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Delhi Electricity Regulatory Commission v. Tata Power Delhi Distribution Limited

Civil Appeal · 2026 INSC 461Decided 7 May 2026
C.A. No.-006388 - 2025
Justice Pamidighantam Sri Narasimha · Justice Alok Aradhe

Background

Tata Power Delhi Distribution Limited (TPDDL) set up a temporary 108-megawatt gas power plant at Rithala, Delhi, ahead of the 2010 Commonwealth Games, with regulatory approval limiting its operation and tariff-recovery period to six years (up to March 2018), even though the plant's technical useful life was assessed at fifteen years. After the plant stopped supplying electricity in March 2018, the Delhi Electricity Regulatory Commission refused to let TPDDL recover the remaining capital cost (about Rs. 94.59 crore) through depreciation, since consumers were no longer receiving power from it. The Appellate Tribunal for Electricity (APTEL) overturned the Commission's order, holding that depreciation had to be spread over the plant's full fifteen-year useful life regardless of whether it was still supplying electricity, prompting the Commission to appeal to the Supreme Court.

Decision Breakdown

The Supreme Court held that tariff determination is a regulatory balancing exercise that must protect consumer interests under Section 61(d) of the Electricity Act, 2003, and that consumers cannot be made to pay for electricity they no longer receive. It held that Regulation 6.32 of the DERC Generation Tariff Regulations (which prescribes depreciation over an asset's useful life) cannot be read in isolation and must be harmonised with Regulation 4.1, which ties tariff entitlement to the period approved under the Power Purchase Agreement: here, six years ending March 2018. Since the Commission's 2017 order fixing this six-year recovery period was never challenged by TPDDL and had become final, the Court held APTEL was wrong to reopen and reconfigure that settled framework in later true-up proceedings. Answering all three legal questions against TPDDL, the Court set aside APTEL's judgment and restored the Commission's order denying further depreciation recovery.

Lesson Learnt

A regulatory recovery period fixed by a final, unchallenged order cannot later be expanded through a general "useful life" provision, and utilities cannot pass on capital costs to consumers for a plant that has stopped actually supplying them electricity.

Official source (sci.gov.in)View Judgment (PDF)

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