“MSEDCL’S Comments

on

Fact Finding Committee Report

on

Continuous-Non Continuous conversion”

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 Comments on Point No 1,2,3 and 4

Observations Comments

Chapter-1: Background
It briefly contains note on MSEDCL’s profile and its tariff determination Factual details
process
.

Chapter-2: Formation of Fact Finding Committee.

Being issue raised by Shri R. B Goenka, Independent Director, MSEB Factual details
Holding Co.Ltd, and also one of the prayer in PIL (22/2015) to form time
bound committee to inquire, the Board of Directors, MSEB Holding Co.Ltd
vide resolution No.18.4 decided to form Fact Finding Committee.

Chapter-3: Methodology adopted by Fact Finding Committee.

Collection and Compilation of all documents, notes, and references
submitted by MSEDCL and Independent director.
Factual details
Perusal of documents, personal hearing to Independent director and
MSEDCL officers and conducting meeting of committee.

Chapter-4: Chronology of Events

Beginning from classification of HT-Industries into Continuous to Non- Factual details
Continuous and its clause in subsequent MERC tariff orders.

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 Comments on Point No 5 , 6 and 7

Observations Comments

Chapter-5: Gist of MERC Case No.121/2014, 94/2015 and PIL

No.22/2015.
Factual details
The Review petition (94/2015) against denial of revenue by MERC
in (121/2014).

Allowing review in the matter and MERC accepting stand of

MSEDCL.

The Consumer representatives, Shri Ashish Chandarana and Suhas

Khandekar filed PIL (22/2015), before the Hon’ble High Court
Nagpur Bench against illegal and high handed action of approving
time barred applications for converting tariff category

Chapter-6 Submission of MSEDCL

MSEDCL’s submission on queries raised as a part of deliberations of Factual details submitted

the committee

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 Comments on Point No. 2
Observations
Chapter-7: Conclusion/Recommendation
1. It is clear that MSEDCL has approved time barred
applications for converting the tariff category from
“Continuous” to “Non Continuous” category, which has
given benefit to some and has denied benefit to some
others.
2. It is pertinent to however objectively analyze the
underlying facts of the case and the sequence event, to
identify the reasons why the MERC (Standard of
Performance, for period for Giving Supply and
determination of Compensation) Regulations, 2005 notified
on 20th January 2005, of which Regulation 9.2 provides
that the change in the tariff category shall be effected
before the expiry of the second billing cycle, after the date
of receipt of application were misinterpreted and misused
by MSEDCL, to grant benefit to some consumers and to
deny the benefit thereof to some others
Comments
MSEDCL has approved applications for converting tariff
category from Continuous to Non Continuous which were
time barred in reference to MERC order,
It may be noted that as per MERC SoP Regulation, 2005
and in view of the recent MERC order 94 of 2015, the
approved applications do not remain time barred.
MSEDCL has approved the applications for conversion of
tariff from Continuous to Non Continuous category to
safeguard interest of company and more so of the
subsidized consumers and retain cross-subsidizing
consumers who might otherwise have left MSEDCL by
availing power through Open Access.
The decision was taken in line with the provisions of SoP
and with bonafide. intent of protecting commercial
interest of the MSEDCL.
It is to be noted that, various adjudicating forums have
dispensed orders for tariff change as per SoP Regulation
9.2 irrespective of time limitation.
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a) The genesis of the misuse, lies in the various MERC orders, commencing from the one dated 20.10.2006,
Factual details
whereby it introduced two such categories under HT industry viz HT –I “Continuous” and HT-I “Non-
Continuous” industry, based on the nature of power requirement of industry (Continuous or non-
Continuous) Change of the tariff category cab be done for eligible consumer only as defined in MERC
Tariff order. DIC (District Industries Centre) was authorized to issue certificate of eligibility for
continuous industries.
b) The MERC, vide its order dt. 18.5.2007, simplified the tariff categories in case of industries and only
the HT industries connected on express feeders and demanding continuous supply were to be Factual details
considered as HT “Continuous” industry and given continuous supply, whereas all other HT industrial
consumers were to be deemed as HT “Non Continuous” industry. This provision was also mentioned
in the Tariff Order dt. 20.6.2008.
Factual details
c) The MERC, pursuant to a review petition filed by MSEDCL on 5.7.2008 with a request to remove the
word demanding for applying Continuous Tariff issued an order dt. 12.9.2008, stating that the industrial
consumer on a Continuous feeder may exercise his choice between Continuous and Non- Continuous
supply, only once in the year, within the first month after the issue of the Tariff Order

d) The MERC issued tariff order on 16.8.2012, in which it stipulated different tariff rates for the
“Continuous” and “Non- Continuous” supply category of customers.
The said order did not mention the clause regarding change of consumer category from “Continuous”
to “Non- Continuous” within one month of tariff order. Factual details
However at Page no. 289, the MERC mentioned that “It should be noted that all previous clarifications
given by the Commission through its various Orders continue to be applicable, unless they are
specifically contrary to anything that has been stated in this Order, wherein the clarifications given in
this Order shall prevail”.
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 Comments on Point No 3 and 4

3. Through this omission in the MERC tariff order dtd. 16.8.2012, was a material deviation from its
earlier orders, the same was not noticed, thus resulting in the grant of multiple positions/
interpretations, in the matter of change in tariff category, upon receipt of applications from the
consumers. Due to failure to notice the significant change in the MERC order dt. 16.8.2012, in
the matter of change of consumer category, and the apparent conflict between the said order of
MERC and its earlier orders, it gave rise to several interpretations and applications thereof in the Factual details
matter of change in tariff category on receipt of consumer application. There was ambiguity in the
matter of whether the change in tariff category was applicable within one month of the original
tariff order on which clarification was sought by MSEDCL, or whether it was applicable within
one month of issue of clarifactory order by MERC. This ambiguity was further compounded by
the said MERC order dt. 16.8.2012.

4. MSEDCL did not follow MERC order in true letter spirit which led to the arbitrary misuse thereof
at the ground level, such that those consumers who were not eligible benefitted and those who
were eligible, were denied the benefit thereof. Such misuse of MERC tariff order was not
Due to different provisions in Tariff orders
identified and stopped at the earliest and there was thus a systemic failure, by MSEDCL not just in and Regulations, there were different
preventing the misuse thereof, due to delayed detection of such lapses and failure to take interpretations and different treatment
immediate action. The matter was detected by the officer of the Accountant General (Audit) vide given to application.
letter dated 27.6.2013 and thereafter recovery committee took a decision to stop the tariff change
to “ Continuous” to “Non- Continuous.”

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Comments on Point No 5

5. Since there has been misuse of the MERC tariff orders,
such that some of the eligible applicants were denied
thereof, it is suggested that for those who have wrongly
benefited under these tariff orders, the benefit must be
withdrawn with retrospective effect, together with
applicable penal charges / levies and for those who were
wrongfully denied such benefit, the same be granted
retrospectively from their date of eligibility.
MERC too in the order dated 19.8.2016 upheld this fact of
ambiguity in their own order stating, the stipulation of time
period criteria in earlier order is inconsistent with MERC
SoP Regulation 9.2 and directed MSEDCL to take
appropriate actions with regard to such selective,
inconsistent and discriminatory treatment given to different
application by it which merit revision, based on principles
settled in this order.
As directed by MERC, MSEDCL has considered
all the pending as well as already disposed of
applications in accordance with the aforesaid
MERC order and as per the provisions of MERC
SoP Regulation 9.2.
The Board Resolution has been passed vide
Resolution No.908 for the same.
MSEDCL has informed the concerned Hon. Court /
Forums about its uniform stand and prayed for
Withdrawal/disposal off the Continuous to Non
Continuous tariff category conversion cases to the
extent of MERC SoP Regulation, 2005

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Recommendation of Committee

Yes, MSEDCL agrees to the suggestion for

6. The glaring errors have occurred for failure to seek unambiguous and apparently
contradictory orders from the MERC. It is imperative to prevent the same and if
necessary seek further clarifications from the MERC, to weed out any ambiguities in
is orders. The system must be set and strengthened to detect such anomalies and
ambiguities forthwith and immediately, to prevent any occurrence in future.
strengthening the system for prevention, detection
and correction for the anomalies forthwith to
prevent any occurrence in future.

Recommendations MSEDCL has followed the MERC Order 94 of

2015 and impact has been submitted to Hon’ble
The Commission in its judgment dated 19 Aug. 2016 in case 94 of 2015 & MISC App.
Commission
5/6/7 has examined the issue in full breadth and depth.. The Hon’ble MERC has
directed: “The commission directs MESEDCL to examine and take appropriate
action with regard to such selective, inconsistent and discriminatory treatment given
to different applicants.

30. In view of foregoing, the review Petition is allowed.

The Commission directs MSEDCL to asses the impact of this Order after examining
all the applications received by it which merit revision, based on the principles
settled in this Order, including the impact on account of any selective, inconsistent
or discriminatory treatment given to different applicants, and submit it to the
Commission within three months.”

Accordingly it is recommended that MSEDCL should take action accordingly