MERC rejects MSEDCL’s plea to recover fuel adjustment charge from bulk consumers
   Date :23-Apr-2019

 
 
Staff Reporter;
 
Mahavitaran suffered a set back after Maharashtra Electricity Regulatory Commission (MERC) rejected its petition to recover fuel adjustment charge from bulk power consumers in the month of consumption. The State run power distribution company had approached MERC saying the current formula of billing of FAC for consumption of n-2 month in n month is resulting in losses. Further it had asked for including of transmission charges in FAC to arrive at correct calculation of actual power charges. Commission in its order noted that as FAC was notified through multi year tariff regulations 2015, same cannot be amended through an order and hence disallowed the petition.
 
 
 
 
For Mahavitaran it is an issue of worry since current methodology of calculating FAC is resulting in higher charges for High Tension (HT) consumers. In case the issue is not resolved, there is fear that HT consumers might prefer open access and this in turn would result in burdening remaining customers to balance the returns. MSEDCL in its petition pointed that according to MYT 2015 Regulations, the FAC is allowed on a monthly basis as an adjustment in tariff against variation in cost of fuel and power purchase and same is applicable on entire sales. However, the clause of Regulation is silent about the month referred for actual sales for levying FAC.
 
They further contended that this calculation affected MSEDCL recovery that depends for respective month in which FAC is levied and its consumers due to change in mix of consumers and energy consumption in the nth month as compared to n-2th. MSEB Holding Company Ltd who formed a committee to support MSEDCL stand on FAC on the actual sales of the consumers corresponding to the FAC calculated for the respective month. In past also, MSEDCL had approached MERC seeking to amend present mechanism of calculation and levy of FAC. However, MERC refused to aye MSEDCL request citing principles of ongoing business where the consumers are added and going out of the system. Thus, FAC is recovered only from consumers who are receiving supply at time of such recovery and are not recovered on one-to-one basis from the same consumers who were receiving supply at the time of cost incurred, the Commission further noted in its order that time. The company further tried to convince Commission futility of waiting for MYT order that takes places every five or two years.
 
 
As against this FAC is chargeable on monthly basis and claimed same concept of applying trued up cost to contemporary consumers cannot be applied to FAC mechanism which is billed on monthly basis. MSEDCL also contended in its argument that according to tariff policy, uncontrollable cost needs to be recovered speedily to ensure that future consumers are not burdened with past cost. Also this mechanism ensured there will be no under recovery or over recovery and also no carrying cost, consumers who migrated under Open Access or gets permanently disconnected in the ‘n’th month will also require to settle FAC payable for past consumption before settlement of accounts, a new consumer who has not consumed electricity in the N’2th month will not be required to pay the unjustified FAC in the Nth month for the period when he was not a consumer.
 
Dictating the order, the Commission said since this is the last year of the control period, mid way changes in FAC cannot be allowed. Also MERC is in the process of framing new MYT Regulation for the next control period and that time MSEDCL will have opportunity to participate in the consultation process and make its suggestions. Similarly, MSEDCL prayer as to FAC has already been adjudicated previously and hence dismissed the petition.