APTEL Upholds TNERC Orders In TSMA-TANGEDCO Power Tariff And Subsidy Dispute

The Appellate Tribunal for Electricity (APTEL) has delivered a major judgment in a long-running dispute involving the Tamil Nadu Spinning Mills Association (TSMA), the Tamil Nadu Electricity Regulatory Commission (TNERC), and Tamil Nadu Generation and Distribution Corporation (TANGEDCO). The ruling, issued on May 11, 2026, dealt with challenges raised against the tariff order of 2017 and the review order of 2018 issued by the state electricity regulator. The case focused on issues related to government subsidy, transmission and distribution losses, and transparency in tariff-related calculations.

One of the key issues in the case was TANGEDCO’s decision to relinquish a subsidy amount of around ₹2,500 crore from the Tamil Nadu government. TSMA argued that giving up the subsidy was against the provisions of the Electricity Act, 2003. The association also expressed concern that the withdrawal of such a large subsidy could eventually result in higher electricity tariffs for consumers in order to compensate for the financial gap created within the utility.

However, the Tribunal did not agree with the arguments made by the association. APTEL observed that the decision was part of a larger financial strategy connected to the UDAY scheme, under which state governments were allowed to take over a major portion of the debt of power distribution companies. In this case, the Tamil Nadu government took over nearly 75 percent of TANGEDCO’s debt. According to the Tribunal, the move helped reduce the carrying cost of debt for the utility and improved its financial condition over the long term. The judgment also noted that there was no immediate burden placed on domestic consumers in the form of tariff increases because of this decision.

Another important issue raised by TSMA was related to Transmission and Distribution (T&D) losses approved by TNERC. The association alleged that the losses had been increased by around 3 percent without proper scientific evidence. It argued that Tamil Nadu did not have 100 percent electricity metering, making it difficult to accurately measure losses in the system. TSMA also criticized the authorities for not making the T&D study report publicly available for stakeholders to examine and verify.

In response, TANGEDCO stated that the approved losses were based on accepted methodologies and were part of a gradual declining trend. The Tribunal acknowledged that complete metering remains important for accurate assessment of losses. At the same time, it observed that the Commission had fixed normative loss targets so that consumers would not be forced to bear the burden of actual higher losses caused by inefficiencies in the system.

While upholding the main findings of the TNERC orders, APTEL also stressed the importance of transparency and accountability in regulatory functioning. The Tribunal directed the State Commission to provide TSMA with detailed data and calculations related to the Cross Subsidy Surcharge (CSS) whenever requested through proper application. The judgment highlighted that although government subsidies are policy decisions and not guaranteed rights, regulatory authorities must ensure openness and clarity in decisions affecting consumers and stakeholders in the power sector.