SC annuls LHC verdict on fuel price adjustment

ISLAMABAD: The Supreme Court on Monday overturned the Lahore High Court’s ruling that had declared the collection of fuel price adjustment (FCA) on the monthly bills of electricity consumers illegal.

A three-member bench of the apex court, led by Chief Justice Qazi Faez Isa, deemed the judgment by the Lahore High Court both constitutionally and legally impractical. The court noted that the Appellate Tribunal of the National Electric Power Regulatory Authority (NEPRA) was the appropriate forum to address the matter.

In disposing of the power transmission companies’ pleas, the court directed them to file an appeal before NEPRA’s Appellate Tribunal within 10 days, which should expedite the matter’s hearing and resolution.

During the hearing, Advocate Salman Akram Raja, representing the power distribution companies, argued that the formation of NEPRA was unconstitutional at the time the fuel price adjustment was imposed in May 2022.

In response, Chief Justice Qazi Faez Isa observed that if the formation of NEPRA was indeed unconstitutional, the Lahore High Court should have addressed this issue separately. The chief justice noted that the single bench’s decision exceeded its authority and could not be upheld.

Justice Athar Minallah, another member of the bench, stressed that neither the Supreme Court nor had any other court jurisdiction to handle the technical matters of NEPRA. He indicated that the Lahore High Court’s verdict had overstepped its boundaries in this context.

Assisting the court, Attorney General Mansoor Usman Awan suggested that both NEPRA and DISCOS were open to resolving the matter by approaching the appropriate tribunal available for addressing the issue.

The court disposed of the petitions after annulling the Lahore High Court’s verdict and directed the petitioners to file an appeal with the Appellate Tribunal of NEPRA within 10 days.

The court also ruled that the outstanding dues from companies and industries following the Lahore High Court’s verdict would now be subject to the decision of the NEPRA Appellate Tribunal.

It’s worth mentioning that the power distribution companies had challenged the Lahore High Court’s decision from February this year, which had declared the collection of fuel price adjustment (FCA) on the monthly bills of electricity consumers illegal.

In that ruling, a single bench of the Lahore High Court, led by Justice Ali Baqar Najafi, had declared the demand for fuel price adjustment, quarter tariff adjustment, and the change of tariff status from industrial to commercial by the National Electric Power Regulatory Authority (NEPRA) illegal, citing that it was not fully constituted under Section 3 of the NEPRA Act, 1997.

The court had also directed NEPRA to take action against overcharging and ensure consumers are informed about the charges regularly.

The Lahore High Court had further directed NEPRA to determine responsibility for overcharging based on line losses and less efficient power plants, with the financial burden shared by companies in a rational proportion. The federal government was also directed to provide a maximum subsidy to domestic consumers of 500 units per month and refrain from imposing extraordinary taxes unrelated to energy consumption.

The LHC had emphasised that NEPRA should consider that the consumer-producer interaction should not be adversely affected by a fiduciary relationship, as imposing various taxes that could be recovered through other means amounted to economic hardship for consumers.