Headline: Consumer tariff cannot include depreciation for assets beyond their approved operational period when electricity supply has ceased.

The Respondent (TPDDL) established the Rithala Combined Cycle Power Plant as a temporary measure to meet peak power demand for the 2010 Commonwealth Games

The project was initially proposed with an operational tenure limited to 5-6 years, after which the land was to revert to the DDA

While the plant had a technical useful life of 15 years, the Commission (Appellant), via its order dated 31.08.2017, approved the Power Purchase Agreement (PPA) and operational framework only until March 2018 (6 years)

TPDDL did not challenge this 2017 order. In subsequent true-up proceedings, the Commission allowed depreciation only up to FY 2017-18

TPDDL appealed to the APTEL, which set aside the Commission’s order, directing that the entire capital cost be recovered through depreciation over the 15-year technical life

1. Whether depreciation must be allowed over the entire technical useful life of an asset regardless of the period it was actually used for supply?

2. Whether Regulation 6.32 of the 2011 Regulations confers an absolute right to recover capital costs even after electricity supply ceases?

3. Whether APTEL erred in disregarding the regulatory framework and approval conditions that limited the recovery period to six years?

Section 61(d) of the Electricity Act, 2003, which mandates that tariff determination must safeguard consumer interests while ensuring reasonable cost recovery

Regulation 6.32 of the DERC (Generation Tariff) Regulations, 2011, which provides for straight-line depreciation over the "useful life" of an asset

Regulation 4.1, which stipulates that tariffs are governed by the PPA or arrangements approved by the Commission

Principle of Finality of Orders, noting that a regulatory framework accepted by a party cannot be reopened in true-up proceedings

The Court reasoned that tariff determination is a balancing act where consumer welfare is central under Section 61(d)

It held that consumers cannot be burdened with charges for a period beyond March 2018, during which no electricity was supplied

The Court found that Regulation 6.32 (depreciation) cannot be read in isolation; it must be harmonized with Regulation 4.1, which binds tariff recovery to the duration approved in the PPA

Furthermore, because TPDDL accepted the 2017 order limiting the operational life to six years, that order attained finality

The Court observed that TPDDL remained free to operate as a "merchant generator" to recover remaining costs from other sources, but it could not pass those costs onto Delhi’s retail consumers after the approved supply period ended

The Court held that Reg. 6.32 does not grant an absolute right to recover costs for an idle plant

The judgment of APTEL was set aside, and the Commission's order dated 11.11.2019, which restricted depreciation to the 6-year operational period, was restored