Damodar Valley Power Consumers’ Association & Ors vs West Bengal Electricity Regulatory Commission & Anr on 2 July 2026

1. Damodar Valley Power Consumers’ Association Through its Authorised Signatory, Mr. Rajesh K. Shah Ideal Centre, 4th Floor 9 AJC Bose Road, Kolkata- 700 017.

2. AIC Iron Industries Pvt Ltd Through Authorised Signatory, Mr. Dinesh Adukia, Regd. Office:-25, Ganesh Chandra Avenue, 4th Floor, Kolkata-700013.

3. Alishan Steels Private Limited Through Authorised Signatory, Mr. Uttam Sarkar Martin Burn House, 1, R.N. Mukherjee Road, 2nd Floor, Room No. 210, Kolkata-700001.

4. BDG Metal & Power Limited Through Authorised Signatory, Mr. Saurabh Shekhar 5th Floor, HMP House, Kolkata-700001.

5. Captain Steel India Limited Through Authorised Signatory, Mr. Ramesh Kumar Jhunjhunwala, Director Read. Office:- 10th Floor, Flat 101N, 21A, Shakespeare Sarani, Kolkata-700017.

6. City Alloys Pvt. Ltd. Through Authorised Signatory, Mr. Tushar Mitra Regd. Office :- Hanuman Charai, P.O. Barakar- 713324. Dist. Paschim Bardhaman (W.B).

7. Expandable Enterprises (P) Ltd. Through Authorised Signatory, Mr. Uttam Sarkar 51 Nalini Seth Road, 2nd Floor, Room No. 01, Kolkata-700007.

8. Gagan Ferro Tech Limited Through Authorised Signatory, Mr. Vinay kumar Agarwal, Director Reg. Office: 113/1B, C.R. Avenue, 7th Floor, Room No. 7C, Kolkata-700073.

9. Jagdamba Ispat Pvt. Ltd. Through Authorised Signatory, Mr. Sandeep Murarka, Director Regd. Office :- 1C, Jorabagan Street, 1st Floor, Room No. A, Kolkata- 700006, West Bengal.

10. Jai Balaji Industries Limited (Consumer No. 440195 ) Through Authorised Signatory, Mr. Roshan Mallick, Regd. Office:- 5, Bentinck Street, 1st Floor, Kolkata-700001.

11. Jai Balaji Industries Limited (Consumer No. 440225) Through Authorised Signatory, Mr. Roshan Mallick, Assistant Manager- Account, Regd. Office:- 5, Bentinck Street, 1st Floor, Kolkata-700001.

12. Lalwani Ferro Alloys Ltd Through Authorised Signatory, Mr. Sandeep Lalwani, Regd. Office :- Om Tower, 32, Jawaharlal Nehru Road, 2nd Floor, Suite No. 205, Kolkata- 700071.

13. Ma Chandi Durga Cements Ltd Through Authorised Signatory, Mr. Kuldip Kumar Kedia, Regd. Office : Bamunara Industrial Area, P.O. Bamunara, P.S. Kanaksha, G.P., Gopalpur, Durgapur — 713212 District — Paschim Bardhaman, West Bengal.

14. Maan Concast Pvt. Ltd.

Through Authorised Signatory, Mr. Amit Goel, Director Reg. Office:-58/1, Sarat Bose Road, Kolkata-700025.

15. Maan Steel & Power Ltd Through Authorised Signatory. Mr. Shyam Sunder Agarwal, Reg. Office:-58/1, Sarat Bose Road, Kolkata-700025.

16. Mackeil Ispat & Forgings Ltd. Through Authorized Signatory, Mr. Debkumar Som Siddha Weston, 2nd floor, Room No. 203, 9, Weston Street, Kolkata-700 013.

17. Maithan Alloys Ltd. Through Authorised Signatory, Mr. Sudhanshu Agarwalla, President & Financial Officer, Regd. Office:- Ideal Centre, 4th Floor, 9, A.J.C. Bose Road, Kolkata- 700017.

18. Maithan Steel & Power Ltd Through Authorised Signatory, Mr. Rameshwar Sah, Regd. Office :- 9, A.J.C. Bose Road, Ideal Centre, 6th Floor, Kolkata — 700017.

19. Mark Steels Ltd. Through Authorised Signatory, Mr. Umesh Kumar Jhunjhunwala, Director Regd. Office:- 8B, Bikaner Building, 2nd Floor, Lal Bazar Street, Kolkata-700001.

20. Metsil Exports Ltd Through Authorised Signatory, Mr. Rintu Bhattacharjee Regd. Office :- 8/1A, Middleton Row, 3rd Floor, Kolkata- 700071.

21. N N Ispat Pvt Ltd Through Authorised Signatory, Mr. Dinesh Adukia, Director. Regd. Office:-25, Ganesh Chandra Avenue, 4th Floor, Kolkata-700013.

22. Neo Metaliks Ltd. Through Authorised Signatory, Mr. Akhilesh Narayan Shukla, Regd. Office:- "Park Plaza", 71 Park Street, 6th Floor, 6F, North Block. Kolkata- 700016.

23. RAIC Integrated Sponge & Power Pvt Ltd Through Authorised Signatory, Mr. Dinesh Adukia, Director, Regd. Office:-25, Ganesh Chandra Avenue, 4th Floor, Kolkata-700013.

24. Rattan Ispat Pvt. Ltd. Through Authorised Signatory, Mr. Gautam Agarwal Regd. Office :- 6 Lyons Range, Unit 4 & 5, 3rd Floor, Kolkata — 700001.

25. Royal Touch Fablon Pvt Ltd- Through Authorised Signatory, Mr. Vikash Kandoi. 16, Strand Road, 12th Floor, Unit No. N1212, Kolkata- 700001.

26. Pawan Putra Steel Company Through Authorised Signatory, Shri Vikash Kedia, 1- B. L. Kedia Road, Post- Asansol Dist- Paschim Bardhaman, West Bengal, Pin- 713301.

27. Shree Ambey Ispat Pvt. Ltd Through Authorised Signatory. Shri Prateek Agarwal. Regd. Office :- Room No. 90, Stephen House, 4 BBD Bagh East, Kolkata- 700001, West Bengal.

28. Super Iron Foundry Ltd Through Authorised Signatory, Mr. Lakshmi Nivas Pandey, Regd. Office :- C/O: Chandra Bhushan Pandey, 12, Pretoria Street, Aspiration Vintage, 1st floor, `1B' Kolkata-700071.

29. Surya Alloy Industries Ltd. (Consumer No. 440214) Through Authorised Signatory, Shri Ashish Rungta, Regd. Office :- 1/1, Cama Street, 3rd Floor,

Kolkata- 700016.

30. Surya Alloy Industries Ltd. (Consumer No. 440283) Through Authorised Signatory, Shri Ashish Rungta Regd. Office :- 1/1, Cama Street, 3rd Floor, Kolkata- 700016.

31. Ujjwal Mineral And Steels Pvt. Ltd. Through Authorised Signatory, Mr. Ujjwal Kamalia, Nakrajoria, P.O.- Salanpur, Distt.- Paschim Bardhaman, West Bengal 713357.

32. Vision Sponge Iron Private Ltd Through Authorised Signatory, Mr. Pawan Kumar Bagla, Regd. Office :- "ANANDLOK", 227 A.J.C. Bose Road, Block-A, 3rd Floor, Kolkata- 700020.

…Appellant(s)

Vs.

1. West Bengal Electricity Regulatory Commission Through Secretary Plot No: AH/5 (2nd & 4th Floor), Premises No : MAR 16-1111, Action Area IA, Newtown, Rajarhat, 700163, Kolkata.

2. Damodar Valley Corporation Through Member Secretary, DVC Towers, VIP Road Kolkata - 700 054.

…Respondent(s)

Counsel for the Appellant(s) : Mr. Rajiv Yadav

Counsel for the Respondent(s) : Mr. C. K. Rai Ms. Anuradha Roy Mr. Vinay Kumar Gupta for R-1

Mr. Shri Venkatesh Mr. Suhael Buttan Mr. Nihal Bhardwaj

Ms. Surbhi Kapoor Mr. Nikunj Bhatnagar Mr. Manav Batia Mr. Siddharth Nigotia Mr. Akash Lamba Mr. Aniket Kanhaua Ms. Devishi Gupta Mr. Shreyshth Ramesh Sharma Ms. Kanika Chugh Mr. Abhishek Nangia Ms. Tanishka Khatana Mr. Kunal Veer Chopra Ms. Drishti Rathi Mr. Manu Tiwari Mr. Aashwyn Singh Ms. Indu Uttara Mr. Ashutosh Kumar Srivastava Ms. Priya Dhankar Mr. Vineet Kumar Mr. Punyam Bhutani Mr. Vedant Choudhary Mr. Adarsh Singh Mr. Mohit Mansharamani Mr. Harsh Vardhan Ms. Ananya Dutta for R-2

JUDGEMENT

PER HON’BLE MR. AJAY TALEGAONKAR, TECHNICAL MEMBER

1. The present Appeal has been filed by the Appellant Damodar Valley Power Consumers’ Association (“DVPCA”) and its members challenging the Impugned Order dated 31.03.2025 passed by the West Bengal Electricity Regulatory Commission (“WBERC”/ “Respondent No. 1”/ “State Commission”) in Case No. APR-125/ 24-25 whereby the State Commission had undertaken Annual Performance Review (APR) for FY 2021-22 in respect of retail supply of electricity by Damodar Valley Corporation (“DVC”/ “Respondent No. 2”) within its command area in the State of West Bengal.

Description of the Parties

2. The Appellant No. 1, DVPCA is a company incorporated under Section 8 of the Companies Act, 1956 and is a collective body representing the interests of its members who are HT consumers of DVC.

3. The Appellant Nos. 2 to 32 are industrial consumers of DVC and are also members of the Appellant No. 1.

4. Respondent No. 1, WBERC is a statutory body under Section 82 of the Electricity Act, 2003. The State Commission is entrusted, inter alia, with the function of determination of tariff for retail supply of tariff within the State of West Bengal.

5. Respondent No. 2, DVC is a statutory corporation owned and controlled by the Government of India, Government of Jharkhand and Government of West Bengal and is engaged in generation, transmission, bulk-supply and distribution of electricity and performs diverse functions relating to irrigation, flood control, afforestation, soil conservation etc. in accordance with the provisions of the DVC Act. However, in matters of tariff determination, DVC is governed by the provisions of the Electricity Act, 2003. The power distribution activity of DVC is confined to industrial HT consumers, receiving power at 33 KV and above in its command area falling in the States of West Bengal and Jharkhand. The members of the Appellant Association i.e. Appellant Nos. 2 to 32 are HT/ EHT consumer of DVC, having their manufacturing facility in the State of West Bengal.

Factual Matrix of the Case

6. The State Commission notified the WBERC (Terms and Conditions of Tariff) Regulations, 2011 governing tariff determination in the State of West Bengal. The

Central Electricity Regulatory Commission (“CERC”) notified the CERC (Terms and Conditions of Tariff) Regulations, 2014 for the control period FY 2014-19 and thereafter notified the CERC (Terms and Conditions of Tariff) Regulations, 2019 for the control period FY 2019-24.

7. Pursuant thereto, the State Commission passed several Aggregate Revenue Requirement (“ARR”), tariff and APR orders concerning DVC for different control periods.

8. For the period FY 2014-17, the State Commission passed an ARR Order dated 25.05.2015 and subsequently an APR Order dated 08.06.2023.

9. For FY 2021-22, the Annual Fixed Charges (“AFC”) pertaining to various generating stations as well as the Transmission and Distribution (“T&D”) system of DVC were determined by the CERC through tariff orders issued for the control period FY 2019-24.

10. DVC filed a tariff petition on 26.02.2020 for determination of tariff for FY 2020-23. Thereafter, by ARR Order dated 07.03.2024, the State Commission determined the retail tariff applicable to DVC for FY 2020-23. In relation to FY 2021-22, DVC filed an APR Petition dated 28.06.2024 before the State Commission on 01.07.2024.

11. DVC had earlier filed review petitions against the APR Orders dated 18.09.2023, 11.12.2023 and 11.01.2024 pertaining respectively to FY 2017-18, FY 2018-19 and FY 2019-20. By separate review orders dated 24.03.2025, the State Commission reviewed the aforesaid APR Orders.

12. While passing the said review orders, the State Commission adopted an “empirical formula” proposed by DVC for computation of interest on differential AFC.

13. The same empirical formula was also applied by the State Commission in relation to FY 2014-17. Thereafter, the State Commission passed the Impugned APR Order dated 31.03.2025 for FY 2021-22.

14. Aggrieved by the Impugned Order dated 31.03.2025, the Appellants have preferred the present Appeal.

15. The Appellants have prayed for the following relief before us: “a) set aside the Annual Performance Review/ Tariff order dated 31.3.2025, passed by the Ld. West Bengal Electricity Regulatory Commission in Case No. APR-125/ 24-25 to the extent challenged in the present appeal;

b) pass such other order(s), as this Hon’ble Tribunal may deem fit and proper in the facts and circumstances of the case.”

16. The appeal had challenged Impugned Order on several issues. However, as recorded in the daily order dated 12th May 2026 for the Appeal No. 15 of 2026 & IA No. 1074 of 2025, Learned Counsels for Appellant as well as Respondents, submitted that, the submissions which have been made on the issue of interest on differential AFC during the course of hearing on the interim application are similar which would be made at the time of final disposal of the appeal on this issue. Therefore, at the request of the Learned Counsels, we are taking up this appeal for final disposal on this issue. Accordingly, in this judgement we are only dealing with the issue of interest on differential AFC. So far as remaining issues are

concerned, the Appellants are given liberty to agitate those issues by way of fresh appeal.

Issues for Consideration

17. Based on the submissions of the Appellants, we have identified following issues for our consideration:

1. Whether the original APR Order had attained finality and could not be reopened.

2. Whether the introduction of the empirical formula after the original APR Order had attained finality is legally permissible.

3. Whether the empirical formula results in an artificial reduction of the principal differential Annual Fixed Charges (AFC).

4. Whether the impugned order suffers from lack of reasoning.

5. Whether the impugned approach results in dual treatment leading to consumer prejudice.

6. Whether the review petitions were beyond the jurisdiction of the State Commission.

7. Whether Regulation 2.5.3 supports the adoption of the empirical formula.

Submissions of the Parties, Our Analysis and Conclusion “I think that it is a relatively good approximation to truth—which is much too complicated to allow anything but approximations—that mathematical ideas originate in empirics.”

— John von Neumann (one of the most influential mathematicians of the twentieth century)

18. The present case revolves around what has been described as an “empirical formula”. Empirical methods and formulas have played, and continue to play, an important role in science, engineering, economics and several other fields. As the observation of John von Neumann suggests, the distinction between empirical observation and mathematical formulation is often less rigid than it may first appear.

19. In the present matter, however, the principal question is not whether the formula under consideration can properly be characterised as empirical. Rather, the more fundamental issue is whether the adoption and application of the formula was justified in the facts and circumstances of the case. The question as to the nature of the formula itself, including whether it is truly empirical or is founded upon identifiable technical and engineering principles, shall be examined in the succeeding part of this judgement.

Issue 1: Whether the original APR Order had attained finality and could not be reopened.

Submissions of the Appellants

20. The Appellants submitted that the retail tariff order dated 25.05.2015 had adopted CERC approved AFC for FY 2013-14 as the input cost for FY 2014-15 to FY 2016-17, subject to truing-up. In the APR Petition for FY 2014-17, DVC itself claimed interest on differential AFC under Regulation 8(13) of the CERC Tariff

Regulations, 2014, linking AFC recovery to availability of stations and the T&D network under Regulation 30.

21. The Appellants contended that the APR Order dated 08.06.2023 accepted DVC’s claim, computed differential AFC as the difference between tariff-order AFC and trued-up AFC and allowed interest thereon for specified stations and the T&D system. A revenue gap of Rs. 175.66 Crore was determined and later recovered through the ARR Order dated 13.03.2024.

22. However, DVC never challenged this methodology and the computation of interest on differential AFC had attained finality. It could not have been reopened in subsequent proceedings.

Submissions of WBERC

23. For the first time in FY 2014-17 APR proceedings, DVC claimed interest under Regulation 8(13) of the CERC Tariff Regulations, which WBERC allowed vide Order dated 08.06.2023. However, WBERC denied that the issue had attained finality. The said order was conditional and kept open for final quantification pending CERC true-up orders for several stations including BTPS ‘B’, CTPS U# 1-3, DTPS U# 3 & 4, MTPS U# 7 & 8 and others. Reliance was placed on paragraphs 4.5.3 and 5.5 of the Order dated 08.06.2023, where DVC was directed to compute adjustment amounts based on subsequent true-up orders and submit the same in subsequent APR proceedings.

24. The impugned order merely implemented those directions; therefore, the principles of res judicata or finality were inapplicable. The computation was not in the nature of review but was a compliance exercise. Since fixed cost itself was

subject to future adjustment, the consequential interest component also necessarily remained open for final determination.

Submissions of DVC

25. DVC submitted that the Appellants’ contention that the APR Order dated 08.06.2023 conclusively determined the issue was untenable. The Order dated 31.03.2025 was neither a reopening nor a new methodology, but a continuation and rectification of a pending computational exercise necessitated by availability of complete CERC true-up data and alignment of projected-sales-based AFC with actual-sales-based AFC.

26. The APR Order dated 08.06.2023 expressly kept the issue open. Reliance was placed on paragraph 4.5.3, where WBERC recorded that trued-up AFC for several stations had not been determined by CERC and directed DVC to furnish revised computations upon issuance of CERC true-up orders. The figure of Rs. 51.82 Crore was provisional and based on incomplete data. After final CERC true- up orders, DVC submitted reconciled computations considered by WBERC in the APR Order dated 31.03.2025, resulting in revised determination of Rs. 252.19 Crore.

27. The exercise did not alter the methodology of tariff determination but merely corrected a mathematical inconsistency arising from comparison of AFC figures computed on different sales bases.

Analysis and Conclusion

28. Both WBERC and DVC have relied on paragraph 4.5.3 and 5.5 of the WBERC APR Order dated 08.06.2023. The relevant extracts of the aforesaid paragraphs are reproduced below: “4.5.3 DVC in the instant petition had submitted the available Truing-up Orders of CERC leading to determination of the Fixed Cost of the transmission tariff for integrated transmission and distribution (T&D) system of DVC dated 02.03.2022 and 10.06.2022 for new and existing elements respectively. Further, they submitted that trueing up orders for power stations of DVC were yet to be issued by the Central Commission at the time of submission of the petition dated 14.07.2022 and prayed for considering issuance of APR orders based on their submission. However, the Commission has observed from the website of CERC that till 31.03.2023, trueing up orders have been issued by CERC for MTPS U#1-3, MTPS U#4, MTPS U#5&6, MHS, THS, PHS and third order of integrated T&D system of DVC for the period 2014 - 15 to 2018 - 19. The Commission finds it prudent to consider the input cost as per the True up orders for the period 2014 - 15 to 2018 - 19 issued by CERC upto 31.03.2023 for finalization of APR for the years 2014 - 15, 2015 - 16 and 2016 - 17. In respect of the other power stations of DVC for which trueing up order has not been issued by CERC till 31.03.2023, fixed costs as per MYT orders are considered. Therefore, the Commission considers Truing-up Orders in respect of MTPS U#1-3, MTPS U#4, MTPS U#5&6, MHS, THS and PHS in determination of proportionate fixed cost of the respective generating stations towards allocation to consumers and licensees in radial mode in West Bengal part. Trueing up orders issued by CERC for the period 2014 - 15 to 2018 - 19 in respect of integrated T&D system of DVC have been considered for allocation of fixed cost of T&D system. The list of orders of CERC considered by the Commission are as tabulated below:

However, after issuance of True up orders by CERC in respect of BTPS 'B', CTPS U#1-3, DTPS U# 3&4, MTPS U# 7&8, CTPS U# 7&8, DSTPS U 1&2, KTPS U# 1&2, BTPS 'A' and RTPS U 1&2, DVC shall compute the adjustment amount, if any, based on respective truing up orders and submit the same along with the subsequent APR. ……

5.5 After issuance of True up orders by CERC in respect of BTPS 'B', CTPS U#1- 3, DTPS U# 3&4, MTPS U# 7&8, CTPS U# 7&8, DSTPS U 1&2, KTPS U# 1&2, BTPS 'A' and RTPS U #1&2, DVC shall compute the adjustment amount, if any, based on respective truing up orders and submit the same along with the subsequent APR.”

29. It is evident that the issue relating to the cumulative AFC of all generating stations, and the transmission & distribution system had not attained finality. WBERC had kept the matter open because the true-up orders for certain generating stations had not been issued by CERC at that stage. While nothing has

been brought to our notice that WBERC specifically contemplated an adjustment on account of difference between projected and actual energy sales, the fact remains that the determination itself had not reached finality. Under these circumstances, we find no infirmity in carrying out any other adjustment that is otherwise justified and necessary while arriving at the final value. Whether the adjustment carried out in the Impugned Order on account of the impact of variation between projected and actual energy sales on AFC recovery was justified or not shall be analysed by us in the subsequent part of this judgement.

Issue 2: Whether the introduction of the empirical formula after the original APR Order had attained finality is legally permissible.

Submissions of the Appellants

30. The Appellants contended that only after realizing that trued-up AFC was substantially lower than the tariff-order AFC did DVC devise a new “empirical formula”. This formula was never pleaded in the original APR proceedings but was introduced subsequently through review petitions and later through Annexure-3 to the APR Petition for FY 2021-22.

31. The Impugned APR Order dated 31.03.2025 adopted this formula by artificially reducing the tariff-order AFC in proportion to actual sales against projected sales, thereby reducing or eliminating the differential AFC for interest computation.

Submissions of the WBERC

32. WBERC contended that regulatory consistency required the same corrected methodology to be uniformly applied across all generating stations within the same

control period. It would have been arbitrary to apply one methodology to previously trued-up stations and another to subsequently trued-up stations.

33. WBERC further contended that the impugned computation was not in the nature of review but was a compliance exercise undertaken pursuant to the liberty granted in the earlier order. Since fixed cost itself was subject to future adjustment upon issuance of pending CERC true-up orders, the consequential interest component also necessarily remained open for final determination.

Submissions of DVC

34. DVC denied introduction of any new “empirical formula”. WBERC merely finalized the pending computation for FY 2014-17 after issuance of CERC true-up orders by applying the same approach already adopted in Review APR Orders dated 24.03.2025 for FY 2017-18, FY 2018-19 and FY 2019-20.

35. DVC noted that Appellants challenged the methodology only for FY 2014-17 and FY 2019-20 where it resulted in amounts receivable by consumers, but consciously refrained from challenging it for FY 2017-18 and FY 2018-19 where it substantially reduced DVC’s interest liability from Rs. 317.76 Crore to Rs. 155.59 Crore and from Rs. 69.47 Crore to Rs. 16.59 Crore respectively.

36. According to DVC, Appellants could not approbate and reprobate. Reliance was placed on Talwandi Sabo Power Limited vs. Punjab State Electricity Regulatory Commission, Appeal No. 21 of 2019 and State of Punjab vs. Dhanjit Singh Sandhu, (2014) 15 SCC 144.

Analysis and Conclusion

37. We have already concluded under Issue 1 that the AFC order had not attained finality. In regard to contention of DVC that the Appellants have covered these issues in the appeals selectively only for the years when revised AFC had reduced from original AFC, during the hearing, Ld. Counsel for the Appellants Mr. Rajiv Yadav had clarified that in-principle they do not agree with the methodology of truing up based on empirical formula for all the years, but had no ground to object to it in the years in which they had gained financially due to such adjustment as they were not adversely affected. We are satisfied with this explanation. It is clear that the application of the “Empirical formula” has benefitted consumers in some years and to the DVC in other years, and therefore, the apprehension of DVPCA is unfounded that this formula was devised after realizing that the trued- up AFC was lower than the AFC considered in the original tariff order. Whatever conclusion we arrive at in this Appeal, may get applied consistently in all those years where the relevant orders have been challenged before us in the form of Appeals.

Issue 3: Whether the empirical formula results in an artificial reduction of the principal differential Annual Fixed Charges (AFC).

Submissions of the Appellants

38. The Appellants submitted that by way of an illustration, if tariff-order AFC was Rs. 100 and trued-up AFC was Rs. 80, the differential AFC ought to remain Rs. 20, on which interest should be payable. Under the empirical formula, the tariff- order AFC is first scaled down by the ratio of actual sales to projected sales, so that the differential becomes zero.

39. According to the Appellants, this artificially reduces the principal amount and deprives consumers of the interest otherwise due.

Illustration Original Approach in APR

Order

Revised Approach (Empirical Formula) AFC in Tariff Order: Rs.100 Trued-up AFC: Rs. 80 Differential AFC Rs. 20

Submission: Interest ought to have been awarded principal differential AFC of Rs. 20. Such differential and interest thereon was liable to be refunded to consumers. AFC in Tariff Order: Rs.100 Trued-up AFC: Rs. 80 Projected Sales (units): 100 Actual Sales (units) : 80

AFC in tariff order adjusted by ratio of Actual Sales to Projected Sales i.e. 100 × 80/ 100 = Rs. 80

Differential AFC (Adjusted AFc – Trued-AFC) 80-80 = 0

Submission: As a result of adjustment of AFC considered in the tariff order by ratio of actual sales to projected sales, such AFC is artificially reduced, resulting in lower principal differential for computation of interest. In the present example, the Differential is reduced to 0 for the purpose of interest on computation. In other words, no interest would be payable to consumers despite the AFC considered in the tariff order being higher than the trued-up AFC.

Submissions of the WBERC

40. WBERC submitted that the earlier methodology resulted in an “Apples to Oranges” comparison by contrasting projected AFC values with actual trued-up costs without accounting for actual sales. The previous approach effectively assumed DVC had collected the entire projected AFC from consumers, whereas actual sales were substantially lower, reducing actual recovery.

41. The Commission was duty-bound under Section 61(d) of the Electricity Act, 2003 to correct the anomaly and ensure cost-reflective tariff determination. The empirical formula was not contrary to Regulation 8(13) but was necessary to give effect to recovery of costs in a reasonable manner under Section 61(d). While CERC determines generation tariff, WBERC determines retail tariff applicable to consumers in West Bengal and therefore actual sales ratio is indispensable for determining actual AFC recovery.

42. The Appellants’ case was founded on a “phantom surplus” fallacy by presuming DVC recovered the full projected AFC. DVC had not collected projected AFC because actual sales were substantially lower. The empirical formula determined recoverable provisional AFC corresponding to actual sales. Without such adjustment, DVC would be directed to refund amounts never collected.

Illustrative Example: The Hypothetical DVC Tariff Scenario Hypothetical Data for FY 2016-17:

• Total Allowed AFC (both Tariff and True-Up orders): ₹2,500 Crore

• Projected Share (West Bengal): 40% (Consumers over-projected)

• Actual Share (West Bengal): 30% (Consumers under-utilised)

• Advance Collected (based on 40%): ₹1,000 Crore Comparison of Methodologies Step Scenario A: Appellant's Method (Flawed) Scenario B: Empirical Formula (Correct)

1. Calculate Liability Actual Cost for 30% share on AFC (True-up): ₹ 750 Crore (30% of 2,500) Actual Cost for 30% share on AFC (True-up): ₹ 750 Crore (30% of 2,500)

2. Credit Given (based on projected share during Tariff order and normalization based on actual i.e. 30%) Full Advance Paid for 40% projected on AFC (Tariff Order): ₹ 1,000 Crore Normalised Advance for 40% projected on the AFC of the Tariff order: (Adjusted to the actual 30% level) ₹ 1,000 X (30/40) = ₹ 750 Crore

3. Result (Principal) Surplus of ₹ 250 Crore

Net Difference: ₹ 0

4. Interest Implication DVC pays Interest to the consumer on ₹250 crore. No Interest Payable.

5. The “Dead Money” The Appellant keeps an interest in the booking error. The extra ₹ 250 Cr (Principal) is returned through Tariff Adjustment, but no interest is paid on it.

Inference: Under the Appellant’s method, they would earn interest on ₹250 Crore simply because of projection of ₹1,000 Crore recovery. The Commission’s formula correctly identifies that since Valid Advance (₹750 Cr) matches Actual Liability (₹750 Cr), no interest is due.

Submissions of DVC

43. DVC submitted that Appellants misunderstood the tariff framework. A distinction must be maintained between: (a) AFC determined by CERC at generation level; (b) AFC adopted by WBERC as input cost for retail tariff; and (c) actual recovery of AFC from consumers which depends upon actual energy sales within West Bengal.

44. While CERC determines generation-level AFC, actual recovery occurs through retail tariff in Rs./unit linked to actual sales and consumption. AFC attributable to West Bengal consumers could not remain static based on projected parameters but depended upon actual energy sales.

45. The core issue is related to rectification of a computational inconsistency. While computing interest on differential AFC in APR Order dated 08.06.2023, WBERC applied actual sales factors (D₂ × S₂)1 to AFC approved in MYT Order computed on projected sales assumptions, resulting in mismatch.

46. The formula was: (AFC₂ − AFC₁) × (PAF₂/NATAF₂) × D₂ × S₂. Tariff Order AFC was neither retained on projected-sales basis nor normalised to actual sales before comparison. Mixing projected and actual parameters distorted Tariff-stage 1 The notations here are as follows (from Impugned Order dated 31.03.2025 in Case No. APR- 125/24-25): D₂= share of sale in West Bengal consumers in APR order S₂= Share of sale (actual) to consumers in APR order AFC₂ = Annual Fixed Cost (AFC) considered APR order AFC₁ = Annual Fixed Cost (AFC) considered tariff order PAF₂= Actual plant /Transmission availability considered in APR order PAF₁ = Projected plant /Transmission availability considered in tariff order S₁ = Share of sale (projected) to consumers in tariff order D₁ =Share of sale in West Bengal consumers in tariff order

AFC and resulting in differential and interest. Comparison without aligning underlying sales denominator is mathematically invalid.

47. This was an error apparent on the face of the record. Projected-sales AFC and actual-sales AFC sit on different denominators; comparison without aligning denominator is internally inconsistent.

48. Actual sales in West Bengal from FY 2014-15 to FY 2016-17 substantially exceeded projected sales at MYT stage. Therefore, MYT-stage AFC linked to projected sales had to be aligned with actual sales before any valid comparison with APR-stage AFC.

Analysis and Conclusion

49. We find that the reasoning advanced by the WBERC and DVC in their submissions for the adjustment sought by DVC and allowed by WBERC in the Impugned Order is persuasive. Since the AFC approved under the CERC tariff framework is specified in absolute monetary terms (₹) on the basis of availability, whereas its recovery from consumers is effected predominantly through energy charges denominated in ₹/kWh, any significant variation between projected and actual energy sales may warrant a corresponding adjustment. We find that the WBERC’s Tariff Regulations (Terms and Conditions of Tariff, 2011) in Table 2.5.5- 1 mention “sale volume of electricity” as “Uncontrollable Factor”. Further Regulation 2.5.5 (i) states “Any variation arising out of all uncontrollable factors during Annual Performance Review using the operating norms, wherever applicable, for determination of allowable normative expenditure on that factor, shall be passed through the tariff in an appropriate manner by the Commission;”.

50. The Annexure-3 of the Written submissions filed by DVC dated 15.05.2026 captures the need for such adjustment through an illustration. This explanation, which is self-explanatory is extracted below: “

Comparison of AFC: Necessity of Like-to-Like Adjustment In a tariff determination exercise, the Annual Fixed Cost (“AFC”) approved in the Tariff Order is intrinsically linked to the projected sales. The recovery of AFC is not in absolute terms, but through tariff (₹/unit), which is applied to actual sales. Thus, where actual sales deviate from projected sales, the actual recovery of AFC will necessarily differ from the projected AFC. DVC could recover the entire projected ARR (including AFC) only if actual sales matched projected sales; otherwise, recovery is proportionately lower or higher depending on actual sales. Illustration

1. Multi-Year Tariff Order (Projected Scenario)

Thus, AFC recovery is designed as: ₹500 = ₹5 × 100 units

2. True-Up Order (Actual Scenario)

However, tariff remains based on projected figures (₹5/unit). Therefore actual Recovery = 80 × ₹5 = ₹400 Fundamental Error in Direct Comparison If one compares Projected AFC (₹500) vs. Actual AFC (₹600); it assumes that ₹500 was fully recovered, which is factually incorrect. In reality only ₹400 was recovered due to lower actual sales.

Thus, the premise that the entire projected AFC has been paid is erroneous.

4. Correct Method: Like-to-Like Comparison To ensure a correct comparison, the projected AFC must be scaled to actual sales, since recovery is dependent on sales. Adjustment Formula: Adjusted Projected AFC = Projected AFC × (Actual Sales / Projected Sales) Applying the formula: Adjusted Projected AFC = 500 × (80 / 100) = ₹400 Hence, the proper comparison would be as follows:

The correct approach mandates that the projected AFC must first be normalized to actual sales, and only thereafter compared with the actual AFC determined in true- up. Failing this, the comparison becomes fundamentally flawed and artificially creates a notional surplus/claim, where in fact there may be under-recovery, as demonstrated above.”

51. Thus, the AFC is not artificially reduced but is pegged to a new level based on actual sales. This new level may be higher or lower than that contained in the tariff order depending on level of actual energy sales vis-à-vis projected energy sales. Before proceeding further, we consider it appropriate to clarify the use of the expression “empirical formula” by DVC, which was also adopted by the WBERC.

52. Though this issue does not materially affect the conclusions arrived at by us, the clarification would assist in appreciating the nature of the methodology employed.

53. A formula is generally regarded as empirical when it is derived from observed data, historical trends, statistical correlations, experimentation or practical experience, rather than being deduced from an underlying principle or objective. The Duckworth-Lewis-Stern (DLS) method used in cricket is perhaps the most widely recognised empirical formula known in India. While statisticians regard it as a practical means of arriving at a fair result in rain-affected matches, its application often attracts criticism from supporters of the team that finds itself on the wrong side of the revised target. For instance in our case, if DVC had analysed historical data and found that actual AFC recovery was, on average, 90% of the AFC determined by CERC, and had then used such observed relationship to re- estimate the interest on differential AFC, the resulting formula could appropriately be described as empirical. In the present case, however, DVC proceeded on the premise that AFC is recovered predominantly through energy charges expressed in ₹/kWh and that, therefore, any variation between projected and actual energy sales would necessarily affect AFC recovery. The formula adopted by DVC merely translates this underlying rationale into a mathematical form so as to quantify the adjustment, albeit with a degree of approximation, since a part of the recovery from consumers also takes place through demand charges. Such a formula is more accurately described as a methodology or computational mechanism for implementing the underlying principle rather than as an empirical formula.

54. We consider it necessary to make this clarification because, although the methodology adopted by DVC contains an element of approximation, such approximation does not arise from an analysis of observed data or statistical

correlations. Rather, it stems from simplifying assumptions made while operationalising an underlying principle accepted by WBERC. Consequently, the expression “empirical formula” is not an accurate description of the methodology employed.

Issue 4: Whether the impugned order suffers from lack of reasoning.

Submissions of the Appellants

55. The Appellants contended that the impugned order gives no adequate reasons and records no finding of under-recovery of AFC. WBERC merely stated that it had prudence checked DVC’s submissions, without explaining why the empirical formula was adopted.

56. The earlier APR Order dated 08.06.2023 only permitted computation of adjustment amounts based on subsequent CERC true-up orders; it did not authorize introduction of a wholly new methodology.

Submissions of the WBERC

57. WBERC emphasized that tariff determination is a continuous regulatory process and regulatory prudence overrides technical objections based on finality or procedural limitations. Relying on UPPCL vs. NTPC Ltd. (2009) 6 SCC 235, the Commission submitted that regulatory power includes inherent authority to revisit and correct tariff-related mistakes whenever necessary.

58. Once it recognized that the earlier methodology was inconsistent with Section 61(d) of the Electricity Act, 2003 it became necessary to uniformly apply

the corrective empirical formula across all generating stations. Selective or piecemeal application would have been arbitrary, discriminatory and contrary to regulatory principles.

59. Referring to Noida Power Company Ltd. vs. UPERC, Appeal No. 98 of 2021, the Commission submitted that tariff orders, though quasi-legislative in nature, are only required to satisfy standards of transparency and adequate consideration of relevant issues. The impugned order sufficiently recorded the rationale for adopting the empirical formula and specifically observed that AFC recovery by DVC depended upon actual sales to consumers.

60. The nexus between actual sales and recovery of AFC was expressly recognized in the impugned order, and the Appellants’ contention that sales had no bearing on AFC recovery was untenable.

Submissions of DVC

61. DVC submitted that the issue must be appreciated in light of tariff chronology. At MYT stage, WBERC passed Tariff Order dated 25.05.2015 determining ARR and tariff for FY 2014-17 on projected parameters. Subsequently, at APR stage through Order dated 08.06.2023, WBERC undertook true-up based on actual operational data, actual plant availability and actual sales. This resulted in AFC figures resting on entirely different sales bases.

62. Divergence between projected sales and actual sales during FY 2014-17 was material and undisputed. Before computing differential AFC or interest, both figures required alignment to a common sales denominator.

63. Error in APR Order dated 08.06.2023 arose because AFC figures computed on projected sales assumptions were directly compared with AFC figures computed on actual sales assumptions, producing distorted differential AFC and incorrect interest.

64. AFC determined in MYT Order is recoverable through tariff in Rs./unit from actual consumers. Actual recovery necessarily depends upon actual energy sold during relevant year. Where actual sales differ from projected sales, actual recoverable AFC varies, resulting in under-recovery or over-recovery.

Analysis and Conclusion

65. We note that WBERC has tried to justify its finding in the Impugned Order on the ground that regulatory prudence override technicalities and procedural limitations. It has contended that the Impugned Order sufficiently recorded the rationale for adopting the empirical formula and specifically observed that AFC recovery by DVC depended upon actual sales to consumers. WBERC referred to this Tribunal’s judgement in Noida Power Company Ltd. vs. UPERC, Appeal No. 98 of 2021 (hereinafter referred to as “Noida Power”) to support its contention. We have perused the aforesaid judgement and we find following extract relevant to the issue raised by the Appellants: “It is not required that reasons, even in a quasi-judicial order passed by a tribunal, should be as elaborate as in the decision of a court of law. The extent and nature of the reasons would depend on the particular facts and circumstances, and the statutory framework. (S.N. Mukherjee v. Union of India, (1990) 4 SCC 594: 1990 SCC OnLine SC 406). All that is required is that the order should be explicit and articulate so as to lend assurance that the case has been properly considered (Siemens Engg. & Mfg. Co. of India Ltd. v. Union of India, (1976) 2 SCC 981: 1976 SCC OnLine SC 189), and that the authority has given due consideration to the points in controversy. (S.N. Mukherjee v. Union of India, (1990) 4 SCC 594: 1990 SCC OnLine SC 406). While elaborate reasons, as is required to be assigned in a judicial order passed by a court, need not be recorded in the tariff order passed by the Commission on

the culmination of the tariff determination exercise, the tariff order must indicate, albeit in brief but with sufficient clarity, the reasons which weighed with the Commission, either in accepting the tariff application in toto or with modifications/ conditions or for rejecting the application filed under Section 64(1).”

66. To examine the contention of WBERC, the relevant extract of the Impugned Order is reproduced below: “3.24.5 The Commission while issuing APR order dated 08-06-23 for the FY 2014- 15, 2015-16 and 2016-17 considered the interest on differential AFC for certain Thermal and Hydel Generating stations (MTPS-U#1to3, MTPS- U#4, MTPS-U#5&6, MHS, PHS, THS) along with the integrated T&D network considering their respective true-up orders of CERC for the period FY-2014-19 upto 31.03.2023. Meanwhile, CERC now issued all the true- up orders for the period FY 2014-19 and Tariff order for FY 2019-24 in respect of all the generating stations and the integrated T&D network of DVC. Accordingly, this Commission has considered the adjustment arising on the interest part on differential AFC for the generating stations (MTPS U#5&6, MTPS U#4, MTPS U#1to3, MHS, PHS, THS) and integrated T&D network along with the remaining generating stations also for the period FY 2014-15 to FY 2016-17. 3.24.6 DVC further submitted that while computing interest on difference of AFC for the FY 2014-15, FY 2015-16 and FY 2016-17 in the APR order dated 08.06.2023 in respect of MTPS-U#1to3, MTPS-U#4, MTPS-U#5&6, MHS, PHS, THS and T&D network system, the Commission considered the methodology which did not include the ratio of actual sale for the respective financial years to the projected sale corresponding to the same financial year. Accordingly, DVC prayed before this Commission to reconsider the above and to adopt the revised methodology for re- computation of the plants for interest computation on differential AFC. 3.24.7 In this context it is pertinent to be noted that in response to the Review petition of DVC vide Case No. APR(R)-29 / 23-24 dated 24.03.2025 against the APR order for the FY 2017-18, this Commission has carefully observed

the petitioner's submission. The Commission after prudence checking, has admitted the submission and adopted the methodology in review of APR order for FY-2017-18 to FY 2019-20 for interest computation on differential AFC. The admitted methodology with empirical formula for computation of the difference of AFC for interest computation is as follows: - [AFC1x PAF1/ TAF1 x D1 x S1] X Actual sale/ Projected Sale — [AFC2x PAF2 /TAF2 x D2 x S2] Where, AFC1 = Annual Fixed Cost (AFC) considered tariff order, PAF1TTAF1 = Projected plant /Transmission availability considered in tariff order, AFC2 = Annual Fixed Cost (AFC) considered APR order, PAF2 /TAF2 = Actual plant /Transmission availability considered in APR order, S1 = Share of sale (projected) to consumers in tariff order, S2 = Share of sale (actual) to consumers in APR order, D1 =Share of sale in West Bengal consumers in tariff order, D2 = Share of sale in West Bengal consumers in APR order.”

67. After going through the above extracted part of the Impugned Order, we find that the WBERC had considered the issue specifically, had applied its mind and has given reasoning. It may be observed that the reasoning, while sufficient, could have been more elaborate so as to render the basis of the decision immediately apparent without requiring an independent reader to engage in extensive analysis. Nevertheless, it cannot be denied that the Impugned Order does contain reasoning, albeit in brief. In view of this analysis and having regard to Noida Power judgement, we are satisfied that the Impugned Order, though not elaborate, meets the minimum standards of a reasoned order required of a quasi-judicial authority.

Issue 5: Whether the impugned approach results in dual treatment leading to consumer prejudice.

Submissions of the Appellants

68. The Appellants submitted that the empirical formula created a dual treatment of differential AFC: one figure for revenue gap/surplus and another artificially reduced figure for interest. This is arbitrary and contrary to the principle that interest represents the time value of money attributable to the principal amount retained or recovered.

69. The earlier consumer benefit of Rs. 51.83 Crore was wiped out and replaced by a liability of Rs. 200.35 Crore. WBERC further permitted recovery of Rs. 270 Crore from consumers by way of tariff hike for FY 2025-26, resulting in a tariff increase of approximately 77 paise per unit from April 2025 onwards.

70. The Appellants argued that, had interest on the principal differential AFC of Rs. 961 Crore been correctly granted, consumers would have been entitled to approximately Rs. 2203 Crore, which could have eliminated the revenue gap and potentially resulted in tariff reduction.

71. The Appellants relied on the following comparison to demonstrate the prejudice caused by the empirical formula. Comparative Table Rs. Crore. Generating FY 2014-15 FY 2015-16 FY 2016-17

Station APR 8.6.2023 I.O. 31.3.2025 APR 8.6.2023 I.O. 31.3.2025 APR 8.6.2023 I.O. 31.3.2025 MTPS #4 -27.86* -24.65 -41.47 -22.16 -16.69 3.15 MTPS 5&6

-1.72 38.81 1.05 9.49 -0.55 34.82 MTPS 1-3 -82.86 -46.96 -101.61 -70.69 -58.77 -9.03 MHS -2.17 1.42 -1.51 2.11 -0.83 3.97 PHS -1.70 0.96 -0.99 1.67 -0.57 2.98 THS -0.24. 0.54 -0.05 0.74 -0.06 1.14 Total -116.55 cr. -29.88 cr. -144.58 cr. -78.84 cr. -77.47 cr. 37.03 cr.

* (-) denotes interest on differential AFC payable to consumers. Submissions of the WBERC

72. WBERC submitted that the Appellants conflated “quantum” with “timing”. Even if trued-up admissible AFC was eventually lower than projected AFC resulting in principal adjustment, that did not eliminate the cash flow deficit suffered by DVC during the relevant period. DVC’s monthly revenue collection depended upon actual sales and since actual consumption was substantially lower than projected sales, DVC experienced a funding gap despite the subsequent true-up adjustment.

73. The Commission emphasized that tariff determination is a continuous regulatory process and regulatory prudence overrides technical objections based on finality or procedural limitations.

74. In conclusion, the Commission submitted that the issue of interest on differential AFC had been correctly decided in the impugned order.

Submissions of DVC

75. DVC submitted that Appellants’ contention regarding “two principal differential AFCs” was misconceived. Differential AFC necessarily varies depending upon sales denominator against which recoverable AFC is computed. Once WBERC identified MYT-stage AFC and APR-stage AFC rested on different sales assumptions, differential AFC required alignment to common sales base before interest computation.

76. Mere inclusion of AFC in approved tariff did not establish actual recovery, since recovery depended upon actual billing and energy sold. Interest on differential AFC is consequential to principal differential AFC and cannot be computed on internally inconsistent or artificially inflated differential derived from mismatched sales denominators. Appellants were effectively seeking interest on notional differential AFC derived from projected-sales-based AFC and actual- sales-based AFC, amounting to carrying cost on mathematically distorted figure.

77. Appellants’ challenge was misconceived and unsustainable. Appellants could not selectively accept methodology for FY 2017-18 and FY 2018-19 where it operated in their favour while challenging it for FY 2014-17 and FY 2019-20. Exercise was not fresh tariff determination but correction of computational inconsistency arising from comparison of AFC figures based on different sales bases.

78. Once MYT-stage AFC was based on projected sales and APR-stage AFC on actual sales, both figures had to be brought to common sales denominator before

computing Differential AFC and interest. Therefore, the correction was mathematically necessary, compliant with regulations and legally sustainable exercise. Analysis and Conclusion

79. We find that the submission of the Appellants is borne out of their inability to appreciate need for re-estimating AFC based on the actual sales. As has already been concluded by us earlier that in addition to true-up value determined by CERC, the AFC also need to be adjusted based on actual energy sales. Such adjustment will obviously lead to a different AFC than the projected AFC originally determined by CERC. The adjusted value is close approximation to AFC actual recovered from the consumers. In view of this, we do no find merit in the submission of the Appellants.

Issue 6: Whether the review petitions were beyond the jurisdiction of the State Commission.

Submissions of the Appellants

80. The Appellants submitted that the empirical formula was first proposed in review petitions concerning FY 2017-18, FY 2018-19 and FY 2019-20, but the grounds and supporting material were not disclosed. DVC’s claim of under- recovery due to lower actual sales was unsupported by data.

81. It was contended that WBERC exceeded the permissible scope of review jurisdiction. The original APR Orders had correctly applied the CERC Tariff Regulations, there was no error apparent on the face of the record, and DVC could not be treated as a “person aggrieved” once its original claim had already been

allowed. Reliance was placed on Haridas Das v. Usha Rani Banik (2006) 4 SCC

78. Submissions of WBERC

82. WBERC contended that the impugned computation was not in the nature of review but was merely a compliance exercise undertaken pursuant to the liberty granted in the earlier order. Since the fixed cost itself was subject to future adjustment upon issuance of pending CERC true-up orders, the consequential interest component also necessarily remained open for final determination.

83. Reliance was placed on UPPCL vs. NTPC Ltd. (2009) 6 SCC 235 to contend that tariff determination and truing-up are continuous regulatory processes and that the Commission retains plenary powers to correct errors, omissions and miscalculations in tariff proceedings. Even the principles of res judicata are inapplicable in tariff proceedings.

Submissions of DVC

84. On statutory power to rectify errors in ensuing APR Order, DVC submitted impugned determination squarely fell within Regulation 2.5.3(v) of WBERC Tariff Regulations, 2011, which empowers State Commission to rectify any miscalculation in tariff order of ensuing year or in APR either suo motu or upon application and specifically provides such rectification shall not be treated as review order.

85. Both procedural and substantive requirements under Regulation 2.5.3(v) stood satisfied. Procedurally, rectification carried out through APR Order dated 31.03.2025; substantively, earlier computation in Order dated 08.06.2023

proceeded on erroneous methodology by comparing projected-sales AFC with actual-sales factors. Methodological error had already been rectified by State Commission in Review Order dated 24.03.2025 for FY 2017-18, upon which reliance was placed in impugned order. Exercise was merely completion of expressly deferred computation and not reopening of concluded issue.

86. DVC denied that State Commission altered underlying methodology at review stage for FY 2019-20. State Commission merely corrected error apparent on face of record within statutory powers under Section 94(1)(f) of Electricity Act, 2003, Regulation 1.7.5 read with Regulation 2.5.3(v) of WBERC Tariff Regulations, 2011 and Regulation 3.3.1 of WBERC (Conduct of Business) Regulations, 2013. Corrective jurisdiction intended only to ensure conformity with governing regulations and factual record. In the present case, WBERC has exercised the said power only to rectify an error on the face of the record arising from non- alignment of the sales base while computing differential AFC.

Analysis and Conclusion

87. Both WBERC and DVC have contended that the revised calculation of interest on differential AFC was of the nature of correction of error and not was not of the nature of review. Regulation 2.5.3(v) of the WBERC Tariff Regulations, 2011 has been cited in this regard. The aforesaid Regulation is extracted below: “In case any error is found in the determined ARR of any ensuing year in any tariff order or APR due to miscalculation or consideration of improper data or missing of any data, then the Commission may while issuing tariff order for an ensuing year, rectify the error on the basis of any application or suo-moto and make necessary adjustment for such rectification in the ARR of any ensuing year or in APR of any year. In such case such rectification shall not be treated as review order.”

88. Having held that adjustment of AFC on the basis of actual energy sales was warranted, it follows that the omission to effect such adjustment in the earlier order was an error. Regulation 2.5.3(v) expressly enables the WBERC to correct such an error without invoking its power of review. Accordingly, we accept the contention of the WBERC and DVC that the revision of the interest on differential AFC in the Impugned Order was in the nature of rectification of an error and not a review of the earlier determination.

Issue 7: Whether Regulation 2.5.3 supports the adoption of the empirical formula.

Submissions of the Appellants

89. The Appellants submitted that Regulation 2.5.3 of the WBERC Tariff Regulations does not authorize interest on differential AFC de hors the CERC Tariff Regulations. It permits only rectification of errors caused by miscalculation, improper data, or omission of data, none of which existed here.

90. Their grievance was always for interest on the principal differential AFC without artificial reduction. The principal differential AFC for FY 2014-17 was Rs. 961 Crore, on which DVC was liable to pay interest at the applicable Bank Rate.

Submissions of WBERC

91. WBERC submitted that it acted within the framework of the WBERC Tariff Regulations, 2011, particularly Regulation 2.5.3(v) which empowers the Commission to rectify errors arising from miscalculation, improper data or omission of data in ARR or APR orders. Such rectification does not amount to exercise of review jurisdiction.

92. The improper data in the earlier orders consisted of treating the provisional AFC projections as if they represented actual amounts collected by DVC, even though such projections were based upon assumed sales levels and not actual recoveries.

93. The Commission contended that the adoption of the empirical formula constituted a valid exercise of power under Regulation 2.5.3(v) to correct improper data and prevent unjust enrichment.

Submissions of DVC

94. DVC submitted that Appellants’ contention that DVC had not specifically pleaded “under-recovery” in APR proceedings was wholly misconceived. Present exercise did not arise out of independent monetary claim but from statutory reconciliation of Differential AFC consequent upon variation between projected sales and actual sales. Once actual sales materially differed from projected sales, AFC attributable to consumers in West Bengal necessarily varied as natural consequence of tariff framework and did not require separate pleading regarding “under-recovery”.

95. Appellants’ contention that differential AFC along with interest already stood adjusted through revenue gap determined in APR Order dated 08.06.2023 for FY 2014-17 was factually incorrect. Subsequent Tariff Order dated 31.03.2025 demonstrated revenue gap arising from prior periods had not been fully adjusted at one instance but carried forward and adjusted in phased manner across multiple tariff periods.

96. State Commission recorded only part of total regulatory assets/ revenue gap which had been adjusted in earlier years including FY 2023-24 and FY 2024-25

while balance amount carried forward for adjustment in FY 2025-26 and subsequent years. Appellants’ premise that entire revenue gap stood finally recovered pursuant to Order dated 08.06.2023 was untenable since regulatory framework contemplated staggered recovery over multiple control periods.

97. Determination and adjustment of revenue gap is ongoing regulatory exercise wherein under-recovery or over-recovery is trued up and adjusted across successive tariff orders. Adjustment of revenue gap arising from differential AFC was merely consequential outcome of underlying cost determination.

98. In any event, rectification is independently traceable to Regulation 2.5.3(v) of WBERC Tariff Regulations, 2011 which expressly permits correction of any miscalculation in ensuing Tariff Order or Annual Performance Review; correction carried out in APR Order dated 31.03.2025 is within regulatory framework and cannot be characterised as impermissible review or reopening of concluded tariff determination.

Analysis and Conclusion

99. We have seen that the Regulation 2.5.3(v) empowers the WBERC to correct an error in its order. The manner in which such correction is effected would depend upon the nature of the error. While some errors may be rectified by merely substituting an incorrect value with the correct one, others may require a computational methodology to quantify the necessary correction.

100. The omission in the earlier orders was the failure to account for the impact of variation between projected and actual energy sales on AFC recovery. The Impugned Order merely rectifies that omission. The formula adopted by the WBERC is only a means of implementing the correction and not an exercise in

review or fresh determination. Accordingly, we reject the contention of Appellants that Regulation 2.5.3(v) does not contemplate the use of a formula for the purpose of rectification.

ORDER

For the foregoing reasons as stated above, we are of the considered view that the captioned Appeal No. 15 of 2026 has no merit and is dismissed.

The Impugned Order dated 31.03.2025 passed by the West Bengal Electricity Regulatory Commission in Case No. APR-125/24-25 insofar as it relates to the computation of interest on differential Annual Fixed Charges (AFC) is affirmed.

The Captioned Appeal and pending IAs, if any, are disposed of in the above terms.

PRONOUNCED IN THE OPEN COURT ON THIS 2nd DAY OF JULY, 2026.

(Ajay Talegaonkar) Technical Member (Virender Bhat) Judicial Member

REPORTABLE / NON-REPORTABLE kns/mkj/kks