The Uttarakhand Electricity Regulatory Commission (UERC) has issued an order on Petition No. 64 of 2026 filed by Uttarakhand Power Corporation Limited (UPCL), concerning its additional Aggregate Revenue Requirement (ARR) claim arising from the historic transfer of assets and liabilities between Uttar Pradesh Power Corporation Limited (UPPCL) and UPCL.
The matter relates to the creation of Uttarakhand on November 9, 2000. A division scheme signed in 2003 had identified Gross Fixed Assets (GFA) of ₹1,058.18 crore. However, the Transfer Scheme was formally notified by the Government of Uttarakhand only on March 8, 2022. Following directions issued by the state government under Section 108 of the Electricity Act, 2003, UPCL approached UERC seeking approval of its financial claims.
UPCL had claimed approximately ₹5,900.01 crore as additional ARR. This included ₹936.37 crore under various ARR components, including depreciation, return on equity and interest on normative loans. The company had also sought ₹4,963.65 crore as carrying cost for the intervening period.
The petition faced objections from stakeholders during the consultation process. The Industries Association of Uttarakhand and other participants questioned the maintainability of the claim and raised concerns that allowing the entire amount could result in a significant tariff burden on electricity consumers.
After conducting a prudence check, UERC substantially reduced the amount claimed by UPCL. The Commission approved an additional GFA of ₹550.18 crore and determined an allowable ARR of ₹389.33 crore. This comprises ₹288.70 crore towards depreciation, ₹97.75 crore as reasonable return on the capital base and ₹2.88 crore towards interest on working capital.
The Commission rejected UPCL’s claims for return on equity and interest on normative loans associated with a ₹572 crore liability of a Central Public Sector Undertaking (CPSU), which had been converted into share capital by the state government. UERC observed that regulatory returns on equity are intended for funds deployed for creating fixed operational assets and cannot be allowed merely for restructuring existing liabilities.
UERC also rejected the entire carrying cost claim of ₹4,963.65 crore. The Commission noted that the prolonged delay in finalizing, notifying and pursuing the Transfer Scheme was attributable to delays on the part of UPCL and the state government. It held that electricity consumers should not be burdened with additional costs arising from such delays.
To avoid an immediate tariff impact, the Commission noted discussions on adjusting the approved amount against inter-departmental dues payable by UPCL to the state government. If this adjustment is not finalized, UPCL will have to submit a phased recovery plan for the approved ₹389.33 crore during the FY 2027-28 tariff proceedings.
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