How do Electricity Tariff Work? Explained

Описание: 61. Tariff regulations.–The Appropriate Commission shall, subject to the provisions of this Act,
specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the
following, namely:–
(a) the principles and methodologies specified by the Central Commission for determination of
the tariff applicable to generating companies and transmission licensees;
(b) the generation, transmission, distribution and supply of electricity are conducted on
commercial principles;
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(c) the factors which would encourage competition, efficiency, economical use of the resources,
good performance and optimum investments;
(d) safeguarding of consumers' interest and at the same time, recovery of the cost of electricity in
a reasonable manner;
(e) the principles rewarding efficiency in performance;
(f) multi year tariff principles;
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[(g) that the tariff progressively reflects the cost of supply of electricity and also reduces
cross-subsidies in the manner specified by the Appropriate Commission;]
(h) the promotion of co-generation and generation of electricity from renewable sources of
energy;
(i) the National Electricity Policy and tariff policy:
Provided that the terms and conditions for determination of tariff under the Electricity (Supply) Act,
1948 (54 of 1948), the Electricity Regulatory Commission Act, 1998 (14 of 1998) and the enactments
specified in the Schedule as they stood immediately before the appointed date, shall continue to apply for
a period of one year or until the terms and conditions for tariff are specified under this section, whichever
is earlier.
62. Determination of tariff.–(1) The Appropriate Commission shall determine the tariff in
accordance with the provisions of this Act for–
(a) supply of electricity by a generating company to a distribution licensee:
Provided that the Appropriate Commission may, in case of shortage of supply of electricity, fix
the minimum and maximum ceiling of tariff for sale or purchase of electricity in pursuance of an
agreement, entered into between a generating company and a licensee or between licensees, for a
period not exceeding one year to ensure reasonable prices of electricity;
(b) transmission of electricity;
(c) wheeling of electricity;
(d) retail sale of electricity:
Provided that in case of distribution of electricity in the same area by two or more distribution
licensees, the Appropriate Commission may, for promoting competition among distribution licensees, fix
only maximum ceiling of tariff for retail sale of electricity.
(2) The Appropriate Commission may require a licensee or a generating company to furnish separate
details, as may be specified in respect of generation, transmission and distribution for determination of
tariff.
(3) The Appropriate Commission shall not, while determining the tariff under this Act, show undue
preference to any consumer of electricity but may differentiate according to the consumer's load factor,
power factor, voltage, total consumption of electricity during any specified period or the time at which the
supply is required or the geographical position of any area, the nature of supply and the purpose for which
the supply is required.
(4) No tariff or part of any tariff may ordinarily be amended, more frequently than once in any
financial year, except in respect of any changes expressly permitted under the terms of any fuel surcharge
formula as may be specified.

1. Subs. by Act 26 of 2007, s. 10, for clause (g) (w.e.f. 15-6-2007).
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(5) The Commission may require a licensee or a generating company to comply with such procedures
as may be specified for calculating the expected revenues from the tariff and charges which he or it is
permitted to recover.
(6) If any licensee or a generating company recovers a price or charge exceeding the tariff determined
under this section, the excess amount shall be recoverable by the person who has paid such price or
charge along with interest equivalent to the bank rate without prejudice to any other liability incurred by
the licensee.
63. Determination of tariff by bidding process.–Notwithstanding anything contained in section 62,
the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent
process of bidding in accordance with the guidelines issued by the Central Government. 49. Agreements with respect to supply or purchase of electricity.–Where the Appropriate
Commission has allowed open access to certain consumers under section 42, such consumers,
notwithstanding the provisions contained in clause (d) of sub-section (1) of section 62, may enter into an
agreement with any person for supply or purchase of electricity on such terms and conditions (including
tariff) as may be agreed upon by them.