Tribunal sets aside electricity regulator's order

Paves way for TNEB to collect development charges from wind energy generators.
Bussinessline Bureau

Chennai, Jan. 11

The Appellate Tribunal for Electricity has set aside an order of the Tamil Nadu Electricity Regulatory Commission (TNERC) not allowing the Tamil Nadu Electricity Board (TNEB) to collect Infrastructure Development Charges (IDC) from wind energy generators.

The tribunal's order paves way for the TNEB to collect an IDC of Rs 28.75 lakh a MW from wind energy generators.

The order by the Appellate Tribunal passed on January 8 follows an appeal by the TNEB challenging TNERC's order dated September 19, 2008, ruling that the TNEB has no jurisdiction to issue the circular imposing the IDC on generators of wind energy when it had not sought the State Commission's approval.

The TNERC ruling had at that time followed a petition from the Indian Wind Energy Association to set aside the circular issued by the TNEB in No. BP FP (146) dated July 4, 2005, imposing the charge and to direct the TNEB to refund the amount collected from the wind energy developers.

The TNEB had originally issued a circular No. BP 251 dated October 28, 1996, for collecting the IDC towards the cost of setting up facilities such as transformers, sub-stations and materials. The IDC had been enhanced in line with increasing costs to Rs 25.75 lakh from Rs 15.75 lakh earlier through an order dated August 21, 2004, and again to Rs 28.75 lakh through a circular dated July 4, 2005.

The Appellate Tribunal ruling on whether the IDC can be collected without approval from the State Commission, said that under the Electricity Act 2003, it is clear from Section 10 (1), and from Central Commission regulations, it is the duty of the generating companies to erect sub-stations and allied inter connection lines.

But the Appellant (TNEB) had erected the transformers and transmission lines at its own cost for the benefit of wind generating companies and collected the proportionate cost as IDC from the wind developers since they could not execute, erect and maintain the transmission network.

This expenditure incurred by the Appellant cannot be included in the tariff as it is a burden on the general public. The filing of Aggregate Revenue Requirement (ARR) with the State Commission is to ensure that the tariff to TNEB's consumers is sufficient for recovery of its expenses besides generating revenue. It has nothing to do with the levy of IDC, which is a contractual obligation between TNEB and wind energy producers.

The tribunal also pointed out that the circulars by TNEB show that it had set up sub-stations and transformers at the request of wind developers for their benefit. The payments were made based on these circulars and had not been challenged before any forum earlier.