Ambuja and UltraTech win legal battle against electricity price hikes

Ambuja Cements and UltraTech Cement are among a number of companies who have won a legal battle against electricity distribution entities in Rajasthan over an increase in cross-subsidy surcharges (CSS). According to The Hindu, the electricity distribution companies buy electricity direct from the power producers and pay the CSS, which is then used to supply power to poor and under-privileged customers.

However, as stated in the Electricity Act 2003, the CSS should be “progressively reduced” as it is really a form of tax. Instead, the CSS has been raised for large industrial customers in Rajasthan, increasing from INR0.18 (US$0.002) per unit for 132kV customers, INR0.13 per unit for 33kV customers and INR0.05 per unit for 11kV customers, to INR1.63, INR1.39 and INR0.83, respectively.

A group of customers, including Ambuja and UltraTech, challenged the rise before the Rajasthan Electricity Regulatory Commission not only on the grounds that these charges were supposed to be "progressively reduced" but also that the distribution companies — the Vidyut Vitaran companies of Jaipur, Ajmer and Jodhpur — did not file tariff petitions, which would require them to make a case for the hikes based on their income and expenditure.The commission overruled the challenge and allowed the price increase to go ahead.

However, when brought before the Appellate Tribunal for Electricity (APTEL), the price hike was not approved and deemed to be “unfair, unjust and violative for the procedure and norms prescribed thereof.” The decision by the commission was set aside, however, the APTEL said the commission would be within its jurisdiction to revisit the subject in future, reports The Hindu.