RECOVERY OF ELECTRICITY DUES BY DISTRIBUTION COMPANIES IN THE STATE OF TELANGANA AND IMPLICATIONS OF THE ELECTRICITY (RIGHTS OF CONSUMERS) RULES, 2020

The Electricity Act, 2003 (“Act”) is the extant legislation that consolidates the legal framework governing the Indian energy sector. It provides the overarching legal regime with regard to generation, transmission, distribution, trading, use of electricity, along with other general measures for development of the electricity industry such as promoting competition and rationalising electricity tariff.

The main provision governing electricity charges is Section 45 of the Act. Thereunder, a distribution licensee can recover charges in accordance with the regulations fixed by the concerned state commission from time to time.

It is important to note that a limitation period of 2 (two) years with regard to recovery of electricity charges is provided under the Act, unless such sum is shown continuously as an arrear[1]. Section 56 of the Act further provides distribution companies the right to disconnect the electric supply of a consumer after providing a 15 (fifteen) days’ notice.

The main remedy available with a distribution company is the filing of a civil suit as a summary suit under Order XXXVII of the Civil Procedure Code, 1908 to recover its dues. The limitation period is counted from the date when the bill is first raised and not when the electricity is consumed. Summary suit is applicable to all suits where the plaintiff seeks to:

1. recover a fixed sum of money or amount in the nature of debt, which is  

1. payable on a written contract or an enactment.

This is a handy mechanism as the electricity bills can, and generally are, drafted in a manner that they fulfil the above ingredients for admissibility under Order XXXVII.

However, the recently notified Electricity (Rights of Consumers) Rules, 2020 (“Electricity Consumer Rules”) that create corresponding duties on distribution companies have to be kept in mind by distribution companies while undertaking the above steps as they may get exposed to counter-claims from consumers. As per the Electricity Consumer Rules:

1. It is the duty of every distribution licensee to supply electricity on request made by an owner or occupier of any premises in line with the provisions of Act.

1. It is the right of a consumer to have minimum standards of service for supply of electricity from the distribution licensee in accordance with the provisions made in these rules. The key rights provided to consumers under the Electricity Consumer Rules are provided below:

1. Option to purchase the electricity meter itself or through the distribution licensee (on payment of applicable charges).

1. Right to receive rebate of two to five percent in case the electricity bill is not served within a specified time period.

1. Right to receive information along with the bill regarding the authority with whom grievance or complaint pertaining to electricity bills can be lodged, along with the distribution licensees’ website.

1. Supply of 24x7 power to all consumers by the distribution licensee (save for certain exceptions for some categories of consumers like agriculture which will be specified)

1. Right to be a ‘prosumer’ i.e., a customer can maintain consumer status and have the same rights as the general consumer, while also having right to set up Renewable Energy (RE) generation units – either by itself or through a service provider.

1. Right to be automatically compensated for parameters which can be monitored remotely when it can be successfully established that there is a default in performance of the distribution licensee.

1. Creation of a Consumer Grievance Redressal Forum to address the grievances of consumers.

1. Right to access various services such as application submission, monitoring status of application, payment of bills, status of complaints raised, etc., through website, web portal, mobile app and various designated offices of the distribution licensee.

Apart from the above and specifically for the State of Telangana,  the ‘General Terms and Conditions of Supply of Distribution and Retail Supply Licensees’[2] framework is applicable for recovery of dues and states the following:

“The amounts due to the Distribution Licensees towards CC charges or any other charges including the charges payable under the provisions of Section 126 of the Act and towards the revenue loss / civil liability on account of theft of electricity u/s 135 of the Act shall be recoverable in accordance with the APSEB (Recovery of Dues) Act, 1984, and the rules made thereunder.”

The Telangana State Electricity Board (Recovery of Dues) Act, 1984 (“Debt Recovery Act”) provides for a powerful remedy to distribution companies in Telangana wherein electricity dues have to be paid, along with interest, upon service of 15 (fifteen) days’ notice. Importantly, electricity dues are treated as ‘arrears of land revenue’ under the Debt Recovery Act that provides distribution companies other mechanisms to recover the dues, such as seizure and sale of movable and immoveable property under the Telangana Revenue Recovery Act, 1864.

Thus, a variety of legal mechanisms are provided to distribution companies at the Central level, as well as the State of Telangana, for the recovery of dues from consumers. While these legal mechanisms are indeed necessary to ensure that consumers pay their electricity bills on time, the corresponding Electricity Consumer Rules are  a welcome step to ensure that distribution companies are kept accountable for their service standards towards consumers while recovering timely payments through the above mechanisms.

To conclude, the Electricity Consumer Rules are in tune with the current market developments such as decentralised power generation and increased open-access adoption by seeking to create a more balanced legal regime in the Indian power sector that protects the interests of consumers and professionalises the operations of distribution licensees. With the steady increase in private sector entities operating as distribution licensees (including as distribution franchises), the various obligations on distribution licensees to provide assured minimum standard of services to consumers such as 24x7 supply of power, consumers acting as ‘prosumers’ and specialised grievance redressal forum will promote healthy competition amongst distribution licensees in an open-access regime to attract and retain consumers.

The views and opinions expressed in this article belong solely to the author and do not reflect the position of Tatva Legal, Hyderabad.

[1] Section 56, Electricity Act, 2003.

[2] General Terms & Conditions of Supply Under Clause 21 of the Distribution and Retail Supply Licence No. 13/2000, Approved by the APERC in proceedings No. Secy/01/2006, dated 06.01.06 and amended up to 26.10.2016. Adopted by the TSERC vide Reg. 1 of 2014