The recent power tariff hike in Jammu and Kashmir has created quite a fierce debate on the social media and amongst the society. Many statistics were tossed around in news reports about the hike in different categories of consumers, the cost of purchase of energy and the recovery thereof. The standard practice across the country is to determine the tariff every year. In case of J&K it was last done in 2023 and hence was overdue. As a matter of fact, this exercise should have been completed before the start of the financial year i.e., latest by end of March. It is now being done after five months into the current financial year. 

As per the Electricity Act of 2003, electricity tariff is determined by the appropriate electricity regulatory commission. For state distribution utilities (like JPDCL and KPDCL), the State Electricity Regulatory Commission (SERC) decides retail supply tariffs for consumers within the state. Prior to reorganisation of the State in 2019, Jammu & Kashmir had its State Electricity Regulatory Commission (SERC) which determined the tariff. After the reorganisation SERC was replaced by Joint Electricity Regulatory Commission (JERC). 

The operating principles of the Commission, however, remain the same i.e., to determine tariff in a transparent way while being guided by the need to ensure efficiency, protect consumer interests, and progressively reduce cross-subsidies while moving toward the actual cost of supply. The tariff policy under the Act also requires a fair, open, and transparent process for all parts of the electricity sector i.e., generation, transmission, and distribution.The Commission determines the tariff through a cost-based approach, where the regulator examines expenses such as power purchase cost, operation and maintenance, capital cost, return on equity, and other approved costs. The process involves submission of a petition by the utility (JPDCL or KPDCL in our case) to JERC in which it submits its accounts as regards the purchase of energy, the losses, the cost of distributing it to consumers. The JERC is expected to check these in detail and satisfy themselves to their correctness. Once found in order the expense is allowed – in case the expense is........

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