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The Supreme Court on Friday held that the captive consumers/captive users, who form a separate class other than the consumers defined under Section 2(15) of the Electricity Act, 2003, shall not be subjected to and/or liable to pay additional surcharge leviable under Section 42(4) of the Electricity Act, 2003.

A bench of Justice MR Shah and Justice Sanjiv was considering an issue “Whether the captive consumers/captive users are liable to pay the additional surcharge leviable under Section 42(4) of the Electricity Act, 2003?"

The bench noted that "So far as captive consumers are concerned, they incur a huge expenditure/invest a huge amount for the purpose of construction, maintenance or operation of a captive generating plant and dedicated transmission lines."

The Maharashtra State Electricity Distribution Co. Ltd. had approached the apex court challenging the order of the Appellate Tribunal for Electricity whereby the Appellate Tribunal had allowed the appeal filed by JSW Steel Limited the ‘captive consumers’ and has set aside the order passed by the Maharashtra Electricity Regulatory Commission holding that the group of ‘captive consumers’ are liable to pay an additional surcharge.

The bench observed that "Sub-section (4) of Section 42 shall be applicable only in a case where the State Commission permits a consumer or class of consumers to receive supply of electricity from a person other than the distribution licensee of his area of supply and only such consumer shall be liable to pay additional surcharge on the charges of wheeling, as may be specified by the State Commission."

Whereas, the bench further noted that "Captive user requires no such permission, as he has statutory right. At this stage, it is required to be noted that as per the Scheme of the Act, there can be two classes of consumers, (i) the ordinary consumer or class of consumers who is supplied with electricity for his own use by a distribution licensee/licensee and; (ii) captive consumers, who are permitted to generate for their own use as per Section 9 of the Act, 2003."

The bench dismissed the plea while directing that the additional surcharge already recovered from the captive consumers/ captive users shall be adjusted in the future wheeling charges bills.

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