NEW DELHI: In an order passed in favour of
state discoms
, the
Appellate Tribunal for Electricity
(APTEL) has ruled that
Indian Railways
is liable to pay
cross subsidy charges
for the power it procures to operate trains. Multiple discoms had argued that railways is not a
deemed distribution licensee
and is a mere electricity consumer. The order will have an additional burden for its
electricity consumption
.
The APTEL bench, in its order passed on Monday, said, “...as railways does not supply electricity to consumers, (i.e. it does not sell electricity to unrelated third parties for a price), it needs no reiteration that the test of being a ‘distribution licensee’ under Section 2(17) of the Electricity Act, as also the requirement of distributing electricity, is not fulfilled by the railways.”
Railway ministry sources said they are studying the order passed by the tribunal to assess the additional expenditure it would incur because of the verdict. “It may be incremental. But the exact amount would be known after proper assessment,” an official said.
As per the Budget Estimate of 2024-25, the railways would spend Rs 25,044 crore for electricity consumption for both traction and other other requirements. For the current financial year, this expenditure is pegged at Rs 22,000 crore as per the revised estimate.
The crux of the dispute was whether Indian Railways is a deemed distribution licensee under the third proviso of Section-14 of the Electricity Act and, if so, whether it is still required to pay additional/cross-subsidy surcharge to different distribution licensees under the law, if it chooses to procure electricity from sources other than the concerned distribution licensees within whose area of supply it is situated.
Railways had argued before the tribunal that if they directly purchase power from gencos (generating companies) as a deemed distribution licensee, it would be able to reduce its financial burden. They are otherwise required to pay additional/cross-subsidy surcharge to distribution licensees in different states.
The tribunal held that railways is not a deemed distribution licensee under the Electricity Act as it does not distribute/supply electricity as required of a distribution licensee under the law; and, even otherwise, as the entire electricity which it receives from the grid is completely consumed by it and its constituents, it is required to pay additional/cross-subsidy surcharge to different distribution licenses under the law, if it chooses to procure electricity from sources other than the concerned distribution licensees within whose area of supply it is situated.
The discoms had based their appeal on two issues. First, Indian Railways is merely a consumer of electricity, and not a deemed distribution licensee; and second, even if it is presumed to be so, it is nonetheless required to pay additional/cross-subsidy surcharge to the concerned distribution licensees on availing open access and procuring electricity directly from generators and others.
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