26. (1) The holder of each license granted under this Act shall observe the methodologies and procedures specified by the Commission from time to time in calculating the expected revenue from charges which it is permitted to recover pursuant to the terms of its license and in designing tariffs to collect those revenues.

(2) The Commission shall subject to the provisions of sub-section (3) be entitled to prescribe the terms and conditions for the determination of the licensee’s revenue and tariffs by regulations duly published in the Official Gazette and in such other manner as the Commission considers appropriate:

Provided that in doing so the Commission shall be bound by the following parameters:--

(a) the financial principles and their applications provided in the Sixth Schedule to the Electricity (Supply) Act, 1948 read with sections 57 and 57-A of the said Act;

(b) the factors which would encourage efficiency, economic use of the resources, good performance, optimum investments performance of license conditions and other matters which the Commission considers appropriate keeping in view the salient objects and purposes of the provisions of this Act; and

(c) the interest of the consumers.

(3) Where the Commission, departs from factors specified in the Sixth Schedule of the Electricity (Supply) Act, 1948 while determining the licensees' revenues and tariffs, it shall record the reasons therefore in writing:

(4) Any methodology or procedure specified by the Commission under sub-sections (1), (2), and (3) above shall be to ensure that the objectives and purposes of the Act are duly achieved..

(5) Every licensee shall provide to the Commission in a format as specified by the Commission at least 3 months before the ensuing financial year full details of its calculation for that financial year of the expected aggregate revenue from charges which it believes it is permitted to recover pursuant to the terms of its licence and thereafter it shall furnish such further information as the Commission may reasonably require to assess the licensee's calculation. Within 90 days of the date on which the licensee has furnished all the information that the Commission requires, the Commission shall notify the licensee either--

(a) that it accepts the licensee's tariff proposals and revenue calculations; or

(b) that it does not consider the licensee's tariff proposals and revenue calculations to be in accordance with the methodology or procedure in its license, and such notice to the licensee shall,--

(i) specify fully the reasons why the Commission considers that the licensee's calculation does not comply with the methodology or procedures specified in its license or is in any way incorrect, and

(ii) propose a modification or an alternative calculation of the expected revenue from charges, which the licensee shall accept.

(6) Each holder of a supply license shall publish in the daily newspaper having circulation in the area of supply and make available to the public on request the tariff or tariffs for the supply of electricity within its licensed area and such tariff or tariffs shall take effect only after seven days from the date of such publication.

(7) Any tariff implemented under this section, -

(a) shall not show undue preference to any consumer of electricity, but may differentiate according to the consumer's load factor or power factor, the consumer's total consumption of energy during any specified period, or the time at which supply is required; or paying capacity of category of consumers and need for cross-subsidization;

(b) shall be just and reasonable and be such as to promote economic efficiency in the supply and consumption of electricity; and

(c) shall satisfy all other relevant provisions of this Act and the conditions of the relevant license.

(8) The Commission also shall endeavor to fix tariff in such a manner that, as far as possible, similarly placed consumers in different areas pay similar tariff.

(9) No tariff or part of any tariff required by sub-section (6) may be amended more frequently than once in any financial year ordinarily except in respect of any changes expressly permitted under the terms of any fuel surcharge formula prescribed by regulations. At least three months before the proposed date for implementation of any tariff or an amendment to a tariff the licensee shall provide details of the proposed tariff or amendment to a tariff to the Commission, together with such further information as the Commission may require to determine whether the tariff or amended tariff would satisfy the provisions of sub-section (7). If the Commission considers that the proposed tariff or amended tariff of a licensee does not satisfy any of the provisions of sub-section (7), it shall, within 60 days of receipt of all the information which it required, and after consultation with the Commission Advisory Committee and the licensee, notify the licensee that the proposed tariff or amended tariff is unacceptable to the Commission and it shall provide to the licensee an alternative tariff or amended tariff which shall be implemented by the licensee. The licensee shall not amend any tariff unless the amendment has been approved by the Commission.

(10) Notwithstanding anything contained in sections 57-A and 57-B of the Electricity (Supply) Act, 1948, no Rating Committee shall be constituted after the date of this enactment and the Commission shall secure that licensees comply with the provisions of their licences regarding their charges for the sale of electricity (both wholesale and retail) and for the connection to and use of their assets or systems in accordance with the provisions of this Act.

Explanation :-

In this section,-

(a) "the expected revenue from charges" means the total revenue which a licensee is expected to recover from charges for the level of forecast supply used in the determination under sub-section (5) above in any financial year in respect of goods or services supplied to customers pursuant to a licensed activity; and

(b) "tariff" means a schedule of standard prices or charges for specified services which are applicable to all such specified services provided to the type or types of customers specified in the tariff notification.

Finances of licensees

27. (1) The State Government may from time to time make subventions to any licensee for the purpose of sub-section (3) of section 12 of this Act or the Electricity (Supply) Act, 1948 for such amounts as may be recommended by the Commission and on such terms and conditions as the State Government may determine.

(2) The State Government may from time to time advance loans to any licensee or Generating Company which for the time being is wholly or partly owned by the State Government on such terms and conditions, not inconsistent with the provisions of this Act or the Electricity (Supply) Act, 1948, as the State Government may determine.

(3) The State Government may guarantee in such manner as it thinks fit the repayment of the principal or the payment of interest (or both) on any loan proposed to be raised by any licensee or Generating Company which is for the time being wholly or partly owned by the State Government or the discharge of any other financial obligation of any such licensee or Generating Company.

(4) The State Government shall be entitled to inspect and verify the accounts of every licensee or generating company obtaining the benefits under sub-section (1), (2) and (3) of this section.