Separate Electricity tariff for Commercial and Industrial Use

Wockhardt Limited vs Maharashtra Electricity Regulatory Commission and Maharashtra State Electricity Distribution Company in Appeal No. 169 of 2012 and IA No. 288 of 2012.

Before: The Appellate Tribunal of Electricity

The Appellate Tribunal for Electricity on Thursday (21st February 2013) dismissed the appeal petition filed by Wockhardt Limited challenging the order of Maharashtra electricity regulatory commission. The Maharashtra Electricity Commission had passed an order that industrial tariff shall be applicable to those Research and development (R&D) units that are situated at the premises of the manufacturing units of the appellants and are taking supply from the same point of supply (manufacturing unit) and commercial tariff shall be applicable to those R&D units that not situated at the premises of the units and are independent or standalone R&D centres. This order was passed on the petition of Maharashtra State Electricity Distribution Company and is being challenged in the above mentioned petition by the Appellants.

The Appellants contended that the R&D units are exclusively dedicated to the manufacturing units and are ancillary to these units and hence cannot be classified differently for the tariff purposes. The appellants submitted that the character of the R&D centre and the purpose for which electricity is required does not change with its location or from the fact that supply is taken from different point of supply and the purpose of taking electricity still remains the same that is for research and development. The appellants also contended that the grouping of R&D centre with other units like multiplexes etc. for the imposition of commercial tariff is not a reasonable classification and has no nexus to the purpose for which electricity is used and is contrary to the electricity Act.

The Respondents on the other submitted that industrial tariff were applicable to all those activities that entail manufacture and this classification did not violate Article 14. The respondents submitted that classification of R&D units under the industrial and commercial tariff was only in respect to those R&D units and other ancillary services that were situated within the industrial premises where there were no separate meters and were drawing electricity supply from same point as the main industrial unit was drawing electricity supply from. The respondents submitted further that the metre shall only record the consumption of the consumer and in case of common point of supply to the manufacturing unit and the ancillary services, the meter shall record the majority consumption of the manufacturing unit as the industrial activity is predominant.

The Appellant tribunal after analysing the order and the tariff schedule observed that electricity supply to the industry is primarily for the industrial purposes and the ancillary services situated at the premises of the industry are intended for the smooth functioning of the industry and hence the consumption is to be included within the total consumption of the industry and billed under industrial tariff. The appellant Tribunal for electricity further observed that the dispensation for the application of industrial tariff has been done in view  of the practical difficulties faced in the segregation of the consumption in premises and hence the electricity consumption of the R&D centre situated in the premises of the company and receiving supply from the same point of supply has to be at the same tariff as applicable to the principle use of the electricity for which the connection has been obtained. The appellate tribunal observed further that this R&D unit should be treated as ancillary service of the industry and should be treated differently from the independent R&D unit getting supply from separate point of supply.

The appellant tribunal further observed that R&D unit situated in the premises and receiving supply from same point and R&D unit getting supply from different point of supply are two different set of consumers having distinct purpose of supply. The tribunal observed that manufacture is the main purpose in industrial connection and the purpose for supply is different when R&D centre is located outside the industry.

The tribunal observed that the state commission order clearly stipulated that consumption of electricity in purely commercial activities like recreational clubs shall be classified as commercial category and billed under commercial tariff if they on standalone basis and shall be billed as per tariff applicable to the industrial activity if these activities are carried out within the premises of the industry and are getting supply from the same supply connection to the industry.

The tribunal observed that R& D centre situated within the premises of the industry shall be integral part of the industry. The tribunal held that State commission is perfectly justified in placing R&D centre situated outside the premises of the industry under the commercial category.

The tribunal observed that separate connection and metering arrangement is required to be made in case consumption of the ancillary activities is to be charged under the commercial tariff and this being a cumbersome and impractical arrangement, the State commission had allowed the consumption of the ancillary commercial activities to be included in the consumption of the main activity for which connection has been given that is industrial.

The tribunal thus held that the state commission is justified in placing the R&D centre situated outside the premises of industry under commercial tariff category as it is carried out for commercial purpose and held that there is infirmity in the order classifying R&D Centre situated in the premises of the industry and drawing supply from same point of supply differently from the R&D centre situated outside the industry and drawing supply from different point of supply.