Gujarat: GERC Upholds Uniform Power Tariff for State Discoms

Gujarat: GERC Upholds Uniform Power Tariff for State Discoms

The Gujarat Electricity Regulatory Commission (GERC) has rejected a petition seeking separate electricity tariffs for the state’s four government-run distribution companies, ruling that the existing uniform tariff structure is justified under current circumstances.

The petition, filed by the Utility Users’ Welfare Association and a consumer rights advocate had urged the Commission to direct Gujarat Urja Vikas Nigam Limited (GUVNL) and its subsidiaries—UGVCL, DGVCL, MGVCL, and PGVCL—to implement distinct tariff schedules based on each company’s performance and geographical area.

Objections Against Uniform Tariff

The petitioners argued that a uniform tariff violates the principles of the Electricity Act, 2003 and the National Tariff Policy, which promote cost-reflective pricing and discourage cross-subsidisation. They contended that efficient Discoms are unfairly made to subsidise inefficient ones, distorting competition and undermining incentives for performance improvement under the Multi Year Tariff (MYT) framework.

Citing sections 61 and 62(3) of the Act and clause 8.4.2 of the Tariff Policy, they claimed the law permits—and in spirit encourages—differentiation of tariffs based on factors like consumer mix, operational efficiency, and geographic region. The petition also relied on previous rulings by the Appellate Tribunal for Electricity (APTEL), which have cautioned against applying a common tariff across different licensees.

Defence Of Uniform Pricing Model 

In response, GUVNL and the four Discoms defended the uniform pricing model, arguing it enables centralized bulk power procurement, which in turn reduces overall costs and ensures equitable electricity access across Gujarat. The respondents said that if Discoms procured power independently, it could result in stranded capacity, suboptimal scheduling, and higher consumer tariffs.

The Commission sided with the Discoms, ruling that the uniform tariff regime is a product of the state’s post-unbundling structure, where GUVNL procures power collectively and pools resources to serve consumers efficiently.

GERC Defends Discoms 

GERC noted that while the Electricity Act and Tariff Policy support cost-reflective pricing and a gradual reduction in cross-subsidies, they do not mandate tariff differentiation in every case. Section 62(3) of the Act allows tariff differentiation but does not prohibit uniform tariffs when justified by operational and policy factors, the Commission observed.

“The uniform tariff has enabled optimal utilization of generation resources, reduced procurement costs, and ensured universal and affordable electricity supply,” GERC said in its order.

The Commission further stated that the MYT mechanism and performance benchmarking are already in place to monitor and incentivize Discom efficiency, even under a uniform tariff framework.

GERC also rejected the petitioners’ reliance on the APTEL ruling, calling it distinguishable, as it applied to private licensees and not to a state-led setup with centralized power procurement.

While acknowledging the absence of any government directive mandating a uniform tariff under Section 108 of the Act, the Commission found “no statutory bar” to its continuation and concluded that the current arrangement aligns with the public interest.

The petition was dismissed, though the Commission said it may review the tariff structure in the future if the sector undergoes significant structural or policy changes.