LUCKNOW: The Uttar Pradesh Electricity Regulatory Commission (UPERC) on Tuesday has directed Uttar Pradesh Power Corporation Ltd (UPPCL) to stop including prior period power purchase liabilities in the monthly Fuel and Power Purchase Adjustment Surcharge (FPPAS) calculation, holding that such costs cannot be recovered through the delegated FPPAS mechanism even if they are otherwise recoverable.The order follows UPPCL’s June 19 submission defending the methodology it has been using since the FPPAS regime was operationalised in April 2025.In its reply to the regulator, UPPCL managing director Nitish Kumar stated that the FPPAS mechanism under the UPERC MYT (multi year tariff for distribution) regulations had been implemented by distribution companies from April 2025 based on Jan 2025 power purchase cost data and had been computed using a methodology that was “consistently followed across all months”.UPPCL told the commission that for the past 14 months discoms had been calculating and levying FPPAS using the same approach and regularly submitting detailed computations before the regulator.UPPCL defended the inclusion of supplementary bills and old power purchase dues in FPPAS, saying these costs became payable and were verified during the month under consideration. Therefore, it treated them as part of the actual power purchase cost.The utility further argued that if such expenses were not recovered through FPPAS, their recovery would be delayed until the annual true up process, increasing carrying costs. UPPCL also pointed to similar practices followed by regulators in Gujarat and Delhi.UPERC, however, disagreed with UPPCL’s interpretation of the regulations. The Commission said Regulation 16.1(3) makes it clear that FPPAS can be levied only for changes in fuel, power purchase and transmission costs linked to electricity procured during a specific month.According to the regulator, the mechanism was designed to allow consumers to bear only the cost variations arising from power purchased in that month, and not liabilities or bills related to earlier periods.The Commission noted that the wording of the regulation leaves no room for including past dues, supplementary bills or prior period expenses in monthly FPPAS calculations. It said the formula and definitions under the regulations specifically refer to power procured in the relevant month and therefore cannot be stretched to cover costs from previous years.UPERC said that while costs may still be legally recoverable by the discoms, they cannot be recovered through the delegated FPPAS route. It directed that from the next FPPAS cycle, calculations must be based only on the actual fuel cost, power purchase cost and transmission charges of the relevant month. Any prior period liabilities will have to be claimed separately through the annual true up process.Any such claims, it said, must be routed through the annual true up process.The Uttar Pradesh Rajya Vidyut Upbhokta Parishad chairman Avadhesh Kumar Verma said, “The UPERC’s order established that consumers had been subjected to FPPAS calculations based on a flawed formula for over a year. The UPPCL had admitted before the regulator that “for the last 14 months FPPAS was being recovered across the state using a flawed formula. We demand refund of all excess recovery from consumers.”
