The Ministry of Power (MoP) is seeking public feedback on an alternative mechanism for implementing Fuel and Power Purchase Adjustment Surcharge (FFPAS) charges under the Electricity (Amendment) Rules, 2022. This public notice was was issued on December 30, 2024.
FPPAS are charges levied on electricity bills to recover variations in power purchase costs incurred by DISCOMs (Electricity Distribution Companies).
Frequent fluctuations in FPPAS can lead to “tariff shock” for consumers due to sudden changes in their electricity bills. To address this issue, the Ministry is exploring an alternative mechanism to stabilize FPPAS charges.
Current Practice
Rule 14 of the Electricity (Amendment) Rules, 2022 mandates a formula for automatic pass-through of FPPAS charges on a monthly basis. Some States have adopted this rule, while others have their own FPPAS recovery mechanisms.
Proposed Alternative Mechanism
A fixed “Base Fuel and Power Price Adjustment Surcharge” (Base FPPAS) would be collected from consumers along with their monthly electricity bills.
The State Electricity Regulatory Commission (SERC) would determine the Base FPPAS as a percentage of the monthly average billing rate. This percentage would be based on the average FPPAS of the past three years and the DISCOM’s proposal for the current year. The actual FPPAS would be calculated monthly as per the existing rules.
The Base FPPAS would be deposited in a separate “FFPAS Stabilization Fund.” The DISCOM would utilize the FPPAS Stabilization Fund to meet the actual FPPAS charges. If the FPPAS Stabilization Fund has a surplus exceeding the past two months’ FPPAS demand, the surplus would be used to reduce the base rate for consumers.
Stakeholder Feedback Requested
The Ministry of Power is inviting comments on the proposed alternative FPPAS mechanism from all stakeholders. Stakeholders can submit their comments by January 15, 2025 to the Chief Engineer (F&CA) through email: cefca.cea@gov.in.
