CASE NO. 18 of 1998

ORDER No. 001 DATED 11th AUGUST, 1997

Shri S. C. Mahalik, Chairman
Shri D. K. Roy, Member

In the matter enhancing electricity charges for domestic and commercial consumers where meters have gone defective.

M/s Grid Corporation of Orissa Limited - Affected Party

For the affected party:
Shri B. C. Jena, Director(T & D)
Shri B. M. M. Rao, Chief Engineer(Commerce)
Shri T. C. Panda, Controller of Revenue and Audit
Shri B.P. Rekhani, S.E. (Commerce)

Several Electrical Divisions of Gridco had issued public notices in newspapers informing the consumers without meters or with defective meters that they should install working meters, failing which consumers in urban areas would be billed on the basis of connected load of 2.5 KW with a load factor of 15% and consumers in rural areas would be billed on the basis of a connected load of 1.5 KW with a load factor of 15%. The Commission had taken suo motu note of this action of Gridco and had called for a report. The report of Gridco dtd. 10.07.97 was considered by the Commission and a notice of inquiry was issued to Gridco to appear before the Commission on 11.08.97 at 11:00 A.M. In the hearing on 11th August, Gridco was represented by Shri B. C. Jena, Director (T & D) and other officials.

2. In the written submission dated 10.07.97 of Gridco, it was stated that Gridco had not proposed any enhancement in energy charges and that there was no irregularity in the billing procedure proposed to be adopted by Gridco in respect of domestic consumers with defective meters or whose meters are not in working order. The main aspects of the submission may be stated at some length before examining the validity of the submission. In view of the direction of the OERC in their Tariff Order No.009 aft. 10.03.97, Gridco was to make all out efforts to bring down the transmission and distribution losses from 47% to 35% during the financial year 1996-97. The major loss in Gridco system was in the LT system and more particularly in the domestic sector due to the large number of meters remaining defective. The replacement of defective meters for the domestic consumers requires a large amount of fund as well as manpower and also time. As it would take considerable time to procure the meter and replace them, Gridco decided to take some short term measures to achieve reduction in T & D losses. These measures were decided in the Revenue Review meeting of Gridco held separately for its four zones. Revenue Review meeting took note of the fact that the load survey in various areas had revealed that billing on the basis of load factor or minimum charges instead of billing on metered consumption was the main reason of loss of revenue. Gridco further submitted that most of the consumers specially with defective meters have got a connected load much higher than the load contracted for. Hence, in case of unmetred supply and in case of consumers with defective meters, it was necessary to access the connected load on realistic basis at 2.5 KW for urban areas and 1.5/1.0 KW in rural areas and made on load factor on the said connected load. It was felt in the Revenue Review meeting of Gridco that the consumers who do not replace the defective meters would have the option either to undergo disconnection or to agree to pay substantially higher load and to be billed on load factor basis till he installs his own meter. It was decided that notices had to be sent from the supply engineers to all individual consumers and in addition, a general notice should be published in the newspapers to the effect that if the working meters were not in place by a stipulated date the billing will be done on the basis of aforesaid presumptive connected load. It was submitted in the written explanation that it is the consumers' responsibility to install meters as per Section 16(a) of General Conditions of Supply Regulation 1995 and keep it in running condition and that if the defective meter was not replaced within a period of three months the consumer would be liable for the disconnection. Gridco in its written explanation relied on Clause 17(f)(iii) of General Conditions of Supply Regulation for the legality of presumptive connected load in respect of consumers whose meters were defective.

3. In course of the hearing it was stated that 99.9% consumers are LT consumers who are billed 43.4% energy but contributed only 18.6% of the revenue collection making it obvious that there was substantial leakage of energy from the LT consumers. The leakage was alarming in case of domestic and commercial categories of consumers. Since the number of such consumers is extremely large and they were widely dispersed, Gridco had to put in massive efforts to bring all such consumers into billing net on the basis of their actual consumption. A load survey conducted had revealed that the average consumption by domestic consumers on meter reading basis works out 413 units whereas on load factor basis it was 244 KWh and minimum charges billing was only 124 KWH per bill. Similarly in case of commercial consumers billing on the basis of meter reading, load factor and minimum charge worked out to 589, 329 & 143 KWH per bill respectively. It was realised that consumers who do not have ly sealed running meters were enjoying unintended and undue benefits at the expenses of Gridco and that this has jeopardised the survival of Gridco as an economically viable organisation. It was explained that in this context of survival that Gridco has adopted "some drastic measures to bring consumers into the billing net on a higher connected load". Gridco felt that in view of Section 26 of the Indian Electricity Act, 1910, the onus primarily lies on the consumer to replace the defective meters within three months of its becoming defective and failure to do so would make them liable for disconnection. Gridco decided that instead of taking drastic action of disconnecting power supply of a large number of consumers which would have caused great inconvenience it could adopt the alternative of billing on higher connected load for the time being as a provisional measure. The provisional billings were to be subsequently revised on average billing after functioning meters were installed and had run for three months. It was further explained that the Gridco had been regularly reviewing the status of meters for domestic and commercial consumers so as to expedite repair and replacement of meters which, however, would take a long time. Gridco felt that in the existing billing method there was in built incentive for consumers to have their meters declared defective with the connivance of unscrupulous staff of Gridco. It was due to vested interest that defects in meters are not reported, defects are not rectified and meters are not installed. Gridco also explained that its efforts to conduct load verification were frustrated by several factors and that in spite of engaging contractors in some cases there has been no significant progress in installation of meters. On the basis of these arguments Gridco submitted that billing on the basis of load factor should be permitted by the Commission as an interim measure for a period ending December'97 during which time it was expected that all domestic and commercial consumers would have installed working meters. It assured that bills prepared on the basis of load factor for the period upto December'97 would be treated as interim and these provisional bills would be corrected on the basis of average meter reading for three months period after working meters are installed.

4. The Commission has carefully considered the circumstances and reasons for Gridco's action and the legality of the same. The Commission has noted with approval Gridco's concern for reduction of distribution loss and its intention to take prompt measures to reduce the same. We have also noted the positive steps such as target fixation for billing and collection on the basis of energy made available, accountability of the sub divisional offices for energy accounting for all consumers in the subdivision, efforts to improve the LT distribution system, extension of revenue improvement action plan etc. The Commission appreciates the need for immediate and effective action with regard to correct billing in case of domestic and commercial consumers as in case of similar efforts on other categories of consumers. However, the Commission finds that the method adopted to charge the consumers without meters or those who have defective meters on the basis of presumptive connected load can not be sustained under the prevalent laws and regulations.

5. Section 26 of the Indian Electricity Act, 1910 prescribes that in the absence of an agreement to the contrary, the amount of energy contained in supplies to a consumer has to be ascertained only through a correctly functioning meter and that if the consumer so requires the licensee is obliged to supply a correct meter. However, Section 16 of the Orissa State Electricity Board (General Conditions of Supply) Regulations, 1995, as amended, prescribes that "meters for the domestic and commercial consumers shall ordinarily be supplied by the Consumer." It appears that the Regulations intend to create a contractual framework between Gridco and the consumer for supply of meters by the consumers. The Form of Requisition for Supply of Energy (for domestic and commercial purposes) appended as Schedule B(2) of OSEB (General Conditions of Supply) Regulations, 1995, has however no column for the consumers to indicate whether he would like the meter to be supplied by the licensee. This is a grey area where the obligation of either party is not clear and needs to be redefined.

6. Section 17 (f) (iii) of OSEB (General Conditions of Supply) Regulations, 1995 stipulates that "the billing in respect of consumers with defective meters shall be done on the basis of load factor as may be fixed by the Board from time to time as part of the tariff after giving minimum seven days public notice and after publication in the gazette". The powers of the Board mentioned in this Section of Regulation is now being exercised by OERC. In Order No. 009 dated 12th March, 1997 of OERC on tariff application of Gridco, the Commission had approved the billing to domestic consumer with defective meters at 15% load factor vice item 11.3 (10) of the Order. This load factor has to be calculated on the basis of the contract load. Contract load and the connected load are the same unless an actual load survey has been carried out by the engineers of the licensee to assess the connected load and the contract load has been increased after serving notice on individual consumers. The licensee has no authority under existing statute to unilaterally increase the connected load on a uniform basis without actual load survey and without giving notice individually to consumers.

7. In the light of above Gridco is hereby directed to :

1. Hold in abeyance, till further orders, the decision to charge consumers without meters or with defective meters uniformly on a connected load of 2.5 KW in urban areas and 1.5 KW/1 KW in rural areas with a load factor of 15% and revert to the earlier system of billing consumers on their contract demand with a load factor of 15%.

2. Modify the Form of Requisition for supply of Electrical Energy (for domestic and commercial purposes) to make it clear to the consumer the responsibility for supply of meters.

3. Take effective steps for expediting installation of meters in the consumers premises so that the quantum of unbilled energy is substantially reduced within the shortest possible time.

4. Carry out load survey to ascertain if the connected load is more than the contract load and revise the contract load on the basis of such load survey.

Dated 18th August, 1997

Back to "Orders"