Bihar Electricity Regulatory Commission

VidyutBhawan-II, J.L.NehruMarg, Patna 800 021

------------------------------------------------------------------------------------------------------
Case No. SMP 11 /202012
In the matter of:

Suo-motu proceeding to specify reduced rate of Late Payment

Surcharge/Delayed Payment Surcharge during lockdown period

In the matter of:

The Commission on its own Motion

VS
1.North Bihar Power Distribution Company Ltd.
2.South Bihar Power Distribution Company Ltd.
3.Bihar State Power Transmission Company Ltd.
4.Bihar Grid Company Ltd.
………………. Respondents

Quoram:
1. S. K. Negi - Chairman
2. Rajeev Amit - Member
Appearance:
1 Deepak Kumar, CE /Commercial On behalf of North Bihar
Power Distribution
2 Ravi Kumar, Sr. Manager/ Revenue Company Ltd

3 Purushottam Prasad, ESE /Revenue On behalf of South Bihar

Power Distribution
4 Nadeem Ahmed, ESE /Commercial Company Ltd

5 Sanjay Kumar Singh, Manager (O&M) On behalf of Bihar Grid

Company Ltd

Date of hearings: -22.05.2020 & 09.06.2020

ORDER
Date: 12.06.2020
1. Background
1.1 Ministry of Power, Government of India considering the gravity and
unprecedented nature of situation arouse due to imposition of countrywide
lockdown and subsequent restrictions placed on the movement of public,
opening of offices and establishments etc. to contain „COVID-19‟ pandemic
as force majeure conditions issued a direction u/s 107 of the Electricity Act,
Page 1 of 10
 2003 (herein after referred as to the Act) to CERC vide its letter No.
23/22/2019-R&R Part-4 dated 28.3.2020 to specify a reduced rate of Late
Payment surcharge (LPS) to GENCOs and TRANSCOs under the
jurisdiction of CERC with a copy marked to the Chief Secretaries of all State
Governments requesting them to issue a similar direction under Section 108
of the Act to the respective SERCs. The excerpts of the aforesaid direction
are as under:

i. “The Commission may specify a reduced rate of Late Payment

Surcharge (LPS) for payment which become delayed beyond a period
of 45 days (from the date of presentation of the bill) during the period
from 24th March 2020 to 30th June 2020 to generating companies and
licensees treating the restrictions placed by the Central Government
vide order dated 24.03.2020 to contain COVID-19 as an event of force
majeure. The reduced LPS shall be applicable for such delayed
payments till 30th June 2020. The LPS should not be more than the
cost that the generating companies or transmission licensees would
have to bear because of the delayed payment.

ii. For generating companies and transmission licensees whose

tariff was determined under section 63 by the Central Commission,
discoms may claim the relief from its obligations regarding the rate at
which LPS is to be paid, as per the force majeure provisions given in
the respective power purchase agreement.”

1.2 Having not received any such direction from Government of Bihar with
regard to Late Payment Surcharge (LPS) to be charged by the state
generating companies and intra state transmission licensees from its
beneficiaries namely, South Bihar Power Distribution Company Limited
(SBPDCL) and North Bihar Power Distribution Company Limited
(NBPDCL), the Commission in the interest of electricity consumers decided
to initiate instant suo-motu proceeding to specify a reduced rate of Late
Payment Surcharge.

Page 2 of 10
1.3 The Commission, having regard to such force majeure condition equally
applicable to the end-consumers, through the instant suo motu proceedings
also decided to specify a reduced rate of Delayed Payment Surcharge
(DPS) to be charged by the state Discoms namely SBPDCL AND NBPDCL
from their retail consumers.

1.4 Accordingly, the Commission after initiating the instant suo-motu

proceedings SMP-11/2020 on its own motion, issued notices to all
concerned parties fixing the date of hearing on 22.05.2020.

1.5 The commission for the sake of transparency and objectivity in its approach
in deciding the issues as per regulatory procedure decided to place the
proceedings of the case in the public domain to the extent possible by
uploading it in the official website of the BERC on 18/05/2020. .
2. Hearing
2.1 Heard the parties on 22.05.2020. None was present to represent Bihar
State Power Transmission Company Limited and Bihar Grid Company
Limited during the hearing nor did these two transmission companies filed
any written replies/objections to the proceedings though notices were
issued to them. The representatives of SBPDCL and NBPDCL were present
during the hearing and prayed for adjournment of the case citing a letter no.
159 dated 21.05.2020 of CE (Commercial), NBPDCL addressed to the
Secretary, BERC in which it has been stated that the Energy Department,
Government of Bihar is going to take a decision with respect to issuing of
direction u/s 108 of the Act to the Commission on the instant subject by
31.05.2020. Accordingly the Commission, considering the request of the
respondents, adjourned the hearing and posted the case for 09.06.2020 for
next hearing.
2.2 The matter again came up for hearing on 09.06.2020. The decision of the
state government as stated by the Discoms to be available by 31/5/2020
has not been received in the Commission till the date of hearing. The
representatives of both the DISCOMs and BGCL were present during the
hearing on 09.06.2020. The Chief Engineer (Com.), NBPDCL on behalf of

Page 3 of 10
 both the DISCOMs submitted that no direction u/s 108 of the Act has yet
been issued by the Energy Department, Govt. of Bihar.
2.3 While explaining the implication of reduction in LPS/DPS and making
available accrued benefits to the end consumers in the light of Covid-19
pandemic induced force majure event, the Commission sought to know from
the representative of NBPDCL, SBPDCL and BGCL present during the
hearing their objections to the instant proceedings and gave them ample
opportunities to enlighten the Commission about their point of view. The
opposite parties did not offer any cogent reasons against the proposed
reduction in the rate of LPS/DPS and they left the issue on the Commission
to be decided as it deems fit & proper.
Neither any comments/objections/suggestions have been received
from any other stake holder nor any of them appeared during the hearings.
The hearing was concluded and the orders were reserved.
3.Commission's analysis:

3.1. The Commission is conscious of the fact that the Covid-19 pandemic has
created an unprecedented crisis at global level including India and the
normal life is severely affected by it. The entire country observed one day
complete Janta Curfew at the clarion call of Hon'ble Prime Minister followed
by state and nationwide complete lock down from 25/03/2020 for three
weeks which was extended up to 31st May, 2020 with certain relaxations.
However, generation, transmission, distribution and supply of electricity
being essential services had been exempted from the purview of the
lockdown restrictions since beginning.
3.2 CERC, in compliance of the direction of MoP, has passed a suo-motu Order
dated 03rd April 2020 regarding reduction of Late Payment Surcharge, the
operative part of which reads as follows:-
“13. Keeping in view the directions issued by the Government of India under
section of the Act and to address the difficulties faced by the distribution
companies (beneficiaries of the generating stations and long term customers
of inter-State transmission systems) on account of the unprecedented
situation arising out of the restrictions placed by the Central Government and
State Governments on the movement of public and opening of offices and

Page 4 of 10
 establishments etc., the Commission in exercise of its powers under
Regulation 76 of the 2019 Tariff Regulations relaxes the provisions of
Regulation 59 of 2019 Tariff Regulations to provide that if any delayed
payment by the distribution companies to the generating companies and
inter-State Transmission licensees beyond 45 days from the date of the
presentation of the bills falls between 24.03.2020 and 30.06.2020, the
concerned distribution companies shall make the payment with LPS at the
reduced rate of 12% per annum that translates into 1% per month"
"16. As per the directions issued under section 107 of the Act the generating
companies whose tariff has been determined under section 63 of the Act by
this Commission, relief on the late payment surcharge for payment which
become delayed beyond 45 days (from the date of presentation of the bill)
during the period from 24.03.202 to 30.06.2020 may be claimed in view of
force majeure provisions of the respective Power Purchase Agreements
(PPAs)".
3.3 The State of Bihar is in lockdown since 25.03.2020. The Commission vide
its order dated 29.04.2020 in case no-06/2020, on request of petitioners
SBPDCL & NBPDCL, has already extended various relaxations including a
direction that the discoms shall not take any coercive action on the electricity
consumers till 30/06/2020 such as disconnection of lines etc due to non-
payment of bills. Commission is aware that due to lockdown and imposition
of restrictions on movement of public, consumers across all categories are
finding it difficult to make payment of their bills in time despite online
facilities. As a result, collection of both the Discoms are likely to fall
substantially. This will affect the liquidity position of Discoms thereby
reducing their ability to clear the dues of the Gencos & Transcos in time.
3.4 At present, there is no major conventional electricity generating company in
the State except a few mini & micro hydro electric plant of Bihar State Hydro
Power Corporation(BSHPC) whose tariff is determined by the Commission
u/s 62 of the Electricity Act` 2003. As regards the transmission licensee
whose tariff is determined by the Commission under Section 62 of the Act,
Regulation 40 of the Bihar Electricity Regulatory Commission (Multi Year

Page 5 of 10
 Transmission Tariff & SLDC Charges) Regulations, 2018, makes following
provision with respect to Late Payment Surcharge:
“In case the payment of any bills for charges payable under these
Regulations is delayed by a beneficiary (ies) beyond a period of 60 days
from the date of billing a late payment surcharge at the rate of 1.25% per
month on billed amount shall be levied for the period of delay by the
Transmission Licensee.”
3.5 Similarly, for the distribution licensee whose tariff is determined by the
Commission under Section 62 of the Act, the TERMS AND CONDITIONS OF
TARIFF of the tariff order dated 20.03.2020 issued in Case No. 30 of 2019 & 31
of 2019 in compliance to BERC (Multi Year Distribution Tariff) Regulations
2018, specifies the provision for payment of delayed payment surcharge as
under:
“7. In case, consumer does not pay energy bills in full within 10 days
grace period after due date specified in the bill, a delayed payment
surcharge of one and one-fourth (1.25) percent per month or part thereof on
the outstanding principal amount of bill will be levied form the original due
date for payment until the payment is made in full without prejudice to right
of the licensee to disconnect the supply in accordance with Section 56 of
the Electricity Act, 2003. The licensee shall clearly indicate in the bill itself
the total amount, including DPS, payable for different dates after the due
date after allowing for the grace period of 10 days. No DPS shall be
charged on DPS arrear.”
3.6 The Commission also observes that the Reserve Bank of India has permitted
lending institutions and banks to grant a moratorium of three months on
repayment in respect of all term loans and has clarified that interest shall
continue to accrue on the outstanding portion of the term loans during the
moratorium period. Similarly, in respect of working capital facilities, the Reserve
Bank of India has permitted lending institutions and banks to defer the recovery
of interest on such facilities, but has clarified that accumulated accrued interest
shall be payable after the deferment period from 01.03.2020 up to 31.05.2020.
The relevant portion of the RBI circular No. RBI/2019- 20/186

Page 6 of 10
 DOR.No.BP.BC.47/21.04.048/2019-20 dated 27th March, 2020 is extracted
below:

“(i) Rescheduling of Payments – Term Loans and Working Capital

Facilities

2. In respect of all term loans (including agricultural term loans, retail and crop
loans), all commercial banks (including regional rural banks, small finance
banks and local area banks), co-operative banks, all-India Financial Institutions,
and NBFCs (including housing finance companies) (“lending institutions”) are
permitted to grant a moratorium of three months on payment of all
instalments1falling due between March 1, 2020 and May 31, 2020. The
repayment schedule for such loans as also the residual tenor, will be shifted
across the board by three months after the moratorium period. Interest shall
continue to accrue on the outstanding portion of the term loans during the
moratorium period.

3. In respect of working capital facilities sanctioned in the form of cash

credit/overdraft (“CC/OD”), lending institutions are permitted to defer the
recovery of interest applied in respect of all such facilities during the period
from March 1, 2020 up to May 31, 2020 (“deferment”). The accumulated
accrued interest shall be recovered immediately after the completion of this
period.”

3.7 Thus, intra-State transmission licensees and distribution licensees as well as

BSHPC can opt for moratorium on payment of installments of term loan and
defer the payment of interest in respect of working capital facilities during the
period from March 1, 2020 up to May 31, 2020 (“deferment”), but the interest
accrued is not waived. Further, in case of working capital facilities, accumulated
accrued interest shall be recovered immediately after the completion of this
period. The interest rate applicable will be the lending rate of the lending
institutions or banks. Thus, the transmission licensees and distribution licensees
as well as BSPHC will have to incur the cost of working capital facilities even
during the deferment period.

Page 7 of 10
3.8 Therefore, intra-State transmission licensees and distribution licensees as well
as BSPHC regulated by this Commission shall be required to continue to
discharge their debt service obligations and arrange for working capital for day
to day operations. Regulation 26 of 2018 Multi Year Transmission & SLDC
Tariff and Multi Year Distribution Tariff Regulations relating to computation of
the rate of interest on working capital are extracted as under:
“Interest on working capital shall be on normative basis and rate
of interest shall be equal to the State Bank one-year Marginal Cost of
Funds-based Lending Rate („MCLR‟) as of the date on which petition for
determination of tariff is filed plus 150 basis points. The rate of interest
for the purpose of Truing-up shall be the weighted average MCLR
of the concerned Financial Year plus 150 basis points”
3.9 Therefore, Commission is of the view that in the given situation, the provisions
of 2018 Multi Year Tariff Regulations with regard to interest on working capital
should be adopted as the normative rate of LPS in place of the penal rate of
LPS specified under Regulation 40 of the 2018 Bihar Electricity Regulatory
Commission (Multi Year Transmission Tariff & SLDC Charges) Regulations for
delayed payments falling due beyond 60 days, during the period from
25.03.2020 to 30.06.2020 i.e. from the date on which lockdown has actually
been imposed till 30.06.2020. Similarly, the normative rate of DPS in place of
the penal rate of DPS specified under TERMS AND CONDITIONS OF TARIFF
of the tariff order dated 20.03.2020 issued in case no. 30 of 2019 & 31 of 2019
for delayed payments falling due beyond 10 days grace period during the
period from 25.03.2020 to 30.06.2020 should be adopted.

As per the MCLR historical data from website of State Bank of India,
one year MCLR on 10.03.2020, 10.04.2020, 10.05.2020 & 10.06.2020 are
7.75%, 7.40%, 7.25% & 7% respectively. Accordingly, the weighted average
MCLR for the period 25.03.2020 to 30.06.2020 comes to 7.35%. By adding 150
basis points, rate of interest as per 2018 Multi Year Tariff Regulations works
out to 8.85% per annum which translates into 0.7375% per month rounded off
to 0.75% per month.

3.10 It would be pertinent to mention in this context that the direction u/s 107 of the
Act of Ministry of Power Government of India to CERC stipulates requirements
Page 8 of 10
 for reduced rate of LPS and that the LPS should not be more than the cost that
the generating companies or transmission licensees would have to bear because
of the delayed payment. However, no such direction of the Government of Bihar
has yet been received to this Commission in the light of the request to the state
governments made by Ministry of Power, Government of India. The Commission
is of the firm opinion that the present circumstances due to outbreak of COVID-
19 pandemic are unforeseen and unprecedented which require the Commission
to act proactively to balance the interest of consumers and utilities. The effect of
lock-down due to COVID-19 is well known to each constituent of the Power
Sector and measures to mitigate hardships to the consumers and the utilities in
public interest are being taken across the nation while ensuring continuity in
operation of each utility. Given that the Commission follows normative approach
for the purpose of interest on working capital irrespective of the actual loan taken
by the generating company, transmission licensees or the distribution licensees,
the Commission is of the view that providing normative LPS/DPS rate would
satisfy the requirements.

3.11 Commission is vested with the power to adopt procedures in variance with
provisions of its Regulations in special circumstances vide Regulation 37(2) of
the BERC (Conduct of Business) Regulations, 2005, Regulation 43 of the
BERC (Multi Year Transmission Tariff and SLDC Charges) Regulations, 2018
and Regulation 39 of the BERC (Multi Year Distribution Tariff) Regulations,
2018. Further, the Regulation 37(3) of BERC (Conduct of Business)
Regulations, 2005 provides that nothing in these Regulations shall, expressly
or impliedly, bar the Commission to deal with any matter or exercise any power
under the Act for which no regulation has been framed, and the Commission
may deal with such matters or exercise such power in such manner as it thinks
fit.

4. Order
4.1 Keeping in view of the above, this Commission in exercise of its powers under
Regulation 37(2)& 37(3) of BERC (Conduct of Business) Regulations, 2005,
Regulation 43 of the BERC (Multi Year Transmission Tariff and SLDC Charges)

Page 9 of 10
 Regulations, 2018 and Regulation 39 of the BERC (Multi Year Distribution
Tariff) Regulations relaxes the provisions to the extent that in the event of
delayed payment by the distribution licensees to the intra-State Transmission
licensees and BSPHC beyond 60 days from the date of the presentation of the
bills falling between 25.03.2020 and 30.06.2020, the concerned distribution
companies shall make the payment with LPS at the reduced rate of 0.75% (as
against existing 1.25%) per month. Likewise the Commission also relaxes the
provision to the extent that in the event of delay in payment by the consumers
to the distribution licensees beyond 10 days of grace period, between
25.03.2020 to 30.06.2020, the concerned consumer shall make the payment
with DPS at the reduced rate of 0.75% (as against existing 1.25%) per month.
4.2 It is clarified that if the period of 10 days beyond the due date of electricity bill of
consumers or the period of 60 days beyond the due date of the presentation of
the bill by intra-State transmission licensees, as the case may be, falls before
25.03.2020 or after 30.06.2020, the concerned consumer or distribution
company, as the case may be, shall be liable to pay the DPS/LPS as per the
governing Regulation or term & conditions of the concerned Tariff Order.
4.3 It is further clarified that the intra-state generating companies whose tariff has
been adopted under Section 63 of the Act by this Commission, relief on the
Late Payment Surcharge for payment which become delayed beyond stipulated
period as per the power purchase agreements (PPAs) (from the date of
presentation of the bill) during the period from 24.03.2020 to 30.06.2020 may
be claimed in terms of the force majeure provisions of the respective power
purchase agreements (PPAs).
4.4 Let the order be communicated to the SBPDCL, NBPDCL, BSPTCL, BGCL and
other Stakeholders for information and compliance.

Sd/- Sd/-
(Rajeev Amit) (S.K Negi)
Member Chairman

Page 10 of 10