The Appellate Tribunal for Electricity (APTEL) has set aside the Rajasthan Electricity Regulatory Commission’s (RERC) 2016 order that imposed an additional surcharge of ₹0.80 (~$0.0093)/kWh on open access consumers in the state.

The judgment covered five appeals filed by industrial consumers against the RERC order and the state’s three distribution companies (DISCOMs) — Jaipur Vidyut Vitran Nigam, Ajmer Vidyut Vitran Nigam, and Jodhpur Vidyut Vitran Nigam.

The appellants were Lord Chloro Alkali, Rajasthan Textile Mills Association, Rajasthan Steel Chambers, Ambuja Cement, and JK Cement Works.

The appeals challenged the additional surcharge of ₹0.80 (~$0.0093)/kWh, which was intended to recover fixed costs allegedly stranded due to open access consumers procuring power from sources other than the DISCOMs.

APTEL found the order “perverse,” holding that the Commission had failed to examine whether the stranded capacity was caused solely by open access consumers. The tribunal remanded the matter back to RERC for fresh adjudication after a detailed hearing.

Background

The three Rajasthan DISCOMs had approached RERC seeking approval of an additional surcharge.

A public notice was issued, and 41 organizations, including the appellants, filed objections. Despite the objections, RERC allowed the DISCOMs’ request in August 2016 and approved the surcharge.

The appellants argued that RERC had wrongly applied the law by assuming that any stranded capacity justified an additional surcharge, whereas, under the Electricity Act and binding precedents, stranded capacity must arise solely due to open-access consumers.

The appellants contended that RERC had relied on uncertified and inaccurate data supplied by the DISCOMs and ignored other reasons for backing down on power, such as cheaper short-term purchases.

They stressed that Rajasthan was a power-deficient state at the time, making it implausible that open-access consumers were creating surplus capacity. The appellants also argued that verification of stranded capacity should have been done block-wise by the state load dispatch centre, which was not undertaken.

The DISCOMs argued that an additional surcharge was necessary to recover fixed costs. They claimed that when open access consumers withdrew from their system, the contracted power purchase agreements (PPAs) were left stranded, leaving them with unrecoverable fixed costs.

Tribunal’s Analysis

APTEL held that an additional surcharge must not be imposed automatically, but only after a detailed demonstration that capacity was stranded exclusively due to open-access withdrawals.

It noted that RERC had failed to frame or decide this critical issue and had instead presumed that all backing down of power was caused by open access.

APTEL It highlighted that in an affidavit filed in January 2025, the DISCOMs themselves admitted that power was being backed down mainly due to cost optimization, as cheaper short-term purchases were available, rather than due to open access.

This showed that capacity would have remained stranded even without open access consumers. APTEL emphasized that the burden of proof lay with the DISCOMs to show that they were unable to schedule power from PPAs specifically due to open access withdrawals.

The tribunal concluded that consumers cannot be penalized for systemic inefficiencies or DISCOM’s cost-based decisions.

Setting the order aside, it remanded the matter for fresh adjudication with proper data and evidence.

Recently, APTEL held that Jindal Aluminium was not entitled to receive any compensation for the energy it injected into the electricity grid between October 4 and November 17, 2015, before the execution of a wheeling and banking agreement.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.