(1) Notwithstanding anything contained in any other law for the time being Determination

in force, the rates of user charges referred to in section 238 shall be determined Of rates of user by the State Commission in accordance with the provisions of this Act and the charges by rules and the regulations made thereunder. State Commission.

1. (2) The State Commission shall determine by regulations separately for each Municipality the terms and conditions of, and the rates for, user charges as aforesaid and, in doing so, shall be guided by the following considerations, namely:-
   • (a) that the rates progressively reflect the cost of supply of municipal services at an adequate and improving level of efficiency,
   • (b) the factors which would encourage efficiency, economical use of resources, god performance, optimum investments and other matters which the State Commission my consider appropriate;
   • (c) that the interest of the consumers of the municipal services are safeguarded and, at the same time, the consumers pay for availing of the municipal services in a reasonable manner based on the average cost of such services: and
   • (d) the production, distribution, and supply of municipal civic services are conducted on commercial basis.
2. (3) The State Commission, while determining the user charges under this Act, shall not have any undue preference for any Municipality but may differentiate between different Municipalities, having regard to the population, density of population, revenue generation, economic importance and the actual conditions obtaining in different municipal areas and the managerial, technical, financial and organizational capacities of different Municipalities.
3. (4) If the State Government requires the grant of any subsidy to any consumer or class of consumers of municipal services in the rates of user charges determined by the State Commission under this section, the State Government shall pay the amount to compensate the Municipality or any other agency affected by the grant of such subsidy in such manner as the State Commission may direct as a condition for implementation of the subsidy provided by the State Government.
4. (5) Where the State Commission departs from any of the considerations specified in sub-section (2), it shall record the reasons in writing for such departure.