Chapter VI TARIFFS

(1) Notwithstanding anything contained in any other law or in any existing contract or agreement or arrangement the tariff for intra-State transmission of electricity and the tariff for distribution and supply of electricity (wholesale, bulk or retail, as the case may be,) in the State (hereinafter called the “tariff”), shall be determined by the Commission in accordance with the provisions of this Act.

(2) The Commission may determine by regulations, the terms and conditions for the fixation of tariff, and in doing so, shall be guided by the following factors, namely:-

(a) that the tariff progressively reflect the cost of supply of electricity at an adequate and improving level of efficiency;

(b) the factors which would encourage efficiency, economical use of the resources, good performance, optimum investments and other matters which the Commission considers appropriate for the purpose of this Act;

(c) the electricity generation, transmission, distribution and supply 2are conducted on commercial principles;

(d) the interests of the consumers are safeguarded and at the same time, the consumers pay for the use of electricity in a reasonable manner;

(e) the principles and their applications provided in sections 46 and 57 of the Electricity (Supply) Act, 1948 and the Sixth Schedule thereto; and

(f) in the case of the Board, the principles under section 59 of the Electricity (Supply) Act, 1948 are observed:

Provided that where the Commission, departs from factors specified in clause (e) it shall record reasons therefor in writing.

(3) The Licensee shall observe the methodologies and procedures specified by the Commission from time to time in calculating the expected revenue from charges which the Licensee is permitted to recover and in determining tariffs to collect those revenues.

(4) If the State Government requires the grant of any subsidy to any category of consumer or class of consumers in the tariffs which is determined by the Commission under this section, the State Government shall pay the amount to compensate the person affected by the grant of subsidy in the manner which the Commission may direct, as a condition for the licensee or any other person concerned to implement the subsidy provided for by the State Government.

(5) Any retail tariff is determined or implemented under this Act shall not show undue preference to any consumer of electricity, but may differentiate according to the consumer’s load factor, power factor, and total consumption of electricity during any specified period or the time at which supply is required or the geographical position of any area, or the nature of supply and the purpose for which the supply is required and further within a class of consumer the paying capacity of category of customers and need for cross subsidization by others in that class;

(a) shall, be in a manner that the existing subsidy given to any class or classes of consumer by charging higher tariff from other classes of consumer is progressively reduced to the extent that within a period of five years from the commencement of this Act, the tariff to every class of consumer shall reflect a minimum of sixty-seven per cent of the licensee’s average cost of supply of electricity to that class;

(b) shall be just and reasonable and be such as to promote efficiency in the supply and consumption of electricity; and

(c) shall satisfy all other relevant provisions of the Act, regulations and conditions of licence.

(6) Every licensee shall provide to the Commission, at such time and in such manner, as may be specified by the regulations, full details of its calculations for the ensuing financial year of the expected aggregate revenue from charges, which it believes to have been permitted to recover under the tariff and such further information, as the Commission may require to assess such calculations.

(7) The Commission may after a public hearing of the licensee and other interested parties determine the tariff to be charged by the licensee at the time of initial grant of licence and thereafter at such intervals not exceeding five years and in such manner as the Commission may specify.

(8) The Commission shall be entitled to include in the tariffs of the licensee an amount to be appropriated to special funds, which the Commission, in its opinion, consider necessary, to meet the expenses required for implementing projects to enable transmission, distribution or supply of electricity in different places in the State.

(9) No tariff or part of any tariff which is determined by the Commission and implemented may be revised at the instance of the licensee more than once in any financial year, except in respect of any changes expressly permitted to be revised including under any fuel surcharge formula as may be specified by the Commission in the order determining the tariff. The licensee shall provide details of the proposed revision in tariff to the Commission, together with such further information as the Commission may require. The Commission shall notify its decision on the proposed revision in tariff within ninety days of receipt of all information and after hearing the interested persons.

(10) The licensee shall publish in a daily newspaper having circulation in the specified area and such tariff shall take effect only after seven days from the date of such publication.

(11) Notwithstanding anything contained in sections 46, 57A and 57B of the Electricity (Supply) Act, 1948 no Rating Committee shall be constituted after the date of commencement of this Act.

Explanation.- In this section —

(a) “the expected revenue from charges” means the total revenue which a licensee is expected to recover from charges for the level of forecast supply in any financial year, in respect of goods or services supplied to consumers.

(b) “Tariff” means a schedule of standard prices for transmission, distribution or supply of electric energy or charges for specified services, which are applicable to all such specified services provided to the type or types of purchaser or person who avails the service or consumer specified in the Tariff.

The State Government may provide financial assistance to licensees on such terms and conditions as it thinks fit to impose, in the following manner, namely:-

(a) Grant of subventions.

(b) Grant of loans.

(c) Guarantee of repayment by a licensee of the amount of loan, or interest on loan or both the loan and the interest thereon.