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

2025 INSC 592
REPORTABLE


IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.8862-8868 OF 2022


JAIPUR VIDYUT VITARAN NIGAM
LIMITED AND ORS. …APPELLANT(S)

VERSUS

RAJASTHAN TEXTILE MILLS
ASSOCIATION & ANR ETC. …RESPONDENT(S)



J U D G M E N T


ABHAY S. OKA, J.

FACTUAL ASPECT
1. These are the statutory appeals under Section 125 of
the Electricity Act, 2003 (for short, ‘the 2003 Act’) against
a common judgment delivered by the Appellate Tribunal
for Electricity (for short, ‘the APTEL’) in a group of appeals.
The issue involved in these appeals relates to the
determination of the Cross-Subsidy Surcharges (for short,
‘the CSS’) by the Rajasthan Electricity Regulatory
Signature Not Verified
Digitally signed by
ANITA MALHOTRA
Date: 2025.04.29
18:30:07 IST
Reason:
Commission (for short, ‘the State Commission’). The
determination was made under Section 42 (2) of the 2003

Civil Appeal Nos.8862-8868 of 2022 Page 1 of 24


Act. The present appellants were the respondents before
the APTEL. The respondents (appellants before the APTEL)
are the industries/industrial units located in various parts
of the State of Rajasthan, running their operations by
availing their supply of electricity from connectivity
through the State grid at EHT levels of 132/33/11 KV
voltage. These industrial units were granted open access
within the contract demand for drawing electricity through
such open access, including from power exchanges. These
industrial units (appellants before the APTEL) were
aggrieved by the determination of the CSS made applicable
st st
from 1 December 2016 by the order passed on 1
December 2016 by the State Commission. Being aggrieved
by the said order of the State Commission, the industrial
units preferred statutory appeals before the APTEL. By the
impugned judgment, the order of the State Commission
was set aside. However, the APTEL clarified that the State
Commission will be within its jurisdiction to undertake the
process of revisiting the subject of the CSS vis-à-vis
distribution licensees operating in the State of Rajasthan
as and when it takes up the exercise of tariff determination
in future in accordance with law.

2. The 2003 Act introduced the concept of open access,
enabling the consumers/end users to procure electricity
from sources other than the distribution licensees of the
area where the premises of such end use are situated.

Civil Appeal Nos.8862-8868 of 2022 Page 2 of 24


Earlier, electricity was generally procured only from
distribution licensees.
3. There was a significant amount of cross-
subsidisation of certain categories of consumers by other
categories of consumers. The consumers benefitting from
the subsidy include agricultural consumers, low-end
domestic consumers and public works. They are known as
subsidised consumers. The consumers paying for the
subsidy include industrial consumers, commercial
consumers, and high-end domestic consumers, and they
are known as subsidising consumers. Allowing open
access users to source electricity from sources other than
distribution licensees benefited such subsidising
consumers and would become a burden on the
distribution licensee. The reason is that such customers
stopped taking electricity from the distribution licensees,
thereby reducing the distribution licensees’ funds to
subsidise the subsidised consumers. The CSS is, in a
sense, compensation to the distribution licensees for being
deprived of the subsidisation prevalent in the retail supply
tariff. The CSS is a statutory charge payable by the
consumers who decide to source electricity through open
access from sources other than the distribution licensee of
the area.

Civil Appeal Nos.8862-8868 of 2022 Page 3 of 24


4. In exercise of the powers under Section 61 read with
Section 181 of the 2003 Act, the State Commission notified
the Rajasthan Electricity Regulatory Commission (Terms
and Conditions for Determination of Tariff) Regulations,
2014 (for short, ‘the Rajasthan Tariff Regulations, 2014’).
Regulation 89 thereof deals with the cross-subsidy.
Regulation 90 provides a formula for determining the CSS
payable by the consumer opting for open access.
5. The State Commission determined the tariff for the
Financial Year (FY) 2015-2016 by the tariff order dated
nd th
22 September 2016. On 20 July 2016, the distribution
licensees approached the State Commission by a petition
praying for determination of the CSS under Section 42 (2)
read with Sections 39 and 40 of the 2003 Act. While
dealing with the said petition, the State Commission
identified the issues for its consideration, including the
issue as to whether distribution licensees were entitled to
claim the CSS, and if so entitled to, what the appropriate
formula for its determination is. The State Commission
noted that the distribution licensees had not applied for
fixation of tariff for the F.Y. 2016-2017, and the tariff
petition for F.Y. 2015-2016 had been decided by the
commission in September 2016 by holding that the tariff
will be in force till the next tariff order. The commission
observed that mere absence of tariff petition for F.Y. 2016-
2017 will not restrict or prevent the State Commission

Civil Appeal Nos.8862-8868 of 2022 Page 4 of 24


from determining the CSS for F.Y. 2015-2016 and apply
the same for F.Y. 2016-2017 till new tariff petition for F.Y.
2016-2017 is filed and the CSS is revised based on the
same. After hearing the respondents-consumers, the State
Commission, by order dated 1st December 2016,
determined the CSS payable entirely based on the tariff
determined for F.Y. 2015-2016 by order dated 22nd
September 2016. The State Commission proceeded to
compute the rate of the CSS, taking note of the formula
prescribed by Regulation 90 of the Rajasthan Tariff
Regulations, 2014, fixing the CSS rate to Rs.1.63 per unit
for 132 KV and above consumers, Rs.1.39 per unit for 33
KV consumers and Rs.0.83 per unit for 11 KV consumers
of the large industrial service open access consumers
category.
st
6. This order dated 1 December 2016, passed by the
State Commission, was challenged by the respondents
herein by preferring an appeal before the APTEL, which
was allowed by the impugned judgment. In appeal, the
th
APTEL relied upon its own decision dated 28 November
2014 in the case of Tata Power Company Limited v
Maharashtra Electricity Regulatory Commission &
1 nd
Ors. as well as judgment dated 2 December 2013 in the
case of Reliance Infrastructure Limited (R-infra) v

1
Appeal No. 107 of 2013 (before the Appellate Tribunal for Electricity)

Civil Appeal Nos.8862-8868 of 2022 Page 5 of 24


Maharashtra Electricity Regulatory Commission &
2
Ors . The APTEL held that the State Commission
completely brushed aside its decision in the case of Tata
1
Power Company Limited . The absence of a tariff petition
for F.Y. 2016-2017 could not have been ignored. The
th
APTEL relied upon its decision dated 18 May 2015 in the
case of D.P. Chirania v Rajasthan Electricity
3
Regulatory Commission & Ors . It was held that the
State Commission should not have entertained the CSS
petition until the distribution licensees provided
authenticated and audited data, which was necessary not
only for tariff fixation but also for determining the CSS.
The APTEL further observed that the tariff petition for the
control period of 2016-2017 was filed along with a petition
for the subsequent control period of 2017-2018.
Ultimately, the APTEL held that the impugned order of the
State Commission resulted in a quantum jump in the rate
of the CSS, which was against the policy enumerated in
the 2003 Act, which requires the CSS rates to be
progressively reduced. It was held that, as the distribution
licensees have failed to explain the default in the timely
filing of the tariff petitions, it would be unfair to give them
the advantage of such a substantial increase in the CSS.

2
Appeal No. 178 of 2011 (before the Appellate Tribunal for Electricity);
2013 SCC OnLine APTEL 150
3
Appeal No. 16 of 2014 (before the Appellate Tribunal for Electricity);
2015 SCC OnLine APTEL 75

Civil Appeal Nos.8862-8868 of 2022 Page 6 of 24


nd
The APTEL also observed that the tariff order dated 22
September 2016 for F.Y. 2015-2016 had directed that it
shall continue to be in force till the next tariff order, which
nd
was passed on 2 November 2017. The CSS rates were
nd
part of the tariff regime put in place by the order dated 22
September 2016. Therefore, the rates of the CSS should
nd
not have been altered till 2 November 2017, when the
new tariff order was passed.
SUBMISSIONS
7. The learned senior counsel appearing for the
appellants did not dispute the proposition that the tariff
determined for the earlier period would continue till the
new tariff is determined. He pointed out that by the order
st
dated 1 December 2016, the State Commission
determined the CSS payable entirely based on the tariff
nd
determined for F.Y. 2015-2016 under the order dated 22
September 2016 by computing the same as provided in the
formula incorporated in Regulation 90. The learned senior
counsel submitted that the CSS is relevant when the
consumer of electricity in the area of the distribution
licensee decides to source a part or whole of his electricity
requirements from sources other than the distribution
licensee. But for such power sourcing from outside
sources, the said consumer would have contributed to the
cross-subsidisation prevalent in the retail tariff. Therefore,

Civil Appeal Nos.8862-8868 of 2022 Page 7 of 24


the CSS is the overriding consequential statutory
obligation on such consumers to pay to the distribution
licensee, which the 2003 Act considers necessary to
compensate the distribution licensee. He pointed out that
the CSS for the period from 1st December 2016 was based
on the current tariff being charged during the period. This
tariff was fixed by the State Commission by the tariff order
nd
dated 22 September 2016. Learned senior counsel
pointed out that the State Commission passed the next
tariff order, including an order of the CSS applicable with
st
effect from 1 November 2017, effectively maintaining both
at the same level as before.
8. If there is a delay in determination of the revenue
requirements of the distribution licensee concerning a
particular financial year for any reason, the tariff prevalent
as per the earlier tariff order will be the applicable tariff to
the consumers and consequentially the CSS payable by
the open access consumers will also be computed with
reference to such prevalent tariff. As and when a new tariff
is determined, the same applies prospectively, and the CSS
applicable will also consequently get revised. He submitted
that the respondents-consumers have not challenged the
findings recorded in the tariff order dated 22nd September
2016.

Civil Appeal Nos.8862-8868 of 2022 Page 8 of 24


9. The learned counsel submitted that the view of the
APTEL that the CSS should have been determined
nd
simultaneously with the order dated 22 September 2016
was hyper-technical and erroneous. He again submitted
st
that the determination of the CSS by the order dated 1
December 2016 was based on the financials and the tariff
as determined by the State Commission in the tariff order
nd
dated 22 September 2016 and not on any other basis. He
nd
pointed out that the tariff order dated 22 September
st
2016 was effective from 1 September 2016. He pointed
out that the distribution licensees did not have to pay the
st th
higher CSS from 1 September 2016 to 30 November
2016.
10. The submission of learned senior counsel is that
there is no stipulation which prevents the increase of the
CSS in monetary terms. The only stipulation in the
Rajasthan Tariff Regulations, 2014 is that the extent of
cross-subsidy to any consumer category should be within
the range of +/- 20% of the average cost of supply. The
learned senior counsel distinguished the decision in the
1
case of Tata Power Company Limited and Reliance
2
infrastructure Limited . He pointed out that in the case
1
of Tata Power Company Limited , the State
Commission, having access to the data and financials for
the relevant period, proceeded to determine the CSS based
on the prior date. Moreover, in the case of Reliance

Civil Appeal Nos.8862-8868 of 2022 Page 9 of 24


2
infrastructure Limited , the APTEL has unequivocally
stated that the CSS should be a derivative of the effective
tariff applicable for the relevant period. He submitted that
there are no adverse implications to the consumers by
reason of the determination of the CSS subsequently by
st
the order dated 1 December 2016.
11. The learned counsel appearing for the respondents
supported the impugned judgment of the APTEL. By
nd
relying upon the tariff order dated 22 September 2016, it
was contended that the rates of the CSS were part of the
nd
tariff regime put in place by the previous order dated 22
September 2016. Learned counsel invited our attention to
the decision of the APTEL in the case of Tata Power
1
Company Limited . The said decision categorically holds
that the CSS has to be determined by the State
Commission every year, along with the determination of
the tariff. Even in the case of Reliance Infrastructure
2
Limited , the APTEL held that the State Commission must
compute the CSS to meet the requirement of the current
level of cross-subsidy. The learned counsel submitted that
3
the decision of the APTEL in the case of D. P. Chirania
has been rightly applied. The learned counsel pointed out
that the rates of the CSS could have been revisited only on
nd
2 November 2017, when the State Commission passed
the subsequent tariff order.

Civil Appeal Nos.8862-8868 of 2022 Page 10 of 24


CONSIDERATION OF SUBMISSIONS
12. In the light of these submissions, it is necessary to
refer to the provision of Section 42 of the 2003 Act, which
reads thus:
“
42. Duties of distribution licensee and open
access
.—(1) It shall be the duty of a distribution
licensee to develop and maintain an efficient,
co-ordinated and economical distribution
system in his area of supply and to supply
electricity in accordance with the provisions
contained in this Act.
(2) The State Commission shall introduce open
access in such phases and subject to such
conditions, (including the cross subsidies,
and other operational constraints) as may be
specified within one year of the appointed
date by it and in specifying the extent of
open access in successive phases and in
determining the charges for wheeling, it
shall have due regard to all relevant factors
including such cross-subsidies, and other
operational constraints:
Provided that [such open access shall be
allowed on payment of a surcharge] in
addition to the charges for wheeling as may
be determined by the State Commission:
Provided further that such surcharge shall be
utilised to meet the requirements of current
level of cross-subsidy within the area of supply
of the distribution licensee:
Provided also that such surcharge and cross-
subsidies shall be progressively reduced in the

Civil Appeal Nos.8862-8868 of 2022 Page 11 of 24


manner as may be specified by the State
Commission:
Provided also that such surcharge shall not be
leviable in case open access is provided to a
person who has established a captive
generating plant for carrying the electricity to
the destination of his own use:
[Provided also that the State Commission shall,
not later than five years from the date of
commencement of the Electricity (Amendment)
Act, 2003 (57 of 2003), by regulations, provide
such open access to all consumers who require
a supply of electricity where the maximum
power to be made available at any time exceeds
one megawatt.]
(3) Where any person, whose premises are
situated within the area of supply of a
distribution licensee, (not being a local
authority engaged in the business of
distribution of electricity before the appointed
date) requires a supply of electricity from a
generating company or any licensee other than
such distribution licensee, such person may,
by notice, require the distribution licensee for
wheeling such electricity in accordance with
regulations made by the State Commission and
the duties of the distribution licensee with
respect to such supply shall be of a common
carrier providing non-discriminatory open
access.
(4) Where the State Commission permits a
consumer or class of consumers to receive
supply of electricity from a person other than
the distribution licensee of his area of supply,

Civil Appeal Nos.8862-8868 of 2022 Page 12 of 24


such consumer shall be liable to pay an
additional surcharge on the charges of
wheeling, as may be specified by the State
Commission, to meet the fixed cost of such
distribution licensee arising out of his
obligation to supply.
(5) Every distribution licensee shall, within six
months from the appointed date or date of
grant of licence, whichever is earlier, establish
a forum for redressal of grievances of the
consumers in accordance with the guidelines
as may be specified by the State Commission.
(6) Any consumer, who is aggrieved by non-
redressal of his grievances under sub-section
5, may make a representation for the redressal
of his grievance to an authority to be known as
Ombudsman to be appointed or designated by
the State Commission.
(7) The Ombudsman shall settle the grievance
of the consumer within such time and in such
manner as may be specified by the State
Commission.
(8) The provisions of sub-sections (5), (6) and
(7) shall be without prejudice to right which the
consumer may have apart from the rights
conferred upon him by those sub-sections. ”
(emphasis added)
13. In the present case, the appellants are the
distribution licensees. The duties of the distribution
licensees have been specified in Section 42. Sub-Section
(2) of Section 42 provides for the State Commission
introducing open access. The first proviso to Sub-Section

Civil Appeal Nos.8862-8868 of 2022 Page 13 of 24


(2) provides that such open access shall be allowed on
payment of a surcharge in addition to the charges for
wheeling as may be determined by the State Commission.
The said surcharge is the CSS. The second proviso to Sub-
Section (2) provides that the CSS shall be utilised to meet
the requirements of the current subsidy level within the
distribution licensee's supply area.
14. As far as the CSS is concerned, this Court in the case
of Sesa Sterlite Ltd. v. Orissa Electricity Regulatory
4
Commission & ors . , has laid down the rationale and
purpose of levying the CSS. Paragraphs 25 to 29 of the said
decision read thus:
25. While open access in transmission implies
freedom to the licensee to procure power from
any source of his choice, open access in
distribution with which we are concerned here,
means freedom to the consumer to get supply
from any source of his choice. The provision of
open access to consumers, ensures right of the
consumer to get supply from a person other
than the distribution licensee of his area of
supply by using the distribution system of such
distribution licensee. Unlike in transmission,
open access in distribution has not been
allowed from the outset primarily because of
considerations of cross-subsidies. The law
provides that open access in distribution would
be allowed by the State Commissions in
phases. For this purpose, the State

4
(2014) 8 SCC 444

Civil Appeal Nos.8862-8868 of 2022 Page 14 of 24


Commissions are required to specify the
phases and conditions of introduction of open
access.
26. However open access can be allowed on
payment of a surcharge, to be determined by
the State Commission, to take care of the
requirements of current level of cross-subsidy
and the fixed cost arising out of the licensee's
obligation to supply. Consequent to the
enactment of the Electricity (Amendment) Act,
2003, it has been mandated that the State
Commission shall within five years necessarily
allow open access to consumers having
demand exceeding one megawatt.
(3) Cross-Subsidy Surcharge (CSS)—Its
rationale
27. The issue of open access surcharge is
very crucial and implementation of the
provision of open access depends on
judicious determination of surcharge by the
State Commissions. There are two aspects
to the concept of surcharge — one, the
cross-subsidy surcharge i.e. the surcharge
meant to take care of the requirements of
current levels of cross-subsidy, and the
other, the additional surcharge to meet the
fixed cost of the distribution licensee
arising out of his obligation to supply. The
presumption, normally is that generally the
bulk consumers would avail of open access,
who also pay at relatively higher rates. As
such, their exit would necessarily have
adverse effect on the finances of the
existing licensee, primarily on two counts —
one, on its ability to cross-subsidise the

Civil Appeal Nos.8862-8868 of 2022 Page 15 of 24


vulnerable sections of society and the other,
in terms of recovery of the fixed cost such
licensee might have incurred as part of his
obligation to supply electricity to that
consumer on demand (stranded costs). The
mechanism of surcharge is meant to
compensate the licensee for both these
aspects.
28. Through this provision of open access, the
law thus balances the right of the consumers
to procure power from a source of his choice
and the legitimate claims/interests of the
existing licensees. Apart from ensuring freedom
to the consumers, the provision of open access
is expected to encourage competition amongst
the suppliers and also to put pressure on the
existing utilities to improve their performance
in terms of quality and price of supply so as to
ensure that the consumers do not go out of
their fold to get supply from some other source.
29. With this open access policy, the consumer
is given a choice to take electricity from any
distribution licensee. However, at the same
time the Act makes provision of surcharge for
taking care of current level of cross-subsidy.
Thus, the State Electricity Regulatory
Commissions are authorised to frame open
access in distribution in phases with surcharge
for:

Civil Appeal Nos.8862-8868 of 2022 Page 16 of 24


15. Section 61 of the 2003 Act provides for the Regulatory
Commission specifying the terms and conditions for
determining a tariff. Under Section 181 of the 2003 Act,
the State Commission is empowered to make regulations
to carry out the provisions of the Act. Accordingly, the
Rajasthan Tariff Regulations, 2014 have been framed.
Regulation 2(a)(60) defines tariff as the schedule of charges
for generation, transmission, wheeling and supply of
electricity together with terms and conditions for
application thereof. Under Regulation 2(a)(4), “Aggregate
Revenue Requirement” means the requirement of the
Licensee or Generating Company for recovery, through
tariffs, of allowable expenses and return on equity capital
pertaining to its Licensed/Regulated Business, in
accordance with these Regulations. Regulation 11 provides
for filing a petition for approval of the aggregate revenue
requirement and the determination of the tariff. The
procedure to be followed by the Commission for
determining the tariff is in Part II of the regulations.
Regulations 89 and 90 dealing with the CSS are relevant
for our purposes, which read thus:
“89. Cross subsidy
(1) The average cost of supply and
realization from a category of
consumer shall form the basis of
estimating the extent of cross subsidy
for that consumer category.

Civil Appeal Nos.8862-8868 of 2022 Page 17 of 24


(2) The Commission shall endeavour to
determine the tariff in such a manner
that it progressively reflects the average
cost of supply and the extent of cross
subsidy to any consumer category is
within maximum range of +/- 20% of
average cost of supply:
Provided that consumers below poverty
line who consume below specified level
say 50 units per month may receive
special support through cross-subsidy.
Tariff for such designated group of
consumers shall be at least 50% of the
average cost of supply.
90. Cross-subsidy Surcharge
The surcharge payable by consumers
opting for open access on the network
of the distribution licensee or
transmission licensee will be
determined by the Commission as per
the following Formula:
S = T – [C/(1 – (L/100)) + D]
Where,
S is the surcharge
T is the Tariff payable by the relevant
category of consumers;
C is the weighted average cost of power
purchase of top 5% at margin excluding
liquid fuel source and renewable energy
sources
D is the wheeling charge
L is the system losses of distribution
licensee for the applicable voltage level,
as a percentage:

Civil Appeal Nos.8862-8868 of 2022 Page 18 of 24


Provided that if S is computed to be
negative as per above Formula, S shall
be considered as Zero. ”
(emphasis added)

Regulation 90 contains a formula for the determination of
the CSS, which is based on the tariff payable by the
relevant category of consumers. Thus, the CSS has to be
determined based on the prevailing tariff rates. Neither in
the provisions of the 2003 Act nor under the provisions of
the Rajasthan Tariff Regulations, 2014, is there a provision
which makes the determination of the CSS simultaneously
with the determination of the tariff mandatory.
nd

16. Now, we turn to the order dated 22 September 2016
passed by the State Commission. By the said order, the
st
tariff was fixed with effect from 1 September 2016, which
was to remain in force till the next tariff order of the
Commission. The appellants filed an application/petition
before the State Commission to determine the CSS. The
prayer in the said petition was for the determination of the
CSS payable by open access customers to the distribution
licensees in accordance with the provisions of the 2003
Act, the National Tariff Policy, 2016 and the Rajasthan
th
Tariff Regulations, 2014. The petition was filed on 20 July
st
2016. The petition was decided by order dated 1
December 2016. The following three issues were
considered by the Commission, which are as follows:

Civil Appeal Nos.8862-8868 of 2022 Page 19 of 24


(i) Whether Petitioners in law are entitled to
claim Cross Subsidy Surcharge under
the provisions of Electricity Act, 2003?
(ii) If yes, whether the same shall be
determined on the basis of formula
specified in the RERC (Terms and
Conditions for Determination of Tariff)
Regulations, 2014 or formula provided in
new National Tariff Policy, 2016 and
based on the values approved in the
Tariff order dated 22.09.2016 which is in
force?
(iii) What is the Cross Subsidy Surcharge
payable by Open access consumers?


17. The Commission answered the first issue by holding
that the appellants (distribution licensees) were entitled to
the CSS as may be determined by the Commission. The
Commission held that in view of the decision of this Court
4
in the case of Sesa Sterlite Ltd. , no one can dispute the
legal entitlement of the present appellants to the CSS. On
the second issue, the State Commission specifically held
that determination of the CSS will have to be made as per
the formula provided under Regulation 90 of the Rajasthan
Tariff Regulations, 2014, based on values approved in the
F.Y. 2015-2016 tariff order. While dealing with the third
issue, the commission specifically observed that the
computation of the CSS will have to be made as provided
in Regulation 90 based on the values approved in the
nd
current tariff order dated 22 September 2016. It must be

Civil Appeal Nos.8862-8868 of 2022 Page 20 of 24


noted here that there was no challenge to the order dated
nd
22 September 2016 fixing the tariff for F.Y. 2015-2016.
The State Commission accordingly computed and
determined the CSS rates. The Commission clarified that
the CSS shall be levied and collected from the date of the
st
order, i.e., 1 December 2016. The commission also
directed that the order will remain in force till the CSS is
re-determined by the Commission.
18. This order has been upset by the APTEL by the
impugned judgment. In paragraph 18 of the impugned
judgment, the APTEL observed that the information
relating to the previous period could not be conceivably
reflected in the current state of affairs. It was further
observed that the tariff for F.Y. 2016-2017 and 2017-2018
nd
was fixed by the order dated 2 November 2017. The
APTEL further observed that it is not clear why the exercise
of the determination of the CSS could not coincide with the
tariff determination. Further, in paragraph 19, the APTEL
observed that the determination of the CSS could not have
been done without examining the requirements of the
current level of cross-subsidy. There is one more reason
assigned by the APTEL. It was held that the tariff order
nd
dated 22 September 2016 for the F.Y. 2015-2016
declared that it shall continue to be in force till the next
nd
tariff order, which was made only on 2 November 2017.

Civil Appeal Nos.8862-8868 of 2022 Page 21 of 24


19. We find no basis for the opinion expressed by the
APTEL that determination of the CSS should coincide with
the tariff determination. In the Rajasthan Tariff
Regulations, 2014, under Regulation 2(a)(60), tariff has
been defined as under:
“(60) “Tariff” means the schedule of
charges for generation, transmission,
wheeling and supply of electricity
together with terms and conditions for
application thereof;”
Thus, the determination of CSS is not necessarily a part of
the tariff determination process. The CSS can be
determined along with the tariff. But, it can be determined
separately in accordance with Regulation 90 based on the
prevailing rate of tariff. In fact, as per Regulation 90, the
tariff payable by the relevant category of consumers is the
basis for the CSS. Therefore, the APTEL committed an
error by holding that the determination of the tariff and
the determination of the CSS should always coincide.
While determining rates of the CSS with effect from 1st
December 2016, the commission relied upon the tariff
fixed in terms of the order dated 22nd September 2016,
st
which was the prevailing tariff as of 1 December 2016.
The CSS is in the nature of compensation qua the tariff,
which the distribution licensees would have received from
the open access consumers but for their availing power
from other sources. Hence, the CSS must be based on the

Civil Appeal Nos.8862-8868 of 2022 Page 22 of 24


applicable retail tariff recoverable during the relevant
period. That is precisely provided in Regulation 90. The
State Commission determined the CSS based on the data
nd
and financials provided in the order dated 22 September
nd
2016. As provided in the said order dated 22 September
2016, the same was to be in force until there was a fresh
nd
tariff determination. The order dated 22 September 2016
nd
continued to be in force till 2 November 2017. Moreover,
nd
the perusal of the order dated 22 September 2016 shows
that the determination of the CSS was not undertaken
while doing the exercise of tariff determination. In fact, by
nd
the further order dated 2 November 2017 passed by the
State Commission, the determination of the CSS has been
made along with the determination of the tariff. Thus, the
st
determination made by order dated 1 December 2016
nd
remained in force until 2 November 2017. The effect of
the determination of the CSS from 1st December 2016 is
that the respondents-consumers were not charged the
nd st
CSS as per the order from 22 September 2016 till 1
December 2016. We may also note that the petition for the
determination of the CSS was filed when the petition for
fixing the F.Y. 2015-2016 tariff was pending.

20. When the CSS was determined based on the
prevailing rates of tariff, the APTEL ought not to have
found fault with the Commission's determination of rates
of the CSS.

Civil Appeal Nos.8862-8868 of 2022 Page 23 of 24


21. In the circumstances, we find that the view taken by
the APTEL is erroneous. Therefore, the impugned
judgment of the APTEL cannot be sustained, and the same
st
is accordingly set aside. Accordingly, the order dated 1
December 2016 passed by the State Commission is
st
restored. Needless to add that the order dated 1
nd
December 2016 was to remain in force only till 2
November 2017.
22. Appeals are allowed on the above terms.

……………………..J.
(Abhay S. Oka)


……………………..J.
(Augustine George Masih)
New Delhi;
April 29, 2025

Civil Appeal Nos.8862-8868 of 2022 Page 24 of 24