensee in such manner and accompanied.

(2)          Every applicant shall publish the application, in abridged form, as may specified, in two leading daily Newspapers circulating in India out of which one shall be in English.

(3)          The appropriate Commission shall, on receipt of the application under sub-section (1), publish in the manner as may be specified, the draft tariff order proposed to be made by it, inviting objections and suggestions on the draft tariff order from the public.

Accordingly to HVPNL in the procedure laid down in the Draft Electricity Bill 2001, the stage of inviting public objections and suggestions is only once and that too after the Commission has applied its mind and conveys to the public its intentions to revise/modify the tariff. This would avoid duplication of efforts and would help in cutting down the delay in consideration and finalization of the ARR and Tariff orders.

v.            Another issue worth consideration is the publication of the summary of the proposed tariff amendment alongwith its effect on a typical small, average and large consumer in each tariff class. The existing provision under section 3 (5) of the HERC (Tariff) Regulation calls for publication of the general description of the tariff amendment being applied for and its effect on the typical residential consumer’s bills. In fact, it is not the domestic or any other category of the consumer, who is affected by the tariff order but all categories of electricity consumers may get affected. Moreover, it would not be possible to show its effect on a typical consumer of any category as the consumers have different load, consumption patterns etc. Therefore, a better course could be to notify the existing tariff and the proposed amendments for all the consumer categories.

vi.          In view of the foregoing reasons HVPNL has proposed that the existing section 3(5) of the HERC (Tariff) Regulations may be reworded as follows:-

“Within 30 days after receiving the application for Annual Revenue Requirement / change in current tariff from the Licensee, the Commission shall publish in two leading daily Newspapers circulating in India out of which one shall be in English, the draft tariff order proposed to be made by it, inviting objections and suggestions on the draft tariff order from the public so as to reach the Commission within next 15 days alongwith an affidavit in Form 2 of the Commission’s (Conduct of Business) Regulations.

The Licensee shall, within 7 days of the publication of the draft order on Annual Revenue Requirement / Tariff, make available a copy of the draft order alongwith the documents submitted by the Licensee with the Commission at all its circle offices and at the Headquarters for public consultation during office hours on any working day. A copy of these documents shall also be supplied to the public on written request, at cost to be notified by the Licensee, from the Headquarters”

vii.    The existing guidelines require the Licensee to submit 7 copies of the applications, each page duly signed by an authorized signatory of the Licensee. It would kindly be appreciated that signing of each page on such a voluminous filing involves lot of unproductive efforts. If it considers fit, one application may be filed duly signed on all the pages and other copies could be certified true copies of the application. This would save lot of efforts and useful time.

12)   We shall now take up the discussion of various points raised by HVPNL.

(a)   The HERC (Tariff) Regulations, 1999 ask only for that information in the ARR and Tariff application which is essential for the purposes of transparency, adequate information to the public & likely objectors and necessary and sufficient information for the Commission to arrive at a decision.

 In the past, the information furnished by the Licensee has generally been inadequate and on occasions sketchy.  Even on deficiencies in information being pointed out, requests for waiver have been numerous and additional information furnished has not only been deficient and inadequate, but even different at different places in the A.R.R. application and often contradictory.  The only plea for the past 4 years has been that HVPNL have inherited a very inadequate and deficient system of information from erstwhile HSEB.

We are inclined to think that 4 years is a long period for substantially improving the so-called very inadequate and deficient system of information inherited from HSEB, given the managerial will and determination.  We regret to note that the improvements have been too slow and too little.

(b)   The purpose of publication of the proposed A.R.R. and Tariff filing is to promote transparency and let the consumers know what proposed increases in tariff are in store for them.  We fail to understand the reluctance of HVPNL to publish their own proposal of tariff increase in newspapers so as to inform consumers at large about them.  The consumers have a right to this information, once the proposals are submitted for the consideration of the Commission.  HVPNL is patently in error when it says that the information contained in it’s A.R.R. & Tariff proposal will be of no use to the public.

(c)    Having disagreed with the proposal of the Commission for publication of the A.R.R. & tariff proposals immediately after they are submitted to the Commission, the HVPNL have come forward with an alternative proposal.  The proposal is that the Commission should consider the A.R.R. and tariff proposal in isolation without hearing any objector and then publish its draft order on the proposals mooted by HVPNL.

(d)   To support their counter-proposal, HVPNL have referred to sub-section (1), (2) & (3) of Section 64 of the Draft Electricity Bill, 2001 as introduced in the Lok Sabha in August, 2001.  Even here, HVPNL has conveniently passed over the proposed sub-section(2) which requires every applicant for determination of tariff under section 62 to publish the application, in abridged form in two leading daily newspapers circulating in India out of which one shall be in English.

We consider that the publication of draft order on the A.R.R. & tariff application by the Commission without hearing the various stake holders including consumers is at variance with the Haryana Electricity Reform Act, 1997.  We consider that such a draft order made without hearing all the stake holders and consumers will be an arm-chair exercise without much utility and may have to undergo large scale changes after hearing the stakeholders and consumers.  For the present, We do not consider the publication of draft order as suggested by HVPNL either necessary or desirable. As and when the requirement of draft order by the Commission becomes legally obligatory, the Commission will amend its Tariff regulations to bring them into conformity with prevailing laws.

(e)   Another point raised by HVPNL is that existing provision under section 3(5) of the HERC tariff regulations calls for publication of the general description of the tariff amendment being applied for and its effect on the typical residential consumer.  The amended section 3(5) requires the publication of the summary of the proposed tariff amendment alongwith its effect on a typical small, average and large consumer in each tariff class. HVNPL argues that the tariff amendment may affect all the consumers and it would not be possible to show its effect on a typical consumer of any category as the consumers have different loads and  consumption pattern.  A better course could be to notify the existing tariff for all the consumer categories.

We don’t agree with the views of the HVPNL on this point.  Consumers have a right to be informed about the likely effect of proposed tariff application on the existing electricity bills of typical consumers in each category.  This can be easily done by suitably grouping the consumers under each category according to consumption.  The aim is not to tell each & every consumer about the likely change in his bill on a predetermined consumption level but to make him aware of the price signals through these typical examples.

(f)   This point is extraneous to the amendment proposed and hence not discussed.

13)   In view of above discussion, We reject the objections filed by HVPNL as being of no substance.  We order that the proposed amendment may be notified according to prescribed procedure.

Place :  Panchkula
Dated: 11.07.2002