Damodar Valley Corporation vs West Bengal Electricity Regulatory Commission & Anr on 27 April 2026

J U D G M E N T

PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER

1. Two separate but identical tariff orders dated 01.03.2019 passed by 1st respondent West Bengal Electricity Regulatory Commission (hereinafter referred to as the Commission) for the years 2014-15 and 2015-16 in respect of the appellant Damodar Valley Corporation (DVC) have been assailed in these two appeals. Vide the said impugned orders, the Commission has held that sale of power by DVC to West Bengal State Electricity Distribution

Company Limited (in short WBSEDCL) and India Power Company Limited (in short IPCL), which have been impleaded as respondent no.2 in these appeals, cannot be treated as sale of power by a generating company to a consumer. It has further been held that the retail tariff determined by the Commission on the basis of tariff petitions filed by DVC for the years 2014- 15, 2015-16 and 2016-17 was not determined for the licensees including WBSEDCL and IPCL and that tariff cannot be charged upon them.

Background of the case:

2. The appellant DVC was established under Damodar Valley Corporation Act, 1948 with a mandate for unified development of Damodar Valley region. Under this Act, DVC functioned as a vertically integrated unit with the powers to fix its own tariff under section 20 of the same. During this period DVC entered into bilateral agreements with WBSEDCL and IPCL to supply power to them at various offtake points. These agreements were executed in the pre-2003 Electricity Act era where DVC exercised monopoly in supply of electricity and was a regulator unto itself.

3. The enactment of the Electricity Act, 2003 on 10.06.2003 brought about a paradigm shift as it unbundled the sector, established independent regulatory Commissions and mandated that the tariffs shall be determined by these Commissions only. In view of fourth proviso attached to section 14

of the Act, DVC was designated as a deemed licensee but was explicitly subjected to the provisions of 2003 Act except where these were in conflict with the DVC Act. Accordingy, the 2003 Act started governing generation, transmission and distribution of electricity.

4. Despite such paradigm shift, the parties continued to follow the earlier practice whereby WBSEDCL and IPCL were supplied power on consumer tariff via radial mode. This continued till the year 2015. The dispute between the parties crystalized when the Commission, in its tariff orders dated 04.03.2015 and 25.05.2015 issued for WBSEDCL and IPCL respectively, began rigorously applying the principles of 2003 Act. Vide these tariff orders, the Commission determined retail tariff for the consumers of DVC in West Bengal and simultaneously it also determined the power purchase cost for WBSEDCL for procuring power from DVC. Dispute arose because DVC continued to bill WBSEDCL and IPCL at the higher retail tariff whereas these two entities, relying on the approval of power purchase cost by the Commission, calculated their liability at the bulk supply rate.

5. In this backdrop, both WBSEDCL and IPCL approached the Commission with two separate petitions on 11.07.2018 and 25.04.2018 numbered OA No.273/18-19 and OA No.272/18-19 respectively praying for a direction to DVC not to impose retail tariff determined for the consumers of DVC in tariff order dated 25.05.2015 on the bulk sale of power to WBSEDCL

and IPCL as a licensee in respect of different offtake points. Another prayer was made to order DVC to revise the sale bills for radial offtake points with effect from June, 2015 as per the power purchase price approved by the Commission vide order dated 28.09.2015 (in case of WBSEDCL) and dated 21.07.2016 (in case of IPCL) or any other power purchase rate determined by the Commission for such drawl of power through retail offtake points.

6. These two petitions have been disposed of by the Commission vide the two identical but separate orders dated 01.03.2019 which have been impugned in these two appeals.

7. The contention of the appellant is that impugned orders are vitiated by error of law and jurisdiction in as much as the Commission has proceeded on legally unsustainable assumptions and has given contradictory findings. It is pointed out that: -

(a) The Commission has incorrectly held that the retail tariff determined for DVC was not determined for the licensees including WBSEDCL and IPCL despite the fact that tariff petitions filed by DVC for the Financial Years 2009-14 and 2014-17 expressly included sales to WBSEDCL in radial/consumer mode and the Commission consciously determined retail tariff on that basis without any objection from WBSEDCL;

(b) the finding that radial mode supply cannot be considered as sale by a generating company to a consumer is inconsistent as DVC never claimed such supply to be under Section 62(1)(a) rather, DVC placed it correctly under Section 62(1)(d) as a retail/consumer supply;

(c) the Commission has wrongfully refused to adjudicate the tariff applicable to an admitted quantum of supply and has, by relegating the parties to settle the matter mutually, abdicated its statutory function under Section 86(1)(b) of the Act; (d) the impugned orders disregarded Commission’s own prior findings in the tariff proceedings initiated in the tariff proceedings in respect of WBSDCL and IPCL where it expressly treated DVC’s radial supply as a component of power purchase cost of these two entities thereby accepting radial supply as a legitimate and regulated category.

8. It is, further contended that WBSEDCL and IPCL had been paying consumer/retail tariff for radial supply for more than two decades i.e. from 1993 to 2015 by WBSEDCL and from 1995 to 2015 by IPCL without any objection, and therefore, their contention in these appeals that retail tariff was never applicable to them and that radial mode supply is outside the tariff jurisdiction of the Commission is wholly inconsistent with their past conduct and previous pleadings filed before the Commission.

9. The appellant also contends that the Electricity Act, 2003 does not place any embargo on a distribution licensee supplying electricity to another distribution licensee and in this regard, reliance is placed upon the definition of the term "supply" in section 2(70) of the Act. It is contended that since for the quantum of power which is being supplied by DVC to WBSEDCL and IPCL in radial mode, there is no specific source of supply (as the power is being supplied through DVC’s pooled base) and there being no scheduling/ discharge mechanism for supply of such power, the tariff payable is the retail tariff determined by the Commission for DVC which is applicable to other consumers of same voltage category. It is contended that the determinative factor is the character of transaction at the point of supply which was applied by Central Electricity Regulatory Commission (in short CERC) in the order dated 30.09.2013 passed in SAIL v. DVC wherein it has been held that SAIL-BSL cannot be considered as a beneficiary of the distribution company in so far as determination of generation tariff of DVC is concerned even though it is a distribution licensee in the State of Jharkhand. It is, thus, sought to be agitated that supply of electricity by one distribution licensee to another distribution licensee at same rate separately fixed by the State Commission is not alien to the Electricity Act, 2003 as DVC has been historically supplying power to SAIL-BSL and JVVNL through radial mode of supply at consumer rate fixed by Jharkhand Electricity Regulatory Commission, even though, both these entities are distribution licensees.

10. The appellant further contends that the impugned orders have left it without any lawful mechanism to recover the under recovered tariff from WBSEDCL and IPCL.

11. We have heard learned counsel for the appellant DVC, learned counsels appearing for the WBSEDCL and IPCL as well as the learned counsel appearing for the Commission.

12. Following two issues arise for our consideration in these appeals:

(i) weather statutory distribution licensee (i.e. WBSEDCL and IPCL) can be classified as a "consumer" under section 2 (15) of the Electricity Act, 2003 solely based on the technical mode of supply of power to them by DVC, that is radial mode?

(ii) Whether the "retail tariff" determined specifically for end consumers can be applied to distribution licensees?

13. Section 2(15) of the Electricity Act, 2003 defines the term "consumer" as :- “"consumer" means any person who is supplied with electricity for his own use by a licensee or the Government or by any other person engaged in the business of supplying electricity to the public under this Act or any other law for the

time being in force and includes any person whose premises are for the time being connected for the purpose of receiving electricity with the works of a licensee, the Government or such other person, as the case may be;”

14. Hence, only that person who gets supply of electricity for his own use from a distribution licensee or the government or whose premises is connected with the work of such licensee or the government for that purpose of receiving electricity, qualifies as a consumer under the Act. Such definition of "consumer" clearly indicates that the basic criteria is that such person ought to be supplied electricity for his own use.

15. "Distribution licensee" is defined in section 2 (17) of the Electricity Act to mean a licensee authorised to operate and maintain a distribution system for supplying electricity to the consumers in his area of supply. It is therefore evident that a distribution licensee does not procure supply of power for its own use but for supplying the same to its own consumers.

16. The fundamental distinction, thus, between a "consumer" and "distribution licensee" is that the former obtains supply of electricity for his own use whereas the latter procures electricity for supply to consumers in its area of supply.

17. In this regard we may profitability refer to the following observations of this Tribunal in K. Raheja Corporation Private Limited v. MERC and Anr. (2011) SCC online APTEL 105:-

“21 ……If a consumer upon receipt of electrical energy distributes such energy to different end users according to their need and if such end users are not consumers within the meaning of the Act and they are charged tariff or fee for such consumption of electrical energy with which a distribution licensee is not concerned then the question may arise definitely whether such distribution of power to different end users within a complex in lieu of a tariff or fee charged by a consumer would amount to unauthorized sale of electricity. A consumer receives electricity only “for his own use” and this excludes a situation where a consumer can on receipt of electrical energy sell a part of that energy or the entire energy itself to different people for their respective consumption. It is only for HT VI category consumer, namely, Group Housing Society where perhaps such single point supply is permitted. Thus, a consumer cannot have his own distribution system for distribution of electrical energy in turn to his tenants/occupiers/users etc. The concept of dedicated

distribution facility cannot be invoked in the circumstances of the case. ….A consumer cannot be permitted to maintain a distribution system of his own for distribution to end users which is not authorized by law. When through a single point supply power is traded, we cannot say that such a transaction as is alleged in the instant case would be legal.”

18. Similarly, in a recent judgement in West Bengal State Electricity Distribution Company Limited v. CERC & Ors. 2024 SCC OnLine APTEL 18, this Tribunal has observed as under: - “333. A distribution system, as noted hereinabove, is the system of wires and associated facilities, which is connected at one end to the end point of the transmission line or the generation station connection, and is connected at the other end to the point of connection to the installation of the consumer. A distribution installation, which does not end at the point of connection of the installation of the consumer, would not fall within the definition of a “distribution system” under Section 2(19). The expression “area of supply” is defined in Section

2(3) of the 2003 Act to mean the area within which a distribution licensee is authorized by his license to supply electricity. …..

335. Section 2(17) of the 2003 Act defines “distribution licensee” to mean one who is authorized (including deemed authorization) to – (1) operate and (2) maintain such a distribution system which would supply electricity to the area of supply of such a licensee/distribution licensee, Section 2(15) defines ‘consumer’ to mean any person who is supplied with electricity for his own use by a licensee or the Government or by any other person engaged in the business of supplying electricity to the public under the 2003 Act or any other law for the time being in force, and to include a person whose premises is, for the time being, connected for the purpose of receiving electricity with the works of a licensee, the Government or such other person, as the case may be, and Section 2(49) of the 2003 Act defines a “person” to include any company or body corporate or

association or body of individuals, whether incorporated or not, or an artificial juridical person.

336. A “consumer” under Section 2(15) is one who is supplied electricity for his own use, among others, by the Government. Section 2(70) defines “supply”, in relation to electricity, to mean the sale of electricity to a licensee or consumer. While the recipient of supply of electricity, to fall within the definition of a “consumer” under Section 2(15) should be one who is receiving electricity for his own use, he must also be a person to whom a deemed licensee sells electricity. “Sale” of goods, (which would include ‘electricity’) involves two distinct persons or entities, ie the seller and the buyer, besides payment of consideration (price) for such sale by the buyer to the seller. Railways cannot be both a “distribution licensee” and a “consumer” at the same time, since one cannot sell goods to oneself.”

19. In the above judgement, the Tribunal has clearly held that Railways cannot be both a "distribution licensee" and a "consumer" at the same time since one cannot sell goods to oneself.

20. It is not in dispute that the DVC, WBSEDCL and IPCL are deemed distribution licensees in terms of fourth and fifth provisos attached to section 14 of the Electricity Act, 2003. It is also not disputed that both WBSEDCL as well as IPCL own and maintain their own distribution networks for undertaking distribution of electricity to their respective consumers and sell electricity to their own respective consumers which they obtained from DVC in radial mode.

21. Considering these factual aspects as well as the law laid down by this Tribunal in the above noted previous judgements, we are unable to accept the contention on behalf of the DVC that supply of power by it to WBSEDCL and IPCL on radial mode ought to be treated as sale of power by a generating company to a consumer.

22. The contentions raised on behalf of appellant DVC that WBSEDCL and IPCL ought to be treated at par with HT consumers of DVC as they are also being supplied power at 33kV, is erroneous and misleading for the reason that the voltage level at which the power is being supplied or the mode of power supply (which is radial mode in the instant case) cannot override the status of these two entities as distribution licensee which has been recognised statutorily. We concur with the submissions made on behalf of the WBSEDCL and IPCL that drawl of power by them on radial mode from DVC does not change the statutory status of distribution licensee under the

Electricity Act. Therefore, these two entities are not liable to pay retail supply tariff applicable strictly to "consumer" who consume power for their self-use.

23. We also note that in the recent judgement dated 15.09.2025 passed in appeal number 275 of 2015 and batch DVPCA v. WBERC & Ors. 2025 SCC OnLine APTEL 65, this tribunal has held as under: - “52. Ld. WBERC by way of the Impugned Order clearly held that the retail tariff determined for Consumers could not be charged upon WBSEDCL for supply on radial mode. Tariff issues between the parties were to be settled under law. This indicated judicial recognition that the tariff for supply under radial mode to licensees is a distinct legal and regulatory issue not covered by the retail tariff orders determined for other consumers. …………………………………………………………………………….. ……..……………………………………………………………………...

62. One Ld. WBERC had specifically held in the Impugned Order, that it had not determined any tariff for ‘bulk supply’ to WBSEDCL and IPCL in Tariff Order dated 24.08.2015, it defied logic to include the quantum of sales to WBSEDCL and revenue realized from them (as the billed revenues and

not the actual revenue realized) in the subject APR petition that was filed much later on 06.09.2020.”

24. In the backdrop of observations in these two Paragraphs of the judgement, this tribunal directed DVC to refund the excess amount recovered by it from its consumers which were attributable to erroneous billing to WBSEDCL and IPCL for power supplied at the retail supply tariff and consequent erroneous accounting. We have been informed by learned counsel for WBSEDCL and IPCL that the said judgement has been challenged by DVC in the Hon’ble Supreme Court and while directing that the judgement shall not be given effect to, the Supreme Court clarified that the proceeding before the West Bengal Commission in terms of the said judgement of this Tribunal has not been stayed.

25. It is the case of DVC that supply of power by it to WBSEDCL and IPCL on radial mode is akin to supplying power to a consumer. In this regard, we find it profitable to refer to DSM Regulations notified by the Commission itself and known as WBERC (Deviation Settlement Mechanism and Related Matters) Regulations, 2021, the relevant portion of which are quoted hereinbelow: - “3.1.4 Applicability of DSM for Distribution Licensees

… …

(ii) Notwithstanding anything to the contrary contained in other Regulations of the Commission, the power drawn/supplied in radial mode between two licensees at a voltage level of 33 kV and below shall not be under the purview of DSM. The same shall be settled as per mutually agreed principle, method and PPA.”

(b) WBERC (Open Access) Regulations, 2022 “18.2.5 Additional Surcharge:

… …

(i) Additional Surcharge Part A in Paise per unit (ASCTR) = [(A+B-C)+D) -E-F … …

D= Energy sold for consumers and licensee in consumer mode or radial mode from distribution system and units billed for Wheeling/transmission for Open Access Customers;”

26. Therefore, it is clear from these Regulations that power can be drawn/supplied in radial mode even between two licensees at voltage level of 33 kV and there is no embargo upon DVC supplying power to WBSEDCL as well as IPCL in radial mode. In the PPAs executed by DVC with WBSEDCL and IPCL, these two entities have been referred to as "licensee". Therefore, radial distribution system being a power distribution network wherein power flows in one direction from the source with no alternate supply path being available, cannot be taken to change the status of the distribution licensees i.e. WBSEDCL and IPCL from licensee to consumer.

27. Learned counsel for DVC further argued that since WBSEDCL and IPCL had been paying consumer/retail supply for radial supply for more than two decades i.e. from 1993 to 2015 without any objection, their contention in these appeals that retail tariff is not applicable to them, is wholly misconceived and inconsistent with their past conduct. We do not find any merit in these submissions of the learned counsel. We have already noted hereinabove that it was in pre-2003 Electricity Act era that such agreements were executed between DVC and WBSDCL & IPCL to supply power to them

at various offtake points. At that time DVC exercised monopoly in supply of electricity and thus billed these two entities also at retail tariff. This arrangement continued between the parties even after the passing of the Electricity Act, 2003 till the year 2015 when the tariff orders dated 04.03.2015 and 25.05.2015 came to be issued by the Commission for WBSEDCL and IPCL respectively wherein the principles of 2003 Act were applied. Therefore, DVC cannot be heard to take advantage of the arrangements between the parties that had commenced prior to the passing of 2003 Act for the reason that subsequent to passing of the 2003 Act, the transactions between the parties have to be governed strictly by the provisions of the said Act.

28. Reliance placed by learned counsel for DVC on the order dated 30.09.2013 passed by Central Electricity Regulatory Commission in petition no.293/2010 Steel Authority of India Limited v. DVC to contend that tariff treatment was determined by the Central Commission with reference to the mode of drawl and not by the mere fact that SAIL was a deemed distribution licensee, is totally misplaced and fallacious. SAIL, apart from being recognized as a deemed distribution licensee in view of its institutional

supply of a portion of power received from DVC to its township and allied facilities, also consumes such power for its own use i.e. for operating its industrial units. This is not the case with regards to WBSEDCL and IPCL. No portion of power procured by them from DVC is being used by them for their own use and the entire power supplied to them by DVC is supplied by them onwards to their respective consumers. Further, in that case, the Central Commission had come to conclusion that there is direct commercial relationship between the generating station i.e. DVC and the licensee i.e. SAIL, which is totally absent in the instant case. Therefore, the said order of the Central Commission has no applicability to the instant appeals.

29. Hence, considering the above discussion, the two issues formulated by us in Paragraph No.12 of this judgment stand answered in negative.

30. We hold that statutory distribution licensees i.e. WBSEDCL and IPCL cannot be classified as “consumers” under Section 2(15) of the Electricity Act, 2003 solely based on the technical mode of supply of power to them by DVC i.e. radial mode and the “retail tariff” determined specifically for end consumers cannot be applied to them. Accordingly, we do not find any error or infirmity in the impugned order of the Commission. The same is affirmed. The appeal stands dismissed.

Pronounced in the open court on this the 27th day of April, 2026.

(Virender Bhat) Judicial Member (Seema Gupta) Officiating Chairperson

✓ REPORTABLE / NON-REPORATBLE

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