P.S.DATTA, J. - (1.) BEING aggrieved by the order dated 14th May,2010 passed by the Kerala State Electricity Regulatory Commission , the sole respondent herein whereby it decided upon the true up petition of the appellant for the FY 2006 -07 the appellant, the Kerala State Electricity Board preferred this appeal on the grounds that the total claims of the appellant on the following points have not been admitted, namely : a)Revenue Gap,, b)Return on Equity, c)Depreciation, d)Interest and finance charges, e)Provision for bad and doubtful debts, f)Other debits, g)Employees Cost,h)Administration& General Expenses with Electricity Duty, i)Transmission and Distribution loss Levels, j)Assumption of revenue from Tariff.
(2.) ACCORDING to the appellant, as per section 181(2) (zd) of the Electricity Act,2003 the State Commission is required to notify the 'Terms and Conditions of Tariff 'under section 61 of the Act which should form the basis for filing the ARR application and an application for truing up of the accounts, and the State Commission is yet to notify any Regulations under the said section 61 of the Act and within the framework of the National Tariff Policy notified by the Central Government on 6th of January,2006.In the absence of any Regulations for preparing the 2 regulatory accounts and for truing up process and revenue requirements the appellant has been following the Electricity (Supply)Annual Accounting Rules,1985 which the State Commission has not been following and instead has been adopting different approach and thereby disallowing many valid expenses.
(3.) BEFORE the enactment of the Act,2003 the appellant has been claiming 3% return on equity on the net fixed assets. This continued till the year 2004 -05., but the State Government has not been extending any subsidy to the appellant who in the circumstance had to find out adequate internal resources to meet its capital investments. The appellant thus claimed 14% return on Government equity of Rs.1553.00 crore as per the Government Order dated 14.9.1998.The State Commission changed its earlier stand and purportedly relied upon the remark of the Comptroller and Auditor General to the effect that the Government of Kerala has not followed the procedural formality of conversion on equity and it has been deemed that the State Government has no equity in the appellant. Further, during the period from 2003 -04 to 2008 -09 the appellant has made additional capital investment of Rs. 3346.06 crore through internal resources. The Board during these years availed itself of loan of Rs.3113.66 crore. The internal resources used for funding of capital assets are required to be considered as equity contribution . 3 The Commission did not allow Rs. 175.31 crore towards depreciation claimed by the appellant for the FY2006 -07 as per the audited accounts of the appellant but approved the depreciation as per the norms contained in the Tariff Regulations of the CERC. It is the case of the appellant during the three financial years preceding the FY 2006 -07 the appellant was allowed depreciation as claimed by the appellant as per the audited accounts at the rates notified by the Ministry of Power but during the FY 2006 -07 the Commission allowed depreciation as per the CERC rate despite the State Government's letter dated 16.12.2006 directing depreciation to be allowed at the rates notified by the Government of India. As per the Kerala Electricity Supply Code,2005 , notified by the State Commission , interest on security deposit has to be paid by the appellant. In the audited accounts of 2006 -07 the appellant had provided an amount of Rs. 37.44 crore for interest on security deposit being the interest on the total outstanding security deposit at the prevalent bank rate as on 1.04.2006 but the Commission did not allow the entire amount on the ground that the actual payment of interest on security deposit for the FY 2006 -07 was only Rs.22.85 crore.;