Centre’s draft electricity rules overrides state, regulators’ jurisdiction, say CERC, WB govt

Source:-https://www.financialexpress.com

The West Bengal government has objected to the Union power ministry’s proposed rules for a late payment surcharge on electricity, terming it the Centre’s attempt to intrude into the jurisdiction of the state and the regulatory commission.

The Central Electricity Regulatory Commission (CERC) has virtually termed the rules, null, saying that “rules must be made to enable legislation” of the Electricity Act (EA) 2003.

It said the rules seek to make changes to the provisions of the Act and encroach on the powers of the regulator by fixing surcharges and inter-state transmission charges. “The objective of the EA 2003 is to distance the regulatory [functions] from the government vesting it on the regulatory commissions. Powers and functions of the central and state regulators have been specified in the EA 2003,” a CERC letter to the power ministry said.

West Bengal’s power department, meanwhile, has said that the rules encroach on the power of the state regulator provided in Sections 43(1), 45, 50 and 86(1) (i) of the said Act.

The power ministry has circulated three draft rules, namely the Electricity (change in law, must-run status and other matters) Rules, 2020; the Transmission System, Planning Development and Recovery of Inter-State Transmission Charges Rules, 2020; and the Electricity ( Late Payment Surcharge) Rules, 2020; for comments from stakeholders.

A highly placed official in the West Bengal power department told FE that the state’s letter to the power ministry said the state regulator has already provided for the late payment surcharge. The Centre “has entered into an area in which it has no jurisdiction,” the letter, of which FE has a copy, said.

The Centre can make rules as per Section 176 of EA 2003, only to carry out the provisions of the Act, it said.

Electricity is a concurrent subject, with specified powers and jurisdiction for the Centre and states.

The CERC letter said, “a subordinate law-making body is bound by the terms of its delegated or derived authority and the court of law as a general rule, will not give effect to the rules unless satisfied that all conditions precedent to the validity of the rules have been fulfilled.”

S Suresh Kumar, West Bengal’s additional chief secretary, power, said the Centre, instead of framing rules, could issue directives to the forum of regulators to come up with a model regulation if it wanted to achieve uniformity in standards of regulation.

An official in the West Bengal regulatory commission said while the CERC’s letter nullifies the draft rules, the state power department has been vocal on the issue of late payment surcharge since it has overridden the state regulator’s regulation, which has fixed the late payment surcharge at the rate of 1.25% per month beyond 60 days from the billing date. The surcharge is payable on the payment of outstanding amount.

AS per the draft rules, the Centre will fix the late payment surcharge rates by notification in the absence of SBI’s lending rate for one year plus 500 points, which is also termed as the marginal cost of funds. Late payment surcharge shall increase by 50 basis points on outstanding payment every month after the expiry of the due date in the first month. The maximum bank rate plus 200 basis points will be applicable for such delays.