Some aspects of tariff setting mechanism including multi year tariff principle with special reference to Orissa

After Enactment of Electricity Act, 2003 there is a paradigm shift in tariff setting mechanism for electricity utilities of India. Many new features have been added to the electricity sector of India such as Regulatory Commissions at Central and State level. Govt. of India has also brought out National Tariff Policy to be followed by the Regulators. The Electricity Act, 2003 envisages gradual shift from cost plus tariff to competitive bidding process. To bring certainty into the power business multi year tariff framework has also been provided. While methodologies adopted by a Central Commission in transmission and generation tariff are to be followed by State Commissions where as they are free to make their own Regulation for determination of the Retail tariff. Orissa Electricity Regulatory Commission is the first Electricity Regulatory Commission in India. The present paper throws light on the some of the basic features of tariff setting mechanism with special reference to Orissa.