DERC Proposes New Draft Rules For Monthly Fuel And Power Purchase Surcharge In Delhi

The Delhi Electricity Regulatory Commission has released a draft notification to amend its existing tariff regulations by introducing a new mechanism for the Fuel and Power Purchase Adjustment Surcharge. These changes are included in the Delhi Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) (Second Amendment) Regulations, 2025, and will come into effect once they are published in the official gazette. The new system is intended to provide a transparent and efficient way of adjusting consumer electricity bills to reflect changes in fuel costs, power purchase costs, and transmission charges.

The Fuel and Power Purchase Adjustment Surcharge, or FPPAS, is defined as the variation in the cost of electricity supplied to consumers compared to the supply cost that has been approved by the commission. This variation arises due to fluctuations in fuel prices, costs of purchasing costs, and transmission charges. The new system allows for the automatic monthly calculation and billing of the surcharge, removing the need for separate regulatory approval each time. However, an annual true-up process will still take place to ensure that the billed amounts match the actual costs incurred by the distribution licensees.

As per the draft rules, the surcharge for a particular month will be billed two months later. For example, the costs for April will be reflected in the consumer bills issued in June. This delay allows for accurate computation and incorporation of all the necessary cost data. The draft regulations also introduce a cap on the surcharge to protect consumers from sudden spikes in electricity bills. The FPPAS amount cannot exceed 10 percent of the consumer’s combined energy and fixed charges in any given billing cycle. If the actual costs exceed this ceiling, the unrecovered portion will be carried forward and adjusted in the following months within the same financial year. This arrangement ensures that the licensee can still recover its costs without burdening consumers with abrupt increases.

The draft regulations emphasize transparency and accountability in implementing this system. Distribution licensees will have to submit their detailed FPPAS computations to the commission every month. In addition, they must provide an auditor’s certificate on a quarterly basis, breaking down the power purchase costs and transmission charges in detail. The regulations also require licensees to make all relevant information publicly available. This includes publishing the FPPAS formula, the monthly calculations, and supporting data on their websites. By doing so, consumers will be able to understand how the surcharge is being computed and applied to their bills.

Another important aspect of the draft regulations is the need for a unified billing system. The commission has made it mandatory for distribution licensees to ensure that their billing mechanisms are capable of smoothly integrating the new surcharge. The aim is to have uniform and updated billing practices across the board, regardless of which vendor or software is being used by the licensee. This will prevent discrepancies and ensure that consumers across Delhi receive consistent and transparent bills.

The draft notification also provides a detailed formula for computing the monthly surcharge. This formula takes into account the total units of electricity procured, any bulk power sales, and different types of losses in the system. By using this structured approach, the surcharge reflects the real costs borne by the distribution licensee while maintaining fairness for consumers. The proposed regulations mark a significant step toward modernizing tariff adjustments in Delhi and ensuring a balanced approach to both cost recovery and consumer protection.