KARACHI: The Sindh High Court (SHC) declared the corrigendum dated 22.01.2020 to be illegal, void, issued in excess of authority hence quashed. K-Electric is restrained from enforcing the same in any manner whatsoever as it has resulted in a determination (higher than NEPRA‟s determined tariff) and it is not correcting any errors on several constitutional petitions filed by dozens of industrialists including M/s Faizan Steel, M/s A-One Re-Rolling Steel Mills, M/s Dollar Industries and others.
On 21 March 2022, Customs Today received a details judgement written by Justice Zulfiqar Ahmad Khan. Court observes that petitioners are industrial consumers of K-Electric (Respondent No.3) engaged in the manufacture of steel and other large scale industrial products, having their factories located in the -2- C.P No.D-2253 of 2020 & others territorial limits of Karachi/Balochistan, where K-Electric has exclusive monopoly of generation, transmission and distribution of electricity, granted to it under the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (“the Act”).
The petitioners through these petitions have challenged the issuance and implementation of the corrigendum dated January 22, 2020 retrospectively withdrawing and modifying KE‟s tariffs notified vide SRO 575(I)/2019 dated May 22, 2019 after withdrawal of off-peak hour subsidies through SRO 810(I)/2019 dated 12 July, 2019 on the following grounds:
(A) That the SRO 810(I)/2019 dated 12.07.2019 (“the July SRO”) purporting to amend SRO 12(I)/2019 dated 01.01.2019 (“the January SRO”) for K-Electric‟s industrial consumers had no legal effect after the notification of SRO 575(I)/2019 dated 22.05.2019 (“the New Tariff”) embodying full determination of KE‟s tariff, whereupon the January SRO ceased to hold the field in accordance with latter‟s paragraph 4;
(B) That once the earlier relief notified through the January SRO was fully incorporated into the New Tariff, the same could not have been unilaterally modified, amended or altered by the Federal Government through the July SRO or through the Corrigendum without following the mandatory procedure specified by the Act and the NEPRA (Tariff Standards & Procedures) Rules, 1998 (“the Tariff Rules”) where the power to determine, modify, or revise rates, charges and terms and conditions for the provision of electric power was exclusively vested in NEPRA under section 7(3) and 31 of the Act, and that the Federal Government had no power under law to issue the July SRO or the ensuing Corrigendum;
(C) That a tariff once determined by NEPRA and notified by the Federal Government under section 31(7) of the Act creates vested rights and could only be modified prospectively under section 31(5) of the Act read with the Tariff Rules.
Accordingly, and once final determinations were notified, only “adjustments” could be incorporated therein as per the proviso to section 31(7) of the Act by NEPRA as law does -3- C.P No.D-2253 of 2020 & others not prescribe any possibility to alter or modify the tariff through unilateral action of the executive via issuance of a corrigendum;
(D) That it is settled law that executive orders and notifications (i.e. the Corrigendum read with the July SRO) could not be applied or given retrospective effect altering vested rights or to reopen past and closed transactions as the tariff related savings were passed on to the consumers by the Petitioners and the costs and expenses for the production of goods during the six month‟s period of July 2019 to December 2019 have also been passed on to the end-users;
(E) That as per section 31(3) of the Act, guidelines are prescribed for the determination, modification or revision of rates, charges, terms and conditions for the provision of electric power, to the extent that “
(i) tariffs should seek to provide stability and predictability for customers; and
(j) tariff should be comprehensible, free of misinterpretation and shall state explicitly each component thereof”. Further, per Section 31(2) of the Act, NEPRA in the determination, modification or revision of rates, charges and terms and conditions for provision of electric power services has to keep in view “
(f) the elimination of exploitation and minimization of economic distortions”. On the touchstone of the above statutory provisions alone, the substantive changes attempted through the July SRO or the ensuing corrigendum are in contravention of the letter and spirit of the law;
(F) That giving effect to the July SRO and the Corrigendum would mean that the Federal Government can bypass NEPRA and unilaterally modify an already approved and determined tariff thereby depriving Petitioners of valuable opportunity to be heard on two statutory forums for redress/appeal under the Act which otherwise would have been available to them, had NEPRA notified a modification to the New Tariff in accordance with law;
(G) That the Petitioners cannot be penalized under any circumstances for the failure of the Federal Government to follow the Act and the Tariff Rules for modification of an approved and determined tariff; or the failure of NEPRA to intervene or take any action in dereliction of its statutory -4- C.P No.D-2253 of 2020 & others duties to ensure that consumers were not unlawfully burdened by the actions of the Federal Government or its licences;
(H) That even if it is accepted, without conceding, that the earlier reduction/relief notified by the January SRO was not directly incorporated into the New Tariff as a reduced rate for industrial consumers of K-Electric, Federal Government enjoyed no powers to withdraw a subsidy retrospectively in violation of Articles 38 and 9 of the Constitution.
It is for these reasons, we dispose of all of these connected petitions and those directed to be treated as reserved with the connected bunch in the following terms:-
(a) The Corrigendum dated 22.01.2020 is declared to be illegal, void, issued in excess of authority hence quashed. K-Electric is restrained from enforcing the same in any manner whatsoever as it has resulted in a determination (higher than NEPRA‟s determined tariff) and it is not correcting any errors.
(b) Industrial consumers of K-Electric to be charged tariff as per the left hand column (K-Electric Tariff) of SRO 575(I)/2019 dated 22.05.2019 as determined vide determination dated 05.07.2018 in respect of variable “offpeak hours” charges, and right hand column (Uniform Tariff) in respect of variable “peak hours” charges, as long as subsidy for “peak hours” provided through SRO 12(I)/2019 dated 01.01.2019 holds the field. At any point in time when the “peak hour” subsidy is withdrawn, values shown in the right hand column would become meaningless and tariff will completely fall back to the left hand column (unless any new determination has taken the field).
(c) SRO 810(I)/2019 dated 12.07.2019 is lawful as GoP is solely competent to provide or withdraw any subsidy.
(d) Any sums charged and paid by the Petitioners per the rates specified in the corrigendum after deducting the rates provided in the left hand column (K-Electric Tariff) of SRO 575(I)/2019 as determined vide determination dated -30- C.P No.D-2253 of 2020 & others 05.07.2018 in respect of variable “off-peak hours” charges shall be refunded or adjusted towards the future bills.
(e) Petitioners who have not paid any previous bills or ISPA component for the period July-2019 to Jan-2020 be reissued bills for this period on the basis of the values provided in the left hand column (K-Electric Tariff) of SRO 575(I)/2019 dated 22.05.2019 as determined vide determination dated 05.07.2018 in respect of variable “off-peak” hours charges and be given a reasonable period to make payments as per the foregoing”.
