Payment Disputes: CERC Clears the Air on CTUIL’s Accountability

The Central Electricity Regulatory Commission (CERC) has clarified that the Central Transmission Utility of India Limited (CTUIL) cannot be held liable for interest on delayed adjustment of excess transmission charges, describing the national grid operator as a “revenue-neutral conduit” within the billing framework.

The ruling came while dismissing a petition filed by Sembcorp Energy India Limited seeking Rs 2.26 crore in interest over a 252-day delay in adjusting overpaid transmission charges for October and November 2020.

At the core of the dispute was whether CTUIL should be held responsible for the delay in processing refunds after revised Point of Connection (PoC) rates were notified.

Background

Sembcorp had paid transmission charges based on provisional PoC rates. On February 21, 2021, CERC notified revised rates, which showed that the company had overpaid approximately Rs 19.40 crore.

The Southern Regional Power Committee (SRPC) issued revised Regional Transmission Accounts (RTAs) in February 2021 reflecting the credit. However, the final adjustment was effected only on February 8, 2022.

Sembcorp argued that under the Sharing Regulations, 2020, the adjustment should have been reflected in the second bill issued in May 2021. It contended that CTUIL had acknowledged the credit through supplementary bills in December 2021 but failed to refund or adjust the amount within the stipulated timeframe, causing financial loss.

Citing judicial precedents including the Supreme Court’s ruling in South Eastern Coalfields Ltd. v. State of Madhya Pradesh, the company sought interest based on principles of restitution and time value of money.

CTUIL’s Role: Conduit, Not Discretionary Authority

In its defence, CTUIL maintained that it functions strictly as an intermediary — collecting transmission charges in accordance with RTAs prepared by Regional Power Committees (RPCs) and disbursing them entirely to transmission licensees.

The Commission accepted this characterisation, observing that CTUIL:

• Does not retain surplus funds or derive financial gain from collections;

• Operates as a revenue-neutral entity; and

• Is legally dependent on finalized RTAs from all regions to ensure “full and exact” recovery across the national grid.

CERC noted that CTUIL could not unilaterally process refunds or adjustments without receiving finalized accounts from all regional bodies. According to the record, the final RTA from the Western Region was received only on October 1, 2021.

The utility also argued that while regulations provide for late payment surcharge when beneficiaries delay payments, there is no corresponding provision requiring CTUIL to pay interest on overpayments.

Commission Examined Delay, Found No “Actionable Lapse”

Importantly, the Commission did not grant CTUIL blanket immunity from scrutiny. During proceedings, CERC specifically directed the utility to explain the reasons for the delay in raising revised bills after the notification of updated PoC rates.

After examining the submissions, the Commission concluded that the delay was not attributable to any “wilful default” or “actionable lapse” by CTUIL. Instead, it stemmed from what the order described as the “collective settlement architecture” — a multi-layered billing mechanism dependent on inputs from RPCs and implementing agencies.

Referring to the Supreme Court’s judgment in NTPC v. MPSEB, CERC held that the doctrine of restitution could not be invoked, as CTUIL had not wrongfully retained the funds.

Forward-Looking Directive

While rejecting Sembcorp’s claim for interest, CERC issued a formal directive to CTUIL, RPCs and the implementing agency to avoid delays in future billing cycles and ensure timely issuance of bills following rate revisions.

The order thus clarifies that although CTUIL can be questioned and examined for delays, liability for interest cannot be imposed in the absence of a regulatory provision or a demonstrable wrongful retention of funds.