Delhi Electricity Regulatory Commission vs Tata Power Delhi Distribution Limited

Held: Tariff determination is not merely a mathematical exercise but a regulatory balancing act – The object of enabling reasonable cost recovery for utilities must be weighed against and calibrated with, paramount obligation to safeguard consumer interest – In the instant case, admittedly, electricity has not been supplied to the consumers beyond March-2018 – The consumers cannot be required to pay for a service which they no longer received – Under the PPA, TPDDL (Tata Power Delhi Distribution Limited) had to supply electricity only for a period of six years – The Commission had clarified to the Managing Director of TPDDL that the plant could be treated as a merchant generator which is free to sell the power anywhere other than to the distribution utilities in Delhi or outside the State or to captive consumers within the State – There was no legal impediment to either sale of the Plant or sale of electricity as a merchant generator – Therefore, TPDDL cannot be permitted to burden the consumers with tariff charges beyond March-2018 – Therefore, the first substantial question of law is answered in the negative – Impugned judgment passed by the APTEL is set aside, order passed by the Commission is restored. [Paras 20, 23] Electricity Act, 2003 – ss.61(d), 62 – DERC (Terms and Conditions for Determination of Generation Tariff) Regulations, 2011 – Regulations 6.30-6.32, 4.1 – Whether Regulation 6.32 of 2011 Regulations confers an absolute right upon the generating utility to recover entire capital cost over the useful life of the asset, even where the asset ceases to supply electricity to the consumer:

Held: No – Regulation 6.32 of 2011 Regulations prescribes the methodology of calculating depreciation over the useful life of the asset – No provision has to be read in isolation – Regulation

6.32 of 2011 Regulations must be construed harmoniously with Regulation 4.1 of 2011 Regulations, which mandates that the tariff for supply of electricity by a generating company to a distribution licensee is to be determined in accordance with PPA or any other arrangement for such period as may be approved or adopted by the Commission, to the extent of existing installed capacity contained in the PPA – Regulation 4.1 of 2011 Regulations confines tariff entitlement to the period approved in the PPA – The order dated 31.08.2017 fixed the operational and recovery framework of the plant up to March-2018 – The 2011 Regulations have to be read in conjunction with s.61(d) of the 2003 Act which places the consumer interest at the centre of tariff Regulation – Thus, Regulation 6.32 of the 2011 Regulations does not, and cannot, override the broader statutory and regulatory framework and the same does not confer an absolute and unconditional right upon the generating utility to recover depreciation from the consumers even for a period when the asset is free to supply electricity. [Para 21] Electricity Act, 2003 – ss.61(d), 62 – DERC (Terms and Conditions for Determination of Generation Tariff) Regulations, 2011 – Whether the APTEL erred in law in disregarding the regulatory framework and approval conditions which limited the operational and recovery period of the Plant to six years: Held: GNCTD granted permission on a temporary basis for a period 5 to 6 years – The TPDDL was directed to obtain all necessary regulatory approvals before commencing generation – The Commission in its order dated 31.08.2017, which was not challenged by TPDDL, approved the PPA only for a period of six years from the date of commercial operation till March-2018 – APTEL ought to have appreciated that distinction between 15 years technical useful life and 6 years regulatory recovery period is not merely semantic but the tariff framework drew the distinction clearly – APTEL’s approach is inconsistent with the order dated 31.08.2017, which was accepted by TPDDL and had attained finality – The True-up proceedings are intended to give effect to tariff framework and not to reopen or reconfigure it – APTEL erred, therefore, in disregarding the regulatory framework and conditions of approval – Therefore, the third substantial question of law, is answered in the affirmative – The substantial questions of law which arise for consideration in this appeal, are answered in favour of the Commission and against the TPDDL – Impugned judgment dated 10.02.2025 passed by the APTEL is set aside and order dated 11.11.2019 passed by the Commission is restored. [Paras 22, 23] Electricity Act, 2003 – s.61 – Tariff Determination – Consumer welfare, a central and guiding statutory principle: Held: s.61 of the 2003 Act governs the determination of tariff – s.61(d) specifically provides that in specifying the terms and conditions for the determination of tariff, the Appropriate Commission shall be guided, inter alia, by the object of safeguarding consumers’ interests and at the same time, recovery of the cost of electricity in a reasonable manner – This provision establishes consumer welfare not as a peripheral consideration but as a central and guiding statutory principle in tariff determination. [Para 15]