Cross-subsidy surcharge determination to meet ‘current level’ of cross-subsidy

The Appellate Tribunal for Electricity in a recent decision has held that determination of cross-subsidy surcharge under Section 42(2) of the Electricity Act, cannot be divorced from the tariff proceedings. Cross-subsidy surcharge cannot be based on historical costs and expenses, but need to necessarily reflect the current level of cross-subsidy. De-linking the process of determination of cross-subsidy surcharge vitiates the end result.

It has further held that a quantum jump in the cross-subsidy surcharge in antithetical to the public policy expecting the same to be progressively reduced. This, in any event, could not be achieved without examining the requirement of current level of cross-subsidy.

You may read the entire judgment at https://aptel.gov.in/sites/default/files/Jud2022/A14of17&B_15.09.22.pdf