DELHI ELECTRICITY REGULATORY COMMISSION versus TATA POWER DELHI DISTRIBUTION LIMITED

Citation: [2026] 5 S.C.R. 441 · Decided: 07-05-2026 · Supreme Court of India · Bench: PAMIDIGHANTAM SRI NARASIMHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2026] 5 S.C.R. 441 : 2026 INSC 461
Delhi Electricity Regulatory Commission 
v. 
Tata Power Delhi Distribution Limited
(Civil Appeal No. 6388 of 2025)
07 May 2026
[Pamidighantam Sri Narasimha and Alok Aradhe,* JJ.]
Issue for Consideration
Whether the depreciation under the applicable tariff regulations 
must necessarily be allowed over the entire technical useful life 
of an asset irrespective of the period during which the asset is 
actually utilised for supply of electricity; whether Regulation 6.32 
of 2011 Regulations confers an absolute right upon the generating 
utility to recover entire capital cost over the useful life of the asset, 
even where the asset ceases to supply electricity to the consumer; 
whether the APTEL erred in law in disregarding the regulatory 
framework and approval conditions which limited the operational 
and recovery period of the Plant to six years.
Headnotes†
Electricity Act, 2003 – ss.61(d), 62 – DERC (Terms and 
Conditions for Determination of Generation Tariff) Regulations, 
2011 – Regulations 6.30-6.32, 4.1 – APTEL set aside the order 
passed by the Delhi Electricity Regulatory Commission and 
directed that entire capital cost of Rithala Combined Cycle 
Power Plant at Rithala, Delhi (the Plant) be recovered through 
depreciation over a period of fifteen years notwithstanding the 
admitted fact that the Plant ceased to supply electricity to the 
consumers from and after March-2018 – Challenge to – Whether 
the depreciation under the applicable tariff regulations must 
necessarily be allowed over the entire technical useful life of 
an asset irrespective of the period during which the asset is 
actually utilised for supply of electricity:
Held: Tariff determination is not merely a mathematical exercise 
but a regulatory balancing act – The object of enabling reasonable 
cost recovery for utilities must be weighed against and calibrated 
with, paramount obligation to safeguard consumer interest – In 
* Author
442
[2026] 5 S.C.R.
Supreme Court Reports
the instant case, admittedly, electricity has not been supplied to 
the consumers beyond March-2018 – The consumers cannot be 
required to pay for a service which they no longer received – Under 
the PPA, TPDDL (Tata Power Delhi Distribution Limited) had to 
supply electricity only for a period of six years – The Commission 
had clarified to the Managing Director of TPDDL that the plant could 
be treated as a merchant generator which is free to sell the power 
anywhere other than to the distribution utilities in Delhi or outside 
the State or to captive consumers within the State – There was no 
legal impediment to either sale of the Plant or sale of electricity as 
a merchant generator – Therefore, TPDDL cannot be permitted to 
burden the consumers with tariff charges beyond March-2018 – 
Therefore, the first substantial question of law is answered in the 
negative – Impugned judgment passed by the APTEL is set aside, 
order passed by the Commission is restored. [Paras 20, 23]
Electricity Act, 2003 – ss.61(d), 62 – DERC (Terms and 
Conditions for Determination of Generation Tariff) Regulations, 
2011 – Regulations 6.30-6.32, 4.1 – Whether Regulation 6.32 of 
2011 Regulations confers an absolute right upon the generating 
utility to recover entire capital cost over the useful life of the 
asset, even where the asset ceases to supply electricity to 
the consumer:
Held: No – Regulation 6.32 of 2011 Regulations prescribes the 
methodology of calculating depreciation over the useful life of 
the asset – No provision has to be read in isolation – Regulation 
6.32 of 2011 Regulations must be construed harmoniously with 
Regulation 4.1 of 2011 Regulations, which mandates that the tariff 
for supply of electricity by a generating company to a distribution 
licensee is to be determined in accordance with PPA or any other 
arrangement for such period as may be approved or adopted by the 
Commission, to the extent of existing installed capacity contained 
in the PPA – Regulation 4.1 of 2011 Regulations confines tariff 
entitlement to the period approved in the PPA – The order dated 
31.08.2017 fixed the operational and recovery framework of the 
plant up to March-2018 – The 2011 Regulations have to be read in 
conjunction with s.61(d) of the 2003 Act which places the consumer 
interest at the centre of tariff Regulation – Thus, Regulation 6.32 of 
the 2011 Regulations does not, and cannot, override the broader 
statutory and regulatory framework an

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