PSEB Engineers Association vs Punjab State Electricity Regulatory Commission & Ors. on 23 September 2026

ORDER

IA-1939/2026 (For impleadment/ intervention)

1. The applicant namely Department of Power, Govt. of Punjab is seeking impleadment as a party to this appeal in which the tariff order

dated 06.03.2026 issued by 1st Respondent – Punjab Electricity Regulatory Commission (in short “the Commission”) in petition No. 70 of 2025 filed by 2nd Respondent – Punjab State Power Corporation Ltd. (in short PSPCL) for true-up of Aggregate Revenue Requirement (ARR) for Financial Year 2024-25, approval of forecast of ARR for 4th MYT control period from Financial Year 2026-27 to Financial Year 2028-29 and determination of Tariff for Financial Year 2026-27. Vide the impugned order, the Commission has, inter alia :- “(i) Approved a Distribution Loss Trajectory of 10.00% for FY 2026-27, 9.95% for FY 2027-28, and 9.90% for FY 2028-29;

(ii) Approved a Net Revenue Requirement of Rs. 48,996 Cr for FY 2026-27;

(iii) Treated loss funding of Rs. 3,581.95 Cr received by PSPCL from the Government of Punjab during FY 2024-25 as Non-Tariff Income under Regulation 27 of the PSERC MYT Regulations, 2022;

(iv) Computed a revenue surplus of Rs. 7,851.91 Cr for FY 2026-27; and

(v) Reduced the Government subsidy obligation to Rs. 15,200 Cr from the projected Rs. 22,250 Cr.”

2. Apart from seeking impleadment in this appeal, the applicant has also sought permission to file reply to the memorandum of appeal and to address all issues having a direct or consequential bearing upon subsidy and Government funding.

3. We have heard Mr. Buddy Ranganadhan, Learned Senior Counsel and Mr. Vivek Jain, Additional Advocate General appearing on behalf of the applicant and Mr. Sitesh Mukherjee, Learned Senior Counsel appearing on behalf of the Appellant. Written submissions filed on behalf of the parties have also been perused.

4. According to Learned Senior Counsel for the applicant, the contents of paragraphs I, J & K at page 14 and paragraphs U & V at page 18 of the memorandum of appeal have given rise to a genuine cause and occasion for the applicant to seek impleadment in this appeal. For the sake of convenience, we extract these paragraphs of the memorandum of appeal hereunder :- “I. BECAUSE the State Commission has, in para 2.31 of the Impugned Order, treated the loss funding of Rs. 3,581.95 Cr received by PSPCL from the Government of Punjab during FY 2024-25 as Non-Tariff Income under Regulation 27 of the PSERC MYT Regulations, 2022. This is erroneous. J. BECAUSE the State Commission failed to consider that PSPCL itself had expressly submitted in the original ARR petition

(para 2.24.3, page 54) that the said amount has NOT been treated as Non-Tariff Income stating "It is pertinent to mention here that during FY 2024-25, PSPCL, has received grant in the form of loss funding from the government of Punjab to the tune of Rs. 3582 Cr. The same has however not been treated as part of non-tariff income in accordance with earlier approach towards similar loss funding under UDAY scheme, which was also followed by the Hon'ble Commission". However, in complete volta face, in the revised submissions, para 8, page 4, PSPCL submitted, "Further, in continuation of this office memo No. 826/Arr/DY.CAO/271/Deficiencies dated 17.12.2026, it is submitted that during FY 2024-25, PSPCL received loss funding amounting to Rs. 3581.95 Reform the Government of Punjab. The said funding was extended as a prerequisite for enabling the Government of Punjab to avail additional borrowing equivalent to 0.5% of GSDP from Government of India. The accounting treatment & presentation of the aforesaid grant in the financial statements of the companies have been carried out in accordance with applicable Ind AS and schedule III of companies Act 2013. However, the treatment of the same in tariff petition may be considered in accordance with Regulation 27 of PSERC MYT Regulations, 2022."

K. BECAUSE the State Commission failed to appreciate that the Government of Punjab extended this funding as a prerequisite for availing additional borrowing equivalent to 0.5% of GSDP from the Government of India, It is a capital grant for operational rehabilitation, not operational income. The purpose of loss funding is to compensate PSPCL for accumulated losses and to improve its financial position. Treating it as Non-Tariff Income would negate this purpose entirely and PSPCL would effectively be paying back through a reduced ARR what was given to it as a financial support……………………………………………………… ………………………………………………………………………….. U. BECAUSE the facts on record make it abundantly clear that the impugned Order was passed in undue haste to enable the Government of Punjab to present its State Budget before the Punjab Legislative Assembly on 08.03.2026, with the reduced tariff and substantially reduced Government subsidy obligation incorporated therein. V. BECAUSE FY 2026-27 is an election year for the Punjab State Legislative Assembly. It is a pattern evident from year-wise data that in election years, the State has consistently resorted to reduction or nil increase in tariff, followed by tariff shock for consumers in subsequent years. The Impugned Order follows this

very pattern and is being passed not in the consumer interest or in the interest of the financially sustainable functioning of PSPCL, but in the political interest of the ruling party, thereby defeating the very purpose of independent economic regulation under the Electricity Act, 2003.”

5. It is submitted by the Learned Senior Counsel that the contents of paragraphs U & V are direct imputations against the State Government of Punjab and the Government has a natural right to respond to the same. He would further submit that the contents of paragraphs I, J & K deal with the nature of grant given by the Government and, therefore, it can hardly be said that the Govt. is not a necessary party to the appeal as the nature of grant given by it, is the core and central issue.

6. The Learned Senior Counsel further argued that the State Government is necessary party to this appeal and has a right to be heard as :- (a) The tariff order is binding on the State Government (see judgement dated 26.05.2026 of this Tribunal in Appeal Nos. 4 of 2005 and batch SIEL vs. PSERC) and hence, the State Govt. has right to be heard before it is passed as well as in the appeal against it; (b) Apart from being itself a consumer as its offices also pay electricity tariff and thus entitled to be heard in a tariff appeal,

the State Government is the “Parens Patraie” of the consumers in the State and therefore, dutybound to protect their interests;

(c) The State Governments’ bill depends upon the tariff which is determined by the Regulator and/or in the appeal by this Tribunal, it has a right to be heard before such determination; and

(d) State budget for Financial Year 2026-27 has been laid before the Punjab Legislative Assembly on the determined figure of subsidy and a mid-year alteration of the tariff would require supplementary provision, thereby disturbing commitments already made across the budget and would unsettle the fiscal stance of the entire state.

7. Reliance is placed upon the judgment of the Hon’ble Supreme Court in A.P. Transco Vs. Sai Renewable Power (P) Ltd. (2011) 11 SCC 34 wherein the apex court wondered why this Tribunal did not implead the State as a party to the appeal proceedings when the Tribunal, in its judgement, had referred to various acts & deeds of the State as well as the consequences thereof.

8. On these submissions, the Learned Senior Counsel Mr. Buddy Ranganadhan urged us to implead the applicant as a respondent to this

appeal and to permit it to file its response and to address arguments on the above noted issues raised in the appeal.

9. The application is vehemently resisted on behalf of the Appellant. Mr. Mukherjee, Learned Senior Counsel for the Appellant argued that the applicant i.e. State of Punjab is neither a proper nor a necessary party to this appeal as neither has any relief been sought against it nor is any of its order/decision/policy under challenge. He would submit that upon enactment of Electricity Act, 2003, the power to fix tariff is vested with the State Electricity Regulatory Commissions and the State Governments have no role in that exercise. Referring to Section 108 of the Electricity Act, he submitted that the State Govt. has not been given any say in the tariff fixation even while exercising power under this provision of the statute. He argued that no provision in the Electricity Act confers jurisdiction upon this Tribunal either to pass orders for or against the State Government and this Tribunal does not exercise any jurisdiction over the State Government. On this aspect, he cited the judgement of this Tribunal dated 17.01.2025 in Execution Petition No. 12/2023 titled Ratnagiri Gas and Power Pvt. Ltd. Vs. Maharashtra State Electricity Distribution Co. Ltd.

10. According to the Learned Senior Counsel, the judgement in Transmission Co. of Andhra Pradesh (supra) and SIEL Ltd. (supra) has been rendered in altogether distinct factual aspects of that case and is not applicable to the instant case.

11. Thus, on these submissions, the dismissal of the application is sought.

12. We may note that the proceedings in a tariff petition before the Commission are of inquisitorial in nature and not adversarial, as there is no respondent or opposite party in the petition. By way of such a petition, a generator or a distribution licensee or a transmission licensee, as the case may be, seeks approval of its ARR and determination of tariff for the power generated and/or supplied or transmitted by using the assets of the entity. The usual course adopted by the regulatory commissions for such petition is to issue a public notice in the newspapers having circulation in the concerned State inviting objections/comments from the stakeholders as well as the general public. The Commission also holds public hearings on such objections/comments received from the general public and the stakeholders. Thereafter, upon analyzing the contentions of the petitioner and upon considering the objections/comments of the general public and stakeholders, the tariff order is passed by the Commission.

13. In the instant case also, the Commission has followed the said course before issuing the impugned tariff order, which is evident from a bare reading of the order particularly paragraph Nos. 1.4, 1.5, 1.7 and 1.9. Perusal of the order reveals that the State Govt. of Punjab did not submit any objections or comments in response to the public notice issued on the petition of 2nd Respondent. Accordingly, the Commission addressed two

D.O. letters dated 08.01.2026 and 23.01.2026 to the State Government seeking its views on the petition but these did not evoke any response from the Govt. Ultimately, the Commission was constrained to issue another D.O. letter dated 08.02.2026 to the State Govt. with the request to convey its decision in respect of subsidies in various categories of the consumers for Financial Year 2026-27, which was then conveyed by the State Govt. vide memo dated 04.03.2026. The contents of the said memo have been taken note of in paragraph 6.4 at page 232 of the impugned tariff order and have been considered for arriving at the amount of subsidy to be released by the State Govt. to the 2nd Respondent – PSPCL.

14. We have already extracted the paragraph Nos. I, J, K, U & V of the memorandum of appeal hereinabove, which according to the applicant relate to it and need its response. The paragraphs I, J & K relate the treatment to the funding received by 2nd Respondent – PSPCL from the State Govt. The Commission, in the impugned order, had permitted the PSPCL to treat the loss funding by the State Government as non-tariff income, which, according to the Appellant is erroneous and contrary to the purpose of loss funding. The contents of the paragraphs U and V are in the nature of direct allegations against the State Govt.

15. Undisputedly, there is no provision in the Electricity Act that confers jurisdiction upon this Tribunal to pass orders either in favour of or against a State Government, as rightly observed in Ratnagiri Case (supra). This

Tribunal does not exercise any jurisdiction over the State Government. The power to examine the orders passed by the State Regulatory Commissions has been conferred upon this Tribunal under Section 111 of the Electricity Act, 2003, which is quoted hereunder :- “Section 111. (Appeal to Appellate Tribunal): --- (1) Any person aggrieved by an order made by an adjudicating officer under this Act (except under section 127) or an order made by the Appropriate Commission under this Act may prefer an appeal to the Appellate Tribunal for Electricity:

Provided that any person appealing against the order of the adjudicating officer levying any penalty shall, while filing the appeal , deposit the amount of such penalty:

Provided further that wherein any particular case, the Appellate Tribunal is of the opinion that the deposit of such penalty would cause undue hardship to such person, it may dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the realisation of penalty.

(2) Every appeal under sub-section (1) shall be filed within a period of forty- five days from the date on which a copy of the order made by the adjudicating officer or the Appropriate Commission is received by the aggrieved person and it shall be in such form, verified in such manner and be accompanied by such fee as may be prescribed:

Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period.

(3) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order

appealed against.

(4) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned adjudicating officer or the Appropriate Commission, as the case may be.

(5) The appeal filed before the Appellate Tribunal under sub-section (1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within one hundred and eighty days from the date of receipt of the appeal:

Provided that where any appeal could not be disposed of within the said period of one hundred and eighty days, the Appellate Tribunal shall record its reasons in writing for not disposing of the appeal within the said period.

(6) The Appellate Tribunal may, for the purpose of examining the legality, propriety or correctness of any order made by the adjudicating officer or the Appropriate Commission under this Act, as the case may be, in relation to any proceeding, on its own motion or otherwise, call for the records of such proceedings and make such order in the case as it thinks fit.

16. Perusal of this statutory provision reveals that any person, who feels aggrieved by any order passed by a State Electricity Regulatory Commission, can file an appeal against that order in this Tribunal. Thus the party aggrieved would be the Appellant and the party in whose favour the order has been passed would be the respondent other than the Commission itself, to resist the appeal.

17. The order impugned in this appeal is the tariff order passed by the Commission in the tariff petition filed by the 2nd Respondent – PSPCL.

18. However, there might arise situations where some explanation/comments are sought from the State Government by the Regulatory Commission before passing the tariff order or some observations are made regarding any action of the State Government in the tariff order, which are subsequently highlighted in the appeal before this Tribunal against the tariff order and made a ground to assail the order. In such an appeal, this Tribunal would be constrained to analyze the actions of the State Govt. and consider the stand taken by the State Govt. before the Commission. Therefore, in those circumstances, it would not be appropriate for this Tribunal to comment adversely upon the actions of the State Govt. or the stand it had taken before the Commission on any issue, without affording an opportunity of hearing to the State Govt.

19. Even though the facts of the case before the Hon’ble Supreme Court in A.P. Transco Case (supra) may not be identical to the facts of this case yet the dictum of that case that this Tribunal could not have referred to the acts and deeds of the State as well as consequences thereof without impleading the State as a party to the appeal, is squarely applicable to the instant case.

20. In the instant appeal, one of the grounds of challenge to the impugned order of the Commission is the treatment given to the loss funding of the Govt. based upon the comments of the State Govt. The

Appellant had also commented adversely upon the acts of the State Govt. in paragraphs U & V of the memorandum of appeal.

21. Considering the fact that the findings of the Commission in the impugned order with regards to the treatment to the loss funding of the State Govt. are based upon the contents of memo dated 04.03.2026 of the State Govt. and also taking note of the statements concerning the State Govt. in paragraphs U & V of the memorandum of appeal, we are of the considered opinion that the State Govt. must be afforded opportunity to file its response limited to these five paragraphs in the memorandum of appeal which would assist us in arriving at a just decision on the aspect of nature and treatment of loss fundings/subsidy granted by it. Taking a contrary view would be against the settled principles of justice, equity and fairplay.

22. Hence, we allow the application and implead the Department of Power, State Govt. of Punjab as Respondent No. 4 in this appeal. However, we make it clear that the State Govt. has been impleaded for the limited purpose of responding to contents of paragraph No. I, J, K, U & V in the memorandum of appeal and hence, its reply as well as the submissions shall be confined to the averments contained in these five paragraphs in the impugned order. Appeal No. 196 of 2026

23. The Appellant shall file amended memo of parties within one week from today.

24. The Department of Power, Govt. of Punjab shall file its reply within two weeks from today to which the Appellant shall file rejoinder within one week thereafter. I.A. Nos. 732 & 1819 of 2026

25. List for hearing on 21.10.2026. Pronounced in the open court on this 23rd day of September, 2026.

Virender Bhat Judicial Member

Seema Gupta Officiating Chairperson

✓ REPORTABLE / NON REPORTABLE js