LHC declares all power surcharges ‘unconstitutional’

LAHORE: A division bench of the Lahore High Court (LHC) on Friday annulled all kinds of surcharges being collected from consumers in electricity bills and declared them unconstitutional.
These surcharges include the Equalisation Surcharge, debt servicing surcharge, Universal Obligation Fund Surcharge and Neelum-Jhelum Surcharge. The court directed the federal government to refund or adjust the collected amount under the heads of these the upcoming bills. The court ordered the National Electric Power Regulatory Authority (Nepra) to work out a repayment plan within three months.
While disposing of 269 identical petitions against collection of different kinds of surcharges, the bench comprising Justice Syed Mansoor Ali Shah and Justice Ayesha A Malik struck down the Section 31 (5) of the Regulation, Transmission and Distribution of Electric Power Act, 1997 and the surcharges it envisages i.e. equalisation surcharge, debt servicing surcharge, universal obligation fund surcharge and Neelum Jhelum surcharge. It declared these surcharges as unconstitutional and illegal.
The court was assisted by amicus curiae Khaleequz Zaman, Waqas Ahmad Meer and Waseeul Hasnain Naqvi. The petitioners’ counsel assailed Section 31(5) of Nepra Act, 1997 stating that the power of the federal government to levy surcharge is ultra vires to the Constitution and a negation of the Constitution as the same has been added/amended through the Finance Act, 2008.
They took the plea that provision of electricity is a fundamental right under articles 9 and 14 and the Annual Tariff Determination under the prevailing practice by including the line losses, theft, administrative losses etc is violation of the aforesaid fundamental rights, and it also amounts to exploitation in terms of Article 3 of the Constitution.
They further argued that fuel adjustment surcharge, determined by Nepra, was unlawful, and against the fundamental rights of the petitioners because the unexplained cost of test energy delivered from Nandipur and Guddu along with transmission losses could not be adjusted.
They said the impact of the surcharge on all the consumers except the lifeline consumers was more than Rs10 billion. The court suspended the impugned notification and sought a reply from Nepra.
The counsel said citizens were being forced to pay electricity bills under different surcharges including the Universal Obligation Fund (UOF) surcharge, debt-servicing surcharge, Neelum Jhelum surcharge, etc. They said the authorities were not providing electricity but charging heavy bills — which was against the fundamental rights of citizens.
They pointed out that on December 8, 2014, the court had directed the Ministry of Water & Power, chairman/member Nepra, managing director Pakistan Electric Power Company (Pepco), CEO(s) Lesco/Fesco/Gepco/Iesco/Mepco to stop charging bills under different surcharges and remove them from bills. However, the practice was continuing, said the petitioner.
He said by not complying with the LHC orders, the authorities concerned had committed a contempt of court. The officials, he said, refused to delete the above surcharges on the pretext that they were not bound to obey the LHC orders, except for instructions from the hierarchy of distribution company.