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`Calcutta HC order will not impact CESC financials'

Our Bureau

Kolkata , Aug. 6

THE order delivered by the Calcutta High Court on the uniform tariff issue of CESC will have no impact on the financials of the company.Sources said the RPG-controlled utility was weighing its options as to whether it should close its accounts for the two financial years beginning 2000-01 based on average tariff.

The other option is to await the conclusion of another round of hearing by the West Bengal Electricity Regulatory Commission, which has been directed by the Court to take a relook at the cross-subsidy issue. "There is no material financial impact of the order on CESC and the company could go ahead with the process of closing its accounts for the years concerned. But a final decision will be taken in about two weeks' time after examining the fine print of the order," sources said.

For CESC, the average tariff remains the same at Rs 3.9 crore and the WBERC is only expected to take a look at its distribution across CESC's consumer classes. With an installed capacity of 1065 MW, CESC serves the city and its vicinity and has a consumer base of about 1.8 million - most of which are domestic consumers.

CESC's tariff review petition for 2000-01 and 2001-02 has been moving back and forth between the WBERC, the Calcutta High Court and the Supreme Court, which in its October 2002 order sent the matter back to the WBERC in response to a petition filed by a city-based chamber of commerce and some consumer associations. They had challenged the Calcutta High Court order given in May 2002 in favour of CESC, which had contested the WBERC order in that petition.

While the WBERC had fixed a tariff of Rs 3.39 and Rs 3.41 for these years, the High Court allowed tariffs of Rs 3.96 and Rs 4. CESC had then postponed its 2001-02 AGM awaiting the outcome of the legal battle.

The Supreme Court's order had also made some observations on cross subsidy, which later became a major bone of contention between the then outgoing WBERC Chairman and the State Government. The WBERC, in its subsequent order delivered in December 2002, had totally dismantled the cross subsidy.

WBERC fixed an average tariff of Rs 3.81 for 2000-01 and Rs 3.9 cutting across consumer classes. This was later challenged by the West Bengal Government which feared that if the same process was extended to the West Bengal State Electricity Board, then schemes like Kutir Jyoti would have to be abandoned and people would be very badly affected.

Meanwhile, CESC got some relief by the way of an interim order for 2003-04 by the WBERC which allowed a 25 paise hike over the 2001-02 level.

Company sources said that since uniform tariff was never charged refunds were not likely, but some segment-wise adjustments might have to be made in case the WBERC advised a phased removal of cross-subsidies. " We are now awaiting the order," CESC executives said.

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