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Electricity & Energy LawSupreme Court of India

Jaipur Vidyut Vitaran Nigam Limited v. The Rajasthan Textile Mills Association

Civil Appeal · 2025 INSC 592Decided 29 Apr 2025
C.A. No.-008862-008868 - 2022
Justice Abhay S. Oka · Justice Augustine George Masih

Background

Industrial consumers in Rajasthan who sourced electricity through "open access" (bypassing the local distribution company) challenged a December 2016 order of the Rajasthan Electricity Regulatory Commission that fixed a higher Cross-Subsidy Surcharge, a charge meant to compensate distribution companies for lost subsidy revenue, based on the tariff fixed in an earlier September 2016 order. The Appellate Tribunal for Electricity (APTEL) set aside the Commission's surcharge order, reasoning that the surcharge determination should have coincided with the tariff-fixing exercise, so the distribution companies (Jaipur Vidyut Vitaran Nigam and others) appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that nothing in the Electricity Act, 2003 or the Rajasthan Tariff Regulations, 2014 requires the Cross-Subsidy Surcharge to be determined simultaneously with the tariff: the surcharge can be fixed separately based on the tariff that is currently in force, as the regulations' own formula makes clear. Since the September 2016 tariff order remained in force until a new tariff order was passed in November 2017, the Commission was entitled to compute the surcharge based on that prevailing tariff in its December 2016 order. The Tribunal's view that the two exercises must coincide was held to be erroneous, and the Commission's original surcharge order was restored.

Lesson Learnt

Regulatory charges and tariffs governed by a statutory formula do not need to be fixed in the same proceeding: a charge can validly be based on whatever tariff is currently in force, even if that tariff was set at an earlier point in time, as long as the governing regulation permits it.

Jaipur Vidyut Vitaran Nigam Limited v. The Rajasthan Textile Mills Association – Legal Case Shots | LegalAware