Power distribution firms can't charge compensatory tariff: SC

The Supreme Court today said that power distribution firms like Adani Power Ltd and Tata Power Ltd cannot charge “compensatory tariff” from consumers and set aside the appellate tribunal’s judgement in this regard. Tata Power’s wholly owned subsidiary Coastal Gujarat Power Ltd and Adani Power had originally moved the Central Electricity Regulatory Commission (CERC) seeking higher tariff on the grounds that their input costs had gone up due to rupee devaluation and higher costs of coal imported from Indonesia, owing to a regulation passed by the Southeast Asian



nation.

The apex court did not agree with the contentions of these firms which referred to the findings of the Appellate Tribunal for Electricity that rise in coal price consequent to change in the Indonesian law was a factor that entitled them to claim compensatory tariff.

While setting aside the appellate tribunal’s judgement as well as the CERC’s order, a bench of Justices P C Ghose and R F Nariman said that an unexpected rise in coal price would not absolve the firms from adhering to the contract as they had knowingly taken the risk while submitting their bids.