By S&S Co. Advocates & Solicitors · Published 2 April 2026 · Informational content, not legal advice. See our disclaimer
Two-Stage Tariff Determination
Electricity tariff in India is typically determined in two stages: a provisional or "projected" tariff order, based on estimated costs and generation for the coming financial year or control period, followed by a "true-up" exercise once actual costs and generation figures are available, reconciling the provisional tariff against actual performance. This two-stage approach, used by both the Central Electricity Regulatory Commission (CERC) and State Electricity Regulatory Commissions (SERCs), lets tariffs be set in advance for revenue certainty while still correcting for the inevitable gap between projection and outcome.
What a True-Up Petition Covers
A true-up petition asks the regulator to reconcile the provisionally approved tariff against actual audited figures for capital expenditure, fuel cost, operation and maintenance expenses, and generation or availability, and to true-up (adjust upward or downward) the revenue the generator or licensee was entitled to for that period. Any shortfall the regulator confirms is typically recovered through future tariffs, along with carrying cost to compensate for the delay in recovery; any excess collected is similarly refunded or adjusted against future tariff.
Timelines and the Consequence of Delay
Tariff regulations generally prescribe a period (commonly within a specified number of months after the close of the relevant financial year or control period) within which a true-up petition should be filed. Filing well outside this window can invite closer regulatory scrutiny of the claim and, in some cases, has been used by regulators to resist claims for carrying cost, though appellate authority has clarified that delay alone does not automatically forfeit an otherwise valid claim if it is adequately explained.
Evidentiary Standard: Audited, Not Estimated, Figures
A true-up petition succeeds or fails largely on the quality of its supporting record. Regulators expect audited financial statements, invoice-level support for major capital expenditure, and generation or availability data reconciled against the metering and dispatch records maintained by the relevant load despatch centre: estimates or internally reconciled figures without independent audit backing are routinely queried or rejected outright.
Carrying Cost on Admitted Claims
Where a regulator admits a true-up claim (for instance, capital expenditure incurred above the normative equity threshold, or fuel cost variance beyond what the provisional tariff assumed) the generator or licensee is generally entitled to carrying cost on the admitted amount, compensating for the period between when the expenditure was incurred and when it is actually recovered through tariff. Getting the carrying-cost computation right, including the date from which it should run, is often as commercially significant as the underlying principal claim itself.
Common Grounds for Rejection
True-up claims are most often rejected or reduced for want of documentary support, for expenditure that falls outside the normative parameters the original tariff order was based on without adequate justification, or for claims that duplicate cost elements already built into the provisional tariff. Generators and licensees preparing a true-up petition should reconcile their claim line-by-line against the provisional order before filing, rather than treating the exercise as a simple aggregate cost update.
Frequently Asked Questions
What is the difference between a provisional tariff order and a true-up order?
A provisional tariff order sets tariff based on projected costs and generation for a control period; a true-up order later reconciles that provisional tariff against actual audited costs and generation, adjusting revenue up or down accordingly.
Can a generator claim carrying cost on a true-up claim?
Generally yes: where a regulator admits a true-up claim such as additional capital expenditure or fuel cost variance, the claimant is typically entitled to carrying cost compensating for the delay between incurring the cost and recovering it through tariff.
Does delay in filing a true-up petition forfeit the underlying claim?
Not automatically. Appellate authority has held that a delay, if adequately explained, does not by itself extinguish an otherwise valid claim, though regulators may scrutinise a delayed claim more closely.
What documentation does a true-up petition require?
Audited financial statements, invoice-level support for major capital expenditure, and generation or availability data reconciled against load despatch centre records: unaudited internal estimates are generally insufficient.
References & Further Reading
This article references the following statutory provisions. Readers should always verify current rules, fees and timelines against the applicable statute and rules as amended, since these are revised from time to time.
- Electricity Act, 2003, Sections 61-64 and 86.
- CERC (Terms and Conditions of Tariff) Regulations, as amended and periodically re-notified for each control period.
- Applicable State Electricity Regulatory Commission tariff regulations, which vary by state.