The Madras High Court on Friday declared as illegal the maximum-demand charges and the compensation charges for low power factor levied by the Tamil Nadu Generation and Distribution Corporation (Tangedco) on high tension consumers when the commercial establishments were shut due to the COVID-19 lockdown.
Justice N. Anand Venkatesh held that it was unfair to demand such charges from HT consumers who were caught between the devil and the deep sea. “On one hand, the government has asked them to shut their establishments, and on the other, Tangedco is levying maximum-demand charges from them,” he said.
“If this is allowed to be continued, it will lead to the permanent shutting down of the industries. The financial crunch being faced by the industries due to the lockdown and the huge challenge they are going to face after the pandemic is now made worse by Tangedco levying maximum-demand charges,” the judge observed, while disposing of a huge batch of writ petitions filed by several high tension consumers.
“Tangedco must understand that its attitude will kill the industries and the closing down of industries will ultimately have a financial implication on Tangedco as well. And Tangedco is virtually killing the goose that is laying the golden eggs,” the judge observed, while disposing of a huge batch of writ petitions filed by several high tension consumers.
The judge pointed out that as per the Tamil Nadu Electricity Regulation Commission (TNERC) regulations, Tangedco could levy demand charges on the actual KVA demand recorded in a month or 90% of the sanctioned demand, whichever was higher. Similarly, it was entitled to levy compensation charges, in the nature of penalty, if there was a lag in power factor beyond the stipulated limit.
“It is illogical that Tangedco mechanically levied compensation for low power factor, even without understanding that the establishments were completely shut and that there was no way they could utilise the optimum PF. In any event… penalty cannot be imposed without affording an opportunity, since it involves civil consequences,” Justice Venkatesh added.
Tangedco’s claim
He also rejected Tangedco’s claim that it would have to suffer huge losses if it was allowed to collect only minimum and not maximum-demand charges from high tension consumers. “This claim made by Tangedco is without any substance. It is aware of the fact that minimum charges are paid as part of a fixed cost and the actual charges are paid with respect to energy charges,” the judge said.
“Therefore, Tangedco is not actually losing any revenue towards consumption of electricity,” the judge concluded.
