KERALA STATE ELECTRICITY BOARD Vs. KERALA STATE ELECTRICITY

JUDGEMENT

(1.) BEING aggrieved by the order dated 14th May,2010 passed by the Kerala State Electricity Regulatory Commission , the sole respondent herein whereby it decided upon the true up petition of the appellant for the FY 2006 -07 the appellant, the Kerala State Electricity Board preferred this appeal on the grounds that the total claims of the appellant on the following points have not been admitted, namely : a)Revenue Gap,, b)Return on Equity, c)Depreciation, d)Interest and finance charges, e)Provision for bad and doubtful debts, f)Other debits, g)Employees Cost,h)Administration& General Expenses with Electricity Duty, i)Transmission and Distribution loss Levels, j)Assumption of revenue from Tariff.

(2.) ACCORDING to the appellant, as per section 181(2) (zd) of the Electricity Act,2003 the State Commission is required to notify the 'Terms and Conditions of Tariff 'under section 61 of the Act which should form the basis for filing the ARR application and an application for truing up of the accounts, and the State Commission is yet to notify any Regulations under the said section 61 of the Act and within the framework of the National Tariff Policy notified by the Central Government on 6th of January,2006.In the absence of any Regulations for preparing the 2 regulatory accounts and for truing up process and revenue requirements the appellant has been following the Electricity (Supply)Annual Accounting Rules,1985 which the State Commission has not been following and instead has been adopting different approach and thereby disallowing many valid expenses.

(3.) BEFORE the enactment of the Act,2003 the appellant has been claiming 3% return on equity on the net fixed assets. This continued till the year 2004 -05., but the State Government has not been extending any subsidy to the appellant who in the circumstance had to find out adequate internal resources to meet its capital investments. The appellant thus claimed 14% return on Government equity of Rs.1553.00 crore as per the Government Order dated 14.9.1998.The State Commission changed its earlier stand and purportedly relied upon the remark of the Comptroller and Auditor General to the effect that the Government of Kerala has not followed the procedural formality of conversion on equity and it has been deemed that the State Government has no equity in the appellant. Further, during the period from 2003 -04 to 2008 -09 the appellant has made additional capital investment of Rs. 3346.06 crore through internal resources. The Board during these years availed itself of loan of Rs.3113.66 crore. The internal resources used for funding of capital assets are required to be considered as equity contribution . 3