Tamil Nadu’s bid to raise electricity tariffs has hit a roadblock and the problem is entirely of its making. The Tamil Nadu Spinning Mills Association (TASMA), an association of 800 spinning mills in Tamil Nadu, has objected to the move on legal grounds.
The association has petitioned the High Court of Madras (Madurai bench) on the issue of the Tamil Nadu Energy Regulatory Commission (TNERC) accepting the increase in tariffs by the Tamil Nadu Generation and Distribution Corporation (TANGEDCO).
TASMA has raised objections on three grounds. First, the commission today has no Member-Legal. The Supreme Court of India, in another case related to the Central Electricity Regulatory Commission (CERC) had stayed the operations of the Commission for about six months, until the Commission had a Member-Legal. TASMA has argued that the same principle applies to the State electricity regulatory commissions too. In TNERC, the Member-Legal, K Venkatasamy, retired in May and the government is yet to appoint another person in his place. TASMA has said that a Member-Legal “is most essential for the Commission to function effectively.”
TASMA’s second objection is that the Commission has no quorum. The Commission, it said, had “lost its quorum” because when Venkatasamy resigned, it was left with just one member—the Chairman. Incidentally, the Chairman is an ex-TANGEDCO officer.
Third, TASMA said the Commission has not given sufficient time for stakeholders to study TANGECDO’s financial reports, because for five years, the utility never filed its Annual Revenue Requirement (ARR) and a true-up statement, showing its expenses, as mandated by law. The Association has pointed out that when TANGEDCO raised tariffs last time, in 2017, the Commission took six months to approve it. However, this time around, the Commission is “showing absolute hurriedness in rushing to release the Tariff Orders, without minding the factual position that all the stakeholders are responsible to review the entire accounts of almost five years.”
Investors and other people concerned to speculate on the matter before accepting the petition for the tariff increase. This is because TANGEDCO has put out data on the operations of the past five years and TNERC rushed to approval without providing adequate time to go through the data. The last time when there was an increase in tariff, TNERC took almost eight months to complete the approval process. This time the TNERC has been suspiciously in a hurry.
This begs a question. Why has the Tamil Nadu government not filled the vacant posts? If the date of retirement of a person is known, should it not have proactively selected the successor? Oftentimes we have seen governments deliberately keeping posts vacant until the person it wants to be appointed becomes free to take up the job. Such inappropriate practices, called ‘regulatory capture’ are common in corrupt systems and frequently lead to such litigation.
The tariff structure is highly irrational: free power for agriculture; 100 units free for all; tariff for industry exhorbitant; even for small and tiny industries it is close to Rs 10 per kwh. The TNREC seems powerless to revise tariffs to meet the costs. And Tangedco’s debt is already in excess of Rs 100,000 crore, still balloooning!
