The Hindu Business Line : Tribunal upholds tariff charged by Damodar Valley

Kolkata, Dec. 7 After more than a two-year long legal battle over the tariff for its power supplies, Damodar Valley Corporation (DVC) has gained substantial ground at the Appellate Tribunal for Electricity.

According to DVC sources, in its judgment on November 23, the Tribunal has not only upheld the tariff charged by DVC but also opened up an opportunity before the corporation to seek an upward revision of the same in the future.

DVC went to the Tribunal in October 2006 challenging an earlier order by the Central Electricity Regulatory Commission (CERC). The CERC order reduced the tariff to be charged by the corporation for 2004-09.

This was irrespective of the fact that DVC’s tariffs were lower than those charged by state power utilities of Jharkhand and West Bengal and the major private operators in the region.

The corporation generates over 2210 MW coal-based power and has lined up plans to expand the capacity to 9510 MW by 2010-11.

The regulator had allowed DVC to recover only 60 per cent of the proposed (Rs 1,535 crore) pension and gratuity contribution fund for its 12,000 employees from the consumers. DVC did not have any such fund and was provisioning the pension and gratuity benefits to superannuating employees on pay-as-you-go basis

The Tribunal had reversed the CERC order and held that DVC can recover the entire amount from the consumers.

“We find it unreasonable to allocate 40 per cent of the burden on DVC. We are of the opinion that the entire expenditure, as determined after prudence check by the Commission, is to be borne by the consumers,” the tribunal said. Following Appellate Tribunal’s order, DVC immediately created the fund.

The Tribunal has also found reason on DVC’s presentation over scope of including certain costs.

The Tribunal holds that while CERC should determine the tariffs for supply of electricity by DVC, the tariff provisions under DVC Act, 1948 that are not in contradiction to the Electricity Act, 2003, are considered valid.

It, however, makes it clear that as per the Electricity Act, the power tariff to be determined should not allow DVC to cross-subsidise its other activities (like irrigation, flood control).

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