Case Note & Summary
The case involves an appeal by Maharashtra State Electricity Distribution Co. Ltd. (the distribution licensee) against the order of the Appellate Tribunal for Electricity, which held that captive consumers are not liable to pay additional surcharge under Section 42(4) of the Electricity Act, 2003. The distribution licensee had filed a petition before the Maharashtra Electricity Regulatory Commission (State Commission) seeking approval to levy additional surcharge on all open access consumers, including those sourcing power from captive power plants. The State Commission initially held that additional surcharge is not applicable to captive users to the extent of self-consumption, but later, in a review petition, allowed the levy on captive consumers. The captive consumers appealed to the Appellate Tribunal, which set aside the State Commission's order, holding that captive users are not liable to pay additional surcharge. The Supreme Court was asked to decide whether captive consumers are liable to pay additional surcharge under Section 42(4). The Court examined Sections 9 and 42 of the Electricity Act, 2003. It noted that Section 9 grants a statutory right to any person to construct, maintain, or operate a captive generating plant and dedicated transmission lines without requiring permission from the State Commission. Sub-section (2) of Section 9 gives the right to open access for carrying electricity from the captive plant to the destination of use, subject only to availability of adequate transmission facility. The Court held that this right is not subject to State Commission permission. Section 42(4) imposes additional surcharge only when the State Commission permits a consumer to receive supply from a person other than the distribution licensee. Since captive users exercise a statutory right under Section 9 and do not require such permission, they are not liable to pay additional surcharge for self-consumption. The Court dismissed the appeals, affirming the Appellate Tribunal's order.
Headnote
A) Electricity Law - Captive Generation - Statutory Right - Section 9, Electricity Act, 2003 - Captive generation is a statutory right under Section 9, and a person may construct, maintain or operate a captive generating plant without permission from the State Commission. The right to open access for carrying electricity from the captive plant to the destination of use is also granted by the Act, subject only to availability of transmission facility. (Paras 9-10) B) Electricity Law - Additional Surcharge - Levy on Captive Users - Section 42(4), Electricity Act, 2003 - Additional surcharge under Section 42(4) is leviable only when the State Commission permits a consumer or class of consumers to receive supply from a person other than the distribution licensee. Since captive users exercise a statutory right under Section 9 and do not require such permission, they are not liable to pay additional surcharge for self-consumption from captive plants. (Paras 11-12) C) Electricity Law - Open Access - Captive Users - Section 9(2), Electricity Act, 2003 - The right to open access for captive users is not subject to State Commission permission; it is conditioned only by availability of transmission facility determined by the Central or State Transmission Utility. Disputes regarding transmission facility may be adjudicated by the Appropriate Commission. (Para 9)
Issue of Consideration
Whether captive consumers/captive users are liable to pay the additional surcharge leviable under Section 42(4) of the Electricity Act, 2003.
Final Decision
The Supreme Court dismissed the appeals, holding that captive consumers/captive users are not liable to pay additional surcharge under Section 42(4) of the Electricity Act, 2003. The Court affirmed the order of the Appellate Tribunal for Electricity.
Law Points
- Captive generation is a statutory right under Section 9 of the Electricity Act
- 2003
- not requiring State Commission permission
- open access for captive use is also a statutory right
- additional surcharge under Section 42(4) applies only when State Commission permits a consumer to receive supply from a person other than the distribution licensee
- captive users are not liable to pay additional surcharge for self-consumption from captive plants.
