SC asks Vedanta to pay cross subsidy charge to Wesco

The notification will not apply to a developer like the appellant (Sesa Sterlite) who has established the SEZ only for itself, the order said

In a setback to Sesa Sterlite, the Supreme Court (SC) has directed the Vedanta Group firm to pay cross subsidy charge (CSS) to Western Electricity Supply Company of Odisha Ltd (Wesco), a power distribution company operating in the state.

A division bench of the S C consisting of Justice S S Nijjar and Justice A K Sikri held that despite claiming to be a deemed distribution licensee under Section 14 (b) of Indian Electricity Act-2003, Vedanta's aluminium Special Economic Zone (SEZ) at Jharsuguda was a consumer of Wesco since it utilized power from Sterlite Energy, also a group firm, for its self consumption only.

Earlier, the Appellate Tribunal on Electricity (ATE) had also dismissed Sesa Sterlite’s petition and had upheld the order of state power regulator Odisha Electricity Regulatory Commission (OERC) to pay CSS.

The apex court clarified that the SEZ notification dated March 3, 2010 providing for the developer of SEZ to be deemed as a 'distribution licensee’ was issued keeping in view the concept of multi-unit SEZs and will apply only to such cases in which the developer is supplying the power to multiple units in the SEZ.

The notification will not apply to a developer like the appellant (Sesa Sterlite) which has established the SEZ only for itself, the order said.

“As correctly indicated by the state commission (OERC), the definition of term ‘deemed licensee’ as enumerated under Section 2 (17) of Indian Electricity Act-2003 emphasizes upon the distribution licensee to operate and maintain a distribution system and supply of power to the consumers. By merely being authorized to operate and maintain a distribution system as a deemed licensee, would not confer the status of distribution licensee to any person. Mere fact that the appellant (Sesa Sterlite) claims to be a deemed distribution licensee is of no consequence at all since admittedly, the entire power purchased by the appellant is for its own use and not for the purpose of distribution and supply/sale to consumers,” the order stated.

The court order further said, any entity that utilises the entire quantum of electricity for its own consumption and does not have any consumers, cannot by such a notification, deemed to be a distribution licensee.