Fuel Adjustment Charges

2013 PLD 182 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

S. 31National Electric Power Regulatory Authority (Tariff Standards and Procedure) Rules 1998, Rr. 2(1)(m) & 17(3)Constitution of Pakistan, Arts. 18 & 199Constitutional petitionIndustrial UnitsElectricity billsFuel Adjustment ChargesLevy and demand of such charges in electricity bills as arrears with retrospective effectLegality

Industrial units/petitioners challenged recovery of fuel adjustment charges ascertained by National Electric Power Regulatory Authority ("NEPRA") vide impugned notifications with the contentions that fuel adjustment charges were being recovered with retrospective effect after payment of the final bill of consumed energy, and as such it became a past and closed transaction, and that Industrial Units were being deprived from doing their legitimate business

Validity

Industrial Units added the cost of energy on their products and in this way recovered the said cost from the end consumer

Industrial Units were purchasing energy and debiting the (additional cost) to the end consumer

Government had not imposed any restriction on the Industrial Units in the present case

Industrial Units calculated their profit after the close of financial year and the impugned additional amount/fuel adjustment charges would be adjustable in the yearly profit

At most fuel adjustment charges might fractionally affect the ratio of projected profit of Industrial Units but the ultimate loser was the Federal Government as it would get less income tax on gross profit of Industrial Units

Electricity distribution companies were entitled to recover fuel adjustment price from the Industrial Units as per impugned notifications

Constitutional petition was allowed accordingly.

2013 PLD 182 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

S. 31National Electric Power Regulatory Authority (Tariff Standards and Procedure) Rules 1998, Rr. 2(1)(m) & 17(3)Constitution of Pakistan, Art. 199Constitutional petitionDomestic consumers of electricityElectricity billsFuel Adjustment ChargesLevy and demand of such charges in electricity bills as arrears with retrospective effectLegalityProtection of interest of consumersScope

Petitioners challenged recovery of fuel adjustment charges ascertained by the National Electric Power Regulatory Authority ("NEPRA") vide impugned notifications with the contentions that NEPRA had no powers to redetermine the tariff of electricity under the garb of fuel adjustment charges; that NEPRA had no power to direct the electricity distribution companies to recover the difference of redetermined tariff from consumers after bills had already been paid; that fuel adjustment charges were being recovered with retrospective effect after payment of the final bill of consumed energy, and as such it became a past and closed transaction and a vested right accrued in favour of the petitioners, and that after making the full payment of the costs of the consumed energy, it was the consumers' legitimate expectation, that they would not be burdened with any additional amount

Validity

While determining tariffs it was the duty of NEPRA to protect the interest of both the parties i.e. the consumers and the power generation companies

NEPRA was responsible to fix, renew, revise or modify the tariff of energy after conducting an inquiry and hearing the consumer, the electricity distribution companies, the power generation companies and the National Transmission and Dispatch Company (NTDC)

Definition of tariff with reference to the present case meant the final cost of energy offered to consumer

NEPRA determined energy tariff on the basis of reference fuel price and any subsequent difference in fuel price was added by NEPRA, as such it was in the knowledge of the consumer that they were paying the price of energy which was arrived at on the basis of tentative fuel price and the actual price would be payable on the receipt of actual invoice of the fuel

Fuel adjustment price was a pre-agreed liability of the consumer which was payable as and when finally determined. thus in such circumstances, no question of vested right and any legitimate expectancy arose

Vested right was a right which was complete in all respects and was not dependent on any contingency

High Court directed that domestic consumers who were utilizing more than 350 units of electricity were liable to pay the fuel adjustment price; that domestic consumers who were consuming 350 Units of electricity or less per month were not liable to pay the fuel adjustment price and the electricity distribution companies were bound to refund the already recovered fuel adjustment charges to such consumers or might adjust the refundable amount in future monthly bills; that after re-examining the present issue if NEPRA came to the conclusion that power generation companies had wrongly claimed fuel adjustment costs and other expenses, then NEPRA will recover the said amount from its beneficiaries, which might be the power generation companies or the Federal Government, and will refund the said amount to the consumers by way of adjustment in their monthly bills; that NEPRA will also determine the transmission losses after holding detail probe and in case it was proved that line loss represented the price of stolen energy, NEPRA will direct the Federal Government to refund the said amount to the consumers by way of adjustment in the monthly bills and will also take appropriate legal action against the culprits in accordance with law

Constitutional petition was allowed accordingly.

2013 CLC 141 ISLAMABAD Judicial Precedent

Ss. 7(6) & 31(2)Constitution of Pakistan, Art.199Constitutional petitionPowers and functions of Regulatory AuthorityScopeProtection of interest of consumersScopeElectricity billsFuel Adjustment ChargesLevy and demand of such charges in electricity bills as arrears with retrospective effectLegality

Electric Power Regulatory Authority was under a statutory obligation to protect the interest of consumers as well, instead of allowing the power distribution companies to raise demand of Fuel Adjustment Charges in a mechanical fashion

Scope and levy of Fuel Adjustment Charges could not be expanded and had to remain within the variations in the prices of fuel

High Court declared levy and demand of Fuel Adjustment Charges as arrears with retrospective effect as unconstitutional and against the applicable law and principles of natural justice

Power distribution companies were directed to issue amended bills and in case consumers had already paid the bills in question, then to adjust excessive amount received accordingly in the bills of coming months

Constitutional petition was allowed accordingly.