Power companies to cut rates after HC says regulators cannot fix provisional tariffs

Power plants producing 50,000 mw, or nearly a quarter of India’s total capacity, will have to cut tariffs as the Calcutta High Court has said regulators cannot fix provisional tariffs for new units, which consumers say are abnormally high.

The court has quashed the regulation that empowers the Central Electricity Regulatory Commission to fix provisional tariffs for generation and transmission. This will also affect 96,000 circuit km of transmission lines of Power GridBSE 0.77 % Corp. The main producers affected by the order are thermal power giant NTPC, hydroelectricity major NHPCBSE -0.64 % and Damodar Valley Corp.

The court said the power of the commission to pass provisional tariffs was ‘ultra vires’ the Constitution and the Electricity Act, 2003 – meaning beyond its powers and scope of law. CERC has approached the Supreme Court against the verdict.

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