The Gujarat Electricity Regulatory Commission (GERC) has imposed an additional surcharge of ₹1 (~$0.011)/kWh on open access consumers for six months starting October 1, 2025.

The additional surcharge will apply to consumers of the four state-owned distribution companies — Dakshin Gujarat Vij Company, Madhya Gujarat Vij Company, Paschim Gujarat Vij Company, and Uttar Gujarat Vij Company — who procure electricity through open access from sources other than their respective distribution companies.

Background

The determination of an additional surcharge originated when the Commission, in March 2014, first decided the methodology for surcharge calculation. That order was challenged by Gujarat Urja Vikas Nigam (GUVNL) and the four state-owned DISCOMs before the Appellate Tribunal for Electricity (APTEL).

The Tribunal, in its October 2018 order, allowed the petitioners to seek revision of the methodology before GERC. GUVNL, the DISCOMs, and industry bodies such as the Federation of Kutch Industries Associations and the Federation of Gujarat filed subsequent petitions.

After detailed proceedings, GERC revised the methodology in its order dated August 30, 2022. That order also established a structured process, requiring GUVNL to submit data certified by the state load dispatch centre and a chartered accountant every six months, which would then be used to determine the surcharge applicable for the corresponding period in the following year.

Pursuant to this process, GUVNL submitted the certified data for the period from October 2024 to March 2025, to determine the additional surcharge applicable from October 2025 to March 2026.

The Commission confirmed that GUVNL and the four DISCOMs had uploaded the relevant data and certifications on their websites, ensuring transparency. GUVNL also addressed initial queries and clarifications sought by the Commission before the final calculation was made.

Commission’s Analysis

GERC’s analysis showed that the total available energy between October 2024 to March 2025 was 89,404 million units (MUs), out of which 62,157 MUs were scheduled for supply to general consumers.

After adjusting for transmission and distribution losses, which were considered at 13.37% based on true-up losses for FY 2023-24, the net supply to consumers was 53,849 MUs.

Stranded generation was calculated at 27,247 MUs, while the fixed costs paid to conventional generators during the period amounted to ₹76.65 billion (~$857.81 million). Out of this, ₹23.36 billion (~$264.83 million) was attributable to stranded capacity.

The scheduled open access energy was 1,496 MUs, resulting in stranded capacity directly attributable to open access at the same level. After apportioning part of the balance stranded energy of 25,750 MUs, the total stranded energy attributable to open access was 2,193 MUs.

Using the fixed cost per unit of available energy of ₹0.86 (~$0.009), the stranded fixed cost attributable to open access was estimated at ₹1.88 billion (~$21.32 million). Adjustments were made for demand charges already recovered from open access consumers, totaling ₹5.78 billion (~$65.53 million), of which 6.71% or ₹390 million (~$4.42 million) was identified as network-related costs.

The net stranded fixed cost recoverable from open access consumers was thus calculated at ₹1.49 billion (~$16.89 million). Dividing this amount by the open-access scheduled energy resulted in an additional surcharge of ₹1 (~$0.011)/kWh.

This surcharge will remain in effect for the specified six-month period and will apply only to consumers procuring electricity under open access from sources other than their designated distribution company.

The Commission reiterated that the methodology established in its 2022 order continues to govern the surcharge calculation process, ensuring consistency, regulatory oversight, and recovery of stranded fixed costs borne by the distribution licensees due to migration of consumers to open access.

In August this year, GERC issued the GERC (Procurement of Energy from Renewable Sources) Regulations, 2025, governing renewable purchase obligations for distribution licensees, open access consumers, and captive users.

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