LUCKNOW: The Uttar Pradesh Electricity Regulatory Commission (UPERC) has raised objections to the manner in which the Uttar Pradesh Power Corporation Limited (UPPCL) calculated the fuel and power purchase adjustment surcharge (FPPAS), making it clear that the mechanism cannot be used to recover historical liabilities, arrears, past-period dues or one-time settlement costs from consumers.In an order issued on Monday, the commission directed UPPCL to explain why nearly Rs 1,400 crore in old liabilities and past claims were included in the surcharge calculations for March 2026. The move is expected to provide significant relief to the state’s 3.73 crore electricity consumers, who were facing the prospect of increase in power bills.The commission observed that FPPAS is designed solely to account for month-specific variations in fuel costs, power purchase expenses and transmission charges related to electricity procured and supplied during a particular period. It stressed that the regulatory framework does not permit the recovery of legacy dues or liabilities through this automatic adjustment mechanism.According to UPERC, “Historical arrears, one-time settlements and payments arising from judicial or quasi-judicial proceedings do not qualify as legitimate cost variations attributable to electricity supplied in a specific month. Such expenditures cannot be treated as part of the actual power purchase cost for that period and therefore fall outside the scope of FPPAS.”Uttar Pradesh Rajya Vidyut Upbhokta Parishad chairman and Central Advisory Committee member Avadhesh Kumar Verma welcomed the commission’s intervention, arguing that consumers would have benefited from a reduction in electricity bills rather than an additional surcharge if the calculations had been carried out in accordance with regulations.Verma claimed that while the approved power purchase cost stood at around Rs 4.94 per unit, UPPCL calculated the cost at approximately Rs 5.86 per unit for March 2026. This difference, he alleged, translated into an additional burden of nearly Rs 1,610 crore on consumers. Had only the admissible costs been considered, consumers could have seen electricity bills reduced by nearly 2 percent instead of facing a 10 percent surcharge, he said.Led by chairman Arvind Kumar, the Commission emphasized that FPPAS is an exceptional provision because it allows distribution utilities to recover certain cost variations from consumers without obtaining prior approval for every monthly adjustment. “Given this automatic nature, utilities are expected to exercise utmost caution and ensure strict compliance with regulatory provisions,” UPERC said in the order.UPERC also expressed concern that including liabilities arising from court orders, tribunal decisions and settlements of previous years in the surcharge calculation could impose a substantial and unjustified burden on consumers.The Commission maintained that this approach is inconsistent with the Multi Year Tariff Regulations, 2025, as well as the broader principles of consumer protection embedded in the regulatory framework.Seeking greater transparency, UPERC has directed UPPCL to submit a detailed explanation within seven days. The power utility has been asked to provide a complete break-up of the FPPAS computation, including current and past-period power purchase and transmission charges, details of payments made under Appellate Tribunal for Electricity orders and the legal justification for including historical liabilities in the surcharge calculations.Verma said the commission’s observations suggest that the 10 percent fuel surcharge imposed by UPPCL may not survive regulatory scrutiny. He added that UPPCL may now be required to revise its order and withdraw the additional burden placed on consumers.He also pointed out that a similar 10 percent surcharge collected in Feb 2026 remains under examination before the commission.
