In what could help the Indian Railways (IR) to cut its power costs, the Central Electricity Regulatory Commission (CERC) on Friday passed an order making it clear that the transporter is a deemed licencee. The tag would lead to a waiver of cross-subsidy surcharge for open access.
Although Section 14 of the Electricity Act spoke of the deemed licensee status to IR and all metro rail corporations, there existed a lack of clarity, enabling the state governments to contest the IR’s claim for the status. The CERC’s order comes at a time when the government is proposing amendments to the Electricity Act, to make the provision of deemed licensee explicit.
Many state governments, including Maharashtra and West Bengal, had joined hands to oppose a move to accord deemed licencee status to IR, fearing revenue loss if the transporter is exempted from the cross-subsidy surcharge.
The railways had sought the status from the CERC, circumventing the state electricity regulators.
The deemed licencee title would stand IR in good stead in its planned shift to the competitive bidding route for power purchases, necessary for reducing its staggering energy bill of over Rs 12,000 crore a year. The states had argued that the CERC had no jurisdiction in this regard; the CERC is only the first among equals in the comity of electricity regulators in the country and can’t issue any writ to state regulators, although it has the additional responsibilities of managing the grid and facilitating open access in interstate transmission, among other things.
“This is good news for the national transporter; not only does it clear all doubt about our deemed licencee status, but it will also help us save a huge amount of money, as we wont have to pay cross-subsidy surcharge.” a senior official at the Railway Energy Management Company said. “Our agreement with Ratnagiri Gas and Power to procure 500 MW of power will also face no problems due to this decision,” he added.
Sources say that the state governments may challenge the order passed by CERC and may file a petition in this regard at Appellate Tribunal For Electricity