TERC Proposes New FPPPA Draft Regulations For 2025 To Enable Monthly Automatic Power Tariff Adjustments In Tripura

The Tripura Electricity Regulatory Commission (TERC) has issued the draft of the new Fuel and Power Purchase Price Adjustment (FPPPA) Regulations for 2025. These new regulations are intended to replace the earlier framework from 2011 and introduce a system that allows monthly automatic adjustment of consumer electricity bills. The purpose of this new approach is to reflect changes in fuel prices, power purchase costs, and transmission charges more promptly and transparently. By doing so, the regulatory process becomes simpler, ensuring that any variation in electricity costs is passed on to consumers without delays.

At the core of the new mechanism is the concept of the FPPPA Surcharge, which will be calculated through a detailed formula. This surcharge represents the difference between the actual cost of power supplied to consumers and the cost that had been approved by the Commission in the tariff order. Several key components are included in the calculation, such as the total amount of power purchased and sold, the difference between projected and actual power purchase costs, and any changes in inter-state or intra-state transmission charges. However, specific charges, such as those arising from the Deviation Settlement Mechanism (DSM) and Ancillary Services, will not be part of the monthly calculation. Instead, they will be adjusted later during the annual true-up process, which will be reviewed and approved by the Commission.

The draft regulations also define a clear timeline for implementing these adjustments. The FPPPA Surcharge will be calculated for the month in which power was supplied, called the nth month, and billed to consumers in the second month after that, referred to as the (n+2)th month. For instance, if the power was supplied in April, the resulting cost adjustment will appear in consumer bills in June. The distribution licensee will be required to carry out this calculation and billing automatically every month without seeking specific regulatory approval each time. However, if the licensee fails to apply this adjustment within the stipulated time frame—except under force majeure circumstances—it will lose the right to recover those costs later.

To avoid placing a sudden financial burden on consumers, the new draft allows flexibility for the distribution licensee to carry forward part of the surcharge to future months. This will apply only when the total surcharge exceeds twenty percent of the variable component of the approved tariff. The carry-forward can be extended for a maximum of two months, and the licensee will be entitled to a carrying cost based on the State Bank of India’s lending rate plus 150 basis points. This cost, too, will be reviewed annually during the true-up process.

Another key feature of the regulations is the introduction of a cap on the automatic recovery of costs. If the calculated FPPPA Surcharge is within five percent, the full amount can be recovered automatically. If it exceeds five percent, only five percent and ninety percent of the remaining portion will be recovered automatically, while the rest will require explicit approval from the Commission during the annual true-up. Additionally, all recovered revenues must be reconciled and finalized by June 30th of the following financial year. To maintain transparency, the distribution licensee will be required to publish the full details of the formula, calculations, and final surcharge amounts on its official website for public access and scrutiny.