Captive consumers’ relaxed right to reduce contract demand does not override prescribed procedural timelines.

The Appellant, a cement manufacturer and captive user of power generated by Arasmeta Captive Power Company Pvt. Ltd., was permitted to operate its captive plant in parallel with the Respondent-DISCOM’s system and to wheel 16 MW of power to its Sonadih cement plant.

By letter dated 10 October 2006, the Appellant sought reduction of its contract demand from 9,500 KVA to zero with effect from 16 October 2006, relying on the Chhattisgarh State Electricity Regulatory Commission’s orders dated 6 February 2006 and 29 September 2006, which liberalised contract-demand reduction for captive consumers.

CSPDCL declined to give immediate effect to the request on 4 November 2006 and subsequently approved reduction to zero with effect from 1 January 2007.

Meanwhile, wheeling of 16 MW was operationalised from 4 November 2006, but CSPDCL continued billing the Appellant on the basis of the subsisting 9,500 KVA contract demand for the period 4 November–31 December 2006.

The Appellant claimed a refund of ₹1,40,96,072 for allegedly excessive demand, penal demand, energy and related charges. Its petition before the State Commission was ultimately dismissed on merits after remand proceedings concerning limitation. The present appeal challenged that decision.

Whether the State Commission’s orders permitting captive consumers to reduce contract demand “to any extent, even to zero, at any time” dispensed with the procedural requirements and timeline prescribed under Clause 7.11 of the Supply Code, 2005.

Whether operationalisation of open access and wheeling of 16 MW from 4 November 2006 automatically resulted in reduction of the Appellant’s contract demand to zero from that date.

Whether CSPDCL was entitled to levy contract-demand and related charges for the period from 4 November to 31 December 2006.

The Tribunal applied Clause 7.9 of the Chhattisgarh State Electricity Supply Code, 2005, which ordinarily restricted reduction of contract demand during the initial two-year agreement period and permitted only limited reduction in specified circumstances.

It also applied Clause 7.11, requiring the licensee to verify and decide an application for reduction within 60 days by a reasoned order, with deemed permission arising only upon failure to decide within the prescribed further period; any approved reduction takes effect from the first day of the month following communication of the decision or deemed permission.

The Commission’s orders dated 6 February and 29 September 2006 relaxed the substantive restrictions in Clause 7.9 for captive consumers, permitting reduction to any extent, including zero, and once during each year, but did not expressly modify Clause 7.11’s procedural requirements.

The Tribunal further recognised that open access and contract demand are legally distinct: open access regulates use of the distribution system and wheeling of energy, whereas contract demand concerns the licensee’s obligation to maintain capacity for the consumer.

Section 42(2) of the Electricity Act, 2003, governing open access, does not override the Supply Code’s procedure for modification of contract demand.

The Tribunal construed the expression “any time” contextually. It held that the Commission’s relaxation removed the substantive two-year prohibition and the requirement of demonstrating compelling reasons under Clause 7.9, but did not eliminate the procedural discipline under Clause 7.11, since the Commission’s orders contained no reference to or modification of that clause.

The Appellant’s application was therefore not self-executing from the date requested. CSPDCL was entitled to examine the application, verify the relevant conditions, and determine the effective date in accordance with the Supply Code.

Since CSPDCL approved reduction to zero with effect from 1 January 2007, that date complied with Clause 7.11.

The Tribunal also rejected the argument that commencement of wheeling on 4 November 2006 automatically extinguished the existing contract demand. Wheeling could be accounted for independently while the 9,500 KVA contract demand remained operative until formally modified under the Supply Code.

Consequently, the absence or operationalisation of open-access arrangements did not invalidate billing based on the subsisting contract demand.

The levy of demand and related charges for the period from 4 November to 31 December 2006 was therefore upheld.

The impugned order of the State Commission was affirmed, the appeal was dismissed, and pending interlocutory applications were disposed of accordingly.