Electricity tariff
Electricity tariff legal meaning, translation and judicial precedents.
Meaning & Judicial Interpretation: (اردو مفہوم اور قانونی تشریح)
Petitioners assailed corrigendum dated 22-1-2020 withdrawing and modifying electricity tariff retrospectively vide notification SRO 575(I)2019, dated 22-5-2019
Validity
Subsidy of Government of Pakistan figured alongside the determined tariff which subsidies were already granted and made part of K-Electric's bills after issuance of Notification SRO 12(I)/2019 dated 1-1-2019
Notification SRO 575(I)/2019 dated 22-5-2019 was not an outcome of determination per se as it only printed earlier determined tariff alongside Government of Pakistan's subsidized tariff
If at any point in time any entry in column of variable charges was attacked, tariff was to fall back to respective and corresponding entry in column of fixed charges and the same was outcome of actual determination
Amount in the column of variable charges could never be higher than those in the column of fixed charges
High Court declared corrigendum dated 22.1.2020, as illegal, void, issued in excess of authority and the same was quashed
High Court restrained K-Electric from enforcing the same in any manner whatsoever as it resulted in determination higher than National Electric Power Regulatory Authority's determined tariff and it was not correcting any error
High Court directed that industrial consumers of K-Electric to be charged tariff as per column of fixed charges of Notification SRO 575(I)/2019 dated 22.5.2019 as determined vide determination dated 5.7.2018 in respect of variable 'off-peak hours' charges and column of uniform tariff in respect of variable 'peak hours' charges as long as subsidy for 'peak hours' provided through Notification SRO 12 (I) /2019 dated 1-1-2019 held the field, as at any point in time when 'peak hour' subsidy was withdrawn, values shown in column of variable charges had fallen back to uniform charges unless any new determination had taken the field
Government of Pakistan was solely competent to provide or withdraw any subsidy, therefore, Notification SRO 810(I)/20219 dated 12-7-2019 was lawful
High Court directed the authorities to refund or adjust towards future bills, the sums charged and paid by petitioners per rates specified in the corrigendum after deducting rates provided in column of fix charges of Notification SRO 575(I)/20219 dated 22-5-2019 as determined vide determination dated 5-7-2018 in respect of variable 'off-peak hours' charges
High Court further directed the authorities to reissue new bills to those petitioners who did not pay any previous bills of ISPA component for period July-2019 to January-2020, on the basis of values provided in fixed charges of Notification SRO 575(I)/2019 dated 22-5-2019 as determined vide determination dated 5-7-2018 in respect of variable 'off-peak hours' charges
High Court also directed the authorities to give reasonable period to make payments
Constitutional petition was allowed accordingly.
Legality and Constitutionality-Section 31(5) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, provided that "distribution company shall pay to the Federal Government such surcharge as the Federal Government, from time to time, notify in respect of each unit of electric power soka to the consumers..."
Said section did not specify the design and nature of surcharge to be imposed on the sale of the electric power; it also failed to provide legislative parameters or guidelines or legislative policy for determining the amount and nature of surcharge or the number of surcharges to be levied
Legislature has left it to the discretion of the Executive to decide what it wanted to recover and how
Power vested in the hands of the Executive (under S.31(5) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997) was unguided and uncontrolled
Section 31(5) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, delegated an essential legislative function to the Executive which was not permissible under the Constitution
Foundations of excessive delegation owed its genesis to the doctrine of separation of powers, which was a fundamental principle of constitutional construct
Section 31(5) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, simply opened an unguided window and empowered the Executive to assume legislative responsibility, which offended separation of powers and fell within excessive delegation
Such unguided and unstructured delegation empowered the Executive with a power which was ex facie discriminatory and hence not permissible under the Constitution
High Court declared S.31(5) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, and the impugned surcharges namely; Equalization Surcharge, Debt Servicing Surcharge, Universal Obligation Fund Surcharge and Neelum Jhelum Surcharge levied from time to time through impugned notifications, as unconstitutional and hence set-aside the same, and that the Federal Government by charging unconstitutional and illegal surcharges from the consumers of electricity had been unjustly enriched
High Court directed that the Federal Government should refund the amount of surcharges illegally extracted from the consumers; that NEPRA should work out the total amount of surcharges collected from the end consumers to date and evolve a plan for the repayment of the said amount through adjustment in tariff for the benefit of the end consumer
Intra-court appeal was allowed accordingly.
Legality and Constitutionality-Involuntary extraction of money from consumers-Contention of Federal Government was that the necessity to impose the surcharges in question was that they represented the cost of the system i.e., the cost of transmission, generation and distribution of electric power consumed, and included capital and development costs for future projects to produce electricity; that the Federal Government was not raising any revenue by levying surcharges but was in fact simply recovering the cost of electricity to ensure economic and efficient generation, transmission and distribution of electricity; that surcharges (costs), over and above the tariff determined by NEPRA were constitutionally permissible and could be imposed by the Federal Government
Validity
Surcharge was an additional or extra charge on the original charge
Surcharge was supposed to be an add on or additional charge built on an existing charge
Federal Government had argued that all four surcharges (i.e. Equalization surcharge, Debt Servicing Surcharge, Universal Obligation Fund Surcharge and Neelum Jhelum Surcharge) were actually costs of the system, which were not included in the tariff determined by NEPRA
In order for such costs to qualify as a surcharge, there must first exist the original cost to which these surcharges owed their existence to-Impugned surcharges did not rest on an existing charge
NEPRA has opined that the surcharges in question did not rest on any original cost which is or was under consideration by NEPRA
NEPRA had categorically stated that it had not allowed these costs to be included in the tariff as they did not satisfy the prudency test nor were they directly related to the costs incurred for producing, transmitting or distributing electricity
Surcharges in question represented costs which were otherwise not included or even considered in the tariff determined by NEPRA, therefore, the impugned surcharges levied by the Federal Government, even though packaged as costs of the system did not figure in the tariff determined by NEPRA
Surcharges in question were, therefore, at best an involuntary extraction of money from the consumers of electricity, labelled as costs of the system or the distribution companies by the Federal Government-Federal Government levied surcharges in question at its own discretion with no accountability and disclosure of the amounts collected
No prescribed process was laid down under which money collected front consumers was allocated to the power producers
Mode and manner in which the money collected under the impugned surcharges was routed through different accounts maintained by different Government institutions, was not only unconstitutional but also exhibited poor financial governance and discipline, which amounted to playing a fraud on the people-Such extraction of money in the garb of surcharges from the ordinary consumer of electricity was, therefore., violative of the fundamental right to life and property. of the consumers-Impugned surcharges, also had no element of quid pro quo, therefore, they could not be labelled as fees-High Court declared the impugned surcharges namely; Equalization surcharge, Debt Servicing Surcharge, Universal Obligation Fund Surcharge and Neelum Jhelum Surcharge levied from time to time through impugned notifications, as unconstitutional and hence set aside the same-High Court directed the Federal Government to refund the amount of surcharges illegally extracted from the consumers-Intra-court appeal was allowed accordingly.
Petitioner companies were aggrieved of decision taken by National Electric Power Regulatory Authority to determine tariff in respect of Captive Power Plants (CPPs) and New Captive Power Plants (NCPPs) commonly known as Small Power Producers (SPPs)
Validity
National Electric Power Regulatory Authority after minutely appreciating all factors passed order in pursuance of Regln.4(1) of Interim Power Procurement (Procedures and Standards) Regulations, 2005. whereby it granted permission for power acquisition to power distribution company to purchase power from the petitioners on take-and-pay basis
Power acquisition contract was approved subject to amendments in relevant sections referring to the tariff
Whole process of determining tariff was legally executed and no illegality rendering it ultra vires of the Constitution and relevant law was pointed out
National Electric Power Regulatory Authority had the power to determine tariff and while doing so it had to keep in view the interest of general public and accordingly it could revise and review its early decisions or determination
No illegality either in the notice issued in the year 2012 or determination of tariff in question was notices
As the notice was published on 01-02-2012, whereby the arrangement granting permission to the companies either generating or distributing power to charge mutually agreed tariff was done away with, same was deemed to be cut-off date after which tariff rates were to be charged as per determination of National Electric Power Regulatory Authority in question and not before that
Petition was allowed accordingly.
Section 31(5) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, provided that "distribution company shall pay to the Federal Government such surcharge as the Federal Government, from time to time, notify in respect of each unit of electric power sold to the consumers..."
Said section did not specify the design and nature of surcharge to be imposed on the sale of the electric power; it also failed to provide legislative parameters or guidelines or legislative policy for determining the amount and nature of surcharge or the number of surcharges to be levied
Legislature has left it to the discretion of the Executive to decide what it wanted to recover and how
Power vested in the hands of the Executive (under S.31(5) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997) was unguided and uncontrolled
Section 31(5) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, delegated an essential legislative function to the Executive which was not permissible under the Constitution
Foundations of excessive delegation owed its genesis to the doctrine of separation of powers, which was a fundamental principle of constitutional construct-Section 31(5) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, simply opened an unguided window and empowered the Executive to assume legislative responsibility, which offended separation of powers and fell within excessive delegation
Such unguided and unstructured delegation empowered the Executive with a power which was ex-facie discriminatory and hence not permissible under the Constitution-High Court declared S.31(5) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997, and the impugned surcharges namely; Equalization Surcharge, Debt Servicing Surcharge, Universal Obligation Fund Surcharge and Neelum Jhelum Surcharge levied from time to time through impugned notifications, as unconstitutional and hence set-aside the same, and that the Federal Government by charging unconstitutional and illegal surcharges from the consumers of electricity had been unjustly enriched
High Court directed that the Federal Government should refund the amount of surcharges illegally extracted from the consumers; that NEPRA should work out the total amount of surcharges collected from the end consumers to date and evolve a plan for the repayment of the said amount through adjustment in tariff for the benefit of the end consumer
Intra-court appeal was allowed accordingly.
Contention of Federal Government was that the necessity to impose the surcharges in question was that they represented the cost of the system i.e., the cost of transmission, generation and distribution of electric power consumed, and included capital and development costs for future projects to produce electricity; that the Federal Government was not raising any revenue by levying surcharges but was in fact simply recovering the cost of electricity to ensure economic and efficient generation, transmission and distribution of electricity; that surcharges (costs), over and above the tariff determined by NEPRA were constitutionally permissible and could be imposed by the Federal Government
Validity
Surcharge was an additional or extra charge on the original charge
Surcharge was supposed to be an add on or additional charge built on an existing charge
Federal Government had argued that all four surcharges (i.e. Equalization surcharge, Debt Servicing Surcharge, Universal Obligation Fund Surcharge and Neelum Jhelum Surcharge) were actually costs of the system, which were not included in the tariff determined by NEPRA
In order for such costs to qualify as a surcharge, there must first exist the original cost to which these surcharges owed their existence to
Impugned surcharges did not rest on an existing charge
NEPRA has opined that the surcharges in question did not rest on any original cost which is or was under consideration by NEPRA
NEPRA had categorically stated that it had not allowed these costs to be included in the tariff as they did not satisfy the prudency test nor were they directly related to the costs incurred for producing, transmitting or distributing electricity
Surcharges in question represented costs which were otherwise not included or even considered in the tariff determined by NEPRA, therefore, the impugned surcharges levied by the Federal Government, even though packaged as costs of the system did not figure in the tariff determined by NEPRA
Surcharges in question were, therefore, at best an involuntary extraction of money from the consumers of electricity, labelled as costs of the system or the distribution companies by the Federal. Government
Federal Government levied surcharges in question at its own discretion with no accountability and disclosure of the amounts collected
No prescribed process was laid down under which money collected from consumers was allocated to the power producers
Mode and manner in which the money collected under the impugned surcharges was routed through different accounts maintained by different Government institutions, was not only unconstitutional but also exhibited poor financial governance and discipline, which amounted to playing a fraud on the people
Such extraction of money in the garb of surcharges from the ordinary consumer of electricity was, therefore, violative of the fundamental right to life and property of the consumers
Impugned surcharges, also had no element of quid pro quo, therefore, they could not be labelled as fees
High Court declared the impugned surcharges namely; Equalization surcharge, Debt Servicing Surcharge, Universal Obligation Fund Surcharge and Neelum Jhelum Surcharge levied from time to time through impugned notifications, as unconstitutional and hence set aside the same
High Court directed the Federal Government to refund the amount of surcharges illegally extracted from the consumers
Intra-court appeal was allowed accordingly.
Exercise of jurisdiction under Art. 184(3) of the Constitution by the Supreme Court on newspaper clippings regarding unprecedented load-shedding in the country and increase in electricity prices
Electricity tariff
Subsidy on electricity tariff taken-away by the Government
Constitutionality
Subsidy that was afforded to consumers was taken-away under S. 31 of Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997
Although the Government had the power to take away subsidies, however, such power must be exercised in consonance with the command of Art. 38 of the Constitution
Article 38 of the Constitution commanded the State to act for the welfare of its citizens
Large part of population in the country was living below the poverty line, therefore, it was difficult to comprehend as to how a raised electricity tariff which did not afford any subsidy, was in the benefit of the people
Provision of electricity was a substantive part of the right to life
Due to load-shedding and high electricity tariffs, government policy in regard to taking away subsidy was violative of Art.9 of the Constitution
Supreme Court observed that subsidy already being given to consumers should not have been withdrawn; that although subsidy was not the right of consumers, the Government might consider in near future to increase the rate of subsidy by extending its benefits to consumers who were not in a position to pay high charges of the electricity.
Exercise of jurisdiction under Art. 184(3) of the Constitution by the Supreme Court on news paper clippings regarding unprecedented load-shedding in the country and increase in electricity prices
Electricity tariff
Subsidy on electricity tariff taken-away by the Government
Constitutionality
Subsidy that was afforded to consumers was taken-away under S. 31 of Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997
Although the Government had the power to take away subsidies, however, such power must be exercised in consonance with the command of Art. 38 of the Constitution
Article 38 of the Constitution commanded the State to act for the welfare of its citizens
Large part of population in the country was living below the poverty line, therefore, it was difficult to comprehend as to how a raised electricity tariff which did not afford any subsidy, was in the benefit of the people
Provision of electricity was a substantive part of the right to life
Due to load-shedding and high electricity tariffs, government policy in regard to taking away subsidy was violative of Art.9 of the Constitution
Supreme Court observed that subsidy already being given to consumers should not have been withdrawn; that although subsidy was not the right of consumers, the Government might consider in near future to increase the rate of subsidy by extending its benefits to consumers who were not in a position to pay high charges of the electricity.
Federal Government or Federal Authority like National Electric Power Regulatory Authority ("NEPRA") could fix electricity tariffs, issue "Fuel Price Adjustment" notifications and determine "Equalization surcharge".
Required to be made by National Electric Power Regulatory Authority ("NEPRA") by "not later than a period of seven days"
No consequences for not complying with the seven day pro vision
Section 31(4), second proviso of Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 provided that NEPRA may, on a monthly basis and not later than a period of seven days, make adjustments in the approved tariff on account of any variation in the fuel charges, and policy guidelines as the Federal Government may issue, and notify the tariff, so adjusted in the official Gazette
Said second proviso did not contain any consequences. for non-compliance with the seven days provision
Moreover, if the price adjustment was not done within the seven days the consumer did not suffer in any manner
Consumer would have to pay the same amount of the "fuel price adjustment" later rather than earlier. (in case it had been increased)
Any delay caused by fixing a date for hearing and providing an opportunity to consumers to submit their objections to the proposed price variation was to the consumer's advantage. Niaz Muhammad Khan v. Fazal Raqib PLD 1974 SC 134 and Noor-ul-Haq v. Ibrahim Khalil 2000 SCMR 1305 ref.
"Electricity tariff", Pakistan Law Portal, available at: https://paklawportal.com/words-terms-maxims/124944356
Precedents & Case Laws citing "Electricity tariff"
1997 S C M R 1669
GANDAF STEEL INDUSTRIES (Pvt.) LIMITED‑‑‑Petitioner Versus FEDERATION OF PAKISTAN and others‑‑‑Respondents .
Court: Supreme Court of Pakistan2000 M L D 774
Messrs SHIFA INTERNATIONAL HOSPITAL‑‑‑Petitioner Versus WAPDA‑‑‑Respondent
Court: Lahore2017 C L C 1679
FAZAL CLOTH MILLS LIMITED through authorized Representative and 14 others — Petitioners Versus FEDERATION OF PAKISTAN, MINISTRY OF WATER AND POWER through Secretary and 3 others — Respondents
Court: Lahore (Multan Bench)2005 S C M R 699
Messrs M.K.B. INDUSTRIES (PVT.) LTD. and others — Appellants Versus CHAIRMAN, AREA ELECTRICITY BOARD, WAPDA, (Peshawar Electric Supply Corporation Ltd.) (PESCO), Peshawar and others — Respondents
Court: Supreme Court of PakistanP L D 2015 Lahore 661
NATIONAL ELECTRIC POWER REGULATORY AUTHORITY — Appellant Versus FAISALABAD ELECTRIC SUPPLY COMPANY LIMITED — Respondent
Court: High CourtP L D 2023 Supreme Court 412
K-ELECTRIC LIMITED through Chief Executive Officer, Karachi — Petitioner Versus FEDERATION OF PAKISTAN through Secretary, Ministry of Energy and Secretary, Ministry of Finance, Islamabad and others — Respondents
Court: High CourtP L D 2014 Balochistan 173
Messrs BOLAN STEEL INDUSTRIES (PVT) LTD. through Managing Director and others — Petitioners Versus WATER AND POWER DEVELOPMENT AUTHORITY (WAPDA) through Chairman and others — Respondents
Court: High Court2021 Y L R 1527
and 7 others — Petitioners Versus FEDERATION OF PAKISTAN through Secretary, Ministry of Energy and through Secretary, Ministry of Finance and 2 others — Respondents
Court: SindhP L D 2005 Supreme Court 430
Messrs GADOON TEXTILE MILLS LTD. and others‑‑‑Petitioners Versus CHAIRMAN, AREA ELECTRICITY BOARD, WAPDA, (PESCO), PESHAWAR and others‑‑‑Respondents
Court:P L D 1998 Karachi 209
WAPDA — Petitioner Versus GOVERNMENT OF SINDH and others — Respondents
Court: High Court