OERC whip on Vedanta
Bhubaneswar : 14/October/2012
The Vedanta Aluminium Ltd (VAL) was found illegally sourcing power from Group Company, Sterlite Energy Limited (SEL) causing losses to the tune of Rs 15crores to the Reliance Infra-owned licensed distribution company WESCO in Odisha.
Holding the activities of VAL as “illegal”, the Odisha Electricity Regulatory Commission (OERC) has directed the Vedanta to cough up the amount due to the DISCOM.
Importantly, the Commission, while disposing off the case, has defined the terms “Open Access’ and “deemed licensee” in a Special Economic Zone (SEZ) which will have far reaching ramifications.
The Vedanta Aluminium Limited (VAL) aluminum manufacturing unit at Jharsuguda in Odisha which has been notified as a SEZ was sourcing power directly form Group company SEL, Independent Power Plant (IPP) located adjacent to the SEZ through a dedicated 400 KV double circuit transmission line.
Claiming that the VAL-SEZ’s sourcing power from SEL-IPP amounts to Open Access drawl of power, the WESCO, which is the sole licensee for power distribution in the area, demanded cross subsidy surcharge on the quantum of power availed by VAL-SEZ.
The Odisha Power Transmission Corporation Limited (OPTCL), the sole licensee for transmission business, also raised objection to the SEL-IPP’s “illegal” laying of 400 KV line in their areas of operation. GRIDCO, the sole bulk power supplier, and the SLDC also become party to the case protesting against these activities of Vedanta.
Interestingly, when the OERC construed that the VAL-SEZ’s sourcing of power is Open Access drawl of power and directed the Vedanta to pay the cross-subsidy surcharge to WESCO, Vedanta came before the Commission with two applications seeking approval for PPA between VAL-SEZ and SEL-IPP, and license for VAL –SEZ to carryout distribution business inside the SEZ area.
Vedanta claimed that the SEZ notification has given the promoter the status of deemed licensee. “So, according distribution licensee by the OERC is only a formality.”
It claimed that there is no illegality in VAL-SEZ directly sourcing power from SEL-IPP and it does not amount to Open Access drawl of power. Ridiculously, Vedanta put forth that the individual units of the aluminium plant such as pot lines, carbon plant, cast house etc. are individual consumers of power.
The three-member Commission, comprising Chairman SP Nanda, members B K Mishra and S.P.Swain, rejected the applications of Vedanta and directed the company to pay the cross subsidy surcharge to the WESCO.
“Consequent upon the rejection of this application the applicant is be treated asconsumer of WESCO, the existing DISCOM of the area. As a result M/s. VAL-SEZhas to pay cross-subsidy surcharge to WESCO for Open Access drawl of power from M/s. SEL”, observed the OERC.
“It has been stated earlier that much before the application for PPA with M/s. SEL and the present application for grant of distribution license were filed, the applicant has been enjoying power in an illegal and unauthorized manner from M/s. SEL through a 400 KV double circuit transmission line.”
Stating that the present application for grant of distribution license is a ploy by which the consumer wants to escape from payment of open access charges, the Commission has observed that this is a matter where the substance should prevail over form – the applicant cannot take shelter under a web of technicalities to subvert the purpose of the Act.
“This is not a genuine application for taking a distribution license for giving supply of electricity to genuine consumers in a particular area to increase competition and efficiency. This is an attempt to avoid payment of open access charges for unauthorized drawl of power from M/s. SEL for a number of years”, remarked the Commission
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