HT power consumers to pay only 50% cross subsidy charges: Madras HC

Our Bureau Chennai | Updated on August 14, 2012 Published on August 14, 2012


The Madras High Court has ordered that the high tension consumers who purchase power from the market to pay only 50 per cent of the ‘cross subsidy charges’ levied by the Tamil Nadu Generation and Distribution Company, TANGEDCO, till such time as the final orders are passed.


In order to subsidise the poor consumers, the electricity distribution company charges the large (industrial) consumers higher. So, a part of the tariff goes for subsidising the poor. However, when the large consumer buys power from the market, the distribution company is obviously unable to collect the ‘subsidy element’ from the large consumer. Therefore, it levies a ‘cross subsidy surcharge’ on the power purchased by the large consumers from the open market.  

In Tamil Nadu, these charges vary from 86 paise for a government or educational institution to Rs 2.07 a unit for an industrial consumer and Rs 3.28 for a commercial establishment. These had been waived because of the R&C measures being in force, but in July, the Government of Tamil Nadu allowed TANGEDCO to start collecting the surcharge again.


However, some industrial consumers went to the High Court of Madras against the cross subsidy charges. These consumers included the Tamilnadu Spinning Mills Association, Tamilnadu Electricity Consumers’ Association, South India Spinning Mills Association, Orchid Chemicals and Tube Products. Their plea was simply that they were buying power from the market only because the distribution company, TANGEDCO, was unable to supply to them. Therefore, as long as TANGEDCO keeps in force the ‘restriction and control’ measures, (or, no power supply), there ought to be no cross subsidy charges.


In its interim order issued a few days back, the High Court upheld the right of TANGEDCO to levy a cross subsidy surcharge, also noted that “the petitioners’ plea for continuation waiver of cross subsidy surcharge is justified as long as the restriction and control measures are in force.”


Taking a view that “balance the rights of both parties” the High Court said that the petitioners should pay 50 per cent of the cross subsidy surcharge, “which can be paid under protest”. If the final order goes in favour of the petitioners, the amount they paid could be adjusted against their current dues.


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Published on August 14, 2012
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