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LESA shortchanges consumers

india Updated: Nov 28, 2006 01:52 IST

WHEN IT comes to its own interest, the electricity department invokes the provisions of the Electricity Act to nail down consumers. But it often turns a blind eye to the law when there is a question of the consumers’ interest.

The Lucknow Electricity Supply Administration (LESA) is virtually cheating its consumers by paying them lower interest on their security deposits in violation of the Electricity Act 2003. Though the Act requires a distribution licencee to pay its consumers at the prevailing bank rate or more, the LESA is paying at half the rate. And the power department was paying no interest at all to the consumers in the rest of the State, sources said. According to a senior official, the UPPCL is sitting on around Rs 100 crore security deposits received from consumers all over the State.

“The distribution licencee shall pay interest equivalent to the bank rate or more, as may be specified by the State Commission concerned, on the security deposit referred to in sub-section (1) and such security on the request of the person who gave such security,” says Section 47 (4) of the Electricity Act 2003. The Act came into effect on June 10, 2003.

The prevailing bank rate of interest varies from 6 and 8 per cent, as per the RBI guidelines. But the LESA is paying interest at 3 per cent only. It adjusts the interest amount in the bills for April-May every year. It started to pay even this 3 per cent from 2002.

No wonder, some enlightened consumers have already started raising their eyebrows. For example, Lucknow Jan Hit Manch, with retired High Court Judge Justice RC Deo Sharma as its patron, has been writing regularly to the UPERC, asking why the consumers were not being paid interest on their security deposits at the bank rate.

The body has now filed an application under the Right to Information Act. Janhit Manch president SP Khanna said the power department was making a mockery of the law by paying a lower rate of interest to the consumers on their security deposits.

Khanna said, “No interest on security deposits was paid to consumers till 2002, although they were entitled to 3 per cent interest as per the rules prevailing at the time.

“We, therefore, demand that UPERC direct the UPPCL/LESA to clear the consumers’ arrears of 3 per cent interest on security deposits from the date it was deposited to the year 2002 and interest at the bank rate or more from June 2003,” he added.

UPPCL director (Finance) SK Agrawal also said consumers should be paid at the rate of 6 per cent and it would have to be seen why LESA was not paying them at that rate. But, he hastened to add, “Interest rates differ from bank to bank, varying from 3 per cent to 6 per cent.” He suggested that the UP Electricity Regulatory Commission should specify the rate of interest to be paid to the consumers.

LESA chief engineer AK Singh said LESA was paying the interest as per the old agreement between it and the consumer. Under that agreement, the interest rate was 3 per cent. “If the Electricity Act provides for a higher rate of interest, maybe necessary changes are being made,” he said. 

UPPCL director (Commercial) Arun said he did not agree with the provision requiring the department to pay interest to consumers at the bank rate. “After all we are not earning any profit from the deposit, but using the money to purchase power for consumers,” he averred.

Interestingly, while the Act requires the Electricity Regulatory Commission to specify the bank rate at which the licensee should pay the interest to the consumers on their security deposit, the commission in UP has not specified it. 

Commission chairman Vijoy Kumar admitted that the licencee must pay the interest to the consumers at the prevailing bank rate which was not less than six per cent at present. “We have already provided this in the Distribution Code,” he said. Kumar said the Commission had received complaints about LESA/UPPCL paying only 3 per cent interest on consumers’ deposits and “we are looking into the matter”.