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6. The first issue is regarding maintainability of single petition for generation, transmission and retail Appeal Nos. 192 & 206 of 2010 supply tariff preferred by the first respondent before the State Commission.

6.1. According to Shri Rajah, learned senior counsel for the appellants, the first respondent has not complied with the Regulations by not submitting the information for generation, transmission and retail supply tariff in distinct formats as specified in the Tariff Regulations and therefore, the State Commission ought to have rejected the tariff petition. 6.2. According to the learned Counsel for the State Commission, the State Electricity Board has been unbundled, pursuant to a transfer scheme, into three Corporations, viz. Tamil Nadu Transmission Corporation, Tamil Nadu Generation & Distribution Corporation Ltd. and TNEB Ltd. The TNEB has been permitted to continue to function as an integrated Appeal Nos. 192 & 206 of 2010 utility till 15.9.2010. Hence, even though TNEB had filed a single application, it was maintainable. The State Commission has determined the generation, transmission and retail tariff in accordance with the Tariff Regulations by calling for additional information. 6.3. Learned counsel for the first respondent argued that at the time of the submission of the tariff petition on 18.1.2010, TNEB was functioning as an unbundled utility. Subsequently, the State Commission directed the TNEB to furnish details separately in distinct format as specified under the Regulations. Thereafter, the State Commission determined the generation, transmission and retail supply tariff in accordance with the Regulations and on the basis of the subsequent details furnished by the TNEB.

6.5. After the reorganization of the TNEB, each company is expected to file separate petition for the distinct functions. However, in this case the companies had been incorporated during the Appeal Nos. 192 & 206 of 2010 FY 2009-10. The Generation & Distribution Corporation and TNEB Ltd. had been incorporated on 1.12.2009. However, the State Electricity Board was permitted to function as an integrated utility till 15.9.2010. Thus when the application for MYT tariff petition was filed, the reorganization of the State Electricity Board was in the transition stage. Accordingly, TNEB filed a composite application for all the functions. However, the State Commission sought additional information from TNEB which was submitted by TNEB. Even though the State Commission had the authority to reject the application but, in view of the prevailing circumstances, it rightly sought the additional information from TNEB and after receipt of the information, the State Commission admitted the petition and determined the tariff. We do not find any fault with the decision of the State Appeal Nos. 192 & 206 of 2010 Commission and, therefore, reject the contention of the appellants in this regard.

The NEP stipulates that "For ensuring financial viability and sustainability, State Governments would need to restructure the liabilities of the State Electricity Boards to ensure that the successor companies are not burdened with past liabilities." The past burden of the utility should not be passed on to the future consumers as also decided in some of the judgments of Courts even in the short term. Further, in accordance with the Government of Appeal Nos. 192 & 206 of 2010 India's Tariff Policy, under business as usual conditions, the opening balances of uncovered gap must be covered through transition financing arrangement or capital restructuring. The Commission has also sent a statutory advice to Government of Tamil Nadu in this regard in their letter dated 04-05-2010. The present endeavour is to add generation capacity, resort to demand side management, improve efficiency in operation, so that the trend of losses be arrested. It is also stated that barring commercial consumers, all other consumers are paying below costs. At the same time, the Board has proposed to increase tariff only to certain category of consumers leading to increase in revenue of Rs.2000 crores leaving a huge gap. The TNEB's proposal is to create a Regulatory asset which could be recovered from the consumers in future. It is to be noted that the regulatory asset is actually a liability to be recovered from the consumers by the TNEB in future years. With the continuing deficit of the Board, it is not possible to amortize the regulatory assets within the next 3 years as stipulated by the Appeal Nos. 192 & 206 of 2010 tariff policy. These issues can only be dealt with in the long term and no short term solutions are available. If they are to be recovered in the short term, there will be a huge tariff shock to almost all categories of consumers. The Commission is not aware of the approach of the State Government, with regard to subsidy as the Government would be deciding the subsidy after the announcement of tariff by the Commission. The practice adopted by the neighbouring state of Andhra Pradesh which is almost similarly placed to Tamil Nadu in respect of the demand served, energy served and consumer mix etc. is to indicate the stand of the Government with respect to subsidy in advance. It is seen from the latest order issued by the APERC that the AP Government gave direction to APERC under section 108 to maintain uniform tariff across the state and also considered subsidy to the extent of Rs.3652.81 Crores before the issue of the order and APERC has distributed the subsidy for the 4 Discoms at the time of issuing the order. The TNERC leaves this issue to the best judgment of the Government of Tamil Nadu for appropriate action".

Appeal Nos. 192 & 206 of 2010 "9.15.3 ..................................

"9. TNEB has projected revenue gap for the years 2010-11, 2011-12 and 2012-13 in tariff petition. The Commission has arrived at the gap for these years as Rs. 7905.04 crores, Rs. 6062.24 crores and Rs. 3489.18 crores respectively and this gap is after allowing a tariff increase of Rs. 1650.46 crores. It is to be noted here that the last tariff hike in Tamil Nadu was in June 2003 and the TNEB has not preferred any tariff revision thereafter, even though their operating costs have been going up. The Commission had also advised them to file tariff revision petition but in vain. There is an accumulated loss of about Rs. 16500 crores upto 2008-09. The estimated revenue gap for 2009-10 is not available. Had there been regular tariff adjustments over the last 7 years the revenue shortfall would not have grown to this extent. There has been no major capacity addition by TNEB for the last 10 years.