SC: Consumers Cannot Be Charged for Discontinued Power Supply, Tariff Must Protect Public Interest

May 7, 2026 : The Supreme Court has held that consumers cannot be compelled to pay for a service that is no longer being provided, observing that tariff determination under the Electricity Act, 2003 is not a mere mathematical calculation but a regulatory exercise balancing competing interests while prioritising consumer welfare.

A Bench comprising Justice P. S. Narasimha and Justice Alok Aradhe set aside a February 2025 judgment of the Appellate Tribunal for Electricity (APTEL) concerning the Rithala Combined Cycle Power Plant in Delhi.

The Court restored the 2019 order passed by the Delhi Electricity Regulatory Commission (DERC), which had refused to allow recovery of the remaining capital cost of the plant through tariff after electricity supply from the project ceased in March 2018.

Emphasising that consumer interest remains a foundational principle of the Electricity Act, 2003, the Bench observed that consumers cannot be burdened with charges for a service that has effectively ended.

The dispute arose after APTEL directed that the entire capital cost of the plant be recovered through depreciation over a period of 15 years. However, the Supreme Court noted that the Power Purchase Agreement (PPA) relating to the project had been approved only for six years.

The Rithala plant had been established ahead of the 2010 Commonwealth Games to address Delhi’s urgent electricity requirements during that period. The Court held that permitting continued recovery of capital costs through tariff even after discontinuation of supply would be contrary to the regulatory framework and consumer protection objectives under the law.